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Appeal No. 407 of 1962. Appeal from the judgment and decree dated January 31, 1957 of the Madras High Court in Appeal No. 969/1952. R.Mamamurthi Aiyar, T. section Rangaraian and R. Gopala krishnan, for the appellant. V.S. Venkataraman, M. R. Krishna Pillai and M. section K. lyengar, for the respondent No. 3. February 11, 1964. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal on a certificate issued by the High Court of Judicature at Madras is preferred against the judgment and decree of the said High Court modifying those of the Subordinate Judge, Tanjore, in a suit filed by the appellant to enforce a mortgage by deposit of title deeds. The facts are as follows. The first defendant borrowed from the plaintiff from time to time on seven promissory notes. The plaintiff, alleging that the first defendant had created a mortgage by deposit of title deeds in his favour in respect of his half share in the properties specified in B Schedule, instituted O.S. No. 45 of 1951 in the Court of the Subordinate Judge, Tanjore, for enforcing the said mortgage against the said properties. The suit was for recovery of a sum of Rs. 20,435 15 0, made up of principal amount of Rs. 16,500/ and interest thereon. To that suit six persons were made defendants: defendant I was the mortgagor; defendant 2 was the subsequent purchaser of several of the items of the suit properties subject to plaintiff 's mortgage; defendant 3 was the subsequent morgagee; defendant 4 was the subsequent purchaser of one of the plaint schedule properties; and defendant 5 and 6 were sister and brother of the 1st defendant. The plaintiff also alleged that in a partition ,effected between the 1st defendant and his brother properties described in the C Schedule annexed to the plaint were ,allotted to the 1st defendant. He, therefore, asked in the alternative that the C Schedule properties should be sold for the realization of the amount due to him from the 1st defendant. 730 As the only contesting party before us is the 3rd defendant (3rd respondent herein), it is not necessary to notice the defences raised by defendants other than the 3rd defendant. The 3rd defendant alleged that the 1st defendant had executed a security bond in his favour for a sum of Rs. 15,0001 on October 10, 1947 and that, being a bona fide purchaser for value, he had priority over the plaintiff 's security, even if it were true. He put the plaintiff to strict proof of the fact that the sum claimed in the plaint under several promissory notes was owing to him and also of the fact that the 1st defendant effected a mortgage of the suit properties by deposit of title deeds in favour of the plaintiff. The learned Subordinate Judge held that the suit loans were true, that the mortgage by deposit of title deeds was also true, but the plaintiff had a valid mortgage only of items 1 and 4 of the C Schedule in respect of a sum of Rs. 9,157 5 0 with interest at 6 per cent. per annum thereon. On that finding, he gave a decree in favour of the plaintiff against defendants 1 to 3 for the said amount with a charge over items 1 and 4 of the C Schedule properties, and he also gave a decree in favour of the plaintiff for a sum of Rs. 7,565 2 0 with further interest at 6 per cent. per annum from July 5, 1947, against the 1st defendant personally. The plaintiff preferred an appeal against the decree of the Subordinate Judge, insofar as it went against him, and the 3rd defendant filed cross objection in respect of that part of the decree which went against him. A Division Bench of the Madras High Court, which heard the appeal and the cross objections, held that the 1st defendant did not effect a mortgage by deposit of title deeds on May 10, 1947, in favour of the plaintiff for the entire suit claim, but that he effected such a mortgage in favour of the plaintiff on January 25, 1947, for a sum of Rs. 3,000 / in respect of two of the plaint schedule items described in exhibit A 8. On that finding, the High Court modified the judgment and decree of the Subordinate Judge by restricting the mortgage decree given to the plaintiff to the amounts covered by the first three promissory notes and interest thereon and to one half of the properties described in exhibit A 8 and by giving a money decree against the 1st defendant for the entire balance of the 731 decree amount. The plaintiff has preferred the present appeal against the decree of the High Court. Learned counsel for the appellant contends, (1) that the finding of both the lower courts that no mortgage by deposit of title deeds was effected for the entire plaint claim was vitiated by the fact that they had ignored exhibit A 19, a registered agreement entered into between the plaintiff and the 1st defendant on July 5, 1947, wherein the said fact was clearly and unambiguously recorded; and (2) that, even if such a mortgage was not effected on May 10, proprio vigore effected such a mortgage to come into effect at any rate from the date of the execution of the agreement. Learned counsel for the contesting 3rd respondent argues that the definite case of the plaintiff was that such a mortgage was effected only on May 10, 1947, and that both the Courts below on a consideration of the oral and documen tary evidence concurrently found that no such transaction was effected on that date and that, therefore, this Court should not interfere with such a finding of fact. He further contends that in exhibit A 19 the parties only recorded that a mortgage by deposit of title deeds was effected on May 10, 1947 and that, if that fact was not true, exhibit A 19 could not be of any help to the plaintiff. If there was no mortgage on May 10, 1947, the argument proceeds, exhibit A 19 by its own force could not create a mortgage by deposit of title deeds on July 5, 1947, as in terms it only referred to a mortgage alleged to have been effected on May 10, 1947. That apart, it is argued that as a mortgage by deposit of title deeds could only be effected at Madras and that, as one of the important ingredients of such a mortgage is that the delivery of the said title deeds to the creditor should have been given at Madras, no such mortgage could have been effected in law in the present case, as the delivery of the title deeds was given by the bank to the representative of the plaintiff at Kumbakonam. Before we advert to the arguments advanced in the case it would be convenient at this stage to notice the relevant aspects of the law pertaining to mortgage by deposit of title deeds. 732 Section 58(f) of the Transfer of Property Act defines a mortgage by deposit of title deeds thus: "Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay. . . delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds. " Under this definition the essential requisites of a mortgage by deposit of title deeds are, (i) debt, (ii) deposit of title deeds, and (iii) an intention that the deeds shall be security for the debt. Though such a mortgage is often described as an equitable mortgage, there is an essential distinction between an equitable mortgage as understood in English law and the mortgage by deposit of title deeds recognised under the Transfer of Property Act in India. In En land an equitable mortgage can be created either, (1) by actual deposit of title deeds, in which case parole evidence is admissible to show the meaning of the deposit and the extent of the security created, or (2) if there be no deposit of title deeds, then by a memorandum in writing, purporting, to create a security for money advanced: see White and Tudor 's Leading Cases in Equity, 9th edition, Vol. 2, at p. 77. In either case it does not operate as an actual conveyance though it is enforceable in equity; whereas under the Transfer of Property Act a mortgage by deposit of title deeds is one of the modes of creating a legal mortgage whereunder there will be transfer of interest in the property mortgaged to the mortgagee. This distinction will have to be borne in mind in appreciating the scope of the English decisions cited at the Bar. This distinction is also the basis for the view that for the purpose of priority it stood on the same footing as a mortgage by deed. Indeed a proviso has been added to section 48 of the Registration Act by Amending Act 21 of 1929. It says: "Provided that a mortgage by deposit of title deeds as defined in section 58 of the , shall take effect against any mortgage deed subsequently executed and registered which relates to the same property." 733 Therefore, under the law of India a mortgage by deposit of title deeds, though it is limited to specific cities, is on a par with any other legal mortgage. The text books and the cases cited at the Bar give some valuable guides for ascertaining the intention of parties and also the nature of delivery of the documents of title requisite for constituting such a mortgage Fisher in his book on The Law of Mortgage., 2nd edition, p. 32, suggests how the intention to create such a security could be established. He says: "The intent to create such a security may be established by written documents, alone or coupled with parol evidence; by parol evidence only that the deposit was made by way of security; or by the mere inference of an agreement drawn from t he very fact of the deposit. " In Norris vs Wilkinson(1) the Master of the Rolls in the context of that case where documents 'were delivered to the Attorney of the creditor for the purpose of enabling the attorney to draw a mortgage which it was alleged that the debtor had agreed to give, made the following observations: "It is clear, that these deeds, if voluntarily delivered at all, were not delivered by way of deposit, in the sense in which that word has been used in the cases : i.e., as a present and immediate security; but were delivered only for the purpose of enabling the attorney to draw the mortgage, which it is alleged, Wilkinson the father had agreed to give." The learned Master of the Rolls distinguished the cases cited before him thus: "Now in all the cases, that have been referred to. the deeds were delivered by way of deposit. Such deposit was indeed held to imply an obligation to execute a legal conveyance, whenever it should be required. But the primary intention was to execute an immediate pledge; with an implied engagement to do all, that might be necessary to render the pledge effectual for its purpose. " (1) ; , 76. 734 These passages indicate that an intention to create a mortgage deed in the future is not inconsistent with the intention to create in presenting a mortgage by deposit of title deeds. Both may co exist. In Keys vs Williams(1) it was held that an agreement to grant a mortgage for money already advanced and a deposit of deeds for the purpose of preparing a mortgage, was, in itself, an equitable mortgage by deposit. Though the facts of the case do not appear in the report, this decision indicates that the fact that deposit of title deeds was given for the purpose of preparing a mortgage does not in itself without more, exclude the inference to create an equitable mortgage if the. requisite conditions for creating thereof are satisfied. The decision in Whitbread, Ex Parte(2) throws some light on the legal requirements of delivery of title deeds. There, the petitioner claimed a lien, as an equitable mortgagee, by deposit in 1808 of the lease of a public house as a collateral security for pound 1,000, lent to the lessee on his promissory note, and a subsequent advance of pound 100 made in January 1810. One of the points mooted was whether the subsequent advance of pound 100 was also charged on the property covered by the document. The learned Chancellor in that context made the following observations : "If the original bargain did not look to future advances, no subsequent advance can be a charge, unless the subsequent transaction is equivalent to the original transaction. If it is equivalent to a re delivery of the deed, receiving it back as a security for both sums, that will do; as it cannot depend upon that mere form : but I shall require them to swear expressly, that when the sum of pound 100 was advanced, it was upon the security of the deposit. " The said observations emphasize the substance of the trans action rather than the form. It implies that a debtor, who has already affected a mortgage by deposit of title deeds in respect of an earlier advance, need not go through the forma (1) (1838) 51 Revised Reports, 339. (2) ; 735 lity of receiving back the said documents from the creditor and formally re delivering them to the creditor as security for further advances taken by him. It would comply with the requirements of law if there was clear evidence that the documents already deposited with the creditor would also be charged by way of deposit of title deeds in respect of the further advances. The doctrine accepted by this decision may, for convenience of reference, be described as the doctrine of constructive delivery. Learned counsel for the respondent attempted to confine the scope of this decision to a case of further advances on the basis of documents already deposited with the creditor in respect of earlier advances. It is true that the principle was enunciated in the context of the said facts, but it is of wider application. In our view, the same principle will have to be invoked wherever documents of title have already been in the possession of creditor at the time when the debtor seeks to create a mortgage by deposit of title deeds. In re Beetham, Ex Parte Broderick(1) the facts were A, being indebted to a banking company in respect of an overdrawn account, wrote to the directors promising to give them, when required, security over his reversionary interest in one fifth share of a farm, to come into possession on the death of the life tenant; but no formal security was ever executed in accordance with this promise. After the death of the life tenant the deeds of the farm came into the possession of A 's brother, the manager of the bank , for the purpose of paying the succession duty. As regards A 's share therein the brother claimed to hold them for the banking company with the consent of A as security for the overdrawn account. There was no memorandum of the deposit in the bank books, nor was the usual printed form of deposit of title deeds by way of security made use of with reference to the transaction. A subsequently became bankrupt. The Queen 's Bench held that the banking company had no valid equitable mortgage on the bankrupt 's share in the farm and that it could not hold the rents as against his trustee in bank ruptcy. On appeal the Court of Appeal confirmed the said decision of the Queen 's Bench. It is contended that this decision negatives the doctrine of constructive deposit. for (1) 736 it is said that though the manager of the bank with the con sent of A, held the title deeds as security for the bank, the Court did not accept that fact for holding there was an equitable mortgage. In our view, this decision does not lay down any such proposition. The main reason for the aforesaid conclusion of the Court of Appeal is found in the judgment of Lord Esher, M. R. at pp. 768 769 of ',he said Report. After considering the facts of the case, the Master of the Rolls proceeded to state: "If this be so, there was nothing but the oral promise of the bankrupt to give the bank security, and that is not enough to satisfy the Statute of Frauds. In order to take the case out of the statute it must be shown that there has been performance or part performance of the rat promise. . . But nothing more was done with the deeds; they were left in precisely the same position. Nothing was done, except that the one brother said something, and the other said something in reply. Was this such a part performance of the original oral promise as will take the case out of the statute?" His Lordship concluded: "I take that proposition to amount to this that where there is a mere oral promise to do something, and nothing takes place afterwards but the speaking of more words by the parties when nothing more is done in fact there is no part performance which can exclude the application of the Statute of Frauds. " The entire judgment was based upon the doctrine of part performance and the Court of Appeal held that the facts established did not constitute part performance of the oral agreement. The doctrine of constructive deposit was neither raised nor touched upon in that case. Now let us consider some of the Indian decisions cited at the Bar. In Dayal Jairaj vs Jivraj Ratansi(1), the plaintiff (1) Bom. 237. 737 had advanced to the 1st defendant Rs. 38,000/ , and had agreed to advance Rs. 27,000/ more, the whole of Rs. 65,000/ to be secured by a mortgage of the 1st defendant 's immovable property. The 1st defendant had deposited with the plaintiff the title deeds of his immovable property, for the purpose of enabling him to get a mortgage deed prepared, and had agreed to execute such mortgage deed on payment to him by the plaintiff the balance of the amount of Rs. 65,000/ . The title deeds were afterwards returned by the plaintiff to the 1st defendant for the purpose of enenabling him to clear up certain doubts as to his title to some of the premises comprised in the deeds, but the said deeds were neither subsequently returned by the 1st defendant, nor were others deposited in lieu thereof. The balance of the Rs. 65.000/ was not paid by the plaintiff to the 1st defedant The Court held that there was an equitable mortagag of the said property to secure the sum of Rs. 38,000,/ The fact that the title deeds were deposited for the purpose of executing a mortgage deed, which did not fructify. did not in any way preclude the Court from holding on the facts of the case that a mortgage by deposit of title deeds was created in respect of the amount that had already been paid to the debtor. The court relied upon the principle enunciated by earlier English decisions based upon the fact wither amounts were lent before or after the deposit of In Jaitha Bhima vs Haji Abdul Vyad Cosman(1) the facts were these: The plaintiff consented to lend Rs. 10,000/ to the defendant. The latter deposited with him on April 2, 1883, the title deeds of a certain property. On receiving them the plaintiff told the defendant that he would take them to his attorney, have a deed drawn and then advance the money. The defendant applied to the plaintiff for the money before the deed was prepared, but the plaintiff refused, saying, he would not advance the money until he was satisfied by his attorney, and the deed had been prepared. At the time the deeds were handed over to the plaintiff, there was no existing debt date by the defendant to the plaintiff. On April 6, 1885, the mortgage deed was executed, and on the same day the money was advanced by the plaintiff to the defendant. The mortgage deed was not registered. The plaintiff filed a suit for a declaration (1) Bom. 134 469 B.C. 47. 738 that he was entitled to an equitable mortgage upon the said property and for the sale thereof. The court held that on the facts no equitable mortgage was created. From the aforesaid narration of facts it would be obvious that the plaintiff lent the money immediately before the execution of the document indicating thereby that it was paid under that document. Farran, J., who delivered the judgment, relied upon the following passage from Seton on Decrees, p. 1131: "If deeds be delivered to enable a legal mortgage for securing an existing debt to be prepared, there is an equitable mortgage until the legal mortgage is completed; secus is to secure a fresh loan yet to be made." Then the learned Judge cited the following passage from the judgment in Keys vs Williams(1): "Certainly, if, before the money was advanced, the deeds had been deposited with a view to prepare a future mortgage, such a transaction could not be considered as an equitable mortgage by deposit; but it is otherwise where there is a present advance, and the deeds are deposited under a promise to forbear suing, although they may be deposited only for the purpose of preparing a mortgage deed. In such case the deeds are given in as part of the security, and become pledged from the very nature of the transaction. " These two passages also indicate that the fact that title deeds were deposited for the purpose of preparing a future mortgage is in itself not decisive of the question whether such a mortgage was effected or not. A Division Bench of The Bombay High Court in Behram Bashid Irani vs Sorabji Rusfomji Elavia(2) held that in that case there was no evidence, whatever of intention to connect the deposit of title deeds with the debt. The plaintiff therein deposited with the defendant in Bombay title deeds of his property situate at Nasik and borrowed a sum from the defendant. He also executed a document but that was held to be inadmissible for want of registration. There was no other (1) (1838) 51 R.V. Rep. 339. (2) Bom. 372, 374. 739 evidence to show under what circumstances the documents were deposited. Beaman, J., made the following observations: "The doctrine thus created, amounted at that time to very much what the law now is, as I have just expressed it, although the learned Chancellor, I think, lent strongly to the supposed legal presumption arising from the fact of indebtedness and the contemporaneous or subsequent deposit of title deeds. Then for the better part of a century, the Courts in England virtually adopted this presumption as a presumption of law and the need of proving intention almost disappeared. Latterly, however, the legal doctrine in England veered in the opposite direction and the Courts began to insist more and more strongly upon the proof of intention as a question of fact, and that has been embodied in our own statute law and that is the law we have to administer. " This decision only negatives the presumption of law, but does not exclude the presumption of fact of a mortgage arising under certain circumstances from the very deposit of titledeeds. An elaborate discussion of the subject is found in V.E.R.M.A.R. Chettyar Firm vs Ma Joo Teen(1). The main question decided in that case was, what did the terms "documents of title" and "title deeds" denote? The Court held that they denoted such a document or documents as show a prima facie or apparent title in the depositor to the property or to some interest therein. But what is relevant for the present purpose is that the learned Chief Justice, who spoke for the Court, after considering the leading judgments on the subject, observed: "If the form of the documents of title that have been delivered to the creditor is such that from the deposit of such documents alone the Court would be entitled to conclude that the documents were deposited with the intention of creating a security for the repayment of the debt, prima (1) Rang. 239, 253. 740 facie a mortgage by deposit of title deeds would be proved; although, of course, such an inference would not be irrebuttable, and would not be drawn if the weight of the evidence as a whole told against it. " The learned Chief Justice accepted the principle that if title deeds, as defined by him, were deposited and the money was lent, prima facie an inference of a mortgage could be drawn, though such an inference could be displaced by other evidence. It is not necessary to pursue the matter further. The foregoing discussion may be summarized thus: tinder the a mortagage by deposit of title deeds is one of the forms of mortgages whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgaae of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property. The three requisites for such a mortality are, (1) debt, (ii) deposit of title deeds; and (iii) an intention that the deeds shall be security for the debt. Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case. The said fact will have to be decided just like any other fact on presumptions and on oral, documentary or circumstantial evidence. There is no presumption of law that the mere deposit of title deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of property Act. But a court may presume under section 114 of the Evidence Act that under certain circumstances a loan and a deposit of titledeeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at the time the titledeeds were deposited there was, an intention to execute a mortgage deed in itself negatives, or is inconsistent with. the intention to create a mortgage by deposit of title deeds to be in force till the mortgage deed was executed. The decision of English courts making a distinction between the debt preceding the deposit and that following it can at best to only a guide; but the said distinction itself cannot be con 741 sidered to be a rule of law for application under all circumstances. Physical delivery of documents by the debtor to the creditor is not the only mode of deposit. There may be a constructive deposit. A court will have to ascertain in each case whether in substance there is a delivery of title deeds by the debtor to the creditor. If the creditor was already in possession of the title deeds,it would be hypertension to insist upon the formality ofthe creditor delivering the title deeds to the debtor and thedebtor redelivering them to the creditor. What would be necessary in those circumstances is whether the parties agreed to treat the documents in the possession of the creditor or his agent as delivery to him for the purpose of the transaction. With this background we shall now proceed to consider the questions that arise for consideration on the facts of the present case. The first question is whether there was a mortgage by deposit of title deeds of the B Schedule properties on May 10, 1947. To put it in other words, whether on that date there was a loan and whether the first defendant delivered to the appellant the documents of title of B Schedule properties with the intent to create a security thereon. Learned Subordinate Judge and, on appeal, the High Court. held on the evidence that there was no such deposit of title deeds with the requisite intention on May 10, 1947. Learned counsel for the respondent pressed on us to follow the usual practice of this Court of not interfering with concurrent findings of fact. But the question whether on facts found a transaction is a mortgage by deposit of title deeds is a mixed question of fact and law. That apart, both the courts in coming to the conclusion which they did missed the importance of the impact of the terms of exhibit A 19 on the question raised. We, therefore, propose to consider the evidence on the said question afresh, along with exhibit A 19. In para 5 of the plaint, after giving the particulars of the promissory notes executed by the first defendant in favour of the plaintiff, it is stated: "On 10th May 1947, the first defendant deposited with the plaintiff at Madras other title deeds and 742 papers relating to his half share in items specified in 'B ' schedule hereunder with intent to create a security over the same in respect of advances made and to be made by the plaintiff. The first defendant has further executed a memorandum of agreement, dated 5th July 1947, in which the equitable martgage thus created and the amount borrowed by him till then were acknowledged and he has undertaken to repay the said sum of Rs. 16,500 with interest at 6 per cent. per annum and to obtain a return of the title deeds and documents deposited by him with the plaintiff. This memorandum of agreement has been duly registered and the same is herewith produced. The plaintiff prays that its contents may be read as part and parcel of this plaint. " There is, therefore, a clear averment in the plaint that an equitable mortgage was created on May 10, 1947, and that was acknowledged by the agreement dated July 5, 1947. The 1st defendant did not file any written statement denying the said allegations. The 3rd defendant, the only contesting defendant, filed a written statement wherein he put the plaintiff to strict proof of the fact that the sums claimed in the plaint were due to him from the 1st defendant and of the fact that the first defendant effected a mortgage in his favour by deposit of title deeds. Before we consider the oral evidence, we shall briefly notice the documentary evidence in the case. Exhibit A 1 dated January 25, dated February 13, dated March 2, dated April 7, dated April 13, dated May 10, 1947, and exhibit A 1 8 dated July 4, 1947 are the promissory notes executed by the 1st defendant in favour of the plaintiff. The total of the amounts covered by the said promissory notes is Rs. 16,500/ . It is not disputed that the promissory notes were genuine and that the said amounts were lent by the plaintiff to the 1st defendant on the dates the promissory notes bear. On January 26, 1947, i.e., a day after the first promissory note was executed, a list of tittle deeds of the properties belonging to the 1st defendant in 743 Tanjore was given to the plaintiff as collateral security and by way of equitable mortgage for the loan of Rs. 1,500 borrowed under exhibit A 1. On April 7, 1947, the 1st defen dant executed an unregistered agreement in favour of the plaintiff whereunder, as the plaintiff agreed to lend to the 1st defendant a sum of Rs. 15,000/ to discharge his earlier indebtedness and also his indebtedness to the Kumbakonam Bank and to enable him to do business, the 1st defendant agreed to execute a first mortgage of the Tanjore properties as well as of the properties mortgaged to 'the Kumbakonam Bank. He also undertook to bring all the title deeds from the Kumbakonam Bank and hand them over to the plaintiff for preparing the mortgage deed. This agreement shows that the 1st defendant was willing to execute a mortgage deed of his properties to the plaintiff and with that object undertook to bring the title deeds and hand them over to the plaintiff for preparing the mortgage deed. Pursuant to this agreement, the plaintiff on the same day advanced to the 1st defendant a sum of Rs. 3,000/ under a promissory note of the same date. On April 13, 1947, the plaintiff lent an other sum of Rs. 3,000/ under a promissory note to the 1st defendant. The 1st defendant did not bring the title deeds, but by a letter dated April 27, 1947, (exhibit B 2), he authorised the Managing Director of the Kumbakonam Bank to hand over the title deeds and the mortgage deed duly discharged to the plaintiff or his representative on his paying the amount due by him to the Bank. On May 5, 1947, the plaintiff wrote a letter, exhibit B 1, to the Kumbakonam Bank informing it that one section Narayana Ayyar of Madras would discharge the mortgage amount due to the Bank from the 1st defendant and authorizing the Bank to deliver to the said Narayana Ayyar the cancelled mortgage deed and the relative title deeds. The said Narayana Ayyar took the letter. exhibit B 1, to the Bank, paid the amount due to it from the 1st defendant and took the title deeds on behalf of the 1st defendant and sent them on to the plaintiff at Madras by registered post. On May 10, 1947, the 1st defendant executed another promissory note, exhibit A 17, for a sum of Rs. 7,100/ in favour of the plaintiff in regard to the amount paid by Narayana Ayyar to the Bank. On July 4, 1947, the 1st defendant executed another promissory note, exhibit A 18, in favour of the plaintiff for a sum of Rs. 400. The total 744 of the amounts advanced up to that date by the plaintiff to the 1st defendant was Rs. 16,500/ . exhibit A 19 dated July 5, 1947, is a registered memorandum of agreement executed between the plaintiff and the 1st defendant. Though it was executed on July 5, 1947, it was presented for registration on October 31, 1947 and was eventually registered on June 22, 1948. It is not disputed that the said agreement was executed on July 5, 1947. Under section 47 of the Registration Act the said document would have legal effect from date of execution i.e., July 5, 1947. Under that document the 1st defendant, after acknowledging that between January 25, 1947, and July 4, 1947, he had received from the plaintiff a sum of Rs. 16,500/ under various promissory notes executed in favour of the plaintiff, proceeded to state: "The borrower hereby acknowledges having deposited with the lender at Madras on 25th January 1947 the title deeds relating to the borrower 's undivided half share in items 17 to 2C mentioned in the B schedule hereunder and also having deposited with the lender on 10th May 1947 the title deeds and other papers relating to the borrower 's undivided half share in items 1 to 16 mentioned in B schedule hereunder with interest to create a security over the deposit of title deeds. " This acknowledgment is couched in clear and unambiguous terms. The 1st defendant acknowledges in express terms that a mortgage by deposit of title deeds was effected on May 10, 1947. If there was no oral evidence adduced in this the said documentary evidence prima facie would establish that the 1st defendant borrowed a sum of Rs. 16.500/ from time to time from the plaintiff and effected a mortgage by deposit of title deeds on May 10, 1947, as security for the repayment of the said amount. Exhibit A 19 contains a clear admission by the 1st defendant that he effected a mortgage by deposit of title deeds in favour of the plaintiff. As the mortgage deed in favour of the 3rd defendant was executed subsequent to exhibit A 19, he is bound by that admission, unless there is sufficient evidence on the record to explain away the said admission. The 1st defendant. who could explain the circumstances under which exhibit A 19 was executed was 745 not examined as a witness in this case. But it is said that the evidence of P.Ws 1, 2 and 3 displaces the evidentiary value of the recitals of the said document. P.W. 1 is the plaintiff. He says in his examination in chief: "On 10th May 1947 defendant I and Narayana Ayyar met my lawyer at Madras and I was sent for. Exhibit A 17 is the pro note executed for Rs. 7,100/ for the payment made to the bank. Defendant I then personally handed over the documents to me by way of deposit of titledeeds as security for the advance made and to be made. Defendant I did not execute any mortgage. In July 1947, defendant I asked for Rs. 400/ to buy stamps for the mortgage. 1 paid Rs. 400/ under Exhibit A 18. On 5th July 1947 the memorandum, Exhibit A 19, was executed in my lawyer 's house. My lawyer attested the document as well as Narayana Ayyar. They saw defendant I sign the docu ment. " If this evidence is accepted, the plaintiff 's case will be established to the. But in the cross examination he deposed: "On 5th July 1947, the agreement about executing a simple mortgage was changed into one of equitable mortgage. Defendant I suggested it and I was advised to accept and I accepted. " Reliance is placed upon this statement to show that the idea of effecting an equitable mortgage dawned on the parties only on July 5, 1947, and. therefore. the case that sect a mortgage was effected on May 10, 1947 ', must be untrue. We do not see any inconsistency between the statement made by the plaintiff in the examination in chief and that made in the cross examination. What he stated in the cross exami nation is that though it was agreed earlier that a formal mortgage deed should be executed, on July 5, 1947, the parties, for one reason or other. were content to have a deed of equitable mortgage. It is too much to expect this witness to bear in mind the subtle distinction between the execution of an equitable mortgage on July 5. 1947, and the acknowledgment of an emitable mortgage that had already been effected. In this statement he emphasized more on the 746 document than on the contents of the document. So under stood, this evidence does not run counter to the express recitals found in exhibit A 19. There is also nothing unusual that on the advice of the advocate the formalities of actual delivery were complied with in the presence of the advocate. But one need not scrutinize the version of this witness meticulously in that regard, if in law a constructive delivery would be as good as a physical delivery. We, therefore, do not see in the evidence of P.W. 1 anything to discountenance the admission made by the 1st defendant in exhibit A 19. P.W. 2. the advocate, also says in his evidence that he gave the title deeds to the 1st defendant and asked him to hand them over to P.W. 1 and to state that these and documents already deposited would be security for the loans advanced till that date. There would be nothing unequal if an advocate, who knew the technicalities of a mortgage by de posit of title deeds, advised his client to conform to the formalities. Even if the parties accepted constructive delivery, the evidence given by this witness is more an embellishment than a conscious effort to depart from the truth. As to what happened on July 4, 1947, this witness says that on that date the 1st defendant and Narayana Ayyar came to him and suggested that the memorandum may be registered instead of executing a simple mortgage as that would be cheaper. There is nothing usual in this conduct of the parties either. If there was a mortgage by deposit of title deeds at an earlier stage, even though there was at that time an agreement to execute a formal document later on, there would be nothing out of the way in the parties for their own reasons giving up the idea of executing a formal document and being satisfied with a memorandum acknowledging the earlier form of security. In the cross examination this witness stated that till July 4, 1947, the idea was only to make a simple mortgage over the half share covered by all the title deeds given to P.W. 1. This statement only means that till that date the parties had no idea of executing a document acknowledging the earlier mortgage by deposit of title deeds, for they wanted a formal document. This answer is in no way inconsistent with the statement of the advocate at the earlier stage that there was a mortgage by deposit of title deeds on May 10. So too, Narayana Ayyar. as P.W. 3, supports the evi 747 dence of P.Ws. 1 and 2. He too in his cross examination says that it was only on July 4, 1947, the idea of executing an equitable mortgage was suggested by the 1st defendant and that on May 10, 1947, he did not suggest to the 1st defendant to execute any document. Here again, his statement in the cross examination would not be inconsistent with that made by him in the examination in chief, if the former statement was understood to relate to exhibit A 19. This witness only meant to say that the idea of executing exhibit A 19 dawned on the parties only on July 4, 1947. The evidence of these three witnesses is consistent with the admission made by the first defendant in exhibit A 19. The evidentiary value of the recitals in exhibit A 19 is in no way displaced by the evidence of the said witnesses: indeed, it supports the recitals therein in toto. In the circumstances, we hold that on May 10, 1947, the 1st defendant deposited the title deeds with the plaintiff physically as security for the amounts advanced by the plaintiff to the 1st defendant up to that date. Even if the evidence of the witnesses as regards the handing over of the documents physically by the 1st defendant to the plaintiff was an embellishment of what took place on that date and that there was only constructive delivery, we think that such delivery satisfied the condition laid down by section 58(f) of the . Even so, it is contended by learned counsel for the res pondent that the delivery of the title deeds was to the appellant 's representative, Narayana Ayyar, at Kumbakonam and, therefore, the mortgage by deposit of title deeds, even if true, must be deemed to have been effected at Kumbakonam and that under the law such a mortgage could not be effected at Kumbakonam as it was not one of the places mentioned in section 58(f) of the . But Narayana Ayyar, as P.W. 3, stated in his evidence that he had authority to take the title deeds on behalf of the 1st defendant and that, after having taken delivery of them on his behalf, he sent them to the plaintiff at Madras by registered post. But whether Narayana Ayyar received the title deeds from the Bank as agent of the 1st defendant or as that of the plaintiff. it would not affect the question to be decided in the present case. We shall assume that Narayana Ayyar was the agent of the plaintiff. But mere delivery of title deeds without the. 748 intention to create a mortgage by deposit of title deeds would not constitute such a mortgage. On May 5, 1947, when the title deeds were received by the plaintiff through his agent, Narayana Ayyar, at Kumbakonam, they were received only for the purpose of preparing the mortgage deed. The plaintiff had the physical possession of the title deeds at Madras on May 10, 1947. On that date the possession of the titledeeds by the plaintiff was as agent of the 1st defendant. He was not holding the said documents in his own right on the basis of his title or interest therein. The agent 's possession was the possession of the 1st defendant, the principal. On May 10, 1947, the creditor and the debtor, i.e., the plaintiff and the 1st defendant, met in the house of P.W. 2 and the 1st defendant agreed to deposit the said title deeds already in the physical possession of the plaintiff as his agent in order to hold them thereafter as security for the moneys advanced. From May 10, 1947, the plaintiff ceased to hold the titledeeds as agent of the 1st defendant but held them only as a mortgagee. If the plaintiff physically handed over the title deeds to the 1st defendant and the 1st defendant immediately handed over the same to the plaintiff with intention to mortgage them, it is conceded that a valid mortgage was created. To insist upon such a formality is to ignore the ,substance for the form. When the principal tells the agent "from today you hold my title deeds as security", in substance there is a physical delivery. For convenience of reference such a delivery can be described as constructive delivery of title deeds. The law recognizes such a constructive delivery. We, therefore, hold that, even on the assumption that the form of physical. delivery had not been gone through though we hold that it was so effected on May 10, 1947there was constructive delivery of the title deeds coupled with the intention to create a mortgage by deposit of titledeeds. The last argument of learned counsel for the appellant is that even if there was no mortgage by deposit of titledeeds on May 10, 1947, under exhibit A 19 such a mortgage created at any rate from July 5, 1947. It is true that ,he ,document in express terms says that the documents of title were deposited on May 10, 1947, with intention to create a mortgage by deposit of title deeds. Assuming it was not so 749 done on that date. can ' such an intention be inferred from the document as on July 50 1947 ? Admittedly on July 5, 1947 '. the title deeds were in the possession of the plaintiff. If on that date the 1st defendant had expressed his intention 'that from that date he would consider the title deeds as security for the loans already advanced,, to him, 'all the necessary conditions of a mortgage by deposit of title deeds would be present, namely, (i) debt, (ii) constructive delivery, and (iii)) intention. The fact that% he had such an intention, from an. earlier date could not make any difference ' in law, as the intention expressed was a continuing one. On July 5, 1947, according to the 1st defendant, the mortgage by deposit of ' title deeds was in existence and, therefore, on that date the, said three necessary ingredients of a mortgage by deposit of title deeds were present. We, therefore, hold that even if there was no mortgage by deposit of title deeds on May 10, 1947, it was effected on July 5, 1947. If the mortgage by deposit of title deeds was effected on. May 10, 1947, or on July 5, 1947, the legal position wouldbe the same, as the mortgage deed in favour of the 3rd defen dant was executed only on October 10, 1947. Though exhibit A 19 was registered on June 22, 1948, under section 47 of the. Registration Act the agreement would take effect from July 5, 1947. It is not disputed that in the partition that was effected ' between the 1st defendant and his brother the properties. specified in 'C ' schedule were allotted to the share of the 1st defendant. If so, the plaintiff would be entitled to have a mortgage decree in respect of the said properties. In the result there will be a preliminary decree in favour of the plaintiff for the recovery of the sum of Rs. 20,434 15 0, with interest at 6 per cent. per annum thereon till the said amount is paid The period of redemption will be three,, months from today and in default the 'C ' schedule properties will be sold for the realization of the same. Liberty isreserved to the plaintiff to apply for personal decree against the 1st defendant in case there is any deficiency after the. hypothetic has been sold. The decree of the Subordinate Judge and of the High Court are set aside and there will be. a decree in the said terms. The 1st and 3rd defendants will pay the costs of the plaintiff throughout.

IN-Abs

The plaintiff appellant filed a suit to enforce a mortgage by deposit of title deeds. The case of the plaintiff was that on 10th May, 1947, the 1st defendant deposited with the plaintiff at Madras other title deeds and papers relating to his half share in items specified in Schedule 'B ' attached to the plaint with intent to create a security over the same in respect of advances made by the plaintiff. Before the 10th May, 1947, the 1st defendant borrowed from the plaintiff from time to time Rs. 16,500/ on 7 promissory notes. 'Me case of the plaintiff further was that the 1st defendant executed a memorandum of agreement, dated 5th July, 1947, in which the equitable mortgage thus created and the amount borrowed by him till then were acknowledged and he had undertaken to repay the said sum of Rs. 16,500/ with interest. This memorandum of agreement had been duly registered. This suit was for recovery of the principal amount of Rs. 16,500/ and interest thereon. The 1st defendant did not file any written statement denying the said allegations. The 3rd defendant (a subsequent mortgagee), the only contesting defendant, filed a written statement wherein he put the plaintiff to strict proof of the fact that the sums claimed in the plaint were due to him from the 1st defendant and of the fact that the 1st defendant effected a mortgage in his favour by deposit of title deeds. The Trial Court held that the 1st defendant had no intention to create a mortgage by deposit of title deeds on May 10, 1947. On appeal the HIgh Court also affirmed the finding of the trial Court. The question for consideration was whether on 10th May, 1947, there was a loan and whether the 1st defendant delivered to the appellant the documents of title of B Schedule properties with the intent to create a security thereon. Held:(i) Under the Transfer of the Property Act, a mortgage by deposit of title deeds is one of the forms of mortgages whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property under Section 58(f) of the Transfer of Property Act. The three requisites of a mortgage by deposit of title deeds are, (i) debt, (ii) deposit of title deeds, and (iii) an intention than the deeds shall be security for the debt. Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case. The 728 said fact will have to be decided on the basis of the evidence. There is no presumption of law that the mere deposit of title deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of Property Act. But a court may presume under section 114 of the Evidence Act that under certain circumstances a loan and a deposit of title deeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at the time the title deeds were deposited there was an intention to execute a mortgage deed in itself negatives, or is inconsistent with, the intention to create a mortgage by deposit of title deeds to be in force till the mortgage deed was executed. On the facts of this case the intention to create a mortgage by deposit of title deeds can be inferred from the document dated 5th July, 1947 which was subsequently registered and in which the deposit of title deeds on May 10, 1947 was duly acknowledged. Norris vs Wilkinson, ; , Keys V. Williams, (1838)51 Revised Reports, 339, Whitbread, Ex Parte, ; , In re. Beetham, Ex Parte Broderick, , Dayal Jairaj vs Jivraj Ratansi, Bom. 237, Jaitha Bhima vs Haji Abdul Vyad Cosman, Bom. 634, Behram Bashid Irani vs Sorabji Rustomji Elavia, Bom. 372 and V.E.R.M.A.R. Chettyar vs Ma Joo Teen, Rang. 239, discussed. (ii)Physical delivery of documents by the debtor to the creditor is not the only mode of deposit. There may be a constructive deposit. A court will have to ascertain in each case whether in substance there is a delivery of the title deeds by the debtor to the creditor. If the creditor was already in possession of the title deeds, it would be hypertechnical to insist upon the formality of the creditor delivering the title deeds to the debtor, and the debtor re delivering them to the creditor. What would be necessary in these circumstances is whether the parties agreed to treat the documents in the possession of the creditor or his agent as delivery to him for the purpose of the transaction. In the present case the plaintiff the mortgagee had the physical possession of the title deeds at Madras on May 10, 1947. On the facts of this case, though the form of physical delivery of title deeds had not been gone through, on May 10, 1947, there was constructive delivery of the title deeds coupled with the intention to create a mortgage by deposit of title deeds. Such delivery satisfied the condition laid down by section 58(f) of the Transfer of Property Act. (Iii)There is nothing unusual in this conduct of the parties either. If there was a mortgage by deposit of title deeds at an earlier stage, even though there was at that time an agreement to execute a formal document later on, there would be nothing out of the way in the parties, for their own reasons, giving up the idea of executing a formal document and being satisfied with the memorandum acknowledging the earlier form of security.

Appeal No. 936 of 1963, Appeal from the judgment and order dated May 31, 1963, of the Punjab High Court in First Appeal from Order No. 2/3 of 1963. Purshotham Trikamdas, Rajinder Nath Mittal , R. B. Datar, V. Kumar. B. P. Singh and Naunit Lal, for the appellant. G.S. Pathak, Bawa Shiv Charan Singh, Hardev Singh, Rajendra Dhawan, Anand Prakash and Y. Kumar, for respondent No. 1. 752 February 12, 1964. The Judgment of the Court was, delivered by: SHAH, J. At the general elections held in February 1962 five candidates contested the election to the House of the People from the Jhajjar parliamentary constituency. On February 27, 1962 the appellant Jagdev Singh Sidhanti was declared elected. Pratap Singh Daulta who was one of the candidates at the election then filed a petition with the Election Commission praying, inter alia, that the election of the appellant be declared void on the ground that the appellant Sidhanti his agents, and other persons with his consent,. had committed certain corrupt practices in connection with the election. Daulta stated that the appellant Sidhanti was set up as a candidate to contest the election by the Harding Lok Samiti, that the appellant and six other persons Piare Lal Bhajnik, Ch. Badlu Ram, Pt. Budh Dev, Prof. Sher Singh, Mahashe Bharat Singh and Achilles Bhagwan Dev who were leaders and active workers of the Gurukul Section of the Arya Samaj had organised a political movement called "the Hindi agitation" in 1957 the real object of which was to promote feelings of enmity and hatred between the Sikh and the Hindu communities in the State of Punjab " on the ground of religion and language" to promote their prospects in the general elections to be held in 1962. and for that purpose they held meetings in the Hariana region of the Punjab and appealed to the electorate to vote for Sidhanti 'on the ground of his religion and language". and used a religious symbol a flag called "Om Dhwaj" in, all these meetings, that the appellant himself made similar appeals to the electorate and appealed to them to refrain from voting for Daulta who was a sitting member of the House of the, People from the constituency stating that he Daulta was an enemy of the Arya Samaj and of the Hindi language, that during the election campaign fifteen meetings were held between December 10, 1961 and February 18, 1962 and at all these meetings appeals were made to the electorate on the ground of religion and language of Sidhanti, and attempts were made to, promote feelings of enmity and hatred between Sikhs 'and Hindus of the Punjab. Allegations about undue influence on the voters in the exercise of their free electoral right were also made in the petition, and details of these 753 alleged corrupt practices were furnished in the schedule annexed to the petition. Sidhanti denied that the six persons who were named as his agents and supporters ever acted as his agents in his elec tion campaign and submitted that they were merely interested in the success of the candidates set up by the Hariana Lok Samiti and acted throughout "on their own and not as his agents". He also submitted that the Hariana Lok Samiti had no connection with the Arya Samaj, it being a political organization started by Prof. Sher Singh who was an impor tant political leader in the Hariana region. Sidhanti admitted, that he had participated in the meetings to canvass votes, but claimed that he was not responsible for convening the meetings or for the speeches made by others in those meetings, that the Om flag was not a religious symbol and denied that it was used on any occasion by him or his agents or the six persons named by Daulta in his petition, except Bhagwan Dev who was accustomed "throughout his career" to carry a pennant with "Om" and his own name inscribed thereon on his motor vehicle, but carrying of such a flag or pennant on Bhagwan Dev 's vehicle during the election was not with his (Sidhanti 's) consent and that it did not amount to commission of a corrupt practice as defined in the Act, that the residents of Hariana area were mainly Hindi speaking, but the Government of Punjab had made Punjabi language in Gurmukhi script a compulsory subject at various levels of school education and this gave rise to a wide spread agitation against the policy of the Government, that to resist the implementation of the policy and the programme of the Government in the administrative, economic and developmental spheres and to mitigate the hardships of the residents of the Hariana region and to secure redress of their grievances the Hariana Lok Samiti was formed. , and an appeal to the electorate to secure a reversal of the policies and programme of the Government was not. it was submitted, an appeal on the ground of language or religion and did not amount to a corrupt practice within the meaning of section 123 of the Representation of the People Act, 1951. The Tribunal held, inter alia, that the "Om flag" was not a "religious symbol" of the Arya Samaj, that no satisfactory proof was adduced that Om flag had been used as a 134 159 S.C. 48 754 symbol of Arya Samaj or that an appeal to secure votes with the aid of the flag was made to the electorate by Sidhanti or by any one else with his consent, that there was no satisfactory evidence to establish that appeals were made to the electorate to vote for Sidhanti or to refrain from voting for the other candidates on the ground of religion or language, and that the applicant Daulta failed to prove that an appeal on the ground of caste, community or religion or language had been made to the electorate to further the prospects of Sidhanti or to prejudicially affect the election of the other candidates. On these and findings recorded on other issues not material in this appeal, the petition filed by Daulta was dismissed by the Election Tribunal. Daulta prefered an appeal against that order to the High Court of Judicature for Punjab. The High Court held that the word "Om" is a religious symbol of the Hindus in general and of the Hindus belonging to the section known as Arya Samaj in particular and that the flag bearing the inscription "Om" is a religious symbol, that "Om Dhwaj" was flown during the election campaign on the election offices of the Hariana Lok Samiti especially at Sampla and Rohtak, that the Samiti office was used by Sidhanti for his election campaign, that Hariana Lok Samiti was generally using the "Om Dhwaj" to further the prospects of its candidates, that out of the agents and supporters of Sidhanti "Bharat Singh at least once and Bhagwan Dev invariably used" the Om flag on their vehicles while attending the meetings convened by the Hariana Lok Samiti in furtherance of the election campaign of Sidhantn. that the Om flag was flying "on the pandal of the meeting" held at Majra Dubaldhan on January 19, 1962 when Sidhanti and his agents and supporters delivered speeches in support of the election campaign and that at the meeting held at Rohtak town, Piare Lal Bhajnik sang a song in the presence of Sidhanti, the purport of which was that the honour of the Om flag should be upheld, that Bhagwan Dev was using the Om flag with the consent of Sidhanti and that Pare Lal Bhajnik at the Rohtak town meeting also sang the son in honour of the Om flag with the consent of Sidhanti. The High Court further held that the appellant had delivered speeches at Majra Dubaldhan in the pandal on which the Om flag was flying, that as even an isolated act of the use 755 of or appeal to the Om flag may constitute a corrupt practice under section 123(3) that corrupt practice by Sidhanti and his agents and by his supporters with his consent was established. The High Court also held that Sidhanti bad appealed for votes on the ground of his language and had asked the electorate to refrain from voting for Daulta on the ground of the language of the latter, and such appeals constituted a corrupt practice. The High Court accordingly allowed the appeal and declared the election of Sidhanti void under section 100 (1) (b) of the Act. Against the order this appeal is preferred with certificate granted by the High Court. Two principal questions which survive for determination in this appeal are: (1) Whether a religious symbol was used in the course of election by the appellant, his agents or other persons with his consent in furtherance of the prospects of his election; and (2) Whether appeals were made to the electorate by Sidhanti, his agents or other persons with his consent to vote in his favour on account of his language and to refrain from voting in favour of Daulta on the ground of his language. In order to appreciate the plea raised by counsel for the parties and their beating on the evidence it may be useful to refer to the political background in the Hariana region and the constituency in particular, in which corrupt practices are alleged to have been committed. The territory of the State of Punjab is divided into two regions the 'Hindi speaking region ' and the Tunjabi speaking region '. The Hindi speaking region is very largely populated by Hindus, while in the Punjabi speaking region the population is approximately equally divided between the Hindus and Sikhs. In the Punjab before the partition, Urdu and English were the 'two official languages. After the partition a controversy about the official language arose. The Government of Punjab decided to replace Urdu and English by Hindi in the Hindi speaking region and Punjabi in the Punjabi speaking region, and for that purpose a scheme called the 'Sachar formula ' was devised, the salient feature of which was that every student reading in the Punjab schools, by the time he passed 756 his matriculation examination should be proficient both in Hindi and Punjabi. Under the scheme two Regional Committees were formed one known, as the Hindi Regional Committee and the other the Punjabi Regional Committee. The function of the Committees was to advise the local Government in matters of finance and other related matters. There was great resentment against the formation of the Regional Committees and the implementation of the Sachar formula which resulted in the launching of a movement called "the Hindi agitation". The agitation against the language policy of the Government gained strength and there was a great mass movement in 1957 in the entire State of Punjab. In the last week of December 1957 there was a settlement between the organisers of the movement and the State Government and the movement was called off. It appears that some of the leading figures in this agitation attempted to make political capital out of this movement and set themselves up as probable candidates for the next election. In the Arya Samaj in the Punjab there are two major sections, one called the 'Gurukul Section ' and the other called the 'College Section '. The Gurukul Section is again divided into the Hariana Section and the Mahashe Krishna Section. It is the case of Daulta that it is the Gurukul Section of the Araya Samaj relying upon the religious and linguistic differences which sought to make at the time of the election, appeals to religions and use of religious symbols. As we have already observed. Daulta challenged the election on the ground that Sidhanti, his election and other agents committed many corrupt practices. Before the Tribunal he restricted his case to the corrupt practices falling within cls. (3) and (3A) of section 123 of the Representation of the People Act 1951. His plea of undue influence falling within cl. (2) failed before the Tribunal and also before the High Court, and it has not been relied upon before us. Similarly his plea that Sidhanti, his election and other agents had promoted or attempted to promote, feelings of enmity or hatred between different classes of citizens of India on grounds of religion, race, caste, community, or language was negatived by the Tribunal and also by the High Court and that plea also does not fall to be determined by us. Daulta had also alleged 757 that appeals were made by Sidhanti and his election and other agents, to the electorate to vote for him or refrain from voting for Daulta on the ground of his Sidhanti 's religion and language and that Sidhanti and his agents used and appealed to religious symbols such as the Om flag for the furtherance of the prospects of the election of Sidhanti and for prejudicially affecting the election of Daulta. It is on this last question about the use of and appeal to religious symbols and appeal to the language of the two candidates for the furtherance of the prospects of the election of Sidhanti that the Tribunal and the High Court have differed. It may be useful to refer to the relevant provisions of the Act, before dealing with the matters in dispute. Section 100(1) sets out the grounds on which an election may be declared void. In so far as that section is material in the present appeal, it provides: "Subject to the provisions of sub section (2) if the Tribunal is of opinion. (a) * * * * * (b) that any corrupt practice has been committed by returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; (c) * * * * * (d) * * * * * the Tribunal shall declare the election of the returned candidate to be void." By sub section (2) if in the opinion of the Tribunal. a returned candidate has been guilty by an agent, other than his election agent, of any corrupt practice but the Tribunal is satisfied (a) that no such corrupt practice was committed at the election by the candidate or his election agent, and every such corrupt practice was committed contrary to the orders and without the consent of the candidate or his election agent , (b) * * * * * * (c) that the candidate and his election agent took all reasonable means for preventing the commission of corrupt practice at the election; and 758 (d) that in all other respects the election was free from any corrupt practice on the part of the candidate or any of his agent, the Tribunal may decide that the election of the returned candidate is not void. Section 123 sets out what shall be deemed to be corrupt practices for the purpose of the Act. Clause (3) as amended by Act 40 of 1961, which alone is material in this appeal, provides: "The appeal by a candidate or his agent or by any other person with the consent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, community or language or the use of, or appeal to, religious symbols, such as the national flag or the national emblem, for the furtherance of the prospects of the election of that candidate or for prejudicially affecting the election of any candidate." The clause falls into two parts (i) an appeal by a candidate, his agents or by other persons with the consent of the candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, community or language; and (ii) use of or appeal to religious symbols, national symbols or national emblems for the furtherance of the prospects of the election of the candidate or for prejudicially affecting the election of any candidate. The first part in terms makes it a condition that the appeal is made by a candidate or his agent or any other person with the consent of the candidate or his agent. There is no reference in the second part to the person by whom the use of, or appeal to, the religious or the national symbols, such as the national flag or the national emblem may be made, if such use of or appeal to them has been made to further the prospects of the election of the candidate or to prejudicially affect the election of any candidate. But it is implicit in section 123(3), having regard to the terms of section 100, that the use of or appeal to the national or religious symbols must be made by the candidate of his election agent or by some other person with the consent of the candidate or his election agent, before it can be regarded as a ground for declaring the election void. If the evidence on the record fails to establish 759 the responsibility for the use of or appeal to the religious or national symbols by the returned candidate or by his election agent or by any other person with his consent or his election agent, no ground for setting aside the election may be deemed to be made out. The first question to which we must then turn is, whether the "Om flag" can be regarded as a "religious symbol" within the meaning of section 123 (3). This question has to be examined in two branches (i) whether the word "Om" has any special religious significance, and, (ii) whether the use of "Om" on a flag or pennant makes it a religious symbol. If the respondent Daulta establishes that the "Om flag" is a religious symbol, the question will arise whether the use of or appeal to the Om flag was made in the election campaign for furtherance of his prospects by Sidhanti or by his agents or other persons with his consent or the consent of his election agent, The expression "Om" is respected by the Hindus generally and has a special significance in the Hindu scriptures. It is recited at the commencement of the recitations of Hindu religious works. Macdonell in his A Practical Sanskrit Dictionary states that "Om" is the sacred syllable used in invocations, at the commencement of prayers, at the beginn ing and the end of Vedic recitation, and as a respectful salutation: it is a subject of many mystical speculations. In the Sanskrit English Dictionary by Monier William it is said that "Om" is a sacred exclamation which may be uttered at the beginning and end of a reading of the Vedas or Previously to any prayer; it is also regarded as a particle of auspicious salutation. But it is difficult to regard "Om" which is a preliminary to an incantation or to religious books as having religious significance. "Om" it may be admitted is regarded as having high spiritual or mystical efficacy: it is used at the commencement of the recitations of religious prayers. But the attribute of spiritual significance will not necessarily impart to its use on a flag the character of a religious symbol in the context in which the expression religious symbol occurs in the section with which we are concerned. A symbol stands for or represents something material or abstract. In order to be a religious symbol, there must be a visible 760 representation of a thing or concept which is religious. To 'Om ' high spiritual or mystical efficacy is undoubtedly ascribed; but its use on a flag does not symbolise religion, or anything religious. It is not easy therefore to see how the Om flag which merely is a pennant on which is printed the word 'Om ' can be called a religious symbol. But assuming that the Om flag may be regarded as a religious symbol, the evidence on the record is not sufficient to establish that by Sidhanti, his election agents or any other person with his consent or the consent of his election agent, Om flag was used or exhibited, or an appeal was made by the use of the Om flag to further the prospects of Sidhanti at the election. It may be remembered that in the trial of an election petition, the burden of proving that the election of a successful candidate is liable to be set aside on the plea that he was responsible directly or through his agents for corrupt practices at the election, lies heavily upon the applicant to establish his case, and unless it is established in both its branches i.e. the commission of acts which the law regards as corrupt, and the responsibility of the successful candidate directly or through his agents or with his consent for its practice not by mere preponderance of probability, but by cogent and reliable evidence beyond any reasonable doubt, the petition must fail. The evidence may be examined bearing this approach to the evidence in mind. Between the months of December 10, 1961 and February 18, 1962, fourteen meetings were held in the constituency as a part of the election campaign of Sidhnti. These meetings were held at Beri, Barhana, Dighal, Akheri Madanpur, Sampla, Ladpur, Majra Dubaldhan, Pakasma, Assaudha. Jhajjar, Badli Dulehra, Sisana and Bahadurgarh. There was, it is claimed by the applicant, one more meeting on February 4, 1962, at Rohtak town which is outside the Jhajjar constituency. The Tribunal held that the evidence was not sufficient to prove that in the meetings at Beri, Barhana, Dighal, Sampla, Ladpur, Pakasma. Assaudha, Jhajjar, Badli, Dulehra, Sisana and Bahadurgarh 'Om ' flag was exhibited in furtherance of the election prospects of Sidhanti and with that view the High Court has agreed. The Tribunal 761 also held that there was no reliable evidence that at Majra Dubaldhan on January 19, 1962, and at Rohtak town on February 4, 1962, 'Om ' flag was used as a religious symbol. On this part of the case, however, the High Court disagreed with the Tribunal. Rohtak town was not, but Rohtak suburban area was, within the constituency in which Daulta and Sidhanti were contesting the election. Therefore the only meeting which took place within the constituency where Sidney and Daulta contested the election in which according to the High Court the Om flag was used was at Majra Dubaldhan held on January 19, 1962. Six witnesses directly spoke about the details of that meeting, beside Sidhanti. Sidhanti said generally that the evidence given by the wit nesses for Daulta regarding what transpired at Maira Dubal dhan and three other meetings was not true. The witnesses for Daulta were Roop Ram. Sukhi Ram and Ramdhari Balmiki. The witnesses who supported the case of the appellant were Piare Lal, Prof. Sher Singh and Jug Lal. It may be observed that the High Court placed no reliance upon the testimony of Ramdhari Balmiki and no arguments have been advanced before us suggesting that his testimony was reli able. Roop Ram a police constable has deposed that about mid day on January 19, 1962, a meeting was held at Majra Dubaldhan and that at that meeting Piare Lal sang a bhajan about the Om flag and he saw the Om flag flying on the pandal of the meeting which was attended by four to five thousand persons. According to the witness Nanhu Ram, Badlu Ram, Jagdev Singh Sidhanti, Bhagwan Dev, Ramdhani Balmiki, Attar Singh, Prof. Sher Singh and Acharya Bhagwan Dev made speeches, that Acharya Bhagwan Dev in the course of his speech asked people not to vote for Daulta but to vote for the candidate who was seeking election on the Hariana Lok Samiti ticket. In cross examination he admitted that he had been supplied with a copy of the report which he had made to the D.I.G., C.I.D., Chandigarh, and that he had gone through the report two or three times, before he gave evidence. The Tribunal refused to place reliance upon the testimony of this witness and of another police constable Ganesh Dass who claimed to have remained present in the various political meetings. It appears that the witness had memorised the so called reports and the same were not made available to counsel for Sidhanti 762 to challenge the truth of the statements made by the wit nesses. The High Court has not given any adequate reasons for accepting the testimony of the witness, when the Tribunal which had opportunity of seeing the witness and noting his demeanour had refused to accept the testimony. Sukhi Ram deposed that he was a sarpanch of Dubaldhan Panchayat for about two years, and that he was present at the meeting convened by the Hariana Lok Samiti on January 19, 1962, for canvassing votes for the candidates of Hariana Lok Samiti, that Prof. Sher Singh and Sidhanti came in a jeep on which there was flying flag with 'Om ' inscribed thereon, that he saw several other vehicles flying the Om flag and that the vehicle in which he went to the meeting also was carrying the Om flag. The Tribunal was of the view that the facts elicited in the cross examination of this witness disclosed that his recollection about other meetings which he had attended was poor, whereas his recollection about the meeting held at Majra Dubaldhan was very clear, and that the reasons given by the witness for specially remembering the details of the proceedings of the meeting in Majra Dubaldhan and not of other meetings could not be accepted. In the view of the Tribunal the witness was interested in Daulta, and this inference was supported by the fact that Daulta had sent him a copy of his election petition before it was even presented to the Election Commission. It also appears that the evidence given by this witness was inconsistent with the summary of the meeting given in Sch. 'D ' to the petition and for this reason according to the Tribunal the testimony of the witness "did not carry conviction" and "it was not safe to rely upon it". The High Court after summarising the effect of the evidence observed that it did not appear from the deposition given by the witness that he was in any manner interested in Daulta. In so observing the High Court appears unfortunately to have lost sight of the grounds given by the Tribunal. Witness Piare Lal stated that he was present at the meeting held at Majra Dubaldhan and that none of the speakers suggested that the electors should vote on the ground of caste, creed, religion or language. He also stated that at 763 none of the meetings there was any Om flag either inside or outside the pandal of the meetings. Prof. Sher Singh who was another witness examined on behalf of Sidhanti deposed that slogans shouted in the meetings were political slogans and that he did not see Om flags in any pandal of the meet ings, and that he 'had instructed all the candidates and the members of the Hariana Lok Samiti not to use any flag or symbol other than the symbol allotted to them. Jug Lal, another witness examined on behalf of Sidhanti, stated that at the meeting at Majra Dubaldhan on January 19, 1962, there were no Om flags to be seen anywhere either inside or outside the meeting and that there were no Om flags flying on any of the vehicles. The testimony of the witnesses Piare Lal, Prof. Sher Singh and Jug Lal was discarded by the High Court, because in their view the witnesses were interested in Sidhanti. Even if this view about the evidence of these three witnesses is accepted, the evidence led on behalf of Daulta of witnesses Sukhi Ram, Ramdhari Balmiki is wholly unreliable and the testimony of police constable Roop Ram is also not such that implicit reliance can be placed upon it. We are unable, therefore, to agree with the High Court in the conclusion it has reached that it had been proved satisfactorily that Om flag was flown at Majra Dubaldhan where Sidhanti and other . speakers delivered speeches in furtherance of the election campaign. The only other meeting at which it is found by the High Court that the Om flag was used in the meeting at Rohtak town on February 4, 1962, which town, it is common ground, is not within the Jhajjar parliamentary constituency from which Sidhanti and Daulta were contesting the election. It is, however, said that Rohtak suburban area is within the Jhajjar parliamentary constituency and a& there is a grain market in Rohtak town and a large number of voters from the Jhajjar constituency assemble in that town a meeting was held by Sidhanti in which Om flag were exhibited. The witnesses in support of the case of Daulta are Ram Nath Sapra, Dafedar Singh, K. K. Katyal and Satyavrat Bedi. The principal witnesses who were examined by Sidhanti in respect of this meeting were Piare Lal, Bharat Singh, Budh Dev, Prof. Sher Singh and Bhagwan Dev. 764 Ram Nath Sapra who is a correspondent of several newspapers deposed that he had attended the meeting at Rohtak town at Anai Mandi 10 or 12 days before the actual polling. According to the witness there was a big procession taken out before the meeting which carried flags either of the symbol of the 'Rising Sun ' or of 'Om ', that he had made reports about the proceedings of the Rohtak meeting and had sent the report of the same to all the five papers of which he was the correspondent. The Tribunal was of the view that the testimony of the witness was unreliable, because he did not remember the details of any. other meeting convened by the other parties, and that he could not speak about the names of the speakers who took part in the meeting convened by the Hariana Lok Samiti. The testimony of the witness therefore was "far from convincing" and the testimony of Sidhanti, Piare Lal, Bharat Singh, Budh Dev, Prof. Sher Singh and Bhagwan Dev was more reliable. In coming to the conclusion that the evidence of the witness was unreliable the Tribunal referred to the details given in Sch. 'D ' annexed to the petition under the heading 'Summary of the meetings ' and observed that the summary was at "complete variance" with the testimony of the witness. The High Court was of the view that the witness Ram Sapra was "wholly disinterested" and therefore his evidence must be accepted. The High Court did not refer to the infirmities disclosed in the testimony of the witness, particularly the discrepancies between the statement of Daulta in his petition and the testimony given by this witness. Witness Dafedar Singh who is a police constable said that he had been deputed to report about the proceedings of the meeting. His version is also different from the version as given in Sch. 'D ' annexed to the petition. The High Court has not referred to the testimony of this witness in support of its conclusion and nothing more need be said about him. K.K. Katyal said that he had attended the meeting at Rohtak town as a special correspondent of the Hindustan Times, Delhi and that he recollected that flags with a symbol of 'Om ' inscribed thereon were seen flying on some 765 vehicles but it was not possible for him to say who owned those vehicles, but from the flags and placards carried on the vehicles it appeared that they were of the Hariana Lok Samiti. He also deposed that he had gone to the office of the Hariana Lok Samiti at Rohtak and saw a similar flag flying on the building of the office. He admitted in cross examination that he did not visit any office of the Hariana Lok Samiti either at Bahadurgarh or at Sampla as all his attention was confined to the central office of the Hariana Lok Samiti at Rohtak. He also stated that he had seen some shopkeepers in Sampla and Bahadurgarh flying Om flags on their stalls. In the view of the Tribunal the testimony of this witness was vague and no reliance could be placed thereon. While generally agreeing with this view,, the High Court observed that the testimony of the witness Katyal that the Om flag was flying at the office of the Hariana Lok Samiti at Rohtak which was the headquarters office and in the procession which was led by Bharat Singh a number of Om flags were seen may be accepted. Satyavrat Bedi who is staff correspondent of the Indian Express stated that during his survey of the election campaign he visited Sampla, Bahadurgarh and Rohtak in one day, and made his report about his observations to the newspaper Indian Express, in which he had recorded that religious symbols and religion were being frequently used for damaging the chances of success of Daulta, that he had seen a large number of flags fluttering on many house tops. that the flag on the office of the Hariana Lok Samiti was that of Om and the other organisations had their own flags, that he saw the Om flag fluttering on the office of Sidhanti at Sampla but he did not remember whether there was any flag of 'Om ' at his election office at Bahadurgarh. The Tribunal declined to accept this testimony. The High Court took a different view and observed that apart from any other infirmity regarding the use of the reports made by the witness, the statement made by him about his observation that he had seen the Om flag flying on the office of the Hariana Lok Samiti and on the motor vehicle of Bharat Singh could not be ruled out. It must be remembered however that we are concerned at this stage with the 766 question whether in the meeting at Rohtak on February 4, 1962. Om flags were exhibited. On that part of the case the evidence of Satyavrat Bedi is not of much use. Sri Ram Sharma was a candidate for election on behalf of a political party called "the Hariana Front". He deposed that he had never attended any procession or meeting organised by the Hariana Lok Samiti but he had seen the motorvehicles employed by the Hanana Lok Sanmti carrying Om flags which were used by the candidates of the Hariana Lok Samiti. He stated that he contributed a number of articles to Hariana Tilak, Rohtak, founded by him in which he had published on January 4, 1962. an article condemning, the use of the Om flag for the purpose of elections. The article published on January 4, 1962, can have no bearing on the use of the flag at Rohtak in the meeting dated February 4, 1962. The High Court did not place any reliance upon the testimony of this witness. This is all the evidence on behalf of Daulta to which our attention was invited by counsel for the parties that at the meeting at Rohtak on February 4, 1962, Om flags were exhibited and appeals were made to the flag as a religious symbol. Apart from the general infirmity of the testimony, the Tribunal refused to accept the evidence of the witnesses on the ground that their statements considerably departed from the summary given in Sch. 'D ' by the petitioner Daulta himself. In view of this inconsistency between the evidence given in Court and the allegations made by the applicant Daulta in the petition, it would be difficult, after discarding the evidence with regard to a very large number of meetings, to 'hold that in the meeting at Majra Dubaldhan which was within the constituency and in the meeting at Rohtak town which was outside the constituency, Om flags were displayed or appeals were made in the name of the Om flag to further the prospects of the election of Sidhanti. We are, therefore, unable to agree with the conclusion of the High Court that the Om flag was used for election purposes at the time when election speeches were delivered by Sidhanti at Majra Dubaldhan or Rohtak town or that the Om, flag was used on the pandals at those meetings. 767 Two other matters which have a bearing on the use of the Om flag in the course of the election campaign by Sidhanti, and on which the High Court has relied may be referred to. The High Court has found that Sidhanti used the office of the Hariana Lok Samiti at Rohtak town as his election office, but on this part of the case our attention has not been invited to any definite evidence which directly supports this conclusion. The High Court merely observed that it was common ground that Sidhanti did not have any office of his own at Rohtak, and inferred from that circumstance that Sidhanti was using the office of the Hariana Lok Samiti for the election campaign. But the inference is in the face of the evidence not justifiable, especially when Rohtak town was not within the constituency. It was conceded by Sidhanti that Bhagwan Dev Sharma an Arya Samaj leader had been accustomed for many years past to carry on his motor vehicle a pennant bearing the Om mark and his name. Witness Bhagwan Dev Sharma stated that he had attended the meetings of the Hariana Lok Samiti and had addressed them because he agreed with their ideology and thought that the institution was for the benefit of the Hindu religion, that he had never been asked to remove the Om flag from his jeep when he reached those meetings and that he had not attended those meetings either on account of Prof. Sher Singh or Sidhanti but "in his independent capacity as a citizen of India having a right to vote", and that he approved of the candidature of Sidhanti in preference to that of his opponent. But if the witness was accustomed to use a pennant with Om mark on it for many years past, in the absence of clear evidence to show that he was an agent of Sidhanti or that he acted with the consent of Sidhanti and made an appeal to the flag, it would be difficult to hold from the circumstances that during the days of the election campaign the witness did not remove the flag from the motor vehicle, that Sidhanti made an appeal to the electorate by using a religious symbol to further his prospects at the election. The evidence about the user of the Om flag by Bharat Singh when he is alleged to have taken out a procession does not appear to be reliable. 768 On a careful survey of the testimony of the witnesses we are unable to agree with the conclusions recorded by the High Court that: (a) Sidhanti "had used an office of the Hariana Lok Samiti on which the "Om flag" was flying for election purposes and further that he gave election speeches at a pandal where the Om flag was fluttering in furtherance of his prospects at the election"; (b) "the agents and supporters delivered speeches about the "Om flag" at the meeting held at Majra Dubaldhan on January 19. 1962, that Piare Lal Bhajnik sang a song, the purport of which was that the honour of the Om flag should be upheld"; and (c) "the Hariana Lok Samiti, the party to which Sidhanti belonged, was using the Om flag for the purpose of election campaign", and thereby committed corrupt practices. It is true that the use of the Om flag by Bhagwan Dev on his conveyance is admitted but that again is for reasons already set out not sufficient to enable the Court to hold that it was for the purpose of furthering the prospects of election of Sidhanti. In considering whether appeals were made to the electorate to vote for Sidhanti on the ground of his language or to refrain from voting for Daulta on the ground of Daulta 's language, it is necessary in the first instance to ascertain the true meaning of the expression "on the ground of his language". By section 123(3) which was introduced for the first titne in its present form by Act 40 of 1961, appeal by a candidate or his agent to vote or refrain from voting for a person on the ground of language is made a corrupt practice. This clause must be read in the light of the fundamental right which is guaranteed by article 29(1) of the Constitution, for in ascertaining the true meaning of the corrupt practice, the area of the fundamental right of citizen must be steadily kept in view. The clause cannot be so read as trespassing upon that fundamental right. article 29(1) provides: "Any section of the citizens residing in the territory of India or any part thereof having a distinct 769 language, script or culture of its own shall have the right to conserve the same. " The Constitution has thereby conferred the right, among others, to conserve their language upon the citizens of India. Right to conserve the language of the citizens includes the right to agitate for the protection of the language. Political agitation for conservation of the language of a section of the citizens cannot therefore be regarded as a corrupt practice within the meaning of section 123(3) of the Representation of the People Act. That is clear from the phraseology used in section 123(3) which appears to have been deliberately and carefully chosen. Unlike article 19(1), article 29(1) is not ' subject to any reasonable restrictions. The right conferred, upon the section of the citizens residing in the territory of India or any part thereof to conserve their language, script or culture is made by the Constitution absolute and therefore the decision of this Court in Jumuna Prasad Mukhariya and others vs Lachhi Ram and others(1) on which reliance was placed by the High Court is not of much use. In that case sections 123(3) and 124(5) of the Representation of the People Act as they then stood were challenged as infringing the fundamental freedom under article 19 (1) (a) of the Constitution, and the Court in negativing the contention held that the provisions of the Representation of the People Act did not stop a man from speaking: they merely prescribed conditions which must be observed if a candidate wanted to enter Parliament. The right to stand for an election is, it was observed, a special right created by statute and can only be exercised on the conditions laid down by the statute, and if a person wants to stand for an election he must observe the rules. These observations have no relevance to the protection of the fundamental right to conserve language. The corrupt practice defined by cl. (3) of section 123 is committed when an appeal is made either to vote or refrain from voting on the ground of a candidate 's language. It is the appeal to the electorate on a ground personal to the candidate relating to his language which attracts the ban of section 100 read with section 123(3). Therefore it is only when the electors are asked to vote or not to vote because of the (1) [19551 1 S.C.R. 608. 134 159 S.C. 49 770 particular language of the candidate that a corrupt practice may be deemed to be committed. Where however for conservation of language of the electorate appeals are made to the electorate and promises are given that steps would be taken to conserve that language, it will not amount to a corrupt practice. It is in the light of these principles, the correctness of the findings of the High Court that Sidhanti was guilty of the corrupt practice of appealing for votes on the ground of his language and of asking the voters to refrain from voting_ for Daulta on the ground of the language of Daulta may be examined. The petition filed by Daulta on this part of the case was vague. In paragraph 1 1 of his petition it was averred that Sidhanti and his agents made a systematic appeal to the audience to vote for Sidhanti and refrain from, voting for Daulta "on the ground of religion and language", and in paragraph 12 'it was averred that in the public meetings held to further the prospects of Sidhanti in the election, Sidhanti and his agents had made systematic appeals to the electorate to vote for him and refrain from voting for Daulta "on the ground of his religion and language". A bare perusal of the particulars of the corrupt practice so set out in paragraphs 1 1 & 12 are to be found in Schs. 'C ' & 'D ' clearly shows that it was the case of Daulta that Sidhanti had said that if the electorate wanted to protect their language they should vote for the Hariana Lok Samiti candidate. Similar exhortations are said to have been made by the other speakers at the various meetings. It is stated in Sch. 'D ' that resolutions were passed at the meetings urging upon the Government to "abolish Punjabi from Hariana", that many speakers said that the Hariana Lok Samiti will fight for Hindi for Hariana and that they were opposed to the teaching of Punjabi in Hariana. These exhortations to the electorate to induce the Government to change their language policy or that a political party will agitate for the protection of the language spoken by the residents of the Hariana area do not fall within the corrupt practices of appealing for votes on the ground of language of the candidate or to refrain from ' voting on the ground of language of the contesting candidate. 771 Speeches made at political meetings held for canvassing votes must be examined in the context of the atmosphere of a Political campaign and the passions which are generally aroused in such a campaign. In adjudging whether an appeal is made to the language of the candidate, a meticulous examination of the text of the speech in the serene atmos phere of the Court room picking out a word here and a phrase there to make out an offending appeal to vote for or against a candidate on the ground of language would not be permissible. A general and overall picture of the speeches delivered by Sidhanti and other speakers at the meeting disclosed nothing more than a tale of political promises, exhortations and inducements to vote at the forthcoming election for Sidhanti. It is not disputed that in 1957 there was a wide spread agitation in the State of Punjab against the enforcement of the education policy of the State, incorporated in the "Sachar formula". Many persons were imprisoned or detained in the cause of the agitation for individual acts done by them. But the movement was not and could not be declared illegal. It is common ground that in the Harriana region, Hindi is the predominant language of the people and if a section of the people thought that compelling the students in the Hariana region to learn Punjabi was not in their interest and in the election campaign such a view was advocated and votes were canvassed on the promise that the candidate if elected will take steps to conserve the language of the region, it would be difficult to hold that appeal as amounting to a corrupt practice. It is open to a candidate in the course of his election campaign to criticise the policies of the Government including its language policy and to make promises to the electorate that if elected he will secure a reversal of that policy or will take measures in the Legislature to undo the danger, real, apprehended or even fancied, to the language of the people. The object of the Hariana Lok Samiti was evidently to resist the imposition of Punjabi in the Hariana region and that object appears to have been made the platform in the election campaign. Thereby it could not be said that the voters were asked not to vote for Daulta on the ground of his language, assuming that it was other than 772 Hindi. Nor can it be said that it was an appeal to the voters to vote for Sidhanti on the ground of his language. The evidence which has been referred to by the High Court regarding the speeches made by Badlu Ram and Harphul Singh on December 10, 1961, at Beri on the face of it shows that the speeches were an attack against Daulta in respect of his political conduct, behaviour and beliefs. The speeches made at the meetings at Sampla, Ladpur and Majra Dubaldhan read like political harangues addressed to the electorate to vote for the candidate who would protect the language of the people of Hariana. At Bahadurgarh also Sidhanti is stated to have claimed that he was opposed to the Government and its supporter Daulta in the matter of the language movement. The evidence also showed that Sidhanti had appealed to the voters to vote for him because he was actively associated with the Hindi agitation movement and that he was championing the cause of Hindi and ' resisting the imposition of a rival language Punjabi and thereby suggesting that Daulta was hostile to the cause of Hindi language and was supporting the Punjabi language. The criticism by 'Sidhanti in his appeal to the electorate related to the political leanings of Daulta, and his support to the policy of the Government and wag not personally directed against him. Nor did Sidhanti appeal to the voters to vote in his favour on account of his language. Such political speeches espousing the cause of a particular language and making promises or asking the people to protest against the Government of the day in respect of its language policy is not a corrupt practice within the description of corrupt practice under section 123(3) of the Act. We are therefore unable to agree with the High Court that Sidhanti was guilty of any corrupt practice under section 123 (3) by appealing for votes on the ground of his language or by asking the voters to refrain from voting for Daulta on the ground of his language. The appeal will therefore be allowed and the order passed by the Tribunal restored with costs in this Court and the High Court. Appeal allowed.

IN-Abs

The appellant was declared elected to the House of the People from a parliamentary constituency. The respondent No. 1 challenged the election of the appellant on the ground that the appellant, his election and other agents committed many corrupt practices falling within section 123 of the Representation of the People Act, 1951. The main grievance of respondent No. was that the appellant and his agents had made appeals to the electorate to vote for him or to refrain from voting for Daulta (Respondent No. 1) "on the ground of his religion and language", and that the appellant and his agents use a religious symbol a flag called "Om Dhwaj" in all the election meetings. The case of the appellant was that the flag was not a religious symbol and denied that it was used on any occasion by him or his agents and submitted that it was used only by one person who was always accustomed to carry it on his motor car. The appellant also pleaded that an appeal to the electorate on the ground of language or religion did not amount to a corrupt practice within the meaning of section 123 of the Act. The Tribunal dismissed the election petition of respondent No. I but the High Court allowed the appeal and declared the election of the appellant void under section 100(1)(b) of the Act. Hence the appeal. Held (i) The use of or appeal to the national or religious symbols to be a corrupt practice must be made by the candidate or his election agent, or by some other person with the consent of the candidate or his election agent, before it can be regarded as a ground for declaring the election void. (ii) 'Om 'is regarded by Hindus as having high spiritual or mystical efficacy:it is used at the commencement of the recitations of religious prayers. But the attribute of spiritual significance will not necessarily impart to its use on a flag the character of a religious symbol within the meaning of section 123. A symbol stands for or represents something material or abstract. To be a religious symbol, there must be a visible representation of a thing or concept which is religious. To 'Om ' high spiritual or mystical efficacy is undoubtedly ascribed, but its use on 751 a flag does not symbolise religion or anything religious. The High 'Court errd in holding that the 'Om ' flag was a religious symbol and its use in an election comes within the purview of cl. (3) of section 123 of the Act. (iii)Clause (3) of section 123 of the Act must be read in the light of the fundamental right which is guaranteed by article 29(1) of the Constitution; the clause cannot be read as trespassing upon The fundamental right under article 29(1). Article 29(1) of the Constitution has conferred the Tight, among others, to conserve their language upon the citizens of India. Right to conserve the language of the citizens includes the right to agitate for protection of the language. Political agitation for conservation of the language of a section of the citizens cannot therefore be regarded a a corrupt practice within the meaning of section 123(3) of the Act. Jamuna Prasad Mukhariya and Ors. vs Lachhi Ram and Ors., [1955]1 S.C.R. 608, distinguished. (iv)The corrupt practice defined by cl. (3) of section 123 is committed when an appeal is made either to vote or refrain from voting on the ground of a candidate 's language. It is the appeal to the electorate on a ground personal to the candidate relating to his language which attracts the ban of section 100 read with section 123(3). Therefore it is only when the electors are asked to vote or not to vote because of the particular language of the candidate that a corrupt practice may be ,deemed to be committed. Where, however, for conservation of language of the electorate appeals are made to the electorate and promises are given that steps would be taken to conserve that language, making of such appeals or promises will not amount to a corrupt practice.

Appeal No. 491 of 1963. Appeal from the judgment and order dated January 17, 1961 of the Madhya Pradesh High Court in Misc. Petition No. 226 of 1960. B. Sen and I. N. Shroff, for the appellant. section T. Desai, J. B. Dadachanji, O. C. Mathur and Ravinder 4Narain, for the respondent. February 19, 1964. The Judgment of the Court was delivered by SHAH, J. Bhopal Sugar Industries Ltd. hereinafter called 'the Company ' was incorporated under the Companies Act of the former Indian State of Bhopal. In 1953 the State of Bhopal which was then a Part 'C ' State under the Constitution of India enacted "The Bhopal State Agricultural Income tax Act, IX of 1953" providing for imposition and levy of tax on agricultural income. The Act was applied to the territory of the entire State of Bhopal and was brought into force on July 15, 1953. By the (No. 67 of 1956), territory of the Part 'C ' State of Bhopal was incorporated with effect from November 1, 1956, into the newly formed State of Madhya Pradesh. Section 119 of the , enacted that by the constitution of the reorganized State, no change in the laws in force which immediately before November 1, 1956, extended or applied to any constituent regions, was effected, and territorial references in the laws 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 November 1, 1956. By the Madhya Pradesh Adaptation of Laws (State and Concurrent Subjects) Order, 1956, promulgated by the 849 Government of the State, all laws in force in the regions which were newly incorporated into the reorganised State St,, of Madhya Pradesh were, with certain adaptations and modifications specified in the Order, to remain in force in those areas until altered, repealed or amended, and by that Order the Bhopal Act IX of 1953 continued to remain applicable in the territory of the former Bhopal State, in the new State of Madhya Pradesh. Later the Legislature of the Madhya Pradesh State enacted the Madhya Pradesh Extension of Laws Act, 1958, extending several Acts Central as well as State to the entire territory of the State, but no alteration was made in the territorial operation of Bhopal Act IX of 1953. It is common ground that in the remaining territory of the State of Madhya Pradesh there was no law providing for levy of tax on agricultural income. The Company paid and continued to pay tax assessed under the Bhopal State Agricultural Income tax Act, 1953, till some time in 1960. On August 4,1960, the Company presented a petition under article 226 of the Constitution in the High Court of Madhya Pradesh at Jabalpur for a writ declaring that Bhopal Act IX of 1953 was unconstitutional and void as being discriminatory and for appropriate directions, writs or orders restraining the State of Madhya Pradesh from giving effect to the Act. It was claimed by the Company that Bhopal Act IX of 1953 deprived the residents of the territory to which it applied, of the protection of article 14 of the Constitution. The High Court upheld the plea of the Company and issued a writ restraining the State of Madhya Pradesh from enforcing the provisions of Bhopal Act IX of 1953, observing that the Act was "in clear contravention of the petitioner 's right under article 14 of the Constitution and must be declared void". Authority of the Part C State of Bhopal to enact the Act, as it originally stood, is not in dispute, nor are the provisions of section 119 of the and the Madhya Pradesh Adaptation of Laws (State and Concurrent Subjects) Order, 1956, challenged as incompetent. The plea that there is infringement of article 14 of the Constitution is advanced on the sole ground that in the reorganized State of Madhya Pradesh formed under the 134 159 S.C. 54 850 , agricultural income tax is ,,levied within the territory of the former State of Bhopal and not in the rest of the territories of Madhya Pradesh. Prima facie, a differential treatment is accorded by the State of Madhya Pradesh to persons carrying on agricultural operations in the Bhopal region, because the State subjects them to pay tax on agricultural income, which is not imposed upon agricultural income earned in the rest of the State. But that by itself cannot be a ground for declaring the Act ultra vires. The State is undoubtedly enjoined by article 14 of the Constitution not to deny to any person equal protection of the laws within the territory, but a proper classification bearing a reasonable and just relation to the object sought to be achieved by the statute does not on that account become impermissible. All persons who are similarly circumstanced as regards a subject matter are entitled to equal protection of the laws, but it is not predicated thereby that every law must have universal application irrespective of dissimilarity of objects or transactions to which it applies, or of the nature or attainments of the persons to whom it relates. The Legislature has always the power to make special laws to attain particular objects and for that purpose has authority to select or classify persons, objects or transactions upon which the law is intended to operate. Differential treatment becomes unlawful only when it is arbitrary or not supported by a rational relation with the object of the statute. This Court has held in several cases, that where application of unequal laws is reasonably justified for historical reasons, a geographical classification founded on those historical reasons would be upheld: Bhaiyalal Shukla vs State of Madhya Pradesh(1): The State of Madhya Pradesh vs The Gwalior Sugar Co. Ltd. and others(2): Maharaj Kumar Prithvi Rai and another vs The State of Rajasthan and others ( 3 ) and Anand Prasad Lakshminiwas Ganeriwal vs State of Andhra Pradesh(4). The decision of this Court in The State of Rajasthan vs Rao Manohar Singhji(5) does not lay down (1) [1962] Suppl. 2 section C. R. 257. (2) (3) C.A. Nos. 327 328 of 1956 decided on Nov. 2, 1960. (4) AIR 1963 section C. 853. (5) ; 851 any contrary principle. In that case the Court accepted that historical reasons may justify differential treatment of separate geographical regions provided it bears a reasonable and just relation to the matter in respect of which it is proposed, but the differentiation in that case was regarded as infringing the equal protection of the laws because members of the same class were treated in a manner ex facie discriminatory, and no attempt was made by the State to justify the treatment as founded upon a rational basis having a just relation to the impugned statute. It is necessary to bear in mind that the various adminis trative units which existed in British India were the result of acquisition of territory by the East India Company from time to time. The merger of Indian States since 1947 brought into the Dominion of India numerous Unions or States, based upon arrangements ad hoc, and the constitu tional set up in 1950 did not attempt, on account of diverse reasons mainly political, to make any rational rearrangement of administrative units. Under the Constitution as originally promulgated there existed three categories of States, beside the centrally administered units of the Andaman and Nicobar islands. Part 'A ' States were the former Governors ' Provinces, with which were merged certain territories of the former Indian States to make geographically homogeneous units : Part 'B ' States repre sented groups formed out of 275 bigger Indian States by mutual arrangement into Unions : Part 'C ' States were the former Chief Commissioners ' Provinces. These units were continued under the Constitution merely because they formerly existed. Later an attempt was made under the to rationalize the pattern of administration by reducing the four classes of units into two States, and Union territories and by making a majority of the States homogeneous linguistic units. But in the States so reorganized were incorporated regions governed by distinct laws, and by the mere process of bringing into existence reorganized administrative units, uniformity of laws could not immediately be secured. Administrative reorganization evidently could not await adaptation of laws, so as to make them uniform, and 852 immediate abolition of laws which gave distinctive character to the regions brought into the new units was politically inexpedient even if theoretically possible. An attempt to secure uniformity of laws before reorganisation of the units would also have considerably retarded the process of reorganisation. With the object of effectuating a swift transition, the made a blanket provision in section 119 continuing the operation of the laws in force in the territories in which they were previously in force notwithstanding the territorial reorganisation into different administrative units until the competent Legislature or authority amended, altered or modified those laws. The reorganized State of Madhya Pradesh was formed by combining territories of four different regions. Shortly after reorganisation, the Governor of the State issued the Madhya Pradesh Adaptation of Laws (State and Concurrent Subjects) Order, 1956, so as to make certain laws applicable uniformly to the entire State and later the Legislature by the Madhya Pradesh Extension of Laws Act, 1958, made other alterations in the laws applicable to the State. But Bhopal Act IX of 1953 remained unamended and unaltered : nor was its operation extended to other areas or regions in the State. Continuance of the laws of the old region after the reorganisation by section 119 of the was by itself not discriminatory even though it resulted in differential treatment of persons, objects and transactions in the new State, because it was intended to serve a dual purpose facilitating the early formation of homogeneous units in the larger interest of the Union, and maintaining even while merging its political identity in the new unit, the distinctive character of each region, till uniformity of laws was secured in those branches in which it was expedient after full enquiry to do so. The laws of the regions merged in the new units had therefore to be continued on grounds of necessity and expediency. Section 119 of the was intended to serve this temporary purpose, viz., to enable the new units to consider the special circumstances of the diverse units, before launching upon a process of adaptation of laws so as to make them reasonably uniform, keeping in view the special needs 853 of the component regions and administrative efficiency. Differential treatment arising out of the application of the laws so continued in different regions of the same reorga nised State, did not therefore immediately attract the clause of the Constitution prohibiting discrimination. But by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reasons may cease to be valid. A purely temporary provision which because of compelling forces justified differential treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared. The High Court observed that even though the State had enacted the Madhya Pradesh Extension of Laws Act, 1958, and had removed diversity in some of the laws of the component regions, no attempt was made to remove discrimination between the territory of the former Bhopal State and the rest of the territories of the State of Madhya Pradesh in the matter of levy of agricultural income tax. This in the view of the High Court was unlawful because the State had since the enactment of the sufficient time and opportunity to decide whether the continuance of the Bhopal State Agricultural Incometax Act in the Bhopal region would be consistent with article 14 of the Constitution. We are unable to agree with the view of the High Court so expressed. It would be impossible to lay down any definite time limit within which the State had to make necessary adjustments so as to effectuate the equality clause of the Constitution. That initially there was a ' valid geographical classification of regions in the same State justifying unequal laws when the State was formed must be accepted. But whether the continuance of unequal laws by itself sustained the plea of unlawful discrimination in view of changed circumstances could only be ascertained after a full and thorough enquiry into the continuance of the grounds on which the inequality could rationally be founded, and the change of circumstances, if any. which obliterated the compulsion of expediency 854 and necessity existing at the time when the. Reorganisation Act was enacted. Unfortunately there was no clear perception by the parties of what has to be pleaded and proved to establish a plea of denial of equal protection of the laws. The Company merely assumed that the existence of a law relating to taxation which imposed agricultural income tax in the Bhopal region, there being no similar levy in the rest of the State, was in law discriminatory. That is clear from the petition of the Company which merely asserted that the Act discriminated between the Company and other owners of sugarcane farms in the State of Madhya Pradesh, because it singled out the Company and other agriculturists in the Bhopal region from other agriculturists and sugarcane farm owners in the State of Madhya Pradesh and subjected them to liability without any reasonable basis for classification. The Company therefore baldly submitted that after the incorporation of the Bhopal region in the reorganised State, the State of Madhya Pradesh ought to have suitably modified the Act so as to make it applicable to all residents alike and by allowing the Act to operate without any modification, the State had violated the fundamental right of the Company under article 14 of the Constitution. The State of Madhya Pradesh did not file any affidavit in reply before the High Court, and chose to defend the petition as if its decision depended on a pure question of law, that if for historical reasons the Act in operation in a region incorporated in the new State was not discriminatory at the date when the reorganisation took place, it can never become discriminatory thereafter. The assumptions made by both the parties appear to be erroneous. The High Court was of the view that after expiry of a reasonable period during which the State has the opportunity of making necessary adaptations ,so as to make the Act applicable to the entirety of the new State, if the State fails to adapt the law, historical considerations which initially justified the classification must be deemed to have disappeared. That assumption without further enquiry may not be accepted as correct. It was necessary for the High Court to investigate whether at the date when the petition was filed, special treatment of the 855 Bhopal region in the matter of levy of agricultural income tax had a rational basis. That necessitated an enquiry into the structure of tax burden imposed directly or indirectly on or in respect of agricultural land or income from it in the different regions constituting the State. If for instance, on account of disparity in the impost of land revenue and related taxes on land and income from land in other regions, the ultimate burden on persons in the Bhopal region who were subjected to agricultural income tax and agricultural land owners in the rest of the State did not disclose a pattern of wide variations, the mere existence of agricultural income impost in one region, and absence of such impost in another region may not necessarily justify an inference of unlawful discrimination. It was therefore necessary to ascertain the difference in the overall tax liability between persons similarly situated in the State of Madhya Pradesh in the matter of levy of agricultural tax. For that purpose an investigation was necessary whether the incidence of total burden on agriculturists was so desparate that an inference of unlawful discrimination may reasonably be made. The High Court had to ascertain the impact of diverse land taxes imposed on agricultural land in the four regions of the State, and whether the burden between persons similarly circumstanced was substantially dissimilar. and whether continuance of dissimilar levies was justified. If upon a thorough examination of the pattern of land taxes in different regions of the State, it appeared to the Court that an unreasonably larger burden was sought to be continued upon this region, without any apparently justifiable ground, an inference of discrimination may arise. In adjudging reasonableness of classification for the purpose of taxation, the Courts recognise greater freedom in the Legislature and if the statute discloses a permissible policy of taxation, the Courts will uphold it. The Courts undoubtedly lean more readily in favour of the presumption of constitutionality of a taxing statute, but that is not to say that they will not strike down a statute unless it appears that the tax was imposed deliberately with the object of differentiating between persons similarly circumstanced. We may state that the observations to the contrary that it 856 matters of taxation a statute may not be struck down "unless the Court finds that" the tax "has been imposed with a deliberate intention of differentiating between individual and individual" in The State of Madhya Pradesh vs The Gwalior Sugar Co. Ltd. and another(1) was not strictly necessary for deciding that case, and was not intended to lay down any special test applicable to taxing statutes in their relation to article 14 of the Constitution. To arrive at a conclusion adverse to the State it was therefore necessary to decide whether the differentiation arising from the continuation of the levy of the agricultural income tax was unfair and not supported by a reasonable standard, and the State having the requisite information and opportunity to make the imposts reasonably uniform, had failed or neglected to do so. No set formula can be devised for solving a problem of this character. It cannot be said that because a certain number of years have elapsed or that the State has made other laws uniform, the State has acted improperly in continuing an impost which operates upon a class of citizens more harshly than upon others. The petition filed by the Company was singularly deficient in furnishing particulars which would justify the plea of infringement of article 14 of the Constitution. It cannot be too strongly emphasized that to make out a case of denial of the equal protection of the laws under article 14 of the Constitution, a plea of differential treatment is by itself not sufficient. An applicant pleading that equal protection of the laws has been denied to him must make out that not only he had been treated differently from others but he has been so treated from persons similarly circumstanced without any reasonable basis, and such differential treatment is unjustifiably made. A mere plea that the Company and other agriculturists within the region of the former Bhopal State had to pay the agricultural income tax, whereas the agriculturists elsewhere had not to pay such tax, is not sufficient to make out a case of infringement of the funda mental right under article 14 of the Constitution. The State also did not place evidence before the High Court, which would in the very nature of things be in its (1) 857 possession, showing a rational relation between the differ ential treatment and the classification and has also not placed any material before the Court throwing light on the question whether the continuance of the tax was justified : it merely chose to plead its case as on a demurrer. Both the State and the Company have by inadequate appreciation of the true position in law contributed to the manner in which the trial of the petition has proceeded. We would in the circumstances not be justified in dismissing the petition on a technical view of the burden of proof. We think that this is a case in which the parties should be given an opportunity to plead their respective cases adequately and to go to trial after the requisite evidence which has a bearing is brought before the Court. We accordingly allow the appeal, set aside the order and remand the case for retrial to the High Court. The High Court, will, if the Company so desires, give opportunity to the Company to amend its petition so as to adequately plead its case of infringement of the fundamental right to equal protection of the laws supported by necessary particulars. The High Court will also give opportunity to the State to file its affidavit in reply and to place all such materials as it may rely upon the plea set up by the Company. After the pleadings are completed and the evidence is brought on the record, the High Court will proceed to decide the case according to law. Costs in this Court will be the costs in the petition before the High Court. Appeal allowed.

IN-Abs

The respondent, a company incorporated in the former State of Bhopal, presented a petition in August 1960 under article 226 of the Constitution in the High Court of Madhya Pradesh for a writ restraining the State of Madhya Pradesh from enforcing the Bhopal State Agricultural Income tax Act, 1953, claiming that the Act contravened the respondent 's right under article 14 of the Constitution. By the the territory of the State of Bhopal was 847 incorporated from November 1, 1956 into the newly formed State of Madhya Pradesh. The by section 119 continued the operation of the laws in force in the territories in which they were previously in force until the competent legislature or authority amended, altered or modified these laws. Shortly after the reorganisation. the Madhya Pradesh Adaptation of Laws Order, 1956 was issued so as to make certain laws applicable uniformly to the entire State and later the Legislature by the Madhya Pradesh Extension of Laws Act, 1958 made other alterations in the laws applicable to the State. But Bhopal Act 11 of 1953 remained unamended or unaltered: nor was its operation extended to the other areas or regions in the State with the result that Agricultural Income tax was levied within the territory of the former State of Bhopal and not in the rest of the territory of the State of Madhya Pradesh. The High Court held that the provisions of Bhopal Act 11 of 1953 contravened article 14 of the Constitution and observed that though the State had removed diversity in some of the laws of the component regions, no attempt was made to remove discrimination between the territory of the former Bhopal State and the rest of the territories of the State of Madhya Pradesh with respect to this law. Held: (i) Where application of unequal laws is reasonably justified for historical reasons, a geographical classification founded on those historical reasons would be upheld. The legislature has always the power to make special laws to attain particular objects and for that purpose has authority to select or classify persons, objects or transactions upon which the law is intended to operate. Differential treatment becomes unlawful only when it is arbitrary or not supported by a rational relation with the object of the statute. Bhaiyalal Shukla vs State of Madhya Pradesh, [1962] Supp. 2 S.C.R. 257, The State of Madhya Pradesh vs The Gwalior Sugar Co., , Maharaj Kumar Prithivi Rai vs State of Rajasthan, C.A. Nos. 327 328, dated 2 11 1960 and Anand Prasad Lakshminivas Ganeriwal vs State of Andhra Pradesh, A.I.R. 1953 S.C. 853. relied on. State of Rajasthan vs Rao Manohar Singhji, [1954] S.C.R. 996, explained. (ii) It would be impossible to lay down any definite time limit within which the State had to make necessary adjustments so as to effectuate the equality clause of the Constitution. It cannot be said that because a certain number of years have elapsed or that the State has made other laws uniform, the State has acted improperly in con tinuing an impost which operates upon a class of citizens more harshly than upon others. (iii) To make out a case of denial of the equal protection of laws under article 14, a plea of differential treatment is by itself not sufficient. An applicant pleading such denial must make out that not only he 848 had been treated differently from others but he has been so treated from persons similarly circumstanced without any reasonable basis, and such differential treatment is Unjustifiably made.

Appeal No. 119 of 1963. Appeal by special leave from the judgment and order dated January 16, 1961 of the Deputy Custodian General, New Delhi in Appeal No. 172 A /SUR/ 1960. M. C. Setalvad, Atiqur Rehman and K. L. Hathi, for the appellant. C. K. Daphtary, Attorney General, K. section Chawla and B. R. G. K. Achar, for the respondents. February 19, 1964. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave against the order of the Deputy Custodian General, and the question involved is whether the appellant is liable to pay Rs. 85,000/ to the Custodian. The matter has a long history behind it which it is necessary to set out in order to understand the point now in dispute in the present appeal. The money in question was deposited with the appellant by his sister as far back as January 1946. The total amount deposited was Rs. 90,000/ , but the appellant 's sister took back Rs. 5,000/ , with the result that the balance of Rs. 85,000/ remained deposited with the appellant. The appellant 's sister thereafter migrated to Pakistan sometimes between June to August 840 1949. Sometime later, the Assistant Custodian General called upon the appelant to pay this sum lying in deposit under section 48 of the , No. XXXI of 1950, (hereinafter referred to as the Act). The appellant contested the matter on the ground that the money had been given to him as a loan and its recovery was barred in January 1949 long before his sister had migrated to Pakistan, and therefore the amount could not be recovered from him. The Assistant Custodian however directed the recovery of the amount as arrears of land revenue under section 48 of the Act, as it then stood. The matter was taken in appeal before the Custodian, Saurashtra, but the appeal failed. The appellant then went in revision to the Custodian General, and the revision also failed. Then followed a writ petition by the appellant before the Saurashtra High Court in 1955. The writ petition was dismissed by a learned Single Judge; but on Letters Patent Appeal the appellant succeeded, the High Court holding that the amount was not recoverable under section 48 of the Act as it stood at the relevant time. This decision was given on December 9, 1957. In the meantime, section 48 had been amended on October 22, 1956 and we shall refer to this amendment in due course. After the appellant had succeeded in the High Court, another notice of demand was served on him by the Assistant Custodian on January 22, 1958, and after hearing the objec tions of the appellant, the Assistant Custodian again directed the amount to be recovered. The appellant then took the matter in appeal to the Custodian General. The Custodian General allowed the appeal in August 1958 and remanded the proceedings for further enquiry as directed by him. The Custodian General then held that section 48 as amended applied to the fresh proceedings which began on the notice issued by the Assistant Custodian in January 1958. He further held that the amount was recoverable under the amended section 48 provided it was due to the evacuee on the date the property of the evacuee vested in the Custodian. He was therefore of opinion that it would have to be determined when the sister of the appellant migrated and whether the amount was due to her on the date of her migration and had. not become barred by the law of Iimitation on that date. Ho was further 841 of opinion that the question whether the transaction amounted to a loan or a deposit had to be determined as there were different periods of limitation for these two types of transactions. He therefore remanded the matter for disposal after finding the facts in accordance with the directions given by him. After the remand further evidence was taken and it was held that the amount in question was payable by the appellant as it was a deposit and was still recoverable when the property vested in the Custodian. Thereupon the appellant again went in appeal to the Custodian General and that appeal was dismissed on February 6, 1961. Then the appellant applied to this Court for special leave which was granted; and that is how the matter has come up before us. Two questions have been urged before us on behalf of the appellant. The first is whether the amended section 48 can be applied to the present case. The second is whether the claim of the Custodian is barred even on the basis of the transaction between the appellant and his sister being a deposit and not a loan. The amended section 48 came into the Act by Act No. 91 of 1956 from October 22, 1956 and runs as follows: "48. Recovery of certain sums as arrears of land revenue: (1) Any sum payable to the Government or to the Custodian in respect of any evacuee property, under any agreement, express or implied, lease or other document or other#vise howsoever, may be recovered in the same manner as an arrear of land revenue. (2) If any question arises whether the sum is payable to the Government or to the Custodian within the meaning of sub section (1), the Custodian shall, after making such inquiry as he may deem fit, and giving to the person by whom the sum is alleged to be payable an opportunity of being heard, decide the question; and the decision of the Custodian shall, subject to any appeal or revision under this Act, be final and shall not be called in question by any court or other authority 842 (3) For the purpose of this section, a sum shall be deemed to be payable to the Custodian notwithstanding that its recovery is barred by the Indian Limitation Act, 1908 (9 of 1908), or any other law for the time being in force relating to limitation of action. " It will be seen that this is mainly a procedural section replacing the earlier section 48 and lays down that sums payable to the Government or to the Custodian can be recovered thereunder as arrears of land revenue. The section also provides that where there is any dispute as to whether any sum is payable or not to the Custodian or to the Government, the Custodian has to make an inquiry into the matter and give the person raising the dispute an opportunity of being heard and thereafter decide the question. Further, the section makes the decision of the Custodian final subject to any appeal or revision under the Act and not open to question by any court or any other authority. Lastly the section provides that the sum shall be deemed to be payable to the Custodian notwithstanding that its recovery is barred by the Indian Limitation Act or any other law for the time being in force relating to limitation of action. Sub sections (1) and (2) are clearly procedural and would apply to all cases which have to be investigated in accordance therewith after October 22, 1956, even though the claim may have arisen before the amended section was inserted in the Act. It is well settled that procedural amendments to a law apply, in the absence of anything to the contrary, retrospectively in the sense that they apply to all actions after the date they come into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. Therefore, when the Assistant Custodian issued notice to the appellant on January 22, 1958 claiming the amount from him, the recovery could be dealt with under sub sections (1) and (2) of the amended section 48, as they are merely procedural provisions. But it is urged on behalf of the appellant that sub section (1) in terms does not apply to the present case, and if so, sub section (2) would also not apply. The argument is that under sub section (1) it is only any sum payable to the Government or to the Custodian in respect of any evacuee property which can be recovered as arrears of land revenue. 843 Therefore, the argument runs, evacuee property itself cannot be recovered under sub section (1), for that sub section only provides for recovery of any sum payable in respect of any evacuee property. In this connection reference has been made to section 9 of the Act, which lays down that if any person in possession of any evacuee property refuses or fails on demand to surrender possession thereof to the Custodian, the Custodian may use or cause to be used such force as may be necessary for taking possession of such property and may, for this purpose, after giving reasonable warning and facility to any woman not appearing in public to withdraw, remove or break open any lock, bolt or any door or do any other act necessary for the said purpose. The argument is that the Custodian can only take action for recovery of evacuee property under this section. We are of opinion that the argument is misconceived. Section 9 deals with the recovery of immovable property or specific movable property which can be physically seized; it does not deal with incorporeal evacuee property which may vest in the Custodian and which, for example, may be of the nature of an actionable claim. So far as actionable claims are concerned, they are dealt with by section 48 as amended read with section 10 (2) (i). It is also a misconception to think that the amount of Rs. 85,000/ which is involved in this case is actually evacuee property. It is true that under section 48 as amended, the Custodian can take action for recovery of such sums as may be due in respect of any evacuee property and if the sum of Rs. 85,000/ which was deposited with the appellant is actually evacuee property, the Custodian may not be able to take action under section 48 (1) and (2) in respect of the same. But the property which vested in the Custodian was not the actual money in specie lying with the appellant who must be treated as a banker with respect to the property with him , on the other hand the property which vested in the Custodian would be the right of the appellant 's sister to recover the amount from the appellant and that would be incorporeal property in the form of an actionable claim. It is in respect of that actionable claim that the Custodian can proceed under section 48, sub sections (1) and (2), to recover the sum payable to him in respect of that property, namely, the actionable claim. The contention of the appellant that section 48 (1) will not apply to the recovery of this sum of money must 844 therefore fail and the Custodian would have the right to recover this sum of money as it is payable in respect of the evacuee property of the appellant 's sister, namely, the right which she had to recover the sum from the appellant, and it is this right which vested in the Custodian. The Custodian could not take action under section 9 by physically seizing the amount because the amount cannot be treated as specific property which is liable to be seized under that section. If the appellant 's sister had the right to recover this amount from the appellant that right would be incorporeal property which would vest in the Custodian and in respect of which action could be taken under section 48 as amended and not under section 9 of the Act. The contention of the appellant that section 48, (1) and (2) do not apply to this case must therefore fail. The next contention is that in any case treating the amount as a deposit the right to recover it had become barred and therefore the Custodian could not recover it under this section and that sub section (3) of section 48 would not apply as it affects vested rights and is not procedural in nature and therefore could not be applied retrospectively. Some dates would be relevant in this connection. On the findings of the authorities concerned, it appears that the deposit was made sometime in January 1946. The appellant 's sister migrated sometimes between June to August 1949. According to the law in force in that area at the relevant time, on the date of migration of the appellants sister, she became an evacuee and her property would vest in the Custodian on such date. So her right to recover this amount from the appellant would vest in the Custodian sometime between June to August 1949, if it was still alive under the law of limitation, even apart from the question that in such cases only the remedy is barred though the right remains. Further as this was a deposit, limitation would run at the earliest from the date of demand and there is no evidence that any demand was made by the appellants sister for the return of the money before she migrated to Pakistan. Therefore, the period of limitation had not even begun to run on the date the appellant 's sister migrated to Pakistan, assuming article 60 of the Limitation Act, No. 9 of 1908 applied. Consequently the right of, the appel 845 lant 's sister to recover the amount vested in the Custodian and was not barred by limitation at the time when she became an evacuee. The demand was made for the first time on January 10, 1952 by the Assistant Custodian and time would run from that date, at the earliest. Then it is urged that even if the actionable claim vested in the Custodian, the demand in this case was made for the first time on January 10, 1952, and therefore under article 60 of the Limitation Act, the right to recover the amount would be barred in January 1955, and consequently no proceeding could be taken under section 48 to recover the same after January 1955. It is further urged that the amended Act came into force on October 22, 1956 and sub section (3) would only apply to such cases where the limitation had not expired before that date. We do not think it necessary for purposes of the present appeal to decide the effect of sub section (3) of section 48, for the appellant never contested before the authorities concerned that recovery could not be made tinder section 48 even if the amount was treated as a deposit. What the appellant had contended before the authorities concerned was that the recovery would be barred as the amount was given to him. , as a loan. The appellant therefore cannot Dow for the first time in this Court take the plea that recovery could not be made under section 48 and sub section (3) thereof would not apply even if the amount is treated as a deposit. This contention thus raised in this Court for the first time raises a question as to the effect of sub section (3) of section 48. Besides the effect of section 48 (3), it is contended for the respondent that if this question had been raised before the proper authorities evidence might have been led to show that the recovery was not barred, for the case proceeded on ,he assumption that At. 60 of the Limitation Act applied and proper defences could have been raised as for example the conditions on which the deposit was made i.e. whether on demand or other wise and acknowledgements of liability made by the appel lant. Such defence would have raised questions of fact which have never been investigated. Therefore it is urged that the appellant should not be allowed to raise the point that the recovery would be barred even if the amount was treated is a deposit and should be confined to his case 846 that this was a loan and not a deposit, for he never pleaded at any time before the authorities concerned that even if it was a deposit the recovery would be barred by time. We are of opinion that there is force in this contention on behalf of the respondents and we are not prepared to allow the appellant to raise the question whether the recovery would be barred even if the amount is treated as a deposit. In this view of the matter, it would not be necessary to consider the exact effect of section 48(3) and to decide whether it will apply even to cases where the recovery had become barred under the Limitation Act before October 22, 1956. We therefore do not allow the appellant to raise the point that the recovery would be barred even if the amount was a deposit. The appeal therefore fails and is hereby dismissed with costs. Appeal dismissed.

IN-Abs

Rupees 85,000/ was deposited with the appellant by his sister in January 1946. The appellant 's sister migrated to Pakistan sometimes between June to August 1949. The Assistant Custodian called upon the appellant to pay this sum lying in deposit under section 48 of the . The appellant pleaded that the amount could not be recovered from him because the money had been given to him as a loan and its recovery was barred in January 1949. The Assistant Custodian rejected the contention of the appellant and directed him to pay the amount under section 48 of the Act, as it then stood. This decision was affirmed in appeal as well as in revision. Then the appellant moved a writ petition before the High Court which was dismissed by the single Judge. On Latters Patent Appeal the High Court held that the amount was not recoverable under section 48 of the Act as it stood at the relevant time. This decision was given on December 9, 1957. In the meantime, section 48 had been amended on October 22, 1956. On January 22, 1958 another notice of demand was served on the appellant by the Assistant Custodian. The Assistant Custodian again directed the amount to be recovered The appellant preferred an appeal before the Custodian General. The Custodian General allowed the appeal and remanded the proceedings for further enquiry as directed by him. After the remand further evidence was taken and it was held that the amount in question was payable by the appellant as it was a deposit and was still recoverable when the property vested in the Custodian. Thereupon the appellant preferred an appeal to the Custodian General and that appeal was dismissed. Then the appellant applied to this Court for special leave which was granted. Hence the appeal. Held: (i) Sub sections 1 and 2 of the amended section 48 of the are clearly procedural and would apply to all cases which have to be investigated in accordance therewith after October 22, 1956, even though the claim may have arisen before the amended section was inserted in the Act. It is well settled that procedural amendments to a law apply, in the absence of anything to the contrary, retrospectively in the sense that they apply to all actions after the date they come into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. In the present case when the Assistant Custodian issued notice to the appellant on January 22, 1958, claiming the amount from him, the recovery could be dealt with under sub sections (1) and (2) of the amended a. 48, as they are merely procedural provisions. (ii) In the present case the property which vested in the Custodian was not the actual money in specie lying with the appellant who must be treated as a banker with respect to the property with him; on the other hand the property which vested in the Custodian would be the right of the appellant 's sister to recover the amount from the appellant 839 and that would be incorporeal property in the form of an actionable claim. It is in respect of that actionable claim that the Custodian can proceed under section 48 sub sections (1) and (2), to recover the sum payable to him in respect of that property, namely, the actionable claim. The Custodian could not take action under section 9 by physically seizing the amount because the amount cannot be treated as specific property which is liable to be seized under that section. (iii) As this amount was a deposit, limitation would run at the earliest from the date of demand and there is no evidence that any demand was made by the appellant 's sister for the return of the money before she migrated to Pakistan. Therefore, the period of limitation had not even begun to run on the date the appellant 's sister migrated to Pakistan, assuming article 60 of the Limitation Act No. 9 of 1908 applied. Consequently the right of the appellant 's sister to recover the amount vested in the Custodian and was not barred by limitation & the time when she became an evacuee.

Appeal No. 135 of 1952. Appeal from the Judgment and Order dated the 19th March, 1951, of the High Court of Judicature at 1030 Bombay in Appeal No. 95 of 1950 arising from the Order dated the 28th August, 1950, of the said High Court exercising its Ordinary Original Civil Jurisdiction in Civil Miscellaneous No. 2 of 1950. Bishan Narain (Sri Narain Andley with him) for the appellants. M. C. Setalvad, Attorney General for India, and C. K. Daphtary, Solicitor General for India (J. B. Dadachanji, with them) for the respondents. Registrar of Trade Marks in person. May 7. The Judgment of the Court was delivered by MAHAJAN J. This is an appeal on a certificate under section 109(c), Civil Procedure Code, from the judgment of the High Court of Judicature at Bombay reversing the judgment of Mr. Justice section C. Shah in Civil Miscellaneous No. 2 of 1950 and restoring the order of the Registrar of Trade Marks refusing to register the appellants ' trade mark. The two questions that were canvassed before us and that fall for our determination are (1) whether the judgment of Mr. Justice Shah was subject to appeal under clause 15 of the Letters Patent of the Bombay High Court and (2) whether Mr. Justice Shah was right in interfering with the discretion exercised by the Registrar in refusing registration of the appellants ' mark. The relevant facts shortly stated are these. The appellants are a limited liability company incorporated under the Indian Companies Act, 1913, having their registered office at Chidambaram, South Arcot District, in the Province of Madras and carrying on the business of manufacturing cotton sewing thread. The respondents are also a limited liability company registered under the English Companies Act. They have their registered office at Eagley Mills, Bolton, (England) where they manufacture 'sewing thread. One of the trade marks used by them on such thread consists of the device of an Eagle with 1031 outspread wings known as "Eagle Mark". This mark was first advertised in the Calcutta Exchange Gazette of 5th June, 1896. Since then sewing thread bearing this mark is being regularly imported into and sold in the Indian markets on an extensive scale. Round about the year 1940 the appellants started selling cotton sewing thread under a mark consisting of the device of a bird with wings fully spread out perched on a cylinder of cotton sewing thread, with the words " Eagle Brand " and the name of the appellant company printed on the mark. The respondents objected to the mark, upon which the appellants substituted the words " Vulture Brand " in the place of the words " Eagle Brand". Thereafter in the year 1942 the appellants applied to the Registrar of Trade Marks, Bombay, for registration of their amended mark as a trade mark, in class 23, in respect of cotton sewing thread claiming that the mark had been in use by them since the year 1939. Though on the objection of the respondents the appellants had named the Eagle in their mark a " Vulture " in every other respect the mark remained unchanged. The respondents to redress their grievance started a passing off action in the District Court of South Arcot against the appellants. That action failed on the ground that the evidence offered on their behalf was meagre and they failed in proving that there was any probability of purchasers exercising ordinary caution being deceived in buying the defendants ' goods under the impression that they were the plaintiff 's goods. The result was that the grievance of the respondents remained unredressed. As above stated, in 1942, the appellants made an application to the Registrar of Trade Marks at Bombay for the registration of their mark "Vulture Brand " under the . The respondents gave notice of their opposition to that application under section 15(2), Rule 30, of the . By his order dated 2nd September, 1949, the Registrar of Trade Marks allowed the respondents ' opposition and rejected the application 1032 made by the appellants. He came to the conclusion that the appellants ' mark so nearly resembled the mark of the respondents as to be likely to deceive or cause confusion. He further held that to describe the mark of the appellants as " Vulture Brand" when the device was that of an eagle was misleading and liable to cause confusion. The appellants preferred an appeal against the order of the Registrar to the High Court of Bombay as permitted by the provisions of section 76 of the . Mr. Justice Shah allowed the appeal, set aside the order of the Registrar and directed the Registrar to register the mark of the appellants as a trade mark. From the judgment of Mr. Justice Shah an appeal was preferred by the respondents under clause 15 of the Letters Patent of the Bombay High Court. The appeal was allowed and the order of the Registrar was restored with costs throughout. Hence this appeal. In our judgment both the questions canvassed in this appeal admit of an easy answer in spite of a number of hurdles and difficulties suggested during the arguments. It is not disputed that the decision of Mr. Justice, Shah does constitute a judgment within the meaning of clause 15 of the Letters Patent. That being so his judgment was subject to appeal under that clause, the material part of which relevant to this enquiry is: " And We do further ordain that an appeal shall lie to the said High Court of Judicature at Bombay from the judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act. " It was said that the provisions of this clause could not be attracted to an appeal preferred to the High Court under section 76 of the and further that the clause would have no application in a case, where the judgment could not be said to have been delivered pursuant to section 108 of the Government of India Act, 1915. Both these objections in our opinion are not well founded. Section 76 (1) provides: 1033 "Save as otherwise expressly provided in the Act an appeal shall lie, within the period prescribed by the Central Government, from any decision of the Registrar under this Act or the rules made thereunder to the High Court having the jurisdiction. " The does not provide or lay down% ' any procedure for the future conduct or career of that appeal in the High Court, indeed section 77 of the Act provides that the High Court can if it likes make rules in the matter. Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and procedure of that Court and in accordance with the provisions of the charter under which that Court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction. 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 very succinctly stated by Viscount Haldane L.C. in National Telephone Co., Ltd. vs Postmaster General in these terms: "When a question is stated to be referred to an established Court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. " The same view was expressed by their Lordships of the Privy Council in R.M.A.R.A. Adaikappa Chettiar vs Ra. Chandrasekhara Thevar (2), wherein it was said: "Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure, applicable thereto and an appeal lies if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not, in terms confer a right of appeal." (1) [19I3] A.C. 546. 134 (2) (1947) 74 I,A. 264, 1034 Again in Secretary of State for India vs Chellikani Rama Rao (1), when dealing with the case under the Madras Forest Act their Lordships observed as follows: "It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent, these being excluded by the terms of the statute just quoted. In their Lordships ' opinion this objection is not well founded. Their view is that when proceedings of this character reach the District Court, that Court is appealed to as one of the ordinary Courts of the country, with regard to whose procedure, orders, and decrees the ordinary rules of the Civil Procedure Code apply." Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case, the principle enunciated therein is one of general application and has an apposite application to the facts and circumstances of the present case. Section 76 of the confers a right of appeal to the High Court and says nothing more about it. That being so, the High Court being seized as such of the appellate jurisdiction conferred by section 76 it has to exercise that jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge, his judgment becomes subject to appeal under clause 15 of the Letters Patent there being nothing to the contrary in the . The objection that Mr. Justice Shah 's judgment having been delivered on an appeal under section 76 of the could not be said to have been delivered pursuant to section 108 of the Government of India Act is also without force and seems to have been based on a very narrow and limited construction of that section and on an erroneous view of its true intent and purpose. Section 108 of the Government of India Act, 1915, provides : " Each High Court may by its own rules provide as it thinks fit for the exercise, by one or more Judges, or by division courts constituted by two or more Judges (1) Mad. 617. 1035 of the High Court, of the original and appellate juris diction vested in the Court. " The section is an enabling enactment and confers power on the High Courts of making rules for the exercise of their jurisdiction by single Judges or by division courts. The power conferred by the section is not circumscribed in any manner whatever and the nature of the power is such that it had, to be conferred by the use of words of the widest amplitude. There could be no particular purpose or object while conferring the power in limiting it qua the jurisdiction already possessed by the High Court, when in the other provisions of the Government of India Act it was contemplated that the existing jurisdiction was subject to the legislative power of the Governor General and the jurisdiction conferred on the High Court was liable to be enlarged, modified and curtailed by the Legislature from time to time. It is thus difficult to accept the argument that the power vested in the High Court under subsection (1) of section 108 was a limited one, and could only be exercised in respect to such jurisdiction as the High Court possessed on the date when the Act of 1915 came into force. The words of the sub section "vested in the court" cannot be read as meaning "now vested in the court". It is a well known rule of construction that when a power is conferred by a statute that power may be exercised from time to time when occasion arises unless a contrary intention appears. This rule has been given statutory recognition in section 32 of the Interpretation Act. The purpose of the reference to section 108 in clause 15 of the Letters Patent was to incor porate that power in the charter of the Court itself, and not to make it moribund at that stage and make it rigid and inflexible. We are therefore of the opinion that section 108 of the Government of India Act, 1915, conferred power on the High Court which that Court could exercise from time to time with reference to its jurisdiction whether existing at the coming into force of the Government of India Act, 1915, or whether conferred on it by any subsequent legislation. 1036 It was argued that simultaneously with the repeal of section 108 of the Government of India Act, 1915, and of the enactment of its provisions in section 223 of the Government of India Act of 1935 and later on :in article 225 of the Constitution of India, there had not been any corresponding amendment of clause 15 of the Letters Patent and the reference to section 108 in clause 15 of the Letters Patent could not therefore be taken as relating to these provisions, and, that being so, the High Court had no power to make rules in 1940 when the was enacted under the repealed section and the decision of Mr. Justice Shah therefore could not be said to have been given pursuant to section 108. This objection also in our opinion is not well founded as it overlooks the fact that the power that was conferred on the High Court by section 108 still subsists, and it has not been affected in any manner whatever either by the Government of India Act, 1935, or by the new Constitution. On the other hand it has been kept alive and reaffirmed with great vigour by these statutes. The High Courts still enjoy the same unfettered power as they enjoyed under section 108 of the Government of India. Act, 1915, of making rules and providing whether an appeal has to be heard by one Judge or more Judges or by Division Courts consisting of two or more Judges of the High Court. It is immaterial by what label or nomenclature that power is described in the different statutes or in the Letters Patent. The power is there and continues to be there and can be exercised in the same manner as it could be exercised when it was originally conferred. As a matter of history the power was not conferred for the first time by section 108 of the Government of India Act, 1915. It had already been conferred by section 13 of the Indian High Courts Act of 1861. We are further of the opinion that the High Court was right in the ' view that reference in clause 15 to section 108 should be read as a reference to the corresponding provisions of the 1935 Act and the Constitution. The canon of construction of statutes enunciated in section 38 of the 1037 Interpretation Act and reiterated with some modifications in section 8 of the General Clauses Act is one of general application where statutes or Acts have to be construed and there is no reasonable ground for holding that that rule of construction should not be applied in construing the charters of the different High Courts. These charters were granted under statutory powers and are subject to the legislative power of the Indian Legislature. Assuming however, but not conceding, that strictly speaking the provisions of the Interpretation Act and the General Clauses Act do not for any reason apply, we see no justification for holding that the principles of construction enunciated in those provisions have no application for construing these charters. For the reasons given above we hold that the High Court was perfectly justified in overruling the preliminary objection and in holding that an appeal was competent from the judgment of Mr. Justice Shah under clause 15 of the Letters Patent. Reliance was Placed by the appellants in the High Court and before us on the decision of the High Court of Judicature of Calcutta in Indian Electric Works vs Registrar of Trade, Marks(1) wherein a contrary view was expressed. After a full consideration of the very elaborate and exhaustive judgment delivered in that case by both the learned Judges of the Bench that heard the appeal and with great respect we think that that case was wrongly decided and the decision is based on too narrow and restricted a construction of section 108 of the Government of India Act, 1915, and that in that decision full effect has not been given to the true intent and purpose of clause 44 of the Letters Patent. Both the learned Judges there took the view that the authority given by section 108(l) of the 1915 statute to make rules for the exercise by one or more Judges of the Court 's appellate jurisdiction was limited to the jurisdiction then vested in the Court by section (1) A.I.R. 1947 Cal. 1O38 106 (1) of the Act and by clause 16 of the Letters Patent. It was held that such rules thus could not relate to jurisdiction conferred by an Act passed after the commencement of the 1915 statute nor to an appeal heard by the Court pursuant to such an Act, since the jurisdiction to hear such appeal having been conferred by the particular Act could not be said to have been conferred upon, or vested in, the Court by section 106(1) and by clause 16 of the Letters Patent. This argument suffers from a two fold defect. In the first place it does not take into consideration the other provisions of the Government of India Act, 1915, particularly the provision contained in sections 65 and 72. By section 65(1) of the Government of India Act, 1915, the Governor General in Legislative Council was given power to make las for all persons, for all courts, and for all places and things, within British India. By section 72 he was also given power for promulgating ordinances in cases of emergency. By the Charter Act of 1915 therefore the High Court possessed all the jurisdiction that it had at the commencement of the Act and could also exercise all such jurisdiction that would be conferred upon it from time to time by the Legislative power conferred by that Act. Reference to the provisions of section 9 of the Indian High Courts Act of 1861 which section 106 (1) of the Government of India Act, 1915, replaced makes this proposition quite clear. In express terms section 9 made the jurisdiction of the High Courts subject to the legislative powers of the Governor General in Legislative Council. Section 106 only conferred on the High Court " jurisdiction and power to make rules for regulating the practice of the court, as were vested in them by Letters Patent, and subject to the provisions of any such Letters Patent, all such jurisdiction, powers and authority as were vested in those courts at the commencement of the Act. " The words " subject to the legislative powers of the Governor General " used in section 9 of the Charter Act of 1861 were omitted from the section, because of the wide power conferred on the Governor General by section 65 of the Government of India Act, 1915. The 1039 jurisdiction conferred on the High Courts from the very inception was all the time liable to and subject to alteration by appropriate legislation. It is therefore not right to say that section 108 (1) of the Government of India Act, 1915, empowered the High Courts to make rules only concerning the jurisdiction that those courts exercised when that Act was passed; on the other hand power was also conferred on them to make rules in respect of all jurisdiction then enjoyed or with which they may be vested hereafter. Clause 16 of the Letters Patent on which reliance was placed by the learned Judges of the Calcutta Court is in these terms: " The High Court shall be a Court of appeal from the civil Courts of Bengal and from all other Courts subject to its superintendence and shall exercise appellate jurisdiction in such cases as are subject to appeal to the said High Court by virtue of any laws or regulations now in force." This clause is also subject to the legislative power of the appropriate Legislature as provided in clause 44 of the Letters Patent. This clause is in these terms: " The provisions of the Letters Patent are subject to the legislative powers of the Governor General in Legislative Council. " That being so the last words of the clause " now in force " on which emphasis was placed in the Calcutta judgment lose all their importance, and do not materially affect the point. The true intent and purpose of clause 44 of the Letters Patent was to supplement the provisions of clause 16 and other clauses of the Letters Patent. By force of this clause appellate jurisdiction conferred by fresh legislation on the High Courts stands included within the appellate jurisdiction of the court conferred by the Letters Patent. A reference to clause 15 of the Letters Patent of 1861, which clause 16 replaced, fully supports this view. This clause included a provision to the following effect : " or shall become subject to appeal to the said High Court by virtue of such laws and regulations 1040 relating to Civil Procedure as shall be hereafter made, by the Governor in Council," in addition to the words " laws or regulations now in force". The words above cited wore omitted from clause 16 of the later charter and only the words "laws or regulations now in force" were retained, because these words were incorporated in the Letters Patent and were made of general application as governing all the provisions thereof by a separate clause. The Judges who gave the Calcutta decision on the other hand inferred from this change that the appellate jurisdiction of the High Court as specified in clause 16 was confined only to the jurisdiction to hear appeals from the the civil Courts mentioned in that clause and appeals under Acts passed and regulations in force up to the year 1865. In our opinion the learned Judges were in error in thinking that the appellate jurisdiction possessed by the High Court under the Letters Patent of 1865 was narrower than the jurisdiction it possessed under clause 15 of the Letters Patent of 1861. Whatever jurisdiction had been conferred on the High Court by clause 15 of the Letters Patent of 1861 was incorporated in the Letters Patent of 1865 (as amended) and in the same measure and to the same extent by the provisions of clauses 16 and 44 of that charter. We are further of the opinion that the Calcutta decision is also erroneous when it expresses the view that the range and ambit of the power conferred on the High Court by section 108 of the Government of India Act of 1915 was limited by the provision of section 106 (1) of the Act or by the provisions of clause 16 of the Letters Patent. There is no justification for placing such a construction on the plain and unambiguous words of that section. Section 108 is an enactment by itself and is unrestricted in its scope, and covers a much wider field than is covered by section 106 of the Government of India Act. The only association it has with section 106 is that in sequence it follows that sec tion. It confers a power on the High Court to make rules in respect not only of the jurisdiction that it 1041 enjoyed in 1915 but it also conferred power on it to make rules in respect of jurisdiction which may hereafter be conferred on it by the enactments enacted by the Governor General in Legislative Council. On the line of thought adopted in the Calcutta decision the learned Judges were forced to the conclusion which seems somewhat strange that the jurisdiction conferred by the Letters Patent on the Calcutta High Court is much more limited and restricted than has been conferred on some of the new High Courts in India by their Letters Patent. Illustratively, Clause I I of the Letters Patent of Patna High Court issued in 1916 provides as follows: " And We do further ordain that, the High Court of Judicature at Patna shall be a Court of Appeal from the Civil Courts of the Province of Bihar and Orissa and from all other Courts subject to its superintendence, and shall exercise appellate jurisdiction in such cases as were, immediately before the date of the publication of these presents, subject to appeal to the High Court of Judicature at Fort William in Bengal by virtue of any law then in force, or as may after that date be declared subject to appeal to the High Court of Judicature at Patna by any law made by competent legislative authority for India The Letters Patent of the Labore High Court, the High Court of Rangoon and the Letters Patent of the Nagpur High Court also contain identical clauses. It is clear from these clauses that in respect of cases subject to appeal to these High Courts the civil appellate jurisdiction is flexible and elastic. Mr. Justice Das in the Calcutta decision under discussion took the view that omission of the words underlined in clause 11 from clause 16 of the Letters Patent of the Calcutta High Court made the civil appellate jurisdiction of that court under clause 16 as rigidly fixed, and that it could be exercised only over courts and only in respect of cases mentioned therein. When the attention of the learned Judge was. drawn to the provisions of clause. 44 of the Letters Patent he 1042 was constrained to say that inflexibility bad to a great extent been modified by preserving the powers of Indian Legislative authority in section 9 of the High Courts Act, by the amended clause 44 of the Letters Patent and by section 223 of the. 1935 Act. The learned Judge however felt that there was still a difference of a vital character between the Letters Patent of the Calcutta High Court and of the newly constituted High Courts inasmuch as cases subsequ ently declared by any Indian enactment to be subject to appeal to the Calcutta High Court could not strictly speaking come within its appellate jurisdiction under clause 16 although the High Court exercised appellate jurisdiction over these. We have not been able to appreciate this distinction and it seems to us it is based on some misapprehension as to the true intendment of clause 44 of the Letters Patent. The purpose and intent of clause 44 of the Letters Patent was to declare that in addition to the jurisdiction conferred by clause 16 it would also exercise the appellate jurisdiction which from time to time would be conferred on it by subsequent enactments. It is inconceivable that larger appellate jurisdiction and greater powers in the matter of making rules would have been conferred upon the newly constituted High Courts than upon the High Court of Calcutta. The words "pursuant to section 108 of the Government of India Act 1915" occurring in clause 15 of the Letters Patent do not in any way restrict the scope of the right of appeal conferred by that clause to appeals that come to the High Court under its appellate jurisdiction under clause 16 of the Letters Patent only. On the other hand we think that these rules have application to all appellate jurisdiction exercised by that court whether existing or conferred upon it by subsequent legislation. The learned Judges in the Calcutta case negatived the applicability of the principle enunciated in 1913 Appeal Cases 546 and applied by the Privy Council in several cases to the matter before them, on the following reasoning set out by Mr. Justice Das: 1043 "The incidents and powers attached to the Registrar as a tribunal fall far short of those which were attached, to the tribunal in the Gurdwara case (1) and to which Sir George Rankin particularly and pointedly referred Having regard to the plain language of clause 16, and in the absence therein of like words which appeal in the concluding portions of the correspond clauses of the Letters Patent of the other High Court to which I have already referred and which make their appellate jurisdiction flexible and elastic it is impossible to hold that section 76 of the has merely extended the appellate jurisdiction of this Court under clause 16 by the addition of a new subject matter of appeal so as to attract the general principle enunciated in 1913 Appeal Cases 546 . . The truth is that the has created new rights, e.g., a right to get a trade mark registered and has given certain new advantages con sequent upon such registration. It has created new Tribunals for its own purposes and it has conferred a new appellate jurisdiction on this Court. It has authorized this Court to make rules regulating the conduct and procedure of the proceedings under the Act before it. This Court has framed separate set of rules accordingly. This very fact makes it impossible to attract the ordinary rules of procedure regarding appeals in this Court and indicates that an appeal under section 76 of the Act involves the exercise of a new appellate jurisdiction regulated by new rules". This reasoning in our opinion is faulty on a number of grounds. The first error lies in the assumption that the Gurdwara Act did not create new rights and did not create new appellate jurisdiction in the High Court which it did not possess before. The Gurdwara Act created peculiar rights in religious bodies and negatived the civil rights of large bodies of Mahants and other persons. Stick rights were unknown before in civil law. The High Court as an established court of record was constituted a court of appeal from the decisions of the Gurdwara Tribunal. The principle enunciated in 1913 Appeal Cases 546 was applied by (1) 63 I.A. 180. 1044 Sir George Rankin to appeals heard by the High Court under its newly created appellate jurisdiction, and we speak with great respect, in our opinion, very correctly. We have not been able to appreciate the special peculiarities of the rights created by the which place the appellate jurisdiction conferred on the High Court by section 76 on a different level from the jurisdiction created by the special provisions of the Gurdwara Act. The rights created by the are civil rights for the protection of persons carrying on trade under marks which have acquired reputation. The statute creates the Registrar a tribunal for safeguarding these rights and for giving effect to the rights created by the Act, and the High Court as such without more has been given appellate jurisdiction over the decisions of this tribunal. It is not easy to understand on what grounds it can be said that the High Court while exercising this appellate jurisdiction has to exercise it in a manner different from its other appellate jurisdiction. It seems to us that this is merely an addition of a new subject matter of appeal to the appellate jurisdiction already exercised by the High Court. The second error lies in the assumption that the appellate jurisdiction exercised by the High Court of Calcutta is much more limited than that possessed by the other High Courts. The matter has been discussed at length in an earlier part of this judgment. We have also not been able to appreciate the emphasis laid to negative the applicability of clause 15 of the Letters Patent by reference to the provisions of section 77 of the Act. The provisions of that section are merely enabling provisions and, as already pointed out, it is open to the High Court to make use of them or not as it likes. There is nothing in the provisions of that section which debars the High Court from hearing appeals under section 76 of the according to the rules under which all other appeals are heard, or from framing rules for the exercise of that jurisdiction under section 108 of the Government of India Act, 1915, for hearing those 1045 appeals by single judges or by division benches. Even if section 77 had not been enacted it could not be said that the High Court would then have no power to make rules for the hearing of appeals under section 76. There are a number of legislative enactments which have conferred appellate jurisdiction on the High Court without more and the High Court exercises appellate jurisdiction conferred by these enactments by framing its own rules under the powers it already possesses under its different charters and under the various statutes which have conferred power on it. It was suggested that the reasoning of the High Court is supported by the rule laid down in Secretary of State vs Mask and Co.(1). In our opinion that rule has neither any relevancy in this case nor is it in any manner in conflict with the rule laid down in 1913 Appeal Cases 546 or in the later Privy Council decisions above referred to. There, by section 188 of the Sea Customs Act the jurisdiction of the civil courts was excluded, and an order made by the Collector on an appeal from an order of the Assistant Collector was made final. A suit was filed to challenge the order of the Collector on the ground that the finality declared by section 188 was no bar to such a suit in a civil court. That contention was negatived on the ground that when a liability not existing in common law is created by a statute which at the same time gives a special and particular remedy for enforcing it, with respect to that class it has always been held that the party must adopt the form of remedy given by the statute. The has not created any special forum for the hearing of an appeal as had been created by the Sea Customs Act. On the other hand, the has conferred appellate jurisdiction on an established court of law. Further, the Sea Customs Act had made the order of the Collector passed on an appeal final. There is no such provision in the . It has only declared that an appeal shall lie to the High Court from the order of the Registrar and has said nothing more about it. Clearly, therefore, to this case the rule (1) 67 I.A. 222. 1046 enunciated in 1913 Appeal Cases 546 had application, and the rule stated in Mask 's case (1) had no bearing on this point. As regards the merits of the case, we are in entire agreement with the decision of the High Court and with the reasons given in that decision. The relevant part of section 8 of the is in these terms: "No trade mark nor part of a trade mark shall be registered which consists of, or contains, any scandalous design, or any matter the use of which would by reason of its being likely to deceive or to cause confusion or otherwise, be disentitled to protection in a court of justice". Under this section an application made to register a trade mark which is likely to deceive or to cause confusion has to be refused notwithstanding the fact that the mark might have no identity or close resemblance with any other trade mark. The Registrar has to come to a conclusion on this point independently of making any comparison of the mark with any other registered trade mark. What the Registrar has to see is whether looking at the circumstances of the case a particular trade mark is likely to deceive or to cause confusion. The principles of law applicable to such cases are well settled. The burden of proving that the trade mark which a person seeks to register is not likely to deceive or to cause confusion is upon the applicant. It is for him to satisfy the Registrar that his trade mark does not fall within the prohibition of section 8 and therefore it should be registered. Moreover, in deciding whether a particular trade mark is likely to deceive or cause confusion that duty is not discharged by arriving at the result by merely comparing it with the trade mark which is already registered and whose proprietor is offering opposition to the registration of the mark. The real question to decide in such cases is to see as to how a purchaser, who must be looked upon as an average man of ordinary intelligence, would react to a (1) 67 I.A. 222. 1047 particular trade mark, what association he would form by looking at the trade mark, and in what respect he would connect the trademark with the goods which* he would be purchasing. So far as the present case is concerned the goods sold under the respondents ' trade mark are well known and are commonly asked for as II Eagley " or " Eagle ", and the particular feature of the trade mark of the respondents by which the goods are identified and which is associated in the mind of the purchaser is the representation of an Eagle appearing in the trade mark. If the trade mark conveys the idea of an Eagle and if an unwary purchaser is likely to accept the goods of the appellants as answering the requisition for Eagle goods, then undoubtedly the appellants ' trade mark is one which would be likely to deceive or cause confusion. It is clear to us that the bird in the appellants ' trade mark is likely to be mistaken by an average man of ordinary intelligence as an Eagle and if he asked for Egg`e goods and he got goods bearing this trade mark of the appellants it is not likely that he would reject them by saying that this cannot be an Eagle. Two years prior to the application for registration, the respondents described this particular bird an Eagle and called their brand Eagle Brand, The same bird was later on described by them a vulture and the explanation offered was that they so described owing to an honest and bona fide mistake. We have no hesitation in holding that the appellants ' camouflaging an Eagle into a vulture by calling it such is likely to cause confusion. Whatever else may be said about the bird in the appellants ' trade mark, it certainly does not represent a vulture or look like a vulture of any form or shape. What has been named by the plaintiffs as a vulture is really an eagle seated in a different posture. That being so, the High Court was perfectly right in the view that Mr. Justice Shah was in error in interfering with the discretion possessed and exercised by the Registrar, and that the appellants had failed to discharge the onus that rested heavily on them to prove that the trade mark which they wanted the Registrar 1048 to register was not likely to deceive or cause confusion. The learned counsel for the appellants contended that the question whether his clients ' trade mark was likely to deceive or cause confusion had been 'Concluded by the earlier judgment of the Madras High Court in the passing off action and already referred to in an early part of the judgment. It is quite clear that the onus in a passing off action rests on the plaintiff to prove whether there is likelihood of the defendant 's goods being passed off as the goods of the plaintiff. It was not denied that the general get up of the appellants ' trade mark is different from the general get up of the respondents ' trade mark. That being so, it was held by the Madras High Court in the passing off action that on the meager material placed on record by the plaintiffs they had failed to prove that the defendants ' goods could be passed off as the goods of the plaintiffs. The considerations relevant in a passing off action are somewhat different than they are on an application made for registration of a mark under the and that being so the decision of the Madras High Court referred to above could not be considered as relevant on the questions that the Registrar had to decide under the provisions of the Act. For the reasons given above we are of the opinion that this appeal must fail and we accordingly dismiss it with costs. Appeal dismissed.

IN-Abs

Section 76(l) of the , provides that an appeal shall lie from any decision of the Registrar under the Act or the rules made thereunder, to the High Court having jurisdiction, but the Act did not make any provision with regard to the procedure to be followed by the High Court in the appeal or as to whether the order of the High Court was appealable: Held that the High Court had to exercise its appellate jurisdiction under section 76 of the Act in the same manner as it exercised its other appellate jurisdiction, and when such jurisdiction was exercised by a Single Judge, his judgment was appealable under el. 15 of the Letters Patent. National Telephone Co. vs Postmaster General ([1913] A.C. 546),R. M. A. R. A. Adaikappa Chettiar vs Ra. chandrasekhara Thevar (74 I.A. 264), Secretary of State vs Chellikani Rama Rao (I. L.R. 39 Mad. 617) referred to. The power conferred by section 108 of the Government of India Act, 1915, on the High Courts, of making rules for the exercise of their jurisdiction by Single Judges or by Division Courts could be exercised not only in respect to such jurisdiction 1O29 as the High Courts possessed when the Act of 1915 came into ' force; but also in respects of jurisdictions I conferred on the High Court by subsequent legislation, e.g., s, 76 of the . Under the rules (if construction enunciated in section 8 of the General Clauses Act and section 38 of the Interpretation Act, which are of general application, the reference to s.108 of the Government of India Act, 1915, in el. 15 of the Letters Patent should, after the enactment of the Constitution of 1950, be read as reference to the corresponding provisions of article 225 of the Constitution. The ambit of the power conferred on the High Courts by a.108 of the Government of India Act, 1915, is not limited by s.106(l) of the said Act or by el. 16 of the Letters Patent of the Calcutta High Court. Indian Electric Works vs Registrar of Trade Marks (A.I.R. overruled. Secretary of State vs Mask & Co. (67 I.A. 222) and the Gur dwara Case (63 I.A. 180) distinguished. The respondents, a company registered in England, manu factured sewing thread with the device of an Eagle with outspread wings known as the "Eagle Mark" as their trade mark, and since 1896 this thread was being sold in the Indian markets on an extensive scale. The appellants, a company registered in India, began in 1940 to sell sewing thread with the device of a bird resembling an eagle with wings fully spread out with the words "Eagle Brand" as their mark. On the objection of the respondents the appellants subsequently changed the name to "Vulture Brand" without changing the mark in other respects. The respondents instituted an action against the appellants for passing off, but that was dismissed. The appellats subsequently applied for registration of their trade mark but their application was disraissed by the Registrar on the ground that the appellants ' mark so nearly resembled the respondents ' mark as to be likely to deceive the public and cause confusion. This order was reversed by a Single Judge of the High Court of Bombay but restored on appeal by a Division Bench: Held (i) that the judgment of the Division Bench upholding the order of the Registrar rejecting the application, on the ground that the mark was likely to deceive and cause confusion, was right; (ii) that the considerations relevant in a passing off action are somewhat different from those which are relevant in an application for registration of a trade mark under the , and the earlier judgment of the High Court in the action for passing off was not conclusive on the matter.

Appeals Nos. 37 40 of 1963. Appeals from the judgment and decree dated August 13, 11, 1959 of the Allahabad High Court in Civil Misc. Writ Petitions Nos. 870 to 873 and 349 of 1956 respectively. WITH Petitions Nos. 335 to 345 of 1960. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. G. section Pathak, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellants (in C.As. 37 40 of 1963). M. C. Setalvad, Rameshwar Nath,S. N. Andley and P. L. Vehra, for the appellant (in C.A. No. 589/63). C. K. Daphtary, Attorney General, K. N. Rajagopal Sastri and R. N. Sachthey, for the respondents (in all the appeals and petitions). 828 February 19, 1964. The Judgment of the Court was, delivered by GAJENDRAGADKAR, C.J. These civil appeals and writ petitions have been placed before us for hearing in a group,. because all of them raise a common question of law about the validity of section 34(1A) of the Income tax Act (No. XI of 1922) (hereinafter called 'the Act '). M/s. K. section Rashid & Son, and its partner, Rashid Ahmad, are the appellants in Civil Appeals Nos. 37 to 40/1963, and petitioners in W.Ps. 335 345/1960. The appeals arise out of the four writ petitions (Nos. 870 873 of 1956) filed by the firm and its partner in the High Court of Allahabad challenging the validity of the notices served upon them under section 34(1A) of the Act in respect of their income for the years 1941 42 to 1946 47. These writ petitions have been dismissed by the said High Court and it is with the certificate issued by it that the firm and its partner have come to this Court in appeal. The writ petitions Nos. 335 345/1960 have been filed by the same parties in this Court under article 32 of the Constitution in respect of the notices served on them on the 19th March. 1956 and the order of excess profit tax levied on them. In these petitions, the same point is urged by the parties; and that is that the notices are invalid, because section 34(1A) is itself ultra vires. The respondents to the appeals are : the Commissioner of Income tax, U.P., Lucknow, and the Income tax Officer, Central Circle IV, Delhi. The respondents to the writ petitions are : the Income tax Officer, Central Circle IV, New Delhi, the Income tax Officer, 'A ' Ward, Meerut, the Commissioner of Income tax, U.P., Lucknow, and the Central Board of Revenue, New Delhi. Civil Appeal No. 589 of 1963 has been brought to this Court in similar circumstances by the appellant, M/s. Bhawani Prasad Girdharlal. The appellant had challenged the validity of the notices issued to it on the 16th August, 1955 under section 3 4 (1A) of the Act. The writ petition filed by the appellant has been dismissed by the Allahabad High Court and it is with the certificate issued by the said High Court that the present appeal has been brought to 829 this Court. That is how the only question which arises for our decision in this group of matters relates to the validity of section 34(1A) of the Act. The argument urged in support of the challenge to the validity of the impugned section is that it suffers from the vice of contravening article 14 of the Constitution. It is urged that whereas under section 34(1) which deals with similar cases of assessees, the remedy by way of appeals and revisions under the relevant provisions of the Act is available to the assessees, that remedy is denied to the assessees against whom proceedings are taken under the impugned section. Section 34(1) thus gives a preferential treatment to the assessees who are similarly placed with the assessees dealt with under section 34(1A); and that amounts to unconstitutional discrimination. It is also urged that in regard to cases falling under section 34(1) (a) as it stood at the relevant time, a period of limitation of 8 years had been prescribed beyond which the assessing authority could not act, and this protection of the prescribed period of limitation is not available to the assessees against whom action is taken under the impugned section. It is on these two grounds that the validity of section 34(1A) is challenged before us. Section 34 deals with income which has escaped assessment. Section 34(1) (a) deals with cases where income has, inter alia, escaped assessment, owing to the omission or failure on the part of the assessee to make a return of his income under section 22 for any year, or to disclose fully and truly all material facts necessary for his assessment for that year, whereas section 34(1) (b) refers to cases where income has escaped assessment notwithstanding that there has been no omission of failure as mentioned in clause (a) on the part of the assessee. In respect of the first category of cases, section 34(1) had provided at the relevant time that the Income tax Officer may, in cases falling under cl. (a) at any time within eight years, and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee "a notice containing all or any of the requirements which may be included in the notice under sub section (2) of section 22, and may proceed to assess or re assess such income, profits or gains, or recompute the loss or 830 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". Let us now read the relevant portion of section 34(1A). This provision lays down, inter alia, that if, in any case of an assessee. the Income tax Officer has reason to believe: (i) that income has escaped assessment for any year in respect of which the relevant previous year falls wholly or partly within the period beginning on the 1st day of September, 1939, and ending on the 31st day of March, 1946; and (ii) that the said income amounts, or is likely to amount, to Rs. 1 lakh or more, he may, notwithstanding that the period of eight years or, as the case may be, four years specified in subsection (1) has expired, in respect thereof, serve on the assessee, or, if the assessee is 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 reassess the income, profits or gains of the assessee for all or any of the years referred to in clause (i), and thereupon the provisions of this Act excepting those contained in clauses (i) and (iii) of the proviso to sub section (1) and in sub sections (2) and (3) of this section shall, so far as may be, apply accordingly : Provided that the Income tax Officer shall not issue a notice under this sub section unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice: Provided further that no such notice shall be issued after the 31st day of March, 1956. 831 It is urged that whereas in cases falling under section 34(1), the Income tax Officer has to deal with the matter on the footing that the notice issued against the assessee is a notice under section 22(2), that obligation is not imposed on the Income tax Officer while he deals with cases falling under section 34(1A), because the words "as if the notice were a notice issued under that sub section" which are found in section 34(1) are omitted in section 34(1A). It is not seriously disputed that if the notice issued under section 34(1A) is not deemed to be a notice under section 22 (2), the remedies by way of appeals and revisions which are prescribed by sections 30, 31, 32, 33, 33A and 33B of the Act would not be available to the assessee, and so, the main basis for the attack against the validity of section 34(1A) rests on the hypothesis that the omission of the relevant words in section 34(1A) in substance deprives the assessee of the said remedies prescribed by the relevant provisions of the Act. If the assumption on which this challenge proceeds is well founded. section 34(1A) may suffer from the infirmity that it contravenes article 14. Though, as we will later point out, there is a rational classification between the assessees falling under section 34(1), and those falling under section 34(1A), that rational classification would not justify the denial of the right of appeal to the persons included in section 34(1A). The question thus presented is one of construction. Before dealing with the construction of section 34(1A), it would be necessary to refer very briefly to the background of the enactment of the said section. This section was introduced by an amendment in the Act on the 17th July, 1954, and that was because section 5 (4) of the Taxation on Income (Investigation Commission) Act (No. 30 of 1947) was struck down by this Court as unconstitutional on May 28, 1954, in Suraj Mall Mohta and Another vs A. V. Viswanatha Sastri and Another(1). In that case, while examining the validity of section 5(4) of the Investigation Commission Act, this Court held that the persons brought within the mischief of the said section belong to the same class of persons who fall within the ambit of section 34 of the Act and are dealt with by section 34(1), and in view of the (1) ; 832 fact that the procedure prescribed by section 5(4) of the Investigation Commission Act was very much less favourable to the assessees than the one available to them if action was taken against them under section 34(1), the conclusion reached was that the impugned section 5(4) was unconstitutional. It is unnecessary to refer to the several grounds mentioned by Mahajan C.J. who spoke for the Court in striking down the impugned section. After this judgment was pronounced, the legislature intervened and enacted section 34(1A). That, however, was not the end of the matter. When section 34(1) was introduced in the Act, there remained two statutory provisions dealing with substantially the same subject matter, section 5(1) of the Investigation Commission Act and section 34(1) of the Act. In Shree Meenakshi Mills Ltd., Madurai vs Sri A. V. Viswanatha Sastri and Another(1), a point was raised before this Court as to whether it was open to the Income tax Department to invoke section 5(1) of the Investigation Commission Act after section 34(1A) of the Act was enacted, and, this Court held that it was not, because on comparing the two relevant provisions, section 5(1), according to the decision of this Court, contravened article 14 of the Constitution. That is how, section 5(1) became a dead letter and the Investigation Commission, in consequence, ceased to function. The cases which had been referred to that Commission and which had not been completed had, therefore, to be taken up under section 34(1A) of the Act. Thus, it would be noticed that the present controversy has had a somewhat chequered career. The first challenge was to section 5(4) of the Investigation Commission Act; when the challenge succeeded and the said section was struck down in the case of Suraj Mall Mohta(2) the legislature intervened and section 34(1A) was added in the Act. Nevertheless, the cases pending before the Investigation Commission were sought to be continued before the said Commission under section 5(1) and this section was struck down in the case of Shree Meenakshi Mills Ltd.(1); and, now, that proceedings against the same class of assessees are sought to be continued under section 34(1A), it is urged that section 34(1A) of the Act itself is invalid. It is in (1) (2) ; 833 the light of this background that the controversy between the parties in the present proceedings has to be judged. Reverting then to the question of construction, the narrow point which needs to be examined is, what is the effect of the omission to include in section 34(1A) the clause " as if the notice were a notice issued under that sub section" which is to be found in section 34(1)? In dealing with this ,question, we think it would not be unreasonable to bear in mind that when the legislature enacted section 34(1A), it must have desired to remove the infirmities which had rendered section 5(4) of the Investigation Commission Act invalid. In other words, the legislature must have presumably wanted to afford to the assessees in respect of whom section 34(1A) was intended to be invoked, the same remedies that were available to the assessee covered by section 34(1). Though the importance or significance of this consideration cannot be unduly emphasised, it cannot be said that this consideration is altogether irrelevant. We have already read the relevant portion of section 34(1A) and we have seen that it requires that a notice containing all or any of "he requirements which may be included in the notice under section 22, sub section (2) has to be issued, In other words, the notice which is required to be issued is, in terms, in a sense referable to section 22(2), because the legislature has provided that it must contain all or any of the requirements which would be included in such a notice. Then, section 34(1A) provides that after issuing ;the notice on the assessee in the manner prescribed by it, the Income tax Officer may proceed to assess or reassess the income, profits or gains of the assessee for the relevant years. In the context, it would, we think, be reasonable to hold that the assessment or reassessment which has to follow the issue of the notice, must be assessment or reassessment in accordance with the relevant provisions of the Act, and this is made very clear by :the clause that follows, because the said clause begins with the word "thereupon" which indicates that when the process of assessment or reassessment commences, the clause beginning with the word "thereupon" comes into operation and this clause requires that the 'Provisions of the 134 159 S.C. 53 834 Act shall, so far as may be, apply accordingly. The word "accordingly" like the word "thereupon" seems to emphasise the applicability of the relevant provisions of the Act to the proceedings taken under section 34(1A); otherwise there is no particular reason which would have justified the further provision in the section excepting certain provisions of the Act which are held to be inapplicable to the proceedings under section 34(1A). It is true that section 34(1) uses the clause "as if the notice. were a notice issued under that sub section" and section 34(1A) does not; but the two provisions were not inserted in the Act at the same time; section 34(1) in the present form was enacted in 1948, whereas section 34(1A) was enacted in 1954. It is quite likely that the draftsman who drafted section 34(1A) took the view that the last clause in question which occurred in section 34(1) was really superfluous and that may account for its omission in section 34(1A). In our opinion, therefore, construing the relevant words in section 34(1A), it would be difficult to accede to the argument that the said omission was deliberate and significant, and its consequence is that the provisions of section 22 and all other provisions consequent upon the application of section 22 become irrelevant in dealing with cases under section 34(1A). If section 22 is held to be inapplicable to proceedings under section 34(1A), the consequence would be entirely irrational and fantastic. The powers conferred on the Income tax Officer under section 23 (2) to take evidence would then not be available to him, and, indeed, all the powers prescribed and the procedure laid down by section 23 would become irrelevant. Likewise, the provisions in regard to appeals and revisions contained in sections 30, 31, 33, 33A and 33B would also be inapplicable. As we have already seen, the inapplicability of these provisions is the main foundation of the attack against the validity of section 34(1A). It is, however, urged that though the specific powers conferred by section 23 may not be available to the Income tax Officer, he may, nevertheless, exercise similar powers, because the authority to assess must itself include such powers as incidental to assessment. The best judgment assessment which is authorised by section 23 (4) may, it is suggested, be made even in cases falling under 835 section 34(1A) under the inherent authority of the Income tax Officer. In our opinion, this approach is wholly miscon ceived. We are satisfied that it could not have been the intention of the legislature when it enacted section 34(1A) that the procedure prescribed by the. relevant provisions of the Act beginning with section 22 should not be applicable to pro ceedings taken under section 34(1A), and that the procedure to be followed in the said proceedings and the powers to be exercised by the Income tax Officers dealing with them should be what is vaguely described as 'the inherent or incidental powers ' of such officers. Therefore, we have no hesitation in holding that the challenge made to the validity of section 34(1A) on the ground that the remedy by way of appeals or revisions which is available to the assessees against whom proceedings are taken under section 34(1) is not available to the assessees who are covered by section 34(1A), cannot be sustained. The other contention raised against the validity of s.34(1A) is based on the fact that at the relevant time, g. 34(1)(a) dealt with cases similar to those falling under s.34(1A), and yet, whereas in the former category of cases a period of limitation was prescribed as eight years there is no such limitation in regard to the latter, and that, it is urged, means unconstitutional discrimination. We are not impressed by this argument. It is true that in a broad sense both section 34(1) (a) and section 34(1A) deal with cases of income which has escaped assessment. and in that sense, the assessees against whom steps are taken in respect of their income which has escaped assessment can be said to form a similar class; but the similarity between the two categories disappears when we remember that section 34(1A) is intended to deal with assessees whose income has escaped assessment during a specified period between 1st of September, 1939 and the 31st of March, 1946. It is well known that that is the period in which as a result of the War, huge profits were made in business and industry. The second point which is very important is that in regard to the cases falling under section 34(1A), action can be taken only where the income which has escaped assessment is likely to amount to Rs. 1 lakh or more. In other words. 836 it is only in regard to cases where the escaped income is of a high magnitude that the restriction of the period of limitation has been removed. It is difficult to accept the argument that the legislature was not justified in treating this smaller class of assessees differently on the ground that the profits made by this class were higher and the income which had escaped assessment was correspondingly of a much larger magnitude. The object of the legislature being to catch income which had escaped assessment, it would be legitimate for the legislature to deal with the class of assessees in whose cases the income which had escaped assessment was much larger, because that would be a basis for rational classification which has an intelligible connection with the object intended to be achieved by the statute. It was suggested that as a result of the provisions con tained in section 34(1)(a) and section 34(1A) one year would overlap; and that may be true. But the argument of overlapping has no significance because it makes no difference whether action is taken under section 34(1), or section 34(1A) in respect of that year. Once the notice is served under section 34(1) or section 34(1A), the rest of the procedure is just the same and all the remedies available to the assessees are also just the same. Therefore, we see no substance in the argument that the absence of the restriction as to period of limitation under section 34(1A) introduces any infirmity in the said provision. In the result, we must hold that section 34(1A) is valid and has not contravened article 14 of the Constitution. That is the effect of the majority view taken by the Allahabad High Court in Jai Kishan Srivastava vs Income tax Officer, Kanpur and Another(1). There is one minor additional point which has been argued before us by Mr. Setalvad in Civil Appeal No. 589 of 1963, and that point is based upon the requirement prescribed by the proviso to section 34(1A) that the Income tax Officer shall not issue a notice unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice. The argument is that the require (1) I. L. R. [1959] II All. 451. 837 ment prescribed by the proviso constitutes a condition precedent for the exercise of the authority conferred on the Income tax Officer by section 34(1A) and since that requirement is not shown to have been satisfied in his case, the appellant in C.A. No. 589 of 1963 must succeed even if section 34(1A) is held to be valid. We are not impressed by this argument. What was urged before the High Court by the appellant was not that no reasons had been recorded by the Income tax Officer as required by the proviso; the argument was that the appellant had not been given a copy of the said reasons and it appears to have been urged that the appellant was entitled to have such a copy. This latter part of the case has not been pressed before us by Mr. Setalvad, and rightly. Now, when we look at the pleadings of the parties, it is clear that it was assumed by the appellant that reasons had been recorded and in fact, it was positively affirmed by the respondent that they had been so recorded; the controversy being, if the reasons are recorded, is the assessee entitled to have a copy of those reasons? Therefore, we do not see how Mr. Setalvad can suggest that no reasons had in fact been recorded, and so, the condition precedent prescribed by the proviso had not been complied with. The result is, all the Civil Appeals and Writ Petitions in this group fail and are dismissed. There would be no order as to costs. Appeals and Writ Petitions dismissed.

IN-Abs

The validity of section 34(1A) of the Income tax Act was challenged by the assessees as contravening article 14 of the Constitution. It was ,,contended, that the remedy by way of appeals and revisions available in cases under section 34(1) was denied to the assessees against whom proceedings were taken under section 34(1A), and that while under section 34(1)(a), as it then stood, the assessing authority could not act beyond 8 years, this protection was not available to assessees against, whom action was taken under section 34(1A). 827 Held: Section 34(1A) was valid and did not contravene article 14 of the Constitution. It could not have been the intention of the legislature when it enacted section 34(1A) that the procedure prescribed by the relevant provisions of the Act beginning with section 22 should not be applicable to proceedings taken under section 34(1A), and that the procedure to be followed in the said proceedings and the powers to be exercised by the Income tax Officers dealing with them should be, what is vaguely described as "the inherent or incidental powers" of such officers. The words "thereupon" and "accordingly" in section 34(1A) seems to emphasise the applicability of the relevant provisions of the Act to the proceedings taken under section 34(1A). The object of the legislature being to catch income which ' had escaped assessment, it would be legitimate for the legislature to deal with the class of assessees in whose cases the income which had escaped assessment was much larger, because that would be a basis for rational classification which has an intelligible connection with the object intended to be achieved by the statute. Jai Kishan Srivastava vs Income tax Officer, Kanpur, I.L.R. [1959] II All. 451, approved. Suraj Mull Mohta vs A. V. Viswanatha Sastri, [1955]1 S.C.R. 448 and Shree Meenakshi Mills Ltd., Madurai vs Sri A. V. Viswanatha Sastri, [1955]1 S.C.R. 787 referred to.

Appeal No. 130 of 1962. Appeal by special leave from the Judgment and decree dated March 17, 1959, of the Allahabad High Court in Misc. Writ Petition No. 280 of 1958. K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant Bishan Narain, G. C. Sharma, O.C. Mathur, J. B. Dadachanji and Ravinder Narain, for the respondent. A. V. Vishwanatha Sastri, D. N. Mukherjee and B. N. Ghosh, for the intervener. January 29, 1964. 'Me Judgment of B. P. Sinha C.J., K.Subba Rao and N. Rajagopala Ayyangar JJ., was delivered by Subba Rao J. The dissenting opinion of Raghubar Dayal and Mudholkar JJ., was delivered by Mudholkar J. SUBBA RAo J. This appeal by special leave raises the question of the construction of the proviso to sub section (3) of section 34 of the Indian Income tax Act, 1922, as amended by Act 25 of 1933, hereinafter called the Act. The facts lie in a small compass and they are as follows: The respondent is a firm carrying on business in different lines. It was assessed to income tax under section 23 (4) of the Act for the assessment year 1949 50 on the ground that the notice issued under sub sections (2) and (4) of section 22 of the Act had not been complied with. On September 27, 1955, the said assessment was cancelled under section 27 of the Act. But before the said cancellation, it was found that an interest income of Rs. 88,737 in the shape of U.P. Encumbered Estates Act Bonds received by him in discharge of 415 the debts due from third parties had escaped assessment as the assessee failed to disclose the same. The Income tax Officer issued a notice under section 34 (1) (a) of the Act for the assessment year 1949 50 on the ground that the said sum of Rs. 88,737 had escaped assessment in the said assessment year. After the assessment of that year was set aside under section 27 of the Act, the Income tax Officer, ignoring the notice issued by him under section 34 (1)(a) of the Act, included that amount in the fresh assessment made by him. The assessee preferred an appeal against that order and that was disposed of by the Appellate Assistant Commissioner on December 4, 1957. The Appellate Assistant Commissioner in his order held that the bonds were received by the assessee in the previous accounting year and, therefore, directed that the sum representing interest on the bonds should be, deleted from the assessment for the year ending 1949 50 and included in the assessment for the year ending 1948 49. pursuant to the direction given by the Appellate Assistant Commissioner the Income tax Officer initiated proceedings under section 34(1) of the Act in respect of the assessment year 1948 49. The notice issued under that section was served on the respondent on December 5, 1957. The assessee filed a petition under article 226 of the Constitution in the High Court of Judicature at Allahabad for quashing the said proceedings, mainly on the ground that the proceedings were initiated beyond the time prescribed by section 34 of the Act. The High Court accepted the contention and quashed the proceedings initiated by the Income tax Officer. Hence the appeal. The proceedings would be in time, if the second proviso to section 34(3) of the Act could be invoked. The question, therefore, is what is the true meaning of the terms of the second proviso to section 34(3) of the Act,. It reads: "Provided further that nothing in this section limiting the time within which any action may be taken, or any order, assessment or re assessment may be made, shall apply to a re assessment made under section 27 or to an assessment or re assessment made on the assessee or any person in consequence of or to give effect to any 416 finding or direction contained in an order under section 31, section 33, section 33A, section 33B. section 66 or section 66A." Prima facie this proviso lifts the ban of limitation imposed by the other provisions of the section in the matter of taking an action in respect of or making an order of assessment or re assessment falling within the scope of the said proviso. The scope of the proviso is confined to an assessment or re assessment made on the assessee or any person in consequence of an order to give effect to any finding or direction contained in any order made under section 31 i.e., in an appeal before the Assistant Appellate Commissioner, under section 33 i.e., in an appeal before the Tribunal, under section 33A i.e., in a revision before the Commissioner, under section 33B i.e. in a revision before the Commissioner against an order of the Income tax Officer, and under sections 66 and 66A i.e., in a reference to the High Court and appeal against the High Court 's order to the Supreme Court. Learned counsel for the appellant contends that the scope of the proviso is only confined to the assessment of the year that is the subject matter of the appeal or the revision, as the case may be. Learned counsel for the Department argues that the comprehensive phraseology used in the proviso takes in its broad sweep any finding given by the appropriate authority necessary for the disposal of the appeal or the revision, as the case may be, and to any direction given by the said authority to effectuate its finding and that the said finding or direction may be in respect of any year or any person. As the phraseology used in the proviso is not clear or unambiguous, the question raised cannot be satisfactorily resolved without having a precise appreciation of a brief history of section 34 of the Act culminating in the enactment of the proviso in the present form. Under section 3 of the Act, income tax for any year shall be charged in respect of the total income of the previous year of every assessee. Notice under section 22 calling for return of income is the first step in the assessment proceedings. Two types of notices are mentioned in that section, namely, (i) the public notice and (ii) the individual notice. 'Me public notice shall be, issued on or before the 1st May of each year and the individual notice may be issued at any 417 time in the course of the assessment year. Income tax proceedings, therefore, for a particular assessment year have to be initiated in the course of that year. But there may be cases of escaped assessment or under assessment. Section 34 empowers the Income tax Officer to take proceedings under that section both in respect of concealed income and also in bona fide cases where the income has escaped assessment or full assessment. Section 34(1) (a) provides for the initiation of assessment proceedings in respect of concealed income and section 34(1) (b) for other escaped income, Section 34(1) has been amended from time to time. Under the said section, as it originally stood, the Income tax Officer was empowered to initiate proceedings at any time within one year of the end of the year in respect whereof the income escaped assessment. By Act 7 of 1939 that section was amended and eight years ' limitation from the end of the year was prescribed in respect of concealed income and a limitation of four years for other escaped income. Under Act 48 of 1948, the same periods of limitation were retained, but certain conditions were imposed. By the Finance Act of 1956, it was enacted that in the case of concealed income the proceedings could be initiated at any time within 4 years of the end of the relevant assessment year. Though no period of limitation was prescribed in respect of concealed income, three conditions were imposed, namely, (i) that an Income tax Officer shall not issue a notice for any year prior to the year ending on March 31, 1941, (ii) that if the escaped income was less than rupees one lakh, he shall not issue a notice if 8 years have elapsed after the expiry of the relevant assessment year, and (iii) that unless he has recorded his reasons and unless the Central Board of Revenue in any case falling under cl. (2) of the proviso and in any other case, the Commissioner, is satisfied that for such reasons as recorded it is a fit case for the issue of a notice. Before 1939, there was no period of limitation for com pleting the assessment once it had been initiated within the prescribed period of limitation. But Act 7 of 1939 for the first time introduced cl. (2) in section 34 whereunder "no order of assessment under section 23 or of assessment or re assessment under sub section (1) of this section shall be made after the 134 159 section C. 27 418 expiry, in any case to which (c) of sub section (1) of sec tion 28 applies, of eight years, and in any other case, of four years from the end of the year in which the income, profits or gains were first assessable". Section 28 (1) (c) dealt with a case of an assessee concealing the particulars of his income or deliberately furnishing inaccurate particulars of his income. Act 23 of 1941 inserted a proviso in section 34(2) providing that "nothing contained in this sub section shall apply to a re assessment made in pursuance of an order under section 31, section 33, section 66 or section 66 A", i.e., provisions relating to appeals, revisions and references: that is to say, if the assessment made by the Income tax Officer was set aside and a re assessment was directed to be made, the said periods of limitation would not apply to such reassessment. Act 48 of 1948 introduced sub section (3) in section 34 in substitution of sub section (2) thereof. Under that sub section the period of limitation prescribed by sub section (2) was retained, and the proviso to section 34(2) before the amendment was made the second. proviso, with some modifications, to the amended sub section While the scope of the previous proviso was confined only to the completion of re assessment proceedings, the scope of the amended proviso is much wider in that it exempts the subject matter of that proviso from the operation, of the period of limitation prescribed by the section; that is to say, it gives full scope to the operation of the substantive part of the section unhampered by the periods of limitation prescribed by sub sections (1), (2) and (3) of section 34 of the Act. While the previous proviso lifted the ban only in regard to the period of limitation prescribed for the completion of the assessment, the new proviso lifted the ban even in respect of the initiation of proceedings under section 34 (1) of the Act. It follows that if a matter fell within the terms of the proviso, there would be no period of limitation for initiating an action or making an assessment or reassessment in respect of that matter. Briefly stated, the said proviso is a proviso to the entire section 34. We shall consider the scope of the proviso at a later stage of our judgment. Then came the Finance Act of 1956. It amended section 34 (1) and introduced a proviso to the said sub section, which we have noticed earlier. That proviso, while removing the period of limitation in respect of concealed income, imposed 419 some conditions in respect thereof, but the four year period of limitation in respect of other escaped income was retained. We are not concerned in this appeal with the subsequent amendments. The history of the section gives us the following background to the proviso under consideration. Broadly stated, under section 34, as it existed in 1956, (i) there was no time limit for initiating proceedings under section 34(1) in respect of con cealed income, but such initiation could be made only sub ject to the conditions laid down in the proviso to section 34(i); (ii) in the case of other escaped income, the proceedings could not be initiated after the expiry of 4 years from the end of the relevant assessment year; (iii) the assessment proceedings once commenced shall be completed within the period of limitation prescribed under section 34(3); and (iv) to a case to which the proviso to section 34(3) applies, there is no period of limitation either for initiating the proceedings under section 34 or for completing the assessment commenced either under section 23 or under section 34(1). With this background let us give a closer look to the relevant terms of the proviso. The first part of the proviso released the operation of the proviso from the restriction imposed by section 34 only in respect of the time limit within which any action may be taken or any order of assessment or re assessment may by made. It means that the proviso continues to be subject to the other restrictions imposed under the section and it cannot override the said provisions in that regard. Under the proviso, the period of limitation will not apply to a re assessment made under section 27 or to an assessment or re assessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33B, section 66 or section 66A of the Act. It was not contended, nor was it possible to contend, that by reason of the reference to the said provisions the powers and jurisdiction conferred on the respective. authorities, tribunals or courts referred to therein were enlarged or modified by a ' reference in the proviso or that the proviso could be read or construed as amending those sections conferring on those bodies wider or different powers or jurisdiction. Learned counsel for the department expressly disclaimed any such submission. Therefore, the scope of the proviso cannot ordinarily exceed the scope of the jurisdiction conferred on an authority under the said provisions. It is not, and cannot be, disputed that under the Income Lax Act, year is the unit of assessment. The Judicial Committee in Commissioner of Income tax vs section M. Chitnavis(1) pointed out : "For the purpose of computing the yearly profits and gains, each year is a separate self contained period, time, in regard to which profits earned or losses sustained before its commencement are irrelevant." This Court in Sir Kikabhai Premchand vs Commissioner of Income tax (Central), Bombay(1) accepted this legal position when it said: ". . for income tax purposes, each year is a self contained accounting period and we can only take into consideration income, profits and gains made in that year and are not concerned with potential profits which may be made in. another year any more than we are with losses which may occur in the future. " Indeed, the decision of an Income tax Officer given in a particular year does not operate as res judicata in the matter of assessment of the subsequent years. The jurisdiction of the tribunals in the hierarchy created by the Act is no higher than that of the Income tax Officer. It is also confined to the year of assessment. Under section 27 of the Act, the Incometax Officer cancels the best judgment assessments made by him if the assessee shows that he was prevented by sufficient cause from making the returns under section 22 of the Act. Section 31 prescribes the mode of disposal by an Assistant Appellate Commissioner of an appeal preferred to him: the appeal before him is certainly confined to an assessment year; after hearing the appeal, he can either confirm, reduce, enhance or annul the assessment; he can set aside the (1)(1932) L. R. 59 I. A. 290. 297. (2) , 222. 421 assessment and direct the Income tax Officer to make a fresh assessment. The various sub sections of that section describe in detail the orders or directions that can be made or issued by him in respect of various matters; but, no power is conferred on him to make an order or issue directions in respect of an assessment of a year which was not the subject matter of the appeal. It may, therefore, be held on a construction of the provisions of section 31, that the jurisdiction of the Appellate Assistant Commissioner is strictly confined to the assessment orders of a particular year under appeal. Section 33, inter alia, deals with an appeal to the Tribunal against the order of the Appellate Assistant Commissioner under section 31; and section 33B confers power of revision on the Commissioner against an order of the Income tax Officer. The jurisdiction of the Appellate Tribunal or the Revisional Tribunal, as the provisions indicate, is confined only to the subject matter which is under appeal or revision. The jurisdiction of the High Court or the Supreme Court under section 66 or section 66B, as the case may be, is far more limited and it is confined only to the questions referred to them. Obviously the questions referred by the Tribunal cannot exceed its jurisdiction. It is, therefore, manifest that assessment or re assessmentmade under the said sections or pursuant to the orders ordirections made thereunder must necessarily relate to the assessment of the year under review, revision or appeal, as the case may be. It is important to remember that the proviso does not confer any fresh power upon the Income tax Officer to make assessments in respect of escaped incomes without any time limit. It only lifts the ban of limitation in respect of certain assessments made under certain provisions of the Act and the lifting of the ban cannot be so construed as to increase the jurisdiction of the Tribunals under the relevant sections. The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing tribunal within the scope of its jurisdiction. If the intention was to remove the period of limitation in respect of any assessment against any person, the proviso would not have been added as a proviso to sub section (3) of section 34, which deals with completion of an assessment, but would have been added to sub section (1) thereof. 422 Now, let us scrutinize the expressions on which strong reliance is placed for the contrary conclusion. The words relied upon are "section limiting the time", ",any person", "in consequence of or to give effect to any finding or direction". Pointing out that before the amendment the word "subsection was in the proviso but it was replaced by the expression "section", it is contended that this particular amendment will be otiose if it is confined to the assessment year under appeal, for it is said that under no circumstances the Income tax Officer would have to initiate proceedings for the said year pursuant to an order made by an Appellate Assistant Commissioner. This contention is obviously untenable. The Appellate Assistant Commissioner or the Appellate Tribunal may set aside the notice itself for one reason or other and in that event the Income tax Officer may have to initiate the proceedings once again in which case section 34(1) will be attracted. The expression "finding or direction", the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or directions which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them in appeal. What does the expression "finding" in the proviso to sub section (3) of section 34 of the Act mean? "Finding" has not been defined in the Income tax Act. Order XX, r. 5 of the Code of Civil Procedure reads: "In suits in which issues have been framed, the Court shall state its finding or decision, with the reasons therefor, upon each separate issue, unless the finding upon any one or more of the issues is sufficient for the decision of the suit." Under this Order, a "finding" is, therefore, a decision on an issue framed in a suit. The second part of the rule shows that such a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. That is to say, the finding shall be one which is necessary for the disposal of the suit. The scope of the meaning of the expression "finding" is considered by a Division Bench of the Allahabad High Court in 423 Pt. Hazari Lal vs Income tax Officer, Kanpur(1) There, the learned Judges pointed out: "The word "finding ', interpreted in the sense indicated by us above, will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the, final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing. " We agree with this definition of "finding". But a Full Bench of the same High Court in Lakshman Prakash vs Commissioner of Income tax, U.P. (2) construed the word "finding" in a rather comprehensive way. Desai, C.J., speaking for the Court, observed: "A finding is nothing but what one finds or decides and a decision on a question even though not absolutely necessary or not called for is a finding. " If that be the correct meaning, any finding on an irrelevant or extraneous matter would be a finding. That certainly cannot be the intention of the Legislature. The Madras High Court also in A. section Khader Ismail vs Income tax Officer, Salem(3) gave a very wide interpretation to that word, though it did not go so far as the Full Bench of the Allaha bad High Court. Ramachandra Iyer J., as he then was, speaking for the Court, observed that the word "finding" in the proviso must be given a wide significance so as to include not only findings necessary for the disposal of the appeal but also findings which were incidental to it. With respect, this interpretation also is inconsistent with the well known meaning of that expression in the legal terminology. Indeed, learned counsel for the respondent himself will not go so far, for he concedes that the expression "finding" cannot be (1) (196O) , 272 (2) (1963) 48 I. T. R. 705, 718. (3) 424 any incidental finding, but says that it must be a conclusion on a material question necessary for the disposal of the appeal, though it need not necessarily conclude the appeal. This concession does not materially differ from the definition we have given, but the difference lies in the application of that definition to the finding given in the present case. A "finding", therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is 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 is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression "direction" cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. Under that section he can give directions, inter alia, under section 31 (3) (b), (c) or (e) or section 31 (4). The expression "directions" in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the ex pression "finding" as well as the expression "direction" can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is, empowered to give under the sections mentioned therein. The words "in consequence of or to give effect to" do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions. The words "any person ', it is said, conclude the matter in favour of the Department. The expression "any person"in its widest connotation may take in any person whether connected or not with the assessee, whose income for any 425 year has escaped assessment; but this construction cannot be accepted, for the said expression is necessarily Circumscribed by the scope of the subject matter of the appeal or revision, as the case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assesment of the year under appeal or revision. If so construed, we must turn to section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said assessment year. A combined eading of section 30(1) and section 31(3) of the Act indicates the cases where persons other than the appealing assessees might be affected by orders passed by the Appellate Commissioner. Modification or setting aside of assessment made on a firm, joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu undivided family or the individual, as the case may be. lit such cases though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessments on the former. The said instances are only illustrative. It is not necessary to pursue the matter further. We would, therefore, hold that the expression "any person" in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessment of the year under appeal. We shall now briefly touch upon the conflict of decisions on the question. The Full Bench of the Allahabad ' High Court in Lakshman Prakash 's case(1) overruled the decision of the Division Bench in Pt. Hazari Lal 's case (2). A Division Bench of the Madras High Court consisting of Rajagopalan and Balakrishna Ayyar JJ., in Simrathmull vs Additional Income tax Officer, Ootacamund(3), took the same view as the Full Bench of the Allahabad High Court in Lakshman Prakash 's case(4). But a Division Bench of the Calcutta High Court, consisting of Bose C.J., and Mookerjee J., in Brindaban Chandra Basak vs Income tax Officer(4), though it had not finally expressed any opinion (1) , 718. (2) , 272. (3) (4) 426 on that, was inclined to accept the view expressed by the Division Bench of the Allahabad High Court in Pt. Hazari Lal 's case(1). We have gone through the decisions carefully. For the reasons given by us, we agree with the view expressed by the Division Bench of the Allahabad High Court in Pt. Hazari Lal 's case(2) on the interpretation of the proviso to sub section (3) of section 34 of the Act. In the result, we hold that the said provision would not save the time limit prescribed under sub s ' (1) of section 34 of the Act in respect of an escaped assessment of a year other than that which is the subject matter of the appeal or the revision, as the case may be. It follows that the notice under section 34(1) (a) of the Act issued in the present case was clearly barred by limitation. In this view no other question arises for our consideration. In the result, the appeal fails and is dismissed with costs. MUDHOLKAR J. This is an appeal by special leave from the judgment of the Allahabad High Court in the writ petition under article 226 of the Constitution quashing a notice under section 34(1) of the Indian Income tax Act, 1922 issued by the appellant, Income tax Officer, A Ward Sitapur on December 5, 1957 against respondent No. 4. The relevant facts are briefly these: For the assessment year 1949 50, correspondiria to Samvat year 2005, the appellant made an ex parte assessment under section 23(4) of the Act on November 13, 1953 which he later set aside under section 27 of the Act. Before that he had issued a notice to the respondent firm under section 314(1) (a) of the Act in respect of the same assessment year on the ground that a sum of Rs. 88,737 representing interest alleged to have been earned by the firm during that year had escaped assessment in the assessment made under section 23(14). After, however, fresh proceedings were taken under section 23 (3) by the appellant consequent upon his order under section 27, he proceeded to include in the assessment a sum of Rs. 88,737 which was alleged to have escaped assessment in the notice earlier issued under section 34(1) (a) and made an assessment (1) (1963)48I.T.R.705,718. 427 order on January 31, 1957. Against this order the respon dent preferred an appeal before the Appellate Assistant Commissioner in which he urged two main grounds and the one accepted by the Appellate Assistant Commissioner was that the aforesaid amount of interest was received by the firm in the accounting period of the previous assessment year and not in that of the assessment year 1949 50. Upon this view, the Appellate Assistant Commissioner reduced the assessment and observed as follows in his order : "I, therefore, hold that the amount in dispute should be deleted from the assessment for 1949 50 and that, instead, the Income tax Officer should take steps to assess the wnount for the assessment year 1948 49." Treating this as a direction or finding of the Appellate Authority, the appellant issued the impugned notice dated December 5, 1957 under section 34(1) (a). The respondent immediately moved the High Court for quashing the aforesaid notice. The High Court quashed the notice on the ground that it was issued by the appellant beyond the ordinary period of limitation, overruling the appellant 's contention that no period of limitation governed the notice inas much as the second proviso to section 34(3) of the Act was attracted to the facts of the case. The High Court in doing so purported to follow its own decision in Pt. Hazari Lal vs The Income tax Officer, Disti. II, Kanpur(1). Briefly stated, the view taken by the High Court is that the only direction which the Appellate Assistant Commissioner can competently give is one which is covered by section 31 of the Act and that since the appeal before him was confined to a particular assessment year, the direction must also be necessarily limited to a matter falling within that year. The High Court further held that if the direction be treated as based on a finding recorded by the Appellate Assistant Commissioner, that finding will have to be disregarded when applying the proviso. The correctness of the view taken by the High Court is challenged before us on behalf of the appellant. (1) Civil Misc. 2227 of 1956. 428 The relevant part of section 34(3) and the second proviso thereto run thus: "No order of assessment or reassessment, other than an order of assessment under section 23 to which clause (c) of sub section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of subsection (1) or sub section (1A) of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable: Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made shall apply to a reassessment made under section 27 or to an assessment or reassessment made on the assessee or any per son in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A." This is how the provision stands as from April 1, 1956 and it is not disputed before us that it is the amended provision which would apply to the present case. What is, however, contended on behalf of the respondent is that the only issue before an Income tax Officer in every case being the assessment for a particular year and no other year, the direction or finding contemplated by the second proviso which the Appellate Authority could make must necessarily be limited to that year alone. The alternative contention is that if the second proviso is so construed as to permit of a direction or finding being made with respect to any other year, it is ultra vires being violative of article 14 of the Constitution. It was further contended that since the amount in this case is below one lakh of rupees, the second proviso will not apply. As regards the last point we may advert to our judgment delivered today in K. C. Thomas, First Income tax Officer, Bombay vs Vasant Hiralal Shah(1) in which we have (1) ; 429 negatived a similar contention. For the reasons given there, we reject the argument of learned counsel for the respondent. Coming to the first contention of the respondent, it is no doubt true that the whole scheme of the Income tax Act is to confine the assessment pursuant to the notice given under section 22 to a particular year and particular year alone and in the proceeding before him he is bound to confine himself to the income of that year. If income in previous years has escaped assessment, he has no power to bring it to assessment along with the income of a subsequent year. The only power which he has for bringing such income to assessment is to resort to the provisions of section 34(1) and issue a separate notice with respect to it to the assessee and the Appellate Assistant Commissioner of Income tax hear ing an appeal from an order of assessment made by the Income tax Officer is in no better position in this matter than the Income tax Officer. All that is perfectly true. But the question which we have to consider is whether the wide language employed by the legislature in enacting the second proviso should not be given its natural meaning. This proviso removes the bar of limitation enacted by section 34(1) and its first two provisos not only with respect to the assessee but with respect to "any person" in certain circumstances. No doubt, this Court has recently held in section C. Prashar & Anr. vs Vasantsen Dwarkadas & ors.(1) that the proviso in so far as it removes the bar of limitation with respect to persons other than the assessee, is invalid as it infringes the provisions of article 14 of the Constitution. That, however, is a question apart. What we have to consider is the legislative intent, and for ascertaining it, it is legitimate to look also at that part of the enactment which has been held to be invalid. By permitting the Appellate Authority to make a finding or give a direction with respect to a person other than the assessee the Legislature has made it abundantly clear that for bringing escaped income to assessment the bar ,of limitation would not apply provided there is a finding or direction of the Appellate Authority that a particular item ,of income had escaped assessment and may, therefore, be brought to assessment. Under the operative portion of section 34(1), the Income tax Officer is empowered to give notice (1) [1964] 1 S.C.R. 29. 430 to an assessee in respect of escaped assessment. He can issue such notice under cl. (a) thereof where income has escaped assessment due to any conduct on the part of the assessee and in such a case he can issue a notice at any time. Certain restrictions, however, have been placed upon his power by the first proviso to sub section (1) of section 34, one of which is the period of limitation of eight years with respect to income of less than a lakh of rupees. The second proviso to sub section (3) is a proviso to the whole of section 34 and would consequently apply to a case falling under section 34(1) (a). The restrictions placed by the enacting provisions of section 34(3) would not, as made clear in the second proviso, apply to such a case. Thus, the proviso in terms says that when a notice is issued under section 34(1) (a), no question of limitation would arise when such notice is issued in pursuance of a direction or finding of an appellate authority. Since the proceeding in pursuance of a notice under section 34 is necessarily independent of the assessment proceedings under section 22 with respect to a particular year, the proviso in question need not be so interpreted as to be limited to a direction made by the Appellate Authority while dealing with an appeal for that particular year. The fact that certain income has escaped assessment may come to the notice of an Appellate Authority in any case and it clearly appears to be the intention of the Legislature to require an Income tax Officer to take cognizance of it in the circumstances stated in the proviso. It is, however, contended that the power of the Appellate Authority to make a direction or finding in any appeal be fore it is confined to matters specified in section 31 and that upon a proper construction of that provision, a direction or finding with respect to income of any particular year other than the one with respect to which there is an appeal before it, cannot be competently made by the Appellate Authority. In support of this contention reliance is placed up on the decisions in Kamlapat Motilal vs Income tax Officer and anr.(1), Hiralal Amritlal Shah vs K. C. Thomas, Income tax Officer, Bombay (2) ; Pt. Hazari Lal vs Income tax Officer, Dist. II Kanpur(3); Brindaban Chandra Basak vs Income tax (1) (2) (3) (196O) 431 Officer(1). In the first of these cases the learned judges have observed : "In our opinion the powers of the Appellate Tribunal under section 3 3 (4) are limited to the passing of such order as it thinks fit to make in the proceedings which are then before it on appeal, and in our judgment it has no power under this section to pass an order or give directions with reference to the proceedings of an earlier year which are concluded. " We may point out that section 33 (4) only refers to a finding or direction made by an Appellate Authority and does not itself confer any power on an Appellate Authority to make a finding or direction. Indeed, section 34 deals with entirely a different aspect, that of empowering an Income tax Officer to bring to assessment escaped income, and ha(; no concern with the powers of an Appellate Authority. The provisions which deals with the powers of an Appellate Authority is section 31 and it is with that provision that we must concern ourselves primarily. The next case is not strictly relevant to this point. But the third one which is again a decision of the Allahabad High Court has proceeded to construe section 31 of the Act and we, therefore, have to consider it. After observing that the scope of the orders which can be passed by the Appellate Authority under section 31 the learned Judges have observed: "The very fact that the Appellate Assistant Commissioner of Income tax, when making an order under section 31, is dealing with an appeal filed by an assessee in respect of an assessment order indicates the scope of his jurisdiction to give findings and to make consequential orders: The various orders, which an Appellate Assistant Commissioner of Income tax can make, are detailed in section 31(3) though there is no detailed provision about the findings which he can record. It appears to us, however, that, (1) 432 from the very nature of the jurisdiction which an Appellate Assistant Commissioner of Incometax exercises, it must follow that his power of recording findings is limited to matters which he is called upon to decide when passing an order in appeal in conformity with the details laid down in section 31(3). Any order passed by him, which is beyond the scope of section 31(3), would be an order without jurisdiction and, similarly, any finding recorded by him, which is not necessary for the purpose of making an order covered by section 31(3), would be a finding without jurisdiction. Further ' when applying the second proviso to section 34(3) of the Income tax Act, the Income tax Officer is only competent to take into account orders which are in conformity with the provisions of section 31(3) and findings which are necessary for passing those orders. Orders, which are outside the scope of section 31(3) or findings which are not at all necessary for making such orders, cannot be taken into account by the Income tax Officer for the purpose of relying on the second proviso to section 34(3) which we are now considering." (p. 271) The learned Judges have proceeded to hold that the word "finding" must be given the same meaning as that in the Code of Civil Procedure, that is. a decision of the Court. In other words, they seem to hold that a finding means only the final conclusion in the case. In support of this conclusion they placed reliance upon section C. Prashar vs Vasantsen Dwarkadas(1). Section 31(3) of the Act confers certain express powers upon the Appellate Authority, one of which is to 'confirm. reduce, enhance or annul the assessment. This power can be exercised only after the Appellate Authority arrives at some conclusions on facts. Thus, if an assessee wants to be exonerated from tax with respect to a particular item of (1) 433 income and sets out the grounds on which he bases his claim for exoneration the Appellate Authority has to consider them and arrive at its findings with regard to them before it can reduce or annul the assessment. It would follow, therefore, that the power to confirm, reduce, enhance or annul an assessment is implicit in the power of giving findings on the grounds on which a claim is made for one or the other of these results by the department or the assesee. No express mention of such power was required in section 31(3). When an appeal is before an Appellate Authority the whole matter is at large before it and, therefore, when a, specific case is put before it by an assessee it has both the power as well as the duty to give its finding thereon. The ground given by the assessee for claiming a reduction or annulment of assessment may well be that the income upon which he has been assessed was not earned in the accounting period of the year to which the assessment pertains but in respect of a specified earlier or later year. The Appellate Authority is entitled to go into the whole question and come to a finding one way 'or the other, whether the income was earned in the year in which it was alleged by the assessee to have been earned or in the year with respect to which he has been assessed by the Income tax Officer. To give a finding on this question would be obligatory upon the Appellate Authority and his duty to give a finding must necessarily be referable to the provisions of section 31(3). We cannot accept the view of the Allahabad High Court that the word "finding" occurring in section 34(3) is susceptible of only one meaning, and that is that ascertainable from the Code of Civil Procedure. The finding of a tribunal is its conclusion on a point agitated before it and for a conclusion to amount to a finding it is not necessary that it should be the final and ultimate conclusion. We are, therefore, unable to accept the view taken by the Allahabad High Court. The last mentioned case does not decide the matter finally. But there the learned Judges have expressed a preference for the view taken by the Allahabad High Court as against that taken by the Madras High Court in K. Simrathmull vs Additional Income tax Officer, Ootacamund(1). In that case a similar argument to that urged before us and before the (1)(1959) 134 159 section C.28. 434 Allahabad High Court was advanced. Dealing with it the learned Judges have observed: "To support this argument no authority was cited and it appear to us to be completely untenable. When an assessment is made and either the Department or the assessee appeals, the whole matter would be before the Assistant Commissioner, and, no express provision would be necessary to enable him to give directions in respect of a matter already before him. This would apply also to the Commissioner and the Income tax Appellate Tribunal." (p. 47) They then explained the reason for an express provision like the one contained in section 34(3) by saying that it was necessary to have such provision so as to enable the Income tax Officer to take action in pursuance of a finding recorded or direction given by an Apellate Authority. Finally they observed: "To construe the proviso in the manner in which Mr. Subbarya Aiyar invited us to do would be to make that proviso otiose. " With these observations we concur. This decision has been followed by the Bombay High Court in, General Construction and Supply Co., vs Income tax Officer (8th) C. Ward, Bombay(1). The same High Court has reaffirmed the view taken in Simrathmull 's case(1) in A. section Khader Ismail vs Income tax Officer, Salem(2) and held that the word "finding" in the proviso to section 34(3) must be given a wide significance so as to include not only findings necessary for the disposal of the appeal but also findings which are incidental to it and would include its conclusion as to whether the income in question in the appeal was not received during the, year to which the appeal relates. Upon this view the High Court held that if in pursuance of such a finding, the Income tax Officer proceeds to investigate afresh as to in which year the income was received, the action of the Income ,ax Officer (1) (2) (3) 435 would still be the result of or the logical consequence of the finding arrived at for the purpose of the disposal of the appeal and the proviso to section 34(3) would apply to such a case. The view taken by the High Court is in our judgment correct. Thus in our view upon a construction of the relevant provisions we have no doubt that the notice was not in contravention of the provisions of section 34 of the Income tax Act and could not be quashed on that ground. The question then remains whether the second proviso below section 34(3) is bad as offending article 14 of the Constitution. In support of this contention reliance is placed by Mr. Bishan Narain for the respondent on the decisions of this Court in Suraj Mall Mohata & Co. vs A. V. Visvanatha Sastri & anr. (1) and section C. Prashar & anr. vs Vasantsen Dwarkadas & ors. In the first case it was held that both section 34 of the Income tax Act and sub section (4) of section 5 of the Taxation on Income (Investigation Commission) Act, 1947, deal with all persons who have similar characteristics and similar properties, that the procedure prescribed in the later Act is substantially more prejudicial and more drastic to the assessee than the procedure under the former Act and that, therefore, sub section (4) of section 5 of the former Act in so far as it affects the persons proceeded against thereunder is void as offending the provisions of article 14 of the Constitution. On the analogy of this case learned counsel contends that the second proviso to section 34(3) enabling a notice to issue only to an assessee in respect of escaped income without limit of time on the ground that an Appellate Authority has made a finding or direction in the proceeding before it makes a discrimination against such an assessee because it does not lift the bar of limitation with regard to other assessees, similarly situate, but with regard to whom no finding has been made or direction given by an Appellate Authority. No doubt, persons whose income have escaped assessment, and the fact that they have escaped assessment has not been discovered till after the lapse of eight years from the year in which they could have been assessed to tax on such (1) ; (2) [1964] I section C. R. 29. 436 income, can be placed in one class. But surely it does not follow that even in that class there can be no further classification. The legislature in enacting the particular provision has made a further or a sub classification by puttinunder one head those whose assessments have come up for scrutiny before an Appellate Authority and with respect to whose escaped assessment a judicial finding or direction is made by the Appellate Authority and under another head other assessees whose escaped income was not detected by the Appellate Authority and with respect to which no judicial finding or direction was, therefore, made by such authority. There is a real difference between the two categories of assessees. Prima facie there is reasonable basis for the sub classification and the grounds on which it is made, that is, discovery by a higher Income tax Authority and a judicial finding or direction made with respect to the fact by it. These grounds have a rational relationship with the object which was intended to be achieved by the law. that is. to detect and brine to assessment the escaped income. (See for example A. Thangal Kunju Musaliar vs M. Venkitachalam Potti & anr. (1) where a further classification of war porfiteers into those who had evaded substantial amount of income tax and those whose evasion was not of a substantial amount was upheld.) We can find nothing in the decision upon which reliance is placed which runs counter to our view. On the other hand we find ample support from the decision in Balaji vs Income. tax Officer, Special Investigation Circle (2) where it has been pointed out that the two tests of permissible classification under article 14 are (a) that the classification must be founded on an intelligible differentia and (b) that the differentia must be reasonably connected with the object of the legisla tion, and that where they are satisfied by a statute. it does not violate article 14 of the Constitution. As regards the other decision relied upon, it is sufficient to point out that the majority of the learned Judges have only struck down that part of the proviso which enables a notice to issue "to any person" on the ground that it is violative of article 14. The precise question which we have before us does not appear to have been the subject of decision in that case. We (1) ; (2) ; 437 are, therefore, unable to accept the contention of learned counsel. For the foregoing reasons we allow the appeal and quash the writ of certiorari issued by the High Court. It may be mentioned that in the absence of a stay of proceedings by the High Court the Income tax Officer has actually made an assessment in pursuance of the impugned notice. That assessment willstand unless it is modified or annulled in any proceeding permitted by law. Costs of the appeal and the petition before the High Court will be borne by the respondent. ORDER BY COURT In view of the judgment of the majority, the appeal fails and is dismissed with costs.

IN-Abs

The respondent was a firm carrying on business in different lines. It was assessed to income tax under section 23(4) of the Income tax Act, 1922 for the assessment year 1949 50 on the ground that notices issued under section 22(2) and (4) had not been complied with. Later on, that assessment 412 was cancelled. However, before the cancellation, it was found that an interest income of Rs. 88,737 in the shape of U.P. Encumbered Estates Act Bonds received by the respondent from third parties had escaped assessment as the assessee failed to disclose the same. The Income tax Officer issued a notice for the assessment year 1949 50 on the ground that a sum of Rs. 88,737 had escaped assessment in the said assessment year. After the cancellation of the assessment made under section 23(4), the Income tax officer, ignoring the notice issued by him under section 34(1)(a), included that amount in the fresh assessment made by him for the year 1949 50.The respondent appealed to the Appellate Assistant Commissioner who ordered the deletion of the sum of Rs. 88,737 from the assessment for the year 1949 50 and directed the same to be included in the assesment for the year ending 1948 49. Pursuant to the direction given, the Income tax Officer served a notice on the respondent under section 34(1). Against that notice the assessee filed a writ petition in the High Court for quashing the above mentioned proceeding on the ground that these were initiated beyond the time prescribed by a. 34. The High Court accepted the petition and quashed the notice on the ground that it was issued by the appellant beyond the ordinary period of limitation It also overruled the contention of the appellant that no period of limitation governed the notice in as much as the second proviso to section 34(3) was attracted to the facts of the case. The only direction which the Appellate Assistant Commissioner could give was one which was covered by section 31 of the Act and as the appeal before him was confined to a particular assessment year, the direction must necessarily be limited to a matter falling within that year. if the direction be treated as based on a finding recorded by Appellate Assistant Commissioner, that finding would have to be disregarded when applying the proviso. The appellant came to this Court by special leave. Held: (per B. P. Sinha, C.J., K. Subba Rao and N. Rajagopala Ayyangar JJ.). The proviso to sub section (3) of section 34 of the Indian Incometax Act, 1922 does not save the time limit prescribed under sub section (1) of section 34 in respect of an escaped assessment of a year other than that which is the subject matter of appeal or revision as the case may be and hence the notice under section 34(1)(a) issued in the present case was clearly barred by time. The jurisdiction of the High Court or the Supreme Court under section 66 or section 66(b) is a limited one and is confined only to the questions referred to them. Moreover, the questions referred by Tribunal cannot exceed its jurisdiction. Therefore the assessment or reassessment made under the said sections or Pursuant to the orders or directions made thereunder must necessarily relate to the assessment of the year under review, revision or appeal as the case may be. 'Me proviso to sub section (3) of section 34 does not confer any fresh power upon the Income tax Officer to make assessment in respect of the escaped incomes without any time limit. It only lifts the ban of limitation in respect of certain assessments made under certain provisions of the Act and the lifting of the ban cannot be so construed as to increase the jurisdiction of the tribunal Under the 413 relevant sections. The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing Tribunal within the scope of its jurisdiction. If the intention was to remove the period of limitation in respect of any assessment against any person, the proviso would not have been added as proviso to sub section (3) which deals with completion of an assessment but would have been added to sub section (1) of section 34. The word 'finding ' covers only the material questions which arise in a particular case for decision by the authority hearing the. case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing. The expression 'direction ' refers to a direction which the appellate or revisional authority is empowered to give under the law. The expression "any person" must be confined to a person intimately connected with the assessment of the year under appeal or revision. Held: per Raghubar Dayal and J. R. Mudholkar JJ. (dissenting): That the notice was not in contravention of the provisions of section 34 and hence could not be quashed on that ground. When an appeal is before an appellate authority, the whole matter is at large before it and there fore when a specific case is put before it by an assessee, it has both the power as well as the duty to give its finding thereon. The ground given by an assessee for claiming a reduction or annulment of assessment may be that the income upon which he had been assessed was not earned in the accounting period of the year to which the assessment pertained but in respect of a specified earlier or later year. The appellate authority is entitled to go into the whole question and come to a finding one way or the other. The finding of a tribunal is its conclusion on a point agitated before it and for a conclusion to amount to a finding, it is not necessary that it should be the final and ultimate conclusion. The contention of respondent that the second proviso to a. 34(3) enabling a notice to issue only to assessee in respect of escaped income without limit of time on the ground that the appellate authority has made a finding or direction in the proceeding before it makes a discrimination against such assessee because it does not lift the bar of limitation with regard to other assessees similarly situated but with regard to whom no finding has been made or direction given by appellate authority, was rejected. It was held that prima facie, there was a reasonable basis for the classification. The ground on which classification was made had a rational relationship with the object which was intended to be achieved by law, ie., to detect and bring to assessment the escaped income. Commissioner of Income tax vs section M. Chitnavis, (1932) L.R. 59 I.A. 290, Sir Kikabhai Premchand vs Commissioner of Income tax (Central), Bombay, pt. Hazart Lal vs Income tax Officer, Kanpur. Lakshman Prakash vs Commissioner of Income 414 tax, U.P., , A. section Khader Ismail vs Income tax Officer, Salem, (1963)48 I.T.R. 16, Simrathmul vs Additional Income tax Officer, Ootachamund, (1959)36 I.T.R. 41, Brindaban Chandra Basak vs Incometax Officer, , K. C. Thomas, First Income tax Officer. Bombay vs Vasant Hira Lal Shah , Prashar & Anr. V. Sasantsen Dwarkadas 49 I.T.R. (S.C.) 1, Kamlapat Hotilal vs Income tax Officer, , Hiralal Amrit Lal Shah vs K. C. Thomas, Income tax Officer, Bombay, , General Construction and Supply Co. vs Income tax Officer (8th) C Ward, Bombay, , Suraj Mal Mohata & Co. vs A. V. Visvanatha Sastri ; , A. Thangal Kunju Mudaliar vs M. Venkatachalam Potti & Anr. ; and Palaji vs Income tax Officer, Special Investigation Circle ; , referred to.

No. 137 of 1962. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. C. B. Agarwala and Naunit Lal, for the petitioner. M. C. Setalvad and C. P. Lal, for respondent No. 1. C. K. Daphtary, Attorney General, N. section Bindra and R. H. Dhebar, for respondent No. 2. M. C. Setalvad, M. section Devendra Swarup and J. P. Goyal, for respondent No. 3. I. M. Nanavati, O. C. Mathur, J. B. Dadachanji and Ravinder Narain. for Intervener No. 1. 788 Rajani Patel and 1. N. Shroff, for Intervener No. 2. February 14, 1964. The Judgment of P. B. Gajendragadkar, C.J., K. N. Wanchoo, Das Gupta and Shah JJ. was delivered by Wanchoo J. Rajagopala Ayyangar J. delivered a dissenting Opinion. WANCHOO J. This petition under article 32 of the Constitution is a sequel to the judgment of this Court in R. L. Arora vs State of U.P. (1). The petitioner is the owner of certain lands in village Nauraiya Khera, in the district of Kanpur. He got information in May 1956 that steps were being taken to acquire nine acres of his land for an industrialist in Kanpur. He therefore wrote to the Collector of Kanpur,in that connection. On June 25, 1956, however, a notification was issued under section 4 of the Land Acquisition Act, No. 1 of 1894 (hereinafter called the Act), stating that the land in dispute was required for a company for the construction of textile machinery parts factory by Lakshmi Ratan Engineering Works Limited, Kanpur. This order was followed on July 5, 1956, by a notification under section 6 of the Act, which was in similar terms. This notification also provided for the Collector to take possession of any waste or parade land forming part of the land in the Schedule to the notification immediately under the powers conferred by section 17(1) of the Act. On July 31, 1956, the Collector took possession of the land and handed it over to the company along with some constructions standing on it. In the meantime, the petitioner filed a writ petition in the High Court on July 31, 1956, praying that the notification under section 6 of July 1956 be quashed and also applied for interim stay. As however possession had already been taken on July 31. 1956, the application for interim stay became in fructuous. One of the main grounds in support of the writ petition of July 31, 1956 was that sections 38 to 42 of the Act had not been complied with. Thereafter steps were taken by the State Government to comply with the provisions of sections 38 to 42 of the Act and an agreement was entered into between the Government and the company in August 1956 and was (1) [1962] Supp. 2 S.C.R. 149. 789 published in the Government gazette on August 11, 1956. This was done without making any enquiry either under section 5 A or section 40 of the Act. Therefore on September 14, 1956 an inquiry was ordered by the Government under section 40. The inquiry was accordingly made and the inquiry officer submitted a report on October 3, 1956. This was followed by a fresh agreement between the Government and the company on December 6, 1956. On December 7, 1956, a fresh notification was issued under section 6 of the Act after the formalities provided under sections 38 to 42 had been complied with. Thereafter a fresh notice was issued under section 9 of the Act and it appears that possession was formally taken again after January 2, 1957. A fresh writ petition was filed by the petitioner before the High Court on January 29, 1957 in view of the fresh action taken by the State Government and the main ground taken in this petition was that the notification was invalid as it was not in compliance with section 40 (1) (b) of the Act read with the fifth clause of the matters to be provided in the agreement under section 41. The petitioner failed in the High Court. Thereafter he came by special leave to this Court. This Court decided on a construction of section 40 (1 ) (b) read with the fifth clause of the matters to be provided in the agreement under section 41 that these provisions had to be read together and required that the work should be directly useful to the public and that the agreement should contain a term as to how the public will have the right to use the work directly. The provision as to access to land or works for those having business with the company or the fact that the product would be useful to public was not considered sufficient to bring the acquisition for a company within the meaning of the relevant words in sections 40 and 41. The appeal therefore was allowed on December 1, 1961 and the last notification under section 6 was quashed: see R. L. Arora 's case(1). On July 20, 1962, the Land Acquisition (Amendment) Ordinance, 1962 (No. 3 of 1962) was promulgated by the President of India. By that Ordinance, sections 40 and 41 of the Act were amended and certain acquisitions of land (1) [1962] Supp. S.C.R. 149. 790 made before the date of the Ordinance were validated notwithstanding any judgment, decree or order of any court. The Ordinance was replaced by the Land Acquisition (Amendment) Act, No. 31 of 1962, (hereinafter referred to as the Amendment Act), which was made retrospective from July 20, 1962, the date on which the Ordinance was promulgated. This Act made certain amendments in sections 40 and 41 of the Act and validated certain acquisitions. The present petition challenges the validity of the amendments to sections 40 and 41 and also the validity of section 7 of the Amendment Act by which certain acquisitions made before July 20, 1962 were validated. It is therefore necessary to read the amendments made in sections 40 and 41 of the Act as well as section 7 of the Amendment Act. In section 40(1) of the Act a new clause was inserted in these terms: "(aa) that such acquisition is needed for the construction of some building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose;" Section 41 was amended to read as below: "41. If the appropriate Government is satisfied after considering the report, if any, of the Collector, under section 5A, sub section (2), or on the report of the officer making an inquiry under section 40 that the proposed acquisition is for any of the purposes referred to in clause (a) or clause (aa) or clause (b) of sub section (1) of section 40, it shall require the company to enter into an agreement with the appropriate Government providing to the satisfaction of the appropriate Government for the following matters, namely: (1) (2) (3) (4) (4A) Where the acquisition is for the construction of any building or work for a corn. 791 pany which is engaged or is taking steps for engaging itself 'in any industry or work which is for a public purpose, the time within which, and the conditions on which, the building or work shall be constructed or executed; and (5) section 7 of the Amendment Act, which validated certain acquisitions reads as follows: "Notwithstanding any judgment, decree or order of any court, every acquisition of land for a company made or purporting to have been made under Part VII of the principal Act before 20th day of July 1962, shall, insofar as such acquisition is not for any of the purposes mentioned in clause (a) or clause (b) of sub section (1) of section 40 of the principal Act, be deemed to have been made for the purpose mentioned in clause (aa) of the said sub section. and accordingly every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and shall be deemed always to have been, as valid as if the provisions of sections 40 and 41 of the principal Act, as amended by this Act, were in force at all material times when such acquisition was made or proceeding was held or order was made or agreement was entered into or action was taken. Explanation Besides these amendments which require consideration in the prese nt petition, sections 44A and 44B were also inserted in the Act providing for restriction on transfer, etc. (section 44A) and making certain provisions forbidding acquisition of land for a private company other than a government company (section 44B). It is however not necessary to set out the terms of these new sections. 792 The present petition challenges the validity of the amendments to sections 40 and 41 of the Act and also of section 7 of the Amendment Act, and the challenge is made in this way. It is submitted that the amendments made to sections 40 and 41 of the Act are ultra vires, as they contravene article 31(2) and article 19(1)(f) of the Constitution. The argu ment is that on a construction of the amendment to section 40 by which cl. (aa) has been introduced therein, it is provided that all acquisitions made for a company for construction of some building or work are permissible even though the building or work for the construction of which the acquisition is made may not be for a public purpose, as the new cl. (aa) merely requires that the company which is applying for acquisition is engaged or is taking steps for engaging itself in any industry or work, which is for a public purpose. It is urged that all that this clause requires is that the company for which the acquisition is being, made should be engaged in any industry or work which is for a public purpose and in that case it can acquire land under this clause even though the particular building or work for the construction of which land is acquired may not be for a public purpose. Therefore the new clause (ad) which permits such acquisition contravenes article 31(2) which lays down that no property shall be compulsorily acquired save for a public purpose, and also article 19(1)(f), as such acquisition would amount ;to an unreasonable restriction on the fundamental right to hold property. The validity of section 7 of the Amendment Act is attacked on the ground that it contravenes article 31(2) and article 14 of the Constitution inasmuch as it makes, acquisition for a company before July 20, 1962 as being for a public purpose even though it may not be so in fact and thus raises an irrebuttable presumption of public purpose by fiction of law and so contravenes article 31(2) which requires that there must be an actual public purpose before land can be compulsorily acquired. And it also contravenes article 14 inasmuch as it makes a discrimination in the matter of acquisitions for a company before July 20, 1962 and after July 20, 1962 insofar as the former acquisitions are validated on the basis of their being deemed to be for a public 793 purpose while the latter acquisitions are not so deemed and have to satisfy the test of public purpose. Besides the attack as to the vires of these provisions in the Amendment Act, it is urged that the rights of the petitioner cannot be affected by the validating provision in the Amendment Act as section 7 of the Amendment Act does not re open decided cases and does not revive notifications or acquisitions struck down by courts. Lastly, it is urged that the, acquisition in the present case cannot be said to be for a public purpose inasmuch as (firstly) the agreement between the company and the Government does not regulate or control the products of the company in the interest of the public, and (secondly) the petitioner 's land which was intended to be used for one public purpose is being taken away for another such purpose. We shall deal with these contentions seriatim. The first question that falls for consideration is the construction of cl. (aa) of sub section (1) of section 40 of the Act. The amendments to section 41 are consequential and will stand or fall with cl. (aa) inserted in section 40(1). It is contended on behalf of the petitioner that on a literal construction of this clause (which, it is urged, is the only possible construction) it requires that the company which is acquir ing :the land should be engaged or should be takincg steps for engaging itself in any industry or work, which is for a public purpose. If a company satisfies that requirement it can acquire land for the construction of some building or work, even though that building or work may not itself subserve such public purpose. Therefore, the argument runs that cl. (aa) permits compulsory acquisition of land for a purpose other than a public purpose and is hit by article 31(2) of the Constitution, whereunder land can be compulsorily acquired only for a public purpose. It may be conceded that on a literal construction the adjectival clause, namely, "which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose", qualifies the word "company" and not the words "building or work" for the construction of which the land is needed, So prima facie it can be argued with some force that all that cl. (aa) requires is that the company for which land, 794 is being acquired should be engaged or about to be engaged in any industry or work which is for a public purpose and it is not required that the building or work, for the construc tion of which land is acquired should be for such public purpose. In approaching the question of construction of this clause, it cannot be forgotten that the amendment was made in consequence of the decision of this Court in R. L. Arora 's case(1) and the intention of Parliament was to fill the lacuna, which, according to that decision, existed in the Act in the matter of acquisitions for a company; nor can it be forgotten that Parliament when it enacted the Amendment Act was aware of article 31(2) of the Constitution which provides that land can only be acquired compulsorily for a public purpose and not otherwise. It could not therefore be the intention of Parliament to make a provision which would be in contravention of article 31(2), though it may be admitted that if the language used is capable of only one construction and fails to carry out the intention of Parliament when making the amendment, the amendment may have to be struck down if it contravenes a constitutional provision. Further, a literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning ,of the words used in a provision of the statute. It is per missible to control the wide language used in a statute if that is possible by the setting in which the words are used and the intention of the law making body which may be apparent from the circumstances in which the particular provision came to be made. Therefore, a literal and mechanical interpretation is not the only interpretation which courts are bound to give to the words of a statute; and it may be possible to control the wide 'language in which a provision is made by taking into account what is implicit in it in view of the setting in which the provision appears and the circumstances in which it might have been enacted. (1) [1962] Supp. 2 S.C.R. 149. 795 We may in this connection, refer to a decision of this Court in 'The Mysore State Electricity Board vs The Bangalore Woollen, Cotton and Silk Mills Ltd.(1), where the wide Words used in section 76(1) of the Electricity (Supply) Act of 1948 fell for interpretation, and this Court held that even though the words used were of wide amplitude, it was implicit in the sub section that the question arising there under was one which arose under the Electricity (Supply) Act. Therefore, we have to see whether the provision in cl. (aa) bears another construction also in the setting in which it appears and in the circumstances in which it was put on the statute book and also in view of the language used in the clause. The circumstances in which the amendment came to be made have already been mentioned by us and the intention of Parliament clearly was to fill up the lacuna in the Act which became evident on the decision of this court in R. L. Arora 's case(2). Parliament must also be well aware of the provision of article 31(2) which lays down that compulsory acquisition of property can only be made for a public purpose. Clause (aa) was inserted between cl. (a) and cl. (b) of section 40(1). Section 40(1) as it stood before the amendment prohibited consent being given to acquisition of land by a company unless the acquisition was for one of the two reasons mentioned in cls. (a) and (b). Those two clauses clearly showed that acquisition for a company was for a public purpose and such acquisition could not be made for any purpose other than public purpose. Between the existing cl. (a) and cl. (b) of section 40 (1), we find cl. (aa) being inserted. We also find that cl. (aa) specifically uses the words "public purpose" and indicates that the company for which land is required should be engaged or about to be engaged in so me industry or work of a public purpose. It was only for such a company that land was to be acquired compulsorily and the acquisition was for the construction of some building or work for such a company, i.e. a company engaged or about to be engaged in so me industry or work which is for a public purpose. In this setting it seems to us reasonable to hold that the intention of Parliament could only have (1) [1963] Supp. 2 S.C.R. 127. (2) (1962) Supp. 2 S.C.R. 149. 796 been that land should be acquired for such building or work for a company as would subserve the public purpose of the company; it could not have been intended, considering the setting in which cl. (aa) was introduced, that land could be acquired for a building or work which would not subserve the public purpose of the company. In the circumstances it seems to us clear that the literal construction of the clause based on rules of grammar is not the only construction of it and it is in our opinion legitimate to hold that the public purpose of the industry of the company, which is imperative under the clause, also attaches to the building or work for the construction of which land is to be acquired. Further, acquisition is for the construction of some building or work for a company and the nature of that company is that it is engaged or is taking steps for encaging itself in any industry or work which is for a public purpose. When therefore the building or work is for such a company it seems to us that it is reasonable to hold that the nature of the building or work to be constructed takes colour from the nature of the company for which it is to be constructed. We are therefore of opinion that the literal and mechanical construction for which the petitioner contends is neither the only nor the true construction of cl. (aa) and that when cl. (aa) provides for acquisition of land needed for construction of some building or work it implicitly intends that the building or work which is to be constructed must be such as to subserve the public purpose of the industry or work in which the company is engaged or is about to be engaged. In short, the words "building or work" used in cl. (aa) take their colour from the adjectival clause which governs the company for which the building or work is being constructed and acquisition under this clause can only be made where the company is engaged or is taking steps to engage itself in any industry or work which is for a public purpose, and the building or work which the company is intending to construct is of the same nature, namely, that it is a building or work which is meant to subserve the public purpose of the industry or work for which it is being constructed. It is only in these cases where the company is engaged in an industry or work of that kind and where the building or work is also constructed for a purpose of 797 that kind, which is a public purpose, that acquisition can be made under cl. As we read the clause we are of opinion that the public purpose of the company for which acquisition is to be made cannot be divorced from the purpose of the building or work and it is not open for such a company to acquire land under cl. (aa) for a building or work which will not subserve the public purpose of the company. We are therefore of opinion that in the setting in which cl, (aa) appears and in the circumstances in which it came to be enacted, a literal and mechanical construction for which the petitioner contends is not the only construction of this clause and that there is another construction which in our opinion is a better construction, and which is that the public purpose of the company is also implicit in the purpose of the building or work which is to be constructed for the company and it is only for such work or building which subserves the public purpose of the company that acquisition under cl. (aa) can be made. Thus there are two possible constructions of this clause, one a mere mechanical and literal construction based on rules of grammar and the other which emerges from the setting in which the clause appears and the circumstances in which it came to be enacted and also from the words used therein, namely, acquisition being for a company which has a public purpose behind it, and therefore the building or work which is to be constructed and for which land is required must also have the same public purpose behind it, that animates the company making the construction. We are therefore clearly of opinion that two constructions are possible of this clause of which the second construction which is other than literal is the better one. It is well settled that if certain provisions of law construed in one way will be consistent with the Constitution, and if another interpreta tion would render them unconstitutional, the Court would lean in favour of the former construction: [see Kedar Nath Singh vs State of Bihar(1)]. We are therefore of opinion that cl. (aa) does not permit acquisition of land for Construction of some building or work for a company ,engaged or to be engaged in an industry or work, which (1) [1962] Supp. 2 S.C.R. 769 798 is for a public purpose unless the building or work for which the land is acquired also subserves the public purpose of the industry or work in which the company is engaged. This is in our opinion the better construction of cl. (aa) taking into account the setting in which it appears and the circumstances in which it came to be enacted and the words used therein. If that is the true construction of cl. (aa) it cannot be said to contravene article 31(2), for the public purpose required therein is present where land is required for the construction of a building or work which must subserve the public purpose of the industry or work in which a company is engaged or is about to be engaged. Nor can it be said that the provision is hit by article 19 (1 ) (f ), for it would in our opinion be a reasonable restriction on the right to hold property. We hold therefore that the clause so interpreted is not unconstitutional. We have already said that the amendments in section 41 are only consequential to the insertion of cl. (aa) in section 40(1) and would therefore be equally valid and constitutional. We now come to the constitutionality of section 7 of the Amendment Act, which is attacked on the ground that it contravenes article 31(2) and article 14 of the Constitution. Let us therefore see what exactly section 7 validates and under what conditions. It first provides that the acquisition to be validated must have been made before July 20, 1962. Secondly it provides where such acquisition is not for any of the purposes mentioned in cl. (a) or cl. (b) of section 40(1) of the Act, it shall be deemed to be for the purpose mentioned in cl. (aa) introduced by the Amendment Act. Thirdly it provides that every such acquisition shall be, and shall be deemed always to have been as valid as if the provisions of sections 40 and 41 of the Act, as amended by the Amendment Act, were in force at all material times when such acquisition was made or proceeding was held or order was made or agreement was entered into or action was taken. Lastly, it provides that such acquisition shall be valid notwithstanding any judgment, decree or order of any court. Terefore before section 7 can validate an acquisition made before July 20, 1962, it must first be shown that the acquisition is complete and the land acquired has vested in Government. This 799 means that the land acquired has vested in Government either under section 16 or section 17(1) of the Act. Thus section 7 of the Amendment Act validates such acquisitions in which property has vested absolutely in Government either under section 16 or section 17 (1). Secondly section 7 of the Amendment Act provides that where acquisition has been made for a company before July 20, 1962 or purported to have been made under cl. (a) or cl. (b) of section 40(1) and those clauses do not apply in view of the interpretation put thereon in R. L. Arora 's case(1), it shall be deemed that the acquisition was for the purpose mentioned in cl. (aa) as inserted in section 40(1) of the Act by the Amendment Act. Thirdly section 7 of the Amendment Act provides that every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and shall be deemed always to have been, as valid as if the provisions of sections 40 and 41 of the Act as amended by the Amendment Act were in force at all material times when any action was taken for such acquisition. Finally, this validity is given to such acquisitions and to all actions taken in connection therewith notwithstanding any judgment, decree or order of any court. This is what section 7 of the Amendment Act provides. The attack on it on the basis of article 31(2) is that it makes an irrebuttable presumption that the acquisition was for a public purpose, though it may not be actually so and there fore contravenes article 31(2) inasmuch as the result of this irrebuttable presumption is that acquisition which may not have been for a public purpose, is validated. We do not think that there is any force in this contention in view of the interpretation we have given to cl. (aa) introduced in section 40 (1). The first fiction in section 7 is that it shall be presumed that acquisitions before July 20, 1962, if they do not fall within cl. (a) or cl. (b) of section 40(1), shall be deemed to fall within cl. That means that building or work for which acquisition was made was required for a public purpose of the kind indicated in cl. It does not however follow from this that if the purpose was not of the kind indicated in cl. (aa) it will still be presumed that the acquisition was for the purpose mentioned in cl. All (1) (19521 Supp. 2 S.C.R. 149. 800 that the first deeming provision lays down is that where the public purpose does not come within cl. (a) or cl. (b) it should be deemed to come within cl. (aa), provided it is of a kind which can come within this clause. The intention behind this deeming provision clearly is to make the purpose of an acquisition made before July 20, 1962 which does not fall within cl. (a) or cl. (b) of section 40(1) to be judged in accordance with the provisions contained in cl. On a reasonable interpretation, this deeming provision therefore only provides that where the purpose does not fall within cls. (a) and (b), it shall be deemed to fall under cl. (aa) and to be judged in accordance therewith. If in fact the purpose of any acquisition made before July 20, 1962, is such as does not fall within cl. (aa), the deeming provision would be of no avail. Thus the first of the two fictions introduced by section 7 of the Amendment Act merely lays down that where a notification under section 6 of the Act cannot be justified under cl. (a) and cl. (b) of section 40(1), it will be judged in accordance with the provisions contained in cl. (aa) and if it satisfies those provisions, the acquisition will be deemed for the purpose of that clause, as if that clause existed at the relevant time, though in actual fact it did not. The first fiction therefore in our opinion goes no further than this and does not provide that even though the purpose of acquisition does not fall within cl. (aa), it will still be deemed to be a public purpose. In this view of the matter, we are of opinion that the attack on section 7 on the basis of article 31(2) must fail. Next it is urged that section 7 of the Amendment Act is hit by article 14 inasmuch as it discriminates between acquisition for a company before July 20, 1962 and after that date. We do not think that there is any force in this contention either. In the view we have taken of the meaning of cl. (aa) land the meaning of the first fiction introduced in section 7 of the Amendment Act, all that the second fiction in section 7 of the Amendment Act says is that when the first fiction is satisfied the second fiction will come into force and every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and &hall be deemed always to have been, as valid as if the provisions 801 of sections 40 and 41 of the Act, as amended by the Amendment Act, were in force at all material times. In effect therefore section 7 provides that even though acquisitions made before July 20, 1962 do not satisfy the conditions of cl. (a) and cl. (b) of section 40(1), they will be valid if they satisfy the conditions of cl. (aa) as introduced by the Amendment Act, as if that clause was in existence when the acquisition was made before July 20, 1962. In this view we are of opinion that there is no discrimination in the matter of acquisition for a company before July 20, 1962 and after that date because in either case the conditions of cl. (aa) have to be actually satisfied whether the acquisition was before July 20, 1962 or thereafter, as the validation by section 7 of the Amendment Act is only of such acquisition before July 20, 1962 which actually satisfy the provisions in cl. We may in this connection refer to the words "as valid as if" appearing in section 7 of the Amendment Act, because they are in our opinion the key words for the purpose of interpreting the extent of the validity conferred on acquisitions before July 20, 1962. What the second fiction provides is that an acquisition made before that date shall be as valid as if the provisions of sections 40 and 41 of the Act as amended by the Amendment Act were in force at all material times. The force of the words "as valid as if" clearly is that the validity of acquisitions made before July 20, 1962, has to be judged on the basis that cl. (aa) was in force at the material time and in accordance therewith. The validity therefore is not absolute; it is conditioned by the fact that it will be as valid as if cl. (aa) was in force; so that if it could not be valid even if cl. (aa) was in force and could not be justified under the terms of that clause, the validity conferred by section 7 of the Amendment Act will not attach to it. This in our opinion is the force of the words "as valid as if" and the validity it has conferred is not absolute as contended on behalf of the petitioner and will not apply to those acquisitions which would not be valid if they could not be justified on the basis of cl. (aa) assuming it to be in force at the material time. In this view the attack under article 14 as well as article 31(2) fails, for in neither case can acquisition be valid whether made before July 20, 1962 or thereafter unless the conditions of cl. (aa) are satisfied. 134 159 S.C. 51 802 Next it is urged that even if section 7 is intra vires, it does not reopen decided cases and does not revive notifications and acquisitions actually struck down by courts. We see no force in this contention. Section 7 opens with the words "notwithstanding any judgment, decree or order of any court" and the validity conferred by it on acquisitions made before July 20, 1962 is thus notwithstanding any judgment, decree or order of any court. These are the usual words to be found in validating legislation where the intention is to validate some action which would otherwise be invalid and which may have been declared invalid by any court. The purpose of such words in a validating legislation is to declare valid what has been held invalid by courts and once the legislature declares such action valid all steps taken in connection therewith are validated to the extent of validation. The result of the validation is that notifications or other steps taken which may otherwise have been invalid become valid. Further an acquisition also even though it may have been struck down by a court would be validated if it has been made in the sense that property in the land to be acquired has vested in Government either under section 16 or section 17 (1) of the Act. It is not in dispute in this case that the property has vested in Government under section 17(1) or the Act. It is also not in dispute that the purpose of the company was a public purpose, namely, manufacture of textile machinery parts and that the acquisition was also for the construction of works for that purpose. In the circumstances we fail to see how it can be said that the rights of the petitioner have not been affected at all by the validating provision in section 7 of the Act. The contention under his head also fails. Then it is urged that the acquisition in the present case cannot be said to be for a public purpose inasmuch as the agreement between the company and the Government does not regulate or control the products of the company in the interest of the public. We have not been able to understand exactly what is meant by this. As we have already said, it is not in dispute that the purpose of the company is a public purpose, namely, production of textile machinery parts, and the land is acquired for the construction of works 803 for that purpose. The agreement shows that the land is required for the construction of a work, namely, a factory for the manufacture of textile machinery and parts ' and that such work is likely to prove useful to the public. One term of the agreement is that the company, its successors and assignees will use the said land for the aforesaid purpose and for no other purpose without the previous sanction in writing of the State Government. Another term provides that if the said land or any part or parts thereof shall no longer be required by the company, then the company will forthwith relinquish and restore the same, after removing all buildings and structures, to the Governor at a price equal to the amount paid by it under the Act. It is clear therefore that the land cannot be used for any other purpose and it will have to be restored to the Government if it is not used for the purpose for which it was acquired. In this connection reference may be made to section 44 A introduced by the Amendment Act which lays down that "no company for which any land is acquired under this Part shall be entitled to transfer the said land or any part thereof by sale, mort gage, gift, lease or otherwise except with the previous sanction of the appropriate Government". 'This provision also provides a safeguard that the land will only be used for the public purpose for which it is acquired and not otherwise. The aforesaid terms in the agreement in our opinion satisfy the condition that the land will be used for the public purpose for which it was being acquired and for no other. Therefore the acquisition is for a public purpose as provided in cl. We do not think it is the purpose of the Act that the agreement should provide for regulation or control of the products of a company, which probably means that Government should control the quantum of production and distribution or the price of the produced articles. This in our opinion is foreign to the purpose of the Act. All that the Act requires is that before land is transferred to the company by the Government, the agreement should provide that land would be used for the purpose for which it was acquired and for no other. The Act has nothing to do with the control or regulation of the products of the company and gives no power to Government in that behalf. Nor do we think it was necessary in order that the public purpose 804 mentioned in cl. (aa) is carried out to have any further term in the agreement besides those which have been provided in the agreement in this case. The contention that the acquisition in the present case was not for a public purpose as the agreement does not provide for the control and regulation of the product of the company must therefore fail. Lastly it is urged that the petitioner who was a businessman was intending to use the land for erecting a factory. He could not do so because certain rules did not permit him to build a factory adjacent to the military installations which had been put up by the Defence Department on adjoining land. It is urged that it could not be the purpose of the Act that land which was intended to be used for one public purpose should be acquired for 'another public purpose. We see no force in this contention either. All that the Act requires is that the land should be required for a public purpose. The intention of the previous owner whatever it may be does not in our opinion enter into the question at all, so far as :the validity of the acquisition is concerned provided the acquisition is for a public purpose. Whether the land should be acquired or not is a matter which may be urged under section 5 A of the Act, which gives the owner of the land the right to object to the acquisition, and it is for Government to decide whether the objection should be allowed or rejected. Once the Government decides that the objection should be rejected and that the acquisition is needed for a public purpose the validity of the notification under section 6 and the subsequent action thereafter cannot be challenged on the ground that the previous owner himself intended to use the land for some public purpose. In this connection our attention is invited to the observations of this Court in Province of Bombay vs Kusaldas section Advani(1), where it was observed that "under certain circumstances even securing a house for an individual may be in the interests of the community, but it cannot be to the general interest of the community to requisition the property of one refugee for the benefit of another refugee". These observations in our opinion have no (1) ; 687. 805 relevance to the matter under consideration. We are con cerned here with acquisition for a public purpose, which is undisputed. This is not a case of a house of one person being requisitioned for another; this is a case of constructing some work which will be useful to the public and will subserve the public purpose of the production of textile machinery and its parts for the use of the general public. In these circumstances we are of opinion that there being a definite public purpose behind the acquisition in the present case, the acquisition would be justified under the Act irrespective of the intention of the previous owner of the land to use it for some other public purpose. The contention under this head must also fail. It now remains only to consider the argument on behalf of the intervener that cl. (aa) violates article 14 inasmuch as it permits acquisition of land for a company but not for an individual or a private company, though the individual or the private company may also be engaged in or taking steps to engage himself or itself in an industry or work which is for a public purpose. Reference was also made to section 44 B, introduced by the Amendment Act, which lays down that "notwithstanding anything contained in this Act, no land shall be acquired under this Part, except for the purpose mentioned in clause (a) of sub section (1) of section 40, for a private company which is not a Government company". It is said that there is discrimination between a public company and a Government company for which land can be acquired under cl. (aa) on the one hand and a private company or an individual on the other. It is true that acquisition for the purpose of cl. (aa) can only be made for a Government company or a public company and cannot be made for a private company or an individual; but there is in our opinion a clear classification between a public company and a Government company on the one hand and a private company and an individual on the other, which has a reasonable nexus with the objects to be achieved under the law. The intention of the legislature clearly is that private individuals and private companies which really consist of a few private individuals banded together should not have the advantage of acquiring land even though they 806 may be intending to engage in some industry or work which may be for a public purpose inasmuch as the enrichment consequent on such work goes to private individuals or to a group of them who have formed themselves into a private company. Public companies on the other hand are broad based and Government companies are really in a sense no different from Government, though for convenience of administration a Government company may be formed, which thus becomes a separate legal entity. Thus in one case the acquisition results in private enrichment while in the other it is the public which gains in every way. Therefore a distinction in the matter of acquisition of land between public companies and Government companies on the one hand and private individuals and private companies on the other is in our opinion justified, considering the object behind cl. (aa) as introduced into the Act. The contention under this head must therefore also fail. The petition therefore fails and is hereby dismissed. In the circumstances we pass no order as to costs. AYYANGAR J. I have had the advantage of perusing the judgment prepared by Wanchoo, J. but regret my inability to agree with it. In my opinion this writ petition has to be allowed. The facts of the case and the relevant statutory provisions whose construction is involved in the petition, have been set out in full in the judgment just now pronounced and it is therefore unnecessary for me to recapitulate them. The principal points on which learned counsel for the petitioner rested his case were mainly two: (1) that section 40(1)(aa) introduced by section 3 of the Land Acquisition Amending Act (Act XXXI of 1962) which I shall hereafter refer to as the Act, was unconstitutional, in that it authorised the compulsory acquisition of land for purposes which might not at all be public purposes and was therefore violative of article 31(2) of the Constitution, and (2) that section 7 of the Act by which acquisitions of land made prior to July 20, 1962 for the purposes mentioned in section 40(1)(aa) were purported to be validated did not on its proper construction cover the present case and further, even if it did that the said provision was 807 invalid as ultra vires for the very same reason for which cl. (aa) was. I shall first take up the submission made to us by Mr. Agarwal about the amendment effected to section 40(1) by the introduction of the new clause (aa). That clause reads "that such acquisition is needed for the construction of some building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose", so that after the amendment land may be compulsorily acquired by the State for a company for being utilised for the purpose above set out. It was not disputed by Mr. Setalvad who, appearing for the first and 3rd respondents, addressed to us the main arguments on behalf of the respondent, nor by the learned Attorney General appearing for the Union of India that if on a proper construction of cl. (aa) power was reserved to compulsorily acquire land for a purpose other than a public purpose, the same would infringe article 31(2) of the Constitution and would, therefore, be void. The scope of the inquiry in the petition is therefore narrowed down and it would be sufficient to consider merely the construction of this clause and ascertain whether the purpose for which authority is conferred by it for making an acquisition, is a public purpose. The clause starts with the words that the acquisition is needed for the construction of a building or work. It goes without saying that if the power to acquire here conferred is related to the construction of a building or work which is essential for starting an industry or for carrying on an industry which is necessary to be carried on in the public interest. the acquisition would be for a public purpose and undoubtedly the provision would be valid. The question is whether the words of the clause are capable of this construction. The words of the clause may be thus split up: (1) the land is needed for the construction of "a building" or "work", and (2) that "building" or "work" is for a company which is engaged (omitting the immaterial words) in an industry or work which is for a public purpose. Therefore, if a company which is engaged in an industry which industry is invested with a public purpose i.e., if the industry itself serves a public purpose, that the land is needed for the construction of a building or work for such a company is made sufficient 808 to enable the acquisition to be made. In other words, the criterion of the justification for the acquisition is, that it is for a company of a designated nature, not that the land acquired is needed for a building or work which is essential for the carrying on of an industry which serves a public purpose. The company might be engaged in an industry which might be informed by a public purpose or whose products might be essential for the needs of the community. but under the clause as enacted it is not necessary that the land acquired is needed for being used for the purpose of that industry but may be needed for any purpose of the company, the only qualification being that the company answers the description set down in the clause. Thus, to take the present case, the third respondent company intends to start a factory for the manufacture of textile machinery, in the present state of the country 's industrial development. There could be no dispute that the industry in which the third respondent is engaged or would be engaged, would serve a national need and therefore a public purpose. But, as was put during the course of the argument, the land acquired might be needed not for the putting up of the factory premises or essential buildings connected with it for its operational needs, if one might use that expression, but say for a swimming pool or a tennis court in the compound of the Directors ' residence for whom the company might consider it proper to provide accommodation. To take a more extreme case, the company 's factory may be in city A, and if the company wants to provide a guest house, a holiday home or accommodation for its Directors at city B, the clause will enable the acquisition to be made for the purpose. It cannot be contended that the use of the land for such a purpose was invested with a public purpose so as to permit compulsory acquisition of land having regard to the terms of article 31 (2). The question, therefore, arises whether an acquisition for a purpose of this type is or is not permitted on cl. (aa) as it now stands. I am clearly of the opinion that an acquisi tion for such a purpose would be covered, for the only two tests that are prescribed in it as conditions to be satisfied before an acquisition could be made under this clause are (1) that the land is needed for the construction of a building or 809 work for a company i.e., the acquisition of the land and the construction are intra vires of the memorandum of associa tion of the company, and (2) that company for which the acquisition is being made is one engaged or is to be engaged in an industry which is for a public purpose. The first, and I would say the primary submission of Mr. Setalvad was that the words "for a public purpose" at the end of the clause ought to be read as governing and qualifying the words "building or work for a company" which occur earlier, so that under the clause not merely has the company to be one of the type described i.e. engaging in an industry which serves a public purpose but such a company needs the land for the construction of a building or work which is essential for that industry to be commenced or carried on. I feel unable to accept this as a possible construction of the words used. For that construction to be adopted even the transposition of the words "for a public purpose" to an earlier point after the words "for a company" would not be sufficient assuming the rules of grimmer per mitted such a course; for, then it would leave out the des cription or categorisation of the company for which the land is needed, and in such a situation the entire object of the amendment would be frustrated, as it would not be a con dition that the industry in which the company is engaged is one which is required in public interest. Even if the clause were rewritten so as to introduce the words "for a public purpose" earlier and also retain them where it occurs now, the construction for which Mr. Setalvad contends cannot result, for then it would not make much sense, for the words "for a public purpose" if transposed earlier would not convey the meaning which Mr. Setalvad says they convey, because the construction which learned counsel suggests is that the clause means that the land is needed for the con struction of the factory and other essential buildings for a company engaged in an industry which serves the national interest. By no transposition of the words actually used in the clause can such a transformation be achieved. The position as regards the construction of cl. (aa) is not improved when one turns to the consequential amendment effected in section 41 of the Land Acquisition Act where a new cl. 4(a) has been introduced by section 4 of the Act. If in this 810 provision at least, which deals with the agreements which the Government is directed to enter info. it is clear that the acquisition could be made only for a public purpose and not for what one might term "the private purposes" of a company engaged in an industry which is essential for the public, then one could read cl. (aa) together with this provision and use the terms of section 41 for construing the scope and purpose of section 40(1)(aa). Clause 4(a) reads: "Where the acquisition is for the construction of any building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose the time within which, and the conditions on which the building or work shall be constructed or executed; If anything, therefore, cl. 4(a) emphasizes that what Parliament considered essential was the nature of the company for whose benefit the acquisition was being made and not the nature of the use to which the property acquired may be put and that it would not matter if a company of the type described used the land acquired for the pleasure of its Directors or for its private purposes unrelated to the purpose of the industry in which it was engaged. Lastly, some attempt was made to show that the rules framed under the Land Acquisition Act themselves threw light on the purpose for which the acquisition was to be made but it was, however, conceded that the rules afforded no assistance either way on the matter. It was then submitted that there is a presumption in favour of constitutionality and that the clause ought to be so read, if that were possible so as to sustain its validity. I quite agree that if the language were flexible in the sense that it could be read so as to make it refer only to cases of acquisition for a public purpose, this could and ought to be done. But this assumes that the clause is reasonably capable of two interpretations: one which would render it unconstitutional and the other which even though it be a little strained, would make it constitutional. then the Court would lean in favour of the latter construction. 811 The question therefore is whether the clause is capable of more than one interpretation. I would be stating only a truism if I said that there is no scope for interpretation here. With profound respect for my learned brethren, I consider that the words are capable only of one meaning. Rules of construction are merely aids to resolving ambiguity. if any exists. The first and primary rule, if those rules have to be invoked, is to take the words themselves and then arrive at their true meaning. for if they disclose an intelligible meaning, then the process of interpretation stops unless the words are reasonably capable of being understood in more than one way and rules of interpretation are then invoked to resolve that ambiguity. It was not suggested that the words do not, as they stand, make sense. They do, only the sense which they convey makes the clause unconstitutional. No doubt, the meaning of a word may vary with the setting or context, but that is not the position here. One asks in vain which is the word which is said to bear a different meaning from the natural normal, dictionary sense, because of the context or setting"? It was, however, urged that it could not have been the intention of Parliament to have intended the clause to mean what appears to be meaning which I have said the words bore. But this argument ignores the basic principle underlying all rules of statutory construction that the intention of the legislature has to be gathered only from the meaning of the words used, for they are the only means by which the intention of the law maker could be gathered. It is only where there is an ambiguity and the words are capable of more than one construction that any extrinsic aid in the shape of the purpose of the legislature, or the object of the legislation come in for consideration. "Were the language of an Act is clear and explicit," said Tindal, C.J. in Warburton vs Loveland(1), "we must give effect to it, whatever be the Consequences, for in that case the words of the statute speak the intention of the legislature". Authority is not needed for the proposition that the intention of the legislature is not a matter to be speculated upon. Interpretation or construction cannot mean that a Court first reaches a conclusion as to what in its opinion the legislature intended, (1) 2 D. & Cl. (H.L.) 480 at p. 489. 812 even though this involves attributing a meaning divorced from the words used, and then adjust the meaning to the conclusion it has reached. As was observed by Lord Watson in an oft quoted passage in Salomon vs A. Salomon & Co. (1): "Intention of the legislature is a common but very slippery phrase, which, popularly understood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it. In a court of law or equity, what the legislature intended to be done or not to be done can only be legitimately ascertained from what it has chosen to enact, either in express words or by reasonable and necessary implication. ' It was the same principle that was explained by Lord Herschell in Cox vs Hakes(2) when he said: ". .It must be admitted that if the language of the legislature interpreted according to the recognised canons of construction involves this result, your Lordships must frankly yield to it even if you should be satisfied that it was not in the contemplation of the legislature. " The only way in which I am able to read the clause is to relate the words "public purpose" to the nature of the industry carried on by the company and by no rule of construction with or without extrinsic aids or with reference to the context, not to speak of rules of grammar, can the reference to public purpose be related to the building or work for which the acquisition is permitted to be made. The learned Attorney General submitted that the provision could and ought to be read down and confined in its operation to acquisition for public purposes as properly understood; in other words, to sever the constitutional from the unconstitutional portions and uphold the former. I do not find it possible to adopt this approach in a clause worded like the one before us. On the construction of the clause which I hold is the only possible one to adopt, it means the (2) 15 A.C. 506 at p. 528. (1) ; at p. 38. 813 State is empowered to compulsorily acquire land for com panies which satisfy the description of being engaged in an industry which is essential for the life of the community whether or not the purpose for which the company proposes to use the land. acquired is a public purpose. Where the purpose for which the acquisition could be made is indicated by the enactment and that purpose is one which is primarily constitutionally permissible, but the words employed for indicating the purposes might possibly include some outside the power of the legislature, an argument about reading down would require consideration. But in the clause now impugned, there is no purpose indicated at all, except that it is needed for a company which falls within a particular category. For such a situation I consider that there is no scope at all for invoking the principle of reading down. Again, where the provision gives a carte blanche to Gov ernment to acquire land for any purpose it is not possible to sustain the validity of such a law and strike down merely the particular acquisition where land is acquired for a purpose which is not a public purpose, for here the vice is in the law itself and not merely in the application. I am, therefore, clearly of the opinion that cl. (aa) intro duced by the Amending Act XXXI of 1962 is unconstitutional as violative of article 31(2). In this view it is unnecessary for me to consider the proper construction of section 7 of the Amending Act. Under the terms of section 7 of the Act, all acquisitions of land made prior to June 20, 1962, even accepting the construction which Mr. Setalvad pressed upon us, are deemed to have been made for a purpose falling within cl. If, as I have held, cl. (aa) is unconstitutional and void, it was not contended that section 7 would of any assistance to the respondents to sustain the acquisition of the petitioner 's land. I would, therefore, allow the petition and grant the reliefs prayed for therein. ORDER In accordance with the opinion of the majority the petition fails and is dismissed. There will be no order at the costs.

IN-Abs

The petitioner is the owner of certain land in Kanpur, U.P. On a previous occasion land acquisition proceedings were taken regarding this land for acquiring it for an industrialist. The petitioner questioned ' the validity of these proceedings and this Court by its judgment reported as R. L. Arora vs State of U.P; [1962] Supp. 2 S.C.R. 149, quashed the notification made under section 6 of Land Acquisition Act, 1894. Thereafter certain amendments were made to sections 40 and 41 of that Act by the Land Acquisition (Amendment) Act, 1961. The petitioner thereupon filed before this Court a petition under article 32 of the Constitution challenging the validity of the amended sections 40, 41 and section 7 of the amending Act. The petitioner contended that the said sections violated article 31(2) and article 19(1)(f) of the Constitution inasmuch as cl. (aa) of the amended section 40 provided that all acquisitions made for a company for construction of some building are permissible even though the building may not be for a public purpose. The validity of section 7 of the amending Act was challenged on the ground ' that it contravened article 31(2) inasmuch as it makes acquisition for a company before July 20, 1962 as being for a public purpose even though it may not be so in fact. Section 7 was also challenged on the ground that it contravenes article 14 inasmuch as it makes an unreasonable discrimination in the matter of acquisition for a company before July 20, 1962 and after that date insofar as the former acquisitions are validated on the basis of their being deemed to be for a public purpose while the latter acquisitions are not so deemed and have to satisfy the test of public purpose. Held (per P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS GUPTA and J. C. SHAH JJ.): (i) If the language of a provision of law is capable of only one construction and if according to that construction the provision contravenes a constitutional provision it must be struck down. A literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used. The Mysore State Electricity Board vs Bangalore Woollen, Cotton ,and Silk Mills, [1963] Supp. 2 S.C.R. 127; followed. (ii) It is well settled that if certain provisions of law construed in one way will be consistent with the Constitution and if another interpretation would render them unconstitutional the court would bear in favour of the former construction. Kedar Nath Singh vs State of Bihar, [1962] Supp. 2 S.C.R. 769, followed. 134 159 S.C. 50 786 (iii) Applying the above principles of construction it cannot be paid that section 40(aa) contravenes article 31(2) for the public purpose required therein is present where land is acquired for the construction of a building or work which must subserve the public purpose of the industry or work in which a company is engaged or is about to be engaged. Nor can it be said that the provision is hit by article 19(1)(f) or it would be a reasonable restriction on the right to hold property. The amendments to section 41 are only consequential to the insertion of c.l (aa) in section 40(1) and would therefore be equally valid. (IV) The first of the two fictions introduced by section 7 of the Amendment Act merely lays down that where a notification under section 6 of the Act cannot be justified under cl. (a)1 and cl. (b) of section 40(1) it will be juded in accordance with the provisions contained in cl. (aa) and it satisfies those provisions the acquisition will be deemed for the purpose of that clause as if that clause existed at the relevant time,though in actual fact it did not. The first fiction does not provide that even though the purpose of the acquisition does not fall within cl. (aa) it will still be deemed to be a public purpose. Therefore a. 7 does not violate article 31(2). (v) The acquisition made before July 20, 1962 as well as the acquisitions made thereafter have to satisfy the conditions of cl. (aa) of section 40 and section 7 of the Amendment Act validates only acquisitions before July 20, 1962 which actually satisfy the provisions in cl. Therefore it cannot be said that section 7 violates article 14. (vi) Section 7 specifically validates acquisition made before July 20. 1962 "notwithstanding any judgment, decree or orders of any court ' and therefore the petitioner 's contention that the acquisition of the petitioners land declared to be invalid by reason of the judgment of this Court reported as R. L. Arora vs State of U.P., [1962] Supp. 2 S.C.R. 149 is bad is rejected. (vii) The various provisions in the agreement between the Government and the industrialist for whom the land in question has been acquired conclusively establish that the acquisition is for a public purpose within the meaning of cl. (aa) of section 40. Province of Bombay vs Kusaldas section Advant; , , distinguished. (viii) A distinction in the matter of acquisition of land between public companies and Government companies on the one hand and private individuals and private companies on the other is justified considering the object behind cl. (aa) of section 40 of the Act and therefore It does not violate article 14. Per Ayyangar J. (dissenting) (i) The wording of cl. (aa) of section 40 is not capable of two interpretations and there is no ambiguity in the wording It is a well established principle of construction that it is only when there is an ambiguity and the words are capable of 787 more than one construction that any extrinsic aid in the shape of the purpose of the legislature or the object of the legislation come in for consideration Where the language of an Act is clear and explicit the court must give effect to it whatever may be the consequence for in that case the words of the statute speak the intention of the legislature. The intention of the legislature is not a matter to be speculated upon. Interpretation or construction cannot mean that a court first reaches a conclusion as to what in its opinion the legislature intended, even though this involves attributing a meaning divorced from the words used and then adjust the meaning to the conclusion it has reached. Warburton vs Loveland, 2 D. & Cl. (H.L.) 480. Salomon vs A. Salomon & Co., ; and Cox vs Hakes, 15 App. 506,followed. (iv) The only way cl. (aa) could be read is to relate the words "public purpose" to the nature of the industry carried on by the company and by no rule of construction with or without extrinsic aide or with reference to the context, not to speak of rules of grammer, can the reference to public purpose be related to the building or work for which the acquisition is permitted to be made (v) Where the provisions, as in the present case, gives a case blanche to Government to acquire land for any purpose it Is not possible to sustain the validity of such law and strike down merely the particular acquisition where land is acquired for a purpose which is not a public purpose, for here the vice is in the law itself and not merely in its application. Clause (aa) of section 40 is violative of article 21(2) of the Constitution.

Appeal No. 647 of 1962. Appeal by special leave from the judgment and decree ,dated December 3, 1959 of the Patna High Court in Appeal from Appellate Decree No. 642 of 1957. section P. Varma, for the appellant. section P. Sinha, Shahzadi Mahiuddin and Shaukat Hussain.for the respondent. February 14, 1964. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal by special leave against the judgment of the High Court of Patna reversing the concurrent judgments of the two courts below, and ordering the dismissal of the suit of the appellant. The appellant is Syed M. Karim, son of one Syed Aulad Ali and the respondent Mst. Bibi Sakina (defendant No.11) is transferee of the properties in dispute from Hakir Alam (defendant No. 2), son in law of Syed Aulad Ali. The appellant, in his turn, is a transferee of the same properties from his father Syed Aulad Ali. 782 The suit was brought for declaration of Title and con firmation of possession or in the alternative for delivery thereof against several defendants in respect of this and other properties. We are not concerned in this appeal with the other defendants or the other properties. This part of the appellant 's suit was based on the allegation that Syed Aulad Ali had purchased the suit properties on May 28, 1914 at a court sale, benami in the name of his son in law Hakir Alam. The reason for the benami purchase was that under the rules of the Darbhanga Raj where Syed Aulad Ali was employed, persons serving in certain capacities were prohibited from purchasing at court sales. The sale certi ficate was issued in the name of Hakir Alam who was then living with Syed Aulad Ali. On January 6, 1950, Syed Aulad Ali sold ;the property to his son the present appellant and Hakir Alam sold the property in his turn to Bibi Sakina and the present suit was filed for the above reliefs. In this appeal, it has been stressed by the appellant that the findings clearly establish the benami nature of the transaction of 1914. This is, perhaps, true but the appellant cannot avail himself of it. The appellant 's claim based upon the benami nature of the transaction cannot stand because section 66 of the Code of Civil Procedure bars it. That section provides that no suit shall be maintained against any person claiming title under a purchase certified by the Court on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims. Formerly, the opening words were, no suit shall be maintained against a certified purchaser. and the change was made to protect not only the certified purchaser but any person claiming title under a purchase certified by the Court. The protection is thus available not only against the real purchaser but also against anyone claiming through him. In the present case, the appellant as plaintiff was hit by the section and the defendants were protected by it, It is contended that the case falls within the second sub section under which a suit is possible at the instance of a third person who wishes to proceed against the property. though ' ostensibly sold to the certified purchaser, on tie ground that it is liable to satisfy a claim of such third person 783 against the real owner. Reliance is placed upon the transfer by Syed Aulad Ali in favour of the appellant which is described as a claim by the transferee against the real owner. The words of the second sub section refer to the claim of creditors and not to the claims of transferees. The latter are dealt with in first sub section, and if the meaning sought to be placed on the second sub section by the appellant were to be accepted, the entire policy of the law would be defeated by the real purchaser making a transfer to another and the first sub section would become almost a dead letter. In our opinion, such a construction cannot be accepted and the plaintiff 's suit must be held to be barred under section 66 of the Code. As an alternative, it was contended before us that the title of Hakir Alam was extinguished by long and uninterrupted adverse possession of Syed Aulad Ali and after him of the plaintiff. The High Court did not accept this case. Such a case is, of course, open to a plaintiff to make if his possession is disturbed. If the possession of the real owner ripens into title under the Limitation Act and he is dispossessed, he can sue to obtain possession,for he does not then rely on the benami nature of the transaction. But the alternative claim must be clearly made andproved. The High Court held that the plea of adverse possession was not raised in the suit and reversed the decision of the two courts below. The plea of adverse possession is raised here. Reliance is placed before us on Sukan vs Krishanand(1) and Sri Bhagwan Singh and others vs Ram Basi and others(1) to sumit that such a plea is not necessary and alternatively, that if a plea is required, what can be considered a proper plea. But these two cases can hardly help the appellant. No doubt, the plaint sets out the fact that after the purchase by Syed Aulad Ali, benami in the name of his son in law Hakir Alam Ali continued in possession of the property but it does not say that this possession was at any time adverse to that of the certified purchaser. Hakir Alam was the son in law of Syed Aulad Ali and was living with him. There is no (1) I.L.R. 32 Pat. (2) A.I.R. 1957 Pat. 784 suggestion that Syed Aulad Ali ever aserted any hostile title against him or that a dispute with regard to ownership and possession had ever arisen. Adverse possession must be adequate in continuity, in publicity and extent and a plea is required at the least to show when possession becomes adverse so that the starting point of limitation against the party affected can be found. There is no evidence here when possession became adverse, if it at all did, and a mere suggestion in the relief clause that there was an uninter rupted possession for "several 12 years" or that the plaintiff had acquired "an absolute title" was not enough to raise such a plea. Long possession is not necessarily adverse possession and the prayer clause is not a substitute for a plea. The cited cases need hardly be considered, because each case must be determined upon the allegations in the plaint in that case. It is sufficient to point out that in Bishun Dayal vs Kesho Prasad and another [A.T.R. , the Judicial Committee did not accept an alternative case based on possession after purchase without a proper plea. Reading the plaint as a whole, we agree with the High Court that a case based on possession after the purchase was not stated in the plaint and the decision of the High Court in the circumstances of this case was therefore proper. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant K claimed certain property alleging that he had purchased it from one A, who had purchased it benami in the name of one H, and H in turn had sold it to S the respondent. Held: (i) The protection available by section 66 of the Code of Civil Procedure is not only against the certified purchaser but also against anyone claiming through him and section 66 bars the claim. The second sub section refer to the claims of creditors and not of transferees, which is dealt with in the first sub section. (ii) If the possession of the real owner ripens into title under the Limitation Act and he is dispossessed, he can sue to obtain possession, for he does not then rely on the benami nature of the transaction. But the alternative claim must be clearly made and proved. Adverse possession must be adequate in continuity, in publicity and extent and a plea is required at the least to show when possession becomes adverse so that the starting point of limitation against the party affected can be found. Sukan vs Krishnand, I.L.R. 32 Pat. 352, Sri Bhagwan Singh vs Ram Basi Kuer, A.I.R. 1957 Pat 157 and Bishun Dayal vs Kesho Prastid, A.I.R. 1940 P.C. 202. referred to.

Appeal No. 120/62. Appeal by special leave from the judgment and decree dated April 23, 1959, of the former Bombay High Court in Second Appeal No. 1359 of 1955. M. section K. Sastri and M. section Narasimhan, for the appellants. O. C. Mathur, J. B. Dadachanji and Ravinder Narain for the respondent. February 14, 1964. The Judgment of the Court was delivered by SUBBA RAo J. This appeal by special leave raises the question of the applicability of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom. Act No. 67 of 1948), hereinafter called the '1948 Act ', to the tenancy of the land in dispute. The appellants are the legal representatives of one Prabhubhai Ratanji. The suit property is agricultural land situate within two miles of the limits of the Surat Municipal Borough. It was part of the erstwhile Sachin State. On May 7, 1946, Nagindas Atmaram Khatri, the respondent herein, who was the owner of the said land, gave a lease of the same in favour of the said Prabhubhai Ratanji for a period of six years. On July 28, 1948, Sachin State became part of the Stateof Bombay. From that date the Bombay Tenancy Act, 1939,hereinafter called the "1939 Act", was made applicable to the said area. On April 23. 1951, Nagindas Atmaram Khatri, the landlord, gave a notice to the defendant terminating the lease from March 31. After giving the said notice, he filed Reg. Suit No. 403 of 1952 in the Court of the Subordinate Judge, Surat, for eviction of the lessee Parbhubhai Ratanji. The suit was contested on various grounds, the main contention being that under the provisions of the 1939 Act, the defendant 775 had acquired tenancy rights therein. As the defendant died on September 30, 1955, his legal representatives were brought on record in his place. The learned Civil Judge, inter alia, held that the 1939 Act was repealed by the 1948 Act and that the latter Act did not apply to the suit land, as it was within two miles of the limits of the Surat Borough Municipality. On that finding, he gave a decree for possession, arrears of rent and mesne profits. Against the said decree, the defendant preferred an appeal to the District Judge. The learned District Judge held that the landlord failed to prove that the suit property was within a distance of two miles of the limits of the Surat Borough Municipality and, on that finding, he came to the conclusion that the 1948 Act applied to the suit land and set aside the decree of the trial court awarding possession to the plaintiff, but maintained the decree for arrears of rent. Thereupon, the plaintiff preferred a second appeal to the High Court insofar as the decree of the District Court went against him. The said appeal came up before a Division Bench of that High Court. The High Court held that the suit land was within two miles of the limits of the Surat Borough Municipality and that, therefore, the 1948 Act did not apply to the suit land. On that finding, it set aside the decree passed by the learned District Judge and restored that passed by the learned Civil Judge. The legal representatives of the defendant have preferred the present appeal. Learned counsel for the appellants contended that the High Court should have held that the rights of the appellants under the 1939 Act were saved by the 1948 Act. He contended broadly that the right of the appellants under the 1939 Act were preserved under section 89(2) of the 1948 Act, with the result that the lease extended to 10 years under the 1939 Act was saved thereunder, and that by reason of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1952 (Bom. Act 33 of 1952), hereinafter called the "1952 Act", which brought the suit land within the scope of the 1948 Act, their rights so preserved came to be governed by the provisions of the 1948 Act and, therefore, the respondent could not evict them except in the manner prescribed by the provisions of that Act. 776 To appreciate the contentions of the parties it is neces sary to trace briefly the history of the relevant provisions. Section 23(1) of the 1939 Act, as amended by the 1946 Act, read (a) No lease of any land situated in any area in which this section comes into force made after the date of the coming into force of this section in such area, shall be for a period of less than 10 years; and (b) every lease subsisting on the said date or made after the said date in respect of any land in such area shall be deemed to be for a period of not less than 10 years. " The 1939 Act was repealed by the 1948 Act. Section 88(1) of the 1948 Act, as it stood before the amendment by the 1952 Act, read: "Nothing in the foregoing provisions of this Act shall apply (a). . . (b). . . . (c) to any area within the limits of Greater Bombay or within the limits of the Municipal Borough of. Surat. and within a distance of 2 miles of the limits such boroughs." Section 89 thereof read : "(1) The enactment specified in the schedule is hereby repealed to the extent mentioned in the fourth column thereof. (2) But nothing in this Act or any repeal effected thereby (a). . . (b) shall save as expressly provided in this Act affect or deemed to affect, 777 (i) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act;. . " SCHEDULE I Year NO. Short Title Extent of repeal 1 2 3 4 1939 XXIX The Bombay Ten The whole except sections ancy Act,1939. 3, 3 A and 4 as modified in the following manner. Section 88 of the 1948 Act was amended by the 1952 Act. The relevant part of the amended section reads : "(1) Nothing in the foregoing provisions of this Act shall apply (a) (b) (c) to any area within the limits of Greater Bombay within the limits of the Municipal Corporations constituted under the Bombay Provincial Municipal Corporation Act, 1949, within the limits of the Municipal Boroughs constituted under the Bombay Municipal Boroughs Act, 1925, and within the limits of any cantonment;. . ." The gist of the provisions in their application to a lease of agricultural land situated within two miles of the limits of the Surat Borough Municipality may be stated thus : Such a lease subsisting on the date of the amending Act of 1946, which came into force on April 11, 1946, shall be deemed to be for a period of not less than 10 years. The 1939 Act was repealed by the 1948 Act. Under section 88(1) (c) 778 or the 1948 Act, the provisions of that Act were not applicable to any area within the municipal limits of the said borough of Surat and within a distance of two miles of the limits of the said borough; but the right, title and interest of a lessee in such area was preserved under section 8 9 (2) (b) (i) of the said Act. Section 88(1) of the 1948 Act, among other things, was amended by the 1952 Act, which came into force on January 12, 1953. By the said amendment the 1948 Act was extended to any area within a distance of two miles of the limits of the Surat Borough Municipality. With the result, all the provisions of the 1948 Act would be applicable to a lease of agricultural land subsisting in such an area after the amendment came into force. If so, such a lease can be terminated only in the manner prescribed by section 14 thereof. What is the effect of this legal position on the facts of the present case? The relevant facts on which there is really no dispute may now be stated. The lease deed between the appellants ' predecessor and the respondent was executed on May 7, 1946, for a period of six years commencing from May 3, 1946; that is to say, it would expire in the ordinary course on May 2, 1952. Sachin State became part of the Bombay State from July 28. After it became part of the Bombay State, the 1939 Act, as amended by the 1946 Act, was extended to that State; with the result the lease which would have expired in May 1952 was statutorily extended by another 4 years. that is, till May 1956. On December 28, 1948, the 1948 Act came into force. That Act repealed the 1939 Act. It also exempted ' the lands within the limits of the Surat Borough Municipality and also lands within two miles of the limits of the said Municipality from the operation of the provisions of the said Act. But, it saved the right or interest of the lessee which he had acquired under the 1939 Act. When the 1952 Act came into force on January 12, 1953, the said lease, protected under the saving clause, was subsisting. By the said amendment, the 1948 Act was made applicable to the land in question which is within two miles of the limits of the Surat Borough Municipality. With the result, the interest of the appellants could be terminated 779 only under section 14 of the 1948 Act. On April 23, 1951, the respondent gave a notice to the appellants terminating the lease from March 31, 1952, and filed the suit for eviction on April 21, 1952. But before the suit was disposed of, the 1952 Act came into force, and by reason of the extension of the 1948 Act to the said land, the respondent could not evict the appellants except in the manner prescribed by the 1948 Act. The High Court, therefore, was wrong in holding that the appellants could not claim the benefit of the provisions of the 1948 Act At this stage another argument advanced by learned counsel for the respondent may also be noticed. The argument is that the saving provision in section 89(2) operates only if there is no express provision to the contrary, but such an express provision is found in section 88(1), inasmuch as it says that the provisions of sections 1 to 87 will not apply to the area in question. It is further contended that the saving of the appellant 's right would be otiose, as he could not enforce his right under the Act. A similar argument was advanced but was repelled by this Court in Sakharam alias Bapusaheb Narayan Sanas vs Manikchand Motichand Shah(1). There the lands in dispute were situate within two miles of the limits of the Poona Municipal Borough. The question was whether the rights of the appellants as protected tenants were affected by the repeal. This Court held that the provisions of section 88(1) were entirely prospective and that they applied to lands of the description contained in the said section from the date on which the Act came into force and that they were not intended, in any sense, to be of confiscatory character. When it was further contended that the right would be illusory, as it could not be enforced under the Act, this Court pointed out that as there was a right recognized by law there was a remedy and, therefore, in the absence of any special provisions indicating a particular forum for enforcing a particular right the general law of the land would naturally take its course. This decision is binding on us. We, therefore, reject this contention. (1) ; 780 Even so, learned counsel for the respondent contended that in the view taken by the High Court it had become unnecessary for it to give its findings on two of the important issues that arose in the case, namely, issues 3 and 4, which are as follows : Issue 3. Whether the plaintiff proves that he wants possession for bona fide personal cultivation. Issue 4. Whether the defendant proves that he had not damaged the suit property in view of the decision in Reg. C. Suit No. 619 of 1950 by the Joint Civil Judge (J.D.), Surat. He, therefore, pointed out that the matter would have to be remanded to the High Court for its decision on the said two points. In view of the supervening circumstances, it is not possible to accede to this argument. As pointed out earlier, on April 23, 1951, the respondent issued the notice on the ground that the tenancy of six years would expire on March 31, 1952. But by reason of the 1939 Act the tenancy was statutorily extended till 1956. So the said notice had become ineffective and the respondent would not be entitled to any relief on its basis. It would be open to him to take any appropriate proceedings, which the law allows, in a proper tribunal. In the circumstances the only course open to us is to set aside the decree of the High 'Court and to restore that of the Dirstict Judge. The parties will bear their respective costs throughout, Appeal allowed.

IN-Abs

The respondent gave notice to the appellants terminating the lease of agricultural land situated within two miles of the limits of the Municipality and filed a suit for eviction. The suit was contested, inter alia, on the ground that under the provisions of the Bombay Tenancy Act, 1939, the defendants had acquired tenancy rights. The civil Judge, inter alia, held that the 1939 Act was repealed by the Bombay Tenancy and Agricultural Land Act, 1948, which did not apply to the suit land, as it was within two miles of the limits of the Surat Borough Municipality and decreed the suit. On appeal, the District Judge held that the 1948 Act applied to the Suit land and set aside the decree of the trial Court. In second appeal by the plaintiff, the High Court held that the suit land was within two miles of the limits of the Municipality and therefore, the 1948 Act did not apply to the suit land. On appeal by Special Leave the appellants contended that their rights under the 1939 Act were saved and preserved under section 89(2) of the 1948 Act with the result that the lease extended to 10 years under the 1939 Act was saved thereunder, and by reason of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1952, which brought the suit land within the scope of the 1948 Act, their rights so preserved came to be governed by the provisions of he 1948 Act and, therefore, they could not be evicted except in the manner prescribed by the provisions of the Act. The respondent contended that the saving provision in section 89(2) of the 1948 Act operates only if there is no express provision to the contrary and that the saving of the appellant 's right would be otiose, as he could not enforce his right under the 1948 Act. Held:(i) Before the suit was disposed of, the 1952 Act came into force, and by reason of the extension of the 1948 Act to the suit land, the respondent could not evict the appellants except in the manner prescribed by the 1948 Act. (ii)The respondent 's contention must be rejected. There is an express provision found in section 88(1) of the 1948 Act, in as much as it says that the provisions of sections 1 to 87 will not apply to the area in question. (iii)As there was a right recognized by law there was a remedy and, therefore. in the absence of any special provisions indicating a 774 particular forum for enforcing a particular right the general law of the land would naturally take its course. The High Court, therefore, was wrong in holding that the appellants could not claim the benefit of the provisions of the 1948 Act. Sakharam (a) Bapusaheb Narayan Sanas vs Manikchand Motichand Shah ; relied on.

Appeal No. 507 of 1961. Appeal from the judgment and order dated February 18, 1959 of the Rajasthan High Court in Civil Misc. Case No. 10 of 1959. section K. Kapur and B. R. G. K. Achar, for the appellant. The respondent did not appear. February 26, 1964. The Judgment of the Court was delivered by SIKRI J. This is an appeal directed against the judgment of the Rajasthan High Court, which granted a certificate under article 133(1)(c). One Mukanchand, respondent No. 1 in this appeal (hereinafter referred to as the decree holder) obtained a mortgage decree on February 12, 1954, for Rs. 1,14,581 14 6, with future interest at 6 per cent per annum, against one Rao Raja Inder Singh (hereinafter referred to as the judgment debtor). The mortgage money was advanced under three mortgages, and the mortgaged properties consisted of 2 Jagirs and some non jagir immovable property. The latter property was sold in execution and Rs. 33,750/ paid to the decree holder in partial satisfaction of the decree. On December 14, 1956, the decree holder filed an execution petition in the Court of the District Judge, Jodhpur, for Rs. 99,965 3 6, praying for attachment of the amount of compensation and rehabili tation grant which would be paid to the judgment debtor on account of resumption of his jagir. This case was registered 906 as Execution Case No. 12/57. On July 29, 1957, the judg ment debtor made an application before the District Judge, Jodhpur, to the effect that the decretal amount should be reduced in accordance with section 5 of the Rajasthan Jagirdars ' Debt Reduction Act (Rajasthan Act IX of 1957). On July 31, 1957, the judgment debtor submitted another application claiming that only half of his total jagir compensation and rehabilitation grant money was liable to attachment under section 7 of the said Act. The decree holder, in his reply to those petitions, urged that the provisions relied on were ultra vires the Constitution of India being in contravention of articles 14, 19 and 31 of the Constitution. On December 3, 1957, the decree holder filed a petition under article 228 of the Constitution, praying that the execution case No. 12 of 1957, pending in the Court of the District Judge, Jodhpur, be withdrawn from that Court to the Rajasthan High Court. The High Court transferred the case to its file, and thereafter issued notice to the State of Rajasthan, as the constitutionality of the said Act had been challenged. By its judgment, the High Court held that apart from the latter part of section 2(e) excluding certain debts hereinafter referred to as the impugned part and section 7(2) of the Act, the rest of the Act was valid. The State applied for leave to appeal to the Supreme Court, and so did the decree holder. On the certificates being granted, two appeals were filed in this Court. The appeal of Mukhanchand (Civil Appeal No. 508/61) was, by order dated April 23, 1962, of this Court, held to have abated. Therefore, we are not concerned with the validity of the other provisions of the Act. Although the validity of the other provisions is not now in question, it is necessary to set out the relevant provisions of the Act, because they have a bearing on the question of the validity of the impugned part of section 2 (e) and section 7 (2) of the Act; and these are reproduced below: "Preamble To provide for the scaling down of debts of jagirdars whose jagir lands have been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952. . 907 section 2(e) "debt" means an advance in cash or in kind and includes any transaction which is in substance a debt but does not include an advance as aforesaid made on or after the first day of January. 1949 or a debt due to: (i) the Central Government or Government of any State; (ii) a local authority; (iii) a scheduled bank; (iv) a co operative society; and (v) a waqf, trust or endowment for a charitable or religious purpose only; or (vi) a person, where the debt was advanced on his behalf by the Court of Wards. section 3. Reduction of secured debt at the time of passing of decree. (1) Nothwithstanding anything in any law, agreement or document, in any suit to which this Act applies relating to a secured debt, the court shall, after the amount due has been ascertained, but before passing a decree, proceed as hereinafter stated. (2)(a) Where the mortgaged property consists exclusively of jagir lands and such lands have been resumed under the provisions of the Act, the court shall first ascertain whether the mortgagor had the right, under the jagir law in force at the time the mortgage deed was executed, to mortgage the jagir lands, or failing that, whether specific permission for effecting the mortgage was obtained from the competent authority, and whether the mortgage was validly subsisting on the date of resumption of the jagir lands. (b) if the mortgage was legally and properly made and was validly subsisting on the aforesaid date, the court shall reduce the amount due in accordance with the formula given in Schedule 1. 908 (3) Where the mortgaged property consists partly of jagir lands as aforesaid and partly of property other than such lands, the court shall after taking action in accordance with the provisions of subclause (a) of sub section (2), proceed to distribute. the amount due on the two properties separately in accordance with the principles contained in section 82 of the (IV of 1882) as if they had been properties belonging separately to two persons with separate: and distinct rights of ownership; and after the amount due has been so distributed, reduce the amount due on the jagir lands in accordance with the formula given in Schedule 1. section 4 Powers to reduce secured debt after passing of decree. (1) Nothwithstanding anything in the Code of Civil Procedure, 1908 (V of 1908) or any other law, the court which passed a decree to which this Act applies relating to a secured debt shall, on the application either of the decree holder or judgment debtor, proceed as hereinafter stated. (2) Where the mortgaged property charged under the decree consists exclusively of jagir lands and such lands have been resumed under the provisions of the Act, the court shall reduce the amount due in accordance with the formula given in Schedule 1. (3) Where the mortgaged property charged under the decree consists partly of jagir lands and partly of property other than jagir lands, the court shall determine the amount due on the first day of January, 1949, and distribute the same on the two properties separately in accordance with the principles contained in section 82 of the (IV of 1882), as if they had been properties belonging to two persons with separate and distinct rights of ownership and after the 909 amount due as respect the jagir lands has been so calculated. reduce it in accordance with the formula given in Schedule 1. section 6 Satisfaction of the decree after the amount due has been reduced under and in accordance with the provisions of section 4, the decree shall, to the extent of the reduction so effected, be deemed, for all purposes and on all occasions, to have been duly satisfied. section 7(2) Notwithstanding anything in any law, the reduced amount found in the case of a mortgagor or judgment debtor as the case may be, under section 3 or section 4 as respects mortgaged jagir lands shall not be legally recoverable otherwise than out of the compensation and rehabilitation grant payable to such mortgagor or judgment debtor in respect of such jagir lands. " We may mention that respondent No. 1 has not entered appearance in this Court. The learned counsel for the State, Mr. section K. Kapur, has urged that the High Court erred in holding that these two provisions, i.e. impugned part of section 2(e) and section 7(2), were void. Regarding the impugned part of section 2(e), he contended that the debts mentioned in sub cls. (i) to (vi) of section 2(e) have been placed on a different footing from debts due to other creditors, because the bodies and the authorities mentioned therein serve a public purpose or a public cause. He urged that this provided a reasonable basis for differentiating between private creditors and creditors mentioned in cls. (i) to (vi) above. Regarding section 7(2), he urged that it imposed reasonable restrictions, in the interest of general public, on the creditors. Before examining the validity of the impugned provisions, it is necessary to examine the scheme of the Act. As the preamble states in plain terms, the object of the Act is to scale down debts of Jagirdars whose jagir lands have been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act. Clause (e) of section 2 defines 'debt ' to mean an advance in cash or in kind. The definition ,does not embrace dues of Government or a local authority 910 in respect of taxes, land revenue, etc. The definition then excludes from the purview of the Act debts due to Central Government and other authorities and bodies mentioned in the clause. We shall advert to them later when discussing the validity of this exclusion. Section 3 provides for reduction of secured debts in accordance with the formula given in Schedule 1 at the time of passing a decree, and their apportionment where necessary, between jagir and non jagir property. Section 4 provides for reduction of secured debts after a decree has been passed. Section 5 directs a court to pass a fresh decree after reduction of the secured debts. Section 6 provides that after reduction of the secured debt in accordance with the provisions of section 4, the decree shall, to the extent of the reduction so effected, be deemed for all purposes and on all occasions to have been duly satisfied. Clause (1) of section 7 provides for the execution of the decree against the compensation and rehabilitation grant payable in respect of the jagir lands of the judgment debtor. Clause (2) of section 7, which has been struck down by the High Court, prohibits the recovery of the reduced amount with respect to jagir property from any property other than the compensation and rehabilitation grant payable to a jagirdar. The effect of this provision is that the other properties of the jagirdar, existing or which 'he may acquire hereafter, are immune from being proceeded against in execution or otherwise. We think that the High Court was right in holding that the impugned part of section 2(e) infringes article 14 of the Consti tution. It is now well settled that in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentiation which distinguishes persons or things that are to be put together from others left out of the group, and (2) that the differentia must have a rational relationship to the object sought to be achieved by the statute in question. In our opinion, condition No. 2 above has clearly not been satisfied in this case. The object sought to be achieved by the impugned Act was to reduce the debts secured on jagir lands which had been resumed under the provisions of the 'Rajasthan Land Reforms and Resumption of 911 Jagirs Act. The Jagirdar 's capacity to pay debts had been reduced by the resumption of his lands and the object of the Act was to ameliorate his condition. The fact that the debts are owed to a government or local authority or other bodies mentioned in the impugned part of section 2(e) has no rational relationship with the object sought to be achieved by the Act. Further, no intelligible principle underlies the exempted categories of debts. The reason why a debt advanced on behalf of a person by the Court of Wards is clubbed with a debt due to a State or a scheduled bank and why a debt due to a non scheduled bank is not excluded from the purview of the Act is not discernible. In this connection, Mr. Kapur has relied on the decision of this Court in Manna Lal vs Collector of Jhalwar (1). This case is clearly distinguishable because there a law giving special facility for the recovery of dues to a bank owned by the Government was held not to offend article 14 of the Con stitution. It is clear that the government can be legitimately put in a separate category for the purpose of laying down the procedure for the recovery of its dues. Mr. Kapur further relied on Nand Ram Chhotey Lal vs Kishore Raman Singh (2). The judgment of the High Court undoubtedly supports him, but, with respect, we are unable to agree with the ratio of the case. The High Court was concerned with. the U.P. Zamindars Debt Reduction Act (U.P. Act XV of 1953), which is substantially similar to the impugned Act The ratio of the High Court is: "It appears to us that the legislature had to make a distinction between debts due from the ex zamindars to private individuals and the debts due to scheduled banks or to Government or semi Government authorities. The obvious reason appears to be that the private money lenders were considered to be a bane to rural economy and perpetrating agricultural indebtedness. It was to save the cultivators from such unscrupulous moneylenders that such laws had to be enacted, the last in series being the Zamindars Debt Reduction Act. " We consider there is no force in these observations. No such reason is apparent from the terms of the Act. Non scheduled banks (1) ; (2) AIR (1962) All. 912 and all other private creditors cannot be said to be a bane to rural economy. The third case relied on by Mr. Kapur Jamnalal Ramlal Kimtee vs Kishendas and State of Hyderabad(1) does not contain any discussion. The High Court supported the exclusion on the ground that "exclusion of certain class of debts under section 3 of the impugned Act also is not without substantial justification for public demands do not stand in the same position as ordinary demands." Apart from the fact that all the exempted categories are not public demands, the High Court does not seem to have considered whether the differentia had any rational relationship sought to be achieved by the Act. In conclusion, agreeing with the High Court, we hold that no reasonable classification is disclosed for the purpose of sustaining the impugned part of section 2(e). Now, coming to the question of the validity of section 7(2), we consider that this sub section is valid as it imposes reasonable restrictions, in the interest of general public, on the rights of a secured creditor. A secured creditor, when he advanced money on the security of jagir property, primarily looked to that property for the realisation of his dues. Further, this sub section has been designed with the object of rehabilitating a jagirdar whose jagir properties have been taken over by the State for a public purpose at a low valuation. If this provision was not made, the jagirdar would find it difficult to start life afresh and look to other avocations, for not only his existing non jagir property but his future income and acquired properties would be liable to attachment and sale for the purpose of satisfying the demands of such secured creditors. Accordingly, we hold that section 7(2) imposes reasonable restrictions in the interest of general public. The appeal is accordingly partly accepted, the decision of the High Court in regard to section 2(e) is confirmed and that in regard to section 7(2) is reversed. As the respondent was not represented and that appeal has only partly succeeded, we order the parties to bear their own costs in this Court. Appeal partly allowed. (1)AIR (1955) Hyd. 194.

IN-Abs

Respondent No. 1 obtained a mortgage decree for Rs. 1,14,581/14/6 against one Rao Raja Inder Singh (the judgment debtor). The mortgage money was advanced under three mortgages, and the mortgaged properties consisted of Jagirs and some non Jagir immovable property. The latter property was sold in execution and Rs. 33,750/ paid to the decree holder in partial satisfaction of the decree. Then the decree holder filed an execution petition in the Court of the District Judge for the balance amount i.e. Rs. 99,965/3/6, praying for attachment of the amount of compensation and rehabilitation grant which would be paid to the judgment debtor on account of resumption of his Jagir. The judgmment debtor submitted two applications in which he claimed relief under sections 5 and 7 of the Rajasthan Jagirdars ' Debt Reduction Act. The decree holder, in his reply, to those petitions urged that the provisions relied in were ultra vires the Constitution of India, being in contravention of articles 14, 19 and 31 of the Constitution. Thereafter the decree holder moved a petition under article 228 of the Constitution before the High Court, praying that the execution case pending in the Court of the District Judge, be withdrawn from that court to the High Court. The High Court transferred the case to its file. By its judgment the High Court could held that apart from the later part of section 2(e) excluding certain debts and section 7 (2) of the Act, the rest of the Act was valid. The High Court granted a certificate under article 133(1)(c) of the Constitution to the State of Rajasthan to file an appeal to this Court. Hence the appeal: Held: (i) That the impugned part of section 2(e) infringes article 14 of the Constitution for the reason that no reasonable classification is disclosed for the purpose of sustaining the impugned part of section 2(e). It is now well settled that in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentiation which distinguishes persons or things that are to be put together from others left out of the group, and (2) that the differential must have a rational relationship to the object sought to be achieved by the statute in question. The said condition No. 2 above has clearly not been satisfied in this case. The object sought to be achieved by the impugned Act was to reduce the debts secured on the Jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act. The fact that the debts are owed to a Government or local authority or other bodies mentioned in the impugned part of section (2) (e) has no rational relationship with the object sought to be achieved by the Act. Further, no intelligible principle underlies the exempted categories of debts. The reason why a debt advanced on behalf of a person by the Court of Wards is clubbed with a debt due to a State or a scheduled bank and why a debt due to a non scheduled bank is not excluded from the purview of the Act is not discernible. Manna Lal vs Collector of Jhalwar. ; , Nand Ram Chhotey Lai vs Kishore Raman Singh, A.I.R. (1962) All 521 and 905 Jamnalal Ramlal Kimtee vs Kishendas and State of Hyderabad, A.I.R. (1955) Hyd. 194, distinguished. (ii) Section 7(2) is valid as it imposes reasonable restrictions, in the interests of general public. on the rights of a secured creditor. This sub section has been designed with the object of rehabilitating a Jagirdar whose Jagir properties have been taken over by the State for a public purpose at a low valuation. If this provision was not made, the Jagirdar would find it diffcult to start life afresh because his future income and acquired properties would be liable to attachment and sale for the purpose of satisfying the demands of such creditors.

Appeal No. 73 of 1961. Appeal from the judgment and order dated January 23, 1961, of the Bombay High Court, in Appeal No. 5 of 1960. C. K. Daphtary, Solicitor General of India, Purshottam Tricumdas, F. section Nariman, Suresh D. Parekh and I. N. Shroff, for the appellants. M. K. Nambiar, K. section Cooper, Anil Dewan, RaMesh A. Shroff, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents. February 27. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal (with certificate) by Messrs. Dhanrajamal Gobindram against a judgment of the Divisional Bench of the High Court of Bombay, by which a petition under section 20 of the Indian was held to be maintainable and the decision of the learned Judge (Original Side) who held otherwise, was reversed. The respondents are Messrs. Shamji Kalidas & Co. (a registered firm), who were the petitioners in the High Court. The facts of the case are as follows: On October 24, 1957, Messrs. Dhanrajamal Gobindram (referred to as buyers, hereafter) entered into an agreement with Messrs. Shamji Kalidas & Co. (referred to as sellers, hereafter), for purchase of 500 bales of African raw cotton. The contract was in the form of a letter 1023 written by the sellers and confirmed by the buyers. The material portions of the letter, which bears No. SK/Bom/13/2014 and was stamped as an agreement, ' are as follows: "We confirm having sold to you African raw cotton on the following terms and conditions subject to the usual Force Majeure Clause: Description: ARBP 52 F. A. Q. Crop/58. Quality : 500 (Five Hundred) bales. Price : at Rs. 1,401 nett per candy CIF Bombay. Payment : Against shipping documents in Bombay. Packing : 420 lbs. approximately per bale. Shipment : February/March 1958. Remarks: The terms and conditions on the reverse form part of the contract. This contract is subject to the Bye laws of East India Cotton Association, Ltd., Bombay, other than the bye law 35 for arbitration on Quality in case of East African cotton. Terms and Conditions. The shipment is subject to any cause beyond seller 's or seller 's shipper 's control and is also subject to availability of freight. This contract is subject to the jurisdiction of the High Court of Bombay. It will be the duty of the buyers to obtain the import licence and to communicate the number thereof to the sellers immediately on the same being obtained but in any event, not later than 20th February, 1958, and in the event of their failure to do so for any reasons whatsoever including the reason that the Government of India may not allow the imports of the contracted goods, the sellers shall be entitled at their discretion either to carry over the goods, in which event the buyers shall pay to the seller all carry over charges in addition to the contracted price or to call upon the buyers to pay for the contracted goods and take immediate delivery thereof in. British East Africa and upon 1024 the buyers failing to do so, to sell the contracted goods at Kampala or Mombasa at the rates prevalent there in convenient lots and as and when it may be practicable to do so at the risk and account of the buyers and to claim from them any deficit that arise between the contracted price and such resale price and also all expense incidental thereto. Even if the Government of India may announce the import policy of the contracted goods in such manner that only the consumers would be entitled to obtain the licences, it will be the duty of the buyers to see that necessary import licences for the contracted goods are obtained in the consumers ' name or in the joint names of themselves and those of the consumers the intention being that in all eventualities it is the duty of the buyers to obtain licences under any policy that may be followed by the Government of India for the import of the contracted goods and to communicate the number thereof to the sellers within the time as specified hereinabove and on the buyer 's failure to do so all the eventualities contemplated under clause 6 shall operate. " By a letter dated November 30, 1957, the contract was later amended by the parties as follows : " With reference to the above mentioned contracts we hereby confirm that, if necessary, we shall carry over the contracted goods for two months, namely, March and April and you will pay as the carry over charges for the same. The interest payable under such carry over charges will be at the rate prevalent in Mombasa. The other terms and conditions remain unaltered. " The contract was not performed. The sellers wrote as many as five letters between March 1, 1958, and May 26, 1958, before they received a reply from the buyers dated June 3, 1958. By that time, the sellers had carried forward the contract, and also invoked their right of resale after giving notice, and claimed Rs. 34,103. 15 nP. for which a debit note had been issued. This note was returned by the buyers with a letter of June 3, 1958, stating that the contract was 1025 void and/or illegal", that they were not obliged to perform it, that there was no right of any sale on their., account and/or on their behalf, and that the alleged" sale was not binding upon them. [exhibit " D " (Colly) No. 6.] The sellers then invoked the arbitration clause of the agreement and Bye law 38 A of the Bye laws of the East India Cotton Association, Ltd., Bombay, and moved the Bombay High Court, on the Original Side, under section 20 of the Indian , requesting that the agreement be filed in Court and the dispute referred to arbitration. The buyers appeared, and resisted the petition on grounds which they set forth in affidavits filed from time to time. By their first affidavit dated July 31, 1958, the buyers contended that cls. 6 and 7, quoted above, were unlawful, as the liability created under them amounted to a contravention " of the import policy of Government of India " and the Foreign Exchange Regulation Act, 1947, and the Rules made thereunder. They contended that, in view of the invalidity of the contract as a whole, the arbitration clause in the agreement was not binding, and that the agreement could not be filed. In the second affidavit which was filed on February 4, 1959, they added the reason that the words " subject to the usual Force Majeure Clause " were vague and uncertain, and made the contract ' void ab initio, as there was no consensus ad item between the parties. They contended that the con. tract being void, the arbitration clause was also void. By yet another affidavit filed on February 27, 1959, they averred that the letter dated November 30, 1957, was void, being in contravention of the Import Trade Control Act and the Foreign Exchange Regulation Act and the Rules made under the two Acts, inasmuch as the consideration was one forbidden by law and was likely to defeat the provisions of law. They also stated that the words " if necessary " in that letter rendered the contract void ab initio for vagueness and uncertainty. The case was heard by K. T. Desai, J. (as he then war,). On March 3, 1959, the learned Judge dismissed 1026 the petition as not maintainable on the ground that ,the dispute was about the legality or validity of the contract including the agreement about arbitration, and that such a dispute could only be considered under sections 32 and 33 of the by the Court and not by the arbitrator in a reference under section 20 of the Act. He declined to consider the question under the former sections, because the petition had not asked for that relief, observing that if by a proper petition the question were raised, it would be decided. Against the order of the learned Judge (0. section), an appeal was filed by the sellers. This appeal was heard by Chainani, C. J. and section T. Desai, J. on April 28, 1959. The learned Judges held that a claim was made by the sellers and was denied by the buyers; that there was thus a dispute arising out of or in relation to a contract as contemplated by Bye law 38 A; that in showing cause against the petition under section 20, the buyers had averred that the contract was illegal and void; and that such a question could be decided by the Court before making the reference. The learned Judges pointed out that a petition under sections 32 and 33 of the Indian questioning the existence or validity of an arbitration agreement was not to be expected from one making a claim under a contract, that the plea was always likely to be raised by one resisting the petition, and that when such a plea was raised, the Court must decide it, even though the proceedings be under section 20 of the Act for making a reference. The case was, therefore, remanded with the following direction: " As the respondents have challenged the validity of this agreement, the Court will have to decide this question before passing further orders in the matter. Accordingly we set aside the order passed by Mr. Justice K. T. Desai, dismissing the petition filed by the petitioners, and remand the matter to the trial court for deciding the objections, raised by the respondent under sub section (3) of section 20 of the Act, to the arbitration agreement being filed in Court, and then disposing of the matter in accordance with law." 1027 When the case went back for retrial, the buyers filed their fourth affidavit on November 16, 1959. They stated in that affidavit that Bye law 38 A was a statutory Bye law of the East India Cotton Association, Ltd., Bombay, a recognised Institution under the Forward Contracts Regulation Act, No. 74 of 1952, and that section 46 of the was ap plicable. They contended that inasmuch as the Bye laws of the Association prescribed a different machinery inconsistent with and repugnant to section 20 of the , the latter section was inapplicable, and that the petition was incompetent. By his order dated November 26 and 27,1959, K. T. Desai, J. hold that the petition did not disclose sufficient materials, and that the sellers were not entitled to have the agreement of reference filed, or to have an order of reference made. Though be held that the Bye laws of the East India Cotton Association, Ltd. were statutory, and that sections 46 and 47 of the applied, he was of opinion that section 20 could not be invoked, because no action under sub section (4) of a. 20 could be taken. The reason given by the learned Judge was that under that sub section the Court had to appoint an arbitrator, if the parties failed to agree, and that sub section was not applicable, because the machinery of Bye law 38 A left no power of action to the Court. He also felt that there was no averment in the petition that the parties had not agreed. On the rest of the points raised by the buyers in their affidavits, the learned Judge held against them. He held that, in view of sections 21(2) and 21(3) of the Foreign Exchange Regulation Act, there was no infringement of that Act by the agreement entered into, though he expressed a doubt if the words " legal proceedings " in section 21(3) were wide enough to include an arbitration. He also held that cl. 7 of the conditions under which the contract was to be performed was, at least in part and under certain circumstances, not a contravention of the Import and Export Control Act, 1947, or the Import Trade Control Order issued Under sections 3 and 4 A of that Act, and thus not wholly void. He held lastly that the contract was not void for vagueness or 1028 uncertainty either on account of the reference to " the usual Force Majeure Clause ", or because of the words if necessary " in the letter of November 30, 1957. The sellers appealed against the dismissal of the petition, and the buyers cross objected against the adverse findings and the disallowance of costs. The appeal was heard by Tarkunde and Chitale, JJ., and by separate but concurring judgments, the appeal was allowed and the cross objection dismissed, and the buyers were ordered to pay costs throughout. The Divisional Bench agreed with K. T. Desai, J. on all the points decided by him against the buyers. They left open the question whether " legal proceedings " in section 21(3) of the Foreign Exchange Regulation Act were wide enough to include an arbitration for the decision of the arbitrators to be appointed, and addressing themselves to the question raised about section 20, held that the petition was maintainable. They were of opinion that the Court could order the arbitration agreement to be filed and also to refer the dispute to arbitrators to be chosen in accordance with Bye law 38 A, though they felt that if the latter action could not be taken, at least the first could be, because the procedural part could not destroy the power conferred to file the agreement. In this appeal, all the arguments which had failed before the High Court were urged before us. Shortly stated, they are: that the contract was void (a) for illegality and (b) for uncertainty and vagueness on two grounds; that the petition under section 20 of the Indian was incompetent, as that section was inapplicable; and that the law governing the parties was not the Indian law but the law of British East Africa. We shall now deal with these contentions. The first contention is that cl. 7 of the agreement involves a breach of the Foreign Exchange Regulation Act. Reliance is placed upon section 5 of the Act, which reads as follows: " (5) Restrictions on payment8. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this subsection which may be granted conditionally or 1029 unconditionally by the Reserve Bank, no person in, or resident in, British India shall (e) make any payment to or for the credit of any person as consideration for or in association with(1) the receipt by any person of a payment or the acquisition by any person of property outside India; (ii) the creation or transfer in favour of any person of a right whether actual or contingent to receive a payment or acquire property outside India: " It is contended that the agreement envisaged (a) payments for goods in Africa against shipping documents, (b) payment in Africa of carrying over charges, and (c) in the event of resale, payment of deficit also in Africa. It is also contended that the two clauses (6 and 7) contemplate acquisition of property in Africa. The clauses, it is submitted, also involved acquisition of foreign exchange, if the goods were resold in Africa and credit for the price was given to the buyers. This, it is argued, was a breach of section 5, unless there was a general or special exemption granted by the Reserve Bank in connection with this contract, and that no such exemption was in existence when the contract was made. In this connection, section 21 of the Foreign Exchange Regulation Act may be read. It provides: " 21. Contracts in evasion of this Act. (1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder. (2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank, shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank, as the case may be; and it shall be an implied term of every contract governed 1030 by the law of any part of British India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except. with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted. (3) Neither the provisions of this Act nor any term (whether expressed or implied) contained in any contract that anything for which the permission of the Central Government or the Reserve Bank is required by the said provisions shall not be done without that permission, shall prevent legal proceedings being brought in British India to recover any sum which, apart from the said provisions and any such term, would be due, whether as a debt, damages or otherwise, but (a) the said provisions shall apply to sums required to be paid by any judgment or order of any Court as they apply in relation to other sums; and (b) no steps shall be taken for the purpose of enforcing any judgment or order for the payment of any sum to which the said provisions apply except as respects so much thereof as the Central Government or the Reserve Bank, as the case May be, may permit to be paid; and (c) for the purpose of considering whether or not to grant such permission, the Central Government or the Reserve Bank, as the case may be, may require the person entitled to the benefit of the judgment or order and the debtor under the judgment or order, to produce such documents and to give such information as may be specified in the requirement. " No doubt, sub section (1) prohibits contracts in contravention or evasion, directly or indirectly, of the Foreign Exchange Regulation Act, and if there was nothing more, then the argument would be understandable. But, sub section (2) provides that the condition that a thing shall not be done without the permission of the Reserve Bank shall not render an agreement 1031 invalid, if it is a term of the agreement that the thing shall not be done unless permission is granted by the Central Government or the Reserve Bank and further that it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract, which cannot be done except with the permission of the Reserve Bank, shall not be done, unless permission is granted. Sub section (3) allows legal proceedings to be brought to recover sum due as a debt, damages or otherwise, but no steps shall be taken to enforce the judgment, etc., except to the extent permitted by the Reserve Bank. The effect of these provisions is to prevent the very thing which is claimed here, namely, that the Foreign Exchange Regulation Act arms persons against performance of their contracts by setting up the shield of illegality. An implied term is engrafted upon the contract of parties by the second part of sub section (2), and by sub section (3), the responsibility of obtaining the permission of the Reserve Bank before enforcing judgment, decree or order of Court, is transferred to the decree holder. The section is perfectly plain, though perhaps it might have been worded better for which a model existed in England. It is contended that section 21 uses the word " permission ", while section 5 speaks of an exemption, and that sections 21(2) and 21(3) do not cover the prohibition in a. 5. The Foreign Exchange Regulation Act, no doubt, uses diverse words like, " authorise ", " exempt " and " permission " in different parts. The word " exempt " shows that a person is put beyond the application of law, while " permission " shows that he is granted leave to act in a particular way. But the word SC permission " is a word of wide import. " Permission " in this section means only leave to do some act which but for the leave would be illegal. In this sense, exemption is just one way of giving leave. If one went only by the word and searched for those sections where the word " permission " is expressly used, sections 21(2) and (3) are likely to prove a dead letter. This could not have been intended, and the very 1032 elaborate provisions in those sub sections show that those matters were contemplated which are the subject of prohibition in section 5. In our opinion, the argument is without foundation. The contention, that on resale the price would have accrued to the buyers in the first instance, as the sellers would be acting as the agents of the buyers, is also incorrect. It has been rightly pointed out by K. T. Desai, J. that the right of resale given by sections 54(2) and (4) of the Indian Sale of Goods Act is exercised by the seller for himself and not as an agent of the buyer, when the latter is given a notice of sale. This is indeed clear from the fact that the buyer is not entitled to the profit on resale in that contingency, though liable for damages. The position is different when no notice is so sent. Then the profits go to the buyer. Perhaps, in that event it may be possible to say that the seller acted as an agent. But, in the case of resale with prior notice, there is no payment to the buyer and no contravention of the Foreign Exchange Regulation Act. The contention that the contract involved an actual or, at least, a contingent right to or acquisition of property abroad is not correct. Even if it were so, the contract is saved by section 21, as already explained. In our opinion, the contract was not void for illegality. The agreement is said to be void because of vagueness and uncertainty arising from the use of the phrase " subject to the usual force majeure clause ". The argument is that there was no consensus ad idem, and that the parties had not specified which force majeure clause they had in mind. We were taken through the Encyclopaedia of Forms and Precedents and shown a number of force majeure clauses, which were different. We were also taken through a number of rulings, in which the expression force majeure " had been expounded, to show that, there is no consistent or definite meaning. The contention thus is that there being no consensus ad idem, the contract must fail for vagueness or uncertainty. The argument, on the other side, is that this may be regarded as a surplusage, and, if meaningless, ignored. It is 1033 contended by the respondents that the addition of the word " usual" shows that there was some clause which used to be included in such agreements. The ' respondents also refer to section 29 of the Indian Contract Act, which provides: "Agreements, the meaning of which is not certain, or capable of being made certain, are void, " and emphasise the words " capable of being made certain ", and contend that the clause was capable of being made certain, and ex facie, the agreement was not void. McCardie J. in Lebeaupin vs Crispin (1) has given an account of what is meant by "force majeure " with reference to its history. The expression "force majeure " is not a mere French version of the Latin expression" Vis major ". It is undoubtedly a term of wider import. Difficulties have arisen in the past as to what could legitimately be included in "force majeure ". Judges have agreed that strikes, break down of machinery, which, though normally not included in" Vis Major" are included in "force majeure ". An analysis of rulings on the subject into which it is not necessary in this case to go, shows that where reference is made to "force majeure ", the intention is to save the performing party from the consequences of anything over which he has no control. This is the widest meaning that can be given to " force majeure ", and even if this be the meaning, it is obvious that the condition about "force majeure, " in the agreement was not vague. The use of the word " usual " makes all the difference, and the meaning of the condition may be made certain by evidence about a force majeure clause, which was in contemplation of parties. Learned counsel for the appellants relies strongly on a, decision of McNair, J. in British Industries vs Patley Pressings(2). There, the expression used was "subject to force majeure conditions ". The learned Judge held that by conditions " was meant. clauses and not contingencies or circumstances, and that there being a variety of force majeure clauses in the trade, there (1) (2) 1034 was no concluded agreement. The: case is distinguish. able, because the reference to force majeure clauses was left at large. The addition of the word " usual " makes it clear that here some specific clause was in the minds of the parties. Learned counsel also relies upon a decision of the House of Lords in Scammell (G.) and Nephew Ltd. vs Ouston (H.C. and J.G.) (1), where the reference to " on hire purchase terms" was held to be too vague to constitute a concluded contract. It will appear from the decision of the House of Lords that the clause was held to be vague, because no precise meaning could be attributed to it, there being a variety of hire purchase clauses. The use of the word "usual" here, enables evidence to be led to make certain which clause was, in fact, meant. The case of the House of, Lords does not, therefore, apply. Both the cases to which we have referred were decided after parties had entered on evidence, which is not the case here. Our case is more analogous to the decision referred to in Bishop & Baxter Ld. vs Anglo Estern Trading & Industrial Co. Ld. (2), namely, Shamrock section section Co. vs, Storey (3). In speaking of the condition there, Lord Goddard observed as follows: " Abbreviated references in a commercial instrument are, in spite of brevity, often self explanatory or susceptible of definite application in the light of the circumstances, as, for instance, where the reference is to a term, clause, or document of a wellknown import like c.i.f. or which prevails in common use in a particular place of performance as may be indicated by the addition of the epithet 'usual ' : see Shamrock section section Co. vs Storey (a), where 'usual colliery guarantee ' was referred to in a charter party in order to define loading obligations. " The addition of the word " usual " refers to something which is invariably to be found in contracts of a particular type. Commercial documents are sometimes expressed in language which does not, on its face, bear a clear meaning. The effort of Courts is to give a meaning, if possible. This was laid down by the (1) (2) (3) , 1035 House of Lords in Hillas & CO. vs Arcos Ltd. 1, and the observations of Lord Wright have become classic, and have been quoted with approval both by the Judicial Committee and the House of Lords ever since. The latest case of the House of Lords is Adamastos Shipping Co. Ltd. vs Anglo Saxon Petroleum Co. Ltd.(2). There, the clause was " This bill of lading ", whereas the document to which it referred was a charter party. Viscount Simonds summarised all the rules applicable to construction of commercial documents, and laid down that effort should always be made to construe commercial agreements broadly and one must not be astute to find defects in them, or reject them as meaningless. Applying these tests to the present case and in the light of the provisions of section 29 of the Indian Contract Act, it is clear that the clause impugned is capable of being made certain and definite by proof that between the parties or in the trade or in dealings with parties in British East Africa, there was invariably included a force majeure clause of a particular kind. In 'our opinion, the contract was not void for vagueness or uncertainty by reason of the reference in the terms stated, to the force majeure clause. Mr. Daphtary posed the question as to on whom was the burden of proving the usual force majeure clause. In our opinion if the agreement is not void for uncertainty, that question would be a matter for the decision of the arbitrators. It is too early to say by what evidence and by whom the usual force, majeure clause must be established. The next ground on which it is said that the agreement was void for uncertainty has reference to the employment of the words " if necessary " in the letter of November, 30, 1957. The effect of that letter is to make an alteration in cl. 6 of the agreement, which has been quoted already. Under that clause, the buyers were to obtain the import licence and to communicate the number thereof to the sellers not later than February 20, 1958, and in the event of their failure to do so for any reason whatsoever, the sellers (1) ; (2) , 153. 132 1036 were entitled "at their discretion " either to carry over the goods or to ask the buyers to pay for the contracted goods and take delivery in British East Africa. By that letter, the sellers confirmed that " if necessary " they would carry over the contracted goods for two months, namely, March and April, subject to payment of charges. It is contended that the words " if necessary " are entirely vague and do not show, necessary for whom, when and why. In our opinion, this argument has no force whatever. Under cl. 6, the sellers had an absolute discretion either to carry over the goods or to insist on delivery being taken. By this letter, they have said that, if necessary, that is to say. if the buyers find it difficult to supply the number of the import licence, the contract would be carried over to March and April. By this amendment, the sellers surrendered to a certain extent their absolute discretion. The clause means that the contract was not extended to March and April, but that the sellers would extend it to that period,. if occasion demanded. Since both the parties agreed to this letter and the buyers confirmed it, it cannot be said that there was no consensus ad idem, or that the whole agreement is void for uncertainty. We shall now consider the next argument, which was very earnestly urged, before us. It is that section 20 of the cannot be made applicable to this case at all. We have already quoted extracts from the agreement which include the clause by which the Bye laws of the East India Cotton Association Ltd., Bombay, were applied to this contract, except Bye law 35,which deals with arbitration on quality in case of East African cotton. Bye law 1(B) relates to East African cotton, and it says that Bye laws 1 to 46 inclusive (with certain exceptions) shall apply to contracts in respect of East African cotton. It was conceded before the High Court and also before us that the Bye laws are statutory. The buyers were members of the Association but not the sellers; but the Bye laws on arbitration, with which we are concerned, include arbitrations between a member and a 1037 non member. We are concerned directly with Bye law 38 A. Bye law 38 A in its opening portion, reads: All unpaid claims, whether admitted or not, and all disputes (other than those relating to quality) arising out of or in relation to contracts (whether forward or ready and whether between members or between a, member and a non member) made subject to these Bye laws shall be referred to the arbitration of two disinterested persons one to be chosen by each party. The arbitrators shall have power to appoint an umpire and shall do so if and when they differ as to their award. " Then follow certain provisions, which were stressed but which need not be quoted in extension Shortly stated, they are that the arbitrators must make their award in 15 days, unless time be extended by the Chairman. The umpire is to be appointed within 15 days or such extended period as may be fixed by the Chairman and the umpire is to make his award within 10 days, unless time be extended by the Chairman. In case of disagreement or failure of a party to appoint an arbitrator, the Chairman may appoint an arbitrator, and similarly the Chairman is to appoint the umpire and he may even appoint himself. Other powers are conferred on the Chairman, who is the Chairman of the Board of Directors of the East India Cotton Association Ltd. The contention is that arbitrations under the , like those under Sch. 11 of the Code of Civil Procedure, are of three kinds described by Lord Macnaghten in Ghulam Jilani vs Muhammad Hassan (1), and that this belongs to the second category there described, in which " all further proceedings are under the supervision of the Court ". It is argued that by the application of the Bye laws, the Court is left no powers under section 20 which is being invoked, and that section 20 cannot thus apply. Section 20 of the , in so far as it is material to this point, is as follows: " 20. Application to file in Court arbitration agreement. (1) Where any persons have entered into an (1) (1901) L.R. 29 I.A. 51, 56, 57. 1038 arbitration agreement before the, institution of any suit with respect to the subject matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. (3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed. (4) Where no sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court. (5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable. " The sellers rely upon cl. (5), which enjoins the application of the provisions of the , so far as they can be made applicable. Reference is then made to provisions of Chap. II and the Schedule of the Act laying down the powers of the Court, and they are contrasted with the provisions of the Bye. laws to show that if the latter prevail, no residuum of power is left to the Court, and that after filing the agreement, the Court must abdicate in favour of the Chairman and the Act, in terms, ceases to apply. Reference is also made to section 47 of the , which provides: "Subject to the provisions of section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder " ' (Proviso omitted) 1039 The opening words of section 47 takes us to a. 46, which may be read at this stage. It provides: "The provisions of this Act, except subsection (1) of section 6 and sections 7, 12, 36 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as this Act is inconsistent with that other enactment or with any rules made thereunder." Section 46 makes the provisions of any other enactment or any rules made thereunder to prevail over the , if inconsistent with the latter. In view of these several provisions, it is clear that the applies to all arbitrations and Chap. III makes it applicable also to arbitrations, in which the arbitration agreement is asked to be filed in Court under section 20, subject, however, to this that the provisions of any other enactment or rules made thereunder, if inconsistent with the , are to prevail. Learned counsel for the buyers contends that nothing is saved of the Act. This is not correct. To begin with, questions as to the existence or validity of the agreement are saved from decisions by arbitrators or umpires, however appointed. Since such a plea can only be raised in bar of an application by persons seeking a reference to arbitration, at least that portion of the Act still applies, and that power can only be exercised by the Court. Other provisions of Chap. II, like sections 15 and 16, still remain applicable. We need not give a list of all the provisions which may be saved, because that will involve an examination side by side, of the sections of the Act and the provisions of the Bye laws. So long as something is saved, it cannot be said that the Court after receiving the agreement and ordering that it be filed, becomes completely functus officio. But the crux of the argument is that the provisions of tub.a. (4) of section 20 read with sub s.(1), ibid., cannot apply, and the Court, after filing the agreement, will have 1040 to do nothing more with it, and this shows that section 20 is not applicable. This argument overlooks the fact that this is a statutory arbitration governed by its own rules, and that the powers and duties of the Court in sub section (4) of section 20 are of two distinct kinds. The first is the judicial function to consider whether the arbitration agreement should be filed in Court or not. That may involve dealing with objections to the existence and validity of the agreement itself. Once that is done, and the Court has decided that the agreement must be filed, the first part of its powers and duties is over. It is significant that an appeal under section 39 lies only against the decision on this part of sub section Then follows a ministerial act of reference to arbitrator or arbitrators appointed by the parties. That also was perfectly possible in this case, if the parties appointed the arbitrator or arbitrators. If the parties do not agree, the Court may be required to make a decision as to who should be selected as an arbitrator, and that may be a function either judicial, or procedural, or even ministerial; but it is unnecessary to decide which it is. In the present case, the parties by their agreement have placed the power of selecting an arbitrator or arbitrators (in which we include also the umpire) in the hands of the Chairman of the Board of Directors of the East India Cotton Association, Ltd., and the Court can certainly perform the ministerial act of sending the agreement to him to be dealt with by him. Once the agreement filed in Court is sent to the Chairman, the Bye laws lay down the procedure for the Chairman and the appointed arbitrator or arbitrators to follow, and that procedure, if inconsistent with the , prevails. In our opinion, there is no impediment to action being taken under section 20(4) of the . We may dispose of here a supplementary argument that the dispute till now is about the legal existence of the agreement including the arbitration clause, and that this is not a dispute arising out of, or in relation to a cotton transaction. Reference was made to certain observations in Heyman vs Darwins Ltd.(1). In (1) 1041 our opinion, the words of the Bye law "arising out 'of or in relation to contracts" are sufficiently wide to comprehend matters, which can legitimately arise under section 20. The argument is that, when a, party questions the very existence of a contract, no dispute can be said to arise out of it. We think that this is not correct, and even if it were, the further words " in relation to " are sufficiently wide to comprehend even such a case. In our opinion, this argument must also fail. It was contended lastly that the law applicable to the case is the lex loci solutionis, that is to say, the law of British East Africa. Reference was made to a passage from Pollock and Mulla 's Contract Act, Eighth Edn., p. 11, where it is observed as follows: " In ordinary circumstances the proper law of a contract (to use Mr. Dicey 's convenient expression) will be the law of the country where it is made. But where a contract is made in one country and to be performed wholly or in part in another ', the proper law may be presumed to be the law, of the country where it is to be performed." (Auckland Corporation vs Alliance Assurance Co.) (1) The learned authors observe, on the same page further : "But these rules are only in the nature of presumptions, and subject to the intention of the parties, whether expressly declared or inferred from the terms and nature of the contract and the circumstances of the case. " Reliance was also placed on Chitty 's Law of Contract and Rule 148, sub r. (3), Second Presumption, in Dicey 's Conflict of Laws, Seventh Edn., p. 738, on which the statement of the law in Pollock and Mulla is based. Whether the proper law is the lex loci contracts or lex loci solutionis is a matter of presumption; but there are accepted rules for determining which of them is applicable. Where the parties have expressed themselves, the intention so expressed overrides any presumption. Where there is no expressed intention, (1) ; 1042 then the rule to apply is to infer the intention from the terms and nature of the contract and from the general circumstances of the case. In the present case, two such circumstances are decisive. The first is that the parties have agreed that in case of dispute the Bombay High Court would have jurisdiction, and an old legal proverb says, " Qui elicit judicem eligit jus" If Courts of a particular country are chosen, it is expected, unless there be either expressed intention or evidence, that they would apply their own law to the case. See N. V. Kwick Who Tang vs James Finlay & Co. (1). The second circumstance is that the arbitration clause indicated an arbitration in India. of such arbitration clauses in agreements, it has been said on more than one occasion that they lead to an inference that the parties have adopted the law of the country in which arbitration is to be made. See Hamlyn & Co. vs Tallisker Distillery (2), and Spurrier vs La Cloche (3). This inference, it was said in the last case, can be drawn even in a case where the arbitration clause is void according to the law of the country where the contract is made and to be performed. In our opinion, in this case, the circumstances clearly establish that the proper law to be applied is the Indian Law. In the result, the appeal fails, and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant entered into an agreement with the respondent to purchase African raw cotton. The agreement included a clause that the contract would be subject to the " usual Force Majeure clause ", the Bye laws of East India Cotton Association Ltd., Bombay, except bye law 35, the said Bye laws having statutory force, and to the jurisdiction of the Bombay High Court. Clause 6 of the agreement provided that the buyers were to obtain import licence from the Government of India, failing which the seller would be entitled either to carry over the goods at the cost of the buyers or call upon them to take immediate delivery on payment in British East Africa, and in default to sell the goods in British East Africa and claim the deficit, if any between the contractual price and the price obtained on re sale. Clause 7 further provided that notwithstanding the import policy followed by the Government of India in respect of the import of the contracted goods, the buyers would be bound to obtain the necessary import licences and communicate the numbers thereof to the sellers on specified dates, failing which cl. 6 would operate. The buyers did not perform the contract and the sellers after notice to them re sold the goods and thereafter claimed the deficit which the,buyers refused to pay. The sellers invoked the arbitration clause and the rules contained in bye law 38A of the Bye laws and others following it, which conferred on the Chairman of the Board of Directors of the East India Cotton Association Ltd., the power of selecting the arbitrator or arbitrators, and applied to the High Court under section 20 of the Indian for filing the agreement and referring the dispute to arbitration. The buyers resisted and the trial judge dismissed the application, but the Court of appeal reversed that decision. It was urged in this Court on behalf of the buyers that (1) cls. 6 and 7 contemplated acquisition of property or Exchange in Africa and thus involved a breach of section 5 of the Foreign Exchange Regulation Act, since no general or special exemption had been granted thereunder by the Reserve Bank, (2) that the expression " subject to the usual Force Majeure clause " was vague and uncertain and rendered the agreement void, (3) that the application of bye law 48A et seq left no powers in the Court to act under sub sections (1) and (4) of section 20n 1021 of the and the section was thus inapplicable and (4) that the law applicable to the case was the law of British East Africa and not that of India. Held, that the contentions must fail. The provisions of sub sections (2) and (3) of section 21 of the Foreign Exchange Regulation Act, properly construed, left no manner of doubt that they contemplated matters which were within the prohibition of section 5 of the Act and had the effect of engrafting on the agreement of parties a term that it would be for the decreeholder before he could enforce the decree or order of the court to obtain the permission of the Reserve Bank and were thus designed to prevent the non performance of the contract under a cover of illegality. The contract involved no actual or contingent right to acquisition of property abroad, and even assuming it did, it was saved by section 21 of the Act subject to its conditions. The agreement was thus enforceable. Nor was the contract void for uncertainty. It was clear from judicial decisions that a reference to "force majeure " means the saving of the performing party from the consequence of factors beyond his control. The condition in respect of "force majeure " did not, therefore" make the contract vague. Further, the use of the word " usual " made it clear that the clause could be made certain by evidence and so it was protected by section 29 of the Contract Act. Lebeaupin vs CriSpin, , referred to. British Industries vs Patley Pressing, and Scammell (G) and Nephew Ltd. vs Ouston (H. C. and J. G.) , distinguished. Bishop & Baxter Ld. vs Anglo Eastern Trading & Industrial Co. Ld., [1944] I.K.B. 12, Shamrock section section Co. vs Storey, (1899) 5 Corn. Cas. 21, Hillas & Co. vs Arcos Ltd., ; and Adamastos Shipping Co. Ltd. vs Anglo Saxon Petroleum Co. Ltd., L,959) A.C. 133, relied on. Although by section 46 of the , the Bye laws, if inconsistent with the provisions of the Act, must prevail, it was not correct to say that their application made the Courtfunctus officio under section 20 of the Act. It must not be overlooked that although the present was a case of statutory arbitration governed by its own rules, the court under section 20(4) of the had two distinct powers, (1) of judicially considering whether or not the arbitration agreement should be filed in court and (2) whether there should be a reference to the arbitrator or arbitrators appointed by the parties or selected by it. Since in the instant case the parties had by their agreement empowered the Chairman of the Board of Directors of the East India Cotton Association, Ltd., to select the arbitrator or arbitrators, the court could send the agreement to him to be dealt with under the pro, cedure laid by the said Bye laws. 1022 Whether the law of the country where the contract is made or of the country where it is to be performed should apply is sometimes a matter of presumption. But the declared intention of the parties overrides such presumption. Where there is no such declaration, the intention may be inferred from the terms and nature of the contract and the general circumstances of the case. In the instant case, since the parties agreed that in case of dispute the Bombay High Court would have jurisdiction and the arbitration clause indicated arbitration in India, there could be no doubt that the Indian law was to apply. N. V. Kwick Who Tong vs James Finlay & Co., [1927] A.C. 604, Hamlyn & Co. vs Tallisker Distillery, and Spurrier vs La Cloche, , referred to.

Appeal No. 552 of 1962. Appeal by special leave from the judgment and decree dated August 22, 1960 of the former Bombay High Court in appeal No. 432 of 1954 from Original Decree. M. K. Nambiar, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. D. R. Prem, B. R. G. K. Achar and R. H. Dhebar, for the respondent. March 3, 1964. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave is directed against the judgment and decree of the High Court of Bombay confirming those of the Civil Judge, Senior Division, 986 Ahmednagar, Jr,, Special Civil Suit No. 6 of 1953 filed by the appellant against the State of Bombay for a declaration of his right to water from a particular source, and for consequential reliefs. The appellant is the owner of Shankar Tukaram Karale Rampur Farm, situated at the tail outlet of the Godavari Right Bank Canal Distributary No. 17, The lands comprised in the said Farm originally belonged to Shankar Tukaram Karale, hereinafter called Karale. In the year 1935 the said Karale had a farm for raising sugarcane consisting of 35 acres owned by him and about 65 acres of land taken on lease by him in Ahmednagar District. He obtained sanction to irrigate his lands on the outlet No. 17 of the Godavari Right Bank Canal. In or about the same year the Government of Bombay proposed to reserve certain area along the said Distributary Canal as "factory area". After some correspondence between the said karale and the Government of Bombay, it was the appellant 's case, the Superintending Engineer agreed on July 14, 1939, to exclude Karale 's lands from the factory area and also to give him water perpetually on condition that he concentrated all his holdings on the tail outlet of Distributary No. 17 and to take the supply of water on volumetric basis. Pursuant to that arrangement, Karale, by purchase or otherwise, concentrated his holdings and shifted his operations to that area and he was supplied water on the agreed basis. In or about April 1948, the appellant and Karale entered into a partnership for exporting the said area whereunder the appellant had three fourths share and the said Karale had one fourth share. Later on disputes arose between the appellant and Karale in respect of the partnership which culminated in a consent decree dated February 7, 1951, whereunder the appellant became the full owner of the partnership business with all its assets and liabilities, including the lands and the compact block and the right to use the canal water. When the appellant applied for the recognition of the transfer, the Canal Officer refused to do so. On appeal, he was informed that his request for supply of canal water could not be granted. From April 1952 the supply was stopped. After giving the statutory notice under 987 section 80 of the Code of Civil Procedure, the appellant filed Special Civil Suit No. 6 of 1953 in the Court of the Civil Judge, Senior Division, Ahmednagar, against the State of Bombay for a declaration that the plaintiff was entitled to the supply and use of water from the tail outlet of Distri butary No. 17 of the Canal to irrigate 100 acres of basic cane land in the concentrated area described in Schedule 11 at the rates prescribed by the Government under the Irrigation Act on a volumetric basis, for specific performance of the aforesaid agreement between Karale and the Government, for recovery of damages, and for other incidental reliefs. The State of Bombay filed a written statement contending, inter alia, that there was no concluded agreement between the Government and Karale embodying the alleged terms stated in the plaint, that even if there was such an agreement, it was void inasmuch as it did not comply with the provisions of section 175(3) of the Government of India Act, 1935, and that, in any view, the appellant could not legally get the benefit of the agreement under section 30 of the Bombay Irrigation Act, 1879. On the pleadings as many as seven issues were framed reflecting the contentions of the parties. The learned Civil Judge held that there was a concluded agreement between the Government and Karale on the, terms alleged by the appellant, but the transfer by Karale of the said right in favour of the appellant was in violation of the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948, and, therefore, there was no legal transfer of Karale 's right of water in favour of the appellant. In that view, he dismissed the suit. On appeal, the High Court held that there was neither a concluded agreement between Karale and the Government nor did it comply with the requirements of law. In the result the appeal was dismissed. Hence the present appeal. The arguments of Mr. M. K. Nambiar, learned counsel for the appellant, may be summarized under the following heads : (1) There was a concluded agreement between Karale and the statutory authority, the Canal Officer, whereunder the said Karale was entitled 'to get water to his compact block permanently from the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal so long 988 as he was willing to pay the rates for such supply on volu metric basis. (2) As under the compromise decree between Karale and the appellant the said block of land was trans ferred to the appellant, the right under the agreement for the supply of canal water was also transferred to him under section 30 of the Bombay Irrigation Act, 1879 (Bombay Act No. 7 of 1879), hereinafter called the Act. (3) Section 175(3) of the Government of India Act, 1935, does not apply to the agreement in question for the following reasons : (i) once the Legislature covers any matter by the enactment of any statute, any functional power assigned to the Government or any other authority under the said statute is exercisable only under that statute and in virtue of the statutory authority and not in the exercise of the executive authority of the Province within the meaning of section 175(3) of the Government of India Act, 1935; (ii) the agreement contemplated by section 30 of the Act is an agreement entered into under the Act by a statutory authority in pursuance of a statutory power with the statutory consequences and, therefore, such an agreement is outside the provisions of section 175(3) of the Government of India Act, 1935; and (iii) that apart, the expression "agreement" in section 30 of the Act does not mean a formal contract, but only a sanction, permission or consent given by the Canal Officer pursuant to the authority given to him under the Act, and, therefore, such sanction, permission or consent is not a contract within the meaning of section 175(3) of the (Government of India Act, 1935. This appeal raises a question a far reaching importance as regards the scope of the executive authority exercised by the Governor under the Government of India Act, 1935; but, we are relieved of the duty to express our opinion on that question in this appeal in view of our finding that the agreement in question was arrived at outside the provisions of the Act and, therefore, it squarely falls within the scope of section 175(3) of the Government of India Act, 1935. We shall at the outset address ourselves to the said agreement, namely, (i) who are the parties to the said agreement; and (ii) what are the terms thereof? 989 When the suit was pending decision of the Civil Court, the appellant filed an application therein for directing the Government to produce, among others, the applications made to the Government from time to time by Karale in respect of supply of water to his farm in the year 1935 and subsequent thereto and the office copies of the replies sent to the said applications, the Government documents and papers, water bills and the records in respect _of the supply of water to the land belonging to Karale from the year 1935. and the correspondence that passed between karale and ' the Government between 1935 and 1939 in respect of consolidation of his lands. Obviously these papers were required by the appellant for establishing the case that there was a concluded agreement between Karale and the Government or the Canal officer. But, unfortunately, the said documents were not produced. It is not clear from the record why and under what circumstances the Government withheld the documents from the court, but in appeal the High Court in its judgment remarked: "In the trial Court no attempt was made to have this endorsement produced in Court which could have been done if the plaintiffs Counsel had so desired by a proper application to the Court". But the High Court felt that it was absolutely necessary in the interests of justice to call upon the learned Government Pleader to produce the file with reference to that particular endorsement, namely, Endorsement No. 3033/36 1 dated 28th April 1939, and directed him to do so. It disposed of the appeal after receiving the said relevant document. Though the High Court threw the blame for this lapse on the appellant, we do not think there was any justification for it. Apart from the fact that the appellant asked for the production of all the relevant documents, the Government, being the defendant in this case, should have produced the documents relevant to the question raised. While it is the duty of a private party to a litigation to place all the relevant matters before the Court, a higher responsibility rests upon the Government not to withhold such documents from the court. Be that at it may, the documents were finally produced before the court, and the High Court considered the same in arriving at its conclusion. Though Mr. Nambiar suggested that the said documents 990 related to some other party, as we will indicate in the course of the judgment, the said file dealt also with the agreement alleged to have been entered into between Karale and the Government. Exhibits Nos. D 67 and D 68 are the documents on which strong reliance is placed on behalf of the appellant. Exhibit D 67 reads thus : Below Government endorsement No. 3033/36 1 dated the 28th April 1939: No. 4223 of 1939 Poona, 14th July, 1939. Returned with compliments. The applicant has already been allowed to continue his present cane irrigation of 93 acres on outlets 2 and Tail of Distributary 17 of the Godavari Right Bank Canal for one year from 15 2 1939 pending consideration of his case in detail, in relation to the demand of the Sugar Company formed by Messrs. Jagtap & Khilari on this canal and lately named the "Changdeo Sugar Factory". In view however of the orders issued verbally by the Hon 'ble Minister, Public Works Department on 12 7 1939 the applicant is being allowed to concentrate all his cane irrigation to the extent of 100 acres on the tail outlet of Dy 17 of the Godavari Right Bank Canal by 15 2 1940 and to continue it permanently there if he so wishes provided he agrees to take water by measurement on volumetric basis of 112" at the outlet head and pay the water rates that may hereafter be sanctioned by Government in this respect. The applicant has since signified his willingness to these conditions. He will be charged, till then on the area basis as is done at present. The area thus allowed to the applicant will be excluded from the Sugar Factory area while 991 fixing the boundaries of the allotted factory area of the "Changdeo Sugar Factory" on this canal. D.A. Marathi petition. (Sd.) W. H. E. GARROD, Superintending Engineer, D.I.C. Copy, with compliments, to the Executive Engineer, Nasik Irrigation Division, for information and guidance with reference to the correspondence ending with this office No. 3686 dated 22 6 1939. Exhibit D 68 is a letter written by the Superintending Engineer to Karale. It reads : No. 4224 of 1939 Poona, 14th July 1939. TO Shankar Tukaram Karale, Esquire, at Belapur. Continuation of cane irrigation on Distributary No. 17 of the Godavari Right Bank Canal. Dear Sir, In continuation of this office No. 3686 dated 23rd June 1939, I have to inform you that under orders of the Honourable Minister, Public Works Department, you will be allowed to irrigate came to the extent of 100 acres on the tail outlet of Distributory No. 17 of the Godavari Right Bank Canal permanently, so long as you may wish to do so, on condition that you agree to take canal water by measurement on volumetric basis of 112" depth at the outlet head at the rate which may be sanctioned by Government hereafter. (2) This will apply to new cane plantation from 15 2 1940 onwards. Till then, you may continue your cane irrigation on outlets 2 and tail as at present. Yours faithfully, (Sd.) W. H. E. Garrod, Superintending Engineer, Deccan Irrigation Circle. 992 Copy, with compliments, to the Executive Engineer, Nasik Irrigation Division, for information. A fair reading of these two documents leaves no room for doubt that a firm agreement was entered into between the Government and Karale in respect of the supply of water to his land to the extent of 100 acres on the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal. These two letters show that there was previous correspondence between the Engineering Department and Karale and that the Minister of Public Works Department intervened and settled the terms of the agreement, and that the terms were communicated to Karale, who accepted the same. The terms of the agreement were, (i) Karale was allowed to concentrate all his cane irrigation to the extent of 100 acres on the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal by February 15, 1940, and to continue it permanently, if he so wished; (ii) Karale agreed to take water by measurement on volumetric basis of 112" at the outlet head and to pay water rates that might thereafter be sanctioned by the Government in that respect; (iii) the said area will be excluded from the sugar factory area while fixing the boundaries of the allotted sugar factory area of Changdeo Sugar Factory; and (iv) the terms will apply to new cane plantation from February 15, 1940 onwards. It is said that the word "permanently" refers to cultivation, but not to supply of water. This interpretation makes the entire contract meaningless. Sugar cultivation can be done only with the permission of the department, for sugarcane crop cannot be raised without supply of water from the canal. When the Superintending Engineer allowed Karale to concentrate all, his cane irrigation in the said area permanently on condition he paid the prescribed rates, it was necessarily implied in the said agreement that he would supply water permanently, if the said rates were paid. Cultivation and supply of water are so inextricably connect ed that one cannot be separated from the other. The permission to have cane irrigation permanently on the basis of a particular rate implies that the supply for irrigation is co terminous with irrigation. In this view we must hold that Exs. D 67 and D 68, read together, record a concluded 993 agreement between the Superintending Engineer, acting on the orders of the Minister of Public Works Department, on the one hand and Karale on the other, agreeing to supply water so long as Karale had cane cultivation in the con s centrated area. The other documents, read along with the documents filed for the first time in the High Court, also do not detract from this conclusion. Exhibit D 78. which is not dated, was the application filed by Karale to the Chief Minister, P.W.D. and Irrigation Department, Bombay. Therein Karale represented to the Chief Engineer that Distributary No. 17 was permanently closed prior to 1935, that he was responsible for starting the said Distributary by commencing plantation. that the "Prime Minister 's" consent gave him an assurance that while declaring the factory area, the area of the previous gardeners would be excluded from the said area, that he had invested a capital of about Rs. 75,000/ for raising the plantation and that in the circumstances he prayed that while declaring the factory area, his land should be excluded therefrom. This application was considered by the concerned office under G.L. No. 3033/36 dated April 27, 1939. In the note put up by the office the contents of the ;said application are summarized. Thereafter the following note is found : "With reference to the H.M.R.D. 's note dated 3 4 1939 it may be observed that Government has already accepted the principle that no ordinary irrigators should be allowed to operate in the sugar factory area. Under the general orders issued on the subject owner irrigators are to be allowed to continue irrigation, on yearly basis. It is for consideration whether this fact may be brought to the notice of the H.M.R.D. If it is decided to do so the papers may be submitted to the H.M., P.W.D. and the H.M.R.D. after the drafts put up are issued." The Revenue Minister accepted the endorsement. This is only an office note and the suggestion that the irrigators should be allowed to continue on the yearly basis was only to prevent further applications after the factory area was declared. This endorsement had nothing to do with the 134 159 S.C. 63 994 exclusion of any particular area from the sugar factory area. The endorsement "should see" below the endorsement made by the Revenue Minister perhaps meant that the papers, should be submitted to the Minister concerned. Exhibit D 79 is a letter written by the Deputy Secretary to the Government of Bombay to Changdeo Sugar Mills. This letter also refers to the office endorsement No. 3033/36 1. Though we are not directly concerned with this letter, it may be mentioned that the application of Karale is connected with the proposal to declare certain area as factory area and to give water to Changdeo Sugar Factory in respect of the lands in that area, for his application was to exclude his area from the factory area. Both the matters obviously were dealt together. Exhibit D 79A is again part of the file relevant to the factory area. But a reference is made again to the office No. 3033/36 1 and in the same file Karale 's letter is also noticed. Exhibit D 81 is an endorsement at page 133 of the same file, which also deals with the subject 'sugar factories". It contains a copy of the letter written to the Superintending Engineer requesting him to submit at a very early date a draft agreement for the supply of water to the company 's area on the Godavari Right Bank Canal on the terms embodied in the margin thereof. Exhibit D 82 is also another endorsement on the same file. The endorsement reads thus : Endorsement at 191. 3033/36 1114 Discussed with the Secy. In addition to his written requests, Mr. Karale had also interviewed the late H.M.R.D. During the discussions, H.M. had made it clear that Mr. Karale can only be allowed to continue if he was willing to consolidate his holdings in an independent block so that the Co. 's cultivation be carried on undisturbed. This is not recorded on this file as H.M. did not pass any orders in Bombay or at the Secretariat but instructed 995 (Presumably after discussion with Mr. Sule) the S.E.D.I.C. in the matter. Please see P. 107 ante. That Mr. Karale 's cane has to be shifted to one block is clear from the wordings of the S.E.S. letter. "The applicant is allowed to concentrate all his cane. . on the tail outlet of D. 17". This is the only record of the orders passed. Moreover Mr. Karale is to have his supply on a volumetric basis as soon as that can be arranged for. This would necessitate the concentration of his cane areas. " This endorsement notices the contents of exhibit D 67 and, therefore, it must have been made only after April 28, 1939. The said documents do not carry the matter further. They only show what we have already noticed, namely, the Govern ment wanted to create a factory area and that Karale filed an application to have his area excluded therefrom. The notings of the department are not in any way inconsistent either with exhibit D 67 or with exhibit D 68. Exhibits D 67 and D 68 refer to Office No. 3686 dated June 23, 1939, and that letter must have been in some other file and that file was not produced and, if produced, it might have thrown some more light. In the circumstances we must proceed on the basis that Exhibits D 67 and D 68 embodied the terms of the agreement entered into between the Government and Karale pursuant to the application, exhibit D 78, made by him to the Chief Engineer, P.W.D. We have already held that the said documents record the completed agreement between the Government and Karale in respect of supply of water to his and. Even so, the question arises whether the said agreement is enforceable, if it has not complied with the provisions of section 175(3) of the Government of India Act, 1935. The premises on which Mr. Nambiar built his argument is that the said agreement was entered into between the parties under the provisions of the Act. If it was not made under the provisions of the Act, but outside the Act, the foundation for this argument would disappear. We would, therefore. proceed to consider now whether the said agreement was under the provision of the Act. 996 The relevant provisions of the Act may now be read. Section 3(6) defines "Canal Officer" to mean any officer lawfully appointed or invested with powers under section 4. Under section 4, such officer can exercise powers and discharge duties that may be assigned to him by the State Government. It is said that the Superintending Engineer was one of the officers so appointed by the Government and that the powers under sections 27 to 30 of the Act were assigned to him. Under section 27, "Every person desiring to have a supply of water from a canal shall submit a written application to that effect to a Canal Officer duly empowered to receive such applications, in such terms as shall from time to time be prescribed by the State Government in this behalf". Under section 29, "When canal water is supplied for the irrigation of one or more crops only the permission to use such water shall be held to continue only until such crop or crops shall come to maturity, and to apply only to such crop or crops". Under section 30, "Every agreement for the supply of canal water to any land, building or other immovable property shall be transferable therewith, and shall be presumed to have been so transferred whenever a transfer of such land, building or the other immovable property takes place." But under the second limb of the section, "except in the case of any such agreement as aforesaid, no person entitled to use the water of any canal, shall sell or sub let, or otherwise transfer, this right to such use without the permission of a Canal Officer duly empowered to grant such permission". A combined reading of these provisions establishes that every person desiring to have supply of water from a canal shall apply in the prescribed manner to the Canal Officer and that the per ,on to whom water is supplied cannot transfer his right to another without the permission of the Canal Officer. But if the land in respect whereof the water is supplied is transferred, the agreement for the supply of water also shall be presumed to have been transferred along with it. The expression "agreement" in section 30 of the Act, it is contended, does not connote a contract as understood in law, but only a convenient mode of expression to indicate the sanction or permission given by the Canal Officer. This meaning of the expression "agreement" is sought to be supported by a reference to the Bombay Canal Rules, 1934, made in 997 exercise of the powers conferred on the State Government under section 70(e) of the Act. Part 11 of the Rules deals with supply of water. It provides for the filing of applications, the manner of their disposal and. the persons entitled to dispose of the same, and also the mode of supply of water for cultivation of different crops. The forms prescribed columns under different heads for giving the necessary particulars. The forms contain the instructions as well as conditions on which permission will be granted. Rule 7 says that an application for supply of water for the irrigation of land for any period may be sanctioned, indicating thereby that there is no maximum period fixed for which application for supply of water can be made. Assuming without deciding that "agreement" under section 30 of the Act means only sanction, the Act and the Rules provide for an application to be made to the Executive Engineer, who, subject to. the Rules, can give the sanction. Rule 36 provides for an appeal from the order of the Executive Engineer to the Superintending Engineer, and from that of the Executive Engineer 's order under r. 18 or r. 19 to the Collector. But there is no provision either in the Act or in the Rules made thereunder enabling any party to make an application to the Chief Engineer to exclude his land from factory area, and to give him supply of water for irrigating the said land permanently, or a power to the Government to enter into an agreement or make an order in respect of such an application. Such an order or agreement is entirely outside the scope of the Act or the Rules made thereunder. We are not called upon in this case to decide whether the Government has any such power outside the Act; but, we shall assume for the purpose of this case that it has such power and to proceed to consider the legal arguments on that basis. The documentary evidence adduced in this case, which we have already considered, discloses that the application was made to the Chief Engineer; that the Government, through the relevant ministry, considered the application and that on the instructions given by the concerned Minister, the Superintending Engineer wrote the letter exhibit D 68 to Karale. It was, therefore, in effect and substance, an agreement entered into between the Government and Karale. 998 Such an agreement fell outside the provisions of the Act. The parties to the agreement also understood that it was an agreement made between the Government and Karale. The Government in or about February 1942 sent a draft agreement to Karale for execution regarding the supply of canal water to his farm, but the said Karale did not execute the agreement. The parties did not agree in regard to some of the conditions found in the draft, but Karale did not contest the position of the Government that a formal agree ment in compliance with the provisions of law was necessary. Again during the continuance of the partnership between Karale and the appellant, in or about 1950, the Government of Bombay sent another draft agreement to the said Karale for execution. Though Karale signed the agreement, he insisted upon a proviso that the agreement should be without prejudice to the permission already granted to him. The Bombay Government did not execute the said agreement. So too, Karale and the appellant were making yearly applications under the Act and getting supply of water to their plantation. That procedure was presumably followed because, though there was an agreement between Karale and the Government, for one reason or other, a formal document, though intended to be executed, was not executed. This conduct on the part of the Government as well as that on the part of Karale and the appellant also establishes that the agreement was not under the Act, but between the Government of Bombay and Karale. If so, it follows that the contract entered into between the Government and Karale was a contract made in the exercise of the executive authority of the Province within the meaning of section 175(3) of the Government of India Act, 1935. The relevant part of section 175(3) of the Government of India Act, 1935, read : "All contracts made in the exercise of the executive authority of a Province shall be expressed to be made by the Governor of the Province . and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor by such persons and in such manner as he may direct or authorise. 999 This section laid down two conditions for the validity of such a contract, namely, (i) it should be expressed to be made by the Governor of the Province, and (ii) it should be executed on behalf of the Governor by such persons and in such manner as he might direct or authorize. We have nothing on the record to disclose whether the Superintending Engineer, though he acted under oral instructions of the Minister, was authorized by the Governor or under relevant rules to enter into such a contract. That apart, even if Exs. D 67 and D 68 together were treated as forming part of a contract entered into between the Government and Karale, can it be said that the said contract was expressed to be made in the name of the Governor? Ex facie it cannot be said so. But it is contended that on a liberal construc tion, which we should adopt in a case where the Government is trying to go back on its solemn promise, such a formality can easily be read into the said documents. Before we construe the said two documents in order to ascertain whether such a formality has been complied with or not, it would be convenient to notice some of the decisions of this Court. The question of construction of section 175(3) of the Government of India Act, 1935, directly arose for decision in Seth Bikhraj Jaipuria vs Union of India(1). There, the Divisional Superintendent, East Indian Railway, placed certain orders with the appellant for the supply of foodgrains for the employees of the said Railway. The orders were not expressed to be made in the name of the Governor General and was not executed on behalf of the Governor General as required by section 175(3) of the Government of India Act, 1935. They were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant. This Court held that the contracts, not having been expressed to be entered into by the ,Governor General and not having been executed on his behalf, were void. This Court held that the provisions of section 175(3) of the Government of India Act, 1935, were mandatory and, therefore, the contracts were void. This decision was followed by this Court in New Marine Coal Co. vs The Union of India(2). Reliance is placed by the (1) (2) ; 1000 learned counsel for the appellant on the decision of this Court in Union of India vs Rallia Ram (1) in support of his contention that though ex facie Exs. D 67 and D 68 do not show that the contract was expressed to be made in the name of the Governor, the said fact could be inferred from the recitals. There, the goods offered to be sold belonged to the Government of India. A tender notice was issued by the Government of India, Department of Food (Division 111), in the name of the Chief Director of Purchases. The Chief Director of Purchases agreed to sell the goods on certain conditions to the respondent and incorporated them in the acceptance note, which was also headed "Government of India, Department of Food (Division III), New Delhi". The general conditions of contract, which accompanied the letter of acceptance, defined Government as meaning the Governor General for India in Council. On the said facts this Court held that the correspondence between the parties ultimately resulting in the acceptance note amounted to a contract expressed to be made by the Government and, therefore, by the Governor General, "because it was the Governor General who invited tenders through the Chief Director of Purchases and it was the Governor General who, through the Chief Director of Purchases, accepted the tender of the respondent subject to the conditions prescribed therein". Though in the acceptance note it was not expressly stated that the contract was executed on behalf of the Governor General, on a fair reading of the contents of the letter in the light of the obligations undertaken thereunder, it was held that the contract was executed on behalf of the Governor General. This decision does not depart from the principle accepted in Seth Bikhraj Jaipuria 's case(2). On a fair reading of the correspondence this Court construed that the contract was entered into on behalf of the Governor General and expressed to be made in his name. Can it be said that in the present case Exs. D 67 and D 68 disclose that the Superintending Engineer was authorized to enter into a contract of the nature mentioned therein on behalf of the Provincial Government and that the contract was expressed to be made in the name of the Governor? (1) ; (2) ; 1001 Nothing has been placed before us to establish that the Superintending Engineer was legally authorized to enter into such a contract on behalf of the Government; nor do the documents ex jacie show that the agreement was expressed to be made in the name of the Provincial Government. The letters mentioned the name of the Minister of the Public Works Department and also the Government, in the context of the rates that might be fixed thereafter, but the said documents did not purport to emanate from the Governor. At best they were issued under the directions of the Minister. We find it difficult to stretch the point further, as such a construction will make the provisions of section 175(3) of the Government of India Act, 1935, nugatory. We cannot, therefore, hold that either the contract was entered into by the person legally authorized by the Government to do so or expressed to be made in the name of the Governor. The agreement is void, as it has not complied with the provisions of section 175(3) of the Government of India Act, 1935. In this view, it is not necessary to express our opinion on other interesting questions raised in this case. In the result, the appeal fails and is dismissed, but in the circumstances, without costs. Appeal dismissed.

IN-Abs

One K had obtained sanction to irrigate certain lands from a canal. The same year the Government proposed to reserve certain area along the canal as factory area. According to the appellant after some correspondence between the Government and K, the Superintending Engineer agreed to exclude K 's land from the factory area and also to give water perpetually on the condition that he concentrated all his holding on the tail outlet of the canal and to take the supply of water on volumetric basis. Pursuant to that arrangement, K concentrated his holdings and shifted his operations to that area and he was supplied water on the agreed basis. Later the appellant and K entered into a partnership in respect of exploiting this area. Disputes arose between the appellant and K which culminated in a consent decree whereunder the appellant became the full owner of the land including the right to use this canal water. When the appellant applied for the recognition of the transfer the canal officer refused to do so. On appeal be was informed that his request for supply of the canal water could not be granted. The supply was stopped. After giving them statutory notice under section 80 of the Code of Civil Procedure, the appellant filed a suit against the State for a declaration of his right to water from the canal and for consequential reliefs. The State contested the suit contending, inter alia, that there was no concluded agreement between the Government and K. that even so, the agreement was void inasmuch as it 'did not comply with the provisions of section 175(3) of the Government of India Act, 1935 and in any view the appellant could not legally get the benefit of the agreement under section 30 of the Bombay Irrigation Act. The Civil Judge held that there was a concluded agreement between the Government and K, but the transfer by K of the said right in favour of the appellant was in violation of the provisions of the Bombay Tenancy and Agricultural Lands Act and dismissed the suit. On appeal, the High Court held that there was neither a concluded agreement between K and the Government nor did it comply with the requirements of law, and the appeal was dismissed. On appeal by special leave: Held (i) The documents in the instant case record a concluded agreement between the Superintendent Engineer, acting on the order of 985 the Minister of Public Works Department, on the one hand and K on the other agreeing to supply water so long as K had cane cultivation in the concentrated area. (ii) The provisions of Bombay Irrigation Act establishes that every person desiring to have supply of water from a canal shall apply in the prescribed manner to the Canal Officer and that person to whom water is supplied cannot transfer his right to another without the permission of the Canal Officer. But if the land in respect whereof the water is supplied is transferred, the agreement for the supply of water also shall be presumed to have been transferred along with it. (iii) The conduct on the part of the Government as well as that on the part of K and the appellant also establishes that the agreement was not under the Bombay Irrigation Act, but between the Government and K. (iv) The agreement is void, as it has not complied with the provisions of section 175(3) of the Government of India Act. The contract was not either entered into by the person legally authorised by the Government to do so or expressed to be made in the name of Governor. Seth Bikhraj Jaipurja vs Union of India, and New Marine Coal Co. vs Union of India, [1964] 2 S.C.R. 859, referred to. Union of India vs Rallia Ram, ; , referred to. Semble: While it is the duty of a private party to a litigation to Place all the relevant matters before the court, a higher responsibility rests upon the Government not to withhold such document from the Court.

Appeal No. 549 of 1962. Appeals from the judgment and orders dated August 1, 1958 and March 13, 1959 of the Assam High Court A. Nos. 86 of 1958 and 14 of 1959 respectively. N. C. Chatterjee, K. P. Sen and P. K. Chatterjee, for the appellant (in C.A. No. 549 of 1962). 878 B. P. Maheshwari, for respondents Nos. 1(a) to 1(e) (in C.A. No. 549 of 1962). Behrul Islam and R. Gopalakrishnan, for the appellant (in C.A. No. 569 of 1963). D. N. Mukherjee, for the respondent (in C.A. No. 569/ 63). February 24, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C.J. These two appeals which have been brought to this Court with a certificate issued by the Assam High Court, raise a short question about the construction and effect of section 5 of the Assam NonAgricultural Urban Area Tenancy Act, 1955 (No. 12 of 1955) (hereinafter called 'the Act '). The relevant and material facts which have led to the suits from which these two appeals respectively arise, are similar, and so, it would not be necessary to state them in detail in regard to both the matters. We would, therefore, mention the facts broadly in C.A. No. 549/1962, in dealing with the common point raised for our decision. The appellant in this case is Mst. Rafiquennessa who sued the predecessor of the respondents for ejectment. It appears that Lal Bahadur Chetri has executed a registered lease deed in favour of the appellant on the 14th February, 1946. The lease covered an open plot of land and under the covenant the leasee was entitled to build a house for residential purposes. In the ordinary course, the lease was due to expire on the 12th February, 1952, and the lessee had agreed to deliver vacant possession of the land at the expiration of the stipulated period. Accordingly, a notice to quit was served on him to vacate on the 12th February, 1952. He, however, did not comply with the notice and that led to the present suit by the appellant for eviction (No. 149 of 1952). In support of her claim, the appellant alleged that the lessee had contravened the terms of the lease inasmuch as he had sublet the premises built by him, and so, that was an additional ground for evicting the lessee. The sub lessees were accordingly joined as defendants to the suit. The lessee Chetri alone resisted the suit. The sub tenants let into possession by him did not join issue with the appel 879 lant. The trial Judge decreed the appellant 's claim where upon the lessee Chetri filed an appeal in the Court of the Sub Judge, Lower Assam District, Gauhati, challenging the validity and the correctness of the decree passed against him (Civil Appeal No. 24/1953). While the appeal was pending, the Act was passed and was published in the Assam Gazette on the 6th July, 1955. Thereafter, when the appeal came on for hearing before the lower appellate Court, the tenant filed an application praying that he should be permitted to take an additional ground under section 5 of the Act. Before that date, the Assam High Court had taken the view that the said provision of the Act was applicable to the pending proceedings between land lords and tenants for eviction and that was the basis on which the tenant Chetri wanted to support his appeal. The lower appellate Court allowed the tenant 's plea, framed an additional issue in pursuance of it and sent the matter back to the trial Court for a finding. On remand, the trial Court took evidence and after local inspection, made a finding that the two houses proved to have been built by the tenant must be regarded as permanent in relation to the locality of the plot. He, however, found that there was no evidence to show when the said houses were constructed. Part of the finding was challenged by the tenant before the lower appellate Court. The lower appel late Court ultimately allowed the appeal and set aside the decree passed by the trial Judge in favour of the appellant. The conclusion of the lower appellate Court was that the two houses had been constructed by the tenant within five years after the taking of the lease and that entitled the lessee to claim the benefit of section 5 of the Act. The appellant then preferred a second appeal in the High Court of Assam (No. 86/1958). Following its earlier decision about the applicability of the provisions of section 5 to pending proceedings, the High Court summarily dismissed the said appeal. Thereafter, the appellant applied for and obtained a certificate from the High Court and with the said certificate the present appeal has been brought before us. Pending these proceedings, the tenant Chetri died and his heirs and legal representatives Mst. Tulsa Devi and others. 880 have been brought on the record and will be described as respondents hereafter. Thus, the only point which arises for our decision is whether the Assam High Court was right in taking the view that the provisions of section 5 applied to the proceedings between the parties which were pending at the relevant time before the lower appellate Court. Appeal No. 569 of 1963 arises from a suit filed by the appellant Wahedulla against his tenant, the respondent Abdul Hamid. The relevant facts are similar to those in C.A. No. 549/1962. In this case also, the Act came into force while the appeal was pending before the lower appellate Court and by the application of section 5 respondent 's claim to continue in possession has been upheld and the appellant 's claim for ejecting the respondent has been rejected. The High Court granted certificate to the appellant when it was told that the appellant proposed to challenge the correctness of its earlier decision holding that section 5 of the Act applied to the pending proceedings. The Act was passed by the Assam Legislature in order to regulate in certain respects the relationship between land lord and tenant in respect of non agricultural lands in the urban areas of the State of Assam. It contains fourteen sections and the scheme which is evident in the operative provisions of the Act is to afford protection to the tenants by regulating in certain respects the relationship between them and their landlords in respect of the lands covered by the Act. Section 3(c) defines a 'landlord ' as meaning a person immediately under whom a tenant holds but does not include the Government. While section 3(d) defines a 'Permanent structure ' in relation to any locality as meaning a structure which is regarded as permanent in that locality, the 'tenant and 'urban area ' are defined by clauses (g) and (b) respectively. Section 4 imposes an obligation on the tenant to pay rent for his holding at fair and equitable rates, and the proviso prescribes that in case of any dispute as to fair rent ,between the parties, the rent which was paid by the tenant immediately before the dispute shall be deemed to be fair and equitable unless a competent court decides to the ,contrary. Section 6 provides for compensation for improvements; section 7 provides for enhancement of rent by contract,. section 8 deals with enhancement of rent without contract; section 9 881 authorises the Court to make an order as to enhancement of rent: section 10 prohibits illegal realisation beyond the prescribed amount; section 11 provides for notice for ejectment; section 12 prescribes the procedure in which the notice has to be served; and section 13 confers rule making power on the State Government. Section 14 repeals the earlier Tenancy Act. Having thus broadly considered the scheme of the Act, it is necessary to read section 5, the effect of which is the main point of controversy between the parties before us. Section 5(i) reads thus: Notwithstanding anything in any contract or in any law for the time being in force (a) where under the terms of a contract entered into between a landlord and his tenant whether before or after the commencement of this Act, a tenant is entitled to build, and has in pursuance of such terms actually built within the period of five years from the date of such contract, a permanent structure on the land of the tenancy for residential or business purposes, or where a tenant not being so entitled to build, has actually built any such structure on the land of the tenancy for any of the purposes aforesaid with the knowledge and acquiescence of the landlord, the tenant shall not be ejected by the landlord from the tenancy except on the ground of non payment of rent; (b) where a tenant has effected improvements on the land of the tenancy under the terms whereof he is not entitled to effect such improvements, the tenant shall not be, ejected by the landlord from the, land of the tenancy unless compensation for reasonable improvements has been paid to the tenant". Sub section (2) prohibits the ejectment of any tenant from the land of the tenancy except in execution of a decree for ejectment passed by a competent civil Court; and sub section (3) prohibits the execution of a decree for ejectment on the ground of non payment of rent within a period of 30 days from the date of the decree, and allows the tenant to pay into the executing Court the entire amount due from him under 134 159 S.C. 56 882 the decree within the said period, Whereupon the decree has to be entered as satisfied. Mr. Chatterjee contends that the Assam High Court was in error in coming to the conclusion that the proceedings which were pending between the parties at the appellate stage on 6th July, 1955 when the Act came into force, fell to be governed by the provisions of section 5. He argues that at the relevant date when the suit was filed by the appellant, he had acquired a right to eject the tenant under the terms of the tenancy, and he contends that where vested rights are affected by any statutory provision, the said provision should normally be construed to be prospective in operation and not retrospective, unless the provision in question relates merely to a procedural matter. It is not disputed by him that the legislature is competent to take away vested rights by means of retrospective legislation. Similarly, the legislature is undoubtedly competent to make laws which over ride and materially affect the terms of contracts between the parties; but the argument is that unless a clear and unambiguous intention is indicated by the legislature by adopting suitable express words in that behalf, no provision of a statute should be given retroactive operation if by such operation vested rights are likely to be affected. These principles are 'unexceptionable and as a matter of law, no objection can be taken to them. Mr. Chatterjee has relied upon the well known observations made by Wright J. in in re Athlumney Ex parte Wilson(1), when the learned Judge said that it is a general rule that when the Legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them. He added that there was one exception to that rule, namely, that, where enactments merely affect procedure and do not extend to rights of action, they have been held to apply to existing rights. In order to make the statement of the law relating to the relevant rule of construction which has to be adopted in dealing with the effect of statutory provisions in this connection, we ought to add that retroactive operation of a statutory provision can be inferred even in cases where such retroactive operation appears to be clearly implicit in the (1) 883 provision construed in the context where it occurs. In other words, a statutory provision is held to be retroactive either when it is so declared by express terms, or the intention to make it retroactive clearly follows from the relevant words and the context in which they occur. Bearing in mind these principles, let us look at section section Before doing so, it is necessary to consider section 2 which pro vides that notwithstanding anything contained in any con tract or in any law for the time being in force, the provisions of this Act shall apply to all non agricultural tenancies whether created before or after the date on which this Act comes into force. This provision clearly indicates that the legislature wanted the beneficent provisions enacted by it to take within their protection not only leases executed after the Act came into force, but also leases executed prior to the operation of the Act. In other words, leases which bad been created before the Act applied are intended to receive the benefit of the provisions of the Act, and in that sense, the Act clearly affects vested rights of the landlords who had let out their urban properties to the tenants prior to the date of the Act. That is one important fact which is material in determining the scope and effect of section 5. Now, section 5 itself gives an unmistakable indication of the legislative intention to make its provisions retrospective. What does section 5 provide? It provides protection to the tenants who have actually built within five years from the date of leases executed in their favour, permanent structures on the land let out to them for residential or business purposes, and this protection is available either when the construction of the permanent structure has been made by the tenant in pursuance of the terms of the lease, or even without any term of that kind and the landlord had knowledge of it and had acquiesced in it. Thus, the plain object of section 5 is to protect the tenants who have built a permanent structure either for business or for residence, provided it has been built within 5 years from the date of contract of tenancy. Therefore, cases where permanent structures had been built within 5 years of the terms of contract, would fall within section 5 ( 1 ) (a), even though those constructions had been made before the date of the Act. Thus, the very scheme of 5 (1) (a) clearly postulates the extension of its protection to 884 constructions already made. That is another point which is significant in dealing with the controversy between the parties before us. There is yet another point which is relevant in this connection. section 5(1)(a) provides that the tenant shall not be evicted by the landlord from the tenancy except on the ground of non payment of rent, provided, of course, the con ditions prescribed by it are satisfied. If the legislature had intended that this protection should operate prospectively. it would have been easy to say that the tenant shall not be sued in ejectment; such an expression would have indicated that the protection is afforded to the suits brought after the Act came into force, and that might have introduced the element of prospective operation; instead, what is prohibited by section 5 (1)(a) is the eviction of the tenant, and so, inevitably, the section must come into play for the protection of the tenant even at the appellate stage when it is clear that by the proceedings pending before the appellate court, the landlord is seeking to evict the tenant, and that obviously indicates that the pending proceedings are governed by section 5(1)(a), though they may have been initially instituted before the Act came into force. Incidentally, an appeal pending before the lower appellate court is a continuation of the suit, and so, there is no difficulty in holding that a suit which was pending when the Act came into force would be governed by section 5(1)(a) and an appeal arising from a suit which had been decided before the Act came into force, would likewise be governed by section 5(1)(a), provided it is pending after the date when the Act came into force. Therefore, we are satisfied that the Assam High Court was right in coming to the conclusion that the dispute between the parties in the present case must be governed by the provisions of section 5(1)(a). It is common ground that if section 5(1)(a) is held to apply, the decrees passed against the appellants in both the appeals cannot be successfully challenged. The result is, the appeals fail and are dismissed with costs. One set of hearing foes. Appeals dismissed.

IN-Abs

The appellant sued the lessee, the predecessor of the respondents, for ejectment on the latter 's failure to deliver possession of a leased land at the expiration of the stipulated period. Under the covenant the lessee was entitled to build a house for residential purposes. The trial Court decreed the appellant 's claim whereupon the lessee filed an appeal. While the appeal was pending the Assam Non Agricultural Urban Areas Tenancy Act was passed, and thereafter the lessee prayed for permission to take an additional ground under section 5 of the Act. Before that date, the High Court had taken the view that this provision of the Act was applicable to pending proceedings. The lower appellate court allowed the lessee 's plea and ultimately allowed the appeal and set aside ,he decree passed by the trial Judge in favour of the appellant, concluding that the two houses had been constructed by the lessee within five years after the taking of the lease and that entitled the lessee to claim the benefit of section 5 of the Act. The High Court on appeal, following its earlier decision about the applicability of the provisions of section 5 to pending proceedings, summarily dismissed the appeal, but granted a certificate for leave to appeal to this Court Held: (i) A statutory provision is retroactive either when it is so declared by express terms. or the intention to make it retroactive clearly follows from the relevant words and the context in which they occur Re. Athlumney Ex parte Wilson, , referred to. (ii) The provisions of the Act clearly indicate that the legislature wanted the beneficient provisions enacted by it to take within their protection not only leases executed after the Act came into force, but also leases executed prior to the operation of the Act. The plain object of s.5 is to protect the tenants who have built a permanent structure either for business or for residence, provided it has been built within 5 yearsfrom the date of contract of tenancy, even though those constructions had been made before the date of the Act. (iii) A suit which was pending when the Act came into force would be governed by section 5(1) (a) and an appeal arising from a suit which had been decided before the Act came into force, would likewise be governed by section 5(1) (a), provided it is pending after the date when the Act came into force. for an appeal pending in a continuation of the suit.

Appeals Nos. 721 723 of 1962. Appeals by special leave from the judgment and order dated March 1, 1961, of the Patna High Court in Misc. Judicial Cases Nos. 1167, 1122 and 1235 of 1960. N. C. Chatterjee, Rai Behari Singh and Udai Pratap Singh,for the appellants (in all the appeals). B. P. Singh, N. P. Singh and I. N. Shroff, for the respondent No. 1 (in all the appeals). C. K. Daphtary, Attorney General, N. section Bindra, V. D.Mahajan and B. R. G. K. Achar, for respondents Nos. 2 and 3. February 26, 1964. The short question which arises in these appeals by special leave is whether section 1(3) of the (No. 34 of 1948) (hereinafter called the Act) is invalid. By their writ petitions filed before the Patna High Court, the appellants who are the workmen of the three respondent concerns, the Eagle Rolling Mills Ltd., the Kumardhubi Engineering Works Ltd., and Kumardhubi Fire Clay and Silica Works Ltd., respectively, alleged that the impugned section has contravened article 14 of the Constitution, and suffers from the vice of excessive delegation, and as such is invalid. These employers were impleaded as respondent No. 1 respectively in the three writ petitions. The High Court has rejected the plea and the writ petitions filed by 915 the appellants have accordingly been dismissed. It is against this decision of the High Court that the appellants have come to this Court and have impleaded the three employers respectively. The three appeals proceed on similar facts and raise an identical question of law and have, therefore, been heard together. It appears that respondents No. 1 in all the three appeals are under the management of M/s. Bird.& Co. Ltd., through a General Manager, and the appellants are their workmen. As such workmen, the appellants were getting satisfactory medical benefits of a very high order free of any charge. Respondent No. 1 in each appeal maintained a wellfurnished hospital with provision for 60 permanent beds for the workmen, their families and their dependents. The main grievance made by the appellants is that as a result of section 1(3) of the Act, the appellants have now to be content with medical benefits of a less satisfactory nature. That is why they challenged the validity of the impugned section and contest the propriety and legality of the notification issued under it. To these writ petitions as well as to the appeals, the Employees ' State Insurance Corporation and the Union of India have been impleaded as respondents 2 and 3 respectively. On the 22nd August, 1960, respondent No. 3 issued a notification under section 1, sub section (3) appointing the 28th August, 1960 as the date on which some provisions of the Act should come into force in certain areas of the State of Bihar. By this notification, the area in which the appellants are working came within the scope of the Act. In pursuance of the said notification, the Chief Executive Officer of respondent No. 1 informed the appellants on the 25th August, 1960 that the medical benefits including indoor and outdoor treatment upto the extent admissible under the Act will cease to be provided to insurable person , from the appointed day. A notice in that behalf was duly issued and published by the said Officer. Similar notices were issued indicating to the appellants that medical benefits would thereafter be governed by the relevant provisions of the Act and not by the arrangements which had been made 916 earlier by respondent No. 1 in that behalf. That, in brief, is the genesis of the present writ petitions and the nature of the dispute between the parties. The first point which Mr. Chatterjee has raised before us is that section 1(3) of the Act suffers from excessive, delega tion and is, therefore, invalid. In order to consider the validity _of this argument, it is necessary to read section 1, sub section (3): "The Act shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and for different States or for different parts thereof '. The argument is that the power given to the Central Government to apply the provisions of the Act by notifica tion, confers on the Central Government absolute discretion, the exercise of which is not guided by any legislative provision and is, therefore, invalid. The Act does not prescribe any considerations in the light of which the Central Government can proceed to act under section 1(3) and such uncanalised power conferred on, the Central Government must be treated as invalid. We are not impressed by this argument. Section 1(3) is really not an illustration of delegated legislation at all; it is what can be properly described as conditional legislation. The Act has prescribed a self contained code in regard to the insurance of the, employees covered by it; several remedial measures which the Legislature thought it necessary to enforce in regard to such workmen have been specifically dealt with and appropriate provisions have been made to carry out the policy of the Act as laid down in its relevant sections. Section 3(1) of the Act purports to authorise the Central Government to establish a Corporation for the administration of the scheme of Employees ' State Insurance by a notification. In other words, when the notification should be issued and in respect of what factories 'it should be issued, has been left to the discretion of the Central Government and that is precisely what is usually done, by conditional legislation. 917 What Lord Selborne said about the powers conferred on the Lieutenant Governor by virtue of the relevant provisions of Act 22 of 1869 in Queen vs Burah(1), can be said with equal justification about the powers conferred on the Central Government by section 1(3). Said Lord Selborne in that case: "Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) as" if, when they were exercised, the efficacy of the acts done under them would be due to arty other legislative authority than that of the Governor General in Council. Their whole operation is directly and immediately under and by virtue of this Act (XXII of 1869) itself. The proper Legislature has exercised its judgment as, to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The Conditions having been fulfilled, the legislation, is now absolute". That is the first answer to the plea raised by Mr. Chatterjee. Assuming that there is an element of delegation, the plea is equally unsustainable, because there is enough guidance given by the relevant provisions of the Act and the very scheme of the Act itself. The preamble to the Act shows that it was passed because the legislature thought it expedient to provide for certain benefits to employees in case of sickness, maternity and employment injury and. to make provision for certain other matters in relation thereto. So, the policy of the Act is unambiguous and clear. The material ' definitions of "benefit period", "employee", "factory","injured person ", "sickness", "wages" and other terms contained in section 2 give a clear 'idea as to the nature of the factories to which the Act is intended to be applied, the class of persons for whose benefit it has ' been passed and the nature of the benefit which is intended to be conferred on them. Chapter II of the Act deals with the (1) 5 I.A. 178 at p. 195. 918 Corporation, Standing Committee and Medical Benefit Council and their constitution; Chapter III deals with the problem of finance and audit; Chapter IV makes provisions for contribution both by the employees and the employer, and Chapter V prescribes the benefits which have to be conferred on the workmen; it also gives general provisions in respect of those benefits. Chapter V A deals with transitory provisions; Chapter VI deals with the adjudication of disputes and claims; and Chapter VII prescribes penalties. Chapter VIII which is the last Chapter, deals with mis cellaneous matters. In the very nature of things, it would have been impossible for the legislature to decide in what areas and in respect of which factories the Employees ' State Insurance Corporation should be established. It is obvious that a scheme of this kind, though very beneficient, could not be introduced in the whole of the country all at once. Such beneficial measures which need careful experimentation have sometimes to be adopted by stages and in different phases, and so, inevitably, the question of extending the statutory benefits contemplated by the Act has to be left to the discretion of the appropriate Government. "Appropriate Government" under section 2(1) means in respect of establishments under the control of the Central Government or a railway administration or a major port or a mine or oilfield, the Central Government, and in all other cases, the State Government. Thus, it is clear that when extending the Act to different establishments, the relevant Government is given the power to constitute a Corporation for the administration of the scheme of Employees ' State Insurance. The course adopted by modern legislatures in dealing with welfare schemes has uniformly conformed to the same pattern. The legislature evolves a scheme of socioeconomic welfare, makes elaborate provisions in respect of it and leaves it to the Government concerned to decide when, how and in what manner the scheme should be introduced. That, in our opinion, cannot amount to excessive delegation. The question of excessive delegation has been frequently considered by this Court and the approach to be adopted in dealing with it is no longer in doubt. In the Edward Mills Co. Ltd., Beawar and Others vs The State of Ajmer 919 and Another(1), this Court repelled the challenge to the validity of section 27 of the (No. XI of 1948), whereby power had been given to the appropriate Government to add to either part of the schedule any employment in respect of which it was of opinion that minimum wages shall be fixed by giving notification in a particular manner, and it was provided that on the issue of the notification, the scheme shall, in its application to the State, be deemed to be amended accordingly. In dealing with this problem, this Court observed that there was an element of delegation implied in the provisions of section 27, for the legislature, in a sense, authorised another body specified by it to do something which it might do itself; but it was held that such delegation was not unwarranted and unconstitutional and it did not exceed the limits of permissible delegation. To the same effect are the recent decisions of this Court in M/s. Bhikusa Yamasa Kshatriya and Another vs Sangamner Akola Taluka Bidi Kamgar Union and Others(2), and Bhikusa Yamasa Kshatriya (P) Ltd. vs Union of India and Another(3). Therefore, we must hold that the impugned section 1 (3) of the Act is not shown to be constitutionally invalid. Before we part with these appeals, there is one more point to which reference must be made. We have already mentioned that after the notification was issued under section 1(3) by respondent No. 3 appointing August 28, 1960 as the date on which some of the provisions of the Act should come into force in certain areas of the State of Bihar, the Chief Executive Officer of respondent No. 1 issued notices giving effect to the State Government 's notification and intimating to the appellants that by reason of the said notification, the medical benefits which were being given to them in the past would be received by then under the relevant provisions of the Act. It was urged by the appellants before the High Court that these notices were invalid and should be struck down. The argument which was urged in support of this contention was that respondent (1)[1955] 1 S.C.R. 735. (2) [1963] Supp. 1 S.C.R. 524. (3) ; 920 No. 1 in all the three appeals were not entitled to curtail the benefits provided to the appellants by them and that the said benefits were not similar either qualitatively or quan titatively to the benefits under the Scheme which had been brought into force under the Act. The High Court has held that the question as to whether the notices and circulars issued by respondent No. 1 were invalid, could not be considered under article 226 of the Constitution; that is a matter which can be appropriately raised in the form of a dispute by the appellants under section 10 of the Industrial Disputes Act. It is true that the powers conferred on the High Courts under article 226 are very wide, but it is not suggested by Mr. Chatterjee that even these powers can take in within their sweep industrial disputes of the kind which this contention seeks to raise. Therefore, without expressing any opinion on the merits of the contention, we would confirm the finding of the High Court that the proper remedy which is available to the appellants to ventilate their grievances in respect of the said notices and circulars is to take recourse to section 10 of the Industrial Disputes Act, or seek relief, if possible, under sections 74 and 75 of the Act. The result is, the appeals fail and are dismissed. There would be no order as to costs. Appeals dismissed.

IN-Abs

The appellants as workmen of respondent No. 1 in all the three respondent concerns were getting free medical benefits of a very high order in a well furnished hospital maintained by respondent No. 1. Respondent No. 3. the Union of India issued a notification under section 1(3) of the Employees State Insurance Act appointing 28th August, 1960 as the date on which some provisions of the Act should come into force in certain areas of the State of Bihar and the area in which the appellants were working came within the scope of the Act. In pursuance of the said notification, the Chief Executive Officer of Respondent No. 1 issued notices to the appellants that the medical benefits upto the extent admissible under the Act will cease to be provided to insurable persons from the appointed day and the medical benefits would thereafter be governed by the relevant provisions of the Act. The appellants in a writ petition to the High Court challenged the validity of section 1(3) of the Act and legality of the notifications issued under it, inter alia, on the ground that it contravened article 14 of the Constitution and suffers from the vice of excessive delegation. The High Court rejected the plea and dismissed the writ petitions. On appeal by special leave the appellants contended that section 1(3) of the Act suffers from excessive delegation and is, therefore, invalid. Held: (i) section 1(3) of the Act is not an illustration of delegated legislation at all, it can be described as conditional legislation. It purports to authorise the Central Government to establish a corporation for the administration of the scheme of Employees ' State Insurance by a notification. As to when the notification should be issued and in respect of what factories it should be issued, has been left to the discretion of the Central Government and that is precisely what is usually done by conditional legislation. Queen vs Burah, 5. I.A. 178, relied on. (ii) Assuming there is an element of delegation, the plea is equally unsustainable, because there is enough guidance given by the relevant provisions of the Act and the very scheme of the Act itself. In the very nature of things, it would have been impossible for the legislature to decide in what areas and in respect of which factories the Employees ' State Insurance Corporation should be established. It is obvious that a scheme of this kind, though very beneficent, could not be introduced 34 159 S.C. 58 914 in the whole of the country all at once. Such beneficial measures which need careful experimentation have sometimes to be adopted by stages and in different phases, and so, inevitably, the question of extending the statutory benefits contemplated by the Act has to be left to the discretion of the appropriate Government. That cannot amount to excessive delegation. Edward Mills Co. Ltd. Beawar vs The State of Ajmer, ; , M/s Bhikusa Yamasa Kshatriya vs Sangamner Akola Taluka Bidi Kamgar Union, [1963] Supp. 1 S.C.R. 524 and Bhikusa Yamasa Kahtriva vs Union of India, ; followed:

iminal Appeal No. 22 of 1953. Appeal by special leave from the Judgment and Order dated the 19th November, 1952, of the High Court of Judicature of Punjab at Simla in Criminal Appeal No. 102 of 1952 and Criminal Revision Nos. 423 146 and 499 of 1952 of the Court of the Sessions Judge, Jullundur, in Sessions Case No. 30 of 1951 and Sessions Trial No. 5 of 1951. Jai Gopal Sethi (R. L. Kohli and Deva Singh, with him) for the appellants. Gopal Singh for the respondent. May 15. The Judgment of the Court was delivered by BosE J. Four persons appeal against sentences of death passed upon them in convictions for a double murder, the victims being two brothers, Rattan Singh and Bawa Singh. The learned Sessions Judge convicted three others also but sentenced all, including the four appellants, to transportation for life. The High Court acquitted three of the seven but sustained the convictions of the four appellants and enhanced their sentences in each case to death. The prosecution story is simple. All seven accused belong to the same village and belong to the same faction or "party", as Mst. Punnan (P.W. 2) calls it. Of the seven, the appellants Dalip Singh and Battan Singh are brothers. Jarnail Singh who was acquitted is a son of Battan Singh. The remaining four, including the appellants Sadhu Singh and Kundan Singh, are not related to the other three and, except for the evidence that they belong to the same party, are not shown to have any common interest with the other three. The appellants Dalip Singh and Battan Singh are said to have assaulted the two dead men Rattan and Bawa about twenty years before the occurrence. They were prosecuted and convicted and served short terms of imprisonment. Dalip Singh and Battan Singh are also said to be dacoits and it is said that they believed that the two dead men used to furnish information against them to the police. This is said to be the motive for the murders. Why the others should have joined in, except on the basis that they belong to the same "Party", is not disclosed. 147 The prosecution case is as follows: On 16th June, 1951, Rattan Singh was taking some food out to a well a short distance from his house for himself and his son. This was about 2 p.m. Just as he left the house, his wife Mst. Punnan (P.W. 2) heard cries of alarm and on rushing out with her daughter Mst. Charni (P.W. 11) saw all seven accused assaulting her husband. They beat him up till he fell to the ground. As soon as Rattan Singh fell down, they left him and rushed to his (Rattan Singh 's) Haveli where the other brother Bawa Singh was lying on a cot, shouting that they would also make short work of him. All seven belaboured him on the cot, then they dragged him out and beat him up some more. After this they returned to where Rattan Singh was still lying on the ground and gave him some more blows. Then they ran away. Bawa Singh died very shortly after the assault. The other brother survived a little longer but he also died not long after. According to Mst. Punnan (P.W. 2) the accused were armed as follows: The appellants Dalip Singh and Sadhu Singh with barchhas; the appellant Battan Singh and two of the accused who have been acquitted with lathis; the appellant Kundan Singh had a takwa a hatchet with along handle, and the accused Kehar Singh, who has been acquitted, had a khunda a hefty stick with a curved iron end. The medical evidence discloses that Rattan Singh had nineteen injuries on his person. Of these, only two, on the head, would have been fatal in themselves. The rest were on non vital parts like the foot, ankle, leg, knee, thigh, buttock, forearm and wrist, but of these six were grievous. The doctor says death was caused by shook produced by the multiple injuries aided by haemorrhage in the brain due to injury No. 14. The other brother Bawa had sixteen injuries but except for two the rest were on non vital parts. One of the two was on the head and the other ruptured the 148 spleen. The rest were on the ankle, leg, knee, thigh, elbow, thumb and wrist, but eleven of them were grievous. In his case the doctor put the death down to rupture of the spleen. In Rattan Singh 's case, only one of the injuries was inflicted by a sharp edged pointed weapon and all the rest by blunt weapons. The two on the head were inflicted by blunt weapons. In Bawa Singh 's case, four wounds were caused by a sharp edged or pointed sharp edged weapon. The others were all inflicted by blunt weapons. Here again, the fatal injury which ruptured the spleen was caused by a blunt weapon. This analysis would appear to indicate that neither of the appellants Dalip Singh and Sadhu Singh, who carried spears, nor the appellant Kundan Singh, who carried a hatchet, aimed at any vital part; and of those who had blunt weapons, the appellant Battan Singh who had a lathi has alone been convicted while Indar Singh and Jarnail Singh, who also had lathis, and kehar Singh, who had a khunda, have all been acquitted; and yet Battan Singh alone could hardly have been responsible for eighteen injuries on Rattan Singh and nine on Bawa Singh. The appellant Dalip Singh was arrested on the 17th June and the other three on the 18th. Each was wearing blood stained clothes. The learned Sessions Judge did not attach much importance to the bloodstained clothes, nor did he regard the recovery of certain weapons, some of which were blood stained, as of much consequence. But he was impressed with the evidence of the two eyewitnesses Mst. Punnan (P.W. 2) and Mst. Charni (P. W. 11) and believing them convicted each of the seven accused under section 302 read with section 149, Indian Penal Code. He said that as the fatal injuries could not be attributed to any one of the accused he refrained from passing the sentence of death. All the assessors considered all seven accused guilty. The learned High Court Judges did not attach any importance to the recovery of the weapons because 149 for one thing they were not recovered till the 30th, that is to say, not until fourteen days after the murders, and when found, one set pointed out by Jarnail Singh, who has been acquitted, was found in Dalip Singh 's field and another set, pointed out by Sadhu Singh, was found in Kehar Singh 's field. But they considered the blood stained clothes an important factor. They were not prepared to believe the two eye witnesses all the way, partly because they were of opinion that a part of their story was doubtful and seemed to have been introduced at the instance of the police and partly because they considered that when the fate of seven men hangs on the testimony of two women "ordinary prudence" requires corroboration. They found corroboration in the case of the four appellants because of the blood stained clothes and none in the case of the others. Accordingly, they convicted the four appellants and acquitted the others. Now this has led the learned Judges into an inconsistency and it is that which led to the granting of special leave to appeal. The learned Judges say that their conclusion is that (1) "generally the story related by Mst. Punnan and Mst. Charni is true; (2) that certainly not less than five persons took part in the beating of the two deceased; and (3) that the corroboration required by prudence is afforded by the presence of the blood stained clothes found on the persons of the four appellants who have been convicted. " As regards the three accused whom they acquitted the learned Judges say The other three accused may or may not have taken part in the affair. " Now it is clear from the above that it is impossible to ascribe any particular injury to any particular person. Therefore ' it is impossible to convict any one of the accused of murder simpliciter under section 302, 21 150 nor do the learned Judges attempt to do that. They convict under section 302 read with section 149. But section 149 requires the presence of five persons who share the common object. It is true that in one place the learned Judges say that there were certainly not less than five present but in the very next breath they say that the three whom they acquit "may or may not have taken part in the affair". If those three are eliminated, then we are left with only four and that militates against their previous finding that they were at least five. Before section 149 can be called in aid, the court must find with certainty that there were at least five persons sharing the common object. A finding that three of them "may or may not have been there" betrays uncertainty on this vital point and it consequently becomes impossible to allow the conviction to rest on this uncertain foundation. This is not to say that five persons must always be convicted before section 149 can be applied. There are cases and cases. It is possible in some eases for Judges to conclude that though five were unquestionably there the identity of one or more is in doubt. In that case, a conviction of the rest with the aid of section 149 would be good. But if that is the conclusion it behoves a court, particularly in a murder case where sentences of transportation in no less than four cases have been enhanced to death, to say so with unerring certainty. Men cannot be hanged on vacillating and vaguely uncertain conclusions. In fairness to the learned Judges we have examined the evidence with care to see whether, if that was in their minds, such a conclusion could be reached in this particular case on the evidence here. That it might be reached in other cases on other facts is undoubted, but we are concerned here with the evidence in this case. Now mistaken identity has never been suggested. The accused are all men of the same village and the eye witnesses know them by name. The murder took 151 place in daylight and within a few feet of the two eye witnesses. If the witnesses had said, "I know there were five assailants and I am certain of A, P and C. I am not certain of the other two but think they were D and E", a conviction of A, B and C, provided the witnesses are believed, would be proper, But when the witnesses are in no doubt either about the number or the identity and there is no suggestion about mistaken identity and when further, the circumstances shut out any reasonable possibility of that, then hesitation on the part of the Judge can only be ascribed, not to any doubt about identity but to doubt about the number taking part. The doubt is not whether D and E have been mistaken for somebody else but whether D and E have been wrongly included to swell the number to five. Again, it is possible for a witness to say that "A, B, C, D, E and others, some ten or fifteen in number, were the assailants". In that event, assuming always that the evidence is otherwise accepted, it is possible to drop out D and E and still convict A, B and C with the aid of section 149. But that again is not the case here. No one suggests that there were more than seven; no one suggests that the seven, or any of them, were, or could be, other than the seven named. Nor is it possible in this case to have recourse to section 34 because the appellants have not been charged with that even in the alternative, and the common intention required by section 34 and the common object required by section 149 are far from being the same thing. In the circumstances, we find ourselves unable to allow the conviction to rest on the insecure foundations laid by the High Court. We have accordingly reviewed the evidence for ourselves. Mr. Sethi took us elaborately through it. In our opinion, the learned Sessions Judge 's conclusions are right. We are unable to agree with the learned Judges of the High Court that the testimony of the two eyewitnesses requires corroboration. If the foundation 152 for such an observation is based on the fact that the witnesses are women and that the fate of seven men hangs on their testimony, we know of no such rule. If it is grounded on the reason that they are closely related to the deceased we are unable to concur. This is a fallacy common to many criminal cases and one which another Bench of this court endeavoured to dispel in Rameshwar vs The State of Rajasthan(1). We find, however, that it unfortunately still persists, if not in the judgments of the courts, at any rate in the arguments of counsel. A witness is normally to be considered independent unless he or she springs from sources which are likely to be tainted and that usually means unless the witness has cause, such as enmity against the accused, to wish to implicate him falsely. Ordinarily, a close relative would be the last to screen the real culprit and falsely implicate an innocent person. It is true, when feelings run high and there is personal cause ' for enmity, that there is a tendency to drag in an innocent person against whom a witness has a grudge along with the guilty, but foundation must be laid for such a criticism and the mere fact of relationship far from being a foundation is often a sure guarantee of truth. However, we are not attempting any sweeping generalisation. Each case must be judged on its own facts. Our observations are only made to combat what is so often put forward in cases before us as a general rule of prudence. There is no such general rule. Each case must be limited to and be governed by its own facts. This is not to say that in a given case a Judge for reasons special to that case and to that witness cannot say that he is not prepared to believe the witness because of his general unreliability, or for other reasons, unless he is corroborated. Of course, that can be done. But the basis for such a conclusion must rest on facts special to the particular instance and cannot be grounded on a supposedly general rule of prudence enjoined by law as in the case of accomplices. (1) ; at 390. 153 Now what is the ground for suspecting the testimony of these two witnesses? The only other reason given by the learned High Court Judges is that they have introduced a false element into their story at the instigation of the police in order to save the "face" of the lambardars. But if that is so, it throws a cloak of, unreliability over the whole of their testimony and, therefore, though it may be safe to accept their story where the corroborative element of the blood stained clothes is to be found, it would be as unsafe to believe, on the strength of their testimony, that at least five persons were present as it would be to accept that the ones who have been acquitted were present; and once we reach that conclusion section 149 drops out of the case. We have carefully weighed the evidence of these women in the light of the criticisms advanced against them by Mr. Sethi, most of which are to be found in the judgments of the lower courts, and we are impressed by the fact that the learned Sessions Judge who saw them in the witness box was impressed with their demeanour and by the way they stood up to the crossexamination, and also by the fact that the learned High Court Judges appear to believe them to the extent that at least five persons were concerned. Some of the accused have made general and sweeping statements to the effect that the prosecution witnesses are inimical to them but no one has suggested why. In the long cross examination of these witnesses not a single question has been addressed to them to indicate any cause of enmity against any of the accused other than the appellants Dalip Singh and Battan Singh. A general question was asked, and it was suggested that there was some boundary dispute between Mst. Punnan 's husband and the accused Indar Singh and Kundan Singh but that was not followed up by other evidence and neither Kundan Singh nor Indar Singh suggests that there was any such dispute in their examinations under section 342, Criminal Procedure Code. Kehar Singh says vaguely that he has inherited land which will pass to the line 154 of Rattan and Bawa if he dies without heirs but lie has made no effort to substantiate this. The questions put in cross examination therefore remain just shots in the dark and leave the testimony of the two women unimpaired. The first information report was made by Mst. Pullnan (P.W. 2) herself. It was made very promptly though this was attacked by Mr. Sethi. It was made at 8 30 p.m. within 6 1/2 hours of the occurrence at a place 12 miles from the police station. The victims did not die at once and it was only natural that Mst. Punnan 's first thoughts should have been to tend them Next, she had to walk part of the distance and the rest she covered in a lorry, and above all she has not been cross examined regarding delay. We consider that a report made within 61 hours in such circumstances is prompt. Now the important thing about this report is that it names the seven accused, no less and no more, and from start to finish Mst. Punnan has adhered to that story without breaking down in cross examination and without any attempt to embellish it by adding more names; and in this she is supported by Mst. Charni (P.W. 11). Next, the bloodstained clothes found on the persons of the four appellants afford strong corroboration as against them, and as two courts have believed the witnesses to that extent all we need do is to concentrate on the other three accused who have been acquitted in order to see whether there were seven persons as Mst. Punnan says and to see whether the conclusion of the High Court that there were at least five present is sound. We do not think the discovery of tile weapons can be, lightly excluded. One set was pointed out by Jarnail Singh. In itself that might not mean much but it is unquestionable corroboration as against Jarnail Singh unless the fact of discovery is disbelieved or is considered to be a fraud. But that is not the finding of either court. The first court, believes the evidence and the High Court does not disbelieve it but 155 considers the incident as of small probative value. It may be in itself, but it is a corroborative element in the case of two witnesses who do not require corroboration and that makes it all the more safe to accept their testimony. Next comes the discovery of another set of weapons by Sadhu Singh. He was already implicated by reason of some blood stained clothes but the importance of the discovery in his case lies in the fact that the weapons were found in the field of Kehar Singh. It is certainly a circumstance to be taken into consideration that these weapons should be found in the field of a man who was named from the start. Then comes the fact that Mst. Punnan (P.W. 2) not only named the various assailants in her first information report but stated exactly what sort of weapon each was carrying. Here again she is consistent from start to finish except for an unessential difference in the case of Jarnail. In the first information report she said he had a dang while in her evidence she says he had a lathi, but as a dang is a big lathi that is not a real discrepancy. This, in our opinion, is impressive consistency, especially as it tallies in general with the postmortem findings. Now the fact that weapons of this description, four stained with human blood, are discovered at the instance of two persons she has named from the beginning in the fields of others whom she has also named from the start certainly does not tend to weaken her testimony. The only accused who is not in some way independently linked up with the testimony of these two women is Indar. But when their stories find corroboration on so many important particulars we see no reason why they should be disbelieved as regards Indar, always remembering that these are not witnesses who require corroboration under the law. In our opinion, the High Court was unnecessarily cautious in acquitting the other three accused when the learned Judges were convinced that at least five persons were, concerned, 156 We have taken into consideration the fact that the High Court considers that the portion of Mst. Punnan 's story regarding the lambardars has been falsely introduced by the police, also that both courts have rejected the evidence about the dying declaration. Despite that, we agree with the learned Sessions Judge that Mst. Punnan and Mst. Charni are to be believed regarding the main facts and that they correctly named all seven accused as the assailants. On that finding the conviction under section 302 read with section 149 can be sustained. We accordingly uphold these convictions. The acquittals in the other the cases will of course stand but the mere fact that these persons have, in our opinion, been wrongly acquitted cannot affect the conviction in the other cases. On the question of sentence, it would have been necessary for us to interfere in any event because a question of principle is involved. In a case of murder, the death sentence should ordinarily be imposed unless the trying Judge for reasons which should normally be recorded considers it proper to award the lesser penalty. But the discretion is his and if he gives reasons on which a judicial mind could properly found, an appellate court should not interfere. The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest possible reasons. It is not enough for an appellate court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate court but to the trial Judge and the only ground on which an appellate court can interfere is that the discretion has been improperly exercised, as for example where no reasons are given and none can be inferred from the circumstances of the case, or where the facts are so gross that no normal judicial mind would have awarded the lesser penalty. None of these elements is present here. This is a case in which no one has been convicted for his own act but is being held vicariously responsible for the act of another or others. In cases where the facts are more 157 fully known and it is possible to determine who inflicted blows which were fatal and who took a lesser part, it is a sound exercise of judicial discretion to discriminate in the matter of punishment. It is an equally sound exercise of judicial discretion to refrain from sentencing all to death when it is evident that some would not have been if the facts had been more fully known and it had been possible to determine, for example, who hit on the head or who only on a thumb or an ankle; and when there are no means of deter mining who dealt the fatal blow, a judicial mind can legitimately decide to award the lesser penalty in all the cases. We make it plain that a Judge is not bound to do so, for he has as much right to exercise his discretion one way as the other. It is impossible to lay down a hard and fast rule for each case must depend on its own facts. But if a Judge does do so for reasons such as those indicated above, then it is impossible to hold that there has not been a proper exercise of judicial discretion. Now the High Court do not consider these facts at all. They give no reasons and dispose of the matter in one sentence as follows: "I would dismiss the appeals of the other four and accepting the revision petitions change their sentences from transportation to death. " That, in our opinion, is not a proper way to interfere with a judicial discretion when a question of enhancement is concerned. We are unable to hold that the discretion was improperly exercised by the learned Sessions Judge. Whether we ourselves would have acted differently had we been the trial court is not the proper criterion. We accordingly accept the appeals on the question of sentence and reduce the sentence in each case to that of transportation for life. Except for that, the appeal is dismissed. Sentence reduced. Appeal dismissed.

IN-Abs

Before section 149 of the Indian Penal Code can be applied, the court must find with certainty that there were at least live persons sharing the common object. This does not, however, mean that five persons must always be convicted before section 149 can be applied. If the judge concludes that five persons were unquestionably present and shared the common object, though the identity of some of them is in doubt, the conviction of the rest would be good; but if this is his conclusion, it behoves him, particularly in a murder case where heavy sentences have been imposed, to say so with certainty. Rameshwar vs The State of Rajasthan ([1952] S.C.R. 377) referred to. The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest reasons. It is not enough for the appellate court to say or think that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate court but to the trial judge, and the only ground on which the appellate court can interfere is that the discretion has been improperly exercised, as for instance where no reasons have been given and none can be inferred from the circumstances of the case or where the facts are so gross that no normal judicial mind would have awarded the lesser penalty.

minal Appeal No. 111 of 1961. Appeal from the judgment and order dated March 2, 1961 of the Calcutta High Court in Criminal Appeal No. 269 of 1961. D. N. Mukherjee, for the appellants. P. K. Chakravarthy for P. K. Bose, for the respondent. March 3, 1964. The Judgment of the Court was delivered by DAS GUPTA J. The appellants were tried by the Additional Sessions Judge, Birbhum, on charges under section 449 and section 307/34 of the Indian Penal Code. The prosecution case was that on the night of the 14th November, 1950 when Haji Ebrar Ali was sleeping on the Verandah of his hut, these appellants came there and while one of them Abdul Odud pressed his knees and Ekram and Habibullah pressed his chest and hands, Matiullah inflicted an injury on his neck with a dagger. Ebrar Ali woke up and raised a shout at the same time catching hold of Odud. The other three assailants made good their escape. Information about the occurrence was lodged at the Thana by Ebrar Ali who was then sent to Rampurhat hospital for treatment. It is alleged by the prosecution that these four appellants entered Ebrar Ali 's house with the common intention of killing him, and that in furtherance of that 980 common intention, Matiullah injured him with a dagger while the other three held him down. Fortunately, the injury inflicted on Ebrar Ali did not prove fatal. The jury returned an unanimous verdict of guilt against all the appellants on both charges. The learned Sessions Judge, accepted that verdict, and convicted them all under sections 449 and 307 read with section 34 of the Indian Penal Code. He sentenced the appellant Matiullah to rigorous imprisonment, for four years under section 307/34 and to rigorous imprisonment for two years under section 449 of the Indian Penal Code. He sentenced the other three appellants to rigorous imprisonment for three years under section 307/34 of the Indian Penal Code and for two years under section 449 of the Indian Penal Code. All the four appealed to the High Court of Calcutta. But, the appeal was summarily dismissed. A Bench of the High Court however gave the appellants a certificate that this was a fit case for appeal to this Court, under article 134 (1) (c) of the Constitution. On the basis of that certificate this appeal has been preferred. Two points are urged before us on behalf of the appellants. The first is that there can be no conviction under section 449 of the Indian Penal Code unless murder has actually been committed. The second is that a charge under section 307 read with section 34 of the Indian Penal Code is not sustainable in law. In our opinion, there is no substance in either of these contentions. Section 449 of the Indian Penal Code provides that whoever commits house trespass in order to the committing of any offence punishable with death, shall be punished with imprisonment for life or with rigorous imprisonment for a term not exceeding ten years, and shall also be liable to fine. Mr. Mukherjee, who appeared before us on behalf of the appellants, argued that unless murder has been committed it is not possible to say that any house trespass was committed "in order to the committing" of an offence punishable with death. According to the learned Counsel, from the fact that the purpose of the house trespass was to commit the murder it is not right to predicate that the house trespass was committed "in order to the committing of 981 murder". We are unable to agree. In our opinion, an act can be said to be committed "in order to the committing of an offence" even though the offence may not be completed. Thus, if a person commits a house trespass with the purpose of the committing of theft but has failed to accomplish the purpose, it will be proper to say that he has committed the house trespass in order to the committing of theft. It has to be noticed that the words "in order to" have been used by the legislature not only in section 449 of the Indian Penal Code but in the two succeeding sections 450, 451 and again in section 454 and section 457 of the Indian Penal Code. Section 450 prescribes the punishment for house trespass if it is done "in order to" the committing of any offence punishable with imprisonment for life. Section 451 makes punishable the commission of an offence of house trespass if it is committed "in order to" the committing of any offence punishable with imprisonment. Section 454 makes punishable, lurking house trespass or house breaking, if committed "in order to" the committing of any offence punishable with imprisonment. Section 457 prescribes the punishment for lurking house trespass by night or house breaking by night, if committed, "in or to the committing of any offence punishable with imprisonment. It is worth noticing also that house trespass, apart from anything else is made punishable under section 448 of the Indian Penal Code, the punishment prescribed being imprisonment which may extend to one year, or with fine which may extend to one thousand rupees, or both. Higher punishment is prescribed where house trespass is committed "in order to" the commission of other offences. An examination of sections 449, 450, 451, 454 and 457 show that the penalty prescribed has been graded according to the nature of the offence "in order to" the commission of which house trespass is committed. It is quite clear that these punishments for house trespass are prescribed quite inde pendent of the question whether the offence "in order to" the commission of which the house trespass was committed has been actually committed or not. In our opinion, there can be no doubt that the words "in order to" have been used 882 to mean "with the purpose of". If the purpose in committing the house trespass is the commission of an offence punishable with death the house trespass becomes punishable under section 449 of the Indian Penal Code. If the purpose in committing the house trespass is the commission of an offence punishable with imprisonment for life the house trespass is punishable under section 450 of the Indian Penal Code. Similarly, sections 451, 454 and 457 will apply it the house trespass or lurking house trespass, or lurking house trespass by night or house breaking by night are committed for the purpose of the offence indicated in those sections. Whether or not the purpose was actually accomplished is quite irrelevant in these cases. Our conclusion therefore is that the fact that the murder was not actually committed will not affect the applicability of section 449 of the Indian Penal Code. The second contention that no charge under section 307 read with section 34 of the Indian Penal Code is sustainable in law appears to proceed on a misreading of the effect of the provisions of section 34 of the Indian Penal Code. Section 307 of the Indian Penal Code runs thus: "Whoever does any act with such intention or knowledge and under such circumstances that, if he by that act caused death, he would be guilty of murder, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine; and if hurt is caused to any person by such act, the offender shall be liable either to imprisonment for life, or to suc h punishment as is hereinbefore mentioned. " According to Mr. Mukherjee, what is made punishable by this section is the individual act of a person when that individual has a particular intention or knowledge referred to in the section and so, where the act is done by a number of person,,, jointly it can have no application. This argu ment ignores the legal position that the act committed by a number of persons shall in the circumstances mentioned in section 34 of the Indian Penal Code be held to be the act of 983 each one individual of those persons. Section 34 runs thus : "When a criminal act is done by several persons, in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone. " It may, in many cases, be difficult to decide whether the criminal act in question has been done by several persons in furtherance of the common intention of all. But, once it is decided that the act is so done by a number of persons in furtherance of the common intention of all, the legal position that results is that each person shall be held to have committed the entire criminal act. Thus, in the present case, when it is found that the four appellants attacked Haji Ebrar Ali in furtherance of the common intention of all of them to kill him and some of them held him down while one used the dagger on him, each of the four is in law considered to have done the entire act of holding Ebrar Ali down and applying the dagger. If Matiullah by himself had held Ebrar Ali down and struck him with the dagger, with the intention of causing his death and the injury had actually resulted in his death, he would have been guilty of murder, except in some special circumstances as mentioned in section 300 of the Indian Penal Code. The act did not result in death. So, he becomes punishable under section 307 of the Indian Penal Code. The position is in no way different when Matiullah is not acting alone but he and several others are acting jointly in furtherance of the common intention of all of them to kill Ebrar Ali. Each of the other three who did not use the dagger must in law be considered to have done this act of using the dagger; and so, each of them becomes punishable under section 307 of the Indian Penal Code for injuring Ebrar Ali with the dagger on the neck as if the act had been done by himself alone. The contention that a charge under section 307 read with section 34 of the Indian Penal Code is not sustainable in law, must therefore be rejected. In the result, the appeal fails and is dismissed. Appeal dismissed.

IN-Abs

The appellants, were alleged to have entered the house of one with the common intention of killing him. One of the appellants injured E with a dagger while the other three held him. E 's injury did not prove fatal. The Sessions Judge convicted them under sections 449 and 307 with section 34 of the Indian Penal Code. which on appeal was upheld by the High Court. On appeal by certificate, it was contended that there can 979 be no conviction under section 449 of the Indian Penal Code unless murder had actually been committed; and that a charge under section 307 read with section 34 of the Indian Penal Code was not Sustainable in law. Held: There was no substance in either of these contentions. An act can be said to be committed "in order to the committing of an offence" even though the offence may not be completed. The words "in order to" have been used in section 449 I.P.C. to mean "with the purpose of '. Whether or not the purpose was actually accomplished is quite irrelevant. Once it is decided that the act is so done by a number of persons in furtherance of the common intention of all, the legal position that results is each person shall be held to have committed the entire criminal act.

iminal Appeals Nos. 150 and 185 of 1961. Appeals by special leave from the judgment and order dated June 19, 1961 of the former Bombay High Court in Criminal Appeals Nos. 218 and 242 of 1961 respectively. section Mohan Kumarmangalam, R. K. Garg and M. K. Ramamurthi, for the appellant (in Cr. A. No. 150/61). B. M. Mistry, Ravinder Narain and J. B. Dadachanji, for the appellant (in Cr. A. No. 185 of 1961). B. K. Khanna, B. R. G. K. Achar and R. H. Dhebar, for the respondent (in both the appeals). February 26, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL J. Shiv Prasad Chunilal Jain, appellant in Criminal Appeal No. 150 of 1961 was accused No. 3 and Pyarelal Ishwardas Kapoor, appellant in Criminal Appeal No. 185 of 1961 was accused No. 2, at the Sessions Trial before the Additional Sessions Judge, Greater Bombay. Along with them was a third accused, Rameshwarnath Brijmohan Shukla who was accused No. 1 at the trial. As the two appeals arise from a common judgment, we would dispose of them by one judgment. The appellants would be referred to as accused No. 3 and accused No. 2 respectively. The facts leading to the conviction of the appellants are that a large quantity of iron angles was consigned early in February 1959 from Gobind Garh to Raypuram under railway receipt No. 597481, They were despatched in an open wagon bearing E.R. No. 69667. The labels of the wagon were changed at Itarsi railway station and it was diverted to Wadi Bunder under a label showing that the iron angles had been despatched from Baran to Wadi Bunder under railway receipt No. 43352 dated February 6, 1959. This wagon reached Wadi Bunder on February 16, 1959. On February 17 it was unloaded by Baburao 923 Gawade, P.W.I and Shridhar, P.W. 14. On February 18, accused No. 1 obtained the delivery sheet of the bill and signed it in the name of Shri Datta. He also obtained delivery of the iron angles from the railway and signed the Railway Delivery Book in the name of Shri Datta. The railway authorities delivered these on the presentation of the forged receipt No. 43352 and on payment of the charges amounting to Rs. 1,500/ . These iron angles were then transported to the godown of the National Transport Company at Sewri and stored there. The entries in the book showed their receipt in the account of accused No. 3 and also contained a further entry indicating the goods to be received in the account of accused No. 2. The latter entry was made on the receipt of a chit, Exhibit Z8, from accused No. 1 saying that the goods be entered in the name of accused No. 2. On February 24, 1959 the accused No. 2 signed an application, Exhibit K, addressed to the head office of the National Transport Company for delivering the goods. Accused No. 1 obtained the goods from the godown of that company on February 26 and March 3, 1959. A complaint by the original consignee about the nonreceipt of the iron angles sent from Gobind Garh led to an enquiry and eventual prosecution of the three accused. Six charges were framed. The first charge was against all the accused for an offence punishable under sections 471 and 467 read with section 34 I.P.C. and stated that in furtherance of their common intention to cheat the railway administration, accused No. 1 had fraudulently or 'dishonestly used the forged railway receipt No. 43352. The second charge was framed in the alternative. Firstly it charged all the accused for an offence under section 467 read with section 34 I.P.C. on account of accused No. 1 having forged the bill portion. In the alternative, accused No. 1 was charged with the offence under section 467 I.P.C. and the other accused Nos. 2 and 3 were charged under section 467 read with section 109 I.P.C. for having abetted accused No. 1 in the commission of that offence. 924 Charges Nos. 3 to 6 were similarly framed in the alternative, i.e., in the first instance all the three accused were charged with certain offences read with section 34 I.P.C. while in the alternative accused No. 1 was charged of the specific offence and the other two accused were charged with that offence read with section 109 I.P.C. The accused were tried by the Additional Sessions Judge, Greater Bombay, with the aid of a jury. The jury returned a unanimous verdict of guilty against all the accused for the various offences read with section 34 I.P.C. The verdict of the jury was not recorded with respect to the five alternative charges against accused No. 1 regarding substantive offences and against accused Nos. 2 and 3 with respect to the various offences read with section 109 I.P.C. The Sessions Judge accepted the verdict of the jury and convicted them of the various offences read with section 34 I.P.C. Their appeals to the High Court were unsuccessful and therefore accused Nos. 2 and 3 have preferred these appeals after obtaining special leave from this Court. The main contention for the appellants is that the learned Sessions Judge misdirected the jury with respect to the requirements of section 34 I.P.C. The contention is that the various offences were actually committed by accused No. 1 on February 18, that neither accused No. 2 nor accused No. 3 was present when he presented the forged railway receipt, did other criminal acts and took delivery of the iron angles and that therefore even if they had agreed with accused No. 1 for the cheating of the railway administration by obtaining the iron angles dishonestly by presenting the forged receipt, they might have abetted the commission of the various offences, but could not be guilty of those offences with the aid of section 34 I.P.C. whose provisions, it is contended, do not apply in the circumstances of the 'Case. It is contended that for the applicability of section 34 against an accused, it is necessary that that accused had actually participated in the commission of the crime either by doing something which forms part of the criminal act or by at least doing something which would indicate that be was a participant in the commission of that criminal act 'at the time it was committed. Reliance is placed on the 925 cases reported as Barendra Kumar Ghosh vs The King Emperor(1) and Shreekantiah Ramayya Munipalli vs The State of Bombay(2). The learned Sessions Judge in the instant case had told the jury : "In case you come to the conclusion that there was a common intention in the minds of all the three accused and accused No. 1 was acting in furtherance of that common intention, all the accused would be answerable for the offences proved against accused No. 1 by virtue of the provisions of section 34 of the Indian Penal Code, and it would be no answer to the charge to say that the acts were done by accused No. 1 alone. Therefore, you have first, to consider for yourselves what offences are proved against accused No. 1. You have next to ask yourselves whether it is proved (and it can also be proved by circumstantial evidence) that there was a common intention in the minds of all the three accused and the acts done by accused No. 1 were done in furtherance of that common intention. If your answer is 'yes ' all the three accused would be guilty of the charges proved against accused No. 1 by virtue of section 34 of the Indian Penal Code. " It is contended that in thus putting the case to the jury the learned Sessions Judge was in error as he did not take into consideration the fact that accused Nos. 2 and 3 were not present at all at the time when the various offences were actually committed by accused No. 1. The two cases relied upon by the appellants support their contention. In Shreekantiah 's case(2), three persons were convicted on several charges under section 409 read with section 34 I.P.C. for committing criminal breach of trust of certain goods entrusted to them as government servants in charge of the stores depot (1) L.R. 52 I.A. 40. (2) ; 926 at Dehu Road near Poona. The stores had illegally passed out of the depot and were handed over to a person who was not authorised to get them from the depot. It was alleged that those accused had conspired to defraud the Government of those properties and that it was in pursuance of that conspiracy that they had arranged to sell the goods to the other person. Accused No. 1 in that case was not present when the goods were loaded nor was he present when they were allowed to pass out of the gates, that is to say, he was not present when the offence was committed. Bose J., delivering the judgment of the Court, said at p. 1189 : "If he was not present, he cannot be convicted with the aid of section 34. He could have been convicted of the abetment had the jury returned a verdict to that effect because there is evidence of abetment and the charge about abetment is right in law. But the jury ignored the abetment part of the charge and we have no means of knowing whether they believed this part of the evidence or not. " In considering the misdirection in the charge to the jury and the requirements of section 34 I.P.C. the learned Judge said at p. 1188 : "The essence of the misdirection consists in his direction to the jury that even though a person 'may not be present when the offence is actually committed ' and even if he remains 'behind the screen ' he can be convicted under section 34 provided it is proved that the offence was committed in furtherance of the common intention. This is wrong, for it is the essence of the section that the person must be physically present at the actual commission of the crime." Shreekantiah 's case(1) is practically similar to the present case. Both accused No. 2 and accused No. 3 deny their presence at the railway station on February 18 when the various offences were committed. None deposed that accused No. 3 was then present. The presence of accused No. 2 was, however, stated by Babu Rao Gawade, P.W. 1. (1) ; 927 He had not stated so in his statement before the police during investigation and the summing up by the learned Sessions Judge was that, under those circumstances, it was for the jury to consider whether to believe the statement of the s witness in Court or not. It cannot be said as there was other evidence against accused No. 2 as well about his connection with this criminal transaction whether the jury believed his presence at the railway station on February 18 or not. In Jaikrishnadas Manohardas Desai vs The State of Bombay(1), Shreekantiah 's case(2) came up for consideration and was distinguished, on facts. In that case, the two accused, who were directors of a company, were convicted of an offence under section 409 read with section 34 I.P.C. for committing criminal breach of trust with respect to certain cloth supplied to them. It was alleged that one of the accused was not working at that factory during the period when the goods must have been removed and that therefore he could not be made liable for the misappropriation of the goods by taking recourse to the provisions of section 34 I.P.C. Shah J., delivering the judgment of the Court, said at p. 326: "But the essence of liability under section 34 is to be found in the existence of a common intention animating the offenders leading to the doing of a criminal act in furtherance of the common intention and presence of the offender sought to be rendered liable under section 34 is not, on the words of the statute, one of the conditions of its applicability. . A common intention a meeting of minds to commit an offence and participation in the commission of the offence in furtherance of that common intention invite the application of section 34. But this participation need not in all cases be by physical presence. In offences involving physical violence, normally presence at the scene of offence of the offenders sought to be rendered liable on the principle of joint liability may be necessary, but such is not the case in respect of other offences where the offence ' consists of diverse acts which may be (1) (2) ; 928 done at different times and places. In Shree Kantiah 's case(1), misappropriation was com mitted by removing the goods from a Government depot and on the occasion of the removal of the goods, the first accused was not present. It was therefore doubtful whether he had participated in the commission of the offence, and this Court in those circumstances held that participation by the first accused was not established. The observations in Shree Kantiah 's case(1) in so far as they deal with section 34 of the Indian Penal Code must, in our judgment, be read in the light of the facts established and are not intended to lay down a principle of universal application." Accused No. 1, in the present case, alone did the various acts on February 18, 1959 which constituted the offences of which he was convicted. Accused Nos. 2 and 3 took no part in the actual commission of those acts. Whatever they might have done prior to the doing of those acts, did not form an ingredient of the offences committed by accused No. 1. They cannot be said to have participated in the commission of the criminal act which amounted to those various offences. They cannot be therefore held liable, by virtue of section 34 I.P.C., for the acts committed by accused No. 1 alone, even if those acts had been committed in furtherance of the common intention of all the three accused. The result, therefore, is that the conviction of the appellants, viz., accused Nos. 2 and 3, for the various offences read with section 34 I.P.C. is to be set aside. We did not hear, at first, the learned counsel for the appellants, on the alternative offences of abetment being made out against the appellants and with respect to which the verdict of the jury was not recorded by the Sessions Judge. We did not consider it necessary to remit the case for further proceedings with respect to those charges and preferred to dispose of the case finally after giving a further hearing to the learned counsel for the appellants. We accordingly heard them on the charges relating to the appellants abetting accused No. 1 in the commission of the (1) ; 929 various offences, subject matter of charges Nos. 2 to 6 and now deal with that matter. We need not discuss the evidence on the record and would just note the various facts which are established from the evidence or which are admitted by the accused. The relevant facts having a bearing on the question of accused No. 2 abetting the commission of the offences com mitted,by accused No. 1 are : 1. Accused No. 1 is the servant of accused No. 3 at whose shop accused No. 2, who is a broker, sits. Accused No. 2 deals in non ferrous goods. Accused No. 2 went with Baburam Gavade, P.W. 1, a clearing agent, on February 17, 1959, to see the goods. The godown register showed the angle irons to be received in the account of Shiv Prasad Bimal Kumar and Pyare Lal, accused No. 2. Accused No. 2 wrote the letter Exhibit K to the National Transport Company for issuing, the delivery order with respect to the angle irons in order to enable him to take delivery thereof. Accused No. 2 was in possession of the note, Exhibit Z 7 which he delivered to the police during the investigation. The relevant facts having a bearing on the alleged abetment of the offences by accused No. 3 are 1. Accused No. 1 is an employee of accused No. 3. 2. The angle irons were stored at the depot of the National Transport Company at the instance of, accused No. 1. 3 The books of the godown noted their receipt in the account of accused No. 3, though the account Showed further that they were received in the, account of accused No. 2. This further entry was,made on receipt of Exhibit Z 8 from .lm0 134 159 S.C. 59 930 accused No. 1 when the last lot was delivered at the godown on February 18. The entire writing on Exhibit Z 7 except the signature of an unknown person and the date below it, was written by accused No. 3. That document reads: "To Piaraya Lal c/o M/s. Sheopershad Bimal Kumar, Bombay. No. 43351, dated 4 2 59 Ashoknagar to Carnac Bridge. No. 43352, dated 6 2 59 Baran to Wadi Bunder. I have received the material of the above RR which I have handed over to you for clearance. Sd./ Yashwant 24 2 1959. " Besides these circumstances, it is urged for the State that the effect of the diversion of the wagon from its right course at Itarsi railway station indicates that the people responsible for it must have a fairly large and influential organization with funds and that such a diversion could no$ have been merely at the instance of accused No. 1, all employee of accused No. 3, who is a substantial merchant About Rs. 1,5001/ were paid as charges to the railway authorities before the angle irons could be taken delivery of Accused No. 1 could not have been in a position to make that payment. It is further urged that accused No. 1 would not have stored the goods with the National Transport Company unless the storage was on account of his master, accused No. 3. Accused No. 2 admits his going to see the goods on February 17, but states that he lost his interest in the good$ as they were iron angles and his line of business was in non ferrous goods. He explains his singing the letter Exhibit 931 K by saying that he did so at the instance of accused No. 3 who represented to him that accused No. 1 had, by mistake, stored the goods in the name of accused No. 2 and of accused No. 3 showing him the document Exhibit Z 7 which he retained with himself. Accused No. 3 states that he had nothing to do with this matter and that he wrote Exhibit Z 7 at the instance of accused No. 2 who asked him to do so, he himself being unable to write in English or Hindi. We now discuss the evidence to determine whether the accused Nos. 2 and 3 abetted the commission of the offences committed by accused No. 1. Exhibit Z 7, as originally written, does not, appear to have had the first line, viz., the writing of 'To, Piaraya Lal C/o '. This was written subsequently. This is clear, as urged for accused No. 2, from the facts that it appears to have been written with a different pen and, possibly, with different ink also, and because the word 'C/o ' has been written at an unusual place. In ordinary writing, it should have been in line with the latter expression 'M/s. Sheopershad Bimal Kumar '. It follows therefore that this document was first written by accused No. 3 to show that a third person had entrusted him with the railway receipt No. 43352, dated February 6, 1959, and that that person had received the material to which the railway receipt related. In this original form, the only conclusion possible from the original contents of the document can be that M/s. Sheopersbad Bimal Kumar, of which accused No. 3 is the proprietor, received this receipt from the third person in order to clear the good. & from the railways. This would amply explain accused No. 1 taking delivery of the goods on February 18 and storing them with the National Transport Company in the account of accused No. 3 and the entries in the godown register. Himmatlal, P.W. 13, is the godown keeper. He issued the receipt Exhibit PI which records: "We have today received the under mentioned goods for storage with us in our godown No. IPL on behalf of and under lien to Shiv Prasad Bimal Kumar. " 932 This is a clear indication of the fact that the goods were stored on behalf of Sheopershad Bimal Kumar, i.e., accused No. 3. The words 'under lien ' are of great significance in this respect and show that the storage was not shown to be on behalf of accused No. 3 merely because the angle irons were sent by accused No. 1 who was an employee of accused No. 3. The expression 'under lien ' points to there being some specified transaction between accused No. 3 and the National Transport Company for the storing of the articles. This note further confirms the statement of Himmatlal that he had all first written in the accounts that the goods were received on account of Sheopershad Bimal Kumar and that it was on receipt of Exhibit Z 8 from accused No. 1 that he noted the words 'Account Pyare Lal ' in the entries with respect to those goods. The circumstance that accused No. 3 was in a better position to finance the transaction than accused No. 1, is also consistent with the aforesaid conclusion from the original contents of Exhibit Z 7. Apart from the apparent later noting of the first line in this document, Exhibit Z 7, there appears no good reason why the receipt should have been written in this form if it was to be written at the instance of accused No. 2. There was no reason to give the address of Pyare Lal as c/o M/s. Sheopershad Bimal Kumar. The later entry in this document must have been therefore for a purpose And that could have only been to show that the railway receipt No. 43352 was dealt with by accused No. 2 and not by accused No. 3. Mention may be made here of the fact that certain witnesses who had, during their police statements, referred to certain actions of accused No. 3, stated in Court that those acts were committed by accused No. 2. No reliance can be placed on any of the statements of those witnesses and this fact is just mentioned to show that it fits in with the very first attempt in converting the document originally prepared to show that accused No. 3 had dealt with this forged railway receipt into a document showing that it was 933 not accused No. 3 but accused No. 2 who dealt with that receipt. Accused No. 2 has been acting as a broker. He signed Exhibit K. He must be conversant with the language in which he signed. It was not necessary that the receipt Exhibit Z 7 should have been written in English or in Hindi even if accused No. 2 did not know any of those languages. We are therefore not prepared to accept the explanation of accused No. 3 with respect to his recording the document Exhibit Z 7. We hold, as admitted by him, that he had written this document. It makes reference to the forged receipt of which advantage was taken in getting delivery of the iron angles. Accused No. 3, writing such a receipt, clearly points to his being concerned with the taking delivery of the iron angles, by accused No. 1, his employee. Once the forged receipt is traced to accused No. 3, from his own writing, the natural conclusion is that it was he who passed it on to his employee accused No. 1 for the purpose of getting delivery of those goods from the railway authorities. He thus aided accused No. 1 in obtaining delivery of those goods, and in his committing the various offences for achieving that object. The further fact that the receipt was endorsed in the name of Datta and not in the name of accused No. 1, also proves that accused No. 3 must have known that the receipt he was dealing with was not a genuine receipt for the goods which were to be taken delivery of. If he had believed the receipt to be a genuine one, he would have endorsed it or got it endorsed in the true name of his employee. His employee too would not have taken delivery under a false name. We are therefore of opinion that it is established from these various circumstances and facts that accused No. 3 had abetted the commission of the offences, the subject matter of charges Nos. 2 to 6, by accused No. 1. The points in favour of accused No. 2 are that he does not deal in non ferrous metals and therefore he would not have taken any interest in the transaction after he had found out on February 17 that the goods were ferrous and not non ferrous. The fact that the goods were not stored in his name in the accounts of the godown of the National Trans 934 port Company, but were stored in the first instance in the name of No. 3, also goes in his favour. If accused No. 3 had nothing to do with it and accused No. 1 was simply acting for accused No. 2, he would have sent instructions in the very first instance to Himmatlal that goods were to be stored in the account of accused No. 2. He did not do so. He sent intimation for storing the goods in the name of Pyarelal with the last lorry transporting the iron angles to the godown. Pyarelal had no previous dealings with the National Transport Company. In this connection, the exact direction given by accused No. 1 is of some significance. The direction given by him in Exhibit Z 8 was 'Please give a receipt in the name of a/c Pyare Lal '. The request was not that the goods were of Pyare Lal and so be stored on his account. That should have been the natural direction. The receipt would have then been issued in the name of Pyare Lal and of nobody else. The direction given by accused No. 1 therefore indicates that for certain purposes he desired the receipt alone to be in the name of Pyare Lal. Naturally, Himmatlal had to make some entry in the books of the godown which would be consistent with a receipt issued in the name of Pyare Lal. Himmatlal therefore noted the words 'account Pyare Lal ' below the original note 'account Sheopershad Bimal Kumar ', but saw no reason to make a statement in the receipt Exhibit P that the goods were stored on behalf of Pyare Lal and noted in it that they were stored on behalf and under lien to Sheopershad Bimal Kumar. Accused No. 2 signed the letter Exhibit K for the issue of the delivery order. His explanation is that he did so when accused No. 3 insisted and told him that his employee had by mistake stored the goods in his name. Ordinarily, this should not have been believed by accused No. 2 as there was no reason why accused No. 1 should store the goods in his name by mistake. He could have and might have suspected something not straight, but could shake off such suspicion by his being shown the receipt Exhibit Z 7, which showed that the goods had been cleared by A 3 on behalf of certain person who had passed on that receipt. He was under an obligation to accused No. 3 and it is possible that he could 935 not have strongly resisted the request of accused No. 3 sign the letter Exhibit K. Accused No. 3 had necessar to obtain a letter signed by Pyare Lal when the goods has not been shown to be stored in his account but were not in the account of Pyare Lal or of both Sheopershad Bin Kumar and Pyare Lal. It is significant that accused No. 2 himself did not to take delivery of the goods. It was accused No. 1 was took the delivery in two lots and each time signed the receipt in the name of Pyare Lal. If accused No. 2 was also a party to the dishonest obtain ing of the goods from the railway, there would not ha been any occasion for such duplication of names on who behalf the goods were stored with the National Transport Company or for such a document as Exhibit Z 7 commitment into existence or for accused No. 2 keeping the document with himself. He kept it with himself for his protection an produced it for that purpose during investigation. It may be that when accused No. 3 tried to dispel his doubts wh. he was requested to sign the letter Exhibit K, accused No. himself suggested the receipt Exhibit Z 7 to be address, 'in his name, as only then that receipt could be of any he to him. In these circumstances, we are of opinion that the complicity of accused No. 2 in the commission of the varios offences by accused No. 1 is not established beyond reason able doubt. We therefore allow the appeal of Pyare Lal and acquired him of the offences he was convicted of. We dismiss tl. appeal of accused No. 3, Shiv Prasad Chunilal Jain, by alter his conviction for the various offences read with section 3, I.P.C. to those offences read with section 109 I.P.C., and mainta. the sentences. Appeal No. 185 allowed at, Appeal No. 150 dismisses Conviction altered and sentence maintained.

IN-Abs

In a trial by jury the appellants were jointly charged along with accused No. 1 with an offence punishable under sections 471 and 467 read with section 34 of the Indian Penal Code. The first charge was that in 921 furtherance of their common intention to cheat the railway administration, accused No. 1 had fraudulently or dishonestly used the forged railway receipt. The second charge was framed in the alternative. Firstly it charged all the accused under section 467 read with section 34 I.P.C. on account of accused No. 1 having forged the bill portion. In the alternative, accused No. 1 was charged under section 467 I.P.C. and the appellants were charged under section 467 read with section 109 I.P.C. for having abetted accused No. 1 in the commission of that offence. Similarly charges Nos. 3 to 6 were framed in the alternative. The jury returned a unani nious verdict of guilty against all the accused for the various offences read with section 34 I.P.C. The verdict of the jury was not recorded with respect to the five alternative charges against accused No. 1 regarding substantive offences and against appellants with respect to various offences read with section 109 I.P.C. The Sessions Judge accepted the verdict of the jury and convicted them of the various offences read with section 34 P.C. Their appeals to the High Court also failed. On appeal by Special Leave the appellants mainly contended that the learned Sessions Judge misdirected the jury with respect to the requirements of section 34 I.P.C. It was urged that the various offences were actually committed by accused No. 1, that the appellants were not present when accused No. 1 presented the forged railway receipts, did other criminal acts and took 'delivery of the goods and that therefore even if they had agreed with accused No. 1 for the cheating of the railway by obtaining the goods dishonestly by presenting the forged receipt. they might have abetted the commission of the various offences, but could not lye guilty of those offences with the aid of section 34 I.P.C. whose provisions do not apply in the circumstances of the case. For the applicability of section 34 against an accused, it is necessary that that accused had actually participated in the commission of the crime either by doing something which forms part of the criminal act or by at least doing something which would indicate that he was a participant in the commission of that criminal act at the time, it was committed. Held: In the present case, accused No. 1 alone did the various acts which constituted the offences of which he was convicted. The appellants took no part in the actual commission of those acts. Whatever they might have done prior to the doing of those acts, did not form an ingredient of the offences committed by accused No. 1. They could not be said to have participated in the commission of the criminal act which amounted to those various offences. They could not be therefore held liable, by virtue of section 34 I.P.C., for the acts committed by accused No. 1 alone, even if those acts had been committed in furtherance of the common intention of all the three accused. Therefore, the conviction of the appellants, for the various offences read with section 34 I.P.C. must be set aside. Barendra Kumar Ghosh vs The King Emperor, (1929) L.R. 52 I.A. 40, Shree Kantiah Ramayya Munipalli vs State of Bombay ; and Jaikrishnadas Manohardas Desai vs State of Bombay , referred to.

Appeal No. 598 of 1962. Appeal from the judgment and order dated March 18, 1961 of the Maharashtra High Court (Nagpur Bench) at Nagpur in Special Civil Application No. 30 of 1960. WITH Civil Appeals Nos. 695 and 700 of 1962. Appeals from the judgment and orders dated October 12, 1961 and March 18, 1961 of the Madhya Pradesh High Court in Misc. Petitions Nos. 122 of 1961 and 319 of 1960 respectively. 949 M. C. Setalvad and section Shaukat Hussain, for the appellant (in C.A. No. 598/62). W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 1 (in C.A. No. 598 of 1962). section G. Patwardhan, Udai Pratap Singh and M. section Gupta, for the appellant (in C.A. No. 695/62). A. N. Goyal, for respondent No. 1 (in C.A. No. 695/ 62). N. Shroff, for respondent No. 2 (in C.A. No. 695/62). M.C. Setalvad and M. section Gupta, for the appellant (in C.A. No. 700/62). G. section Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents Nos. 1 to 4 and 6 to 9 (in C.A. No. 700/62). N. Shroff, for respondent No. 10 (in C.A. No. 700/62). March 3, 1964. The Judgment of the Court was delivered by AYYANGAR, J. These three appeals which are on certificates of fitness granted by the High Courts the first by the High Court of Bombay at Nagpur and the two others by the High Court of Madhya Pradesh raise a common question as regards the construction of article 277 of the Constitution and the validity of certain terminal taxes imposed by the respective appellant municipal authorities under notifications issued under Ch. IX of the C.P. & Berar Municipalities Act, 1922, subsequent to the coming into force of the Constitution, and so have been heard together. Civil Appeal 598 of 1962 is an appeal from the High Court of Bombay at Nagpur and has been filed by the Municipal Committee of Amravati against a decision of the High Court allowing the 1st respondent 's petition under articles 226 and 227 of the Constitution. The Municipal Committee of Amravati has been established under the 950 C.P. & Berar Municipalities Act, 1922 (C.P. & Berar Act II of 1922) hereinafter referred to as the Act. Chapter IX of the Act deals with the imposition, assessment and collection of taxes which might be imposed by the Municipal Committee. Section 66 specifies the taxes which, subject to the provisions of the Chapter, the Committee may from time to time impose. Its first sub section specifies in its several clauses 15 varieties of taxes and among them is cl. (o) which reads: "The terminal tax on goods or animals imported into or exported from the limits of the municipality provided that terminal tax under this clause and an octroi under cl. (e) shall not be in force in any municipality at the same time , ' The other sub clauses which are relevant for the considera tion of the question arising in the appeal are sub cls. (2),(3) and (4) of section 66 and they read : (2) The State Government may, by rules made under this Act, regulate the imposition of taxes under this section, and impose maximum amounts of rates for any tax. (3) The first imposition of any tax specified in subsection (1) shall be subject to the previous sanction of the State Government. (4) Subject to the control of the State Government, a committee may abolish any tax already imposed and specified in sub section (1) clauses (a) to (in) inclusive, or may, within the limits imposed under sub section (2), vary the amount or rate of any such tax : Provided that in the case of any municipality indebted to the Government, the abolition of any tax or a reduction in the amount or rate thereof shall be subject to the previous sanction of the State Government. " 951 Section 67 lays down the procedure for the imposition of taxes and it provides : "67. (1) A committee may, at a special meeting, pass a resolution to propose the imposition of any tax under section 66. (2) When such a resolution has been passed, the committee shall publish, in accordance with rules made under this Act, a notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted. (3) (4) (5) The State Government, on receiving such proposals, may sanction or refuse to sanction the same, or sanction them subject to such modifications as it may think fit, or return them to the committee for further consideration. (6) No modification affecting the substance shall be made under sub section (5), unless and until the modification has been accepted by the committee at a special meeting. (7) (8) A notification of the imposition of a tax under this section shall be conclusive evidence that the tax has been imposed in accordance with the provisions of this Act. " The procedure for the variation of the taxes is to be found in section 68 and it reads "68. (1) A committee may, at a special meeting, pass a resolution to propose the abolition of any tax already imposed, or a variation in the amount or rate thereof. (2) 952 (3) If the proposal is to increase the amount or rate of any tax, the committee shall publish, in the manner prescribed by rules made under this Act, a notice showing in detail the effects of the proposal. (4) Any inhabitant of the municipality objecting to the proposed increase may, within thirty days from the publication of the notice, submit his objection in writing to the committee. (5) The committee shall take the proposal and all objections received thereto )into consideration at a special meeting, and may modify the proposals as it may think fit, and may pass a final resolution on the proposal. (6) If the proposal requires the previous sanction of the State Government under the provisions of section 66, sub section (4) or sub section (5), the committee shall forward it to the State Government and it shall be dealt with in the manner provided in section 67, sub sections (4), (5) and (6). (7). . . . (8). . . . (9) The publication in the manner prescribed of the abolition or variation of any tax under this section shall be conclusive proof that such abolition or variation has been made in accordance with the provisions of this Act." From even before the constitution of the municipality under the Act and at a time when the municipal committee was governed by the Berar Municipal Law of 1886 which was in force prior to the Act and whose taxation provisions were continued by the Act of 1922, a terminal tax on goods imported by road or rail had been imposed by the Munici pality by virtue of a notification dated August 10, 1916 on several specified kinds of goods. This notification exempted silver, bullion and coin from the operation of this tax. This was superseded by a notification of June 2, 1921 under which the Schedules were modified and the terminal tax 953 imposed was confined to goods imported into or exported out of the Municipal area by rail. The notification of June 1921 was amended from time to time by other items being added and the rates being increased but no change was effected in the taxes imposed after 1936. Under the scheme of the distribution of taxing powers between the provinces and the Central Government under the Government of India Act, 1935 terminal taxes on goods carried by rail were assigned exclusively to the Federal Centre under item 58 of List I to Sch. VII, but the validity of the levy and collection of the terminal tax in force, before the 1st April, 1937 was continued by section 143 of the Government of India Act, 1935 and it was by virtue of this continuance that these taxes were continued to be levied after April 1, 1937 Their continuance after January 26, 1950 when after the repeal of the Government of India Act, 1935, the Consti tution came into force with the same scheme of distribution of taxing power on the relevant item identical with that under the Government of India Act, was by reason of article 277 which was practically in the same terms as section 143 of the Government of India Act, 1935. The taxes imposed by the pre Constitution notification could, therefore, be legally levied and collected even after the Constitution came into force. Subsequent to January 26, 1950 there was a notification on December 1, 1959, under which to the list of goods liable to terminal tax imported into or exported out of the Municipal area, not merely by rail, but also by road were added three new items silver and silver jewellery, gold and gold jewellery, and precious stones, and these three specified items were subjected to the tax at the same rates as had been imposed on other articles by the notifications which were in force from before the Constitution. Before the notification was issued the procedure indicated by section 67 was gone through and the Government accorded their sanction to the rules made by the Municipal Committee for the imposition of the tax on the newly added articles. The validity of the tax imposed by this notification was challenged by the 1st respondent who was carrying on business within Amravati municipality in gold, silver and precious stones, 954 on the ground of legislative incompetency which had not been saved by Article 277 of the Constitution, in a petition under Article 226. The learned Judges of the High Court by a majority accepted the contention raised by the respondent and allowed the petition but granted a certificate of fitness and hence this appeal. The facts of the other two appeals are nearly similar but we shall refer to them after dealing with the, common question which arises in these appeals. It is common ground that the right to levy a terminal tax is now vested in the Union Parliament under Entry 89 of the Union List which reads : "Terminal taxes on goods or passengers carried by railway, sea or air; taxes on railway fares and freights", so that if the levy by the appellant of the terminal tax on the newly added items, and the same principle would apply to an increase in the rate of the duty, had to rest on the independent taxing power of the State, the same would have to be struck down for want of legislative competence. Besides it is necessary to add that whereas under the notifications in force prior to 1st April 1937 when Part III of the Government of India Act was brought into force, articles imported into or exported out of the municipal area by road were not subject to the tax, and that state of affairs continued till long after the Constitution came into force, a terminal tax was imposed by the impugned notification of December 1959 on goods imported or exported by road a tax which it was not open to the State to impose even with the aid of article 277. But ignoring this feature of the impugned notification, insofar as it brought in goods carried by road within the scope of the terminal tax, it is admitted that the validity of the imposition cannot be justified if it was a fresh imposition. What is, however, urged in support of the validity of the imposition is that the same is saved by article 277 which runs: "277. Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the 955 Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List. continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law. " If learned Counsel for the appellant is right in his contention 'that the impugned tax which he is now seeking to sustain, 'was the tax which "was being lawfully levied" by the municipality before the commencement of the Constitution he would certainly be well founded in the submission that the fact that the terminal taxes are under the distribution ,of taxing powers under the Constitution assigned to the Union would make no difference for the valid continuance of the levy. The question, therefore, is whether this was the tax which was being levied by the municipal authority before the Constitution and for whose continuance the Article provides. The first submission of Mr. Setalvad for the appellants was that this condition would be satisfied whenever a ,terminal tax (without reference either to the article on which it was levied or the rate) was being lawfully levied by the municipality prior to the commencement of the ,Constitution and as in this case admittedly a terminal tax was being levied on certain articles that condition was satisfied. His argument was that the words 'tax or duty ' in the opening part of article 277 should be read as meaning a tax or duty under a specified legislative Entry, and if such a tax or duty was being levied before the commencement ,of the Constitution other duties of the same type or falling within the same category might be imposed after the Constitution notwithstanding that such duties or taxes were mentioned in the Union List by reason of the words "shall continue to be levied". Secondly, he said that the word 'levy ' meant not merely the ascertainment, i.e., assessment and collection of the tax but included its imposition, i.e., also the charging and if that expression were understood in that wide sense it would comprehend a case where other 956 items than those originally specified were brought into the fold of the taxing provision. The learned Attorney General who appeared for the State and supported Mr. Setalvad, however, went a step further and submitted that it was not even necessary that a terminal tax should be actually imposed and was being collected prior to the Constitution, but that it was sufficient if the State enactment had vested in the municipality a power to levy such a tax. The argu ment of the learned Attorney General has to be rejected as lacking any substance, for on no construction, wide or narrow, of the expression 'levy ' in the phrase 'continue top be levied ' can such a case be comprehended. From the mere fact that a State enactment has authorised a municipality to levy a tax it cannot be said that a tax which had never been imposed was "being lawfully levied" by the municipality, not to speak of the tax etc. collected being "applied to the same purposes" before the commencement of the Constitution as contemplated by the concluding portion of the Article. Coming next to what one might term the narrower submission of Mr. Setalvad we do not find it possible to agree with it either. His first submission may be expanded thus : The expression "taxes, duties, cesses" with which article 277 opens, has to be read in the context of Part XII in which the Article occurs and so read has to be understood as referring to the class or category of taxes which were levied and collected by the State, municipality etc. before the commencement of the Constitution. In other words, the reference here is to the entries in the legislative lists which permit such taxes to be levied, and so read and taken in conjunction with the circumstance that the Article is one designed to prevent the dislocation of the finances of the State or other local authorities, the terms of the Article would be satisfied and the legislative power to continue to levy the tax would be conferred "notwithstanding that the tax, etc. are mentioned in the Union List". This argument, in our opinion, proceeds on ignoring the terms of article 277. If, as is admitted, the sole object sought to be achieved by this provision for "continuance" is to avoid dislocation of the finances of the State and local authorities, 957 by depriving them of the revenues which they were deriving at the commencement of the Constitution, it would mean that the intention was to permit the existing range of taxes to be continued, not that the Article conferred on them authority to expand the range of their taxation by subjecting new items to taxation or by increasing the rates of duty. This consideration apart, it is not possible to read the words "notwithstanding that the taxes etc. are mentioned in the Union List" as conferring an unlimited legislative power to impose what in effect the argument involves new taxes, though of the same type or nature as existed before the Constitution. The question of the proper construction of section 143(2) of the Government of India Act, 1935 which is for all practical purposes identical with article 277 came up for consideration before this Court in Rama Krishna Ramanath vs The janpad Sabha, Gondia(1). There it was submitted on behalf of the respondent local authority that by virtue of section 143 (2) of the Government of India Act the Provincial Legislature was vested with a plenary power to legislate in respect of every tax which was being lawfully levied by local authorities prior to the commencement of the Government of India Act. This Court rejected that contention and observed "Section 143 (2) which is a saving clause and obviously designed to prevent a dislocation of the finances of Local Governments and of local authorities by reason of the coming into force of the provisions of the Government of India Act distributing heads of taxation on lines different from those which prevailed before that date, cannot be construed as one conferring a plenary power to legislate on those topics till such time as the Central Legislature intervened. Such a construction would necessarily involve a power in the Provincial Legislature to enhance the rates of taxation a result we must say from which Mr. Sanyal did not shrink, but having regard to the language of the section (1) [1962] Supp. 3 S.C.R. 70. 958 providing for a mere continuity and its manifest purpose this construction must be rejected. " No doubt, even the words "continue to be levied and to be applied to the same purposes" might import and imply a limited legislative power in the State. The scope of this limited power was also examined by this Court in the same case and it was stated : "In the context the relevant words of the sub section could only mean 'may continue to be levied if so desired by the Provincial Legislature ' which is indicated by or is implicit in the use of the expression 'may ' in the clause 'may be continued until provision to the contrary is made by the Federal Legislature. ' This would therefore posit a limited legislative power in the Province to indicate or express a desire to continue or not to continue the levy. If in the exercise of this limited power the Province desires to discontinue the tax and effects a repeal of the relevant statute the repeal would be effective. Of course, in the absence of legislation indicating a desire to discontinue the tax, the effect of the provision of the Constitution would be to enable the continu ance of the power to levy the tax but this does not alter the fact that the provision by its implication confers a limited legislative power to desire or not to desire the continuance of the levy subject to the overriding power of the Central Legislature to put an end to its continuance and it is on the basis of the existence of this limited legislative power that the right of the Provincial Legislature to repeal the taxation provision under the Act of 1920 could be rested. Suppose for instance, a Provincial Legislature desires the continuance of the tax but considers the rate too high and wishes it to be reduced and passes an enactment for that purpose, it cannot be that the legislation is incompetent and that the State Government 959 must permit the local authority to levy tax at the same rate as prevailed on April 1, 1937 if the latter desired the continuance of the tax. If such a legislation were enacted to achieve a reduction of the rate of the duty, its legislative competence must obviously be traceable to the power contained in words 'may continue to be levied ' in section 143 (2) of the Government of India Act. " Dealing next with the import of the words 'may continue to be levied ' the same was summarised in these terms : (1) The tax must be one which was lawfully levied by a local authority for the purpose of a local area, (2) the identity of the body that collects the tax, the area for whose benefit the tax is to be utilised 'and the purposes for which the utilization is to take place continue to be the same, and (3) the rate of the tax is not enhanced nor its incidence in any manner altered, so that it continues to be the same tax. It is obvious that if these tests were applied the submission on behalf of the appellant cannot be accepted. But authority apart, we cannot, even if this decision were put aside, accede to the construction for which Mr. Setalvad contends. It is not disputed that in ultimate analysis the answer to the question raised should turn on the meaning of the word 'levied ' in the phrase 'continue to be levied ' which is the operative word conferring a power. Mr. Setalvad submits that 'levied ' is a word of wide and varying import and includes in its denotation not merely the actual collection of the tax, but the imposition in the sense of the creation of the charge by the statute, as well as the ascertainment of the amount due from the tax payer. Mr. Setalvad is right, for before a tax can be collected from any tax payer, its quantum must be ascertained and assessed, and for this to be lawfully done there must be legislative sanction in other words an imposition of the charge because it is the charge under the Statute that is quantified ' by the authorities acting under the taxing enactment. The acceptance of this construction however does not lead to the result desired, for what can "continue to be levied" is what "was being lawfully levied" in the same sense of the, 960 word "levied", prior to the Constitution. Admittedly, there was no imposition of the charge now sought to be recovered prior to the Constitution, i.e., the Act did not impose the charge by section 66 but merely enabled the Municipal Committee by appropriate procedure to impose the tax. If, of course, this power had been availed of and a charge had been imposed it would be a different matter. So long as the Municipal Committee did not pass the necessary resolutions and impose the tax there was no charge levied on the commodity, so that it could not be said that the tax "was being lawfully levied" before the commencement of the Constitution. The words "was being lawfully levied ' obviously mean "was actually levied" and it would not be sufficient to satisfy those words that the Municipal authority could lawfully levy the tax, but had not availed itself of that power. There is another circumstance to which also reference may be made. The last portion of article 277 uses the words "continue to be levied" and "to be applied to the same "purposes". By reason of this collocation between the concept of the levy and of application of the proceeds of the tax , the Constitution makers obviously intended the word 'levy ' to be understood as including the collection of the ,tax, for it is only when a tax is collected that any question of its application to a particular purpose would arise. It is apparent that if the word "levied" were understood in the sense which Mr. Setalvad contends, there could be no "application" of the proceeds of the tax to the same pur poses as at the commencement of the Constitution. For ex concessis at that date there were no proceeds to be applied. In this connection learned Counsel for the respondent referred us to the decision in Chuttilal vs Bagmal and Balwantrai(1) where the relationship between the levy and the application of the tax has been referred to as an aid to the construction of the expression "continue to be levied" in article 277. We find ourselves in agreement with the views there expressed. The decision of the High Court is, therefore, correct and "the appeal fails. (1) I.L.R. [1956] Madhya Bharat 339. 961 CIVIL APPEAL No. 695 OF 1962. In this appeal a notification was issued under sub sections (5) and (7) of section 67 of the C.P. & Berar Municipalities Act, 1922, on December 9, 1960 imposing a terminal tax on gun powder imported into or exported out of the municipal area by rail. It is admitted that previous to the Constitution there was no tax imposed on gun powder. The position in this case is, therefore, identical with that in Civil Appeal No. 598 of 1962 which we have just disposed of and it follows that this appeal also fails and should be dismissed. CIVIL APPEAL No. 700 OF 1962. In Civil Appeal 700 of 1962 the original notification imposing terminal taxes in respect of goods coming into or going out of the municipal area by rail was one dated March 17, 1926 which was operative from April 1, 1926. This was amended by a notification under section 67 (5) of the C.P. Berar Municipal Act, 1922 dated September 23, 1960 by which new articles were included to the list of items imported into or exported from the municipal area by rail subject to the terminal tax and besides the rate of tax on the previously existing items was also increased. It was this inclusion of new articles for the levy of terminal tax by the notification of 1960 and the increase in the rate of duty on articles, already subjected to tax, that was impugned in the writ petition filed by the respondent before the High Court. On our reasoning on the basis of which we have dismissed Civil Appeal 598 of 1962 it would follow that this appeal should also fail. We can see no difference between the inclusion of new items and the increase in the rate of duty because if there is an increase it would not be a mere continuance of the duty which had been lawfully levied which is the only purpose and function of article 277. The judgment of the High Court allowing the writ petition of the respondent was therefore correct. In the result, ;all the three appeals fail and are dismissed with costs of the contesting respondent or respondents. in each appeal. Appeals dismissed.

IN-Abs

A terminal tax on goods imported by road or rail was imposed by the Amravati Municipality by virtue of a notification dated August 10, 1916. This notification exempted silver, bullion and coins from the operation of this tax. When terminal taxes on goods imported by rail were assigned exclusively to the Federal Centre under the Government of India Act, 1935, the municipality was authorised by section 143 to continue to levy the terminal taxes which were actually levied before the enforcement of the Act. Likewise, the terminal taxes imposed by the pre Constitution notification were allowed to be levied and collected even after the Constitution came into force by virtue of article 277 of the Constitution. In 1960, the Municipality levied terminal taxes on three new items, viz., silver and silver jewellery, gold and gold jewellery and precious stones. In a writ petition filed under article 226 of the Constitution, the validity of the newly imposed terminal tax was challenged by the respondent who was carrying on business, within the limits of the Municipality, in gold, silver and precious stones on the ground of legislative incompetence. The writ petition was granted by the High Court and the appellant came to this court after obtaining a certificate of fitness from the High Court. Dismissing the appeal: Held: The newly imposed terminal taxes on silver and silver jewellery, gold and gold jewellery and precious stones had never been imposed by the Municipality and hence it could not be said that those were "being lawfully levied" by the Municipality and "applied to the same purposes" before the commencement of the Constitution as required by article 277 of the Constitution. article 277 was not intended to confer an unlimited legislative power to impose what in effect were new taxes, though of the same type or nature as existed before the Constitution. Rama Krishna Ramanath vs The Janpad Sabha, Gondia, [1962] Supp. 3 S.C.R. 70 and Chuttilal vs Bagmal and Balwantrai, I.L.R. [1956] M.B. 339. referred to.

Appeal No. 264 of 1962. Appeal from the judgment and order dated April 24, 1959 of the Madras High Court in L.P.A. No. 75 of 1958. A. V. Viswanatha Sastri and R. Ganapathy Iyer, for the appellants. M. C. Setalvad, M. A. Sattar Sayeed and R. Thiagarajan, for the respondent. 1018 March 4, 1964. The Judgment of GAJENDRAGADKAR C.J., SHAH and SIKRI JJ. was delivered by Shah J. The dissenting opinion of WANCHOO and AYYANGAR JJ. was delivered by AYYANGAR J. SHAH J. The appellant Vajrapani Naidu and his mother Bangarammal hereinafter collectively called 'the lessors granted a lease of an open site in the town of Coimbatore to Abirama Chettiar under a registered deed dated September 19, 1934, for 20 years at an annual rental of Rs. 1,080/ for putting up a building suitable for use as a theatre. Abirama Chettiar constructed a theatre on the site, and assigned his rights to the New Theatre Carnatic Talkies Ltd., Coimbatore hereinafter called 'the Company '. The Com pany attorned to the lessors and was recognised as tenant under the lease dated September 19, 1934. On March 9, 1954 the lessors served a notice calling upon the Company to vacate and surrender vacant possession of the site, and the Company having failed to comply with the requisition, the lessors commenced an action against the Company for a decree in ejectment and for mesne profits at the rate of Rs. 1,000/ per mensem from September 19, 1954. The Subordinate Judge at Coimbatore awarded to the lessors a decree for possession and mesne profits at the rate of Rs. 350/ per mensem and costs of the suit. Against the decree the Company preferred an appeal to the District Court at Coimbatore which was transferred for trial to the High Court at Madras. During the pendency of this appeal by G.O. No. 608 dated February 10, 1958, the State of Madras extended the Madras City Tenants ' Protection Act 3 of 1922, as amended by Madras Act 19 of 1955, to the Municipal town of Coimbatore. The Company then applied under section 9 of the Act for an order directing the lessors to convey the site demised to the Company for a price to be fixed by the Court. Panchapakesa lyer, J., directed that the lessors do sell to the Company the site in dispute under section 9 of the Madras City Tenants ' Protection Act, 1922. against payment of the full market value of the land on the date of the order, and further directed that the trial Court do appoint a Commissioner to fix the value of the site based on the market value prevalent on July 28, 1958. 1019 An appeal under cl. 15 of the Letters Patent of the High Court against the order of Panchapakesa lyer, J., was dis missed. With certificate granted by the High Court of Madras, this appeal is preferred by the lessors. Two questions fall to be determined in this appeal : (1) Whether the Company is entitled under section 9 of the Madras City Tenants ' Protection Act, 1922, notwithstanding the terms of the lease, to an order calling upon the lessors to sell the land demised under the deed dated September 19, 1934; and (2) Whether the terms of section 9 of the Act infringe the fundamental right under articles 19 (1 ) (f ) and 31(1) of the Constitution, of the lessors, and section 9 is on that account invalid. It is necessary in the first instance to notice the material terms of the lease. The land demised under the lease was a vacant site situate in the municipal town of Coimbatore. The annual rent stipulated was Rs. 1,080/ and the period of the lease was 20 years from the date of delivery of possession of the site. The land was to be utilised for constructing buildings thereon for "purposes of Cinema, drama, etc.". After the expiry of the term of 20 years stipulated under the deed the lessee had an option of renewal for another period of 20 years on fresh terms and conditions. The deed provided that "if after the termination of the stipulated period" * * the lessees "fail to pay the arrears of rent that will fall due till that date and hand over possession of the site" to the lessors "after making it clear by dismantling the constructions therein and by demolishing the walls etc. " the lessors "shall, besides realizing the arrears of rent due to them according to law, have the right to take possession through Court of the site in which the aforesaid buildings are put up after dismantling the constructions and demolishing the buildings therein". The other covenants of the lease are not material. It appears that before 1922, in many cases on lands in the town of Madras belonging to others constructions had 1020 been put up by tenants obtained under periodic leases "in the hope that they would not be evicted so long as they paid fair rent". But on account of the inflationary pressure in the wake of the First World War, there was a steep rise in land values and rents, and many tenants who had constructed buildings on lands obtained on leases were sought to be evicted by the landlords. To prevent loss to the tenants consequent upon the enforcement of the strict provisions of the Transfer of Property Act, the Legislature enacted the Madras City Tenants ' Protection Act 3 of 1922. Under the Act every tenant is on ejectment entitled to be paid as compensation the value of any building which may have been erected by him or by his predecessors in interest and for which compensation has not already been paid to him. ln a suit for ejectment against a tenant in which the landlord succeeds, the Court has to ascertain the amount of compensation which is to be the value as on the date of the order of the buildings constructed, trees planted and other improvements made by the tenant and the decree in the suit must declare the amount so found due and direct that, on_payment by the landlord into Court, within three months from the date of the decree, of the amount so found due, the tenant has to put the landlord into possession of the land and the building. By section 9 it is provided that any tenant entitled to compensation and against whom a suit in ejectment has been instituted may within the time prescribed apply to the Court for an order that the landlord shall sell the whole or part of the land for a price to be fixed by, the Court. The price under the Act as originally enacted was to be the market value of the land on the date of the order, but by an amendment made in 1926 it has to be the lowest market value prevalent within seven years preceding the date of the order. On the price being fixed, the tenant has the option within a period not being less than three months and not more than three years from the date of the order to pay into Court or otherwise the price either the whole or in instalments with or without interest as directed, and when the payment is made the Court has to pass the final order directing conveyance of the land by the landlord to the tenant, and thereupon the suit or proceeding is to stand dismissed, and any decree or order in 1021 ejectment that may have been passed therein but which has not been executed is to stand vacated. By section 12 it is provided : "Nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract. " The Act as originally enacted extended only to lands in the City of Madras, let out before the commencement of the Act for construction of buildings for non residential as well as residential use. By Madras Act 19 of 1955 power was conferred upon the State Government to extend Act 3 of 1922 by notification to tenancies of land created before the date on which the Act was extended, to any other municipal towns and any specified village within five miles of the City of Madras or such municipal town with effect from such date as may be specified in the notification. Exercising this power, the Government of Madras issued a notification on 'February 10, 1958, extending the provisions of the Act to the municipal town of Coimbatore. The scheme of the Act as extended by notification issued under Act 19 of 1955 is that when under a tenancy of open land within the municipal town created before the date with effect from which the Act is extended, a building has been constructed by the tenant, and he is sued in ejectment by the landlord, he has the right on ejectment to be paid as compensation the value as at the date of the order of ejectment, of the building constructed and trees planted by him, and he has in the alternative the right to claim an order from the Court that the land belonging to the lessor shall be sold to him at the price fixed by the Court according to the terms of the statute. By section 12 it is provided that the rights conferred by the Act shall not be taken away or restricted by any contract made between the landlord and the tenant provided, however, the stipulations made by the tenant in writing registered as to the erection of buildings, 1022 in so far as they relate to buildings erected after the date of the contract of lease, are exempt from this restriction. The lease granted by the lessors in this case was before the date on which the Act was extended to the Coimbatore municipal town and it is common ground that the buildings were constructed after the date of the contract of lease. Ex facie, the Company as lessee had, when an order for ejectment was made, an option to receive compensation for the value of the structure, or to claim that the lessors shall sell to it the land demised. But the lessors contend that because of the stipulations in the deed of lease (which is registered under the law in force for registration of assurances) relating to the obligation of the tenant on the expiry of the lease to deliver vacant possession of the land after dismantling the constructions therein, the Company has by the terms of section 12 disentitled itself to 'the benefit of section 9 of the Act. It is submitted that the stipulation relating to delivery of vacant possession of the site on the expiry of the period of the lease after removing the buildings is a stipulation "as to the erection of buildings" within the meaning of section 12, and therefore the restriction on the liberty of contract between landlord and tenant imposed by the opening clause of section 12 is removed, and the Company is bound by the terms of the lease and is not entitled to claim the benefit of section 9 of the Act. We are, for reasons presently to be set out, unable to uphold that contention. Section 12 of the Act consists of two parts : by the first part it enacts that the rights conferred upon the tenant under the Act may not be taken away or limited by any contract made by a tenant. Such rights would, amongst others, include the right to claim compensation under sections 3 and 4 and the right to purchase the land from the lessor by order of the Court under section 9. By the second part of section 12, the protection granted by the first part does not avail the tenant in certain conditions. If there be a stipulation "as to the erection of buildings" made by the tenant in writing registered, in so far as it relates to buildings erected after the date of the contract, the protection conferred by the first part of section 12 shall not apply. A covenant in a lease which is duly registered that the tenant shall on expiry of 1023 the lease remove the building constructed by him and deliver vacant possession, is undoubtedly a stipulation relating to the building, but it is not a stipulation as to "the erection of building". Section 12 has manifestly been enacted to effectuate the object of the Act which is set out in the preamble viz. "to give protection to tenants who . have constructed buildings on others ' lands in the hope that they would not be evicted so long as they pay a fair rent for the land". The Legislature has sought thereby to protect the tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection intended to be conferred by the statute. And the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease. The restriction is therefore made only in respect of a limited class of cases which expressly attract the description of the stipulations as to the erection of buildings. Having regard to the object of the Act, and the language used by the Legislature, the exception must be strictly construed, and a stipulation as to the erection of buildings would not, according to the ordinary meaning of the words used, encompass a stipulation to vacate and deliver possession of the land on the expiry of the lease without claiming to enforce the statutory rights conferred upon the tenant by section 9. The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings such as restrictions about the size and nature of the building constructed, the building materials to be used therein and the purpose for which the building is to be utilized. It is true that the operative part of section 12 protects the tenant against the deprivation or limitation of his rights under the Act and the rights conferred by the Act do not directly relate to covenants relating to erection of buildings. But on that account it is not possible to give a wider meaning to the expression "as to the ' erection of buildings" that the stipulation as:to the erection of buildings would include stipulations to remove buildings on the determination of the lease. It cannot be said that the literal meaning of the expression is likely to render the exception ineffective,, for stipulations 1024 concerning erection of buildings in registered leases, or contracts subsequent to the leases, providing for forfeiture on failure to comply with the terms of the lease relating to the erection of buildings may undoubtedly involve limita tions or deprivation of the rights of the tenant under the Act and to that extent the protection conferred by section 12 in favour of the landlord may be lost. The construction for which the appellant contends assigns no meaning to the words "as to the erection of buildings" and makes them superfluous, besides it materially affects the scope of the relief which the Act obviously extends to the tenants falling under its provisions. Section 9(1) which enables a tenant to purchase on determination of the lease the land of the landlord is somewhat unusual. But it cannot be said that it imposes an unreasonable restriction upon the right of the landlord to hold and dispose of property within the meaning of article 19(1)(f) of the Constitution. The Act applies to only a limited class of lands : it applied to lands granted in lease for construction of buildings before the date with effect from which the Act is extended to the town or village. It was enacted with a view to give protection to the tenants who had, notwithstanding the usual covenants relating to determination of tenancies, obtained lands on lease in the hope that so long as they paid and continued to pay fair rent, they would not be evicted, but because of changed conditions as a result of the War, appreciation in land values and consequent increase in the level of rents. were faced with actions in ejectment involving dismantling of properties constructed by them, and eviction. The protection becomes effective only when the landlord seeks to obtain, in breach of the mutual understanding, benefit of the unearned increment in the land values, by instituting a suit in ejectment. It was manifestly in the interest of the general public to effectuate the mutual understanding between the landlords and the tenants as to the duration of the tenancies, and to conserve building materials by maintaining existing buildings for purposes for which the leases were granted. Restriction imposed upon the right of the landlord to obtain possession of the premises demised according to the terms 1025 of the lease would, therefore, not be regarded as imposing an unreasonable restriction in the exercise of the right conferred upon the landlord by article 19(1)(f) of the Constitution, because the restriction would be regarded as in the interests of the general public. We ought to empha sise that what section 9 does is not so much to deprive the landlord of his property or to acquire his rights to it as to give effect to the real agreement between him and his tenant which induced the tenant to construct his building on the plot let out to him. If the law is not invalid as offending article 19(1)(f) of the Constitution, no independent infringement of article 31(1 ) of the Constitution may be set up. It was urged, however, that by the statute as amended by the Madras City Tenants ' Protection (Amendment) Act VI of 1926 (before it was amended by Act 13 of 1960), the price which the Court may fix and at which the tenant is entitled to purchase the land is to be the lowest market value prevalent within seven years preceding the date of the order. This, it was submitted was unreasonable. But it is not necessary for the purpose of this case to decide that question, for the Company has offered to pay the market value of the land as at the date on which the order was passed by Panchapakesa lyer, J. That absolves us from the necessity to adjudicate upon the reasonableness of the provisions relating to payment of compensation at the rate prescribed by the Act as amended by Act VI of 1926. We may observe that by the Amending Act 13 of 1960 several alterations have been made as regards the extent of the right of the tenants to require the landlords to sell the land and the price which has to be paid by the tenants for purchasing the land. For instance, under the Amending Act the Court nay direct sale only of the minimum area of land necessary for convenient enjoyment by the tenant of the house built by him and the price is to be the average marked value in the three years immediately preceding the date of the order. In view of this amendment, and having regard to the special circumstances, viz. the offer made by the Company, notwithstanding the provisions of the Act, to pay the market value of the land it the date of the order, we decline to enter upon an academic consideration as to the validity of the 134 159 S.C. 65 1026 provision fixing compensation at the lowest market value prevalent within seven years preceding the date of the order. Assuming that a provision fixing such compensation is Unreasonable and therefore invalid, it would be clearly severable from the rest of the statute and would not affect the validity of the provision relating to acquisition by the tenant of the land demised by purchasing it from the land lord. At best, the landlord would be entitled to obtain compensation which is equivalent to the market value, and that the Company has agreed to pay. That, however, is a matter on which we express no opinion. The appeal therefore fails and is dismissed. There will be no order as to costs. AYYANGAR, J. We regret our inability to agree with the order that the appeal should be dismissed. The facts of the case have been set out in the Judgment of our brother Shah, J. and do not, therefore, require to be repeated. The two principal points arising for consideration and on which the decision of the appeal would turn are, first, the interpretation of section 12 of the Madras City Tenants Protection Act (Madras Act III of 1922) and, second, the constitutional validity of section 9 of that enactment. Section 12 enacts : "Nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stpulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract. " The question that first calls for examination is the proper construction of section 12 and in particular the meaning and effect of the proviso contained in it. Before, however, taking up the words of the section, it would be useful to read the preamble and certain of the other provisions of the Act because it is in the light of the guidance afforded by them that the content of the proviso to section 12 could be determined, The preamble recites that the Act had been 1027 enacted as it was "found necessary to give protection to tenants who in municipal towns and adjoining areas in the State of Madras have constructed buildings on others ' land in the hope that they would not be evicted so long as they pay a fair rent for the land". Section 1 (3) of the Act which defines the tenancies within the local area to which the Act extends enacts (to read the provision as it now stands) that the Act shall apply only "to tenancies of land created before the commencement of the Madras City Tenants Protection (Amendment) Act, 1955 and in any municipal town or village to which this Act is extended by notification under sub section (2) only to tenancies created before the date with effect from which this Act is extended to such town or village. " From these provisions two matters are clear: (1) that the Act was enacted in order to ensure that the hope entertained by tenants who had constructed buildings on others ' lands that they would not be evicted so long as they paid fair rent was not frustrated, and (2) that the Act has application only to tenancies which having commenced earlier were subsisting on the date on which the Act came into force in the particular area. With these preliminary observations we shall proceed to deal with the, construction of section 12 of the Act. The tenancy under which the respondent was inducted into the land on which he has constructed buildings was of 1934, a date long anterior to 1958 when by a notification issued under section 1(2) of the Act its provisions were extended to the municipal town of Coimbatore where the land involved in the present proceedings is situated. It was therefore a tenancy governed by the provisions of the Act. Next, the lease under which the respondent held the land was in writing registered, and therefore the only question to be considered is whether the stipulations it contains are comprehended by the proviso. Section 12, it would be seen, is made up of two limbsfirst a general provision saving to tenants comprehended by the Act, the rights conferred by its operative terms, notwithstanding any contract, and next a proviso which makes an inroad into the generality of the saving, by saving con 1028 tractual stipulations from the operation of the statutory rights created by the Act. The entirety of the debate before us is as to the nature, scope and width of the saving effected by the proviso. It does not need any argument to establish that if section 12 had stopped with its first limb, the respondent would be entitled to the benefit of every right conferred upon tenants by the Act, but the proviso it is conceded is intended to cut down the scope of that saving. Expressed in other terms, from the prohibition against the operation of any stipluation in a contract limiting the rights conferred on tenants by the Act an exception is carved out. So much is common ground but the controversy is as regards the scope and limits of that exception. As regards the exception contained in the proviso four matters are clear: (1) The stipulation must find a place in a contract in writing which is registered, (2) the stipulation which is within the proviso and to that extent detracting from the non obstante provision contained in the opening words must be one in relation to "the erection of buildings", (3) it must relate to buildings erected after the date of the contract, and (4) if there is a stipulation satisfying these three conditions such stipulation would have effect notwithstanding anything in the previous part of section 12 which would be the same things saying that the rights of the tenant under the Act may be taken away or limited by such a stipulation. It is common ground and beyond controversy that conditions 1 & 3 above are satisfied and the only point in dispute is whether the 2nd condition is satisfied so as to attract the operation of condition 4. The learned Judges of the High Court have understood the words "as to the erection of buildings" occurring in the proviso as equivalent to a stipulation regarding the manner in which the building may be erected, the materials to be used, the area the building should cover and other details in relation to the construction of the building and as not apt to cover the case of a stipulation whereby the tenant undertakes to remove the buildings constructed by him on the termination of the tenancy; and that was also the submission made to us by Mr. Setalvad on behalf of the respondent. With the greatest respect to the learned Judges 1029 of the High Court we are unable to agree with this construc tion of the proviso. Before examining this we think it convenient and even necessary to refer to the terms of the lease deed under which the appellant became a tenant before considering whether it is a stipulation which would fall within the words "stipulations as to the erection of buildings". The lease deed which has been marked as exhibit B 1 in the case is a registered instrument dated September 19, 1934. The term of the demise was a period of 20 years from the date of delivery of possession and the rent stipulated was Rs. 1,080/ per year. The purpose for which the site was leased is stated in the document to be "to construct buildings thereon as he (the lessee) requires on the aforesaid site for the purpose of cinema, drama etc. at his own expense and also further constructions necessary for the same". This is followed by two clauses which have some relevance. Notwithstanding that the lease was for a fixed definite period of 20 years, the lessee was permitted to surrender the lease if he found that the business venture for which the lease was taken was not profitable. In that event the lessee was entitled to surrender the lease, and put an end to the tenancy, when he had to dismantle the buildings constructed by him at his own expense and pay to the lessors one year 's rent for loss by the latter sustained by the premature termination of the lease,. If this condition as to the removal of buildings were not fulfilled by the lessee, the lessors were authorised to take possession of the vacant site dismantling the constructions and demolishing the walls. On the termination of the stipulated period of 20 years the lessees stipulated that they would dismantle the constructions by demolishing the walls etc. and deliver possession of the vacant site to the lessors. The question now for consideration is whether this stipulation contained in the registered lease deed that at the end of the term the lessee would demolish the buildings which he had erected and deliver vacant possession of the site is a stipulation which is saved by the proviso to section 12. If the scope of the proviso had to be construed in the light of the preamble, it is obvious that the tenant who had entered into a contract with a stipulation of the sort we have extracted, could not be said to have constructed the buildings on 1030 another 's land "in the hope that he would not be evicted so long as he pays rent for the land". The preamble would, therefore, indicate that the Act would not apply to afford protection in a case where by an express term in a registered lease deed a tenant agreed to surrender the site on which he had erected a building where he specifically contracted that he would demolish the building and deliver vacant possession of the site on the termination of his tenancy. The next matter to be noticed is that the tenancies dealt with by the Act are tenancies which came into existence prior to the enactment or prior to the date the Act became operative in the local area and therefore one cannot expect stipulations worded in exactly the same terms as in the Act, because exconcessis the Act and its provisions were not in the contemplation of the parties when they entered into the contract. The mere fact, therefore, that a stipulation as regards the erection of the buildings is not worded in the same manner as under the provisions of the Act or in terms of the Act is no ground for refusing effect to it. Lastly, since what is saved by the proviso from the operation of the Act are the rights which are created in favour of tenants by the Act, we are led to an inquiry as to the rights which are conferred by the Act, for the saving must obviously have reference to and be determined by these rights. Broadly speaking two kinds of rights have been conferred on lessees under tenancies failing within the scope of the Act first a right to the payment of compensation for buildings erected by them on leased land before they are evicted, (under section 3 of the Act) and secondly (this of course could be only in the alternative) a right or option to require the landlord to sell them the land under lease for a price to be computed in accordance with section 9. It is obvious from the very nature of things having regard to the time when the lease was entered into that there would not and could not in terms be a stipulation in a deed against the option accorded to a tenant to purchase the leased land, and the matter is so self evident as not to need any argument in support. We therefore reach the position that the stipulation contemplated by the proviso to section 12 could only be one in relation to the right of the tenant to claim compensation for the buildings erected by him after the 1031 commencement of the tenancy. Expressed differently, though the proviso is worded as to permit the saving of stipulations contained in registered deeds whether the stipulations relate to the right to the compensation receiv able by tenants under section 3, or their right to require the sale of the leased land to them under section 9 when on the termination of the tenancy they are sought to be evicted, the latter right is not one which could be affected by an express stipulation in that regard, but its non availability to the tenant could be brought about only by a stipulation bearing on the right of the tenant to compensation under section 3 for buildings erected by him during his tenancy. We shall now proceed to ascertain the stipulation which would affect the right to compensation in respect of build ings erected conferred on tenants by section 3. That provision reads : "Every tenant shall on ejectment be entitled to be paid as compensation the value of any building, which may have been erected by him, by any of his predecessors in interest, or by any person not in occupation at the time of the ejectment who derived title from either of them, and for which compensation has not already been paid. A tenant who is entitled to compensation for the value of any building shall also be paid the value of trees which may have been planted by him on the land and of any improvements which may have been made by him. " A stipulation which if effective would limit the quantum of compensation payable in respect of buildings constructed by a tenant provided for by section 3, it is conceded, is within the proviso to section 12 as being one with respect to the "erection of buildings". The effect of this concession on the meaning of the proviso, we shall consider later. But the question is whether these words can on any resonable construction be limited or confined to such a contingency. us take a case where in a lease like the one before us for a fixed term say of 20 years there is a stipulation that the tenant shall not build on the land and that if lie erected 1032 buildings he shall remove the structures, and deliver vacant possession at the end of the tenancy. Obviously such a stipulation would imply that he shall not claim any com pensation, for the structures which contrary to his under taking he erects. We did not understand Mr. Setalvad to whom this was put during arguments to contend that the tenant, who constructed buildings under a lease with a stipulation such as this would be able to obtain compensa tion under section 3, with the attendant rights conferred by section 9. This can only be on the basis that a stipulation forbidding the erection of buildings by the lessee is a stipulation as regards "erection of buildings" notwithstanding that it is part and parcel of this stipulation that the tenant shall demolish buildings which he constructed. If a stipulation forbidding erection of buildings and requiring their removal before surrendering possession of the site is conceded to be one 'in respect of erection of buildings ' as has to be conceded, it is not possible to accept the construction that a stipulation for the removal of buildings which the lessee is permitted to erect and keep in the site only for the duration of the tenancy is any the less one "in respect of erection of buildings". We understand these words to mean a stipulation which bears on or is in relation to the erection of buildings. Such a construction would reconcile the proviso with the preamble which sets out the object sought to be achieved by, the Act. If the lease deed contains no stipulation whatsoever in regard to the erection of. buildings, as was the case with the large number of leases in the city of Madras which were entered into prior to the enactment of the Act in 1922. the tenant who erected a building exconcessis without contravening any undertaking on his part., obtains protection under the Act. Again if the lease though it contains such a stipulation against construction of buildings on the leased land is not by a registered instrument as were again several leases in the city the statutory rights to compensation and purchase were protected. If however the parties had recourse to a formal registered instrument for putting through the transaction and such a deed contained a stipulation against erection of buildings, or against the continuance of the buildings on the land at the termination of the tenancy, or what comes to the same thing against the tenant being entitled to compensation for the buildings 1033 erected by him during the currency of the lease, the stipulation would govern the rights of the tenant and not the statute. This in oar opinion is the proper construction of the proviso to section 12. The test would therefore be"did the parties advert to and have in mind the contingency of the tenant erecting buildings on the leased land"? If they had and had included in a solemn registered deed a provision which would bear upon the relative rights of the parties in the event of the erection of buildings on the site, the stipulation would have effect notwithstanding the Act; for in such an event the tenant would not have constructed buildings on the land in the hope that he would not be disturbed from possession so long as he paid the rent agreed upon. Before concluding we shall examine how far the limited meaning attributed to the phrase "as to the erection of buildings" can be sustained. First let us take a case where there is a stipulation in a registered deed under which the lessee in consideration of a favourable rent undertakes to construct buildings of a particular type and deliver possession of the site as well as the building constructed at the end of the term without any claim to compensation. On the construction put forward by the respondent this would be a stipulation which would be saved by the proviso since it refers to the construction of buildings and not removal, though it negatives all right to compensation to which he would be entitled under section 3. Such a stipulation being valid and enforceable, on a suit for ejectment being filed, the tenant would not be entitled to compensation and would therefore be outside section 9 because section 9 applies only to cases where the tenant is entitled to compensation. Now, does it make any difference if the deed stipulated that the buildings erected by the tenant should be removed, without any claim to compensation in the event of non removal. We can see no sensible distinction between the two cases, and if the one is a stipulation in respect of "erection of buildings", the other is equally so. Next we shall take the case which the respondent asserts is precisely the one intended to be covered by the proviso viz: a stipulation that the lessee shall not construct a building in excess of a particular plinth area, or beyond a ground floor, or in excess of a specified number of rooms. 134 159 S.C. 66. 1034 Obviously the question about the applicability of the proviso would come in only if the tenant broke the covenant and we shall therefore assume that in breach of the stipulation, the tenant erects buildings contrary to his undertaking. In such an event it is said that when the compensation to which the tenant is entitled under section 3 is computed, the amount would be confined to what he would have got, if he had abided by the contract. But this is to ignore the basic feature of the Act, under which the tenant who is entitled to compensation under section 3, and certainly the limited compensation that the tenant obtains even when he breaks a covenant would still be compensation under that section, is entitled to purchase the lease land under section 9. The construction suggested therefore comes to this that though under the proviso to section 12 there might be stipulations which might reduce the quantum of compensation to which a tenent would be entitled under section 3, there cannot be a stipulation apart possibly from a covenant against any erection of buildings which we have already dealt with, which would preclude a tenant from his right under section 9. If as must be conceded the first limb of section 12, save the statutory rights of tenants both under sections 3 & 9 from the operation of any contract, it appears to us to stand to reason that the proviso which saves rights under contracts from the rights conferred by the Act should be construed to be co extensive with and operate on the same field as the opening portion of section 12. We are, therefore, clearly of the opinion that the learned Judges of the High Court were in error in their construction of the proviso to section 12. In this view the question as regards the constitutional validity of section 9 would not really arise for consideration, and we express no opinion on it. We would accordingly allow the appeal and decree the suit for ejectment filed by the appellant ORDER In accordance with the majority opinion, the appeal is dismissed. No order as to costs. Appeal dismissed. GMGIPND L 134 59 section C. of India (6021 46) 18 10 65 2,500.

IN-Abs

The appellant and his mother (the lessors), granted a lease of an open site in the town of coimbatore to Abirama Chettiar under a registered 'deed dated September 19,1934. The annual rent stipulated under the lease was Rs. 10,80 and the period of the lease was 20 years. The term under the lease was that the land was to be utilised for constructing buildings thereon for "purposes of cinema. drama etc. " It was further agreed between the parties that at the end of the term the lessee would demolish the buildings which he had. constructed and deliver vacant possession of the site Lo the lessor. Abirama Chettiar constructed a theatre on the site, and assigned his rights to the respondent company. In an action against the company for a decree in ejectment and for mesne profits, the Trial Court awarded to the lessors a decree for possession and mesne profits. Against the decree the company respondent preferred an appeal to the District Court which was transferred for trial to the High Court. During the pendency of this appeal, the State of Madras extended the Madras City Tenants ' Protection Act, 3 of 1922, as amended by Madras Act 19 of 1955 to the Municipal Town of Coimbatore. The company then applied under a. 9 of the Act and on this application the High Court directed that the lessors do sell to the company the site in dispute under section 9 of the Madras City Tenants Protection Act, 1922. against payment of the full market value of the land on the date of the order. The order was confirmed in an appeal under the Letters Patent Held: Per Gajendragadkar, C.J., Shah and Sikri, JJ. section 12 has been enacted to protect the tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection intended to be conferred by the Statute. And the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease. The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings. such as restrictions about the size and nature of the building constructed, the building materials to be used therein and the purpose for which the building is to be utilised. (ii)Section 9(1) of the Act was manifestly in the interest of the general public to effectuate the mutual understanding between the, landlords and the tenants as to the duration of the tenancies, and to conserve building materials by maintaining existing buildings for purposes for which the leases were granted. Restriction imposed upon the right of the landlord to obtain possession of the premises demised according to the terms of the lease would, therefore not be regarded as imposing an unreasonable restriction in the exercise of the right conferred upon 1017 the landlord by article 19(1) of the Constitution, because the restriction would be regarded as one in the interests of the general public. What section 9 does is not so much to deprive the landlord of his property or to acquire his rights to it as to give effect to the real agreement between him and his tenant which induced the tenants to construct his building on the plot let out to him. If the law is not invalid as offending article 19(1)(f) of the Constitution, no independent infringement of article 31(1) of the Constitution may be set up. Per Wanchoo and Ayyangar, JJ (dissenting) (1) The preamble of the Act would indicate that the Act would not apply to afford protection in a case where by an express term in a registered lease deed a tenant agreed to surrender the site on which he had erected a building, where he specifically contracted that he would demolish the building and deliver vacant possession of the site on the termination of his tenancy. If the scope of the proviso to section 12 had to be construed in the light of the preamble, it is obvious that the tenant who had entered into a contract with a stipulation of the sort as stated above could not be said to have constructed the buildings on another 's land "in the hope that he would not be evicted so long as he pays rent for the land". The High Court erred in interpretting the proviso to section 12 of the Act. (ii) These words "as to the erection of buildings" mean a stipulation which bears on or is in relation to the erection of buildings. Such a construction would reconcile the proviso with the preamble which sets out the object sought to be achieved by the Act. If the lease deed contains no stipulation whatsoever in regard to the erection of buildings, as was the case with the large number of leases in the city of Madras which were entered into prior to the enactment of the Act in 1922, the tenant who erected the building exconcessis without contravening any undertaking on his part, obtains protection under the Act. The test would therefore be "did the parties advert to and have in mind the Lontingency of the tenant erecting buildings on the leased land"? If they had and had included in a solemn registered instrument a provision which would bear upon the relative rights of the parties in the event of the erection of buildings on the site, the stipulation would have effect notwithstanding the Act; for in such an event the tenant would not have constructed buildings on the land in the hope that he would not be disturbed from possession so long as he paid the rent agreed upon.

os. 85 and 86 of 1961. Appeals from the judgment and decree dated November 23, 1954 of the Calcutta High Court in Appeals from Original Orders Nos. 84 and 83 of 1953. B. Sen and P. K. Ghosh, for the appellants (in both the appeals). Sukumar Ghosh, for the respondents Nos. 12 and 13 (in C.A. No. 85 of 1961). March 4, 1964. The Judgment of the Court was delivered by SUBBA RAO J. These two appeals raise the question of the validity of the court sale held in contravention of section 35 of the Bengal Money Lenders Act, 1940 (Bengal Act X of 1940), hereinafter called the Act. The facts in both the appeals may be briefly stated. In Civil Appeal No. 85 of 1961, Sudhir Chandra Ghosh, respondent No. 1, executed a first mortgage in favour of one Provash Chandra Mukherjee, since deceased, for a sum of Rs. 12,000/ . Respondent No. 1 executed a second, third and fourth mortgages in favour of the appellant for a total sum of Rs. 7,700/ . He also executed another mortgage in favour of the 9th respondent. In the year 1948 respondents 2 and 3, representing the first mortgagee 's estate, filed Title Suit No. 8 of 1948 in the 7th Additional Court of the Subordinate Judge at Alipore, for enforcing the first mortgage. To that suit the puisne mortgagees were also made parties. On May 24, 1948, a preliminary decree by consent was made in the suit whereunder the judgment 1004 debtor was directed to pay a sum of Rs. 15,473 7 9 to the appellant in 7 equal annual instalments. As the judgment debtor failed to pay the said amount, in due course a final decree was passed in the mortgage suit on or about February 2, 1949. Thereafter, the decree was put in execution on January 31, 1950, and in the said execution application a schedule of properties sought to be sold for the satisfaction of the said claim was annexed. The schedule comprised 11 properties and the appellant gave valuation of the said properties. Though the 1st respondent received a notice under O. XXI, r. 66 of the Code of Civil Procedure, he did not file any objection to the valuation. Though the first respondent got the sale adjourned a number of times promising to pay the decretal amount, he failed to do so. Finally two of the said properties were put up for sale on June 23, 1951, and one of the said properties was purchased by the 12th respondent for a sum of Rs. 11,800/ and the other, by the 13th respondent for a sum of Rs. 10,100/ . On July 21, 1951, the 1st respondent filed an application in the executing court for setting aside the said sale under O. XXI, r. 90 of the Code of Civil Procedure, inter alia, on the ground that section 35 of the Act was not complied with. The learned Subordinate Judge held that there was no fraud in publishing and conducting the sale, that the price of the lots sold was fair and that the sale was not vitiated by reason of infringement of section 35 of the Act. On appeal a Division Bench of the High Court held that though there had not been any substantial injury to the 1st respondent, the provisions of section 35 of the Act were mandatory and, therefore, the. infringement of the said provisions would invalidate the sale. In that view, it set aside the sale and directed the appellant to refund the money with interest. Civil Appeal No. 86 of 1961 also arises out of the same execution proceedings. Under the said compromise preli minary decree the judgment debtor agreed to pay the decretal amount of Rs. 25,687/ to the executors of the estate of the first mortgagee, respondents 2 and 3. As the amount was not paid, the said respondents filed an application in the 7th Court of the Additional Subordinate Judge, Alipore, for the execution of the said decree. In the 1005 execution petition 8 properties were described and their valuations were given. The judgment debtor filed objections to the valuations given by the decree holders, but on the date fixed for settling the valuations of the said properties neither the judgment debtor nor his advocate appeared in court. The learned Subordinate Judge, by his order dated February 11, 1950, directed that both the valuations of the decreeholders and the judgment debtor be noted in the sale proclamation. Thereafter the sale proclamation was duly issued and the date of the sale was fixed for May 11, 1950. The judgment debtor took as many as 15 adjournments of the sale promising to pay the decretal amount, but did not do so. Finally the sale of the properties was fixed for June 23, 1951 and on that date two lots of the property were sold in execution and the appellants purchased lot No. 1 at a price (if Rs. 14,000/ and respondent No. 9 purchased Lot No. 2 at a price of Rs. 19,600/ . On July 21, 1951, the 1st respondent filed an application before the learned Subordinate Judge for setting aside the sale under O. XXI, r. 90 of the Code of Civil Procedure, on grounds similar to those raised in the other application, the subject matter of Civil Appeal No. 85 of 1961. The said application was heard by the learned Subordinate Judge along with the said other application. For the same reasons, he dismissed the application. On appeal, the Division Bench of the High Court heard the appeal along with the connected appeal and set aside the sale. The present appeals are filed by certificate against the common judgment of the High Court in both the matters. Mr. Sen, learned counsel for the appellants in both the appeals, contends that whether section 35 of the Act is mandatory or directory the sale held in violation of the said provision is only illegal but not a nullity and, therefore, it can be set aside only in the manner and for the reasons prescribed in O. XXI, r. 90 of the Code of Civil Procedure, and further that, as the respondents did not attend at the drawing up of the proclamation of sale, the sale cannot be set aside at their instance. To appreciate the argument it is necessary and convenient to read at the outset the relevant provisions of the Act and the Code of Civil Procedure. 1006 Section 35 of the Act. "Notwithstanding anything contained in any other law for the time being in force, the proclamation of the intended sale of property in execution of a decree passed in respect of a loan shall specify only so much of the property of the judgment debtor as the Court considers to be saleable at a price sufficient to satisfy the decree, and the property so specified shall not be sold at a price which is less than the price specified in such proclamation : Provided that, if the highest amount bid for the property so specified is less than the price so specified, the Court may sell such property for such amount, if the decree holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest amount bid and the price so specified. " CODE OF CIVIL PROCEDURE Order XXI, r. 64 Any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same. Order XXI, r. 66. (1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court. (2) Such proclamation shall be drawn up after notice to the decree holder and the judgment 1007 debtor and shall state the time and place of sale, and specify as fairly and accurately as possible (a) the property to be sold; Order XXI, r. 90. (1) Where any immovable property has been sold in execution of a decree. the decree holder, or any person entitled to share in a rateable distribution of assets or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it or on the ground of failure to issue notice to him as required by rule 22 of this Order : Provided (i) that no sale shall be set aside on the ground of such irregularity, fraud or failure unless. upon the facts proved. the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity, fraud or failure. (ii) that no sale shall be set aside on the ground of any defect in the proclamation of sale at the instance of any person who after notice did not attend at the drawing up of the proclamation or of any person in whose presence the proclamation was drawn up, unless objection was made by him at the time in respect of the defect relied upon. Under O. XXI. r. 64 of the Code of Civil Procedure, the executing court may order that any property attached by it and liable to sale or such portion thereof as may seem necessary to satisfy the decree shall be sold. Under r. 66 of the said Order of the Code when a property is ordered to be sold in public auction in execution of a decree the court shall cause a proclamation of the intended sale to be made and such proclamation shall specify as fairly and accurately as possible, among others, the property to 1008 be sold and such proclamation shall be drawn up after notice to the decree holder and the judgment debtor: under sub r. (4) thereof, the court may summon and examine any person or require him to produce any document in his possession or power relating thereto. Under the said provisions the court has power to direct the sale of the entire property attached or a part thereof sufficient to satisfy the decree and it shall also specify the said property directed to be sold in the proclamation fixed after giving notice to both the decree holder and the judgment debtor. Under section 35 of the Act a duty is cast upon the court in settling the pro clamation of the intended sale of property in execution of a decree passed in respect of a loan to which the Act applies to specify only so much of the property of the judgment debtor as the court considers to be saleable at a price sufficient to satisfy the decree and not to sell the property so specified at a price which is less than the price so specified in such proclamation. This provision is in effect a statutory addition to O. XXI, r. 66 of the Code of Civil Procedure. Indeed, this provision could have been added as another clause to the said rule. This statutory provision pertains to the field of proclamation. The rule says so in terms. The said two conditions are also steps to be taken by the court in the matter of publishing or conducting the sale. If a sale is held without complying with the said conditions, what is the remedy open to a party affected thereby to get the sale set aside? Order XXI, r. 90 of the Code in terms provides for the remedy. It says that a person whose interests are affected by the sale may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it or on the ground of failure to issue notice to him as required by r. 22 of the Order. As the non compliance with the said conditions is a material irregularity in publishing or conducting the sale the court under the first proviso to O. XXI, r. 90 of the Code cannot set aside the sale unless it is satisfied that the applicant had sustained substantial injury by reason of such irregularity. That apart, under the second proviso to the said rule, no sale shall be set aside on the ground of any defect in the proclamation of sale at the instance of any person, who after notice did not attend at the drawing up 1009 of the proclamation or of any person in whose presence the proclamation was drawn up unless objection was made by him at the time of drawing up of the proclamation in respect of the defect relied upon. Shortly stated, the noncompliance with the provisions of section 35 of the Act is a defect or a irregularity in publishing or conducting the sale. A party who received the notice of the proclamation but did not attend at the drawing up of the proclamation or did not object to the said defect cannot maintain an application under O. XXI, r. 90 of the Code of Civil Procedure. Even if he could, the sale cannot be set aside unless by reason of the said defect or irregularity he had sustained substantial injury. On this question a divergence of views is reflected in the decisions cited at the Bar. Mukherjea and Pal, JJ., in Asharam Thikadar vs Bijay Singh Chopra(1) set aside the order of the executing court and sent the case back to that court, as the said court inserted in the proclamation the valuation of the property given by the judgment debtor as well as that given by the decree holder and did not, as it should do under section 3 5 of the Act, determine the price of the property which was to be put up for sale on proper evidence. This decision has no relevance to the question raised before us, as the appeal before the High Court was against the order made by the executing court dismissing the application filed by the judgment debtor requesting the court to demarcate the property to be sold pursuant to the provisions of section 35 of the Act. The question whether a sale held in non compliance with the said provisions could be set aside de hors the provisions of O. XXI, r. 90 of the Code of Civil Procedure did not arise for consideration therein. The question now posed before us directly arose for decision before a Division Bench of the Calcutta High Court, consisting of Akram and Chakravartti, JJ., in Manindra Chandra vs Jagadish Chandra (2) Chakaravartti, J., met the objection raised by the judgment debtor who sought to set aside the sale on the ground of non compliance with the provisions of section 3 5 of the Act, thus : (1) I.I. R. 134 159 S.C. 64 (2) ,270. 1010 "It (section 35 of the Act) is a provision relating to the contents of the sale proclamation and its effect, to my mind, is to amend or supplement Or. 21, r. 66 (2) (a) which directs the Court to specify in the sale proclamation "the property to be sold". Any objection regarding non compliance with sec. 35 in specifying the property to be sold is, in my view, a defect in the sale proclamation within the meaning of the second proviso to Or. 21, r. 90, C.P.C. It follows that an objection that the sale proclamation did not conform to sec. 35 of the Bengal MoneyLenders Act cannot avail a judgment debtor in an application under Or. 2 1, r. 90, if he was present at the drawing up of the sale proclamation and did not raise any such objection at the time, nor can it avail a judgment debtor who, after receiving notice did not attend at the drawing up of the sale proclamation at all. " We agree with this reasoning. Another Division Bench of the Calcutta High Court, consisting of Guha and Banerjee, JJ., in Maniruddin Ahmed vs Umaprasanna(1), considered the entire case law on the subject, including the decision now under appeal, and differed from the view expressed by section R. Das Gupta and Mallick, JJ., in the decision now under appeal and agreed with the view expressed by Akram and Chakravartii, JJ., in Manidra Chandra vs Jagdish Chandra (2). The said decisions are in accord with the view we have expressed earlier. The contrary view is sustained by the High Court in the present case on the principle that the sale held in contravention of the provisions of section 35 of the Act was a nullity and, therefore, no question of setting aside the sale within the meaning of O. XXI, r. 90 of the Code of Civil Procedure would arise. This raises the question whether such a sale is a nullity. If a provision of a statute is only directory, an act done in contravention of the provision is manifestly not a nullity. Section 35 of the Act is couched in a mandatory form and it casts in terms a duty on the court to comply with its (1) (2) , 270. 1011 provisions before a sale is held. Prima facie the provision is mandatory; at any rate, we shall assume it to be so for the purpose of these appeals. Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In Ashutosh Sikdar vs Behari Lal Kirtania(1), Mookerjee, J., after referring to Macnamara on "Nullity and Irregulari ties", observed : no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated. " Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the nature, scope and object of a particular provision. A workable test has been laid down by Justice Coleridge in Holmes vs Russell(2), which reads: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity. " A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book "On the (1) Cal. 61, 72. (2) 1012 Interpretation of Statutes", 11th Edn., at p. 375, describes the rule thus: "Another maxim which sanctions the non observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. " The same rule is restated in "Craies on Statute Law", 6th Edn., at p. 269, thus : "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court. " The Judicial Committee in AL. Vellayan Chettiar vs Government of Madras(1) pointed out that there was no inconsistency between the propositions that the provisions of section 80 of the Code of Civil Procedure were mandatory and must be enforced by the court and that they might be waived by the authority for whose benefit they were provided. In that case the Judicial Committee held that section 80 of the Code of Civil Procedure was explicit and mandatory; but still it held that it could be waived by the authority for whose benefit that was provided. This aspect of the law in the context of section 35 of the Act was considered by a Division Bench of the Calcutta High Court in Gaya Prosad vs Seth (1) [1947] L.R. 74 I.A. 223, 228. 1013 Dhanrupwal Bhandari(1). Dealing with this argument, P. N. Mookerjee, J., speaking for the court, observed : "It is true that section 35 of the Bengal MoneyLenders Act casts a duty upon the court but such duty is solely for the benefit the private benefit of the judgment debtor. It is, therefore, open to him to waive this benefit, or, in other words, to waive his objection of nonobservance of that statutory provision by the court. Guha and Banerjee, JJ., expressed much to the same effect in Maniruddin Ahmed vs Umaprasanna(2) thus, at p. 30: "The Bengal Money Lenders Act, 1940 enacted for the purpose of making better provision for the control of money lenders and for the regulation and control of money lending, has certainly a public policy behind it. But some of its provisions, and section 35 one of them, are intended for the benefit of the individual judgment debtors and have no public policy behind them. Such provisions may be waived by the person for whose benefit the same were enacted." A Division Bench of the Patna High Court in Sheo Dayal Narain vs Musammat Moti Kuer(3), speaking through Meredith, J., in the context of the provisions of section 13 of the Bihar Money Lenders (Regulation of Transactions) Act, 1939, which are pari materia with the provisions of section 35 of the Bengal Money Lenders Act, 1940, rejected the contention that a sale held in contravention thereof was a nullity in the following words "Illegal the sale may have been, in the limited sense that it was held in a manner at variance with a mandatory statutory provision. That provision, however, has no reference at all to the jurisdiction of the Court. It affords no foundation for (1) 508. (2) (3) Pat. 281, 286. 1014 the contention that the sale was one which the Court concerned had no power at all to hold. " Where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a manda tory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. In the present case the executing court had inherent jurisdiction to sell the property. We have assumed that section 3 5 of the Act is a mandatory provision. If so, the question is whether the said provision is conceived in the interests of the public or in the interests of the person affected by the non observance of the provision. It is true that many provisions of the Act were conceived in the interests of the public, but the same cannot be said of section 35 of the Act, which is really intended to protect the interests of a judgment debtor and to see that a larger extent of his property than is necessary to discharge the debt is not sold. Many situations may be visualized when the judgment debtor does not seek to take advantage of the benefit conferred on him under section 3 5 of the Act; for instance, if the part of the property carved out by the court for sale is separated from the rest of his property, the value of the remaining property may be injuriously affected by the said carving out, in which case the judgment debtor may prefer to have his entire property sold so that he may realize the real value of the property and pay part of the sale price towards the decretal amount. He cannot obviously be compelled to submit to the sale of a part of the property to his disadvantage. A provision intended for his benefit cannot be construed in such a way as to work to his detriment. But it is said that the proviso to section 35 of the Act indicates a contrary intention. Under that proviso, "if the highest amount bid for the pro perty so specified is less than the price so specified, the Court may sell such property for such amount, if the decree holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest bid and the price so specified". This is only an option given to the decree holder : he may exercise this option, if he does 1015 not like to go through the entire sale proceedings overagain. In one contingency this proviso also Works for the benefit of the judgment debtor, for he will be relieved of part of his indebtedness. But anyhow this does not show that the main provision is not intended for the benefit of the judgment debtor. We are, therefore, satisfied, on a true construction of section 3 5 of the Act, that it is intended only for the benefit of the judgment debtor and, therefore, he can waive the right conferred on him under section 35 of the Act. If that be the legal position, O. XXI, r. 90 of the Code of Civil Procedure is immediately attracted. The concurrent finding of the courts is that by reason of the non observance of the provisions of section 35 of the Act no substantial injury was caused to the judgment debtor. Further, though notice was given to the judgment debtor, in one case he did not file objections at all and in the other case, though the judgment debtor filed objections, he did not attend at the drawing up of the proclamation. The sales are, therefore, not liable to be set aside under the terms of the said provision. In the result the orders of the High Court are set aside and those of the Additional Subordinate Judge are restored. The appellants will get their costs throughout from the 1st respondent. There will be one set of hearing fee. Appeals allowed.

IN-Abs

In execution of a decree passed in a mortgage suit, the appellant annexed in the execution application a Schedule comprising of 11 properties sought to be sold for the satisfaction of the claim. The appellant gave valuation of the said properties. Though the 1st respondent received a notice under O.XXI, r. 66 of the Code of Civil Procedure, he did not file any objection to the valuation. Though he got the sale adjourned a number of times promising to pay the decretal amount, he failed to do so. Finally, two of the said properties were sold. The 1st respondent then filed an application in the executing court for setting aside the said sale under O.XXI, r. 90 of the Code of Civil Procedure, inter alia, on the ground that section 35 of the Bengal Money Lender 's Act was not complied with. The learned subordinate Judge held that there was no fraud in publishing and conducting the sale, that the price of the lots sold was fair and that the sale was not vitiated by reason of infringement of section 35 of the Act. On appeal, the High Court held that though there had not been any substantial injury to the 1st respondent, the provisions of section 35 of the Act were mandatory and. therefore, the infringement of the said provisions would invalidate the sale. In this Court it was contended on behalf of the appellants that whether section 35 of the Act was mandatory or directory, the sale held in violation of the said provision was only illegal but not a nullity and, therefore, it could be set aside only in the manner and for the reasons prescribed in O.XXI, r. 90 of the Code of Civil Procedure, and further that, as the respon dents did not attend at the drawing up of the proclamation of sale, the sale could not be set aside at their instance. Held: The non compliance with the provisions of section 35 of the Act is a defect or a irregularity in publishing or conducting the sale. A party who received the notice of the proclamation but did not attend at the drawing up of the proclamation or did not object to the said defect cannot maintain an application under O.XXI, r. 90 of the Code of Civil Procedure. Even if he could, the sale cannot be set aside unless by reason of the said defect or irregularity he had sustained substantial injury. Ashram Thikadar vs Vijay Singh Chopra, I.L.R. (1944) 1 Cal. 166, distinguished. Manindra Chandra vs Jagdish Chandra, and Maniruddin Ahmed vs Umanprasamma,(1959) , approved. On a true construction of section 35 of the Act, it must be held that it was intended only for the benefit of the judgment debtor and, therefore, he could waive the right conferred on him under section 35 of the Act. Case law reviewed. 1003 If that be the legal position, O.XXI. r. 90 of the Code of Civil Procedure is immediately attracted. The concurrent finding of the courts is that by reason of the non observance of the provisions of section 35 of the Act no substantial injury was caused to the judgment debtor. Fur ther, though notice was given to the judgment debtor ' in one case he did not file objection at all and in the other case, though the judgment debtor filed objections, he did not attend at the drawing up of the proclamation. The sales are, therefore, not liable to be set aside under the terms of the said provision.

Appeal No. 580 of 1962. Appeal from the judgment and decree dated May 1, 1961, of the Madras High Court in Writ Petition No. 975 of 1959. R.M. Seshadri. and R. Gopalakrishnan, for the appellant. R. Ganapathy lyer, for respondent No. 1. A. Ranganadham Chetty and A. V. Rangam, for respondent No. 2. March 3, 1964. The Judgment of the Court was delivered by AYYANGAR, J. This appeal comes before us by virtue of a certificate of fitness granted by the High Court of Madras under article 133(1)(c) of the Constitution against its judgment dismissing a petition filed by the appellant under article 226 of the Constitution seeking a writ of prohibition against the Corporation of Madras challenging the constitutional validity. of a notice requiring the appellant to pay profession tax. The appellant held office as the last Governor General of India. Under section 3 of Central Act XXX of 1951 the appellant is entitled to a pension of Rs. 15,000/ per annum and has been drawing this sum residing in the city of Madras. The Corporation of Madras the first respondent before us demanded profession tax from the appellant under section 111(1)(b) of the City Municipal Act, 1919 hereinafter called the Act for the year 1958 1959 on the ground of the appellant 's residence within the city for the period therein specified and his drawing the pension to which he was entitled. The appellant addressed a communication to the Corporation asserting that this demand was illegal as the Corporation was empowered by the relevant constitutional provisions merely to levy a tax "on a profession, 965 trade, calling or employment" and that as he as a pensioner did not fall under any of these classes, the said demand was illegal. The authorities of the Corporation, however, insisted on compliance with the demand on the ground that under the express terms of the Act persons in receipt of pensions were also liable to the tax. The appellant thereupon filed a writ petition for the relief already set out, and as the validity of the State Act was impugned impleaded the State of Madras also as a respondent. It would be seen from the foregoing that the question for consideration is whether the 1st respondent Corporation is entitled to levy a tax on pensioners in respect of the pensions received by them. In order to appreciate the submissions made to us by learned Counsel for the appellant it would be necessary to set out the history of the legislation in relation to profession tax and the impugned tax on persons in receipt of pensions applicable to the City of Madras because it is on a construction of these provisions that the learned Judges of the High Court have upheld the validity of the levy and dismissed the appellant 's writ petition. For this purpose it is not necessary to travel to any period anterior to the enactment of the Madras City Municipal Act (Madras Act IV of 1919) which with certain amendments to be referred to presently is still in force. The Act received the assent of the Governor on March 26, 1919, of the Governor General in June, 1919 and came into force on publication in the Gazette which was in the same month. Having been enacted while the powers of the Local Legislatures were governed by the Government of India Act, 1915, the constitutional validity of the legislation is not open to any challenge. Section 111(1 of this enactment ran "Every person not liable for the companies ' tax. who, within the city and for the period prescribed in Sec. 113, exercises a profession, art, trade or calling or holds an appointment, public or private, bringing him within one or more of the classes of persons specified in the taxation rules in Schedule IV shall pay by way of licence fee and in addition to any other licence fee 966 that may be leviable under this Act a tax as determined under the said rules but in no case exceeding rupees five hundred in the half year and such tax may be described as the profession tax. " The Section had two explanations of which the second is material and this reads: Explanation 2 "A person in receipt of a pension paid from any source shall be deemed to be a person holding an appointment within the meaning of this section. ' The next change in the relevant provision was effected by Madras City Municipal Amendment Act, 193,6 (Madras Act X of 1936) which came into force on 14th April 1936. By this amendment a new section section III was substituted ,for the old one just set out, and under this Explanation (2) was deleted and the substituted provision ran : "III(1). If the Council by a resolution determines that a profession tax shall be levied, every person not liable to the tax, on companies, who after the date specified in the notice published under sub sec. (2) of Sec. 98 A in any half year (a) exercises a profession , art or calling or transacts business or holds any appointment, public or private (i) within the city for not less than sixty days in the aggregate, or (ii) outside the city but who resides in the city for not less than sixty days in the aggregate; or (b) resides in the city for not less than sixty days in the aggregate and is in receipt of any pension or income from investments, shall pay in addition to any licence fee that may 967 be leviable under this Act, a half yearly tax assessed in accordance with the rules in Schedule IV in no case exceeding rupees five, hundred. " Along with this was added a new section section 98 A which ran : Sec. 98 A(1): "Before the council passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the Fort St. George Gazette and in the local papers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the Fort St. George Gazette for submission of objections. The Council may, after considering the objections, if any, received within the period specified, determine by resolution to levy the tax or duty. Such resolution shall specify the rate at which, the date from which and the period of levy, if any, for which such tax or duty shall be levied. When the Council shall have determined to levy any tax or duty for the first time or at a new rate the Commissioner shall forthwith publish a notice in the manner laid down in sub section (1) specifying the date from which the rate at which and the period of levy, if any, for which such tax or duty shall be levied. " At this stage it is necessary to refer to Schedule IV in accordance with which the tax has to be assessed under the terms of section 111(1). In the Act as enacted in 1919 the relevant rule in Schedule IV divided persons assessed to profession tax etc. into 8 classes, based upon the amount of ,monthly salary received in the case of those holding appointments, and income derived in the case of those in trade, art calling etc. Each of these classes was again sub divided ,into two the first sub class comprising "Persons holding appointments upon a monthly salary" and the other of 968 "persons exercising any profession, trade, art, calling or transacting business". It would be seen that having regard to Explanation 2 to section 111, as it stood in 1919, before its amendment by Act X of 1936 by reason of the provision which enacted that "persons in receipt of pension" were deemed to be "persons holding appointments" when the rule in Schedule IV referred to "persons holding appointments" it included by the statutory fiction pensioners who on the basis of the amount of pension which they derived were classified as "persons holding appointments" under the various classes. But when this Explanation to section Ill was deleted by the Amending Act X of 1936 and when the new section 111,(1)(b) referred to the "half yearly tax assessed in accordance with rules in Schedule IV, it was urged that there could not have been an assessment of persons in receipt of pension unless they could be comprehended as within the category of persons holding appointments, or of persons exercising any profession, trade, or art or calling",as these were the only classes relevant to the present purpose who were within the scope of the rules under Schedule IV. We shall refer to the submission based on this feature as regards the terminology employed in Schedule IV in its proper place. The Corporation of Madras availed itself of the provisions of section 98 A and after the issue of the notices prescribed by it passed a resolution at a meeting held on March 31, 1937 to levy inter alia "profession tax" for the year 1937 38 at the rates which were specified in the resolution. As regards "profession tax", the resolution read : "Resolved that the profession tax in respect of clauses 1, 2, 3, 4, 5 and 6 be fixed at the maximum rate and 25 per cent over and above the minimum rates prescribed in Schedule IV of the Act in respect of clauses 7, 8 and 9." This resolution further specified that the tax at the rates therein set out which were higher 'than what prevailed before, were to have effect from April 1, 1937. Notwith standing the apparent inapplicability of the rules in Schedule IV to the levy of profession tax on pensioners, the Corporation continued to assess pensioners to the said tax and 969 collected the same. The lacuna in the enactment was Apparently noticed in 1942 when by a notification in the Official gazette the Schedule was amended in exercise of the powers conferred on Government by section 347(3) of the Act. Under the amendment instead of the words "Persons holding any appointment or persons exercising profession, trade or calling etc. "the classes 'Were divided, on the basis of "the half yearly income received by the individual specified in section 111(1)". This amendment to the Schedule was directed to come into force from April 1, 1942. The relevant terms of Schedule IV have continued up to date in the same from as amended in 1942 only the rate of tax has been progressively increased; first in 1950, then in 1958 and again in 1961, but in the view we take of the principal contention raised by the appellant it is not necessary to set out or deal with these increases. Pausing here the ground upon which the demand for "profession tax" made by the Corporation was impugned may be briefly stated. The power of the Corporation to levy the tax is dependent on the subject of the tax being within State legislative power under the Constitution. The relevant 'entry in the Legislative Lists conferring taxing power on the State under which alone, if possible, the present levy could be supported was item 60 in the State List in Schedule VII of the Constitution reading: "Taxes on profession, trades, callings and ' employments. " Being a "pensioner" cannot be a "profession, trade, business or calling", nor could a tax on a person because he is in receipt of a pension be said to be a tax on "employments". The tax therefore under the last portion of section 111(1)(b) reading Profession tax on persons "in receipt of any pension or income from investments" is nothing but a tax on income falling within Entry 82 of the Union list. If, therefore, the Corporation could not justify the tax as being within the State legislative power the only manner in which it could be done would be by reference to article 277 of the Constitution by which "taxes, duties, etc." ' which "were being lawfully levied" prior to the commencement of the 970 Constitution were permitted to be levied "notwithstanding that the tax was in the Union List" and "to be applied to the same purposes" as before. Unless therefore the Corporation could make out that the tax now impugned was being lawfully levied from before the Constitution the levy would be illegal and besides there was the complication introduced by the enhancement of the rates of tax which, as stated earlier, were effected in April, 1950, April 1958 and in 1961. Leaving aside for the moment the question of the effect of the enhancement of the rate, we have to see whether it has been established that the duty was lawfully levied by the Corporation prior to the Constitution. The answer to the question whether it was "lawfully levied" prior to 26th January, 1950 when the Constitution came into force would depend upon the effect of certain provisions of the Government of India Act, 1935. Under that enactment, as under the Constitution, the State legislative power as regards taxes of the nature now in controversy was couched in terms identical with that employed in entry 60 of the State List in the Constitution. Entry 46 in the Provincial Legislative List under the Government of India Act, 1935 ran: "Taxes on profession, trades, callings and employments" : and "taxes on income" fell within the exclusive Federal 'Legislative power under Entry 54 of List I. By the Indo Burma Miscellaneous Provisions Act, 1940 the Parliament of the U.K. enacted section 142 A to whose terms we shall advert later and by the same enactment entry 46 was amended and the words : "Subject, however, to the provisions of section 142 A" were added at the end of entry 46. Here, again, it would be seen that if the right of the Corporation to levy profession tax on the pension received by a pensioner had to rest on the legislative entries it would fail because it was ,outside the legislative power of the Province under the Lists read with section 100 of that Act corresponding, to article 246 of the Constitution. The validity of the levy during the period when the Government of India Act was in force i.e. between 1st April, 1937 and 25th January, 1950 was dependent on 971 its falling within the saving contained in section 143 (2) of the Government of India Act which ran : "Any taxes, duties, cesses or fees which, immediately before the commencement of Part III of this Act, were being lawfully levied by any Provincial Government, municipality or other local authority or body for the purposes of the Province, municipality, district or other local area under a law in force on the first day of January, nineteen hundred and thirty five, may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Federal Legislative List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by the Federal Legislature." No doubt the Amending Act was not in force on 1st January, 1935 having been passed in April 1936, but this would not take it out of section 143 (2) because para.3 of the Indo Burma (Transitory Provisions) Order, 1937, being an Order in Council by His Majesty in Council authorised by section 310 of the Government of India Act, provided : "Para 3(1): For a period of two years from the commencement of Part III of the Indian Act, the provisions of subsection (2) of section one hundred and forty three of that Act (which authorises the continuance until provision to the contrary is made by the Federal Legislature, of certain provincial taxes falling within the Federal List) shall have effect as if the reference to the first of January nineteen hundred and thirty five were a reference to the commencement of the said Part Ill." It would follow, therefore, that for the present demand to be sustained as valid it would be sufficient if it was shown that the tax was lawfully levied immediately prior to the commencement of Part III of the Government of India Act, 1935, i.e., on 31st March, 1937. The learned Judges of the High Court held that this condition was satisfied and on this basis they have dismissed the appellant 's petition. 972 Learned Counsel for the appellant submitted four points in support of the appeal : (1) That the amending Act X of 1936 Was not validly passed by reason of its contravening the Devolution Rules framed under section 45 A of the Government of India Act, 1919 by which Local Governments were given legislative power inter alia to levy taxes on professions, trades, etc. but that the present tax which is really a "tax on income" was a Central subject outside the competence of the Local Legislature, (2) Even assuming that Act X of 1936 was valid, the tax which was permitted to be levied under it was, having regard to the terms of section 111 ( 1 ) a new tax which was levied for the first time by the resolution of the Corporation only on and from April 1, 1937 and, therefore, the present tax was not in operation prior to the commencement of Part III of the Government of India Act, 1935 and not therefore saved by section 143(2) of that Act, (3) Besides, between 1st April, 1937 to 1st April, 1942 it was not lawfully levied by reason of the lacuna created by the words of the rules in Schedule IV being inapplicable to the levy of a tax on pensioners, (4) The increase. in the rates from 1937 onwards could not be justified even under section 143 (2) or article 277 and by reason of these changes in rates the tax became virtually a new tax and could not continue to be lawfully levied to any extent after the increases. The first point need not detain us long. Prima facie it would seem that there being no rigid distribution of legis lative power between the Central and Local Governments under the Government of India Act, 1919 any infraction of the rules made under the Devolution Rules framed under section 45 A would be validated by section 80 A(3) and section 84(2) of the Government of India Act, 1919. The learned Judges of the High Court before whom this contention was urged rejected it, and the learned counsel submitted that the decision on this point was not correct. But in the view that we took of the other submissions made to us, we did not hear learned counsel fully on this point and therefore do not propose to express any final opinion on the tenability of the argument on this head. 973 As preliminary to the consideration of the second point it would be necessary to advert to one feature of the change effected by the Amending Act of 1936 to the tax levy. Under section 111, as it originally stood, the liability to pay the tax, i.e., the charge for the tax, was imposed by virtue of the statute itself, on persons who for the period prescribed "exercised a profession or trade or calling or held an appointment", persons in receipt of pensions being deemed to be persons holding appointments. This structure as regards the imposition of liability was altered by the Amending Act. Under the provision, as recast, before a liability to pay the tax could arise the Council had to determine by a resolution that profession tax shall be levied and it was only that resolution which brought the charge into operation. Thus, the resolution of the Council was substi tuted for the statute itself as the mode by which the charge was to be imposed. There was also a second change that was introduced by rendering residence for six months within the city, besides the receipt of pension in the city, a necessary ingredient of the chargeability of the "profession tax" on pensioners. The effect of these two changes now calls for consideration. On the amendment of section Ill by the Act of 1935 coming into force in April 1936, the statutory imposition of the charge to tax laid on persons in receipt of pensions within the city of Madras ceased, and the liability to tax as regards the period after that date was dependent on the passing of a resolution by the Council in terms of the amended section III( 1 ) of the Act. In this con nection it has to be pointed out that though recourse to the procedure as respects previous publication etc. prescribed by section 98 A was necessary only in the case of taxes newly levied, and might have been adopted in the present case because of the enhancement of the rates, still, a resolution ,of the Council was necessary to impose the tax as without it, no liability to profession tax would arise. The charge to tax was imposed, as stated earlier by the resolution of the Council which was to have effect from April 1, 1937. In other words by reason of the repeal of the original section III, the statutory charge to tax on pensions ceased in April 1936. A charge was imposed again under the resolution of the Council effective from 1st April, 1937, so that 974 between April 1936 to 31st March, 1937, no charge was imposed by virtue of any "law". Learned Counsel for the Appellant submits that this is in effect a new levy a levy of a tax which was not legally in existence on 31st March, 1937, and if this levy could not be supported as being sanctioned by section 143(2) of the Government of India Act, 1935, it is common ground that the lawfulness of the levy cannot be sustained. We consider this submission well founded. If the statutory charge to profession tax imposed on pensioners by the Act of 1919, was lifted by the Act of 1936, and the tax again came into operation only on 1st April, 1937, it would follow that there was no "levy of the tax" "immediately before" the commencement of Part III of the Government of India Act, 1935, so as to bring it within the saving in section 143(2) of that Act. Besides, the two circumstances. viz. : that residence within the city for a specified period was made a condition of the liability to the tax, as well as the increase in the rates would both serve to emphasise that the levy was a new one, with a different texture and not a continuance of the tax which was levied just prior to the 1st April, 1937. Learned Counsel for the respondents the Corporation of Madras and the State have urged that it was in substance the old levy. We are unable to agree. The mere fact that prior to 1st April, 1937 the Corporation had under Act X of 1936 the power to bring the tax into force by a resolution does not on a proper construction of section 143(2) bring it within the range of those taxes or duties which "were being lawfully levied" prior to the commencement of Part III of the Government of India Act which alone are permitted to be continued to be levied notwithstanding that these duties were in the Federal Legislative List. This question has been considered by us in great detail in The Town Municipal Committee, Amravati vs Ram Chandra Vasudeo Chimote and Another, etc.(1) in which judgment has been pronounced today and it is unnecessary to re examine the same. The mere existence of a power to bring a tax into operation, cannot, as pointed out, be equated with "a tax (1) ; 975 which was being lawfully levied" before Part III of the Government of India Act, 1935. The 3rd submission of learned Counsel for the appellant is also well founded. The conclusion we have reached as to the effect of the amendment to section 111 by Act X of 1936, and of the tax being imposed by resolution of the Council from 1st April, 1937 not being a tax which was being lawfully levied immediately prior to 1st April, 1942, is reinforced by reference to the rules in Schedule IV which; remained unamended till 1942. Under section 111(1) as amended, the tax could be levied only in accordance with the rules in Schedule IV and as those rules did not make a provision for the levy of a tax on pensioners, it would follow that the tax "was not being lawfully levied" on them. As already pointed out, the relevant rules in that Schedule were framed at a time when Explanation 2 formed part of section III and "pensioners" were deemed to "hold appointments". With the deletion of the Explanation, the fiction created by the original Madras Act IV of 1919 ceased and thereafter if the rules in Schedule IV had to be applied to them these had to be suitably modified. This, as we have pointed out earlier, was done only from April 1, 1942, so that in reality taxes on pensioners were "lawfully" levied upto 1936 and then after a break from April 1, 1942, we use the word "lawfully" on the assumption that this could ' have been legally done under the Government of India Act, 1935, a point already discussed. The learned Judges of the High Court have rejected the argument addressed to them under this head by reference to section 18 of the Madras General Clause Act corresponding to section 24 of the General Clauses Act (Central Act X of 1897). With great respect to the learned Judges we do not see how this provision affords any assistance in the matter. The Schedule and the rules continued without repeal or amendment when the new section III (1) was substituted in 1936, and when this section made a reference to the rules in Schedule IV it could only be a reference to the rules in the Schedule IV which stood ' unaltered. If the phraseology employed in the Schedule was inappropriate to a class which fell within section 111(1), the, only effect would be that the tax could not be levied, because 976 of the defect in the law imposing the tax, but such a situation is not remedied by reference to the provision in the General Clauses Act on which the learned Judges have relied. If, therefore, the, tax was one not lawfully levied just prior to April 1, 1937 and was one brought in after the Government of India Act, 1935 came into force, and really only from April 1, 1942 assuming this to be lawful it is obvious that the validity of this tax could not be sustained as a continuation of a lawful pre existing levy under section 143 (2). In this view it is not necessary to consider the last of the points urged by learned Counsel and examine whether in case of an increase of rate, the entire tax would become a new tax and so unconstitutional or whether it is only the increase in the rate that would become unenforceable. Learned Counsel for the respondent Corporation submitted that the tax could not be deemed to be a tax on income, as was suggested by the appellant, but was really a tax on employment because it was in consideration of past services during employment that pension was payable. This argument was admittedly not urged before the learned Judges of the High Court and is obviously untenable. The taxes specified in item 60 are taxes on the carrying on of a profession, trade, etc. and would, therefore, apply only to a case of present employment. The mere fact that a person has previously been in a profession or carried on a trade, etc. cannot justify a tax under this Entry. The tax on the receipt of pension or on the income from investments which is referred to in the last part of section 1 1 1 ( 1 ) is in truth and substance a tax on income and in fact the argument before the High Court proceeded on this basis, so have the learned Judges. At the time the tax is levied the pensioner is in no employment but is only in receipt of income though it might be for past services, in an employment. He next submitted that Act X of 1936 which had been enacted prior to the Government of India Act, 1935 was continued as an existing law by section 292 of the Government of India Act and as there was nothing in the Government of India Act against its continuance it would have effect 977 even if the terms of section 143 (2) were not satisfied by the present levy. The learned Judges of the High Court accepted this submission. In our opinion, they were in order. The question of the correlation between article 372 corresponding to section 292 of the Government of India Act and article 277 corresponding to section 143(2) of the Government of India Act was considered by this Court in South India Corporation (P) Ltd. vs The Secretary, Board of Revenue, Trivandrum(1) and this Court said: "It is settled law that a special provision should be given effect to the extent of its scope, leaving the general provision to control cases where the special provision does not apply. The earlier discussion makes it abundantly clear that the Constitution gives a separate treatment to the subject of finances, and article 277 saves the existing taxes etc. levied by States, if the conditions mentioned therein are complied with. While article 372 saves all pre Constitution valid laws, article 277 is confined only to taxes, duties, cesses or fees lawfully levied immediately before the Constitution. Therefore, article 372 cannot be construed in such a way as to enlarge the scope of the saving of taxes, duties, cesses or fees. To state it differently, article 372 must be read subject to article 277. " Learned Counsel next drew our attention to section 142 A(1) of the Government of India Act, 1935 and faintly suggested that it might afford him some assistance. This provision, again, was not adverted to before the learned Judges of the High Court and for a proper reason. section 142 A(1) which corresponds to article 276(1) of the Constitution enacted : "Notwithstanding anything in section one hundred of this Act, no Provincial law relating to taxes for the benefit of a Province or of a municipality, district board, local board or other local authority therein in respect of professions, (1) ; 134 159 S.C. 62 978 trades, callings or employments shall be invalid on the ground that it relates to a tax on income. " This section would assist the respondent only if tax imposed were one on a profession, trade, calling, or employment and in that event the section provides that such a tax shall not be deemed to be a tax on income, but where the tax imposed is one not on a profession, etc. at all, it does not mean that the State might levy a tax on income and call it "profession tax". This is sufficient to dispose of a similar argument as regards the scope of the amended Entry 46 in the Provincial Legislature List (List II) to which we have adverted earlier. The appeal accordingly succeeds and the appellant is held entitled to the relief prayed by him in the, filed in the High Court, viz., a writ of Prohibition against the respondent Corporation from enforcing the demand. The appellant will be entitled to his costs from the respond ents here and in the High Court. Appeal allowed.

IN-Abs

The appellant held office as the last Governor General of India. He has been drawing Rs. 15,000/ per annum as pension while residing in the city of Madras. The Corporation of Madras demanded profession tax from him under section 111(i)(b) of the City Municipal Act, 1919 for the year 1958 59 on the ground of his residence being within Madras city and his drawing the pension to which he was entitled. The appellant addressed a communication to the Corporation asserting that this demand was illegal as the Corporation was empowered by the relevant constitutional provisions merely to levy a tax "on a profession, trade calling or employment" and that as he as a pensioner did not fall under any of these classes, the said demand was illegal. The Corporation did not accept the contention of the appellant and therefore, the appellant filed a writ petition under article 226 of the Constitution before the High Court. The High Court dismissed the writ petition of the appellant. The High Court granted a certificate under Art.133(1)(c ) of the Constitution to the appellant to file on appeal to the Supreme Court. Hence the appeal. The question before the Supreme Court was whetherthe Corporation was entitled to levy a tax on pensioners in respect of thepensions received by them in Madras City. Held:(1) that the power of the Corporation to levy the tax is dependent on the subject of the tax being within the State Legislative power under the Constitution. The present levy comes within the purview of item 60 in the State list in Schedule VIII of the Constitution, which reads as follows: "Taxes on profession, trades, callings and employments. " Being a "pensioner" cannot be a "profession, trade, business or calling", nor could a tax on a person because he is in receipt of a pension be said to be a tax on 'employments". The tax, therefore, under the last portion of sec. 111(1)(b) reading profession tax on persons "in receipt of any pension or income from investments" is nothing but a tax on income falling within Entry 82 of the Union List. 963 The taxes specified in item 60 are taxes on the carrying on of a profession, trade etc., and would, therefore, apply only to a case of present C. ' employment. The mere fact that a person has previously been in a profession or carried on trade etc. cannot justify a tax under this entry. The tax on the receipt of pension or on the income from investments which is referred to in the last part of sec. 111(1) is in truth and substance a taxon income. At the time the tax is levied the appellant pen sioner is inno employment but is only in receipt of income. (ii) The present levy of tax cannot be saved by article 277 of the Constitution because the tax was a new levy and not a continuance of a tax which had been levied just prior to April 1, 1937. On the facts of this case it was held that if the statutory charge to profession tax imposed on pensioners by the Act of 1919, was lifted by the Act of 1936, and the tax again came into operation only on April 1, 1937, it would follow that there was no "levy of the tax ' immediately before the commencement of Part III of the Government of India Act. so as to bring it within the saving in section 143(2) of that Act. Besides, the two circumstances, viz., that residence within the city for a specified period was made a condition of the liability to the tax, as well as the increase in the rates would both serve to emphasise that the levy was a new one, with a different texture and not a continuation of the tax which was leved just prior to April 1, 1937. (iii)The mere fact that prior to 1st April, 1937 the Corporation had under Act of 1936 the power to bring the tax into force by a resolution does not on a proper construction of section 143(2) bring it within the range of those taxes or duties which "were being lawfully levied" prior to the commencement of Part III of the Government of India Act 1935, which alone are permitted to be continued to be levied notwithstanding that these duties were in the Federal Legislative List. The mere existence of a power to bring a tax into operation, cannot be equated with "a tax which was being lawfully levied" before Part III of the Government of India Act, 1935. The High Court erred in holding that section 292 of the Government of India Act applies to this case. The Town Municipal Committee, Amravati vs Ramchandra Vasudeo Chimote, ; , South India Corporation (P) Ltd. V. The Secretary, Board of Revenue, Trivandrum, A.I.R. , relied on. (iv)Under section 111(1) as amended, the tax could be levied only in accordance with the rules in Schedule IV and as those rules did not make a provision for the levy of a tax on pensioners, it would follow that the tax "was not being lawfully levied" on them. The High Court erred in holding that such defect would be removed by section 18 of the Madras General Clauses Act. (v)S. 142 A(1) of the Government of India Act, 1935 would assist the respondent 's case only if tax imposed were on a profession, trade, calling or employment. In the present case, the tax is being imposed 664 on an income of a pensioner and so this provision has no application. It is not the intention of Parliament that State might levy a tax on income and call it "profession" tax.

Appeals Nos. 6 to 12 of 1963. Appeals from the judgment and decree dated February 2, 1959 of the Madras High Court in Writ Petition Nos. 1. 2, 202, 203, 204, 309 and 373 of 1958. A. Ranganadham Chetty and A. V. Rangam, for the appellants (in all the appeals). R. Gopalakrishnan, for the respondent (in C.A. No. 11/63). section V. Gupte, Additional Solicitor General and R. H. Dhebar, for interveners Nos. 1 and 2. M. C. Setalvad, N. section Bindra and R. H. Dhebar, for intervener No. 3. G. C. Kasliwal, Advocate General, Rajasthan, R. H. Dhebar and B. R. G. K. Achar, for intervener No. 4. 938 March 3, 1964. The Judgment of the Court was delivered by SHAH, J. "Whether sections 2 and 3 of the Madras Lignite (Acquisition of Land) Act XI of 1953 which seek to amend the Land Acquisition Act 1 of 1894 in their application to acquisition of lignite bearing lands are invalid because they infringe the fundamental right under article 31 of the Constitution of owners of lands whose property is to be compulsorily acquired is the only question which falls to be determined in this group of appeals. Investigations conducted by the Geological Survey of India in 1947 revealed deposits of lignite in the South Arcot District of the State of Madras, and exploratory mining operations were commenced by the Government of Madras. Discovery of deposits of lignite led to speculation in lands. On October 6, 1948, the Government of Madras issued a "Press Note" announcing that the Government proposed to undertake legislation reserving power to compel any person who had purchased land on or after a date to be prescribed in 1947 in the lignite bearing areas to sell such lands to the Government at the rate at which it was purchased. The Government also advised the owners of the lignite bearing lands in the Vriddhachalam and Cuddalore taluks not to sell their lands to speculators. On January 7, 1953, the Government of Madras published a Bill to amend the Land Acquisition Act 1 of 1894 in certain respects. The Bill was duly passed by the State Legislature on June 2, 1953 and received the assent of the President. It was published as an Act on June 10, 1953 and came into force on August 20, 1953. By this Act substantially three provisions are made: (1) that compensation for acquisition of lignitebearing lands under the Land Acquisition Act as amended, is to be assessed on the market value of the land prevailing on April 28, 1947, and not on the date on which the notification is issued under section 4(1) of the Land Acquisition Act; 939 (2) power is reserved under section 17 of the Land Acquisition Act to take possession in cases of urgency of lands for the purpose of working lignite mines in the areas in which the Madras Lignite (Acquisition of Land) Act XI of 1953 extends; and (3) in assessing the market value of the land on April 28, 1947, value of any non agricultural improvements on the land commenced, made or effected after that date are not to be taken into account, even if such improvements were made before the date of publication of the notification under section 4(1) of the Land Acquisition Act. Pursuant to this Act, notifications under section 4(1) of the Land Acquisition Act were issued between the months of January and May 1957 notifying for acquisition certain lands in Vriddachalam taluk of the South Arcot District. These notifications were followed by notifications under section 6 of the Land Acquisition Act. Between the months of May and November 1957 the Land Acquisition Officer made his awards under section 11 of the Land Acquisition Act assessing compensation on the basis of market value of the lads on April 28, 1947 and ignoring in the computation of compensation the value of houses built or other non agricultural improvements made on the land since that date. The owners of the lands affected by these awards submitted petitions under article 226 of the Constitution to the High Court of Judicature at Madras challenging the validity of the awards on the ground that the provisions of Madras Act XI of 1953 violated the fundamental right of the owners of the lands under article 31(2) of the Constitution. They claimed that the Land Acquisition Officer was bound to award compensation for acquisition of their lands and buildings at the market value prevailing on the respective dates of the notifications under section 4(1), and that awards valuing the lands at the market rate prevailing on April 28, 1947, and excluding the value of buildings constructed after that date and trees thereon were without jurisdiction. The petitioners accordingly claimed that writs of mandamus be 940 issued directing the State of Madras and the Land Acquisi tion Officers to refrain from taking possession of the land& and buildings from the petitioners without payment of adequate compensation and for other appropriate relief. The High Court upheld the contention of the petitioners and declared that the awards made on the basis of the provisions of Madras Act XI of 1953 could not be sustained. Against the order passed by the High Court, these appeals have been preferred by the State of Madras, with certificate of fitness granted by the High Court under article 132 of the Constitution. The Madras Act XI of 1953 makes an important departure from the scheme of the Land Acquisition Act 1 of 1894. Under the Land Acquisition Act 1 of 1894, a person interested in any land. compulsorily acquired is entitled to the market value of his interest in the land at the date of the publication of the notification under section 4(1), and this compensation includes the value of all improvements agricultural and non agricultural made in the land upto the date of the notification. By Madras Act XI of 1953, compensation made payable for compulsory acquisition of land is the value of the land on April 28, 1947, together with the value, of any agricultural improvements made thereon after that date and before publication of the notification under section 4(1). The result of the Madras Act is therefore to freeze for the purpose of acquisition the prices of land in the area to which it applies, and the owners are deprived of the benefit of appreciation of land values since April 28, 1947, whenever the notification under section 4(1) may be issued and also of non agricultural improvements made in the land after April 28, 1947. Departure from the provisions of the Land Acquisition Act is challenged as illegal on the ground that it deprives the owner of the land of just compensation for compulsory acquisition of his property. Madras Act XI of 1953 was passed before the Constitution (Fourth Amendment) Act, 1955 was enacted, and we have to deal with the question of the validity of the Act in the light of the constitutional provisions contained in article 31 before the constitutional amendment. We may 941 :make it clear that for the purpose of this judgment, we express no opinion on the question whether it is possible by enacting legislation after the amendment of article 31(2) by the Constitution (Fourth Amendment) Act, 1955 (which is not given any retrospective operation) to provide that compensation for compulsory acquisition of land may be fixed on the basis of market value prevailing on a date Anterior to the date of the issue of the notification under section 4(1). Article 31 before it was amended by the Constitution (Fourth Amendment) Act 1955, by its cls. (1) and (2) provided: "(1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. " It was held by this Court in Chiranjit Lal Chowdhuri vs, Union of India and others(1) and The State of West Benga vs Subhodh Gopal Bose and others(2) that cls. (1) and (2, of article 31 relate to the same subject of "eminent domain", By article 31 therefore every person was protected agains, deprivation, of his property save by authority of law, an( the law authorising taking possession or acquisition of property for public purposes had to fix the quantum o compensation, or to specify principles on which compensa tion was to be determined for the, property. taken possession of or acquired. Power to legislate,, in respect of compensa tion for acquisition and requisitioning of property was (1) ; (2) ; 942 contained in Entry 42 List III of the Seventh Schedule and read as follows : "Principles on which compensation for property acquired or requisitioned for the purpose 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. " The Constitution therefore conferred by article 31(2) fundamental right upon every person, protecting his property against compulsory acquisition otherwise than by authority of law, and without just indemnification for loss suffered by him. In The State of West Bengal vs Mrs. Bela Banerjee and others(1) this Court observed that when under Entry 42 List III the Legislature was given discretionary power to, lay down the principles which should govern determination of the amount to be given to the owner of the property appropriated, such principles must ensure that what is, determined as payable must be a just equivalent of what the owner has been deprived of, and that subject to this basic limitation the Constitution allowed free play to the legislative judgment as to what principles should guide the determination of the amount payable. The Court therefore held that the West Bengal Land Development and Planning Act, 1948, which was enacted primarily for the settlement of immigrants who had migrated into West Bengal due to, communal disturbances in East Bengal and which by section 8 provided that the compensation to be awarded for compulsory acquisition to the owner of the land was not to exceed the market value on December 31, 1946, was ultravires the Constitution and void under article 31(2) of the Constitution. It was observed at p. 564 : "Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market 'value of the land (1) ; 943 on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the ceiling on compensation, without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due com pensation in letter and spirit with the requirement of article 31(2). " That principle must apply in adjudging the validity of Madras Act XI of 1953. It may be assumed that April 28, 1947, was the date on which lignite deposits were discovered in the areas to which the Act is extended. But there is no true relation between the acquisition of the lands in these cases and fixation of compensation based on their value on the market rate prevailing on April 28, 1947. Fixation of compensation for compulsory acquisition of lands notified many years after that date, on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of article 31(2) as it stood before it was amended by the Constitution, (Fourth Amendment) Act, 1955. If the owner is by a, constitutional guarantee protected against expropriation of ' his property otherwise than for a just monetary equivalent, a law which authorises acquisition of land not for its true. value, but for value frozen on some date anterior to the acquisition, on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at some time in future, must be, regarded as infringing the fundamental right. Counsel for the State of Madras relying upon the following observation of Patanjali Sastri, C.J., in Mrs. Bela Banerjee 's case(1) at p. 564: "The fixing of an anterior date for the ascertainment of Value may not, in certain circumstances, be (1) ; 944 .lm15 a violation of the constitutional requirement as, for instance, when the proposed scheme of acquisition becomes known before it is launched and prices rise sharply in anticipation of the benefits to be derived under it, but the fixing of an anterior date, which might have no relation to the value of the land when it is acquired, may be, many years later, cannot but be regarded as arbitrary", submitted that a law which merely fixes the market value on a date anterior to the date on which the owner is expro priated of his land, as determinative of the market value on which the compensation is to be based, cannot without further enquiry be regarded as infringing article 3 1 (2) of the Constitution. In our view this observation cannot assist the State of Madras in saving the provisions of Madras Act XI of 1953 from the vice of infringing the constitutional guarantee under article 31 (2) of the Constitution. The right which is guaranteed is undoubtedly the right to just indemnification for loss, and appreciation in the market value of the land because of the proposed acquisition may in assessing compensation be ignored. Even the Land Acquisition Act provides for assessment of compensation ,on the basis of market value of the land not on the date on which interest of the owner of land is extinguished under section 16, but on the basis of market value prevailing oil the date on which the notification under section 4(1) is issued. Whether this rule in all cases irrespective of subsequent developments ensures just indemnification of the expropriated owner so as to be immune from attack, does not call for comment in this case. But any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notification under section 4(1 ), must prima facie, be regarded as denying to him the true equivalent of, the land which is expropriated and it is for the State to show that fixation of compensation on the market value on an anterior date does not amount to a violation of the constitutional guarantee. No materials have been placed by the State before this Court ,which would support any such case. 945 it is true that, the Province of Madras had issued a 'Press Note" in 1948 announcing that the Government proposed to undertake legislation reserving the power to compel any person who had purchased land in the lignite bearing areas to sell such land to them at the rate at which it was purchased. The only intimation given thereby to the owners of lands was that the Government may undertake legislation for the purpose of purchasing lands at the price at which the speculators in land may have purchased them. There is no evidence that any scheme for acquisition of land for mining of lignite was prepared in 1947 by the Government of Madras. The mining operations in 1947 must, in the very nature of things, have been exploratory. The statement of objects and reasons for the Act clearly discloses that initially mining operations were started by the Government on a small area. Assuming that in appropriate cases, fixation of a date anterior to the publication of the notification under section 4(1) for ascertainment of market value of the land to be acquired, may not always be regarded as a violation of the constitutional guarantee, in the absence of evidence that compensation assessed on the basis of market value on such anterior date, awards to the expropriated owner a just monetary value of his property at the date on which his interest is extinguished, the provisions of the Act arbitrarily fixing compensation based on the market value at a date many years before the notification under section 4(1) was issued, cannot be regarded as valid. It is a matter of common knowledge that since the termination of hostilities in the last World War there has been an upward tendency in land values resulting in appreciation In some areas many times the original value of lands. No attempt has been made by the State to prove that appreciation in the market value of lands in the area since April 1947 was solely attributable to a scheme of land acquisition of lignite bearing lands. To deny to the owner of the land compensation at rates which justly indemnify him for his loss by awarding him compensation at rates prevailing ten years before the date on which the notification under section 4(1) was issued amounts in the circumstances to a flagrant infringement of the fundamental right of the owner of the land under article 31 (2) as it stood when the Act was enacted. 134 159 S.C. 60 946 The validity of the provision relating to fixation of compensation had to be adjudged in the light of the constitutional protection guaranteed at the date when the Act was brought into operation, and any restriction of the constitutional protection by subsequent amendment of article 31(2) which has not been given retrospective effect, must be entirely ignored. The provision which denies to the owner of land compensation for non agricultural improvements made by him since April 28, 1947, also infringes the protection of article 31(2). Under section 3(a) of the Land Acquisition Act "land" is defined as including benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth, and when tinder section 4(1) land is notified for acquisition, the acquisition is of the entirety of the interest of the owner in the land including underground rights if any, crops, trees and superstructures. By the Madras Act the owner is deprived of the value of all non agricultural improvements including the value of non agricultural buildings, erected on the land after April 28, 1947. It is not clear whether the non agricultural build ings constructed after the specified date are forfeited to the State on acquisition, or the owner is entitled to remove them. In either case the owner is deprived of just value of his land including the superstructure, of which he is expro priated. Denial to the owner of the land of the value of the structures constructed by him (even of those put up after April 28, 1947, with the knowledge that the Government may undertake legislation for the purpose of compulsory acquisition of the land) would still be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding, and would amount to infringement of article 31(2) of the Constitution. We are therefore of the view that the provisions which require the Land Acquisition Officer and the Court to assess compensation of the land compulsorily acquired only on the market value of the land on April 28, 1947, together with the value of agricultural improvements on the land commenced, made or effected after that date, and before the date of the publication of the notification under section 4(1), 947 without taking into consideration the value of non agricul tural improvements made after that date, must be regarded as invalid. We are not called upon to express any opinion on the question whether the power reserved under section 17 of the Land Acquisition Act as amended by section 2 of Madras Act XI of 1953 to take possession of lands under the emergency clause for the purpose of working lignite mines in the areas to which the Madras Lignite (Acquisition of Land) Act, 1953, extends is invalid. No argument has been advanced by either side before us on this question. Nor was the High Court called upon to consider the validity of that provision. The appeals therefore fail and are dismissed. The respondents in this group of appeals, except in appeal No. 11 of 1963, have not appeared in this, Court. Therefore in appeal No. 11 of 1963 alone, the State of Madras will pay the costs of the respondent. There will be no order as to costs in other appeals. Appeals dismissed.

IN-Abs

The respondents in the above appeals are owners of certain lands which are to be compulsorily acquired udder Madras Lignite (Acquion of Land) Act, 1953. This Act came into force on August 20, 53 before article 31 of the Constitution was amended by the Constituion (Fourth Amendment) Act, 1955. By the said Act substantially o provisions which are material to the present appeals were made. ,e first was that compensation for acquisition of lignite bearing lands der the Land Acquisition Act is to be assessed on the market value the land prevailing on August 28, 1947 and not on the date on which notification is issued under section 4(1) of the Land Acquisition Act. condly it was provided that in awarding compensation the value of non agricultural improvements commenced since April 28, 1947 win not taken into consideration. In accordance with the above provisions, after issuing the notices as acquired under sections 4(1) and 6 of the Land Acquisition Act the Land acquisition Officer made awards regarding the lands of the respondents. he respondents thereupon filed petitions under article 226 of the Constition before the High Court of Madras challenging the validity of the ward on the ground that the provisions of the Act relating to the ward of compensation violate article 31(2) of the Constitution [as it food before the Constitution (Fourth Amendment) Act, [955]. The High Court upheld the contention. In appeal, Held: (i) The validity of the Act impugned in the present appeal ,is to be examined in the light of the provisions of article 31 of the constitution as they stood before the Constitution (Fourth Amendment) Act, 1955. Chiranjit Lai Chowdhuri V. Union of India, [1950] S.C.R. 869, State of West Bengal vs Subodh Gopal Bose, ; , and State of lest Bengal vs Mrs. Bela Banerjee, ; , relied. 937 (ii) The principle laid down in Bela Banerjee 's case, that the ceiling on the compensation without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compensation in letter and spirit within the requirement of article 31(2), would apply to the impugned Act. Fixation of compensation for compulsory acquisition of land notified many years after that date on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of article 31(2) as it stood before the Constitution (Fourth Amendment) Act, 1955. (iii) Any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notice under section 4(1) of the Land Acquisition Act must prima facie, be regarded as denying him the true equivalent of the land which is ex propriated and it is for the State to show that fixation of compensation on the market value on an anterior date does not amount to a violation of the Constitutional guarantee. In the present appeals no materials have been placed by the State which would support any such case. (iv) Denial of compensation for the value of non agricultural improvements would be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding and would amount to infringement of article 31(2) of the Constitution.

Appeal No. 19 of 1964. Appeal by special leave from the judgment and order dated October 29, 1963, of the Madras High Court in Writ Appeal No. 214 of 1962. section Mohan Kumar amagalam, M. N. Rangachari, R. K. Garg, M. K. Ramamurthi, for the appellant. R. Ganapathy Iyer, for respondents Nos. 2 and 3. A. Ranganadham Chetty and A. V. Rangam, for respondent No. 4. M. C. Setalvad, N. C. Krishna Iyengar and 0. C. Mathur, for Intervener. March 5, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C.J. The short but important point of law which has been raised for our decision in this appeal by special leave is whether G.O. No. 1298 issued by the Gov ernment of Madras on April 28, 1956 in exercise of its powers conferred by section 43A of the (Central Act IV of 1939) (hereinafter called the Act) inserted by the Madras Amending Act 20 of 1948, is valid. Mr. Mohan Kumaramangalam who appears for the appellant contends that the impugned Government order is invalid for the simple reason that it is outside the purview of section 43A. The impugned order was issued as early as 1956 and since then, its validity 3 has never been impeached in judicial proceedings. Litigation in regard to the grant of permits under the relevant provisions of the Act has figured prominently in the Madras High Court in the form of writ petitions invoking the said High Court 's jurisdiction under article 226 of the Constitution and several aspects of the impugned order have come to be examined. The echoes of such litigation have frequently been heard in this Court and this Court has had occasion to deal with the impugned order, its character, its scope and its effect , but on no occasion in the past, the validity of the order appears to have been questioned. The legislative and judicial background of the order and the course of judicial decisions in regards to the points raised in the enforcement of this order would prima facie and at the first blush suggest that the attack against the validity of the order may not be wellfounded and that would tend to make the initial judicial response to the said challenge more hesitant and reluctant. But Mr. Kumaramangalam contends that section 43A under which the order purports to have been passed would clearly show that the said order is outside the purview of the authority conferred on the State Government and is therefore invalid. It is obvious that if this contention is upheld, its impact on the administration of the system adopted in the State of Madras for granting permits under the Act would be very great and so though the question lies within a narrow compass, it needs to be very carefully examined. The facts which lead to the present appeal conform to the usual pattern of the permit litigation in which the grant or refusal to grant a permit is chal lenged under the writ jurisdiction of the High Court under article 226. The appellant B. Rajagopala Naidu is a bus operator in the State of Madras and he runs a number of buses on various routes. On June 26, 1956, the State Transport Authority by a notification invited applications for the grant of two stage carriage permits on the route Madras to Krishnagiri. The buses on this route were to be run as express service. The appellant and 117 bus operators including respondents 2 and 3 D. Rajabahar Mudaliar, proprietor of Sri Sambandamoorthy Bus Service and K. H. Hanumantha Rao, proprietor of Jeevajyoti Bus Service respectively, submitted applications for the two permits in question. The State Transport Authority considered the said applications on the merits. In doing so, it proceeded to award marks in accordance with the principles prescribed by the impugned order and came to the conclusion that the appellant satisfied the requirements enunciated by the State Transport Authority for running an efficient bus service on this long route, and so, it granted the two permits to the appellant on May 8, 1958. L/P(D)1SCI 1(a) 4 Against this decision, 18 appeals were preferred by the unsuccessful applicants including respondents 2 and 3. All these appeals were heard together by the State Transport Ap pellate Tribunal, Madras in June 1959. It appears that before the appeals were thus heard, the State Government had superseded the principles enunciated in the order in so far as they related to the grant of stage carriage permits and had issued another direction under section 43A known as G.O. 2265 on August 9, 1958. Incidentally, it may be added that by this order, different criteria had been prescribed for selection and a different marking system had been devised. The Appellate Tribunal considered the claims of the rival bus operators and allotted marks in accordance with the principles laid down by the earlier order. As a result, respondents 2 and 3 secured the highest marks and their appeals were allowed, the order under appeal was set aside and two permits were granted to them. This order was passed on July 4, 1959. The appellant then invoked the jurisdiction of the Madras High Court under article 226 of the Constitution by this writ petition No. 692 of 1959. In his writ petition the ap pellant challenged the validity of the order passed by the Appellate Tribunal on several grounds. One of them was that the impugned order on which the decision of the Appellate Tribunal was based, was invalid. This plea along with the other contentions raised by the appellant failed and the learned Single Judge who heard his writ petition dismissed the petition, on October 18, 1962. The appellant then challenged the correctness of this decision by a Letters Patent Appeal No. 214 of 1962 before a Division Bench of the said High Court. The Division Bench, however, agreed with the view taken by the Single Judge and dismissed the Letters Patent Appeal preferred by the appellant. The appellant then moved the said High Court for leave, but failed to secure it, and that brought him here with an application for special leave which was granted on November 14, 1963. It is with this special leave that the appellant has brought this appeal before us for final disposal. Before dealing with the points raised by the appellant, it is necessary to consider the background of the impugned order, and that takes us to the decision of the Madras High Court in Sri Rama Vilas Service Ltd. vs The Road Traffic Board, Madras, by its Secretary(1). In that case, the appellant had challenged the validity of a Government order No. 3898 which had been issued by the Madras Government on December 9, 1946. This order purported to direct the transport authorities to issue only temporary permits as the Government intended to nationalise motor transport. Accordingly, instruction No. 2 in the said order had provided that when (1) 5 applications were made for new routes or new timings in existing routes, then small units should be preferred to old ones. In accordance with this instruction, when the application for permit made by the appellant, Sri Rama Vilas Service was rejected, the order stated that it so rejected in the interests of the public generally under section 47(1)(a) of the Act. The appellant preferred , in ' appeal against the order to the Central Board namely the Provincial Transport Authority which had been constituted by the Government under section 44 of the Act. His appeal failed and so, he moved the Madras High Court under section 45 of the Specific Relief Act for an order directing the respondent the Road Traffic Board, Madras to consider the application of the appellant in accordance with the provisions of the Act and the rules made thereunder for renewal of the permit for plying buses. The High Court held that G. O. No. 3898 was in direct conflict with the proviso to section 58 sub section (2) of the Act, and so, was invalid. This decision showed that there was no authority or right in the State Government to issue instructions such as were contained in the said Government order. In reaching this decision, the High Court emphasised the fact that the Central Transport Board and the Regional Transport Board were completely independent of the Government except that they must observe the notifications made pursuant to section 43 of the Act. It was conceded that if and when the Government acted as an Appellate Tribunal, it had judicial functions to discharge. But these functions did not include the power to give orders to any Board which was seized of an application for renewal of permits. That is how it was established by this decision that as the Act stood, the State Government had no authority to issue directions as to how applications for permits or their renewal should be dealt with by the Tribunals constituted under the Act. This judgment was pronounced on November 19, 1947. As a result of this judgment, the Madras Legislature amended the Central Act by Act XX of 1948 which came into force on December 19, 1948. Amongst the amendments made by this Act was the insertion of section 43A with which we are concerned in the present appeal. This section clothed the State Government with powers to issue certain directions and orders. As we have already indicated, the point which we are, considering in the present appeal is whether the impugned order falls within the purview of the power and authority conferred on the State Government by this section. We will read this section later when we address ourselves to the question of its construction. The amendment of the Central Act led to the next round of controversy between the bus operators and the State Gov ernment and that resulted in the decision of the Madras High 6 Court in C.S.S. Motor Service Tenkasi vs The State of Madras and another(1). In that case, the validity of several provisions of the Act including the provisions introduced by the Madras Amendment Act were challenged. It will be recalled that at the time when this challenge was made, the Constitution had come into force and the appellant C.S.S. Motor Service urged before the High Court that under article 19(1)(g) it had a fundamental right to ply motor vehicles on the public pathways and the impugned provisions of the Act invaded its aforesaid fundamental right and were not justified by article 19(6). The High Court elaborately considered the first part of the contention and it took the view, and we think rightly, that a citizen has a fundamental right to ply motor vehicles on the public pathways for hire or otherwise and that if any statutory provision purports or has the effect of abridging such fundamental right, its validity would have to be judged under the relevant clause of article 19. Proceeding to deal with the dispute on this basis, the High Court examined the validity of the several impugned provisions of the Act. In regard to section 43A, the High Court came to the conclusion that the said section was valid though it took the precaution of adding that the orders passed thereunder might be open to challenge as unconstitutional. It is, however, necessary to emphasise that the main reason which weighed with the High Court in upholding the validity of this section was that the High Court was satisfied that the said section was "intended to clothe the Government with authority to issue directions of an administrative character." Thus, section 43A was held to be valid in this case and the correctness of this conclusion is not disputed before us. In other words, we are dealing with the appellant 's challenge against the validity of the impugned order on the basis that section 43A itself is valid. This judgment was pronounced on April 25, 1952. Some years after this judgment was pronounced, the impugned Government order was issued on April 28, 1956. This order purported to issue instructions or directions for the guidance of the Tribunals constituted under the Act. In fact, it refers to the judgment of the Madras High Court in the case of C.S.S. Motor Service. It would appear that the Madras Government wanted to give effect to the said decision by issuing appropriate directions under its authority derived from section 43A which was held to be valid. The impugned order deals with five topics. The first topic has relation to the instructions which had to be borne in mind whilst screening the applicants who ask for permits. This part of the order provides that the applicants may be screened and disqualified on one or more of the principles enunciated in cls.1 to 4 in that part. The second part deals with the system of assigning marks to (1) A.L.R. 7 the several claimants, under four columns. In laying down these principles, the impugned order intended to secure precision in the disposal of claims for permits and to enable quick consideration of the merits of such claimants. This part of the order, however, made it clear that in cases where the system of marking worked unfairly the Regional Transport Authority may ignore the marks obtained for reasons to be stated. It is this ' part of the order which has introduced the marking system which has been the special feature of adjudication of claims for permits in the State of Madras. These two parts are described as "A." in the Government order. Part 3 deals with the variation, or extension of routes granted under the permits. Part 4 deals with the revision of timings and Part 5 has reference to suspension or cancellation of permits. That in brief is the nature of the directions issued by the impugned order. After this order was issued and the Tribunals constituted under the Act began to deal with applications for permits in accordance with the principles prescribed by it, the decisions ,of the said Tribunals came to be frequently challenged before the Madras High Court and these disputes have, often been brought before this court as well. In these cases, the character of the order passed by the Tribunal was examined, the nature of the instructions issued by the impugned order was considered and the rights of the parties aggrieved by the quasi judicial decisions of the tribunals also fell for discussion and decision. A question which was often raised was whether it was open to a party aggrieved by the decision of the Tribunal to contend that the said decision was based either on a misconstruction of the impugned order or in contravention of it, and the consensus of judicial opinion on this part of the controversy appears to be that the proceedings before the Tribunals constituted under the Act are quasijudicial proceedings and as such liable to be corrected under article 226 of the Constitution. It also appears to be well estab lished that the impugned order is not a statutory rule and has therefore no force of law. It is an administrative or executive direction and it is binding on the tribunals; it does not, however, confer any right on the citizen and that means, that a citizen cannot be allowed to contend that a misconstruction of the order or its contravention by any decision of the Tribunal functioning under the Act should be corrected under Article 226. In M/s Raman and Raman Ltd. vs The State of Madras and others(1), this Court by a majority decision held that section 43A of the Act as amended by the Madras Amendment Act, 1948 must be given a restricted meaning and the jurisdiction it conferred on the State Government to issue orders and directions must be confined to administrative functions. An order or (1) 8 direction made thereunder by the State Government was con sequently denied the status of law regulating rights of parties. and was treated as partaking of the character of an administrative order. Similarly, in R. Abdulla Rowther vs The State Transport Appellete Tribunal, Madras and others(1) this Court held by a majority decision that the orders and directions issued under section 43A were merely executive or administrative in character and their breach, even if patent, would not justify the issue of a writ of certiorari. It was also observed that though the orders were executive and did not amount to statutory rules, they were rules binding on the transport authorities for whose guidance they have been issued, but that did not confer any right on the citizen and so a plea that a contravention of the orders should be corrected by the issue ,of an appropriate writ was rejected. Such contravention, it was held, might expose the Tribunal to the risk of disciplinary or other appropriate action, but cannot entitle a citizen to make a complaint under article 226. It is necessary to emphasise that in both these cases no argument was urged that the impugned order was itself invalid and should have been ignored by the Tribunals exercising quasi judicial authority under the relevant provisions of the Act. The Court was no doubt called upon to consider the character of the impugned order and some of the reasons given in support of the conclusion that the impugned order is administrative or executive seem to suggest that the said order would, prima facie, be incon sistent with the provisions of section 43A which received a narrow and limited construction from the court. Nevertheless, since the point about the validity of the impugned order was not raised before the court, this aspect of the question was not examined and the discussion and decision proceeded on the basis that the impugned order was valid. Now that the question has been raised before us, it has become necessary to examine the validity of the impugned order. Before proceeding to examine the scope and effect of the provisions of section 43A, it is necessary to bear in mind two general considerations. The first broad consideration which is relevant has relation to the scheme of the Act in general and the scheme of Ch.IV in particular. The Act consists of 10 chapters and deals mainly with administrative problems in relation to motor vehicles. Chapter 11 deals with licensing of drivers of motor vehicles. Chapter IIA deals with licensing of conductors of State carriages and Chapter III with registration of motor vehicles. Chapter IV is concerned with the control of transport vehicles and in this chapter are included the relevant provisions for the applications for grant of permits, the consideration of those applications and other allied topics. Chapter IVA includes the provisions relating to (1) A.I.R. (1959) S.C. 896. 9 State Transport Undertakings. Chapter V addresses itself to the construction, equipment and maintenance of motor vehi cles, Chapter VI deals with the control of traffic, Chapter ' VII has reference to motor vehicles temporarily leaving or visiting India, Chapter VIII with the question of insurance of motor vehicles against third party risks, Chapter IX prescribes offences, penalties and procedures to try the offences and Chapter X contains miscellaneous provisions. This scheme shows that the hierarchy of transport autho rities contemplated by the relevant provisions of the Act is clothed both with administrative and quasi judicial functions and powers. It is well settled that sections 47, 48, 57, 60, 64 and 64A deal with quasi judicial powers and functions. In other words, when applications are made for permits under the relevant provisions of the Act and they are considered ,on the merits, particularly in the light of the evaluation of the claims of the respective parties, the transport authorities are exercising quasi judicial powers and are discharging quasijudicial functions, and so, orders passed by them in exercise of those powers and in discharging those functions are quasijudicial orders which are subject to the jurisdiction of the High Court under article 226, vide New Prakash Transport Co. Ltd. vs New Suwarna Transport Co. Ltd.(1) and M/s Raman and Raman Ltd. vs The State of Madras and others(3) and R. Abdulla Rowther vs The State Transport Appellate Tribunal Madras and others(3) so that when we examine the question about the validity of the impugned order, we cannot lose sight of the fact that the impugned order is concerned with matters which fall to be determined by the appropriate transport authorities in exercise of their quasi judicial powers and in discharge of their quasi judicial functions. The other broad consideration relevant in dealing with the present controversy is that there are three sets of provi sions under the Act which confer legislative, judicial and administrative powers respectively on the State Government. Section 67 which confers on the State Government power to make rules as to stage carriages and contract carriages and section 68 which confers power on the State Government to make rules for the purposes of Ch.IV are obviously legislative powers, and in exercise of these powers, when the rules are framed, they become statutory rules which have the force of law. Naturally, the exercise of these legislative powers is controlled by the safeguard provided by section 133 of the Act. This latter section requires that when power is exercised by the State Government to make rules, it is subject to the condition that the rules must be previously published before they are (1) p. 118.[1959] 2 S.C.R. p. 227.A.I.R. (1959) S.C. 896.10 made. That is the effect of section 133(i). Sub cl.(2) of section 133 provides that all rules made under this Act shall be published in the Official Gazette after they are made and shall, unless some later date, is appointed, come into force on the date of such publication. Clause 3 is important. It provides that all rules made under the Act shall be laid for not less than fourteen days before the appropriate Legislature as soon as possible after they are made, and shall be subject to such modifications as the appropriate Legislature may make during the session in which they are so laid. So that if statutory rules are made by the Government in exercise of legislative powers conferred on it by sections 67 and 68, they are subject to the control of the appropriate legislature which can make changes or modifications in the said rules if it is thought necessary or expedient to do so. Publication before the rules are made and publication after they are made also afford another statutory safeguard in that behalf. That is the nature of the legislative power conferred on the State Government. Section 64A confers judicial power on the State Transport Authority, because the said authority is given revisional jurisdiction to deal with orders therein specified, subject to the limitations and conditions prescribed by the two provisos to the said section. This is a clear provision conferring judicial power on the State Transport Authority. Along with the legislative and judicial powers which have thus been conferred, there is the administrative power con ferred on the State Government by section 43A. Section 43A reads thus: ,,The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions". It is the construction of this section which is the basis of the challenge to, the validity of the impugned rules in the present appeal. It may be conceded that there are some words in the section which are against the construction for which Mr. Kumaramangalam contends. The words "in respect of any matter relating to road transport" are undoubtedly wide enough to take in not merely administrative matters but also matters which form the area of the exercise of quasi judicial authority by the Tribunals constituted under the Act. Prima facie, there are no words of limitation in this clause and it would, therefore, be possible to take the view that these are matters which are scrutinised by the appropriate authorities in exercising their quasi judicial jurisdiction. Similarly, the State Transport Authority and the Regional Transport 11 Authority to which reference is made in this section are clothed not only with administrative power but also with quasijudicial jurisdiction so that reference to the two authorities and reference to any matter relating to road transport would indicate that both administrative and quasi judicial matters come within the sweep of section 43A. But there are several other considerations which support Mr. Kumaramangalam 's construction. The first is the setting and the context of the section. As we have already seen, this section has been introduced by the Legislature in response to the decision of the Madras High Court in C.S.S. Motor Service case(1) and that would indicate that the Madras Legislature intended to confer on the State Government power to issue administrative orders or directions of a general character. Besides, the two preceding sections section 42 and section 43 and section 44 which follows support the argument that the field covered by section 43A like that covered by sections 42, 43 and 44 is administrative and does not include the area which is the subjectmatter of the exercise of quasi judicial authority by the relevant Tribunals. Then again, the use of the words 'orders and directions ' would not be appropriate in regard to matters which fall to be considered by authorities exercising quasi judicial powers. These words would be appropriate if they have reference to executive matters. And lastly, the provision that the relevant transport authority shall give effect to all orders and directions issued under section 43A would be clearly inappropriate if the instructions issued under the said section are meant for the guidance of quasi judicial bodies. If the direction is issued by the appropriate Government in exercise of its powers under section 43A and it is intended for the guidance of a tribunal discharging its quasi judicial functions, it is hardly necessary to say that the authority shall give effect to such directions. Section 43A being valid, if the orders and directions of a general character having the force of law can be issued within the scope of the said section, then such orders or directions would by themselves be binding on the transport authorities for whose guidance they are made; and it would be superfluous to make a specific provision that they are so binding. On the other hand, if the orders and directions are in the nature of administrative orders and directions, they do not have the force of statutory rules and cannot partake of the character of provisions of law, and so, it may not be inappropriate to that the said orders and directions shall be followed by the appropriate tribunals. Therefore, it seems to us that on a fair and Leasonable construction of section 43A, it ought to be held that the said section authorises the State Government .R. 12 to issue orders and directions of a general character only tin respect of administrative matters which fall to be, dealt with by the State Transport Authority or Regional Transport Authority under the relevant provisions of the Act in their administrative capacity. In reaching this conclusion, we have been influenced by certain other considerations which are both relevant and material. In interpreting section 43A, we think, it would be legitimate to assume that the legislature intended to respect the basic and elementary postulate of the rule of law, that in exercising their authority and in discharging their quasi judicial function, the tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgment. It is of the essence of fair and objective administration of law that the decision of the Judge or the Tribunal must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. If the exercise of discretion conferred on a quasi judicial tribunal is con trolled by any such direction, that forges fetters on the exercise of quasi judicial authority and the presence of such fetters would make the exercise of such authority completely inconsistent with the well accepted notion of judicial process. It is true that law can regulate the exercise of judicial powers. It may indicate by specific provisions on what matters the tribunals constituted by it should adjudicate. It may by specific provisions lay down the principles which have to be followed by the Tribunals in dealing with the said matters. The. scope of the jurisdiction of the Tribunals constituted by statute can well be regulated by the statute and principles for guidance of the said tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done by adminis trative or executive orders. This position is so well established that we are reluctant to hold that in enacting section 43A the Madras Legislature intended to confer power on the State Government to invade the domain of the exercise of judicial power. In fact, if such had been the intention of the Madras Legislature and had been the true effect of the provisions of section 43A, section 43A itself would amount to an unreasonable contravention of fundamental rights of citizens and may have to be struck down as unconstitutional. That is why the Madras High Court in dealing with the validity of section 43A had expressly observed that what section 43A purported to do was to clothe the Government with authority to issue directions of an administrative character and nothing more. It is somewhat unfortunate that though judicial decisions have always emphasised this aspect of the matter, occasion did not arise so long 13 to consider the validity of the Government order which on the construction suggested by the respondent would clearly invade the domain of quasi judicial administration. There is another consideration which is also important. If section 43A authorises the State Government to issue directions or orders in that wide sense, section 68 would become redundant and safeguards so elaborately provided by section 133 while the State Government purports to exercise its authority under section 68, would be meaningless. If orders and directions can be issued by the State Government which are not distinguishable from statutory rules, it is difficult to see why section 68 would have dealt with that topic separately and should have provided safeguards controlling the exercise of that power by section 133. It is likewise significant that the directions and orders issued under section 43A are not required to be published nor are they required to be communicated to the parties whose claims are affected by them. Proceedings before the Tribunals which deal with the applications for permits are in the nature of quasijudicial proceedings and it would, indeed, be very strange if the Tribunals are required to act upon executive orders or directions issued under section 43A without conferring on the citizens a right to know what those orders are and to see that they are properly enforced. The very fact that these orders and directions have been consistently considered by judicial decisions as administrative or executive orders which do not confer any right on the citizens emphatically brings out the true position that these orders and directions are not statutory rules and cannot therefore seek to fetter the exercise of quasi judi cial powers conferred on the Tribunals which deal with applications for permits and other cognate matters. It is, however, urged that the principles laid down in the impugned order are sound principles and no challenge can be made to the validity of the order when it is conceded that the order enunciates very healthy and sound principles. This order, it is argued, can be considered as expert opinion the assistance of which is afforded by the State Government to ,he Tribunals dealing with the question of granting permits. We are not impressed by this argument. It is not the function of the executive to assist quasi judicial Tribunals by issuing directions in the exercise of its powers conferred under section 43A. Besides, if section 43A is valid and an order which is issued under it does not fall outside its purview, it would be open to the State Government to issue a direction and require the Tribunal to follow that direction unquestionably, in every case. It is true that in regard to the marking system evolved by the im pugned rule, liberty is left to the Tribunal not to adopt that system for reasons to be recorded by it. This liberty in practice 14 may not mean much; but even theoretically, if the impugned order is valid, nothing can prevent the State Government from issuing another order requiring that the marking system prescribed by it shall always be followed. We have already seen that section 43A itself provides that effect shall be given to the orders issued under it, and so, if an order issued under section 43A itself were to prescribe that it shall be followed, it will have to be followed by the Tribunal and no exception can be made in that behalf. Therefore, we cannot accept the argument strongly pressed before us by Mr. Ganapathy Iyer on behalf of respondent No. 1 that the validity of the order cannot be challenged on the ground that the principles laid down by it are sound and healthy. We have, therefore, come to the conclusion that the impugned order is outside the purview of section 43A inasmuch as it purports to give directions in respect of matters which have been entrusted to the Tribunals constituted under the Act and which have to be dealt with by these Tribunals in a quasi judicial manner. We cannot overlook the fact that the validity of the Act particularly in reference to its provisions prescribing the grant and refusal of permits, has been sustained substantially because this important function has been left to the decision of the Tribunals constituted by the Act and these Tribunals are required to function fairly and objectively with a view to exercise their powers quasijudicially, and so, any attempt to trespass on the jurisdiction of these Tribunals must be held to be outside the purview of section 43A. We are conscious of the fact that the impugned order was issued after and presumably in response to the decision of Madras High Court in the case of C.S.S. Motor Service(1) though it Would appear that what the High Court had suggested was presumably the making of the rules under section 68 of the Act. It cannot also be disputed that the main object of the State Government in issuing this order was to avoid vagaries, and introduce an element of certainty and objec tivity, in the decision of rival claims made by applicants in respect of their applications for permits. It may have been thought by the State Government that if the Tribunals are allowed to exercise their discretion without any guidance, it may lead to inconsistent decisions in different areas and that may create dissatisfaction in the public mind. It does appear, however, that in some other States the problem of granting permits has been resolved without recourse to the marking 15 system. But apart from that, even if it is assumed that the, marking system, if properly applied, may make the decisions in regard to the grant of permits more objective, fair and consistent, we do not see how that consideration can assist the decision of the problem raised before us If the State Government thinks that the application of some kind of marking system is essential for a fair administration of the Act, it may adopt such course as may be permissible under the law. Section 47(1)(a) requires inter alia that the interests of the public generally have to be borne in mind by the Regional Transport Authority in considering applications for stage carriage permits. The said section refers to other matters which have, to be borne in mind. It is unnecessary to indicate them for our present purpose. The Legislature may amend section 47 by indicating additional considerations which the Transport Authority has to bear in mind; or the Legislature may amend section 47 by conferring on the State Government expressly and specifically a power to make rules in that behalf or the State Government may proceed to make rules under section 68 without amending section 47. These are all possible steps which may be taken if it is thought that some directions in the nature of the provisions made by the impugned order must be issued. That, however, is a matter with which we are not concerned and on which we wish to express no opinion. As this court has often emphasised, in constitutional matters it is of utmost importance that the court should not make any obiter observations on points, not directly raised before it for its decision. Therefore, in indicating the possible alternatives which may be adopted if the State Government thinks that the marking system helps the administration of the Act, we should not be taken to have expressed any opinion on the validity of any of the courses specified. That leaves only one point to be considered. Mr. Ganapathy Iyer urged that even though the impugned order may be valid, that is no reason why the order passed by the Appellate Tribunal which has been confirmed by the High Court in the present writ proceedings should be reversed. He argues that what the Appellate Tribunal has done, is to act upon the principles which are sound and the fact that these principles have been enunciated by an invalid order should not nullify the decision of the Appellate Tribunal itself. Thus presented, the argument is no doubt plausible; but a closer examination of the argument reveals the fallacy under lying it. If the Appellate Transport Authority had considered these, matters on its own without the compulsive force of the impugned order, it would have been another matter , but the order pronounced by the Appellate Authority clearly and unambiguously indicates that it held and in a sense rightly, that it was bound to follow the impugned order unless in the exercise of its option it decided to depart from it and was prepared to record its reasons for adopting that course. It would, We think, be idle to suggest that any Transport Authority functioning in the State would normally refuse to comply with the order issued by the State Government itself. Therefore, 16 we have no hesitation in holding that the decision of the Appellate Tribunal is based solely on the provisions of the impugned order and since the said order is invalid, the decision itself must be corrected by the issue of a writ of certiorari. In the result, we allow the appeal, set aside the order passed by the High Court in Writ Petition No. 692 of 1959 and direct that the said Writ Petition be allowed. There would be no order as to costs throughout. In accordance with this decision a writ of certiorari shall be issued setting aside the order passed by the Appellate Tribunal and remanding the matter to the Regional Transport Authority for disposal in accordance with law.

IN-Abs

The appellant is a bus operator in the State of Madras. On an invitation for applications for the grant of two stage carriage permits he submitted his applications along with many others. The State Transport Authority considered the merits of the application awarding marks in accordance with the principles prescribed by Madras G.O. No. 1298, dated April 28, 1956 issued under section 43A of the inserted by the Madras Amending Act 20 of 1948. The Transport Authority on this basis granted the two permits to the appellant. Against this order a number of appeals were filed by some of the unsuccessful applicants including respondents Nos. 2 and 3 in the present appeal. The Appellate Tribunal re allotted marks in accordance with the above G.O. and respondents 2 and 3 having secured the maximum number of marks were granted the permits. On the rejection of a petition under article 226 of the Constitution and after appealing without success to a Division Bench the appellant applied for a certificate to appeal to this Court which rejected. The present appeal was filed on special leave granted by this Court. It was contended on behalf of the appellant before this Court that since Madras G.O. No. 1298, dated April 28, 1956, purports to issue direction to the Transport Authority in the discharge of its quasi judicial functions it is beyond the powers conferred by section 43A of the which authorises only the issue of directions to the said authority in the discharge of its administrative functions and therefore it is bad. Held, (i) Section 43A confers power on the State Government to issue orders and directions to the State Transport Authority only in relation to its administrative functions. M/s. Raman and Raman vs The State of Madras [1959] 2 S.C.R. 227, relied on. (ii)It is well settled that sections 47, 48, 57, 60, 64 and 64A deal with quasi judicial functions and when the transport authorities are dealing with applications for permits and evaluating the respective claims of the parties, the transport authorities are discharging quasi judicial functions and their orders are quasi judicial orders subject to the jurisdiction of the High Court under article 226. L/P(D)1SCI 1 2 New Prakash Transport Co. Ltd. vs Suwarna Transport Co. Ltd. M/s Raman and Raman Ltd. vs State of Madras, , B. Abdulla Rowther vs State Transport Appellate Tribunal, Madras, A.I.R. 1959, S.C. 896, relied on. (iii) In interpreting section 43A it is legitimate to assume that the legislature intended to respect the basic and elementary postulate of the, rule of law that in exercising their authority and discharging their quasi judicial functions, the tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgement. It is of the essence of fair and objective administration of law that the decision of judges or tribunals must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. (iv) The impugned order is outside the purview of section 43A inasmuch as it purports to give directions in respect of matters which have been entrusted to the tribunals constituted under the Act and which have to be dealt with by them in quasi judicial manner. (v) The decision of the appellate Tribunal is solely based on the provisions of the impugned order and since the said order is invalid, the decision is also bad.

No. 87 of 1962. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. section section Shukla, for the petitioner. N. section Bindra and R. H. Dhebar, for respondent No. 1. M. C. Setalvad and D. N. Mukherjee, for respondent No. 2. March 6, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C. J. This is a writ petition filed under article 32 of the Constitution by which the eight petitioners challenged the validity of section 87B of the Code of Civil Procedure. These petitioners claim that they and respondent No. 2, His Highness Maharaja Kirit Vikram Kishore Deb Varman, are members off a joint Hindu family governed by the Dayabhaga School of Hindu Law. Under a family custom which, it is alleged, has prevailed in this family for centuries, the Raj as well as the Zamindari properties belonging to the family are held by a single individual and the other members of the family are entitled to maintenance according to the status of the family with the right to succession to the Raj as well as the Zamindari properties under the general rule of succession which prevails and which is not inconsistent with the family custom. The head of the family was, by family custom, called the Chief and he was chosen from among the members of the Ruling Deb Barman family and used to be installed on the Gaddi or Throne. The petitioners further alleged that the Ruler when so chosen and installed held the State and Zamindari as life tenant subject to the usual charges for maintenance of the members of the Ruling Family. In course of time, the maintenance allowance of the members of the Ruling family came to be fixed arbitrarily by the Rulers without any regard to their status and their legiti mate needs, and that led to discontent among them which re sulted in a serious agitation raised by them during the lifetime of the late Maharaja Bir Bikram. In consequence, at the time of Regency of Her Highness Rajmata during the minority of the last Ruler Maharaja Kirit Bikram, a Committee was appointed on the 20th June, 1949, to consider the question of allowances payable to the members of the Ruling family. However, before the Committee could submit its report, the State of Tripura merged with and became part of India and was constituted into a separate Province under the Chief Commissioner. After merger, the then Chief Commissioner Mr. Hazra submitted a proposal to the Ministry of States on the 12th April, 1951, recommending a revision of allowance paid to the 57 maintenance holders. The ministry of States did not accept this proposal and refused to make any increase in the total expenditure on the allowances to the maintenance holders. 'This order was passed on the 23rd May, 1951. Later, the then ,officiating Chief Commissioner Maj. Chatterjee stopped the maintenance allowances paid to some of the maintenance,holders without justification and that led to the appointment of another Committee to go into the matter, but the Committee could never function with the result that the condition of the majority of the maintenance holders grew worse day by day. That is why the present eight petitioners desire to file a suit against respondent No. 2 for appropriate reliefs. They want to implead the Union of India also to that suit, because it is their case that either the Ruler or the Union of India is responsible to pay them appropriate and adequate maintenance allowance. Before filing a suit in a competent court of law against respondent No. 2, the petitioners are required to obtain the sanction of the Union Government under section 87B C.P.C., as respondent No. 2 is a Ruler of a former Indian State within ,the meaning of the said section. A request made by the petitioners for such sanction was rejected by the Central Government. That is how the present petition has been filed challening the validity of the said section. The petitioners contend that the said section is ultra vires, because it contravenes articles 14 and 19(1)(f) of the Constitution and as such, the condition precedent prescribed by it which requires the previous sanction of the Central Government before filing a suit against the Ruler of an Indian State therein mentioned, is invalid and inoperative. That is the genesis of the present writ petition. At the hearing of this writ petition, Mr. Shukla for the petitioners fairly conceded that the challenge to the validity of section 87B, C.P.C., on the ground that it contravenes article 14 has been repelled by a recent decision of this Court in Mohan Lal Jain vs His Highness Maharaja Shri Sawai Man Singhji(1). He, however, attempted to argue that some aspects of the problem had not been pressed before the Court when it decided the case of Mohan Lal Jain (1), and so, he wanted us to reconsider that question. We have not allowed Mr. Shukla to raise this contention, because we are satisfied that the decision in Mohan Lal Jain 's case concludes the point and it would not be reasonable to reconsider it as suggested by him. We ought to add that we are dealing with Mr. Shukla 's argument that section 87B, C.P.C., is invalid because it contravenes article 19(1)(f), on the basis that the case of Mohan Lal Jain(1) has correctly repelled the challenge against the said section ,under article 14. (1) [1962] 1 S.C.R. 702. 58 That leaves the challenge under article 19(1) (f) to be considered. In dealing with this point, it will be necessary to examine the background, both historical and legislative, of section 87B. Section 87B(1) provides that the provisions of section 85 and of sub sections (1) and (3) of section 86 shall apply in relation to the Rulers of any former Indian State as they apply in relation to the Ruler of a foreign State. Section 87B(2) defines a 'former Indian State ' and a "Ruler". It is not necessary to refer to these provisions, because it is common ground that respondent No. 2 is a Ruler of a former Indian State within the meaning of section 87B(2). In appreciating the effect of section 87B(1), it is necessary to consider section 86. Section 86 deals with suits against foreign Rulers, Ambassadors and Envoys. Section 86(1) provides that no Ruler of a foreign State may be sued in any court other wise competent to try the suit, except with the consent of the Central Government certified in writing by a Secretary to that Government to that effect. The proviso excepts from the application of section 86(1) cases where tenants of immovable property seek to sue such a Ruler. Section 86(2) lays down that the consent prescribed by section 86(1) may be given either with respect to specified suits or to several specified suits, or with respect to all suits of any specified class or classes, and it requires that the sanction should specify in the case of any suit or class of suits the court in which the Ruler may be used. It then adds that such consent shall not be given unless it appears to the Central Government that the Ruler satisfies one or the other of the four conditions prescribed by clauses (a) to (d). Section 86(3) prohibits the arrest of any Ruler of a foreign state under the Code and provides that except with the consent of the Central Government certified in writing by a Secretary to that Government, no decree shall be executed against the property of any such Ruler. Section 86(4) extends the application of section 86 to the persons specified in clauses (a) to (c) of that sub section. The result of the extension of section 86(1) and (3) to the cases falling under section 87B(1) is that the sanction of the Central Government is a condition precedent to the institution of a suit against the Ruler of any former Indian State. It is this requirement which the petitioners have not been able to comply with in respect of the suit which they intend to file against respondent No. 2, because the Central Government has refused to accord sanction to the said intended suit. Now, the legislative background of the provisions contained in section 86 and section 87B is well known. Prior to the present Constitution, Part IV of the Code of Civil Procedure contained provisions in respect of suits in specified cases. These cases were divided into three parts. Section 79 to 82 covered cases of suits by or against the Crown or Public Officers in their official capacity. Sections 83 to 87 dealt with suits by aliens and by or against foreign Rulers and Rulers of Indian States; and 59 section 88 had reference to interpleader suits. After the Constitution came into force, the President made certain adaptations by the Adaptations of Laws Order, 1950. As a result of article 372, the protection afforded to Foreign Rulers and Rulers of Indian States continued, and that is how section 87B came to be enacted in the statute book. It is in the light of this legislative background that the plea raised by the petitioners in the present proceedings has to be examined. The legislative background to which we have referred cannot be divorced from the historical background which is to be found for instance, in article 362. This Article provides that in the exercise of the power of Parliament or of any legislature of any State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause (1) of article 291 with respect to the personal rights, privileges and dignities of a Ruler of an Indian State. This has reference to the ,covenants and agreements which had been entered into between the Central Government and the Indian Princes before :all the Indian States were politically completely assimilated with the rest of India. The privilege conferred on the Rulers ,of former Indian States has its origin in these agreements and covenants. One of the privileges is that of extra territoriality and exemption from civil jurisdiction except with the sanction of the Central Government. It was thought that the privilege which was claimed by foreign Rulers and Rulers of Indian States prior to the independence of the country should be continued even after independence was attained and the States had become part of India, and that is how in 1951, the Civil Procedure Code was amended and the present sections 86, 87, 87A and 87B came to be enacted in the present form. Considered in the light of this background, it is difficult to see how the petitioners can successfully challenge the validity of the provisions contained in section 87B. In the case of Mohan Lai Jain(1) this Court has held that the ex Rulers of Indian States form a class by themselves and the special treatment given to them by the impugned provisions cannot be said to be based on unconstitutional discrimination. There is, of course, discrimination between the ex Rulers and the rest of the citizens of India, but that discrimination is justified having regard to the historical and legislative background to which we have just referred. If that be so, it would follow that the restriction imposed on the petitioners ' fundamental right guaranteed by article 19(1)(f) cannot be said to be unreasonable. The restriction in question is the result of the necessity to treat the agreements entered into between the Central Government and the ex Rulers of Indian, States as valid and the desirability, of giving effect to the assurances given to them during the (1) [1962] 1 section C. R. 702. 60 course of negotiations between the Indian States and the Central Government prior to the merger of the States with India. We have to take into account the events which occurred with unprecedented swiftness after the 15th August, 1947, and we have to bear in mind the fact that the relevant negotiations carried on by the Central Government were inspired by the sole object of bringing under one Central Government the whole of this country including the former Indian States. Considered in the context of these events, we do not think it would be possible to hold that the specific provision made by section 87B granting exemption to the Rulers of former Indian States from being sued except with the sanction of the Central Government, is not reasonable and is not in the interests of the general public. It is true that the restriction works a hardship so far as the petitioners are concerned; but balancing the said hardship against the other considerations to which we have just referred, it would be difficult to sustain the argument that the section itself should be treated as unconstitutional. Before we part with this matter, however, we would like to invite the Central Government to consider seriously whether it is necessary to allow section 87B to operate prospectively for all time. The agreements made with the Rulers of Indian States, may, no doubt, have to be accepted and the assurances given to them may have to be observed. But considered broadly in the light of the basic principle of the equality before law, it seems somewhat odd that section 87B should continue to operate for all time. For past dealings and transactions, protection may justifiably be given to Rulers of former Indian States; but the Central Government may examine the question as to whether for transactions subsequent to the 26th of January 1950, this protection need or should be continued. If under the Constitution all citizens are equal, it may be desirable to confine the operation of section 87B to past transactions and not to perpetuate the anomaly of the distinction between the rest of the citizens and Rulers of former Indian States. With the passage of time, the validity of historical considerations on which section 87B is founded will wear out and the continuance of the said section in the Code of Civil Procedure may later be open to. serious challenge. There is also another aspect of the matter to which we must refer in this connection. In considering the question as to whether sanction should be granted to a person who intends to sue a Ruler of a former Indian State, it is advisable that the authority concerned should ordinarily, if not as a matter of course, allow such sanction, because in the present set up it does not appear very satisfactory that an intended action against the Ruler of a former Indian State should be stifled by refusing to grant the litigant sanction under section 87B. Where frivolous claims are set up by intending litigants, refusal to 61 give sanction may be justified ; but where genuine disputes arise between a citizen and a Ruler of a former Indian State and these disputes, prima facie, appear to be triable in a court of law, it would not be fair or just that the said citizen should be prevented from inviting a court of competent jurisdiction to deal with his dispute. If the power to grant sanction is exercised in a sensible way and is not used for stifling claims which, are not far fetched or frivolous, that may prevent the growth of discontent in the minds of litigants against the artificial provision prescribed by section 87B. In the present proceedings, it does appear, prima facie, that the petitioners have a genuine grievance against the Central Government 's refusal to, accord sanction to them to get a judicial decision on the dispute between them and respondent No. 2. That, naturally is a matter for the Central Government to consider. However, since it is not possible to accede to the petitioner 's argument that section 87B is invalid, we see no alternative but to dismiss the writ petition. In the circumstances, there would be no order as to costs. Petition dismissed.

IN-Abs

The petitioners applied for the consent of the Central Government under section 87B of the Code of Civil Procedure to sue the Maharaja of Tripura, Ruler of a former Indian State, which has merged with India. They wanted to implead the Union of India as well, as party to the suit as their case was that they were entitled, as members of a joint Hindu family to receive either from the said Ruler or from the Union appropriate maintenance allowance under the custom of the Ruling family. Consent having been refused, they applied to this Court under article 32 of the Constitution. Their case was that section 87B of the Code in granting exemption to Rulers of former Indian States from being sued except with the consent of the Central Government contravened articles 14 and 19(1)(f) of the Constitution. Held, that in view of the previous decision of this Court section 87B of the Code of Civil Procedure was no longer open to challenge under article 14 of the Constitution. Mohan Lal Jain vs His Highness Maharaja Shri Sawai Man Singhji [1962] 1 S.C.R. 702, referred to. Regard being had to the legislative and historical back ground of section 87B of the Code, it could not be said that, that section in giving special treatment to ex Rulers had imposed an unreasonable restriction on the petitioner 's fundamental rights. Motivated as it was by the sole object of bringing the entire country including the former Indian States under one Central Government, it must be held to be reasonable and in the interest of the general public. But considered in the light of the basic principle of equality before law it would be odd to allow the section to continue prospectively for all time to come. It would therefore, be for the Central Government to consider whether it should not be confined to dealings and transactions previous to January 26, 1950. Nor should the section be used to stifle claims except such as are clearly far fetched or frivolous and consent should ordinarily if not as matter of course, be granted in the case of a genuine dispute which prima facie appears to be triable by a court of law such as the present one.

minal Appeal No. 156 of 1961. Appeal from the judgment and order dated June 15, 1961, of the Calcutta High Court in Criminal Appeal No. 745 of 1959. D. N. Mukherjee, for the appellant. P. K. Chakraborty and P. K. Bose, for the respondent. March 6, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. Sunil Kumar Paul has preferred this appeal, after obtaining a certificate from the Calcutta High Court under article 134(1)(c) of the Constitution. The facts leading to the appeal are these. The appellant was a clerk in the office of the Sub Divi sional Health Officer at Barrackpore in 1955 56. He used to prepare bills of the establishment, to present them at the ,Sub treasury and later present them at the State Bank at Barrackpore, to receive payment in cash and to make over that amount to the Sub Divisional Health Officer. Certain bills were drawn under the heading '38 Medical '. Certain bills were to be drawn under the heading '39 Public Health '. Some other bills were drawn under other headings. On October 5, 1956, the appellant presented a bill for Rs. 1,769 out of Which a sum of Rs. 5 10 0 was to be credited in the Postal Life Insurance Ledger and the balance of Rs. 1,763 6 0 was to be received in cash. This bill was duly passed by the Sub Treasury and was subsequently presented to the Bank on October, 6, 1956 for payment of Rs. 1,763 6 0. 'The Bank paid this amount to the appellant. The amount was 72 not paid to the Sub Divisional Health Officer. In fact, the records of the Office of the Sub Divisional Health Officer did not refer to any such bill being prepared and submitted to the Sub Treasury and the Bank for payment. A bill for practically the same items which were mentioned in the bill cashed on October 6, was however presented on October 1, 1956. It was for an amount of ' Rs. 1,767 out of which Rs. 5 10 0 were to be credited to the PLI account ledger and the balance of Rs. 1,761 6 0 were to be paid in cash. The amount of this bill was received on October 1, and was duly handed over to the Sub Divisional Health Officer. It may be mentioned that this bill. cashed on October 1, 1956 was at first prepared for Rs. 1,769 and the amount to be received in cash was to be Rs. 1,763 6 0 but prior to this encashment, a correction was made at some stage ', and the bill was reduced by Rs. 2 in the total amount and consequently in the amount to be paid in cash. The fact of the presentation of a bill for its encashment of Rs. 1,763 6 0 on October 6, 1956 came to the notice of the. Divisional Health Officer at the instance of the Accountant General and on enquiry it was found that no such bill had been actually presented by his office for encashment and that no such amount was received by him. This led to a complaint and further enquiries and investigation which ended in the prosecution of the appellant. The case was made over to the Special Judge by the Government in view of the provisions of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (W. B. Act XXI of 1949), hereinafter called the Act, as it involved an offence punishable under section 409 I.P.C. The Special Judge tried the appellant for that offence and convicted him and sentenced him to rigorous imprisonment for two years and to pay a fine of Rs. 2,000. The appellant went in appeal to the High Court of Calcutta. The High Court agreed with the appellant 's contenion that no offence under section 409 I.P.C. had been made out, but held.that he was proved to have committed an offence under section 420 I.P.C. It accordingly altered his conviction from an offence under section 409 I.P.C. to one under section 420 I.P.C., for cheating the employees of the State Bank, Barrackpore, by representing that the bill for Rs. 1,769 gross and Rs. 1.763 6 0 cash drawn on October 6, 1956, was a genuine bill drawn by the Sub Divisional Health Officer, and thereby dishonestly inducing the Bank 's staff to make over the sum of Rs. 1,763 6 0 to him and sentenced him to rigorous imprisonment for one year and to fine of Rs. 2,000. It is against this order that this appeal, has been preferred. 73 The facts found by the High Court are sufficient to justify the finding that the appellant committed the offence under section 420 I.P.C. Learned counsel for the appellant has, urged the following points: (1) A case involving an offence under section 420 I.P.C. cannot be allotted for trial to a Special Court by the State Government when such an offence is not committed by a public servant while purporting to act as such public servant. (2) The Special Court could not take recourse to the provisions of section 237 Cr. P.C., and if it could, the requiremen ts of section 237 Cr. P.C. were not satisfied in the present case, and that consequently the High Court could not have altered the conviction of the appellant from an offence under section 409 I.P.C. to one under section 420. (3) The ingredients of an offence under section 420 I.P.C. were neither alleged nor proved by the prosecution. (4) The accused has been prejudiced on account of the absence of the necessary allegations and the omission to frame a charge for an offence under s.420 I.P.C. and therefore the provisions of section 537 Cr. P. C. would not cure this defect in trial. To appreciate the first contention, reference may be made to the relevant provisions of the Act. They are: "4(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898, or in any other law, the offences specified in the Schedule shall be triable by Special Courts only: Provided that when trying any case, a Special Court may also try any offence other than an offence specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898., be charged at the same trial. (2) The distribution amongst Special Courts of cases involving offences specified in the Schedule, to be tried by them, shall be made by the State Government. (2) Save as provided in sub section (1). . the provi sions the Code of Criminal Procedure, 1898, shall, so far as they are not inconsistent with this Act, apply to the pro ceedings of a Special Court; and for the purposes of the said provisions, a Special Court shall be deemed to be a Court of Session trying cases without a Jury, and a person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. " THE SCHEDULE * * * 2. An offence punishable under section 409 of the Indian Penal Code. , if committed by a public servant or by a person dealing with property belonging to Government as an agent of Government in respect of property with which he is entrusted, or over which he has dominion in his capacity of a public servant or in the way of his business as such agent. An offence punishable under section 417 or section 420 of the Indian Penal Code, if committed by a public servant or by a person dealing with property belonging to Government as an agent of Government, while purporting to act as such public servant or agent. The Government notification allotting the present case to the Special Court is not on the record and therefore what its actual contents were cannot be stated with any precision. It may however be assumed that it mentioned the offence involved in the case to be that under section 409 I.P.C., and, possibly, did not state the various facts which went to establish that offence against the appellant. Section 409 I.P.C. is mentioned in the Schedule referred to in sub section (2) of section 4 of the Act. The State Government was therefore competent to allot the case involving that offence to the Special Court. In fact it had to allot the case to the Special Court in view of the provision of sub section (1) of section 4 to the effect that the offences specified in the Schedule shall be triable by Special Courts only. The question therefore really is whether the Special Court could try the appellant 75 for the offence under section 420 I.P.C. An offence under section 420 I.P.C. when committed in certain circumstances is also men tioned in the Schedule. It has to be tried by Special Courts only when it is committed by a public servant while purporting to act as such. There is no doubt that the appellant is a public servant. This has not been disputed. Learned counsel for the appellant, Mr. Mukherjee, has urged that the expression 'while purporting to act as such public servant ' be construed to mean 'while purporting to act in the discharge of official duties ' and that presentation of a false bill could not be in the discharge of official duty. Such presentation may not be in the discharge of official duty, but the question is different and is as to whether the presentation of a false bill was made by the public servant purporting to do so in the discharge of his duties. The appellant did present the false bill purporting to present it in the discharge of his duties as a clerk of the Office of the Sub Divisional Health Officer who was duly authorised to present bills and cash them. Reliance is placed on the case reported as Bhajahar Mondal vs The State or West Bengal(1) in support of the contention that the appellant should not have been tried by the Special Court of the offence under section 420 I.P.C. when the case was allotted as one involving an offence under section 409 I.P.C. The facts of that case were very different. The order allotting the case mentioned the offence of which the accused was to be tried to be an offence under section 161 read with section 116 I.P.C. The order was made on November 27, 1952. Prior to this date, on July 28, 1952, abetment of an offence under section 161 I.P.C. was made a distinct offence under section 165 A I.P.C. by the Criminal Law Amendment Act XLVI of 1952 An offence under section 165A was not mentioned in the Schedule to the Act as it stood on November 27, 1952. This Court held that the notification of the Government making over the case to the Special Court was bad as the case made over related to no existing offence. Such cannot be said of the Government notification allotting the case in the present appeal to the Special Court, as on the date of such notification there existed an offence under section 409 I.P.C. and it was included in the Schedule to the Act. On the facts proved, it is not to be doubted that the appellant presented the bill for Rs. 1,763 6 0 at the State Bank oil October 6, purporting to act as the clerk of the Sub Divisional Health Officer. The bill presented was on be half of that officer. The Bank made the payment to him a (1) ; 76 the messenger of that officer duly authorised to receive payment in cash. It follows that the offence under section 420 committed by the appellant would be committed by him as a public servant purporting to act as such, and that a case involving this offence also could have been allotted to the Special Court by the State Government for trial. The Special Court was therefore competent to try the accused for this offence if the facts proved established it. Apart from the consideration that the offence of cheating of which the appellant accused has been convicted fell within the offences mentioned in the Schedule, the appellant could be tried by the Special Court for this offence in view of the proviso to section 4. The proviso authorizes the Special Court, when trying a case involving an offence specified in 'he Schedule to try any offence other than that offence with which the accused may be charged at the same trial in accordance with the provisions of the Code of Criminal Procedure. The accused could be charged with an offence under section 420 I.P.C. if he could be tried for this offence at the trial for an offence under section 409 I.P.C. He could be so tried in view of is. 236 and 237 Cr. P. C. It is urged for the appellant that the provisions of section 236 Cr. P. C. would.apply only to those cases where there be no doubt about the facts which can be proved and a doubt rises as to which of the several offences had been committed on the proved facts. Sections 236 and 237 read: "236. If a single act or series of acts is of such a nature that it is doubtful which of several offences the facts which can be proved will constitute, the accused may be charged with having committed all or any of such offences, and any number of such charges may be tried at once; or he may be charged in the alternative with having committed some one of the said offences. Illustrations (a) A is accused of an act which may amount to theft, or receiving stolen property, or criminal breach of trust or cheating. He may be charged with theft, receiving stolen property, criminal breach of trust and cheating, or he may be charged with having committed theft, or receiving stolen property, or criminal breach of trust or cheating. 77 237. If, in the case mentioned in section 236, the accused is charged with one offence, and it appears in evidence that he committed a different, offence for which he might have been charged ' under the provisions of that section, he may be, convicted of the offence which he is shown to have committed, although he was not charged with it. Illustration A is charged with theft. It appears that he committed the offence of criminal breach of trust, or that of receiving stolen goods. He may be convicted of criminal breach of trust or of receiving stolen goods (as the case may be) though he was not charged with such offence. " The framing of a charge under section 236 is, in the nature of things, earlier than the stage when it can be said what facts have been proved, a stage which is reached when the court delivers its judgment. The power of the Court to frame various charges contemplated by section 236 Cr. P. C. therefore arises when it cannot be said with any definiteness, either by the prosecutor or by the Court, that such and such facts would be proved. The Court has at the time of framing the charges, therefore to consider what different offences could be made out on the basis of the allegations made by the prosecution in the complaint or in the charge submitted by the investigating agency or by the allegations made by the various prosecution witnesses examined prior to the framing of the charge. All such possible offences could be charged in view of the provisions of section 236 Cr. P. C. as it can be reasonably said that it was doubtful as to which of the offences the facts which could be ultimately proved would constitute. The facts which must have been alleged prior to the stage of the framing of the charge in the present case must have been what had been stated in the charge sheet submitted by the Investigating Officer, 24 Parganas, which is printed at p. 3 of the appear record. This charge sheet narrates in the column meant for the name of offences and circumstances connected with it: "that on the 6th October 1956 Sunil Kumar Paul, a Public servant in the employment of the office of the Sub Divisional Health Officer, Barrackpore i.e., (clerk) dishonestly drew Rs. 1,763 6 0 excluding Postal Life Insurance deduction of Rs. 5 10 0 from the State Bank of India, Barrackpore Branch by submitting a false duplicate Estt. Pay Bill 78 for the office of the said S.D.H.O., Barrackpore. The money drawn was not credited to the office of the Sub Divisional Health Officer, Barrackpore. " It is practically on these facts that the conviction of the appellant for an offence under section 420 I.P.C. has been found ed. It follows that the Special Court could therefore have framed a charge under section 420 I.P.C. at the relevant time if it had been of the opinion that it was doubtful whether these facts constitute an offence under section 409 I.P.C. as stated in the charge sheet or an offence under section 420 I.P.C. When a charge under section 420 I.P.C. could have been framed by the trial Court by virtue of section 236 Cr. P.C. that ,Court or the appellate Court can, in law, convict the appellant of this offence instead of an offence under section 409 I.P.C. if it be of the view that the offence of cheating bad been established. This would be in accordance with the provisions of section 237 Cr. P. C In Begu vs The King Emperor(1) sections 236 and 237 were construed by Viscount Haldane thus: "The illustration makes the meaning of these words quite plain. A man may be convicted of an offence, although there has been no charge in respect of it, if the evidence is such as to establish a charge that might have been made. That is what happened here. The three men who were sentenced to rigorous imprisonment were convicted of making away with the evidence of the crime by assisting in taking away the body. They were not charged with that formally, but they were tried on evidence which brings the case under section 237. " This was approved by this Court in Ramaswamy Nadar vs The State of Madras(2). In this case, the accused, acquitted of an offence under section 420 I.P.C. was convicted by the High Court of an offence under section 403 I.P.C. This Court held that the High Court could do so. On facts, however, this Court did not find the offence under section 403, proved. In the State of Andhra Pradesh vs Kandimalla Subbaiah(3) it was held that while a Special Judge appointed under section 6 of the Criminal Law Amendment Act (XLVI of 1952) had juris diction to try cases under section 5 of the Prevention of Corruption Act, he could, under section 7(3) of the Criminal Law Amendment (1) 52 I.A. 191. (2) (3) , 203. 79 Act try other offences under the Code of Criminal Procedure if the accused could be charged with them at the same trial and that therefore the accused could be tried at the trial for an offence under section 5 of the Prevention of Corruption Act for an offence under section 120B read with sections 466, 467, 420 I.P.C. and that the other accused who had abetted the commission of these offences could also be tried. Sub section (3) of section 7 of the Criminal Law Amendment Act provided that when trying any case a Special Judge might also try any offence other than an offence specified in section 6 with which the accused might, under the Code of Criminal Procedure, 1898, be charged at the same trial. In support of his contentions, learned counsel for the appellant referred to the case reported as Nanak Chand vs The State of Punjab.(1) wherein it was stated at p. 1212: "The provisions of section 236 can apply only in cases where there is no doubt about the facts which can be proved but a doubt arises as to which of several offences have been committed on the proved facts in which case any number of charges can ' be framed and tried or alternative charges can be framed. . . In the present case there is no doubt about the facts and if the allegation against the appellant that he had caused the injuries to the deceased with takwa was established by evidence, then there could be no doubt that the offence of murder had been committed. " This does not help the appellant 's contention as the alle gations in that case if proved could establish, according to the Court, the offence of murder only and therefore there was no room for any doubt about the nature of offence com mitted and for the application of section 236 Cr. P. C. In that case, the appellant was tried along with others for an offence under section 302 read with section 149 I.P.C. The Sessions Judge convicted the appellant and a few others under section 302 read with section 34 I.P.C. The High Court acquitted the others and altered the conviction of the appellant to the offence under section 302 I.P.C. It was, in this setting, that this Court held that on the basis of the specific allegation that the appellant had struck the deceased with a takwa, there could be no doubt of that fact constituting an offence under section 302 and not an offence under section 302 read with section 149 I.P.C. We therefore hold that at the trial of the appellant for an offence under section 409 I.P.C., in this case, the appellant could have also been charged for an offence under section 420 I. P. C. in view of section 236 of the Code of Criminal Procedure. (1) ; 80 It is then urged for the appellant that under the proviso to section 4 of the Act, the Special Court can try any other offence only when the accused is specifically charged with that offence. The language of the proviso does not lead to such a conclusion. It provides for the trial of the accused for any other offence provided the accused could be charged with that offence at the same trial under the provisions of the Code of Criminal Procedure. The proviso does not say that the charge must be framed, though of course, if the trial Court itself tries the accused for a certain offence, it will ordinarily frame a charge. The proviso empowers a Court to try the accused for that offence and has nothing to do with the power of the trial, court or of the appellate Court to record a conviction for any other offence when an accused is being tried with respect to an offence mentioned in the Schedule. The Court 's power to take recourse to the provisions which empower it to record a conviction for an offence not actually charged, depends on other provisions of the Code and the Act. Section 5(2) of the Act provides that the provisions of the Code of Criminal Procedure so far as they are not incon sistent with the Act, would apply to the proceedings of the Special Court and for the purposes of these provisions, the Special Court could be deemed to be a Court of Sessions. There is nothing in the provisions of section 237 of the Code of Criminal Procedure which is inconsistent with the provisions of the Act. Section 237 simply empowers the Court to convict an accused of the offence with which he could have been charged under section 236, even when he had not been charged with it. Section 237 really deals with the final orders which the Court can pass on a trial of an accused for a certain offence. In view of the proviso to sub section (1) of section 4, the Special Court could have tried the appellant for the offence under section 420 I.P.C. It did not actually try him for that offence. It was however open to it and to the appellate Court to convict him of the offence under section 420 I.P.C. when trying for an offence under section 409 I.P.C. in view of section 237 of the Code. It has also been urged for the appellant that the proviso to section 4 does not give any power to the Special Court to try an offence which be independent of the offence mentioned in the allotment order. That is to say, the Special Court, in this case, could have tried the appellant only for such offences which will be in some way related to the offence under section 409 I.P.C. It is further urged that the ingredients of the offence under section 420 I.P.C. are absolutely different from the ingredients of the offence under section 409 I.P.C. 81 The ingredients of two must be different from one another and it is therefore not necessary to consider whether the ingredients of the two offences are in any way related. The Court has to see, for the purpose of the proviso, ' whether the accused could be charged with any offence, other than the one referred to in the allotment order, in view of the provisions of the Code. There is nothing in the proviso which could lead to the construction that any limitations other than those laid down by the provisions of the Code of Criminal Procedure were to affect the nature of the offence which could be tried by the Special Court. We are therefore of opinion that the Special Court could try the appellant for the offence under section 420 I.P.C. and that therefore the High Court was right in altering his conviction from that under section 409 to section 420 I.P.C. We have already referred to the statement in the chargesheet that the appellant presented a false bill to the State Bank and cashed it. This allegation is sufficient for the pur pose of the offence under section 420 I.P.C. It was not necessary to allege or to prove that the appellant himself had prepared the false bill. Such an allegation could not be made in the present case in particular, as the bill which was cashed on October 6, could not be traced. The presentation of the bill for encashment carries with it the representation that it is a genuine bill and therefore the allegations in the case attributed misrepresentation to the appellant at the time he presented the bill. It may be mentioned here that if the bill had been a genuine bill, the offence made out in the present case would have been an offence under section 409 I.P.C. In the circumstances, therefore, the appellant cannot be said to be prejudiced in his conviction under section 420 I.P.C. on account of the non framing of the charge, and consequent non trial, under section 420 I.P.C. In fact, in the circumstances of the case, no question of irregularity in the trial arises. The framing of the charge under section 420 I.P.C. was not essential and section 237 Cr. P. C. itself justifies his conviction of the offence under section 420 if that be proved on the findings on the record. The last contention for the appellant was that the sentence is severe. We do not consider a sentence of 1 year 's rigorous imprisonment and a fine of Rs. 2,000 severe. The appeal therefore fails and is dismissed. Appeal dismissed.

IN-Abs

The appellant was tried and convicted by the Special Judge for an offence under section 409 I.P.C. and sentenced to rigorous imprisonment for two years and to pay a fine of ' Rs. 2,000. On appeal, the High Court altered his conviction from an offence under section 409 to one under section 420 I.P.C. for cheating the employees of the State Bank, by representing a, bill as a genuine bill drawn by the Sub Divisional Health Officer, and thereby dishonestly inducing the Bank 's Staff to make over the sum of Rs. 1,763 6 0 to him and sentenced him to rigorous imprisonment for one year and to a fine of Rs. 2,000. On appeal by certificate the appellant mainly contended (i) that a case under section 420 I.P.C. could not be allotted for trial to a Special Court by the Government when such an offence was not committed by a public servant while purport ing to act as such public servant: (ii) that the Special Court could not take recourse to the provision of section 237 Code of Criminal Procedure and if it could, the requirements of section 237 Code of Criminal Procedure were not satisfied and consequently the High Court could not have altered the conviction from section 409 I.P.C. to one under section 420 and (iii) that the accused had been prejudiced ' on account of the absence of a charge under section 420 I.P.C. Held (i) that on the facts proved it must be held that the offence under section 420 committed by the appellant would be committed by him as a public servant purporting to act as such, and that a case involving this offence also could have been allotted to the Special Court by the Government for trial. The Special Court was, therefore, competent to try the accused for this offence if the facts proved established it, Besides, the appellant could be tried by the Special Court for this offence in view of the proviso to section 4 of the West Bengal Criminal Law Amendment Act. Bhajahari Mondal vs State of West Bengal, [1959] S.C.R. 1276, distinguished. (ii) that at the trial of the appellant for an offence under section 409 I.P.C., in this case, the appellant could have also been charged for an offence under section 420 I.P.C., in view of section 236 of ' the Code of Criminal Procedure. 71 In view of the proviso to sub section (1) of section 4 of the Act, the Special Court could have tried the appellant for the offence under section 420 I.P.C. It did not actually try him for that offence. It was however, open to it and to the appellate court to convict him of the offence under section 420 I.P.C., when trying for an offence under section 409 I.P.C., in view of section 237 of the Code of Criminal Procedure. (iii) that in the present case the appellant could not be said to be prejudiced in his conviction under section 420 I.P.C. on account of the non framing of the charge, and consequent non trial, under section 420 I.P.C. In fact, no question of irregularity in the trial arises. The framing of the charge under section 420 I.P.C. was not essential and section 237 Code of Criminal Procedure itself justifies his conviction of the offence under section 420 if that be proved on the findings on the record. Case Law discussed.

Appeals Nos. 52, 53 and 54 of 1950. Appeals from the Judgment and Decree dated the 7th March, 1949, of the High Court of Judicature at Bombay in Appeals Nos. 55 and 54 of 1948, arising out of Decree dated the 29th July, 1948, of the said High Court in its Ordinary Original Civil Jurisdiction in Suits No. 336 of 1945 and No. 786 of 1948. G.S. Pathak (H. J. Umrigar and P. N. Mehta, with him) for the appellant in Civil Appeals Nos. 52 and 54 and respondent in Civil Appeal No. 53, 119 M. C. Setalvad, Attorney General for India (J. B.Dadachanji, with him) for the respondent in Civil Appeals Nos. 52 and 54 and appellant in Civil Appeal No. 53. 1953. May 19. The Judgment of the Court was delivered by MAHAJAN J. These appeals, though they arise out of two different suits, 336 of 1945 and 786 of 1948, can be disposed of by a common judgment, as both these suits were instituted in effect to obtain the same relief. In July, 1944, a struggle commenced between the group of Sir Padampat Singhania and the group of Shri Maneklal Prem Chand for control of the management of the Bombay Life Assurance Co. Ltd. and there was a race for the acquisition of the shares of the company between the two groups. Sir Padampat, the appellant in Civil Appeal No. 54 of 1950, and respondent in the cross appeal No. 53 of 1950, on the 25th July, 1944, purchased through Shri P. N. Gupta, his Bombay agent, 667 shares of the company, 484 out of which belonged to Mr. Reddy, the appellant in C.A. No. 53 of 1950 and respondent in Civil Appeal No. 54 of 1950. This deal was made on his behalf by a firm of share and stock brokers, Bhaidas Gulabdas. The shares were sold at the rate of Rs. 300 per share. On the 29th July, Gupta executed a receipt in favour of Bhaidas Gulabdas acknowledging the receipt of these shares, while Bhaidas Gulabdas as constituted attorneys of Mr. Reddy executed five blank transfer forms in respect of the 484 shares sold by them four for 100 shares each, and one for 84 shares. It is alleged that these transfer forms were ultimately filled in the name of Sir Padampat Sin ghania. Sir Padampat, however, made no application to the company for registration of his name in the register of shareholders till the 11th April, 1945. On an application being made, the company declined to register the shares in his name and intimated to him their refusal to do so on the 8th May, 1945. 120 On the 8th January, 1945, the company, in order to combat the move of Sir Padampat to acquire control of its management, made an application under rule 94 A of the Defence of India Rules for sanction for the issue of further capital. The sanction was granted and the company was authorised within a time limit of six months to increase its capital by a sum of Rs. 4,59,600 by issuing 4,596 shares; otherwise the sanction was to lapse. On the 21st February, 1945, the directors of the company passed a resolution increasing the capital of the company by issuing these 4,596 shares of Rs. 100 each at a premium of Rs. 75 per share. On the existing shares only Rs. 25 per share had been called up. The company therefore decided that the new shares should be offered to the existing shareholders, in the proportion of four shares to every five shares held by the shareholders. Reddy as a shareholder of 534 shares (including 484 shares sold by him on 25th July, but yet not registered in the transferee 's name) thus became entitled to 427 new shares and one fractional certificate. Out of the 427 new shares offered to him he was entitled to 40 shares in his own right which appertained to 50 unsold shares which he still held in the company. The other 384 shares appertained to the shares that he had sold. The company issued a circular letter to every shareholder giving the details of the offer made and along with it sent two forms, A and B. Form A being the application form for allotment of new shares, the shareholder had to subscribe his name to it and return it to the company for allotment of the shares offered accompanied with a cheque for the amount that had to be paid for obtaining the shares. Form B was a renunciation form. In case a shareholder did not want all or any of the shares offered to be allotted to him, he was allowed to renounce his right in favour of some other person. On the 21st February, 1945, Reddy returned to the company form A duly filled in, requesting, the company for allotment of 40 shares out of the new issue, 121 which appertained to the 50 shares he still held in the company. In respect of the balance of 384 shares offered to him and which appertained to the 484 shares sold by him he said nothing. The renunciation form was retained by him. On the 23rd February, 1945, Messrs. J. L. Mehta and N. K. Bhartiya purporting to act on behalf of the purchasers of 484 shares wrote to Reddy asking him to forward to them the, company 's circular letter along with forms A and B as and when received by him, after appending to them his signatures, to enable them to apply for these shares either in Mr. Reddy 's name or in the name of, the transferees. He was told that he was to hold the shares offered when acquired as a trustee for them. On the 28th February, 1945, Messrs. Craigie, Blunt & Caroe, a firm of solicitors, also acting on behalf of the purchasers, wrote to Mr. Reddy a letter to a similar effect. This was prefaced with the remark that the offer of fresh shares by the company was illegal. Without prejudice to that contention, Mr. Reddy was called upon to apply for the newly offered shares and obtain them on their behalf or to send them the application form (A) and the renuniciation form (B) and the fractional certificate to enable them to obtain the new shares offered which appertained to the 484 shares sold by him. The relevant part of this letter reads thus: "We are instructed by our clients, the parties to whom you, sold these shares,Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others to call upon you to apply for the additional shares and fractional certificates now issued to which you have become entitled, and to let us know when you have done so. When allotted to you, you will hold these shares on their behalf and please then hand them to the Hindustan Commercial Bank Ltd., Apollo Street, Fort, Bombay, who will pay you the sum of Rs. 100 for every share allotted to you, which should be accompanied by blank transfer form signed by you as the transferor and the form of renunciation unsigned. They will also pay you the, 122 Proportionate sum on any fractional certificate to which you are entitled on handing over the same to the bank in blank unsigned on or before the 7th March, 1945. If you prefer to do so, please send the form of application 'A ' duly signed by you as well as the renunciation form 'B ' as also the fractional certificate and the relevant application attached thereto unsigned in blank to our client, Mr. N. K. Bhartiya at Second Floor, Rahimtoola House, Homji Street, Fort, Bombay, so as to reach him before the 7th March, 1945, and he will then forward the application to the company on your behalf along with the necessary remittance. Our clients agree to indemnify you against any and every liability which you will incur by applying for the partly paid shares. We are instructed to point out that you are a trustee for our clients by virtue of the fact that you have sold your shares in this company to them pending our clients ' name being entered on the register in respect of the shares which you have sold to them and that you are bound to comply with our clients ' request. " The Hindustan Commercial Bank Ltd. also wrote a letter to Mr. Reddy on the 1st of March, 1945, which reads thus : "With reference to a circular dated the 28th February, 1945, issued by Messrs. Craigie, Blunt and Caroe on behalf of their clients Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others, we have instructions to pay you in respect of all shares of the abovenamed company in the new issue that you deliver to us at Rs. 100 per share, when such shares are allotted to you in exchange for the allotment letters or share scrips with a duly signed transfer deed. We have also instructions to pay you at Rs. 20 per fractional certificate delivered to us on or before the 7th March, 1945. Please note that we shall do the same if the shares and/or fractional certificates are delivered to us in terms of the circular mentioned above. You may send these to us through any 123 bank and the exchange commission will also be paid by us. " These letters indicate that the persons named therein with some undisclosed persons were the purchasers of the shares sold by Reddy and they were the equitable owners of the shares, in spite of the original bargain having been made by Sir Padampat. It was not disclosed in these letters that the persons named therein were mere nominees or benamidars of Sir Padampat. One fact however is beyond dispute that the names of these persons were not entered in the blank transfer forms in the column of transferee, and eventually it was the name of Sir Padampat alone that was entered therein. Mr. Reddy replied to all these communications received by him on the 3rd March, 1945, in the following terms: "With reference to all these communications, I have to state that nearly eight months have elapsed since I sold the shares and the shares are not as yet transferred to the names of the purchasers. I have no objection to give the renunciation forms, duly signed in favour of the real and true purchasers. As regards the requisition made by you in paras. 4 and 5 of the circular letter of 28th February, 1945, 1 fail to understand as to how I am under an obligation to comply with it. I am ready and willing to sign renunciation form in favour of the true purchasers, on my being satisfied that those who are described as the purchasers of my shares are the real and true purchasers of those shares by their producing the transfer forms given by me duly executed by them along with the share certificates. " Whatever else may be said about the attitude of Reddy, he was certainly entitled to know the name of person or persons who were the real purchasers of the shares sold, because he could only respect and comply with the requisition made by those persons and those persons alone and by none else. Not satisfied with this reply and in view of the fact that the last date for making the application for the issue of additional shares 124 was to expire on the 10th March, Sir Padampat instituted suit No. 336 of 1945 on the 8th March, 1945, on the Original Side of the Bombay High Court, inter alia, for the following reliefs against Mr. Reddy as the sole defendant. The company was not impleaded in this suit. That the defendant may be ordered to send and deliver to the plaintiff the application form A annexed to the circular letter for the number of additional shares allotable to him, as also the fractional certificates and the application relating thereto (unsigned and in blank) upon the plaintiff paying to him such sum as this honourable court may direct and/or upon the plaintiff giving such indemnity as this hon 'ble court may deem proper; 2. That the defendant may be ordered upon receiving the certificates of the new shares to hand over the same as also the fractional certificates to the plaintiff together with transfer forms in blank duly signed by him." On the 7th December, 1945, the plaint was amended and an alternative relief for a decree for Rs. 7,29,600 by way of damages was included therein. It was averred in the plaint that upon the sale by defendant of 484 shares the plaintiff became the beneficial owner of those shares and the defendant became a trustee for him of all rights and benefits whatsoever appertaining or accruing to the said shares, that one of such rights was the right and opportunity to apply for shares forming part of the new issue, that the defendant was bound to do all lawful acts in relation to and for the purpose of securing the said benefits for the plaintiff and which the plaintiff might call upon him to do, on terms of the plaintiff indemnifying him against all the consequences thereof, and that the plaintiff was ready and willing to do the same. It was further alleged that unless the plaintiff 's rights were safeguarded by the 10th March, 1945, which was the last day for making application for the shares, he will be irretriev ably prejudiced. Ail application was made for the appointment of a receiver of the application form and 125 letterof renunciation and of the rights of Reddy in the new issue of shares. On the same day Bhagwati J. made an order under Order XL, rule 1, of the Civil Procedure Code, appointing the court receiver, interim receiver of the application form and letter of renunciation and of the rights, if any, of the defendant in the 384 shares of the Bombay Life Assurance Co. Ltd. The receiver was given power to exercise all the rights of the defendant in respect of the said shares on the plaintiff giving the usual undertakings. On the 10th March, 1945, the receiver made a request to the company for the allotment to him of 384 shares of the new issue appertaining to the 484 shares standing in Reddy 's name in the company register and sold by him on the 25th July, 1944. This application was accompanied by a remittance of Rs. 38,400 payable on these shares according to the resolution of the board. The company was requested to register the name of the receiver in the register of members in respect of these shares. On the 30th April, 1945, the company intimated to the receiver that his application for allotment of shares was considered by the board of directors in a meeting held on the 21st April, 1945, and it was resolved to reject the same because Reddy had accepted the company 's offer only to the extent of 40 shares and the offer regarding the balance had lapsed. The result was that the company refused to register the name of the receiver in respect of the new shares on the 30th April, 1945, and it also refused Sir Padampat 's application for registering his name as transferee in respect of the 484 shares of Reddy purchased by him which might have entitled him to retain the new shares in his own name. Sir Padampat having thus failed in getting the newly issued shares regis tered in the name of the receiver had no alternative left but to fight out the suit already instituted against Reddy. He also had another suit instituted to obtain practically the same reliefs which were claimed in his own suit, by the receiver against the company with the leave of the court, namely, suit No, 786 of 1948. 18 126 This suit was filed on the 8th March, 1948, after the lapse of about three years of the company 's rejection of the receiver 's application. It was explained in paragraph 14 of the plaint that the suit had not been filed earlier as the validity of the issue of the new shares 'was being challenged in suit No. 347 of 1945. The prayer in this suit was that the defendant company be ordered to allot to the plaintiff 384 shares mentioned in the application and to put his name on the share register of the company for the said shares. Both the suits were heard by Bhagwati J., who delivered one judgment in both of them and substantially granted the reliefs claimed in both the suits. It was held by the learned judge that the 484 shares which Reddy had sold through Bhaidas Gulabdas had been purchased by Sir Padampat, that as trustee of these shares he as vendor was also a trustee of all. property rights annexed to the shares and that it was the duty of Reddy, when called upon to do so by Sir Padampat on proper safeguard and indemnity for payment, to transfer to Sir Padampat all the benefits which he derived by the issue of the new shares by virtue of his being their legal owner. It was further held that a proper requisition had been made by the beneficial owner on the trustee to obtain for him these shares and that the trustee defaulted in his duty in not complying with that requisition and that the company was also in error in refusing the application of the court receiver for registration of his name as a shareholder in respect of the new shares on the ground that Reddy having applied for 40 shares, his right to obtain the remaining shares had lapsed. It was argued on behalf of the company that the sanction given by the examiner of capital issues having lapsed, no relief could be given against the company and it could not be ordered to allot shares to the plaintiff as there was no available capital which could be issued. Bhagwati J. however took the view that the plaintiff could not be deprived of his rights by reason of this circumstance. In the result he ordered the company to comply with the order and allot within three 127 months 384 shares to the plaintiff after obtaining a fresh sanction for the same from the authority concerned. Before concluding the learned judge said that issues 10 and 11 had not been argued before him and the contentions raised therein seemed to have been abandoned and that even otherwise there was no merit in them. Against this common judgment in both the suits, Reddy and the company preferred separate appeals. The appeal Bench of the High Court allowed the company 's appeal and dismissed the receiver 's suit on the finding that the court receiver was not entitled to the allotment of the new shares in his own name as such. Civil Appeal No. 52 of 1950 has been preferred against this decision. In suit No. 366 of 1945 Reddy 's appeal was allowed to the extent that the plaintiff was held disentitled by the reason of lapse of the sanction to reliefs (A) and (B) granted to him by Bhagwati J. It was however held that he was a trustee of Sir Padampat in respect of the shares of the new issue and he having failed to apply for the new shares was liable to him in damages and the fact that he made an application in respect of 40 shares did not disentitle him to make another application in respect of the 384 shares. It was also held that a proper requisition had been made by the beneficiary upon the trustee to carry out the trust and he had defaulted in complying with the requisition. The suit was accordingly remanded to the trial judge for assessing damages. The principal questions involved in the appeals are: (a)Whether on the facts and circumstances of this ease Reddy was under a legal obligation as a trustee to apply for and obtain on behalf of Sir Padampat 384 new shares which appertained to the shares sold by Reddy to Singhania; (b)whether the requisition made on Reddy by Messrs. Craigie, Blunt & Caroe by their letter dated 3rd March, 1945, was sufficient in law to call upon him to apply for shares of the new issue and whether Reddy committed default as a trustee in not complying with this requisition; 128 (c)whether the conduct of Sir Padampat in not lodging 484 shares for transfer to his name till April, 1945, disentitled him to the reliefs claimed by him; (d)whether the receiver was not entitled to make the requisition and was not the proper person to apply for the new shares in his own name, and whether the company was under no obligation to allot to him the shares; (e)whether the plaintiff was entitled to reliefs (A) and (B) of the plaint in the altered situation of the company. It has been held in the courts below that Sir Padampat became on the 29th July, 1944, the sole beneficial owner of 484 shares sold by Reddy, the legal title to which was vested in him. That having been found, the relation of trustee and cestui que trust was thereby established between them. All that is necessary to establish such a relationship is to prove that the legal title was in the plaintiff and the equitable title in the defendant. The fact that such a relationship qua the 484 shares sold by Reddy existed between the parties to the suit was not disputed by the learned AttorneyGeneral appearing for Reddy, but he contested the view of the High Court that the cestui que trust could not on any principle of equity or law call upon the trustee to bear his burdens and ask him to obtain on his behalf new shares of the company or make further investments in its capital which would involve in its train new obligations and fresh burdens. As observed by Lord Lindley in Hardoon vs Belilios(1) the plainest principles of justice require that cestui que trust who gets all the benefit of the property should bear its burden unless be can show some good reason why his trustee should bear them himself. Mr. Pathak did not contest the proposition that Singhania had any right as a beneficial owner of 484 shares to throw on Reddy any of the burdens incidental to the ownership of those shares. He conceded that Reddy as a trustee had a right to be indemnified by his cestui que trust against calls. The proposition is well recognised and (1) ; 129 the liability is enforced on the principles applicable to the equitable ownership of property. Once it is held established that Reddy was a trustee of the 484 shares sold by him, he as holder of those shares must also be held to be a trustee of all the property rights annexed to the shares. It was conceded that he was not only the trustee of the corpus but also the trustee of the income and of the dividends that he may receive and that he was bound to pay them over to the beneficiary. In E.D. Sassoon & Co. Ltd. vs Patch(1) Pratt J. held that under section 94 of the Indian Trusts Act a transferor holds the shares for the benefit of the transferee to the extent necessary to satisfy its demands and that as the transferee holds the whole beneficial interest and transferor has none, the transferor must comply with all reasonable directions that the transferee may give and that in this situation if he becomes a trustee of dividends he is also a trustee of the right to vote because the right to vote is a right to property annexed to the shares and as such the beneficiary has a right to control the exercise by the trustee of the right to vote. The learned AttorneyGeneral did not combat the view expressed by Pratt J., but he objected to any further extension of the rule therein laid down. The question that needs our decision is bare of authority. The English law can furnish no guidance for its solution as there is no provision corresponding to section 105 (C) in the English Companies Act. In India this is the first known occasion when a situation like this has arisen between a transferor and transferee of shares on a stock exchange transaction. The proposition therefore that has been canvassed in this case has to be decided on first impressions and on general principles of equity. Section ' 105(C), the enactment of which has conferred certain rights and privileges on a shareholder which he did not possess before its enactment is in these terms: " Where the directors decide to increase the capital of the company by the issue of further shares such shares shall be offered to the members in proportion to (1) 130 the existing shares held by each member and such offer shall, be made by notice specifying the number of shares to which the member is entitled and limiting a time within which the offer, if not accepted, will be deemed to be declined ; and after the expiration of such time, or on receipt of an intimation from the member to whom such notice is given that he declines to accept the shares offered, the directors may dispose of the same in such manner as they think most beneficial to the company. " This section limits the powers of the directors to dispose of the further issue of capital in any manner that they may think most beneficial to the company. They are under a mandate to offer these shares in the first instance to the members in proportion to the existing shares held by them. In other words, a member becomes entitled under the provisions of this section by reason of his being the holder of a certain number of shares in the company, to obtain shares in the further issue of capital as of right. This is not a fruit of stock ownership, in the nature of a profit, nor does it amount to a division of any part of the assets of the company. It is not an organic product of the original stock like the young of animals or the fruit of trees, but, as described by the Supreme Court of America in Miles vs Safe Deposit Trust Co.(1) this right to subscribe to new stock is but a right to participate in preference to strangers and on equal terms with other existing shareholders in the privilege of contributing new capital called for by the corporation an equity that inheres in stock ownership under such circumstances as a quality inseparable from the capital interest represented by the old stock. The exercise of the privilege depends on the option of the shareholder. If he likes, he can invest further money and purchase a proportionate share, of the new issue of capital. He is of course not obliged to do so. He has also the right to assign the offer made to him in favour of any other person but in that event the directors have the option to allot or not to allot the (1) 66 Law. Edition 903 at 026. 131 shares to the person in whose favour the share holder renounces the shares offered to him. The offer, of course, creates fresh rights but it also brings in its train liabilities and obligations. It confers the right on a shareholder to purchase shares in the new issue of capital in proportion to his existing shareholding, but in order to obtain that right he has to fulfil certain obligations and he has to incur certain liabilities. In the first instance, if he decides to invest his money in the further capital issued, he has to make an application to the company for the allotment of shares so offered and with his application he has to remit to the company the amount of the application money. That having been done, if the shares offered are only partly paid up, as they were in this case, he incurs on allotment the further liability of meeting any future calls on these shares. Can it be said in this situation that a transferor of a certain number of shares who being the legal owner of those shares and the beneficial interest of which vests in the cestui que trust, is liable for all the payments and obligations attaching to the new issue of shares and is bound to act in both respects for the benefit of the cestui que trust; in other words, whether he is under a duty, when so instructed by his beneficiary, to make an application for the new issue of shares offered under the provisions of section 105 C and obtain them in his name by making the necessary payment and by incurring the consequential obligations. Plainly put, the question may be posed thus: whether the obligation of a transferor of a certain number of shares as a trustee extends also in respect of the right to acquire further shares issued by the company on behalf of his cestui que trust by putting himself on the register of shareholders in respect of the new shares regarding which. he may have to incur fresh liabilities and obligations which were not existing at the time when he made the transfer. Mr. Pathak contended that as the right to obtain new shares was inseparable from the ownership of the old stock, the transferor of the old stock held the option to buy new stock in like manner as he held the 132 original stock, and if qua the old stock he was a trustee for the beneficial owner, in the like manner he was a trustee also of the right or the option to buy new shares and was bound to exercise it for the benefit of the cestui que trust and according to his directions, and was bound to obtain new shares in his own name for the cestui que trust. Reliance was placed for this proposition on certain observations of Buckley J. in Biss vs Biss(1). In that case, a lessor granted a lease for seven years of a house in which the lessee carried on a profitable business. On expiration of the term of the lease, the lessor refused to renew the lease, but allowed the lessee to remain as a tenant from year to year on increased rent. During the tenure of the lease, the lessee died leaving a widow and 3 children, one being an infant. The widow and a son each applied to the lessor for a new lease for the benefit of the estate, which the lessor refused to grant. Having determined the yearly tenancy by notices the lessor granted to the son personally a new lease for 3 years. In an action already instituted by the children against the administratrix, namely, the widow, she applied to have the new lease treated as being taken by the son for the benefit of the estate. Buckley J. held that the son was a trustee of the new lease for the benefit of the estate. The Court of Appeal reversed this decision and held that the right of renewal had been determined by the lessor long before the son intervened, and that the new lease could not be regarded as an accretion to the estate and the son was entitled to retain the lease and that he had not abused his position in any way. This case therefore is no authority for the proposition before us, and the Court of Appeal did not say anything on the point. Buckley J. however in the course of his judgment observed as follows: "It is, of course, very familiar law that if a trustee obtains a renewal of a lease of property vested in him as trustee, whether by virtue of a right of renewal or not, he must hold the new lease for the benefit of his cestui que trust. The leading authority upon that is (1) [1903] 2 Ch . 133 Keech vs Sanford (1). The principle is that the trustee owes it to his cestui que trust to obtain a renewal, if he can do so, on beneficial terms, and that the court will not allow him to obtain a renewal upon beneficial terms for himself when his duty is to get it for his cestui que trust. " Reliance was also placed on certain observations of Neville J. in Jones vs Evans(2). That was a case where the capital of a company was divided into 10,000 shares of pound 10 each, of which 3,728 only had been issued and were fully paid up. The company was very prosperous and the market value of the shares was pound 30 each. The reserve fund of the company exceeded pound, 50,000. The directors proposed a scheme for distribution of the reserve fund representing accumulated undivided profits amongst the shareholders, so that every shareholder was to get a bonus of one new fully paid up share of pound 10 for every existing share held by him. Accordingly resolutions were passed by the company empowering the directors to declare a bonus dividend out of the reserve fund and sanctioning the distribution of a bonus dividend of pound 10 per share out of the reserve fund and authorising the further issue of 3,728 shares of pound 10 each out of the unissued capital of the company to be allotted pro rata amongst the existing shareholders and directing that such new shares be paid up in full forthwith. The directors sent a circular letter to every shareholder with a warrant for the bonus divident on his shares, informing him of an allotment to him of his proportion of the new shares and giving him an option to accept or refuse the allotment, and stating that if he accepted the allotment he was to indorse and return the dividend warrant to the company to be applied in payment of the new shares. Trustees of a testator 's will held 200 shares of the company, and on receipt of the circular letter accepted their allotment of 200 new shares, indorsed and returned their bonus dividend warrant for pound 2,000, and afterwards sold the new shares (1) (1726) Sel. (2) 134 at a profit. The question then arose whether, as between the tenants for life and remainderman under the will, the bonus dividend was capital or income. It was held, on the evidence, that the company intended to capitalize the reserve fund and not to distribute it as a bonus dividend, and therefore the whole of the bonus dividend was capital of the testator 's estate. In the concluding portion of his judgment, Neville J. said as follows: ". . when I say that the option vested in each shareholder, either to take the dividend and keep it, or to return it and get the greater benefit which the company offered if be did, I do not think that is true in the case of trustees; because it seems to me that, if by taking pound 10 in cash, when they were offered by the company a share worth E 20 if they would return it, it would be a wilful default on their part if they refused and took less, and consequently their cestui que trust would be entitled to insist upon the trustees taking the greatest benefit which the company offered. Therefore, in the case of trustees it seems to me that, although as between the company and them there may be a right to elect, between them and their cestui que trust there is no such right, and they must take the dividend in what I will call the capitalized form. " On the basis of these authorities, Mr. Pathak contended that his client as a beneficiary was entitled to the fullest benefit conferred on the old shares by reason of the new offer and that he was entitled to compel the trustee to act in a manner which would enable him to obtain the benefit. In our opinion the observations made in these cases cited above must be limited to the facts of those cases. We are here dealing with a trustee with peculiar duties and peculiar liabilities, and it is a fallacy to suppose that every trustee has the same duties and liabilities. In none of the cases cited by Mr. Pathak was there any question of the trustees incurring any personal pecuniary liability. In the case of Biss vs Biss(1), the question was obtaining the benefit of renewal of a (1) 135 lease, and the trustee had to incur no fresh liability for obtaining it. On the other hand, a prosperous business was being conducted in those premises and the renewal of the lease was obviously for the benefit of the lessee and carried with it no new or onerous obligations. In Jones vs Evans (1), the trustee had incur no liability of any kind whatsoever. That only question there was whether he should exercise the option of receiving the dividend or of converting the bonus into the shape of capital. It is part of the general law of trust that a trustee must act in a manner most beneficial to the cestui que trust and he can retain no benefit to himself from the corpus of the trust estate or from anything that accrue to that estate subsequently. None of these cases death with a situation like the one that has arisen in the present case. If the newly offered shares were fully paid up and no liability was attached to them, there is no question that the trustee would have been bound to obtain them for the benefit of the cestui quo trust. The cases referred to therefore go only so far and no further. We see no principle of equity or on general law which obliges a trustee to buy new shares in his own name for the benefit of the cestui que trust, when in so doing he has to bear a heavier pecuniary burden than he undertook to bear as constructive trustee by reason of the sale of his shares in favour of the cestui que trust and which relationship was contemplated to last only till the time when the shares sold could not be registered in the name of the transferee. Of course, if the trustee of his own volition chose to obtain the new shares which appertain to the shares already sold by him, on principles of equity it could not be denied that the cestui que trust would have been entitled to call upon the trustee to hand over those shares to him on receipt of the amount spent by the trustee; but if the trustee of his own volition is not prepared to obtain those shares in his own name, it is difficult to see on what principle of law or equity he can be forced to make an application for obtaining those shares in his own name, and then pass (1) 136 them over to the cestui que trust after obtaining the amount spent by him or after being otherwise fully indemnified in respect of the payments made or to be made, or liabilities incurred or to be incurred in future. It is difficult to conceive any principle of equity which obliges a person in the position of a constructive trustee in respect of X number of shares to also become a constructive trustee in respect of in additional, say, Y number of shares and thus become a trustee of X plus Y shares. Such a burden is not a necessary consequence or an incident of the original transaction of purchase and sale of shares or of the legal relationship of trustee and cestui que trust thus created. That relationship arises by reason of the circumstance that till the name of the transferee is brought on the register of shareholders in order to bring about a fair dealing between the transferor and the transferee equity clothes the transferor with the status of a constructive trustee and his obliges him to transfer all the benefits of property rights annexed to the sold shares of the cestui que trust. That principle of equity cannot be extended to cases where the transferee has not taken active steps to get his name registered as a member on the register of the company with due diligence and in the meantime certain other privileges or opportunities arise for purchase of new shares in consequence of the ownership of the shares already acquired. The trustee can very well say to any request made by the cestui que trust for the acquisition of new shares that he is not prepared to put his name on the register of members for any Additional shares, particularly when the acquisition of those shares involves him in further liabilities. In our judgment therefore neither on principle nor on authority can it be held that Mr. Reddy could be forced to acquire in his own name 384 shares which appertain to the 484 shares sold by him to Sir Padampat. All that Sir Padampat could call upon Reddy to do was to sign he renunciation form in his favour of the shares offered put of the new issue appertaining to the old shares and after having obtained the renunciation form, to make an application in his own name for the purchase of those shares. This view can be sustained on the intelligible principle that the transferor as a constructive trustee in respect of the shares sold by him cannot retain any benefit himself of the new issue which is annexed to the shares sold by him and if any benefit arises out of that offer made under section 105 C, that benefit must go to the beneficiary, but more than that the beneficiary is not entitled to call upon the trustee to do. Mr. Pathak reiterated the argument that had been accepted by the High Court that if the only duty of Reddy was to transfer the offer made to him under section 105 C to Sir Padampat after signing the renunciation, then in that case Sir Padampat could not get the full advantage of that offer because in that event the directors were not bound to allot the shares to the person in whose favour they have been renounced by the shareholder, while on an application made by the shareholder they were bound to allot him the shares offered. That disadvantage is certainly there but it has to be borne in mind that the relationship of constructive trustee and cestui que trust created on principles of equity cannot be extended ad infinitum in respect of all future acquisitions of rights annexed to the shares sold which acquisitions may involve not only rights but liabilities and obligations which the constructive trustee may not be prepared to undertake, and in this situation the cestui que trust may not be able to get all the benefits of the fresh incidents annexed to the ownership of the shares that he had purchased. He himself may be blamable for the loss that be may have thus to suffer by his not having made an application in time for getting himself registered on the register of members and for not having taken proper steps in law for getting his transfer recognised by the company if the request made by him has already been refused by the company. The equitable principle on the basis of which the legal relationship between the transferor and the transferee arises cannot be worked in a manner so as to prejudice the 138 position of the constructive trustee and make him an accounting party in respect of all privileges or fresh offers that may be annexed to the shares sold for all time to come. Mr. Pathak urged that his client was prepared not only to pay the application money and the allotment money to the trustee but was further prepared to indemnify him against any future calls on those shares. It has to be remembered that even the original 484 shares sold by Reddy to Sir Padampat were partly paid up shares and Reddy was liable to pay the amount of any call made on those shares, subject to being indemnified when the time arose by Sir Padampat for the amount paid on those shares. If Mr. Pathak 's contention is accepted, then Reddy will also become further liable for future calls on the new 384 shares. He would be entitled only to claim indemnity when an occasion arose. It is well settled that a trustee is not entitled to claim indemnity till he suffers an injury for which he has to be indemnified. But the fact remains that the liability to pay calls is for the time being his liability and not that of the cestui que trust. Once his name is entered on the register of shareholders, a mere right to claim indemnity may, in a case like the present, when the time to claim it arises, prove to be merely illusory. The shares may go down in value, the company may go in liquidation, or the financial position of the equitable owner of the shares may deteriorate. In all these situations, the right of the trustee to be indemnified in respect of fresh liabilities accruing on the shares would be, as already stated, merely chimerical, and the trustee would have to incur in those situations personal pecuniary liability on account of the shares. Therefore, the contention that the trustee is bound to buy the new shares in his own name for the benefit of the cestui que trust is not well founded, because it involves in its train pecuniary liabilities which the trustee may have to incur personally and which he is not bound to undertake under any system of law for the benefit of the cestui que trust. We thus hold that Sir Padampat was not 139 entitled to call upon Reddy to make an application in his own name for the acquisition of the newly issued shares by investing his own money in the first instance and then recovering it from Sir Padampat or by signing the application form and sending it to Sir Padampat for acquiring the shares in his name. All that he was entitled to was to call upon him to send him the renunciation form. This Reddy was prepared to do and offered to do so provided the names of all the persons in whose favour renunciation had to be made were disclosed to him. Admittedly this was never done and Sir Padampat could not gain his object by merely having the renunciation form, because the directors of the company in the circumstances of this case would never have granted his application, if made in his own name on the basis of the renunciation form signed by Reddy. Sir Padampat 's or the receiver 's suit therefore in this view of the case could not have been decreed. On the view expressed above, both the suits must fail. If Sir Padampat had no right to call upon the trustee to buy the newly offered shares in his own name for his benefit, a fortiori, the receiver appointed by the court had also no such right, and on this short ground the claim put forward in both the suits has to be negatived. We are further of the opinion that even if it was held that Reddy was under a duty to sign the application form and the renunciation form and send them over to Sir Padampat to enable the latter to obtain the newly offered shares in Reddy 's name, the requisition that was made on his behalf directing the trustee to purchase these shares and to exercise the option was ineffective and inadequate. On the basis of that requisition, it was not possible for the trustee to carry out the mandate of the cestui que trust, and, that being so, on this ground also, the plaintiff was disentitled to relief in the two suits. The first requisition made by Messrs. J. L. Mehta and N. K. Bhartiya on the 23rd February, 1945, was made on their own behalf only and not on 140 behalf of Sir Padampat. It called upon Mr. Reddy to forward the circular letter with his signatures on the forms annexed to the letter, to enable them to apply for the newly offered shares either in his name or in their or such other names as might be decided upon by them. This requisition was not considered adequate by the High Court and was left out of consideration. Mr. Pathak also did not place much reliance upon it. Both the courts below and Mr. Pathak however placed reliance on the requisition made on the 28th February, 1945, in the letter of Messrs. Craigie, Blunt & Caroe cited in the earlier part of this judgment. In that letter, it was stated as follows "We are instructed by our clients, the parties to whom you sold these shares, Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others to call upon you to apply for the additional shares and fractional certificates now issued. . " This requisition therefore purports to have been made on behalf of 4 disclosed beneficiaries and some other undisclosed cestuis que trust. It was not asserted in this letter that the real purchaser of the shares was Sir Padampat Singhania and the other persons mentioned therein were merely his agents or benamidars. Moreover, it did not disclose the names of all the beneficiaries. Legitimately, therefore, in his letter of the 3rd March, 1945, Mr. Reddy said that he was ready and willing to sign the renunciation form in favour of the true purchasers, on his being satisfied that those who are described as the purchasers of his shares are the real and true purchasers by perusing the transfer forms duly executed by them along with the share certificates. It is difficult to understand how a requisition made on the trustee by some disclosed and other undisclosed beneficiaries could be regarded as a proper direction to him, which he could be called upon to obey. This requisition was therefore faulty in this respect, and the trustee could not be said to have defaulted in his duty in not carrying out 141 such a requisition. Again, the indemnity offered in the requisition is merely illusory, because in the letter the extent of the liability of each beneficiary, whether known or unknown, is not mentioned, and the trustee could not ascertain from its contents the name of each and every person liable for his claim for indemnity as and when the occasion for it arose, or its extent. A mere bald statement in the following words "Our clients agree to indemnify you against each and every liability that you incur by applying for these partly paid up shares" was in our opinion wholly inadequate. The matter may have been different if along with this requisition a bank guarantee safeguarding the trustee in regard to his future liabilities had been sent to him as well as a cheque for the money required to be paid at the time of making the application. We are also of the opinion that in view of the allegations made in the plaint and in view of the fact that all the share transfer forms were subsequently signed by Sir Padampat Singhania alone, this requisition cannot be said to have been made on behalf of the plaintiff and on the basis of it he cannot be heard to say that he made a proper requisition on the trustee which the latter failed to carry out and was therefore liable to him in damages for not carrying out his directions. It is significant that no mention is made in the plaint as to how the names of the persons contained in the letter of the 28th February came to be mentioned therein, and how the requisition was made on their behalf when they had never signed the blank transfer forms. It may also be observed that it was left to the option of the trustee to pay from his own pocket the application money, and then recover it from the bank. Such a demand could not be made on a trustee and he could not be asked to invest his own money for the benefit of the cestui que trust. The trustee was under no obligation to find a heavy sum of money and to invest it on the purchase of new shares for the benefit of the cestui que trust, and to recover the amount after having invested it in them. What the letter of the solicitors in fact intended to 20 142 convey to Reddy was: "Pay yourself and obtain the shares, or else, sign a blank cheque and send it to us and then we will see to what extent we are going to make you liable by putting your name on the register of shareholders. " The conclusion of the High Court on this point has been stated in these terms: "Sir Jamshedji relies on the attitude taken up by his client and has contended that he took up the right attitude by enquiring as to who the real beneficiary was and to be satisfied by the production of the relative transfer forms. Now, if this had been the only attitude of Reddy much might have been said in his favour. But unfortunately in this very letter Reddy clearly declined any liability or obliga tion upon him to apply for these shares on behalf of his beneficiary. Whether he knew that his purchaser was Sir Padampat or not, as the learned Judge has held, or whether there is force in Sir Jamshedji 's contention that Messrs. Craigie, Blunt and Caroe referred to the purchasers as Sir Padampat and others, the fact remains that Reddy did not accept his liability as a trustee and then agreed to discharge that liability provided he was satisfied as to who his purchaser was. He only wanted to be satisfied about his purchaser in order to send to him the letter of renunciation. That was the only question on which he wanted to be satisfied. 'In view of the attitude taken up by Reddy the plaintiff had no other course open to him except to file the suit, and, therefore, in our opinion the learned judge was right when he came to the conclusion that the plaintiff was entitled to the relief he had claimed. " We have not been able to appreciate this line of thought. The attitude adopted by Reddy could not cure the defects in the requisition alleged to have been made on behalf of the plaintiff. If the directions given to the trustee were of an inconclusive nature, and were in law ineffective, then the trustee could not be mulcted in damages for not obeying them, even if his attitude was not what it should have been. The plaintiff is not entitled to damages unless and until lie 143 proves that he made a proper and effective demand on the trustee and this the trustee failed to carry out. On this ground also, both the suits are bound to fail. Mr. Pathak argued that the plaintiff was entitled to reliefs A and B, both in his suit as well as in the receiver 's suit and that the receiver 's suit was wrongly dismissed by the High Court. We are unable to agree. In our opinion, the High Court rightly held that the receiver appointed in the suit of Sir Padampat could not acquire the newly issued shares in his name. That privilege was conferred by section 105 C only on a person whose name was on the register of members. The receiver 's name admittedly was not in the register and the company was not bound to entertain that application. Mr. Pathak argued that that may be so but the receiver was not making an application in his individual right but he had been armed by the court with power to apply in the right of the defendant Reddy. The fact however is that the receiver made the application in his own name. Even if Mr. Pathak 's contention is right the company was no party to the suit filed by Sir Padampat against Reddy and that being so, no order could be issued to the company in that suit to recognize the receiver as a shareholder in place of Reddy. The matter might have been different if the company was a party to the suit and was ordered by the court to register the receiver 's name in place of Reddy for the 484 shares purchased by Sir Padampat and was also ordered to issue new shares in the name of the receiver. It is not necessary for us to offer any final opinion on the question if the court would have been within its right to direct his name to be included in the register, even if the company was impleaded in the suit filed by Sir Padampat against Reddy. We are however quite clear that the company not having been impleaded in that suit, it was not bound to issue the now shares in the name of a person whose name was not already in the register of members even if he represented a person whose name was already in the register. The High Court was thus right in dismissing the receiver 's suit. We are also of the opinion that the appellate bench of 144 the High Court was also right when it declined to grant reliefs A and B of the plaint to Sir Padampat. The sanction given to the company to issue new capital had lapsed long before Bhagwati J. granted reliefs A and B to the plaintiff. It was an extraordinary procedure in a civil suit to direct a company which was no party to the original suit to obtain fresh sanction for the issue of new shares and then allot them to the plaintiff It seems to have been overlooked that if sanction to issue new capital was somehow obtained, that capital would also have to be distributed as directed by section 105 C and could not be allotted by the directors in favour of any particular shareholder. In the altered situation that arose after the institution of the suit, if the plaintiff succeeded, the only relief that could be granted to him was the relief of damages. We are however unable to grant the relief to the plaintiff in view of our finding that Reddy could not be compelled as constructive trustee to buy new shares in his own name for the cestui que trust and further in view of our finding that even if he could be compelled to acquire those shares in his own name for the cestui que trust he could not be said to have defaulted in his duty in carrying out the directions of the cestui que trust as in this case no proper and valid requisition was made by the cestui que trust on the trustee for the acquisition of those shares. The plaintiffs in the two suits are therefore not entitled to any relief For the reasons given above, we allow Reddy 's appeal No. 53 of 1950 and dismiss the cross appeal of Sir Padampat as well as the receiver 's appeal No. 52 of 1950 and dismiss both the suits, but in the circumstances of this case we will make no order as to costs in both the suits throughout. Appeal No. 53 allowed. Appeals Nos. 52 and 54 dismissed. Agent for the appellants in Appeals Nos. 52 and 54 and the respondent in Appeal No. 53: section P. Varma. Agent for the respondents in Appeals Nos. 52 and 54 and the appellant in Appeal No. 53: Rajinder Narain.

IN-Abs

A, who held a certain number of shares in a company, sold some of these shares to B on the 29th July, 1944, and executed blank transfer forms in respect of the shares. B made an application to the company for registration of his name, only on the 11th April, 1945, and his application was rejected. Meanwhile, in February, 1945, the company resolved to issue new shares and offered to A the number of shares to which he was entitled under the provisions of section 105 C of the Indian Companies Act in respect of the shares which stood in the register in his name. A did not apply for the now shares pertaining to the shares sold to B. A firm of solicitors sent a requisition to A on behalf of B, C, D, E and others who claimed to be the purchasers of the shares sold by A, calling upon A to apply for the additional shares, and to hold them, when allotted, on behalf of B, C, D and E and others, and offering to indemnify A against all liabilities he may incur thereby. A declined to apply but offered to sign the renunciation form in favour of the true purchasers. As the time fixed for making an application for the new shares was about to expire, B filed a suit against A praying that A may be ordered to deliver to B the application form for the now shares, and to hand over the new share certificates when received, with transfer forms in blank duly signed by him, and for damages in the alternative. A receiver 17 118 was appointed and he applied to the company in his own name for allotment of the new shares and for registering his name in respect thereof but the company declined to do so. The receiver filed a suit against the company for allotment of the new shares to him. The High Court of Bombay held that, as A was a trustee of B in respect of the new issue, and he had failed to apply for the new shares, he was liable in damages to B. On appeal : Held, (i) that if A ",as not of his own volition, prepared to obtain the now shares in his name, there was no principle of law or equity by which he could be compelled to acquire those shares by spending his own money or by undertaking financial liabilities and pass them over to B on receiving the amount spent by him from the purchaser or being otherwise fully indemnified by him in respect of the liabilities incurred or to be incurred. (ii)Assuming that A was under any such obligation, as the requisition made by the solicitors to A to purchase the shares was made on behalf of 4 disclosed and some undisclosed persons, it was ineffective and inadequate, and A was not guilty of any breach of duty as a trustee in not complying with the requisition. (iii)As B had no right to call upon A to buy the new shares in his own name for his (B 's) benefit, a fortiori, the receiver had also no such right. (iv) In any event, as the company was not a party to B 's suit, no order could be issued to the company in that suit to recognise the receiver as a shareholder in respect of shares sold to B and, as long as he was not on the register, the company was not bound to entertain an application from him for issue of the now share in his favour. Hardoon vs Belilios ([1901] A. C. 118), E. D. Sassoon, & Co Ltd. vs Patch , Miles vs Safe Deposit Trust Co. (66 L.E. 903) referred to. Biss vs Biss ([1903] 2 Ch. 40), Jones vs Evans ([1913] 1 Ch. 23) distinguished.

Appeal No. 318 of 1962. Appeal by special leave from the judgment and order dated November 27, 1959 of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ Petition No. 545 D of 1959. Purshottam Trikamdas, M. V. Goswami and B. C. Misra, for the appellant. W.S. Barlingay and R. H. Dhebar, for the respondent. March 6, 1964. The Judgment of the Court was delivered by AYYANGAR, J. There are no merits in this appeal by special leave and it deserves to be dismissed. The appellant obtained, in November 1951, an import licence from the Joint Chief Controller of Imports at Calcutta, for importing "iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adapted for use on cycles". In purported conformity with this licence the appellant imported from Japan through the Bedi port 221 cases of bolts and nuts during the period April 4, 1952 to July 14, 1952. The cases were described in the Bills of Entry which he filed as "Stove Bolts and Nuts" and he produced the import licence of November 1951 as his authority to clear the goods. One hundred and ninety two of these cases were cleared out of the port customs but before the rest of the 89 cases could be cleared, the Customs authorities got suspicious that the goods were mis described and though called "Stove Bolts and Nuts" in the invoices and relative documents they were really identifiable parts of bolts and nuts of the "Jackson Type single bolt oval platebelt fasteners" whose importation had been prohibited by a Notification of the Ministry of Trade issued in January 1952. Their suspicions got confirmed after examination of the samples of the nuts and bolts imported and thereafter a notice was issued to the appellant to show cause why he should not be proceeded against (a) for mis describing the 64 goods as "stove bolts and nuts" and (2) for importing and attempting to import goods without a proper import licence this being an offence under section 167(8) of the Sea Customs Act. The appellant showed cause and in the written pleas which he filed, he raised two defences; (1) that the description of the goods as "stove and nuts" was merely a description given by the manufacturers in their invoices and he himself not being acquainted with the technical details could not be held responsible for the description given in the invoices which was copied in the Bill of Entry not being precise or exact and (2) that even if the bolts and nuts which he imported were identifiable parts of the "single bolt belt fasteners" whose importation was banned, there had been, on a proper construction of the import licence, read in conjunction with the Import Trade Regulations under which it was issued, no contravention since the ban on importation by the notification was confined to a complete "Jackson type single bolt belt fastener" and did not extend to the importation of the component parts of such a belt fastener. These two defences were examined by the Collector of Central Excise. As regards the first he found from the cor repondence exchanged between the appellant and his foreign suppliers and produced by the appellant himself in his de fence at the hearing, that the name "stove bolts and nuts" had been decided upon by the appellant himself after samples of the nuts and bolts which he desired to import had been received and examined by him. Practically therefore during the hearing before the Collector the appellant conceded that the name "stove bolts and nuts" was a misdescription of the articles which he actually imported. The next question was whether the appellant was guilty of an offence of the nature described in section 167(8) of the Sea Customs Act. The Collector recorded a finding that the appellant was guilty of a contravention of this provision which reads: "If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction , or if any attempt be made so to import or export any such goods;. . " in reaching this finding the Collector was satisfied from the samples which were forwarded to the appellant and which were approved by him before finalising the indent, that the appellant was really ordering and importing nuts and bolts which were identifiable components of "Single bolt belt fasteners" whose importation was prohibited. He arrived 65 at this conclusion because (1) the bolts and screws imported by the appellant were those specially adapted by reason of their structure and details for use as "single bolt belt fasteners" and (2) these nuts and bolts could not be put to any use other than as components of a belt fastener of the type whose import was prohibited. In further support of his conclusion that the appellant really intended to evade the prohibition imposed by the Notification of January 1952 by which the importation of" single bolt belt fasteners" was prohibited, the Collector referred to the fact that these single bolt belt fasteners were composed of three components (1) a bolt (2) a nut and (3) washers. The washers to fit into the bolts and nuts imported by the appellant were found to have been separately imported by a firm called Nawanagar Industries Ltd. which was owned or controlled by close relations of the appellant. Having thus received confirmation about the real intention of the appellant to evade the prohibition contained in the Notification and thus contravene the provisions of section 167(8) of the Sea Customs Act, the Collector imposed the penalty of confiscation of the goods and gave the owner under section 183 of the Sea Customs Act the option to pay a fine of Rs. 5 1,000 to redeem the confiscated goods. He also imposed a personal penalty of Rs. 1,000 on the appellant under section 167(37)(c) of the Sea Customs Act for misdescribing the goods in the Bills of Entries which he had filed. The appellant filed an appeal to the Central Board of Revenue which was dismissed. The argument before the appellant authority again was that what was prohibited was an assembled "Jackson Type single belt oval plate belt fasteners" but that this notification could not be read as imposing a ban on the importation of the parts of such a belt fastener though these parts may be identifiable and the parts could have no use other than as components of the article whose importation was prohibited. This submission was rejected, and appeal was dismissed. Thereafter the appellant applied to the High Court of Punjab for the issue of a writ of certiorari under article 226 of the Constitution and this having been dismissed in limine, moved this Court for special leave which was granted. That is how the appeal is before us. Two points were urged by Mr. Purshottam on behalf of the appellant. The first was that the appellant having been granted a licence to import "nuts and bolts" falling under item 22 of Part 1 of the Import Trade Control Hand book for the relevant year, the appellant was entitled to import iron and steel bolts and nuts, whatever be the purpose they 66 served. The only limitation imposed upon the appellant by the import licence which was granted to him and which re produced the terms of Entry 22 in the Hand book was that he could not import bolts and nuts adapted for use on cycles. The limitation thus imposed, it was urged, also indicated that if the nuts and bolts were adapted for use on articles other than on cycles they could still import them unless the importation not merely of the other article but its compo nents was also prohibited or restricted. In this connection our attention was drawn to item 28 of Part II in the same Hand book reading 'Belting for machinery, all sorts, includ ing belt laces and belt fasteners '. The Notification dated January 12, 1952 was a clarification issued in respect of licensing policy for January June, 1952. Dealing with serial No. 28 of Part 11 which we have extracted just now, the notification stated: "Jackson type oval plate belt fasteners (other than single bolt). General licences will be granted freely subject to the provisions of Public Notice No. 189 ITC(PN)/51, dated the 28th December, 1951. Jackson type oval plate single bolt belt fasteners. No imports will be granted from any source. " It was not disputed that having regard to the terms of the import licence issued to the appellant the Notification as regards the prohibition against the importation of "Jackson Oval Plate Single Bolt belt fasteners" would apply to the appellant 's licence and these belt fasteners could not be imported after January 1952. For the import licence specifically stated: "This licence is granted under Government of India, Ministry of Commerce, Notification No. 23 ITC/ 43, dated the 1 st July, 1943, and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival." The point, however, sought to be made was that the components of such a belt fastener could still be imported because it was said that the scheme of the Import Trade Control Hand book was to specify wherever it was so intended "component parts" along with the articles of which they formed components, when a restriction or prohibition was intended to be imposed upon them also. It is, no doubt, true that in some cases component parts are specifically in cluded in some of the items in the Hand book. It might very well be that this feature might be explained on the ground 67 of the specification being by way of abundant caution, or possibly because in them the component parts might have an independent use other than as components of the articles specified. It appears to us that it does not stand to reason that a component part which has no use other than as a component of an article whose importation is prohibited is not included in a ban or restriction as regards the importa tion of that article. Expressed in other terms. we cannot accede to the position that it is the intention of the rule that importers are permitted to do indirectly what they are forbidden to do directly, and that it permits the importation separately of components which have no use other than as components of an article whose importation is prohibited, and that an importer is thereby enabled to assemble them here as a complete article though if they were assembled beyond the Customs Frontiers the importation of the assembled article into India is prohibited. Learned Counsel, however, relied upon an unreported judgment of the Bombay High Court delivered by Mr. Justice Mudholkar when a judge of that Court, in Appeal No. 4 of 1959 (D. P. Anand vs M/s. T. M. Thakore & Co.) in support of his submission that a ban on a completed article, having regard to the phraseology employed in the Hand book cannot be read as a restriction or prohibition of the separate importation of the component parts which when assembled result in the article whose import is prohibited. We do not read the judgment in the manner suggested by learned Counsel. The learned Judge in the judgment recorded an admission that the articles imported which were components of a motor bicycle, would not when assembled form a complete cycle which was the article whose importation was restricted, because of the lack of certain essential parts which were admittedly not available in India and could not be imported. The next submission of the learned Counsel was that the decision of the Customs Collector was vitiated by a patent error, in that he misconstrued the scope of Entry 22 of Part 1 of the Import Trade Control Hand book. In support of this submission the learned Counsel invited our attention to the decision of this Court in A. V. Venkateswaran Collector of Customs. Bombay vs Ramchand Sobhraj Wadhwani and Anr.(1). We see no force in this argument. The decision of this Court referred to proceeded on the basis set out on page 757 of the Report where this Court said: "The learned Solicitor General appearing for the appellant argued the appeal on the basis that the view of the learned Judges of the Bombay ; L/P(D) 3(a) High Court that on any reasonable interpretation of the items in the Schedule to the Tariff Act the consignment imported by the respondent could have been liable only to a duty of 30 per cent under item 45(3) was correct." Learned Counsel cannot therefore derive any support from this decision. Besides, what we have said earlier should suffice, to show that the conclusion reached by the authority that the offence under section 167(8) has been made out, is not incorrect. This apart, we must emphasise that a court dealing with petition under article 226 is not sitting in appeal over the decision of the Customs authorities and therefore the correctness of the conclusion reached by those authorities on the appreciation of the several items in the Hand book or in the Indian Tariff Act which is referred to in these items, is not a matter which falls within the writ jurisdiction of the High Court. There is, here, no complaint of any procedural irregularity of the kind which would invalidate the order, for the order of the Collector shows by its contents that there has been an elaborate investigation and personal hearing accorded before the order now impugned was passed. Learned Counsel next submitted that the Collector of Customs had taken into consideration the importation of the washers by the Nawanagar Industries Ltd. in arriving at the conclusion that the appellant had violated section 167(8) of the Sea Customs Act and that as in the notice that was served upon him to show cause this was not adverted to, the order adjudging confiscation was illegal and void for the reason that there had been a violation of the principles of natural justice and procedural irregularity in the hearing. We are not impressed by this argument. This submission proceeds upon a total misapprehension of the significance of the separate import of the washers by the sister concern. That import was not and could not be the subject of any charge against the appellants, and the appellants were not punished for that importation. It was merely evidence to confirm the conclusion reached by the Collector that the nuts and bolts imported were in reality the actual components of the Jack son type belt fastener whose importation was prohibited. The charge which the appellant was called on to answer did specify the nature of the offence which he was alleged to have contravened, and if evidence which the appellant could have rebutted was brought on record and considered in his presence and that evidence conclusively proved the real nature of the articles imported, there could certainly be no justifiable complaint of violation of the principles of natural justice. The misdescription of the article imported in the Bill of Entry having practically been admitted and there being 69 not much dispute that the goods imported were really com ponents of the Jackson type single belt fasteners, nothing more was needed to establish a contravention of section 167(8). The reference therefore to the Nawanagar Industries Ltd. which imported the washers merely confirmed the finding. In these circumstances we do not consider that there is any substance in this objection. The result is that this appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant who was granted a license to import "iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adopted for use on cycles", imported nuts and bolts which were the components of "Jackson Type Single bolt oval plate belts fasteners" which were described in the bill of Entry as "Stove Bolts and Nuts. " The importation of "Jackson Type Single bolt oval plate belt fasteners" had been prohibited. When the goods were attempted to be passed through the customs, the collector issued notice to the appellant to show cause why penalties should not be imposed on him(a) for misdescribing the goods and (b) for attempting to import goods without a proper import license. After receiving his explanation, penalties were imposed on the appellant. One of the facts which the Collector of Customs bad taken into consideration in arriving at the conclusion that the nuts and bolts imported were in reality the actual components of the prohibited articles was that washers, the third component of the prohibited articles were imported by a firm owned or controlled by close relations of the appellant. An appeal to the Central Board of Revenue from the order of the Collector imposing the penalties was dismissed. Thereafter, the appellant filed a writ petition under article 226 of the Constitution in the High Court which was dismissed in limine. On appeal by special leave: Held: (i) A component part which has no use other than as a component of an article whose importation is prohibited is included in a ban or restriction as regards the importation,of that article. D. P. Anand vs M/s. T. M. Thakore and Co., Appeal No. 4 of 1959 of Bombay High Court referred to. (ii) There was no force in the contention that the decision of the Collector of Customs was vitiated by a patent error, in that he misconstrued the scope of Entry 22 of Part 1 of the Import Trade Control Hand book. A court dealing with a petition under Article 226 is not sitting in appeal over the decision of the Customs Authorities and therefore the correctness of the conclusion reached by those authorities on the appreciation of the several items in the Hand book or in the Indian Tariff Act which is referred to in these items, is not a matter which falls within the writ jurisdiction of the High Court. 63 A. V. Venkateswaran, Collector of Customs, Bombay vs Ramchand Sobhraj Wadhiwani; , , referred to. (iii)Taking into consideration the importation of washers by another firm was merely evidence to confirm the conclusion reached by the Collector that the nuts and bolts imported were in reality the components of the prohibited article. The charge which the importer was called upon to answer did specify the nature of offence which he was alleged to have committed and if the evidence which the appellant could have rebutted was brought on record and considered in his presence and that evidence conclusively proved the real nature of the articles imported, there could be no justifiable complaint of violation of the principles of natural justice.

ppeal No. 79 of 1962. Appeal by special leave from the judgment and decree dated February 20, 1958 of the Madras High Court in Second Appeal Lo. 91 of 1955. M. section K. Sastri and M. section Narasimhan, for the appellants. K. N. Rajagopal Sastri and B. K. B. Naidu, for respondents Nos. 1 to 4. March 6, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C.J. This appeal by Special leave raises a short question about the correctness, propriety and legality of the decree passed by the Madras High Court in second appeal No. 91. of 1955. The respondents had sued the appellants in the Court of the District Munsif of Thiruvaiyaru for a mandatory injunction directing the removal of certain masonry structure standing on the suit site which was marked as A B C D in the plan attached to the plaint and for a permanent injunction restraining the appellants from building upon or otherwise encroaching upon the suit property and from causing obstruction to the right of way of the residents of the village in which the suit property was situated. According to the respondents, the plot on which encroachment had been caused by the construction of the masonry structure by the appellants was a street and the reliefs they claimed were on the basis that the said property formed part of a public street and the appellants had no right to encroach upon it. This suit had been instituted by the respondents in a representative capacity on behalf of themselves and other residents in the locality. The appellants disputed the main allegation of the res pondents that the masonry structure to which the respondents had objected, stood on any part of the public street. According to them, the plot on which the masonry structure stood along with the adjoining property belonged to them as 51 absolute owners and as such, they were entitled to use it in any manner they pleased. On these pleadings, appropriate issues were framed by the learned trial Judge and on considering the evidence, findings were recorded by him in favour of the respondents. In the result, the respondents ' suit was decreed and injunction was issued against the appellants. The appellants then took the dispute before the Subordi nate Judge at Kumbakonam. On the substantive issues which arose between the parties, the learned Subordinate Judge made findings against the respondents and in consequence, the decree passed by the Trial Court was set aside. The learned Subordinate Judge, however, made it clear that it might be open to the respondents to agitate "against any case of customary rights in the nature of an easement in their favour, if they can legally do so, without any bar, and if they are so advised. " That question was left by him as undecided as it did not arise before him in the present suit. This decree was challenged by the respondents by preferring a second appeal before the Madras High Court. BasheerAhmed Sayeed J. who heard this appeal, passed a decree which is challenged before us by the appellants in the present appeal. All that the learned Judge has done in his judgment is to state that "after a careful consideration of all the issues that arise for decision in this Second Appeal, 1 am of the opinion that the best form in which a decree could be given to the plaintiffs is in the following terms," and then the learned Judge has proceeded to set out the terms of his decree in clauses (1), (2) & (3), the 3rd clause being sub divided into clauses (a), (b) & (c). As to the costs, the learned Judge directed that parties should bear their own costs throughout. The appellants contend that the method adopted by the learned Judge in disposing of the second appeal before him clearly shows that the judgment delivered by him cannot be sustained. Before dealing with this contention, however, it is neces sary to refer to a preliminary objection raised by Mr. Raja gopal Sastri on behalf of the respondents. He contends that it was open to the appellants to apply for leave to file a Letters Patent appeal against the judgment of the learned Single Judge and since the appellants have not adopted that course, it is not open to them to come to this Court by special leave. He has, therefore, argued that either the leave granted by this Court to the appellants should be revoked, or the appeal should be dismissed on the ground that this was not a matter in which this Court will interfere having regard to the fact that a remedy available to the appellant under the Letters Patent of the Madras High Court has not been availed of by them. In resisting this preliminary objection, Mr. M. section K. Sastri for the appellants has relied on the decision of this Court in 52 Raruha Singh vs Achal Singh and Others(1). In that case, this Court allowed an appeal preferred against a second appellate decision of the Madhya Pradesh High Court on the ground that the said impugned decision had interfered with a finding of fact contrary to the provisions of section 100 of the Civil Procedure Code. It appears that a preliminary objection had been raised in that case by the respondents similar to the one which is raised in the present appeal, and in rejecting that preliminary objection, this Court observed that "since leave has been ranted, we do not think we can or should virtually revoke the leave by accepting the preliminary objection. " It is because of this observation that this appeal has been referred to a larger Bench. It is true that the statement on which Mr. M. section K. Sastri relies does seem to support his contention; but we are satisfied that the said statement should no, be interpreted as laying down a general proposition that if special leave is ranted in a given case, it can never be revoked. On several occasions, this Court has revoked special leave when facts were brought to its notice to justify the adoption of that course, and so we do not think Mr. M. section K. Sastri is justified in contending that leave granted to the appellants under article 136. as in the present case, can never be revoked. The true position is that in a given case, if the respondent brings to the notice of this Court facts which would justify the Court in revoking the leave already granted, this Court would, in the interests of justice, not hesitate to adopt that course. Therefore, the question which falls to be considered is whether the present appeal should be dismissed solely on the ground that the appellants did not apply for leave under the relevant clause of the Letters Patent of the Madras High Court. There is no doubt that if a party wants to avail himself of the remedy provided by article 136 in cases where the decree of the High Court under appeal has been passed under section 100 C. P. C., it is necessary that the party must apply for leave under the Letters Patent, if the relevant clause of the Letters Patent provides for an appeal to a Division Bench against the ,decision of a single Judge. Normally, an application for special leave against a second appellate decision would not be granted unless the remedy of a Letters Patent Appeal has been availed of. In fact, no appeal against second appellate decisions appears to be contemplated by the Constitution as is evident from the fact that article 133(3) expressly provides that normally an appeal will not lie to this Court from the judgment, decree, or final order of one Judge of the High Court, It is only where an application for special leave against a second appellate judgment raises issues of law of general importance that the Court would grant the application and proceed to deal with the merits of the contentions raised by the appellant. But even in such cases, it is necessary that the remedy 53 by way of a Letters Patent Appeal must be resorted to before a party comes to this Court. Even so, we do not think it would be possible to lay down an unqualified rule that leave should not be granted if the party has not moved for leave under the Letters Patent and it cannot be so granted, nor is it possible to lay down an inflexible rule that if in such a case leave has been granted it must always and necessarily be revoked. Having regard to the wide scope of the powers conferred on this Court under article 136, it is not possible and, indeed, it would not be expedient, to lay down any general rule which would govern all cases. The question as to whether the jurisdiction of this Court under article 136 should be exercised or not, and if yes, on what terms and conditions, is a matter which this Court has to decide on the facts of each case. In dealing with the respondents ' contention that the special leave granted to the appellant against a second appellate decision should be revoked on the ground that the appellant had not applied for leave under the relevant clause of the Letters Patent it is necessary to bear in mind one relevant fact. If at the stage when special leave is granted, the respondent caveator appears and resists the grant of special leave on the ground that the appellant has not moved for Letters Patent Appeal, and it appers that the said ground is argued and rejected on the merits and consequently special leave is granted, then it would not be open to the respondent to raise the same point over again at the time of the final hearing of the appeal. If, however, the caveator does not appear, or having appeared, does not raise this point, or even if he raises the point the Court does not decide it before granting special leave, the same point can be raised at the time of final hearing. In such a case, there would be no technical bar of res judicata, and the de cision on the point will depend upon a proper consideration of all the relevant facts. Reverting then to the main point raised by the appellants in this appeal, we do not think we would be justified in refus ing to deal with the merits of the appeal solely on the round that the appellants did not move the learned single Judge for leave to prefer an appeal before a Division Bench of the Madras High Court. The infirmity in the judgment under appeal is so glaring that the ends of justice require that we should set aside the decree and send the matter back to the Madras High Court for disposal in accordance with law. The limitations placed by section 100, C.P.C., on the jurisdiction and powers of the High Courts in dealing with second appeals are well known and the procedure which has to be followed by the High Courts in dealing with such appeals is also well established. In the present case, the learned Judge has passed an order which reads more like an award made by an arbitrator who, 54 by terms of his reference, is not under an obligation to give reasons for his conclusions embodied in the award. When such a course is adopted by the High Court in dealing with second appeals, it must obviously be corrected and the High Court must be asked to deal with the matter in a normal way in accordance with law. That is why we think we cannot uphold the preliminary objection raised by Mr. Rajagopal Sastri, even though we disapprove of the conduct of the appellants in coming to this Court without attempting to obtain the leave of the learned single Judge to file a Letters Patent Appeal before a Division Bench of the Madras High Court. Therefore, without expressing any opinion on the merits of the decree passed in second appeal, we set it aside on the ground that the judgment delivered by the learned judge does not satisfy the basic and legitimate requirements of a judgment under the Code of Civil Procedure. The result is, the appeal is allowed, the decree passed by the High Court is set aside and second appeal No. 91 of 1955 is sent back to the Madras High Court with a direction that it should be dealt with in accordance with law. The costs of this appeal would be costs in the second appeal. Appeal allowed.

IN-Abs

The respondents brought a suit for a mandatory injunction directing the removal of certain masonry structure on suit site and for a permanent injunction restraining the appellants from encroaching upon the suit property and from causing obstruction to the right of way of the residents of the village. They claimed that the suit property formed part of a public street and the appellants had no right to encroach upon it. The appellants claimed the suit property as absolute owners and as such, they were entitled to use it in any manner they pleased. The trial. Court decreed the suit. On appeal, the learned Subordinate Judge set aside the decree. On challenge of this decree by the respondents in second appeal before the High Court, the learned single Judge passed a decree in their favour. All that the learned Judge stated in his judgment was that "after a careful consideration of all the issues that arise for decision in this second appeal, I am of the opinion that the best form in which a decree could be given to the plaintiffs is in the following terms" and then he proceeded to set out the terms of his decree. On appeal by Special Leave the appellants contended that the method adopted by the learned Judge in disposing of the second appeal before him clearly shows that the judgment delivered by him cannot be sustained. The respondents, raised a preliminary objection that since the appellants did not avail themselves of the remedy available to them under the Letters Patent of the High Court either the special Leave granted by this Court should be revoked, or the appeal should be dismissed. Held: It would not be possible to lay down an unqualified rule that special leave should not be granted if the party has not moved for leave under the Letters Patent and it cannot be so granted, nor is it possible to lay down an inflexible rule that if in such a case special leave has been granted, it must always and necessarily be revoked. Having regard to the wide scope of the powers conferred on this Court under article 136, it is not possible and, indeed, it would not be expedient, to lay down any general rule which would govern all cases. The question as to whether the jurisdiction of this Court under article 136 should be exercised or not, and if yes, on what terms and conditions, is a matter which this Court has to decide on the facts of each case. 50 Raruha Singh vs Achal, A.I.R. 1961, S.C. 1097, referred to. In the present case, the learned Judge passed an order which reads more like an award made by an arbitrator who, by terms of his reference, is not under an obligation to give reasons for his conclusions embodied in the award. When such a course is adopted by the High Court in dealing with second appeals, it must obviously be corrected and the High Court must be asked to deal with the matter in a normal way in accordance with law. Therefore, the decree passed in second appeal, must be set aside on the ground that the judgment delivered by the learned Judge did not satisfy the basic and legitimate requirements of a judgment under the Code of Civil Procedure.

Appeal No. 135 of 1962. Appeal from the judgment and order dated April 30, 1958, of the Orissa High Court in O.J.C. No. 321 of 1955. M. C. Setalvad, Sarjoo Prasad and A. D. Mathur, for the appellant. section V. Gupta, Additional Solicitor General, M. section K. Sastri and R. N. Sachthey, for the respondent. March 5, 1964. The Judgment of the Court was delivered by WANCHOO, J. This appeal on a certificate granted by the Orissa High Court raises the question of the constitu tionality of the Shri Jagannath Temple Act, 1954, No. 11 of 1955, (hereinafter referred to as the Act). The challenge to the Act was made by the father of the present appellant by a writ petition filed in the High Court of Orissa. The appellant was substituted for his father on the death of the latter while the writ petition was pending in the High Court. The case put forward in the petition firstly was that the Shri Jagannath Temple (hereinafter referred to as the Temple) was the private property of the petitioner, Raja of Puri, and the Act, which deprived the appellant of his property was unconstitutional in view of article 19 of the Constitution. In the alternative it was submitted that the appellant had the sole right of superintendence and management of the Temple and that that right could not be taken away without payment of compensation, and the Act inasmuch as it took away that right without any compensation was hit by article 31 of the Constitution. It was further pleaded that the right of superintendence was property within the meaning of article 19 (1) (f) and inasmuch as the appellant had been deprived of that property by the Act, it was an unreasonable provision which was not L/P(D)1SCI 2 . 34 saved under article 19(5). The Act was further attacked on the ground that it was was discriminatory and was therefore hit by article 14 of the Constitution, as the Temple had been singled out for special legislation, though there was a general law in force with respect to Hindu religious endowments, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952. Reliance was placed on articles 26, 27 and 28 of the Constitution to invalidate the Act, though the appellant did not indicate in the petition how those Articles hit the Act. Lastly, it was urged that the utilisation of the Temple funds for purposes alien to the interest of the deity as proposed under the Act was illegal and ultra vires. The petition was opposed on behalf of the State and it was urged that the Temple was not the private property of the appellant. The case of the State was that it was a public temple and the State always had the right to see that it was properly administered. Before the British conquered Orissa in 1803, the Temple had for a long time been managed by Muslim Rulers directly, though through Hindu employees. After 1803, the Temple began to be managed directly by the British Government, though by Regulation IV of 1809 the management was made over to the Raja of Khurda (who is now known as the Raja of Puri), who was appointed as hereditary superintendent in view of his family 's connection in the past with the Temple. Even so, whenever there was mismanagement in the Temple during the course of the last century and a half, the Government always intervened and many a time administered the secular affairs of the Temple directly through one of its officers in whose favour the then Raja was made to execute a power of attorney divesting himself completely of all powers of management. The case of the State further was that in view of the reported mismanagement of the Temple, the State legislature passed the Puri Shri Jagannath Temple (Administration) Act, (No. XIV of 1952) for the appointment of a Special Officer for the preparation of a record pertaining to the rights and duties of different sevaks and pujaris and such other persons connected with the seva, puja or management of the Temple and its endowments in order to put the administration of the Temple on a suitable basis. A Special Officer was accordingly appointed who submitted his report on March 15, 1954, which disclosed serious mismanagement of the affairs of the Temple and in consequence the Act was passed in 1955. The State contended that the Act was perfectly valid and constitutional and did not offend any constitutional provision. When the matter came to be argued before the High Court, the appellant gave up the plea that the Temple was his private property and it was conceded that it was a public temple, the properties of which were the properties of the deity 35 and not the private properties of the Raja of Puri. In view of this concession, the attack on the constitutionality of the Act was based mainly on the ground that it took away the, Raja 's perquisites which had been found to belong to him in the record of rights prepared under the Act of 1952. It may be mentioned that the Raja of Puri had two fold connection with the Temple. In the first place, the Raja is the adya sevak, i.e., the chief servant of the Temple and in that capacity he has certain rights and privileges. In addition to that, he was the sole superintendent of the Temple and was incharge of the management of the secular affairs of the Temple. The main contention of the appellant before the High Court was that the Act not only took away the management of the secular affairs of the Temple from the appellant but also interfered with his rights as adya sevak and was therefore unconstitutional. The High Court repelled all the submissions ,on behalf of the appellant and held that the Act was valid and constitutional except for one provision contained in section 28(2)(f) thereof. The High Court therefore struck down that provision and upheld the constitutionality of the rest of the Act. Thereupon the appellant applied for a certificate which was granted; and that is how the appeal has come up before us. Before we consider the attack on the constitutionality of the Act we should like to indicate briefly what the scheme ,of the Act is and what it provides with respect to the management of the Temple. Section I provides for its commencement. Section 2 provides for certain repeals. Section 3 provides that the Orissa Act XIV of 1952 shall be deemed to be a part of the Act and delegates to the committee constituted under section 6 of the Act all powers of the State Government under the 1952 Act from such date as the State Government may notify. Section 4 is the definition section. Section 5 vests the administration and the governance of the Temple and its endowments in a committee called the Shri Jagannath Temple Managing Committee. The Committee shall be a body corporate, having perpetual succession and a common seal and may by the said name sue and be sued. Section 6 provides for the constitution of the committee with the Raja of Puri as its chairman. No person who does not profess the Hindu religion shall be eligible for membership. Besides providing for some ex officio members, the other members of the committee are all nominated by the State Government, one from among the persons entitled to sit on the mukti mandap, three from among the sevaks of the Temple recorded as such in the record of rights, and seven from among those who do not belong to the above two classes. 36 The Collector of the district of Puri is an ex officio member and is designated as the vice chairman of the committee. Section 7 provides for the appointment of a chairman during the minority of the Raja of Puri or during the time when the Raja is suffering from any of the disabilities mentioned in section 10(1) clauses (a) to (e) and (g) thereof. Section 8 lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja of Puri in respect of the Gajapati Maharaj Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being. Section 9 provides for the terms of office of members and section IO gives power to the State Government to remove any member of the committee other than the ex officio members on the rounds specified in cls. (a) to (g) thereof. No member can be removed from his membership unless he has been given a reasonable opportunity of showing cause against his removal. Section 11 provides for dissolution and supersession of the committee in certain contingencies, such as incompetence to perform the duties imposed upon it by ' the Act 'or making of default in performing such duties. The committee is given an opportunity to show cause against any such action before it is taken, and provision is made for continuing the management during the time the committee is superseded or has been dissolved. Section 12 provides for casual vacancies, section 13 for the meetings of the committee and section 14 for allowances to the members of the committee payable from the Temple fund, but no member of the committee other than the administrator is to be paid any salary or other re muneration from the Temple fund except such travelling and daily allowances as may be prescribed. Section 15 provides for the duties of the committee and it may be quoted in full as it is the main target of attack: " 15. Subject to the provisions of this Act and the rules made thereunder, it shall be the duty of the Committee (1) to arrange for the proper performance of sevapujah and of the daily and periodical Nitis of the Temple in accordance with the Record of Rights; (2) to provide facilities for the proper performance of worship by the pilgrims; (3) to ensure the safe custody of the funds, valuable securities and jewelleries and for the preservation and management of the properties vested in the Temple; (4) to ensure maintenance of order and discipline and proper hygienic conditions in the Temple and of proper standard of cleanliness and purity in the offerings made therein; 37 (5) to ensure that funds of the specific and religious endowments are spent accordi ng to the wishes, so far as may be known, of the donors; (6) to make provision for the payment of suitable emoluments to its salaried staff; and (7) to do all such things as may be incidental and conducive to the efficient management of the affairs of the Temple and its endowments and the convenience of the pilgrims. " Section 16 provides a ban on the alienation of Temple properties subject to certain conditions. Section 17 lays down that the committee shall have no power to borrow money from any person except with the previous sanction of the State Government. Section 18 provides for an annual administration report to be submitted to the Government. Section 18 A gives power to the committee with the prior approval of the State Government to delegate its functions to the Collector of the district or, as the case may be, to the officer who happens to be a member of the committee in place of such Collector. Section 9 gives power to the State Government to appoint an administrator for the Temple. Section 20 provides for the qualifications and conditions of service of the administrator and section 21 for the powers and duties of the administrator. As this section is specially attacked we quote it here in full. "S.21. (1) The Administrator shall be Secretary of the Committee and its chief executive officer and shall subject to the control of the committee have powers to carry out its decision in accordance with the provisions of this act. (2) Notwithstanding anything in sub section (1) or in section 5, the Administrator shall be responsible for the custody of all records and properties of the Temple, and shall arrange for proper collections of offerings made in the Temple and shall have power (a) to appoint all officers and employees of the Temple; (b) to lease out for a period not exceeding one year at a time the lands and buildings of the Temple which are ordinarily leased out , (c) to call for tenders for works or supplies and accept such tenders when the amount or value thereof does not exceed two thousand rupees; (d) to order for emergency repairs; (e) to specify, by general or special orders, such conditions and safeguards as he deems fit, subject to which any sevak, office holder or servant 38 shall have the right to be in possession of jewels or other valuable belongings of the temple; (f) to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public; (g) to decide disputes relating to the rights, privileges, duties and obligations of sevaks, office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature; (h) to require various sevaks and other persons to do their legitimate duties in time in accordance with the Record of Rights; and (i) in the absence of any sevak or his substitutes or on the failure on the part of any such person to perform his duties, to get the niti or seva performed in accordance with the record ofrights by any other person. (3) The administrator may subject to such conditions, if any, as the committee may, by general or special order impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony, such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall be paid to the sevaks, office holders or servants of the Temple. " Section 21 A provides that all sevaks, office holders and servants attached to the Temple or in receipt of any emolu ments or perquisites therefrom shall, whether such service is hereditary or not, be subject to the control of the administrator who may, subject to the provisions of the Act and the regulations made by the committee in that behalf, after giving the person concerned a reasonable opportunity of being heard withhold the receipt of emoluments or perquisites, impose a fine, suspend or dismiss any of them for breach of trust, incapacity, disobedience of lawful orders, neglect of or wilful absence from duty, disorderly behaviour or conduct derogatory to the discipline or dignity of the temple or for any other sufficient cause: Section 22 provides for extraordinary powers of the administrator who is directed to take action in emergency and report forthwith to the committee the action taken and the reasons therefor. Section 23 provides for the establishment schedule and section 24 provides for an appeal to, the committee against an order of the administrator under section 21 (2)(f) or (g) or section 21 A. Sections 25 to, 27 provide for the preparation of annual budget and audit. Section 28 provides for a Temple fund and how it is to be utilised. Section 29 bars suits against 39 the State Government or against the committee or the administrator for anything done or purported to be done by any of them under the provisions of the Act. Section 30 gives power of general superintendence of the Temple and its endowments to the State Government which may pass any orders for the proper maintenance or administration of the Temple or its endowments or in the interest of the general public worshipping in the Temple. It also gives power to the State Government to examine the records of the administrator or of the committee in respect of any proceedings with a view to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order made therein; and if in any case it appears to the State Government that any such decision or order should be modified, annulled, reversed or remitted, for reconsideration, it may pass orders accordingly. The State Government is also given the power to stay the execution of any such decision or order in the meantime. Section 30 A creates an offence which is punishable on conviction with fine which may extend to Rs. 500 whenever any person having duties to perform in respect of the nitis of the Temple or sevapuja of the deity raises any claim or dispute and fails or refuses to perform such duties, knowing or having reasons to believe that the non performance of the said duties would cause delay in the performance of the niti or sevapuja or inconvenience or harassment to the public or any section thereof entitled to worship in the Temple and wilfully disobeys or fails to comply with the orders of the administrator directing him to perform his duties without prejudice to the results of a proper adjudication of such claim or dispute. Section 31 gives power to the committee to frame regulations as to the conditions of service of office bearers and employees of the Temple, procedure for transfer of sevapuja, chuli or panti in the Temple, observance of nitis and other usages in the Temple in the absence of specific mention in the record of rights; and any other matters for which regulations are required to be made for the purposes of the Act. Section 32 gives power to the State Government to frame rules. Section 33 lays down that "the committee shall be entitled to take and be in possession of all movable and immovable properties, including the Ratna Bhandar and funds and jewelleries, re cords, documents and other assets belonging to the Temple" and also lays down the procedure to be followed in case of resistance in obtaining such possession. Section 34 lays down that "all public officers having custody of any record, register, report or other documents relating to the Temple or any movable or immovable property thereof shall furnish such copies of or extracts from the same as may be required by the administrator". Section 35 lays down that "no act or proceeding of the committee or of any person acting as a member of the committee shall be deemed to be invalid by reason only 40 of a defect in the establishment or constitution of the commitee or on the ground that any member of the committee was not entitled to hold or continue in such office by reason of any disqualification or by reason of any irregularity or illegality in his appointment or by reason of such act having been done or proceeding taken during the period of any vacancy in the office of member of the committee. " Similar protection is given to an act or proceeding of the administrator. Section 36 provides for the removal of difficulties by the State Government so long as the order passed in that behalf is not inconsistent with the Act or the rules made thereunder. This review of the provisions of the Act shows that broadly speaking the Act provides for the management of the secular affairs of the Temple and does not interfere, with the religious affairs thereof, which have to be performed according to the record of rights prepared under the Act of 1952 and where there is no such record of rights in accordance with custom and usage obtaining in the Temple. It is in this background that we have to consider the attack on the constitutionality of the Act. We may first dispose of the attack based on article 14. It is urged that inasmuch as this special Act has been passed for this Temple and the general Act, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952 no longer applies to this Temple, there has been discrimination inasmuch as the Temple has been singled out for special treatment as compared to other temples in the State of Orissa. There is no doubt that the Act is in many respects different from Act 11 of 1952 and substitutes the committee for the Raja of Puri for the purpose of management of the Temple, and there would prima facie be discrimination unless it can be shown that the Temple stands in a class by itself and required special treatment. As to that the affidavit on behalf of the State Government is that the Temple is a unique institution in the State of Orissa and is in a class by itself and that there is no comparison between the Temple and other temples in the State. The averment on behalf of the State is that the Temple has been treated as a special object throughout the centuries because of its unique importance and that there is no other temple which occupies the unique place which this Temple occupies in the whole of India. Also there is no other temple in Orissa with such vast assets or which attracts such a large number of pilgrims which pour into it from the whole of India. It is also averred that it is absolutely incorrect that there are other temples in Orissa which are equal to it from the standpoint of assets or from the standpoint of their all India character or from the standpoint of the complicated nature of nitis and sevapuja affecting the lives, religious susceptibilities and senti ments of millions of people spread all over India. There can be no doubt after this averment on behalf of the State that the Temple occupies a unique position in the State of Orissa and 41 is a temple of national importance and no other temple in that State can compare with it stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers it must be a subject of special consideration by the State Government. In reply to these averments on behalf of the State, all that the appellant stated in his rejoinder was that these averments were not admitted. There was no denial of the special importance of the Temple as averred on behalf of the State and we have no doubt therefore that this Temple stands in a class by itself in the State of Orissa and therefore requires special treatment. We may in this connection refer to the decision of the Court in Tilkayat Shri Govindlalji vs State of Rajasthan(1) where in relation to the temple at Nathdwara with respect to which a special Act had been passed by the State of Rajasthan, this Court observed that "a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself". The attack under article 14 on the constitutionality of the law with respect to the temple at Nathdwara was repelled on the ground that the temple had a, unique position amongst the Hindu Shrines in the State of Rajasthan and no temple could be regarded as comparable with it. The same reasons in our opinion apply to the Temple in the present case and the Act cannot be struck down under article 14 because the Temple in the present case holds a unique position amongst the Hindu temples in the State of Orissa and no other temple can be regarded as comparable with it. Next we come to the attack on the constitutionality of the Act on the ground that it has taken away the sole management of the temple which had so far been vested in the appellant or his ancestors. The reasons why the Act was passed are to be found in the preamble thereof. The preamble says that the ancient Temple of Lord Jagannath of Puri has ever since its inception been an institution of unique and national importance, in which millions of Hindu devotees from regions far and wide have reposed their faith and belief and have regarded it as the epitome of their tradition and culture. It further says that long prior to and after the British conquest the superintendence, control and management of the affairs of the Temple have been the direct concern of successive rulers, governments and their officers and of the public exchequer. it then says that by Regulation IV of 1809 and thereafter by other laws and regulations in pursuance of arrangements entered into with the Raja. of Khurda, later designated as the Raja of Puri, the said Raja came to be entrusted hereditarily with the management of the affairs of the Temple and its properties as superintendent subject to the control and supervision of the ruling power. It then goes on to say that in view of grave (1) [1964] 1 S.C.R. 561. 42 and serious irregularities thereafter the Government had to intervene on various occasions in the past. Finally the preamble says that the administration under the superintendent has further deteriorated and a situation has arisen rendering it expedient to reorganise the scheme of management of the affairs of the Temple and its properties and provide better administration and governance therefor in supersession of all previous laws, regulations and arrangements, having regard to the ancient customs and usages and the unique and traditional nitis and rituals contained in the record of rights prepared under the 1952 Act. So for all these reasons the appellant was removed from the sole superintendence of the Temple and a committee was appointed by section 6 of the Act for its management. These statements in the preamble are not seriously in dispute as will be clear from the reports by G. Grome dated June 10, 1905 and by the Special Officer appointed under the 1952 Act dated March 15, 1954 and the correspondence which passed from time to time between the officers of the Government and the predecessors of the appellant. In these circumstances if the secular management of the Temple was taken away from the sole control of the appellant and vested in a committee of which he still remains the chairman, it cannot be said that the provisions contained in the Act for that purpose are hit either by article 31(2) or by article 19(f). There is in our opinion a complete parallel between the provisions of the Act and the Act relating to the temple at Nathdwara in Rajasthan, which came up for consideration before this Court in Tilkayat Govindlalji 's case(1). If anything, the case of the appellant is weaker than that of Shri Govindlalji, for the appellant in the present case was conferred with the power of superintendence by Regulation IV of 1809 after the British conquered Orissa. Whatever may have been his connection prior to 1809 with the Temple, the history of the Temple shows that the Muslim Rulers had removed him and were carrying on the management of the Temple directly through Hindu officers appointed by them. The right of management was conferred on the appellant 's ancestor after the British conquest by virtue of the Regulation of 1809 and other laws passed thereafter. All that the Act has done is to replace his sole right of management by appointing a, committee of which he is the chairman. Further there can be in the circumstances no question of the application of article 31(2) in the present case. In the first place the right of superintendence is not property in this case for it carried no beneficial enjoyment of any property with it, and in the second case, that right has not been acquired by the State which article 31(2) requires. As was pointed out in Tilkayat Govindlalji 's case.(1), all that has happened in the present case is that the sole right of the appellant to (1) 1964 1 S.C.R. 561. 43 manage the property has been extinguished and in its place another body for the purpose of the administration of the property of the Temple has been created. In other words the office of one functionary is brought to an end and another functionary has come into existence in its place. Such a process cannot be said to constitute the acquisition of the extinguished office or the vesting of the rights in the person holding that office: (see Tilkayat Govindlalji 's case(1). As we have already pointed out, the appellant and his predecessors always had two distinct rights with respect to this Temple. In the first place, they were the adya sevaks and as such had certain rights and privileges and perquisites. The rights as adya sevak as we shall show later have not been touched by the Act. The Act has only deprived him of the second right i.e., the sole management of the Temple which carried no beneficial enjoyment of any property with it and has conferred that management on a committee of which he still remains the chairman. In view of this clear dichotomy in the rights of the appellant and his predecessors there is no question of article 31(2) applying in the present case at all, insofar as this right of superintendence of the appellant is concerned. The attack on the constitutionality of the Act on the ground that the sole right of superintendence has been taken away from the appellant and that is hit by article 19(1)(f) or article 31(2) must therefore fail. This brings us to the other aspect of the rights of the appellant as adya sevak, and it is urged that those rights have been taken away by the Act, and insofar as the Act has done that it is unconstitutional in that the provisions with respect to those rights are unreasonable and cannot be protected under article 19(5). Now we have already referred to the provisions of the Act, and if one looks at those provisions one finds nothing in them which takes away the rights of the appellant as adya sevak. If anything, there are indications in the Act to show that his rights, other than those of superintendence remain intact. When we say this we are not to be understood as saying that any rights which the appellant might have had in the capacity of adya sevak but which were of the nature of secular management of the Temple would still remain in him. Because the appellant and his predecessors were holding a dual position of superintendent and adya sevak, there was in the past a mix up of his rights flowing from being an adya, sevak with his rights as a superintendent. But apart from the rights which vested in him as the sole manager of the Temple with respect to its management and which have only been taken away from him by the Act, we find nothing in the Act which takes away his rights as an adya sevak (i.e. the chief servant) of Lord Jagannath in the matter of sevapuja, nitis etc. These rights flow from his position as adya sevak, they (1) [1964] 1 S.C.R. 561. . 44 are religious in character and are referable to his status and obligations as sevak. We may in this connection refer to section 8 of the Act which lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja in respect of Gajapati Maharaja Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being. This provision clearly shows that even though the appellant may not be able to act as chairman of the committee because of his minority or because of certain disqualifications mentioned in section 7 read with section 10(1), his rights and privileges in respect of the Gajapati Maharaja Seva (i.e., the daily sevapuja of Lord Jagannath) remain unaffected, and these were the rights which he had as adya sevak. Therefore section 8 preserves by the clearest implication the rights of the appellant as adya sevak in connection with the sevapuja of Lord Jagannath. In this connection our attention was drawn to section 14 of the Act, which provides that it shall be within the power of the State Government by order to direct from time to time the payment from out of the Temple fund to the chairman of such allowances at times and in such manner as the State Government may consider reasonable and proper. It is said that in view of section 14, the appellants rights and privileges as adya, sevak have gone. We are of opinion that this is not so. As we have already said, the position of the superintendent and of adya sevak were two different positions, which the appellant and his predecessors held in this Temple. His position as a Superintendent has gone and in place of it he has become the chairman of the committee constituted under section 6. When section 14 speaks of allowances to him, it refers to his position as a chairman, which replaces his position as superintendent before the Act. It has nothing to do with his position as an adva sevak, which is safeguarded by section 8 of the Act inasmuch as rights and privileges in respect of the Gajapati Maharaja Seva are protected, even though he may cease to be the chairman on account of his minority or on account of some other reason. Therefore, the provisions of section 14 refer to allowances only as a chairman and have nothing to do with the rights, privileges and perquisites as an adya sevak, for he remains as adya sevak even though he may not for certain reasons remain a chairman. His rights, privileges and perquisites as adya sevak will remain protected under section 8 even though he may not be entitled to anything under section 14 if he ceases to be the chairman in view of section 7. No provision in the Act has been pointed out to us, which expressly takes away his rights, privileges and perquisites as adya sevak; on the other hand there are other provisions which seem to indicate that even the rights and privileges of sevaks have not been affected by the Act. If so it is hardly likely in the absence of any specific provision, that the Act would affect the privileges of the appellant as adya sevak. For example, section 21 (2) (g) gives power to the 45 administrator to decide disputes relating to the rights, privileges, duties and obligations of sevaks , office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature. This clearly postulates that the rights and privileges of sevaks remain intact, and if there is any dispute about them, the administrator has to decide it. Again section 21(2)(f) provides that the administrator shall have power to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public. This again postulates a right in some persons who could only be sevaks etc. to a share of the offerings, fees and other receipts, and if there is any dispute about its distribution or apportionment, the administrator has been given the power to decide it. Reading these two clauses together, there can be no manner of doubt that the Act does not affect even the rights, privileges and perquisites of sevakas. If so, in the absence of express provision, it cannot possibly be argued that the Act affects rights, privileges and perquisites of adya sevak. As we have already indicated, those rights, privileges and perquisities of adya sevak have also been safe ,guarded under section 8 of the Act. Then we may refer to section 21 (3) which provides that "the administrator may subject to such conditions, if any, as the committee may, by general or special order 'Impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall paid to the sevakas, office holders or servants of the Temple " This again postulates that the rights, privileges and perquisites of the sevaks are not to be affected by the Act but have to be governed by the record of rights or, as the case may be, by the order of the committee. The argument that the Act is ultra vires because it takes away the rights, privileges and perquisites of the appellant as adya sevak, some of which may be property must therefore fail in view of the specific provision in section 8 and indications in other provisions of the Act to which we have referred. Clause (1) of section 15 of the Act is however specially attacked as interfering with the religious affairs of the Temple. The rest of the provisions of that section deal so obviously with secular matters that they have not been challenged. This clause provides that it shall be the duty of the committee to arrange for the proper performance of sevapuja and of the daily and periodical nitis of the Temple in accordance with the record of Tights. As we read this clause we see no invasion of the religious affairs of the Temple therein. All that it provides is that it shall be the duty of the committee to arrange for the proper performance of sevapuja etc. of the Temple in accordance with 46 the record of rights. Sevapuja etc. have always two aspects. One aspect is the provision of materials and so on for the purpose of the sevapuja. This is a secular function. The other aspect is that after materials etc. have been provided, the sevaks or other persons who may be entitled to do so, perform the sevapuja and other rites as required by the dictates of religion. Clause (1) of section 15 has nothing to do with the second aspect, which is the religious aspect of sevapuja; it deals with the secular aspect of the sevapuja and enjoins upon the committee the duty to provide for the proper performance of sevapuja, and that is also in accordance with the record of rights. So that the committee cannot deny materials for sevapuja if the record of rights says that certain materials are necessary. We are clearly of the opinion that cl. (1) imposes a duty on the committee to look after the secular part of the sevapuja and leaves the religious part thereof entirely untouched. Further under this clause it will be the duty of the committee to see that those who are to carry out the religious part of the duty do their duties properly. But this again is a secular function to, see that sevaks and other servants, carry out their duties properly; it does not interfere with the performance of religious duties themselves. The attack on this provision that it interferes with the religious affairs of the Temple must therefore fail. We may now briefly refer to some other sections of the Act which were attacked. Apart from the main sections 5 and 6 by which the appellant was divested of the sole management, the first section so attacked is section 11 which deals with the dissolution and supersession of the committee. We have not been able to understand how this section can be attacked once it is held that sections 5 and 6, constituting the committee in place of the Raja, are valid, as we have held that they are for they are the main provisions by which the management has been transferred from the sole control of the Raja to the control of the committee. The next section in this group is section 19. That section provides for the appointment of an administrator to carry on the day to day administration of the secular part of the affairs of the Temple. We cannot see how this provision is liable to attack once sections 5 and 6 are held good, for the committee must have some officer under it to carry on the day to day administration. The next provision that is attacked in this group is section 21, which deals with powers and duties of the administrator. Again we cannot see how this provision can be attacked once it is held that the appointment of the administrator under section 19 is good, for section 21 only delimits the powers and duties of the administrator, and all powers and duties therein specified are with respect to the secular affairs of the Temple, and have no direct impact on the religious affairs thereof. The next section in this group is section 21 A. That section is clearly concerned with the secular management of the Temple, for the disciplinary 47 powers conferred thereby on the administrator are necessary in order to carry on the administration of the secular affairs of the Temple. The next section which is attacked is section 30, which gives over all supervisory power to the State Government. We cannot see how the control which the State Government is authorised to exercise by section 30 over the committee can be attacked once the appointment of the committee is held to be ,good. The last section under this group is section 30A, which creates a criminal offence and makes sevaks etc. liable to a fine on ,conviction. We think it unnecessary for present purposes to consider the validity of this section. The matter can be decided if and when a case of prosecution under that section ever arises. This brings us to the contention relating to articles 26, 27 and 28 of the Constitution, which were referred to in the petition. Articles 27 and 28 in our opinion have nothing to do with the matters dealt with under the Act. The main reliance has however been placed on article 26(d) which lays down that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to administer its property in accordance with law. In the first place besides saying in the petition that the Act was bit by article 26 there was no indication anywhere therein as to which was the denomination which was concerned with the Temple and whose rights to administer the Temple have been taken away. As a matter of fact the petition was filed on the basis that the appellant was the owner of the Temple which was his private property. There was no claim put forward on behalf of any denomination in the petition. Under these circumstances we are of opinion that it is not open to the appellant to argue that the Act is bad as it is hit by article 26(d). The argument addressed before the High Court in this connection was that the worshippers of Lord Jagannath constitute a distinct religious denomination within the meaning of article 26 and that they had a right to administer the Temple and its endowments in accordance with law and that such administration should be only through the Raja of Puri as superintendent of the Temple assisted by the innumerable sevaks attached thereto. But inasmuch as the Act has taken away this right of management from the religious denomination, i.e., the worshippers of Lord Jagannath, and entrusted it to the nominees of the State Government, there had been a contravention of the funda mental rights guaranteed under cl. (d) of Art 26. This argument was met on behalf of the State with the contention that the Temple did not pertain to any particular sect, cult or creed of Hindus but was a public temple above all sects, cults and, creeds, therefore, as the temple was not the temple of any particular domination no question arose of the breach of cl.(d) of article 26. The foundation for all this argument which was 48 urged before the High Court was not laid in the writ petition. In these circumstances we think it was unnecessary for the High Court to enter into this question on a, writ petition of this kind. The High Court however went into the matter and repelled the argument on the ground that the Temple in the present case was meant for all Hindus, even if all Hindus were treated as a denomination for purposes of article 26, the management still remains with Hindus, for the committee of management consists entirely of Hindus, even though a nominated committee. In view of the defective state of pleadings however we are not prepared to allow the argument under article 26(d) to be raised before us and must reject it on the sole ground that no such contention was properly raised in the High Court. For these reasons we find there is no force in this appeal and it is hereby dismissed with costs. Appeal dismissed.

IN-Abs

A writ petition was filed in the Orissa, High Court by the father of the appellant challenging the validity of Shri Jagannath Temple Act, 1954. The petition was dismissed by High Court which held that the Act was valid and constitutional except section 28(2)(f). The High Court struck down that provision and upheld the constitutionality of the rest of the Act. The appellant came to this Court after obtaining a certificate of fitness to appeal to Supreme Court. The contentions raised before this Court were that the Act was discriminatory as the Jagannath Temple alone had been singled out for special treatment as compared to other temples in the State of Orissa. The Act took away the sole management of the Temple which had so far been vested in the appellant or his ancestors. section 15 (1) of the Act interfered with the religious affairs of the temple. The validity of sections 11, 19, 21, 21A and 30 of the Act was also attacked. Dismissing the appeal, Held: There is no violation of article 14 of the Constitution. The Jagannath Temple occupies a unique position in the State of Orissa, and is a temple of national importance and no other temple in that State can compare with it. It stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers, it could be the subject of special consideration by the State Government. A law may be constitutional even though it related to a single individual if on account of special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself. (ii) There was no violation of article 19(1) (f) or article 31 (2) of the Constitution. All that the Act has done is that it has taken away the sole right of the appellant to manage the property of the Temple and another body has been set up in its place with the appellant as its Chairman. Such a process cannot be said to constitute the acquisition of the extinguished office or of the vesting of the rights in the person holding that office. The appellant occupied a dual position as Superintendent and Adya Sevak. His position as Superintendent hers gone and in that place he has become the Chairman of the Committee set up under section 6. The position of the applicant as Adya Sevak is safeguarded by section 8 of the Act inasmuch as the rights and privileges in respect of Gajapati Maharaja Seva axe protected even though he may cease to be Chairman on account of his minority or on account of some other reason. (iii) section 15(1) of the Act does not interfere with the religious, affairs of the Temple. Sevapuja of the Temple has two aspects. One aspect is the provision of materials and that is a secular, 33 function. The second aspect is the performance of the Sevapuja and other rights as required by religion. section 15(1) has nothing to do with the second aspect which is the religious aspect of Seva Raj puja. While section 15(1) imposes a duty on the committee to look after the secular aspect of the Sevapuja, it leave the religious part entirely untouched. (iv) Ss. 11, 19 and 21 were valid provisions and could not be attacked sections 5 and 6 constituting the committee in place of the Raja, were valid. 21A and 30 were also valid. articles 27 and. 28 had nothing to do with the matter dealt with under Act. It was not open to the appellant to argue that the Act was bad as it was hit by article 26(d). No such contention was _properly raised in the High Court. Tilkayat, Shri Govindlal ji vs State of Rajasthan, A.I.R. , referred to.

Appeals Nos.475 478 of 1963. Appeal from the order dated July 14, 1961 of the Andhra Pradesh High Court in Writ Petition Nos. 516 to 519 of 1960. D. Narsaraju, Advocate General, Andhra Pradesh, P. R. Ramchandra Rao and T. V. R. Tatachari, for the appellant (in all the appeals). K. N. Rajagopala Sastri, Gopal Singh and R. N. Sachthey, for the respondents (in all the appeals). Rajeshwari Prasad and section P. Varma, for Intervener No. 1 (in all the appeals). B. Seri, section C. Bose and P. K. Bose, for Intervener No. 2 (in all the appeals). M. C. Setalvad, section C. Bose and P. K. Bose, for Intervener No. 3 (in all the appeals). 19 March 5. The judgement of the Court was delivered by GAJENDRAGADKAR, C.J. These four appeals arise from four, writ petitions filed by the appellant, the Andhra Pradesh State Road Transport Corporation, in the High Court of Andhra Pradesh against the Income tax Officer, and the Appellate Assistant Commissioner of Income tax, Hyderabad, respondents 1 and 2 respectively, in which it claimed a writ of prohibition restraining them from collecting any tax, or taking any proceedings under the Indian Income Tax Act against them. In its writ petitions, the appellant further claimed an order, writ, or other appropriate direction quashing the assessment orders passed by respondent No. 1 on the 29th February, 1960. for the years 1958 59 and 1959 60. For the first year, a tax of Rs. 13,60.963.86 nP. has been imposed for the period 11 1 1958 to the 31 3 1958, and for the latter year, a tax of Rs. 34,44,430.48 nP. has been levied for the period 1 4 1958 to 31 3 1959. After hearing the parties, the High Court has dismissed the appellant 's writ petitions with costs. The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that these four appeals have been brought to this Court. It appears that the appellant was established under the (No. 64 of 1950) (hereinafter called the Act) by a notification issued by the Andhra Pradesh Government and it has been functioning with effect from the 11th January, 1958. Before the formation of the appellant Corporation, the road transport was a depart ment of the Government of Hyderabad and after integration of Hyderabad with Andhra Pradesh, it was run by the Government of Andhra Pradesh. During the whole of this period, the road transport was treated as exempt from income tax. After the appellant Corporation was, however, formed the Income tax Department took the view that the income made by the appellant was liable to tax, and so, a notice under section 22 of the Income Tax Act was served on the appellant on the 29th January, 1959. In pursuance of the proceedings which were taken after service of the notice, the impugned orders of assessment were passed. Before the Income tax Officer, it was urged by the appellant that since the appellant was an independent body carrying on the business of road transport, it did not fall Linder any of the five categories of assessees under section 3 of the Income tax Act; it was neither an individual, nor a Hindu undivided family, nor a firm, nor a company, nor an association of persons, and as it was outside the said five categories of assessees, no tax could be levied against it. It was further argued that the net income of the appellant ultimately goes to the State of Andhra Pradesh under section 30 of the Act, and is such it was immune from Union taxation under 20 article 289 of the Constitution. Yet, another contention was raised in support of the plea that the noice issued by respondent No. 1 was invalid, and that was that the appellant was a local authority exempt from income tax. All these contentions were rejected by respondent No. 1, with the result that the impugned orders of assessment came to be passed. It is the validity of these orders that the appellant challenged before the Andhra Pradesh High Court. The High Court has held that the appellant is not a State owned Corporation and that it is not carrying on business on behalf of the Government. It has also observed that the trade or business which the appellant was carrying on was not incidental to the ordinary functions of government, and since no declaration had been made to that effect under article 289(3), the appellant could not rely on article 289(1). The contention that the appellant was a local authority which was urged before the High Court was rejected, and the argument that the charging section of the Income tax Act was repugnant with the material provisions of the Act, such as sections 28, 29 and 30, was also held to be without any substance by the High Court. Thus, since none of the arguments urged by the appellant before the High Court was accepted, the writ petitions filed by it were dismissed. The main point urged before us by the learned Advocate General of Andhra Pradesh on behalf of the appellant is that the income in respect of which the impugned order of assess ment has been passed by respondent No. 1, is exempt from Union taxation under article 289(1) of the Constitution, and that raises the question about the construction and effect of the provisions of the three clauses of article 289. Let us, therefore, read the said article: "289. (1) The property and income of a State shall be exempt from Union taxation. (2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied or any income accruing or arising in connection therewith. (3) Nothing in clause (2) shall apply to any trade or business, or to any class of trade or business, which Parliament may by law declare to be incidental to the ordinary functions of government." 21 The learned Advocate General concedes that the transport activity carried on by the appellant is strictly not inci dental to the ordinary functions of government. It is true that in a modern democratic Welfare State, Government has to undertake several economic activities some of which are trade activities, while others are commercial activities, because the pursuit of the welfare policies inevitably requires that Government should help the process of economic improvement of its citizens. However desirable these socioeconomic activities may be and however legitimate may be the attempt of the State Government to undertake them, there is no denying the fact that the ordinary functions of the Government to which clause (3) of article 289 refers must be distinguished from these socioeconomic activities. The Advocate General, however, urges that though the trade activities of the appellant may thus be distinguishable from the ordinary functions of Government, they are nevertheless included in article 289(1) and income derived by the appellant from the said activities falls within the protection of article 289(1). This argument proceeds on the assumption that clause (2) of article 289 is an exception or proviso to clause (1) and as such, whatever is included in clause (2) must be deemed to have been included also in clause (1); otherwise, the proviso cannot be logically explained. It is because the trading or commercial activities of the government of a State to which the said clause refers were originally included in clause (1) that it became necessary to provide by clause (2) that the said trading or commercial activities carried on by the Government of a State would not claim the benefit of exemption prescribed by clause (1). That is how the Advocate General seeks to include trading or business activities mentioned in cl. (2) in cl. (1) itself. Logi cally, no exception can be taken to this approach. The next stage in the argument urged by the Advocate General is that clause (2) is wide enough to include the trading activities carried on by the appellant and as a result of the width of its scope, the appellant 's activities can be treated as the commercial activities carried on by the Government of Andhra Pradesh itself. It will be noticed that clause (2) refers to a trade or business of any kind carried on by or on behalf of the Government of a State. The argument is that the first part of the clause refers to the trade or business carried on by the Government and that means, carried on by the Government either departmentally or by agents appointed by the Government in that behalf. Whether the department carried on the business or an agent specifically and exclusively appointed for that purpose carries it on, it is the business carried on by the State. The latter part of the clause refers to trade or business carried on on behalf of the Government of a State and it is 22 suggested that this part of the clause is intended to take in trade or business carried on by a Corporation like the appellant which is either State owned, or State controlle. The appellant Corporation, says the Advocate General, ;Is undoubtedly State controlled and he would suggest that it is also owned by the State of Andhra Pradesh. Therefore, the commercial activity carried on by the appellant must be deemed to be an activity carried on on behalf of the State of Andhra Pradesh, and it is with this postulate that the argument reverts to clause (1) of article 289 and urges that the income received by the appellant in respect of commercial activities carried on by it on behalf of the Government of Andhra Pradesh is exempt from Union taxation. In support of this argument, the Advocate General has relied. on a recent decision of this Court in Akadasi Padhan vs State of Orissa & Others(1) In that case, this Court had occasion to consider the scope and effect of the provisions contained in article 19(6). It will be recalled that article 19(6) authorrises the State, inter (ilia, to make any law relating to the carrying on by the State or by 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. One of the points which fell to be considered in the Akadasi Padhan case was the effect of the words "a law relating to the carrying on by the State of any trade or business. " Dealing with this question, this Court held that though normally, the trade specified in the clause would be carried on by the State departmentally or with the assistance of public servants appointed in that behalf, there may be cases of some trades or business in which it would be open to the State to employ the services of agents, provided the agents work on behalf of the State and not for themselves. Relying upon this decision, the Advocate General argues that when clause (2) of article 289 refers to trade or business carried on by tile Government of a State, it includes trade or business carried on by the Government either departmentally or with the assistance of agents appointed in that behalf, and so, be argues that these two categories of carrying on business having been included in the first part, what the second part is intended to cover is trade or business carried on by the Government of a State through the instrumentality of a corporation like the appellant, and so. the trade or business carried on by the appellant is trade or business carried on on behalf of the Government of Andhra Pradesh within the meaning of article 289(2) and that makes the income earned out of the said trade or business income of the State under article 289(1). (1) [1963] Supp. 2 S.C.R. 691. 23 In substance, this argument is really based on the American doctrine of the immunity of State agencies or instru mentalities from Federal taxation. When this doctrine was accepted by American decisions, it was normally confined to such State agencies as were concerned with functions which were essentially governmental in character. But, says the Advocate General, since article 289(2) takes in trade activities carried, on by a corporation like the appellant, the question as to whether the trade is a function which is essentially governmental in character is irrelevant. In support of his contention, the Advocate General has relied upon two American decisions; first of these is the decision in the case of Mark Graves. John J. Merrill and John P. Hennessy vs People of the State of New York Upon the Relation of James B. O 'keefe(1). In that case Stone J. who spoke for the Supreme Court of America. has observed that when the national government lawfully acts through a corporation which it owns and controls, those activities are governmental functions entitled to whatever tax immunity attaches to those functions when carried on by the government itself through its departments. In other words, this observation shows that the Court was inclined to take the view that for the purpose of claiming exemption from taxation, it did not make a material difference whether the operation was carried on by the State departmentally or with the assistance of a corporation. In Clallan County vs United States of America, (2) it was held by the Supreme Court of America that a State cannot tax the property of a corporation organised by the Federal government to produce material for war purposes, the property of which is conveyed to it by, or bought with the money of, the United States, and used solely for the purposes of its creation. Holmes J. who delivered the opinion of the Court emphasised the fact that in the case before the Court not only the agent was created, but all the agent 's property was acquired and used for the sole purpose of producing a weapon for the war. "This is not like the case of a corporation," added the learned Judge, "having its own purposes as well as those of the United States, and interested in profit on its own account. The incorporation and formal erection of a new personality was only for the convenience of the United States, to carry out its ends, and so, it is unnecessary to consider whether the fact that the United States owned all the stock and furnished all the property to the corporation, taken by itself, would be enough to bring the case within the policy of the rule that exempts property of the United States." ; ; , 331. 24 Both these decisions would not assist us in determining the question as to whether the income received by the appellant is the income of the State of Andhra Pradesh within the meaning of article 289(1), because the decision of the problem raised before us by the appellant must be reached not on any academic considerations of the claims for exemption from taxation which the State instrumentalities can put forward, but on the construction of article 289 itself. article 289(1) exempts from Union taxation the property and income of a State, and the Advocate General can succeed only if he is able to establish that the income derived by the appellant in respect of which the impugned assessment order has been passed is the income of the State of Andhra Pradesh. There fore, the American doctrine on which strong reliance was placed by the Advocate General would be of no assistance to his case. If the trading activity carried on by the appellant is sought to be brought into article 289(1) solely as a result of the construction of article 299(2), the test on which the validity of the Advocate General 's argument must necessarily be judged, is whether or not the requirement of article 289(1) is satisfied and that requirement clearly is that the income like the property for which exemption from Union taxation is claimed must be the income or property of a State. Besides, there is another reason why the Advocate General cannot derive any assistance from the American doctrine of the exemption from taxation in regard to State instru mentalities. The said doctrine has been categorically rejected by this Court in State of West Bengal vs Union of India(1) Speaking for the majority of the Court, Sinha C. J. observed that "it was futile to attempt the resuscitation of the now exploded doctrine of the immunity of instrumentalities which originating from the observations of Marshall, C. J., in M ' Culloch vs Maryland,(2) has been decisively rejected by the Privy Council as inapplicable to the interpretation of the respective powers of the States and the Centre under the Canadian and Australian Constitutions (vide Bank of Toronto vs Lambel(3) and Webb vs Outrim(4) and has practically been given up even in the United States." Thus, it is necessary to revert to the construction of article 289 in deciding whether the appellant is right in claiming immunity from Union taxation. We have already seen that article 289 consists of three clauses, the first clause confers exemption from Union tax ation on the property and income of a State. In Special Reference No. 1 of 1962. In re. Sea Customs Act (1878), Section (1) [1964] 1 S.C.R. 371. 407. (3) (2) ; at p. 436. (4) 25 20(2),(1) a Special Bench of this Court by a majority as e that the immunity granted to the States in respect of Union taxation, under article 289(1) does not extend to duties of customs including export duties or duties of excise. In that case, the question which directly arose for decisions was to determine the scope and effect of the nature of taxation from which exemption could be claimed by the property and income of a State under article 289(1). With that aspect of the matter, however, we are not concerned in the present appeals. The scheme of article 289 appears to be that ordinarily, the income derived by a State both from governmental and non governmental or commercial activities shall be immune from income tax levied by the Union, provided, of course, the in come in question can be said to be the income of the State. This general proposition flows from clause (1). Clause (2) then provides an exception and authorises the Union to impose a tax in respect of the income derived by the Government of a State from trade or business carried on by it, or on its behalf; that is to say, the income from trade or business carried on by the Government of a State or on its behalf which would not have been taxable under clause (1), can be taxed, provided a law is made by Parliament in that behalf. If clause (1) had stood by itself, it may not have been easy to include within its purview income derived by a State from commercial activities, but since clause (2), in terms, empowers Parliament to make a law levying a tax on commercial activities carried on by or on behalf of a State, the conclusion is inescapable that these activities were deemed to have been included in cl.(1) and that alone can be the justification for the words in which cl. (2) has been adopted by the Constitution. It is plain that cl. (2) proceeds on the basis that but for its provision, the trading activity which is covered by it would have claimed exemption from Union taxation under cl. That is the result of reading clauses (1) and (2) together. Clause (3) then empowers Parliament to declare by law that any trade or business would be taken out of the purview of cl. (2) and restored to the area covered by cl. (1) by declaring that the said trade or business is incidental to the ordinary functions of government. In other words, cl. (3) is an exception to the exception prescribed by cl. Whatever trade or business is declared to be incidental to the ordinary functions of government, would cease to be governed by cl. (2) and would then be exempt from Union taxation. That, broadly stated, appears to be the result of the scheme adopted by the three clauses of article 289. (1) 26 Reading the three clauses together, one consideration emerges beyond all doubt and that is that the property as well as the income in respect of which exemption is claimed under cl. (1), must be the property and income of the State, and so, the same question faces us again: is the income derived by the appellant from its transport activities the income of the State? If a trade or business is carried on by the State departmentally and income is derived from it, there would be no difficulty in holding that the said income is the income of the State. If a trade or business is carried on by a State through its agents appointed exclusively for that purpose, and the agents carry it on entirely on behalf of the State and not on their own account, there would be no difficulty in holding that the income made from such trade or business is the income of the State. But difficulties arise when we are dealing with trade or business carried on by a corporation established by a State by issuing a notification under the relevant provisions of the Act. The corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders. It cannot be said that a shareholder owns the property of the corporation or carries on the business with which the corporation is concerned. The doctrine that a corporation has a separate legal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately; and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation. It may that the statute under which the notification has been issued constituting the appellant corporation may provide expressly or by necessary implication that the income derived by the corporation from its trading activity would be the income of the State. The doctrine of the separate entity or personality of the corporation is always subject to the exceptions which statutes may create, and if there is a statutory provision which clearly indicates that despite the concept of the separate personality of the corporation, the trade carried on by it belongs to the shareholders who brought the corporation into existence and the income received from the said trade likewise belongs to them, that would be another matter. It would then be possible to hold that as a result of the specific statutory provisions the income received from the trade carried on by the corporation belongs to the shareholders who have constituted the said corporation, and so, we must look to the Act to determine whether the income in the present case can be said to be the income of the State of Andhra Pradesh. In this connection, we may usefully refer to the observa tions made by Lord Denning in Tamlin vs Hansaford: (1). "In 27 the eye of the law," said Lord Denning, "the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, Po doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government." These observations tend to show that a trading activity carried on by the corporation is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf. That takes us to the provisions of the Act which will assist us in determining the question as to whether the income in question can legitimately be held to be the income of the State of Andhra Pradesh. The Act was passed to provide for the incorporation and regulation of Road Transport Corpora tions. Section 3 authorises the State Government to issue a notification in the Official Gazette establishing a Road Transport Corporation for the whole or any part of the State under such name as may be specified in the notification, after taking into account considerations specified by clauses (a), (b) and (c). Section 4 then provides that every corporation shall be a body corporate by the name notified under section 3 having perpetual succession and a common seal, and shall sue or be sued by the said name. Section 5 deals with the constitution of Road Transport Corporation; sub section (3) provides for the representation both of the Central Government and of the State Government in the Corporation in such proportion as may be agreed to by both the Governments and of nomination by each Government of its own representatives therein; it also contemplates that if capital is raised by the issue of shares to other parties, provision has to be made for the representation of such shareholders. Section 17 authorises the appointment of Advisory Councils. Section 18 prescribes the general duty of the corporation. Section 23(1) provides for the capital of the corporation; under this sub section, the capital contributed by the Central Government and the State Government is in the proportion of I : 3. Sub section (3) authorises the division of the capital of the corporation into such number of shares as the State Government may determine , and it provides that the number of shares which shall be subscribed by the State Government, the Central Government and other parties shall also be determined by the State Government in consultation with the Central Government. This provision contemplates the possibility of other shareholders joining the State Government and the Central Government. Section 24 permits additional capital of the corporation to be raised. Section 25 requires that 28 the share of the corporation shall be guaranteed by the State Government as to the payment of the principal and the payment of the annual dividend at such minimum rate as may be fixed by the State Government. Section 26 confers powers of borrowing on the corporation. Section 27 constitutes a fund of the Corporation. Section 28 provides for the payment of interest and dividend. Section 29(1) requires the Corporation to make such provisions for depreciation and for reserve and other funds as the State Government may, from time to time, direct. Section 29(2) provides that the management of the said funds, the sums to be carried from time to time to the credit thereof and the application of the moneys comprised therein shall be determined by the Corporation. There is a proviso to this sub section which prohibits the utilisation of these funds for any purpose other than that for which it was created without the previous approval of the State Government. Section 30 deals with the disposal of net profits: it says that after provi sion is made as required by sections 28 and 29, the Corpora tion may utilise such percentage of its net annual profits as may be specified in this behalf by the State Government for the purposes therein specified, and it adds that out of the balance, such amount as may, with the previous approval of the State Government and the Central Government, be specified in this behalf by the Corporation, may be utilised for financing the expansion programmes of the Corporation and the remainder, if any, shall be made over to the State Government for the purpose of road development. Section 31 gives power to the Corporation to spend such sums as it thinks fit on objects authorised by the Act. Section 32 deals with the budget; section 33 with accounts and audit; and section 34 provides that the directions issued by the State Government after consultation with the Corporation shall be followed by the Corporation, and it adds that such directions may include instructions relating to the recruitment, conditions of service and training of its employees, wages to be paid to the employees, reserves to be maintained by it and disposal of its profits or stocks. Under Section 38, power is conferred on the State Government to supersede the Corporation for reasons specified by section 38(1). On supersession, all property vested in the Corpora tion vests during the period of supersession, in the State Government; that is the effect of section 38(2)(c). Section 39 deals with the liquidation of a Corporation and clause (2) of this section provides that in the event of such liquidation, the assets of the Corporation, after meeting the liabilities, if any, shall be divided among the Central and the State Government and such other parties, if any, as may have subscribed to the capital in proportion to the contribution made by each of them to the total capital of the Corporation. That, in brief, is the position ,of the relevant provisions of the Act. 29 There is no doubt that the bulk of the capital is contribut ed by the State Government and a small proportion by the Central Government, and in that sense, the majority of shares, are at present owned by the State Government. There is also no doubt that the Corporation is a State controlled corporation in the sense that at all material stages and in all material particulars, the activity of the Corporation is controlled by, the State , but it is clear that other citizens may be admitted to the group of shareholders, and from that point of view, the Act contemplates contribution of the capital for the Corporation not only by the Central and the State Governments, but also by the citizens. The main point which we are examining at this stage is: is the income derived by the appellant from its trading activity, income of the State under article 289(1)? In our opinion, the answer to this question must be in the negative. Far from making any provision which would make the income of the Corporation the income of the State, all the relevant provisions emphatically bring out the separate personality of the corporation and proceed on the basis that the trading activity is run by the corporation and the profit and loss that would be made as a result of the trading activity would be the profit and loss of the corporation. There is no provision in the Act which has attempted to lift the veil from the face of the corporation and thereby enable the shareholders to claim that despite the form which the Organisation has taken, it is the shareholders who run the trade and who can claim the income coming from it as their own. Section 28 which provides for the payment of interest clearly brings out the duality between the Corporation on the one hand, and the State and Central Governments on the other. Take, for instance, the case of supersession of the corporation authorised by section 38. Section 38(2)(c) emphatically brings out the fact that the property really vests in the Corporation, because it provides that during the period of supersession, it shall vest in the State Government. Similarly, section 39(2) which deals with the distribution of assests in case of liquidation, brings out the same feature. It has been urged before us by the Advocate General that section 50 contemplates that after provision is made as required by sections 28 and 29 and funds are utilised as prescribed by section 30, the balance has to be given to the State Government for the purpose of road development, and that, it is suggested, indicates that the income belongs to the State Government. This argument is clearly not well founded. When we are deciding the question as to whether the income derived by the Corporation is the income of the State, the provision made by section 30 for making over to the State Government the balance that may remain as indicated therein, is of no assistance. The income is undoubtedly the income of the Corporation. All that section 30 requires is that a part of that income may be entrusted to the 30 State Government for a specific purpose of road developmen nt is not suggested or shown that when such income is made over to the State, it becomes a part of the general revenue of the State. It is income which is impressed with an obligation and which can be utilised by the State Government only for the specific purpose for which it is entrusted to it. Therefore, we are satisfied that the income derived by the appellant from its trading activity cannot be said to be the income of the State under article 289(1), and if that is so, the fact that the trading activity carried on by the appellant may be covered by article 289(2), does not really assist the appellant 's case. Even if a trading activity falls under cl. (2) of article 289, it can sustain a claim for exemption from Union taxation only if it is shown that the income derived from the said trading activity is the income of the State. That is how ultimately, the crux of the problem is to determine whether the income in question is the income of the State, and on this vital test, the appellant fails. There is one more point which was faintly argued before us by the learned Advocate General. He frankly told us that he did not propose to challenge the correctness of the conclusion recorded by the High Court that the appellant is not a local authority; but he was not prepared to give up his contention that there is repugnancy between the charging section of the Income tax Act and sections 29 and 30 of the Act. He suggested that in view of the repugnancy on which he relied, the Act which is Act No. 64 of 1950 should prevail over the Income Tax Act which is an enactment of 1922. None of the assumptions made by the learned Advocate General in support of this plea can be said to be valid. Though the original Income tax Act was passed in 1922, as is well known, every year a fresh Finance Act is passed and it is by virtue of such successive Finance Acts that income tax is assessed from year to year, and so, the argument that the Act on which the appellant relies is later in point of time must fail. Besides, there is really no repugnancy at all. Basing himself on the provisions of sections 29 and 30, the Advocate General contends that these two provisions show that the Act did not contemplate the payment of income tax. This argument is entirely misconceived. It is hardly necessary for the Act to make a provision that tax, if chargeable, would be paid. In fact, the Companies Act which deals with companies does not make such a specific provision, though no one can seriously suggest that there would be repugnancy between the provisions of the Companies Act and the Income Tax Act. All that sections 29 and 30 purport to do is to provide for the administration of the funds vesting in the Corporation and their disposal. It is clearly far fetched, if not fantastic, to suggest that these provisions are inconsistent with the liability to pay tax which is imposed by the Income Tax Act. The Advocate General, no doubt, attempted to derive some support 31 to his argument by relying on section 43 of the ), as well as section 43 of the Damodar alley Corporation Act, 1948 (No. 14 of 1948). Sec tion 43 which occurs in both the said Acts provides that the Corporation shall be liable to pay any taxes on income levied by the Central Government in the same manner and to the same extent as a company. It is urged that where the legislature wanted to provide for the liability of the Corporation to pay the taxes on income levied by the Central Government, it has made specific provisions in that behalf and since no such provision has been made in the Act, it follows that the legislature intended that no tax should be levied on the income earned by the Corporation established under the Act. We do not think there is any substance in the argument. The whole object which section 43 is presumably intended to achieve is to provide that the tax should be levied on the basis that the Corporation is a company and nothing more. If no such provision was made in the Act, that has no bearing on the liability of the Corporation to pay the tax on its income. Therefore, we are satisfied that the High Court was right in rejecting the argument that by virtue of the repugnancy between the mater ial provisions of the Act and the charging section of the Income Tax Act, it should be held that the appellant was not liable to pay tax on its income. The result is, the appeals fail and are dismissed with costs. One hearing fee. Appeals dismissed.

IN-Abs

The Income tax Officer (respondent No.(1) served a notice under section 22 of the Income tax Act on the appellant. Upon the receipt of the notice, the appellant appeared before the Income tax Officer. The appellant pleaded before the Income tax Officer that it did not fall under any of the five categories of assessees under section 3 of the Income tax Act. The appellant also raised the contention that it was a local authority exempt from income tax. All these contentions were rejected by respondent No. 1 with the result that the impugned orders of assessment came to be passed. The appellant filed Writ Petitions before the High Court in which it challenged the impugned orders of assessment passed by respondent No. 1. In its Writ Petitions, the appellant claimed an ,order, writ or other appropriate direction quashing the assessment orders passed by respondent No. 1. The High Court dismissed these writ petitions. The High Court held that the appellant could not claim the exemption under article 289(1) because it was not a state owned Corporation. The High Court granted a certificate under article 133 of the Constitution and hence the appeal. Held: (i) article 289 of the Constitution consists of three clauses. The first clause confers exemption from union taxation on the property and income of a State. Clause (2) then provides that the income from trade or busi ness carried on by the Government of a State or on its behalf which would not have been taxable under cl. (1), can be taxed, provided a law is made by Parliament in that behalf. In other words cl. (2) is an exception to cl. Clause (3) then empowers Parliament to declare by law that any trade or business would be taken out of the purview of cl. (2) and restored to the area covered by cl. (1) by declaring that the said trade or business is incidental to the ordinary functions of Government. In other words, cl. (3) is an exception to the exception prescribed by cl. (ii) A trading activity carried on by the corporation (appellant) is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf because according to statute the Corporation has a personality of its own and this personality is distinct from that of the State or other shareholders. All the relevant provisions of the impugned Act also emphatically bring out the separate personality of the Corporation. Section 30 of the Act also does not suggest that the income of the 18 Corporation is the income of the State. All that section 30 requires is that a part of that income may be entrusted to the State Government for a specific purpose of road development. Therefore, the income derived by the appellant from its trading activity cannot be said to be the income of the State either under cl. (1) or cl. (2) of article 289. The American doctrine of the immunity of State agencies or instrumentalities from Federal taxation has no application to the present case. Akadasi Padhan vs State of Orissa [1963] Supp. 2 S.C.R. 691, distinguished. Mark Graves, John J. Merrill and John P. Hennessy vs People of the State of New York Upon the Relation of James B.O 'keefe, ; and Clallan County vs United States of America, ; , no application. State of West Bengal vs Union of India [1964] 1 S.C.R. 371, relied on. M 'Culloch vs Maryland, ; , Bank of Toronto vs Lambe and Webb vs Outrim [1907] A.C. 81, referred to. Tamlin vs Hansaford, , relied on. (iii)It is hardly necessary for the Act to make a provision that tax,if chargeable would be paid. In fact, the Companies Act which deals with companies does not make such a specific provision, though no one can seriously suggest that there would be repugnancy between the provisions of the Companies Act and the Income tax Act. There is no repugnancy between the charging section of the Income tax Act and sections 29 and 30 of the Act. All that sections 29 and 30 of the impugned Act purport to do is to provide for the administration of the funds vesting in the Corporation and their disposal. These provisions are not inconsistent with the liability to pay tax which is imposed by the Income tax Act.

l Appeal No. 133 1963. Appeal from the judgment and decree dated November 17, 1960, of the Orissa High Court in First Appeal No. 45 of 1955. M. C. Setalvad, R. K. Garg, M. K. Ramamurthi, D. P. Singh and section C. Agarwala, for the appellant. section V. Gupte, Additional Solicitor General of India, Gana pathy Iyer and R. H. Dhebar, for the respondents. March 9, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C.J. The principal point of law, which arises in this appeal is whether the Sanad issued in favour of the appellant, Rajkumar Narsingh Pratap Singh Deo, by his elder brother, the Ruler of Dhenkanal State, on March 1, 1931, is existing law within the meaning of article 372 of the Constitution read with cl. 4(b) of Order No. 31 of 1948 issued by the respondent State of Orissa on January 1, 1948. This question arises in this way. The State of Dhenkanal which was an independent State prior to 1947 merged with the Province of Orissa in pursuance of a Merger Agreement entered into between the Ruler of Dhenkanal and the Dominion of India on December 15, 1947. This Agreement came into force as from January 1, 1948. In consequence of this Agreement the entire administration of the State of Dhenkanal was taken over by the State of Orissa pursuant to the authority conferred on it by the Central Government under section 3(2) of the Extra (No. 47 of 1947). After the Sanad in question was issued in favour of the appellant, be was getting a monthly allowance of Rs. 5001 from the Dhenkanal District Treasury on the authority of a permanent Pay Order which had been issued in his favour by the Ruler of Dhenkanal on the basis of the said Sanad. This payment was discontinued by the respondent from 1st of May, 1949 and the several representations made by the appellant to the various authorities of the respondent to reconsider the matter failed. That is why lie filed the present suit on September 26, 1951 in the Court of the subordinate Judge, Dhenkanal, alleging that the act of discontinuing the appellant 's pension was illegal, and asking for appropriate reliefs in that behalf. It is from this suit that the present appeal arises. 114 The appellant 's case is that in the family of the appellant, it has been recognised as a customary right of the junior members of the family to receive adequate maintenance consistently with the status of the family. Indeed, the appellant 's allegation is that this custom was recognised in Dhenkanal and enforced as customary law in the State. The grants made to the members of the Royal Family for their maintenance consisted of lands and cash allowances. These latter were described as Kharposh allowances and they were charged and paid out of the revenue of the former State of Dhenkanal. It was in accordance with this customary law that the Sanad in question was issued by the Ruler of Dhenkanal in favour of the appellant. By this Sanad, certain lands were granted to the appellant and a cash allowance of Rs. 5001 per month was directed to be paid to him for life. The appellant 's grievance is that this , rant of Rs. 5001 allowance has been discontinued by the respondent and that, according to the appellant, is an illegal and unconstitutional act. In support of his plea that the respondent was bound to continue the payment of the cash allowance, the appellant urged in his suit that the grant was a law within the meaning of article 372 and as such, it had to be continued. He also alleged that after the merger of Dhenkanal with Orissa, his right to receive the grant was recognised by the respondent and acted upon; and that is another reason why he claimed an appropriate relief in, the form of an injunction against the respondent. Several other pleas were also taken by the appellant in support of his claim, but it is not necessary to refer to them for the purpose of the present appeal. The respondent denied the appellant 's claim and urged that having regard to the nature of the grant on which the appellant has rested his case, it was competent to the respondent to discontinue the grant. The grant in question is not law under article 372 and just as it could be made by the Ruler in 1931 by an executive act, it can be discontinued by the respondent by a similar executive act since the respondent is the successor of the Ruler. It was also urged by the respondent that the appellant 's allegation that the respondent had recognised and agreed to act upon the grant of cash allowance, was not well founded. Both the learned trial Judge who tried the appellant 's case, and the High Court of Orissa before which the appellant took his case in appeal, have, in the main, rejected the appellant 's contention, with the result that the appellant 's suit has been dismissed. The appellant then applied for and obtained a certificate from the High Court and it is with the certificate thus granted to him that he has come to this Court in appeal. The first and the main point which Mr. Setalvad for the appellant has urged before us is that the Sanad on which the appellant 's claim is founded, is law. At the time when the 115 Senad was granted, the Ruler of Dhenkanal was an absolute monarch and in him. vested full sovereignty; as such absolute sovereign, he was endowed with. legislative, judicial and executive powers and authority and whatever order tie passed amounted to law. In the case of an absolute monarch whose ' word is literally law, it would be idle, says Mr. Setalvad, to distinguish between binding orders issued by him which are legislative from other binding orders which are executive or administrative. All binding orders issued by such a Ruler are, on the ultimate analysis, law, and the Sanad in question falls under the category of such law. In support of this argument, Mr. Setalvad has referred Lis to the definition of the words "existing law" prescribed by article 366(10) of the Constitution. article 366(10) provides that "existing law" means any law, ordinance, order, bye law, rule or regulation passed or made before the commencement of this Constitution by any Legislature, authority or person having power to make such a, law, ordinance, order, bye law, rule or regulation. Basing himself on this definition, Mr. Setalvad also relies on the provisions of article 372(1) which provides for the continuance in force of existing laws; this continuance is, of course, subject to the other provisions of the Constitution and it applies to such laws as were in force in the territory of India immediately before the commencement of the Constitution, until they are altered, repealed or amended by a, competent Legislature or other competent authority. These provisions are invoked by Mr. Setalvad primarily by virtue of cl. 4(b) of Order 31 of 1948 issued by the respon dent on the 1st of January, 1948. It is well known that by s.3(1) of the Extra , the Central Government was given very wide powers to exercise extra provincial jurisdiction in such manner as it thought fit. Section 3(2) provided that the Central Government may delegate any such jurisdiction as aforesaid to any officer or authority in such manner and to such extent as it thinks fit. The width of the powers conferred on the Central Government can be properly appreciated if the provisions of section 4 are taken into account. Under section 4(1), the, Central Government was authorised by notification in the Official Gazette to make such orders as may seem to it expedient for the effective exercise of the extraforeign jurisdiction of the Central Government. Section 4(2) indicates by cls. (a) to (d) the categories of orders which can be passed by the Central Government in exercise of its jurisdiction. The sweep of these powers is very wide and they had to be exercised in the interests of the proper governance of the areas to which the said Act applied. Under section 3(2), the Central Government bad delegated its powers to the Province of Orissa in respect of States which had merged with it, and it was in exercise of its powers as such delegated that Order 31 of 1948 116 was issued by the Province of Orissa (now the respondent). 4 of the Order dealt with the question of the laws to be applied to the merging areas. 4(a) referred to the enactments specified in the first column of the Schedule annexed to the Order and made them applicable as indicated in it. 4(b) provided that as respects those matters which are not covered by the enactments applied to the Orissa States under sub para (a), all laws in force in any of the Orissa States prior to the commencement of this Order, whether substantive or procedural and whether based on custom and usage, or statutes, shall, subject to the provisions of this Order, continue to remain in force until altered or amended by an Order under the Extra, Provincial Jurisdiction Act, 1947. There is a proviso to this sub clause to which it is unnecessary to refer. The argu ment is that by virtue of cl. 4(b) of this Order, the customary law prevailing in the State of Dhenkanal prior to its merger continued to operate as law in the territory of Dhenkanal and that is how it is operative even now, because it has not been repealed or amended. Since the Sanad issued in favour of the appellant is, according to the appellant 's case, law, there would be no authority in the respondent to cancel the payment of cash allowance to the appellant merely by an executive order. If the respondent wants to terminate the payment of the cash allowance to the appellant, the only way which the respondent can legitimately adopt is to make a law in that behalf, or issue an order under cl. 4(b) of the Order. That, broadly stated, is the argument which has been pressed before us by Mr. Setalvad. We do not think that the basic assumption made by Mr. Setalvad in presenting this argument is sound. It would be noticed that the basic assumption on which the argument is based is that in the case of an absolute monarch, there can be no distinction between executive and legislative orders. In other words, it is assumed that all orders which are passed by an absolute monarch, are binding, and it is idle to enquire whether they are executive or legislative in character, because no such distinction can be made in regard to orders issued by an absolute monarch. It is true that the legislative, executive and judicial powers are all vested in an absolute monarch; he is the source or fountain of all these powers and any order made by him would be binding within the territory under his rule without examining the question as to whether it is legislative, executive or judicial; but though all the three powers are vested in the same individual, that does not obliterate the difference in the character of those powers. The jurisprudential distinction between the legislative and the executive powers still remains, though for practical purposes, an examination about the character of these orders may serve no useful purpose. It is not as if where absolute monarchs have sway in 117 their kingdoms, the basic principles of jurisprudence which distinguish between the three categories of powers are inapplicable. A careful examination of the orders passed by an absolute monarch would disclose to a jurist whether the power exercised in a given case by issuing a given order is judicial, legislative, or executive, and the conclusion reached on jurisprudential grounds about the nature of the order and the source of power on which it is based would nevertheless be true and correct. That, indeed, is the approach which must be adopted in considering the question as to whether the grant in the present case is law within the meaning of article 372 as well as cl. 4(b) of Order 31 of 1948; and so, prima facie, it does not seem sound to suggest that in the case of an absolute monarch, that branch of jurisprudence which makes a distinction between three kinds of power is entirely inapplicable. In dealing with this aspect of the matter, it is hardly necessary to examine and decide what distinguishes a law from an executive order. A theoretical or academic discussion of this problem would not be necessary for our present purpose, because all that we are considering at this stage is whether or not it would be possible to consider by reference to the character of the order, its provisions, its context and its general setting whether it is a legislative order or an executive order. Though theorists may not find it easy to define a law as distinguished from executive orders, the main features and characteristics of law are well recognised. Stated broadly, a law generally is a body of rules which have been laid down for determining legal rights and legal obligations which are recognised by courts. In that sense, a law can be distinguished from a grant, because in the case of a grant, the grantor and the grantee both agree about the making and the acceptance of the grant; not so in the case of law. Law in the case of an absolute monarch is his command which has to be obeyed by the citizens whether they agree with it or not. Therefore, we are inclined to hold that Mr. Setalvad is not right in making the unqualified contention that while we are dealing with a grant made by absolute monarch, it is irrelevant to enquire whether the grant is the result of an executive action, or a legislative action. On Mr. Setalvad 's contention, every act of the absolute monarch and every order passed by him would become law though the act or order may have relation exclusively to his personal matters and may have no impact on the public at large. That is why it is unsound to suggest that the jurisprudential distinction between orders which are judicial, executive or legislative or in relation to purely individual and personal matters should be treated as irrelevant in dealing with Acts or orders passed even by an absolute monarch. Realising the difficulty in his way, Mr. Setalvad has strongly relied on certain decisions of this Court which, according to him, support the broad point which he has raised before 118 us. It is, therefore, necessary to examine these decisions. The first case on which Mr. Setalvad relies is that of Ameer unNissa Begum vs Mahboob Begum(1). In that case, this Court was called upon to consider the validity 'of the Firman issued by the Nizam of Hyderabad on the 19th February, 1939, by which a Special Commission had been constituted to investigate and submit a report to him in the case of succession to a deceased Nawab which was transferred to the commission from the file of Darul Quaza Court. Dealing with the question as to whether the Firman in question was passed by the Nizam in exercise of his legislative power or judicial power, Mukherjea, C.J., speaking for the Court, observed that the Nizam was the supreme legislature, the supreme judiciary and the supreme head of the executive and there were no constitutional limitations upon his authority to act in any 'of these capacities. He also observed that the Firmans were expressions of the sovereign will of the Nizam and they were binding in the same way as any other law; therefore so long as a particular firman held the field, that alone would govern or regulate the rights of the parties concerned, though it could be annulled or modified by a later Firman at any time that the Nizam willed. It appears, however, that the learned counsel appearing in that case did not argue this point, and so, the question as to whether it would be possible or useful to draw a line of demarcation between a Firman which is legislative and that which is executive, was neither debated before the Court, nor has it been examined and decided as a general proposition of law. In The Director of Endowments, Government of Hyderabad vs Akram Ali(2), similar observations were repeated by Bose, J., who spoke for the Court on that occasion. Dealing with the Firman issued by the Nizam on the 30th December, 1920, which directed the Department to supervise the Dargah until the rights of the parties were enquired into and decided by the Civil Court, it was 'observed that the Nizam was an absolute sovereign regarding all domestic matters at the time when the Firman was issued and his word was law. That is bow the validity of the Firman was not questioned and it was held that its effect was to deprive the respondent before the Court and all other claimants of all rights to possession pending enquiry of the case. In this case again, as in the case of Ameer un Nissa Begum(1), the point does not appear to have been argued and the observations are, therefore, not intender to lay down a broad or general proposition as contended by Mr. Setalvad. That takes us to the decision in the case of Madhaorao Phalke vs The State of Madhya Bharat(3). On this occasion, This Court was called upon to consider the question as to (1) A.I.R. 1955 S.C. 352. (2) A.I.R. 1956 S.C. 60 (3) ; 119 whether the relevant Kalambandis issued by the Ruler of Gwalior constituted law, 'or amounted merely to executive orders. In the course of the judgment, the passages in the two cases to which we have just referred were, no doubt, quoted; but the ultimate decision was based not so much on any general ground as suggested by Mr. Setalvad, as on the examination of the character of the Kalambandis themselves and other ' relevant factors. If Mr. Setalvad 's argument be well founded and the Kalambandis had to be treated as law on the broad , round that they were orders issued by an absolute monarch, it would have been hardly necessary to consider the scope and effect of the Kalambandis, the manner in which they were passed, and the object and effect of their scheme. In fact, these matters were considered in the judgment and it was ultimately held that "having regard to the contents of the two orders and the character of the provisions made by them in such a detailed manner, it is difficult to distinguish them from statutes or laws; in any event, they must be treated as rules or regulations having the force of law". That was the finding made by the High Court and the said finding was affirmed by this Court. Therefore, though this judgment repeated the general observations made by this Court on two earlier occasions, it would be noticed that the decision was based not so much on the said observations, as on a careful examination of the provisions contained in the Kalambandis themselves. In Promod Chandra Deb vs The State of Orissa(1), this Court has held that the grant with which the Court was concerned, read in the light of Order 31 of the Rules, Regulations and Privileges of Khanjadars and Khorposhdars, was law. In discussing the question, Sinha, C.J., has referred to Order 31 of the Rules and Regulations and has observed that like the Kalambandis in the case of Phalke(2), the said Rules has the force of law and would be existing jaw within the meaning of article 372 of the Constitution. This case does not carry the position any further except that the same general observations are reproduced. In the case of Tilkayat Shri Govindlalji Maharaj vs State of Rajasthan(3), while dealing with the question as to whether the Firman issued by the Udaipur Darbar in 1934 was law or not, this Court examined the scheme of the said Firman, considered its provisions, their scope and effect and came to the conclusion that it was law. Having thus reached the conclusion that the Firman, considered as a whole, was law, the general observations on which Mr. Setalvad relies were reproduced. But as in the case of Phalke (2), so in this case, the decision does not appear to be based on any general or a priori consideration, but it is based more particularly on the examination of the scheme of the Firman and its provisions. (1) [1962] Supp. 1 S.C.R. 405,410. (2) ; (3) [1964] 1 section C. R. 561. 120 In the case of Maharaja Shree Umaid Mills Ltd. vs Union of India(1), a similar question arose for the decision of this Court in regard to an agreement made on the 17th of April, 1941. The point urged before the Court was that the said agreement was law, and reliance was placed on the several general observations to which we have already referred. section K. Das. J. who spoke for the Court examined the said observations and the context in which they were made and rejected the plea that the said observations were intended to lay down a general proposition that in the case of an absolute monarch, no distinction can be made between his legislative and his executive acts. In the result, the agreement in question was held to be no more than a contract which was an executive act and not a law within the meaning of article 372. The same view has been recently expressed by Hidayatullah, Shah and Ayyangar, JJ. in the judgments respectively delivered by them in The State of Gujarat vs Vora Fiddali Badruddin Mithibarwala(2). Therefore, a close examination of the decisions on which Mr. Setalvad relies does not support his argument that this Court has laid down a general proposition about the irrele vance or inapplicability of the well recognised distinction between legislative and executive acts in regard to the orders issued by absolute monarchs like the Raja of Dhenkanal in the present case. The true legal position is that whenever a dispute arises as to whether an order passed by an absolute monarch represents a legislative act and continues to remain operative by virtue of cl. 4(b) of the Order, all relevant factors must be considered before the question is answered; the nature of the 'order, the scope and effect of its provisions, its general setting and context, the method adopted by the Ruler in promulgating legislative as distinguished from executive orders, these and other allied matters will have to be examined before the character of the order is judicially determined, and so, we are satisfied that Mr. Setalvad is not right in placing his argument as high as to say that the Sanad issued in favour of the appellant by the Raja of Dhenkanal must be field to be law without considering the nature of the rant contained in it and other relevant circumstances and facts. We must, therefore. proceed to examine these relevant facts. Let us then examine the Sanad. It consists of three clauses. The first clause refers to the practice in the State of Dhenkanal under which the Rajas made grants in hereditary rights to their relatives, and it adds that there exists a patent necessity for making an adequate provision for the grantee. (1) ; (2) ; 121 the appellant, to enable him to maintain his dignity as a Rajkumar of the State and to maintain himself, his family, his heirs and descendants in a manner befitting his and their position. 'That is why out of love and affection for him, the grantor made the khanja grant in the shape of a monthly cash allowance of Rs. 500/ for his life time and also an assignment of land measuring 6942 71 5 acres specified in the Schedule attached to the Sanad. The grant of the said land has been made heritable and the grantee has been authorised to enjoy it from generation to generation. The extent of the grant is also clarified by additional clauses which it is unnecessary to mention. Clause 2 of the Sanad imposes the condition of loyalty on the grantee and his heirs; and by cl. 3 the State undertook to bear all costs for reclaiming the land covered by the grant with a view to render it fit for cultivation, Now, it is plain that there is no legislative element in any of the provisions of this grant. It does not contain any command which has to be obeyed by the citizens of the State; it is a gift pure and simple made by the Ruler in recognition of the fact that under the custom of the family and the customary law of the State, he was bound to maintain his junior brother. The grant, therefore, represents purely an executive act on the part of the Ruler intended to discharge his obligations to his ,junior brother under the personal law of the family and the customary law of the State. It would, we think be idle to suggest that such a grant amounts to law. It is true that partly it is based on the requirement of personal and customary law , but no action taken by the Ruler in discharging his obligations under such personal or customary law can be assimilated to an order issued by him in exercise of his legislative authority. 'Therefore, we have no difficulty in holding that the Sanad in question is a purely executive act and cannot be regarded as law as contended by Mr. Setalvad. It was then faintly argued by Mr. Setalvad that the obli gation undertaken by the Ruler was recognised by the respon dent, and so, it could not be cancelled by the respondent merely by an executive act. In our opinion, there is no substance in this argument. If the act by which the grant was made was a purely executive act on the part of the then Ruler of the State of Dhenkanal, we do not see how it can be legitimately urged that the terms of the grant cannot either be modified, or the grant cannot be cancelled altogether by an executive act of the respondent which is the successor of the Ruler. As we have just indicated, the customary law which required the Ruler to provide maintenance for his junior brother, can be said to have been continued by cl. 4(b) of the Order of 1948 and article 372 of the Constitution; but to say that the customary law in that behalf is continued is very different from saying that the amount of maintenance fixed by the grant cannot be 122 varied or altered. What the respondent has done is to stop the payment of cash allowance of Rs. 5001 per month an a does not mean alteration of the law. It is common ground that the grant of the land covered by the Sanad has not been disturbed, and so, all that the impugned action of the respondent amounts to is to reduce the total maintenance allowance granted to the appellant by the Ruler in 19 3 1. It is plain that though the customary law requiring provision to be made for the maintenance of the appellant is in force, the respondent has the right to determine what would be adequate and appropriate maintenance, and this part of the right is purely executive in character. It would, we think, be unreasonable to suggest that though the Sanad is not law, the amount granted by the Sanad cannot be modified by an executive act of the respondent, and that the respondent must file a suit for that purpose. All that the customary law requires is the making of a suitable provision for the maintenance of the junior members of the family. But what is adequate provision in that behalf will always be a question of fact which has to be determined in the light of several relevant factors , the number of persons entitled to receive maintenance, the requirements of the status of the members of the family, the total income derived by the family, and other commitments, may all have to be weighed in deciding the quantum of maintenance which should be awarded to anyone of the junior members. In fact, both the Courts below have agreed in holding that having regard to the relevant facts, the grant of the land made by the Sanad would be adequate and appropriate for the maintenance of the appellant. But apart from this aspect of the matter, we do not see how the appellant can seriously quarrel with the validity of the respondent 's action in discontinuing the payment of cash allowance to him. The plea that payment was made for some time after the merger can hardly avail the appellant. in contending that the discontinuance is invalid. In the very nature of things, the respondent could not have decided whether the cash allowance should be continued to the appellant or not without examining the merits of the case, and since a large number of such cases had to be examined after merger, if the payment continued to be made in the meantime, that cannot give any valid ground to the appellant to challenge the legality of the ultimate decision of the respondent to discontinue the payment of the said allowance. The result is, we confirm the decision of the High Court, though on somewhat different grounds. The appeal according ly fails and is dismissed. There would be no order as to costs.

IN-Abs

The Ruler of Dhenkanal State granted a sanad by way of Khorposh allowance to his younger brother, the appellant giving certain lands and a maintenance allowance, under the customary law of the State. After the merger of that State to the Dominion of India which became effective on January 1, 1948, the Government of Orissa took over the administration of the State and discontinued the cash allowance. The appellant challenged the validity of the order of discontinuance by a suit in the Court of Subordinate Judge. The suit was dismissed. On appeal to this Court it was urged on behalf of the appellant that the sanad issued by an absolute monarch was law, and was continued by articles 366(10), 372(1) of the Constitution and cl. 4(b) of the Order 31 of 1948 issued by the Orissa Government in exercise of the power delegated to it by the Central Government under section 3(2) of the Extra . Held: (i) It was not correct to say that in dealing with a grant made by an absolute monarch any enquiry as to whether the grant was the result of an executive or legislative act was altogether irrelevant. This Court did not lay down any inflexible rule that the well recognised jurisprudential distinction between legislative and executive acts was wholly irrelevant or inapplicable to such a case. Ameer un Nissa Begum vs Mahboob Begum, A.I.R. 1955 S.C. 352, Director of Endowments, Government of Hyderabad vs Akram Ali, A.T.R. , Madhaorao Phalke vs State of Madhya Bharat, ; , Promode Chandra Deb vs State of Orissa, [1962] Supp. 1 S.C.R. 405, Tilkayat Shri Govindlalji Maharaj vs State of Rajasthan, [1964] 1 S.C.R. 561, Maharaja Shree Umaid Mills Ltd. vs Union of India, ; and State of Gujarat vs Vora Fiddali Badruddin Nithibarwala, ; , considered. In such an enquiry it was necessary to consider such rele vant factors as the nature of the order, its scope and effect, general setting and context and the method adopted by the Ruler in promulgating it. So judged, the Sanad in question had no legislative element in any of its provisions and was a gift pure and simple made in pursuance of the custom of the family and customary law of the State. The gift therefore, was an executive act of the Ruler and did not amount to law although the Ruler was discharging by it his obligation under personal or customary law. 113 The gift being an executive act of the Ruler could be modified or cancelled by an executive act of the successor to the Ruler. The discontinuance of the cash allowance could not affect the continuance of the customary law under cl. 4(b) of the Order of 1948 and article 372 of the Constitution. Nor could the plea of payment of such allowance even after the merger invalidate the discontinuance.

Appeal No. 120 of 1963. Appeal by special leave from the judgment and decree dated December 13, 1960, of the Allahabad High Court in Special Appeal No. 204 of 1957. H. N. Sanyal, Solicitor General of India and C. P. Lal, for the appellants. M. C. Setalvad and J. P. Goyal, for the respondents. March 9, 1964. The Judgment of the Court was delivered by SHAH, J. Audh Narain Singh hereinafter called 'Singh ' was appointed in 1949 a Tahvildar in the District of Azamgarh in the State of U.P. and worked in the Cash Department of the Government treasury of that District. The appointment of Singh was made by Dhanpat Singh Tandon, Government Treasurer, with the approval of the District Magistrate. By order dated April 20, 1956, Singh who was then working as a Tahvildar in the sub treasury at tahsil Lalganj in the District of Azaimarli was informed that he was, under instructions from the Collector, removed from service. Against the order of removal, Singh preferred an appeal to the Collector but the same was rejected, and a representation made to the Commissioner of the Banaras Division was unsuccessful. Singh then preferred a petition under article 226 of the Constitution in the High Court of Judicature at Allahabad for a writ of certiorari quashing the order of removal passed against him and for a writ of mandamus or an order directing the Collector of Azamgarh and the State of Uttar Pradesh, Dhanpat Singh Tandon, Government Treasurer, and the Commissioner of Banaras Division to treat him as Tahvildar in the sub treasury at Lalganj in the District of Azamgarh. Singh claimed that be was a member of the civil service of the State of Uttar Pradesh or 91 held a civil post under the State, and was not liable to be removed from service without being afforded a reasonable opportunity of showing cause against the action proposed to be taken in regard to him under article 311(2) of the Constitu tion. Mehrotra J., who heard the petition held that the Government Treasurer being an employee of the State, a Tahvildar employed by the Government Treasurer to carry out the work entrusted by the State, subject to the control of the State Government, was an employee of the State Government, and the impugned order of removal was invalid because Singh was not afforded a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. The order of Mehrotra J., was confirmed in appeal by the High Court of Allahabad. In the view of the High Court, no direct relationship of master and servant between Singh and the State was established because Singh was appointed by the Treasurer, but the Treasurer having authority to employ him in order to carry out the work of the State, Singh was as much under the control of the State as he was under the con trol of the Treasurer and therefore he could claim to hold a civil post under the State and to have the benefit of article 311 of the Constitution. Against the order passed by the High Court, this appeal is preferred with special leave. The question which falls to be determined is whether a Tahvildar appointed in the Cash Department in the State of Uttar Pradesh is a civil servant of the State of Uttar Pradesh or holds a civil post in the State. In the State of Uttar Pradesh, contracts for administering the Cash Department of the District treasuries are given to persons who are called Government Treasurer. The Treasurer holds a post specifically created in the District Treasury: he is appointed by the Collector subject to the approval of the Finance Secretary. On being appointed, the Treasurer enters into an engagement for the due performance of his duties, and executes a bond in favour of the State. The tenure of a Government Treasurer is temporary and he is not entitled to privileges of leave and pension, but he performs various duties connected with the executive functions of the State. His appointment is made by the Collector subject to the approval of the Finance Secretary. He has to maintain a true and faithful account of the property entrusted to him and his dealings therewith and to submit returns as prescribed. He is also bound by the conditions, rules and regulations of the Government and also departmental rules and orders as may be in force, especially with reference to his relations and dealings with and the right of his subordinates. He has to attend the Government Treasury for the purpose of discharging his duties, and to show to his superior officers whenever called upon the property entrusted to him. A Government Treasurer is not in 92 the position of an independent contractor; he does not merely undertake to produce a given result, without being in the actual execution under the control of the person for whom he does the work. He is in the execution of his duties, and in the manner, method and mode of his work under the control of the State Government. A Government Treasurer is entitled to appoint Tahvildars to assist him in the discharge of his duties, but the appoint ment is made 'with the approval of the District Collector. Originally Tahvildars were directly appointed by the Govern ment of the Province to specific posts for performing duties in the District Treasuries. In 1927, however, Government Order dated July 25, 1927, was issued by the Secretary to Government Uttar Pradesh, Finance Department, reciting that Tahvildars in sub treasuries were appointed on the nomination of the Treasurer of the District Treasury, who was responsible for their work and honesty, the intention of the Government being that a Treasurer might dispense with the services of a Tahvildar as soon as he had lost confidence in him, but it had not been possible to put this intention into practice, because the Tahvildars were paid from the general revenue and were whole time Government servants and entitled to the protection given to all Government servants by the Classification Rules, and it was difficult to hold the usual enquiry for the removal of a Tahvildar for he must be removed from service as soon as he lost the confidence of the Treasurer, otherwise the responsibility of the Treasurer to the Government would be impaired. In the circumstances, the best solution was to abolish the post of Tahvildars, to increase the remuneration of the Treasurer by an amount equal to the pay given to Tahvildars and to make 'him responsible for carrying on the work at sub treasuries through his own servants. A reservation, however was made that the Treasurer must not employ any person in the treasury or sub treasury without the approval of the District Officer and the Treasurer shall, when required by such District Officer remove without delay any person so employed. Pursuant to this Government Order, in the Manual of Orders the following paragraph 1561 was incorporated: "Tahvildars at sub treasuries are no longer Government servants. They are employed by the Treasurer who receives an allowance from Government to cover their pay and leave salary. The Treasurer however, shall not employ any person as a Tahvildar without the approval of the District Officer. The Treasurer shall remove a Tahvildar or transfer him from one Tahsil to another if required by the District Officer to do so on any ground which in the latter 's opinion would justify such a step. " 93 Even after the posts of Tahvildar were abolished the Government of Uttar Pradesh did not adopt a consistent atti tude and from time to time issued orders which indicate that a ,considerable degree of control was maintained by the District Officers upon the Tahvildars in the matter of appointment, removal from service, suspension and transfers and in the matter of payment of remuneration, dearness allowance and making available certain medical benefits, Tahvildars were treated on a par with other civil servants of the State. On December 9, 1939, a Government Order was issued for payment of remuneration to the Tahvildars directly from the ,Government Treasury. It had come to the notice of the Government that the Treasurers paid to the cashier staff of the treasuries less than what they received on their account from the Government, after obtaining receipts for full amount. It was therefore directed that the Treasurer should prepare a statement showing in detail the emoluments of the staff, but payment of emoluments was to be made to the persons concerned by the Treasury Officer personally and their acknowledgment taken. In 1945 the Government of Uttar Pradesh raised with effect from April 1, 1945, the allowance to be paid to Government Treasurers for the pay of "the cashier staff of treasuries. " By para 3(a) a scheme for payment of gratuity on retirement was also devised for the benefit of permanent Tahvildars. It was provided that when a permanent Tahvildar retired, a gratuity of one month 's pay will be given to him for ,each completed year of service, subject to a maximum of 25 years ' completed service, the gratuity being admissible to permanent incumbents of posts and also to future entrants when appointed permanently, but not if the service of a Tahvildar was found either unsatisfactory, or if he resigned or was removed or dismissed from service. Gratuity was to be paid in the same manner as salaries were paid to the Tahvildars, and provisions on account of the increase due to the pay of Government Treasurers and allowances payable for the pay of the cashier staff of treasuries and for the grant of gratuity to the cashier staff were made under the Heads "25 General Administration B District Administration (a) General Establishment, Pay of Establishment Contract and Extra Contract Establishment" and "55 Superannuation Allowances and Pensions and Gratuities Voted" respectively in the budget. By ,a letter dated June 17, 1953, addressed by the Joint Secretary to the Government, it was brought to the notice of the Collectors of Districts that the Government Treasurers had frequently dispensed with the services of Tahvildars working under them without sufficient reasons justifying such a course of action and attempts had been made to harass such staff and that as a result of such arbitrary action on the part of the Government Treasurers, hardship had been caused to those employees. The Government therefore informed the Collectors to bring to the 94 notice of the Treasure that adverse notice of such action is likely to be taken by the Government in future in case it was established that the Government Treasurers had indulged in high handedness in their dealings with their staff. It was also recorded by the Collector of Azamgarh that instances had come to his notice in which the services of the employees in the Cash Department of the treasuries had been dispensed with arbitrarily without framing specific charges against them or obtaining explanations, and it was ordered that in future when services of the employees in the Cash Department were to be dispensed with, a report for their suspension should be made and specific charges framed against them and they should be given time to explain the charges and their services should not be dispensed with as a result of arbitrary action of the subordinate staff or the Treasurer. Orders have also been lately issued in 1959, by which the scale of dearness allowance of the Tahvildars was revised and certain facilities for free medical attendance were also provided. It also appears that in some cases in which the Tahvildars who had been dismissed or suspended were reinstated by order of the Collector. For instance, under Treasury Officer, Azamgarh 's order dated August 14, 1948, it was recorded that under the Collector 's order Naunidh Prasad, Tahvildar, Phulpur (under suspension), was reinstated with effect from the date of taking over charge. There is also an order passed by the District Magistrate, Allahabad, in 1952 deputing one Ganesh Prasad working as Tahvildar in Handia sub treasury for Kumbha Mela duty. There is also the record of the disciplinary proceeding held by the District Magistrate on April 12, 1948, against Tahvildar Ganesh Prasad for improper conduct. It is therefore clear from the record that Tahvildars were appointed to perform the duties of cashiers in Government Treasuries. Their appointment was made by the Government Treasurer with the approval of the District Collector, but it was made for performance of public duties, and remuneration was paid to them by the State directly. Tahvildars were liable to be transferred under orders of the Collector and to be suspended or removed from service under his orders. An instance already referred to shows that a Tahvildar who had, been suspended by the Treasurer was ordered to be reinstated by the Collector. It is from these circumstances that the relationship between the Government of Uttar Pradesh and Tahvildars has to be ascertained. Whether in a given case the relationship of master and servant exists is a question of fact, which must be determined on a consideration of all material and relevant circumstances having a bearing on that question. In general selection by the employer, coupled with payment by him of remuneration or wages, the right to control the method of work, and a power 95 to suspend or remove from employment are indicative of the relation of master and servant. But co existence of all these indicia is not predicated in every case to make the relation one of master and servant. In special classes of employment, a contract of service may exist, even in the absence of one or more of these indicia. But ordinarily the right of an employer to control the method of doing the work, and the power of superintendence and control may be treated as strongly indicative of the relation of master and servant, for that relation imports the power not only to direct the doing of some work, but also the power to direct the manner in which the work is to be done. If the employer has the power, prima facie, the relation is that of master and servant. The work of the Government Treasurers has to be conducted according to the Rules and Regulations framed by the Government, and directions issued from time to time. The Government Treasurer holds a post in a public employment and he is assisted by Tahvildars in the performance of his duties. The Tahvildar acts not on behalf of the Treasurer in performing his duties, but on behalf of the State. Undoubtedly the Treasurer undertakes responsibility for the loss which may be occasioned by the Tahvildar, but solely on that account it cannot be held that the Tahvildar is merely an appointee of the Treasurer and is not a servant of the State. The selection of Tahvildar though made by the Treasurer is controlled by the Collector; the Tahvildar is remunerated by the State, method of his work is controlled by the State, and the State exercises the power to suspend, dismiss and reinstate him. In Shivanandan Sharma vs The Punjab National Bank Ltd.(1) it was held that a head cashier in one of the branches of the Punjab National Bank Ltd., who was appointed by the Treasurer in charge of the Cash Department under an agreement with the Bank, was an employee of the Bank. In the view of the Court, the direction and control of the cashier and of the ministerial staff in charge of the Cash Department the Bank being entirely vested in the Bank, the cashier must be deemed to be an employee of the Bank. Sinha J., observed at p. 1442: "If a master employs a servant and authorizes him to employ a number of persons to do a particular job and to guarantee their fidelity and efficiency for a cash consideration, the employees thus appointed by the servant would be equally with the employer, servants of the master." Similarly in Dharangadhara Chemical Works Ltd. vs State of Saurashtra(2) it was held that "the prima facie test of" the (1) ; (2) ; 96 relationship of master and servant "is the existence of the right in the employer not merely to direct what work is to be done but also to control the manner in which it is to be done, the nature or extent of such control varying in different industries and being by its nature incapable of being precisely defined. " In M/s Piyare Lal Adishwar Lal vs The Commissioner of Income tax, Delhi(1) it was held that the Treasurer appointed by the Bank who was to carry out the duties as directed by the Bank was a servant of the Bank, and not an independent contractor. The Government Treasurer is a civil servant of the State holding a specific post, and he is authorised by the terms of his, employment to employ Tahvildars to assist him in discharging his duties. Payment of remuneration to the Tahvildars is for services rendered in the "cashier department of the District treasury" of the State. The Tahvildars receive their remuneration directly from the State, and are subject to the control of the District Officers in the matter of transfer, removal and disciplinary action. Employment of Tahvildars being for the purpose of carrying out the work of the State, even though a degree of control is exercised by the Government Treasurer and the appointment is in the first instance made by the Treasurer subject to the approval of the District Officers, it must be held that the Tahvildar is entitled to the protection of ' article 311 of the Constitution. The order removing Singh from service was made at the instance of the Collector, and did not conform to the requirements of article 311(2) of the Constitution and was on that: account invalid. We therefore agree with the High Court, that the impugned order must be declared invalid. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent was appointed in 1949 a Tahvildar in the District of Azamgarh in the State of Uttar Pradesh and he worked, in the Cash Department of the Government Treasury of that District. His appointment was made by Government Treasurer with the approval of Collector of the District. In 1956, he was removed from service under instructions from the Collector. He filed a writ petition in the High Court in which he challenged the legality of the order removing him from service on the ground that he was a member of the civil service of the State of Uttar Pradesh or held a civil post under the State and hence was not liable to be removed from service without being afforded a reasonable opportunity of showing cause against the action proposed to be taken in regard to him under article 311(2) of the Constitution. The High Court held that the respondent was an employee of the State Government and as the provisions of article 311(2) had not been observed, the order terminating his services was illegal. The appellant has come to this Court by special leave. The only question raised before this Court was, whether a Tahvildar appointed in the Cash Department in the State of Uttar Pradesh is a civil servant of the State of Uttar Pradesh or holds a civil post in the State. Dismissing the appeal, Held:The respondent was a civil servant of the State of Uttar Pradesh and as the requirements of article 311(2) were not conformed to, the order terminating his services was invalid. The Government Treasurer is a civil servant of the State holding a specific post and he is authorised by the terms of his employment to employ Tahvildars to assist him in discharging his duties. Payment of remuneration to Tahvildars is for services rendered in the Cash Department of the District Treasury of the State. The Tahvildars receive their remuneration directly from the State and are subject to the control of the District Officers in the matter of transfer, removal and disciplinary action. Employment of Tahvildars being for the purpose of carrying out the work of the State, even though a degree of control is exercised by the Government Treasurer and the appointment is in the first instance made by the Treasurer subject to the approval of the District Officers, the Tahvildar is entitled to the protection of article 311. Whether in a given case, the relationship of master and ser vant exists is a question of fact which must be determined on a consideration of all material and relevant circumstances having a bearing on that question. In general, selection by the employer,. coupled with payment by him of remuneration or wages, the, 90 right to control the method of work and a power to suspend or remove from employment are indicative of the relation of master and servant. However, co existence of all these indicia is not predicted in every case to make the relation one of master and ,servant. In special classes of employment, the contract of service may exist, even in the absence of one or more of these indicia. But ordinarily, the right of an employer to control the method of doing the work and the power of superintendence and control may be treated as strongly indicative of the relation of master and servant, for that relation imports the power not only to direct the doing of some work, but also to direct the manner in which work is to be done. If the employer has such power, prima facie, the relation is one of master and servant. Shivanandan Sharma vs The Punjab National Bank Ltd. ; , Dharangadhara Chemical Works Ltd. vs State of Saurashtra ; and M/s Piyare Lal Adisivar Lal vs Commissioner of Income tax, Delhi ; , referred to.

s 1, 7, 8, 10, 53 and 76 of 1963. Petitions under Art 32 of the Constitution of India for the enforcement of Fundamental Rights. R.V. section Mani and K. R. Shama, for the petitioner (in W.P. Nos. 1 and 76 of 1963). R. V. section Mani and T. R. Y. Sastri, for the petitioner (in W.P. Nos. 7, 8, 10 and 53). A.V. Ranganadham Chetty and A. Y. Rangam, for the respondent (in the petitions). I.N. Shroff, for the interveners Nos. 1 and 5 (in all the petitions). M. C. Setalvad, N. section Bindra and R. H. Dhebar, for inter vener No. 2 (in W.P. No. 1 of 1.963). C. P. Lal, for intervener No. 3 (in W.P. No. 1 of 1963). R. H. Dhebar, for intervener No. 4 (in W.P. No. 1 of 1963). section V. Gupte, Additional Solicitor General, N. section Bindra and R. H. Dhebar, for intervener No. 6 (in W.P. No. 1 of 1963). 83 March 9, 1964. The Judgment of the Court was delivered by WANCHOO, J. These six petitions under article 32 of Constitution raise a common question about the constitution ality of the Madras Land Reforms (Fixation of Ceiling on Land Act, No. 58 of 1961 (hereinafter referred to as the Act), which was assented to by the President on April 13, 1962 and came into force on publication in the Fort St. George Gazette on May 2, 1962. The constitutionality of the Act is attacked on the ground that it violates articles 14, 19 and 31(2) of the Constitution. It is not necessary to set out in full the attack made on the constitutionality of the Act in these petitions. It will be enough if we indicate the two main attacks on the constitutionality of the Act under article 14. The first of these is with respect to section 5 of the Act which lays down the ceiling area. The second is on section 50 of the Act read with Sch. III thereof, which provides for compensation. It is urged that the Act is not protected under article 31 A of the Constitution and is therefore open to attack in case it violates article 14, 19 or 31. The petitioners in this connection rely on the judgment of this Court in Karimbil Kunhikoman vs State of Kerala(1). Before we consider the two main attacks on the constitu tionality of the Act we may briefly indicate the scheme of the Act. Chapter 1 is preliminary, Section 3 thereof provides for various definitions, some of which we shall refer to later. Chapter 11 deals with fixation of ceiling on land holdings. Section 5 thereof fixes the ceiling area. The other sections provide for determining surplus land, and s.18 provides for the acquisition of surplus land which vests in the Government free from all encumbrances. Chapter III provides for ceiling on future acquisition and restriction on certain transfers. Chapter IV provides for the constitution and functions of the land board. Chapter V provides for the constitution and functions of the sugar factory board. Chapter VI provides for compensation. Section 50 thereof read with Sch. III lays down the mode for determining compensation for the land acquired by the Government and other ancillary matters. Chapter VII provides for survey and settlement of lands in the transferred territory which came to the State of Madras by virtue of the States Reorganisation Act of 1956. Chapter VIII provides for cultivating tenants ' ceiling area. Chapter IX provides for exemption of certain lands from the application of the Act. Chapter X provides for land tribunals and Chapter XI for appeals and revision. Chapter XII provides for certain penalties and procedure while Chapter XIII provides for disposal of land acquired by the Government under the Act. Chapter XIV deals with miscellaneous provisions, including s.110, which provides for the framing of rules (1) [1962] Suppl. 1 S.C.R. 829. 84 The main purpose of the Act is to provide for a ceiling on land holdings, for determining surplus land which would be acquired by Government and for payment of compensation therefor. The Act is applicable to agricultural land as defined in section 3(22) and is mainly concerned with persons holding lands in ryotwari settlement or in any other way subject to payment of revenue direct to the Government. It is not in dispute that the Act is not protected under article 31 A of the Constitution and it is in this background that we shall consider the attack based on article 14 on the two main provisions of the Act relating to ceiling area under section 5 and compensation under section 50 read with Sch. III of the Act. It is first necessary to read certain definitions in s 3. Section 3(14) defines family as follows "family" in relation to a person means the person, the wife or husband, as the case may be, of such person and his or her (i) minor sons and unmarried daughters; and (ii) Minor grandsons and unmarried grand daughters in the male line, whose father and mother are dead. " It is unnecessary to refer to the explanation of section 3(14), for present purposes. Section 3 (34) is in these terms: person ' includes any trust, company, family, firm, society or association of individuals, whether incorporated or not. " Section 3 (45) is as follows: " 'surplus land ' means the land held by a person in excess of the ceiling area and declared to be surplus land under sections 12, 13 or 14. " Section 5 is in these terms: "5. (1) (a) Subject to the provisions of Chapter VIII, the ceiling area in the case of every person and, subject to the provisions of sub sections (4) and (5) and of Chapter VIII, the ceiling area in the case of every family consisting of not more than five members, shall be 30 standard acres (b) The ceiling area in the case of every family consisting of more than five members shall, subject to the provisions of sub sections (4) and (5) and of Chapter VIII, be 30 standard acres together with an additional 5 standard acres for every member of the family in excess of five. (2) For the purposes of this section, all the lands held individually by the members of a family or jointly by some or all of the members of such family shall be deemed to be held by the family. 85 (3) (a) In calculating the extent of land held by a member of a family or by an individual person, the share of the member of the family or of the individual person in the land held by an undivided Hindu family, a Marumakkattayam tarwad, an Aliyasanthana family or a Nambudiri Illom shall be taken into account. (b) In calculating the extent of land held by a family or by an individual person, the share of the family or of the individual person in the land held by a firm, society or association of individuals (whether incorporated or not) or by a company (other than a non agricultural company) shall be taken into account. Explanation For the purposes of this section (a) the share of a member of a family or of an individual person in the land held by an undivided Hindu family, a Marumakkattayam tarwad, an Aliyasanathana family or a Nambudiri Illom, and (b) the share of a family or of an individual person in the land held by a firm, society or association of individuals (whether incorporated or not), or by a company (other than a non agricultural company), shall be deemed to be the extent of land (i) which, in case such share is held on the date of the commencement of this Act, would have been allotted to such member, person or family had such land been partitioned or divided, as the case may be, on such date; or (ii) which, in case such share is acquired in any manner whatsoever after the date of the commencement of this Act, would be allotted to such member, person or family if a partition or division were to take place on the date of the preparation of the draft statement under sub section (1) of section 10. "(4). . . " It is unnecessary to consider the rest of section 5 for present purposes. The attack on section 5 (1) is that it is hit by article 14 inasmuch as it denies equality before the law or equal protection of law to persons similarly situate, and reliance is placed in this connection on the decision of this Court in Karimbil Kunhikoman(1). In that case this Court was considering the Kerala Agrarian Relations Act, 1961 (hereinafter referred to as the 86 [1962] Suppl. 1 S.C.R. 829. Kerala Act). The argument is that as in the Kerala Act, so in the present Act, the word "family" has been given an artificial definition which does not conform to any kind of natural families prevalent in the State, namely, Hindu undivided family, Marumakkattayam family, Aliyasanathana family or Nambudiri Illom, and that a double standard has been fixed in section 5(1) in the matter of providing ceiling. It is therefore urged that the ratio of that decision fully applies to the present Act. Therefore, section 5(1) should be struck down as violative of article 14 in the same manner as section 58 of the Kerala Act was struck down. We are of opinion that this contention is correct and the ratio of that case applies with full force to the present case. It was observed in that case that "where the ceiling is fixed . . by a double standard and over and above that the family has been given an artificial definition which does not correspond with a natural family as known to personal law, there is bound to be discrimination resulting from such a provision". In the present case also "family" has been given an artificial definition as will immediately be clear on reading. 3(14), which we have set out above. It is true that this definition of "family" in section 3(14) is not exactly the same as in the Kerala Act. Even so there can be no doubt that the definition of the word "family" in the present case is equally artificial. Further in the Kerala Act section 58 fixed a double standard for the purpose of ceiling; in the present case section 5(1)(a) fixes a double standard though there is this distinction that in section 5(1) the same ceiling is fixed in the case of a person as in the case of a family consisting of not more than five members, namely, 30 standard acres while in the Kerala Act, the ceiling fixed for a family of not more than five was double that for an adult unmarried person. But that in our opinion makes no difference in substance. The provision of section 5(1) results in discrimination between persons equally circumstanced and is thus violate of article 14 of the Constitution. This will be clear from a simple example of an undivided Hindu family, which we may give. Take the case of a joint Hindu family consisting of a father, two major sons and two minor sons, and assume that the mother is dead. Assume further that this natural family has 300 standard acres of land. Clearly according to the personal law, if there is a division in the family, the father and each of the four sons will get 60 standard acres per head. Now apply section 5(1) to this family. The two major sons being not members of the family because of the artificial definition given to "family" in section 3(14) of the Act will be entitled to 30 standard acres each as individuals and the rest of their holdings i.e. 30 standard acres in the case of each will be Surplus land. But the father and the two minor sons being an artificial family as defined in section 3(14) will be entitled to 30 87 standard acres between them and will thus lose 150 standard acres, which will become surplus land. This shows, clearly how this double standard in the matter of ceiling read with the artificial definition of "family" will result in complete discrimination between these five members of a natural family. Under the Hindu law each member would be entitled to onefifth share in the 300 standard acres belonging to the family. Under the Act however the two major sons will keep 30 standard acres each while the father and the two minor sons together will keep 30 standard acres which work out to 10 standard acres each. The two major sons will thus lose 30 standard acres each while the father and the two minor sons will lose fifty standard acres each. No justification has been shown on behalf of the State for such discriminatory treatment resulting in the case of members of a joint Hindu family; nor ;.ire we able to understand why this discrimination which clearly results from the application of section 5 (1) of the Act is not violative of article 14 of the Constitution. Examples can be multiplied with reference to joint Hindu families which would show that discrimination will result on the application of this provision. Similarly we are of opinion that discrimination will result in the case of Marumakkattayam family, Aliyasanthana family and a Nambudiri Illom, particularly in the case of the former two where the husband and wife do not belong to the same family. We are clearly of opinion that as in the case of section 58 of the Kerala Act so in the case of section 5 (1) of the Act discrimination is writ large on the consequences that follow from section 5(1). We therefore hold that section 5(1) is violative of the fundamental right enshrined in article 14 of the Constitution. As the section is the basis of Chapter 11 of the Act, the whole Chapter must fall along with it. Next we come to the provisions as to compensation contained in section 50 read with Sch. III of the Act. Here again we are of opinion that the decision of this Court in Karimbil Kunhikoman 's(1) case fully applies to the scheme of compensation provided in the Act which is as discriminatory as was the scheme in the Kerala Act. Learned counsel for the respondent however contends that Sch., III does not provide for any cut in the purchase price as was the case in the Kerala Act, and therefore the provisions in the Act are not discriminatory. If we look at the substance of the matter, however, we find that there is really no difference between the provisions for compensation in the Kerala Act and the provisions in respect thereof in the Act, though the provisions in the Act are differently worded. What was done in the Kerala Act was to arrive at the figure of compensation on certain principles, and a cut was then imposed on the figure thus arrived at and this cut pro gressively increased by slabs of Rs. 15,000. In the present [1962] Suppl. 1 S.C.R. 829. 88 case , a converse method has been adopted and the provision is that first the net annual income is arrived at and thereafter compensation is provided for slabs of Rs. 5,000 each of net income. For the first slab of Rs. 5,000, the compensation is 12 times the net annual income, for the second slab of Rs. 5,000 it is II times, for the third slab of Rs. 5,000 it is ten times and thereafter it is nine times. Let us now work out this slab system. Take four cases where the net annual income is respectively Rs. 5,000, Rs.10,000, Rs. 15,000 and Rs. 20,000. The firstperson whose net annual income is Rs. 5,000 will get Rs.60,000 as compensation, the second person whose net annualincome is Rs. 10,000 will et Rs. 1,15,000, the third personwith a net annual income of Rs. 15,000 will get Rs. 165,000 and the person with a net annual income of Rs. 20,000 will et Rs. 2,10,000. If the same multiplier had been applied as in the case of the first slab of Rs. 5,000 to the other three slabs also, these persons would have got compensation of Rs. 1,20,000, Rs. 1,80,000 and Rs. 2,40,000. This will show that in effect there is a cut of about 4 per cent on the total compensation which corresponds to the purchase price in the Kerala Act in the case of a person with a net annual income of Rs. 10,000, of about 8 per cent in the case of a person with a net annual income of Rs. 15,000 and about 12 per cent in the case of a person with a net annual income of Rs. 20,000. Though the manner of arriving at the total com pensation is ostensibly different from that provided in the Kerala Act, its effect is the same, namely, as the total net income goes up after the first slab of Rs. 5,000 there is a progressive cut in the total compensation just as was the case in the Kerala Act. The argument that the cut is justified on the same basis as higher rates of income tax on higher slabs of income has already been rejected by this Court in Karimbil Kunhikoman 's case(1). Therefore, for the reasons given in that case, we are of opinion that the provisions contained in section 50 read with Sch. III of the Act with respect to compensation are discriminatory and violate article 14 of the Constitution. Sections 5 and 50 are the pivotal provisions of the Act, and if they fall, then we are of opinion that the whole Act must be struck down as unconstitutional. The working of the entire Act depends on section 5 which provides for ceiling and section 50 which provides for compensation. If these sections are unconstitutional, as we hold they are, the whole Act must fall. We therefore allow the petitions and strike down the Act as unconstitutional. The petitioners will get their costs from the State of Madras one set of hearing fee. Petitions allowed. (1) [1962] Suppl. 1 S.C.R. 829.

IN-Abs

The constitutionality of the Madras Land Reforms (Fixation of Ceiling on Land) Act, 1961 was attacked on the ground that it violated articles 14, 19, 31(2) of the Constitution. Held (i) The provisions of section 5(1) of the Act result in discrimination between persons equally circumstanced and are thus violative of article 14 of the Constitution. As this section is the basis of Chapter II of the Act, the whole chapter must fall along with it. The ratio of Karimbil Kunhikoman vs State of Kerala [1962] Supp. 1 S.C.R. 829 applies with full force to the present case. (ii)The provisions in section 50 read with Sch. III of the Act with respect to compensation are discriminatory and violate article 14 of the Constitution. Karimbil Kunhikoman vs State of Kerala [1962] Supp. S.C.R. 829, followed. (iii)Ss. 5 and 50 are the pivotal pro visions of the Act, and as they fall, the whole Act must be struck down as unconstitutional.

Appeals Nos. 11 5 & 116 of 1963. Appeals by special leave from the judgment and orders dated July 9, 1958, September 24, 1958 of the Union of India (Ministry of Steel, Mines and Fuel, New Delhi) and the Punjab High Court (Circuit Bench) at Delhi respectively. G.S. Pathak, Rameshwar Nath and section N. Andley, for the. appellant (in both the appeals). section G. Patwardhan and B. R. K. G. Achar, for respondent No. 1 (in both the appeals). I. N. Shroff, for respondent No. 2 (in C.A. No. 116/1963). March 10, 1964. The Judgment of the Court was delivered by AYYANGAR, J. Civil Appeal No. 115 is by special leave granted by this Court under article 136 of the Constitution and is against an order of the Union of India (Ministry of Steel, Mines and Fuel) dated July 9, 1958 rejecting an application filed by the appellants under rule 57 of the Mineral Concession Rules, 1949 to review an order passed by the Government of Madhya Pradesh rejecting their application for the renewal of the Certificate of Approval granted to them. The appellants filed a petition to the High Court Punjab under article 226 of the Constitution praying for a writ of certiorari to quash the above order of the Union of India. This petition was dismissed by the High Court in limine and Civil Appeal No. 116 of 1963 is by special leave of this Court against this order of the High Court, Punjab. It would thus be seen that both the appeals are directed to challenge the validity of the same order and we shall therefore deal with them together. The appellants, who constitute a partnership, are engaged inter alia in the business of mining and they held a prospecting licence in the State of Madhya Pradesh. They hold concessions in regard to prospecting and working minerals in several areas of the State to the details of which it is not necessary to refer. Under the scheme of the Mines and Minerals (Regulation and Development) Act, 1948 (Act No. XLIII of 1948) and the Mineral Concession Rules, 1949 framed thereunder, in order that a prospecting licence may be granted to a person he has 99 to hold a certificate of approval from the State Government concerned and similarly the rules provide that no mining lease shall be granted to any person unless he held a similar certificate of approval. To enable them to do the prospecting in lands in which they had obtained mineral concessions, the appellants applied for and obtained from the Government of Madhya Pradesh a certificate of approval under the Mineral Concession Rules from 1952 onwards. The duration of the certificate is one calendar year and the same has to be renewed every year, if it is to be in force. The original certificate granted to the appellants for the year 1952 was being renewed from year to year and as a result they held a valid certificate of approval up to the period ending on December 31, 1955. Being desirous of having the same renewed for the following calendar year 1956 they made an application to the Government of Madhya Pradesh on November 22, 1955. The information required by the form of application prescribed by the rules was furnished and the necessary documents were filed and this application was recommended by the District Officer, Bhandara. The State Government, however, by an order dated September 21, 1956 rejected the application, the reason given being that the partners composing the firm had changed. This order was communicated to the appellants on October 6, 1956 and thereupon the appellants made an application on November 15, 1956 to the Union Government for a review of the order of the State Government under rule 57 of the Mineral Concession Rules. Rule 57(2) which was invoked by the appellants provides: "Where a State Government has failed to dispose of an application for grant of renewal of a certificate of approval or prospecting licence or a mining lease within the period prescribed therefor in these Rules, such failure shall, for the purpose of these rules, be deemed to be a refusal to grant or renew such certificate, licence or lease, as the case may be, and any person aggrieved by such failure may, within two months of the expiry of the period aforesaid, apply to the Central Government for reviewing the case. " The procedure for review is laid down by rule 59 which ,reads: ,,Review Upon receipt of such application, the Central Government may, if it thinks fit, call for the relevant records and other information from the State Government, and after considering any explanation that may be offered by the State Government cancel or revise the order of the State Government, or pass such order as the Central Government may deem just and proper. " L/P(D)1SCI 4(a) 100 Thereafter correspondence seems to have ensued between the Central Government and the Government of Madhya Pradesh in regard to the propriety of granting the application for review. The appellants having come to know from a letter addressed to them by the Government of India that the State Government had been required to send a report of their remarks in connection with their application for review made enquiries as to what had happened and also requested that they might be informed as to the progress of their application and that they might be given an opportunity of a personal hearing at which they would be able to satisfy the Government about the genuineness of their case. Some portions of this correspondence between the Government of India. and the Government of the State as to the merits of the appellants ' application are now on record but it is common ground that the appellants were not informed of these documents prior to the order now impugned rejecting the application for review was passed. On July 9, 1958 the application of the appellants was rejected by the Union Government, the order stating: "The Central Government have come to the conclusion that there is no valid ground for interfering with the decision of the Government of Madhya Pradesh rejecting your application for renewal of a certificate of approval for the year 1956. " The appellants thereafter applied to the Government of India requesting for a copy of the report of the State Government on the basis of which the application was rejected. The reply that the appellants received was that the Government of India regretted their inability to accede to their request. It is the validity of this order dated July 9, 1958 that is challenged in appeal No. 115 of 1963. Mr. Pathak, learned Counsel for the appellants, submitted that the Union Government when disposing of an application under section 57(2) in terms of rule 59 is acting as a quasi judicial authority and the order which was passed taking into consideration the report of the State Government and without their knowing the contents of the report and without affording them a reasonable opportunity of presenting their case was contrary to natural justice and was therefore void. In this connection learned Counsel relied on the decision of this Court: Shivji Nathubhai vs The Union of India(1). Mr. Pathak is well founded in his submission as to the nature of the jurisdiction exercised by the Union Government when disposing of an application for review under Rule 59 and the decision referred to does (1) ; 101 support him that the Central Government acting under the rule referred to is functioning as a quasi judicial authority. It does follow therefore that they could not act on the basis of material as regards which the appellants had no opportunity to make their representation. No doubt, the decision in Shivji Nathubhai v The Union of India and Ors.(1) was concerned with a case where an order had been passed prejudicial to the respondents before the Central Government without affording them an opportunity to meet the case of an applicant for review but the same principle would, in our opinion, apply even where a petition for review is rejected based on materials which were not made available to the applicant for review. As we have already indicated, the State Government had refused renewal of the certificate of approval because they considered that there had been a change in the composition of the firm which destroyed its identity. On the other hand, the case of the appellants was that the terms of the partnership deed made express provisions for the continuance of the identity of the firm, notwithstanding changes in the persons composing the firm by death, retirement or because of the accession of new members to replace deceased or retiring partners or even otherwise. If the report of the State Government made any points against the representations made by the appellants, and these were being taken into consideration by the Union Government, in common fairness, the appellants were entitled to be informed as to what these were and an opportunity to point out how far they militated against the contentions raised by them. Learned Counsel for the respondent Union of India, did not seek to support the position taken by the Central Government that they were justified in refusing to disclose the con tents of the report they obtained from the State Government which afforded them the factual basis on which they rejected the application for review. We have therefore no hesitation in holding that the order of the Central Government now under appeal is vitiated as being contrary to the principles of natural justice, in that the decision was rendered without affording to the appellants a reasonable opportunity of being heard which is a sine qua non of a fair hearing. The learned Judges of the Punjab High Court dismissed the petition filed before them under article 226, apparently be cause they proceeded on the view that the exercise of jurisdiction of the Central Government under rules 57 and 59 of the Mineral Concession Rules was really administrative in character so that the reasonable opportunity that is an essential requisite of quasi judicial procedure was not attracted to the (1) ; 102 case. That was the view taken by that Court in the Shivji Nathubhai vs The Union of India and Ors.(1) which decision was reversed by this Court. It might be mentioned that the decision of this Court was rendered subsequent to their judgment now under appeal and therefore the learned Judges had not the advantage of the pronouncement of this Court. The result is that the appeals are allowed and order of the Central Government dated July 9, 1958 and of the High Court dated September 24, 1958 are set aside. The Central Govern ment will consider the review application afresh and dispose of the same in accordance with law and in the light of the observations contained in this judgment. The appellants are entitled to their costs in this Court (Hearing fee one set). Appeals allowed.

IN-Abs

The appellants constitute a partnership engaged in mining and they held a prospecting license as well as a certificate of approval from the State Government under the Mineral Concessions Rules, 1949 framed under the Mines and Minerals (Regulation and Development) Act, 1948. The approval certificate was granted for one year and until December 1955 it had been renewed from year to year when the State Government refused to renew it on the ground that the partners composing the firm had changed. Thereupon the appellants applied under r. 57 of the Minerals Concession Rules to the Union Government for the review of the order of the State Government refusing to renew the certificate of approval. While this application Was pending the Union Government corresponded with the State Government and gathered information and received the latter 's remarks regarding the merits of the matter behind the appellants ' back. The request made by the appellants for copies of the correspondence and for an opportunity to be heard was refused by the Union Government. Ultimately the Union Government refused the review application on the ground that there was no valid ground to interfere with the decision of the State Government. The present appeal was filed on special leave granted by this 'Court. On behalf of the appellants it was contended that the Union Government while disposing of an application under r. 57(2) in terms of r. 59 acts as a quasi judicial authority and the ,order which was passed taking into consideration the report of the State Government behind the appellants ' back and without affording a reasonable opportunity for presenting their case was contrary to natural justice and was therefore void. Held:(i) The Union Government when disposing of an ap plication for review under r. 59 is functioning as a quasi judicial authority. Shivji Nathubhai vs Union of India, , relied ,on. (ii)Though Shivji Nathubhai 's case was concerned with a case where an order had been passed prejudicial to the respon dents before the Central Government without affording them L/P(D)1 SCI 4. 98 an opportunity to meet the case of an applicant for review the same principle would apply even where a petition for review is rejected based on materials which were not made available to the applicant for review. (iii) Applying the above principle to the present case the order of the Central Government is vitiated as being contrary to the principles of natural justice in that the decision was rendered without affording to the appellants a reasonable opportunity of being heard which is a sine qua non of a fair hearing.

Appeal No. 552 of 1963. Appeal by special leave from the order dated April 28, 1960 of the Deputy Secretary to the Government of India, Ministry of Rehabilitation, New Delhi, purporting to exercise the powers of Revision under section 33 of the Displaced Persons (Compensation of Rehabilitation) Act, 1954 in Case No. 38(894)/59 Neg. A. With Writ Petition No. 108 of 1960. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. Achhru Ram and N. N. Keswani, for the appellants and the petitioners. N. section Bindra and B. R. G. K. Achar, for respondents Nos. 1 and 2 (in both the appeal and petition). M. C. Setalvad, K. Jairam and R. Ganapathy Iyer, for the respondents Nos. 3 to 7 (in both the appeal and petition). March 10, 1964. The Judgment of the Court was delivered by AYYANGAR, J. The appeal, by special leave, is directed to question the correctness of an order passed by the Deputy Secretary to the Government of India, Ministry of Rehabilitation under section 33 of the Displaced Persons (Com pensation and Rehabilitation) Act, 1954 (Central Act XLIV of 1954) which for convenience will be referred to hereafter as the Act. The facts necessary to appreciate the points urged be fore us are briefly these: The property in dispute is agricul tural land of an extent of about 60 acres situated at Nizam abad in the former State of Hyderabad and now in the State 105 of Andhra Pradesh. On September 7, 1950 the Deputy Cus todian of Nizamabad District allotted 44 acres of this land to five persons who are the respondents before us. All these five were displaced persons and were entitled to this allotment. By a further order dated July 21, 1951 the balance of the 16 acres and odd was also allotted to them. The allotment was by way of lease and one of its stipulations was that the terms of the lease would be revised only after five years. The only point that needs to be stated about the terms of this lease is, that there was no condition imposed upon the lessees that they should cultivate the lands personally. While the lease was continuing in force, the Government of India issued a press note on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural lands had been verified under the Displaced Persons (Claims) Act, 1950. It further stated that the allotments would be towards the settlement of claims in respect of their agricultural lands. The allotment was to be on the same terms as under the quasi permanent allotment scheme in the Punjab and applications for allotment were invited from persons residing inter alia in Hyderabad State whose verified claims included a claim for agricultural lands. The press note prescribed the 31st of December as the last date for the receipt of these applications. The appellants made an application in pursuance of this notification and on May 4, 1954 the land now in dispute, though under a sub sisting lease in favour of the respondents, was allotted to them on quasi permanent tenure. It is not disputed that the appellants satisfied the qualifications for making applications under the press note and for being allotted evacuee property thereunder. The order of allotment, a copy of which was forwarded to the Collector of Nizamabad district, contained a request that the allottees may be put in possession of the land and the fact intimated to the office of the Regional Settlement Commissioner. The revenue authorities acting on this request or direction dispossessed the respondents from the lands leased to them and put the appellants in possession thereof. Thereafter, the respondents made a representation to the Regional Settlement Commissioner, Bombay pointing out that they were displaced persons who having been rehabilitated by the allotment by way of lease were now being uprooted. They also pointed out that they had incurred large expenses in improving the land and bringing it into proper cultivation. These applications were considered by the Regional Settlement Commissioner who by his order dated July 10, 1954 rejected their application. It is not necessary 106 to set out the reasons for making this order except to say that one of them was the failure on the part of the lessees to personally cultivate the lands. The respondents, then, moved the Regional Settlement Commissioner requesting him to review his order and they also sought relief from the Gov ernment of India seeking intervention in their favour. Subsequent to this date the Act was enacted and it came in to force on October 9, 1954. Section 12 of the Act em powered the Central Government to acquire evacuee property for rehabilitation of displaced persons and in pursuance thereof the properties now in dispute were acquired by Government by a notification dated January 18, 1955. During the pendency of the proceedings by which the respondents ,sought to obtain a reversal of the order dated July 10, 1954 and without reference to them, the Regional Settlement Commissioner issued sanads in favour of appellants 1 to 4 on January 12, 1956 acting under section 20 of the Act. The Deputy Chief Settlement Commissioner who dealt with the representations made by the respondents passed an order on August 22, 1958 after obtaining a report from the Regional Settlement Commissioner. He pointed out in his ,order that there was no indication from the papers on the file that the land was originally leased to the respondents on condition that they should cultivate the lands personally. He therefore set aside the order of the Regional Settlement Commissioner dated July 10, 1954 and remanded it for further enquiry directing the passing of fresh orders after a thorough enquiry. Thereafter a report was called for and obtained from the Collector who conducted this enquiry and in his report dated June 13, 1959 he recorded a finding that there had been personal cultivation of the lands by the respondents. He pointed out that of the 60 acres comprising the entire extent, 26 guntas were allotted on a quasi permanent basis to other displaced persons in 1954 and this extent was therefore out of the controversy. It ought to be mentioned that the order of the Deputy Chief Settlement Commissioner which was of the date August 22, 1958 was apparently by inadvertence passed without notice to the appellants. When this was brought to his notice after the remand he issued notice to them and after hearing them, referred the case to the Government of India for action under section 33 of the Act. The matter was considered by the Deputy Secretary in the Rehabilitation Ministry who heard all the parties and recorded the following findings: (1) that the order dated July 10, 1954 refusing to transfer the lands to the respondents was wrong, and (2) that there was no justification for terminating the lease and depriving the respondents of possession of the 107 property now in dispute and on these findings directed the sanads granted to the appellants to be revoked and the res pondents be put in possession of the property. It is the legality of this order that is challenged in this appeal. Three points were urged by Mr. Achhru Ram learned Counsel for the appellant: (1) that the Central Government had no power under section 33 of the Act to revise the order of the Regional Settlement Commissioner dated July 10, 1954, (2) that even assuming that that order was capable of revision, the land in dispute had been transferred to the appellants irrevocably by way of quasi permanent allotment and sanads issued and that thereafter the title under the sanads which had been granted in the name of the President of India could not be disturbed except in accordance with the terms of the sanads, (3) that the Deputy Secretary in the Government of India had no materials before him on the basis of which he could find that the order dated July 10, 1954 was erroneous and required to be revised. We shall deal with these points in the same order. Section 33 under which the order under appeal was made reads: "The Central Government may at any time call for the record of any proceeding under this Act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is not inconsistent with any of the provisions contained in this Act or the rules made thereunder. " In considering the argument addressed to us under this head there are two points to be borne in mind. If the order dated July 10, 1954 passed by the Regional Settlement Com missiooner was "a proceeding under this Act" then obviously there is no limitation on the power of the Central Govern ment to pass "such order as in the circumstances of the case was required". Of course, the Central Government cannot pass an order which is inconsistent with any of the provisions contained in the Act or the Rules made thereunder and subject to the objection made that after the transfer of property and the grant of a sanad under section 20 of the Act read with r. 91(8) in the form specified in Appendix XXIV to the Rules which is the second point raised by learned Counsel, it was not suggested that the order now impugned was inconsistent with any of the provisions of the Act or the Rules made thereunder. Whether the opinion which the Central Government entertained was correct or incorrect on the evidence would, of course, not fall for consideration by this Court in an appeal under article 136 but as regards the contention that 108 the order is illegal or invalid as distinct from its being incorrect, we shall deal with it in considering the last of the arguments submitted to us by learned Counsel. It was urged that the order of the Regional Settlement Commissioner which the Central Government revised under section 33 was not "a proceeding under the Act" having been passed before the Act came into force and was therefore outside its jurisdiction under section 33 of the Act. The answer to this is, however furnished by section 39 of the Act. That section deals with orders passed prior to the commencement of the Act and renders "all things done" or "action taken" in the exercise of powers conferred by or under this Act as if the Act were in force on the date when such thing was done or action taken. Section 39 enacts: "Anything done or any action taken (including any order made) by the Chief Settlement Commissioner, Settlement Commissioner, Additional Settlement Commissioners or Settlement Officers for the purposes of payment of compensation or rehabilitation grants or other grants to displaced persons shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act were in force on the date on which such thing was done or action was taken. " It was then suggested that since the order dated July 10, 1954 had merely rejected an application filed by the respon dents for restoring them to possession of lands from which they complained they had been unjustly dispossessed, it was not "a thing done" or "action taken for the purpose of payment of compensation or rehabilitation grants to dis placed persons" so as to be deemed to be taken under the provisions of this Act. The same point was urged in a slightly different form by saying that even if the Central Government could interfere and set aside the order of the Regional Settlement Commissioner dated July 10, 1954 still they could not direct the cancellation of the sales and grants of sanads to the appellants and that as this was not a matter pending before them, the order in so far as it directed the cancellation of the sanads and the dispossession of the appellants from the disputed property was without jurisdiction. We do not see any substance in the points stated in either form. In the first place, even if learned Counsel is right in submitting that the Central Government should have stopped with setting aside the order dated July 10, 1954 the result would have been the same, because the prayer which was rejected by the Regional Settlement Commissioner when he 109 passed that order was that contained in an application by the respondents that they should be restored to the possession of the lands from which they had been dispossessed. If that prayer had to be granted on the reversal of the order dated July 10, 1954 it would inevitably have meant that the appellants should have been deprived of possession which is exactly what the order now impugned has directed. As the dispossession of the appellants was consequential on the setting aside of the order dated July 10, 1954 the appellants do not obtain any advantage by raising the contention that the Central Government should have confined itself to setting aside that order and doing nothing more. Besides, this submission proceeds from not appreciating the matters that were the subject of consideration before the Central Government and were considered by them at the time when the impugned order was passed. The facts were that there had been an allotment by way of lease as a rehabilitation grant to persons who were admittedly displaced persons in 1950 51. It was "this thing done" that had been upset in 1954 and which was restored by the order of July, 1954 being set aside by the order under section 33 of the Act. In substance and effect therefore the impugned order was dealing with and rectifying an error committed in relation to a "thing done or action taken" with respect to a rehabilitation grant to a displaced person. Not merely the order dated July 10, 1954 but the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Regional Settlement Commissioner dated November 3, 1959. Both the parties were heard on all the points by the Central Government before the orders were passed and it would not therefore be right to consider that the matter in issue before the Central Government was technically merely the correctness of the order of the Regional Settlement Commissioner dated July 10, 1954, which read in vacuo might not be comprehended within section 39. The next point that was urged was that the appellant had been granted sanads on January 12, 1956 and that their sanads could. not be cancelled and the title acquired there displaced except in accordance with the terms of the sanads The term of the sanad which is relevant and which was referred to as the sole ground on which it could be set aside and the title of the appellants displaced reads: "It shall be lawful for the President to resume the whole or any part of the said property if the Central Government is, at any time, satisfied and records a decision in writing to that effect (the decision of the Central Government in this behalf 110 being final) that the transferee or his predecessor in interest had obtained or obtains any other compensation in any form whatsoever under the said Act by fraud or misrepresentation. " It is not disputed that this condition has not been ful filled but the question, however, is whether when the order of allotment on the basis of which the property was granted to the appellant and the sanad issued, is itself reversed or set aside can the sanad and the title obtained thereunder survive? On this point there are two decisions to which our attention was invited the first is a decision of the High Court of Rajasthan in Partumal vs Managing Officer, Jai pur(1), being a decision of a Full Bench of that Court. That case was concerned With the construction of section 24 of the Act which deals with the power of the Chief Settlement Commissioner to revise orders passed by a Settlement Officer, Assistant Settlement Officer, Assistant Settlement Commissioner, Additional Settlement Commissioner etc. The relevant part of the head note brings out the point of the decision. It reads: "Section 24 of the , no doubt confers very wide powers of revision on the Chief Settlement Commissioner, but it does not authorise cancellation of sal es after they are completed. No doubt, allotments can be set aside under section 24 of the Act, but after such allotments ripen into sales, they cannot be cancelled. The Chief Settlement Commissioner, but it does not authosioner exercising his power has no authority to cancel sale of property and an order of cancellation of sale of property is without jurisdiction and invalid. It would be too much to read in section 24 of the Act to hold that it extends to cancellation of sales by expressly providing for cancellation of allotments. The execution of a sale deed can not be regarded as only a formal expression of an order of allotment dependent on its subsis tence. " Subsequent to this decision a case arose before the High Court of Punjab: Balwant Kaur vs Chief Settlement Commiss ioner (Lands)(2 ) and a Full Bench of that Court by a majority dissented from this view and held that where an order making an allotment was set aside the title which was obtained on the basis of the continuance of that order also well with it We are clearly of the opinion that the judgment (1) I.L.R. (2) I.L.R. [1964] Punjab 36. 111 of the Punjab High Court is correct. The relevant provisions of the Act and the Rules have all been set out in the decision of the Punjab High Court and we do not consider it necessary to refer to them in any detail. It is sufficient to say that they do not contain any provision which militates against the position which is consistent with principle and logic. It is manifest that a sanad can be lawfully issued only on the basis of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that that grant should be valid it should have been effected by a competent officer under a valid order. If the validity of that order is effectively put an end to it would be impossible to maintain unless there were any express provision in the Act or in the rules that the grant still stands. It was not suggested that there was any provision in the Act or in the rules which deprives the order, setting aside an order of allotment, of this effect. We do not therefore consider that there is any substance in the second point urged by learned Counsel. The last of the points urged was that the Deputy Secretary who passed the impugned order had no materials upon which he could find that the order dated July 10, 1954 was erroneous or justified being set aside. Learned Counsel is not right in this submission because if the respondents were entitled to remain in possession of the property originally leased to them by way of allotment and their leasehold interest had not been validly terminated a fact which on the materials the Deputy Secretary was competent to find the order that he passed restoring them to possession could not be said to lack material. We consider therefore that there is no merit in this submission. The result is that the appeal fails and is dismissed with costs. Writ Petition 108 of 1960: This petition under article 32 of the Constitution has been filed by the appellants in Civil Appeal 552 of 1963 and seeks the issue of a writ of certiorari to quash the same order of the Deputy Secretary to the Union Government as that whose legality is challenged in the appeal. Both the Writ Petition as well as the application for special leave came on for preliminary hearing on November 30, 1960 and while the leave prayed for was granted, rule nisi was also issued in the petition and the two matters have been heard together. In view of our decision in the appeal, the writ petition will stand dismissed, but there will be no order as to costs. Appeal and Writ petition dismissed.

IN-Abs

The appellants and the five respondents were displaced persons. The Deputy Custodian of Nizamabad District allotted about 60 acres of land to the five respondents. The allotment was by way of lease. There was no condition imposed upon them that they should cultivate the lands personally. While the lease was continuing in force, the Government of India issued a Press Note on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural land had been verified under the Displaced Persons (Claims) Act, 1950. The appellants made an application in pursuance of this notifi cation and on May 4, 1954 the land now in dispute, though under a subsisting lease in favour of the respondents, was allotted to them. In the mean time the , came into force on October 9, 1954. Under Section 20 of this Act, the Regional Settlement Com missioner issued Sanads in favour of appellants in respect of these lands. Both the appellants and the respondents claimed these disputed plots. The matter went up to the Deputy Chief Settlement Commissioner. He referred the case of both parties to the Government of India for action under section 33 of the Act. The matter was considered under section 33 of the Act by the Deputy Secretary in the Rehabilitation Ministry who upheld the contentions of these respondents. The result was that the allotment made in favour of the appellants was set aside. It is the legality of this order that is challenged in this appeal. Held (i) The order of the Central Government was covered by section 33 of the Act as one dealing with and rectifying an error committed in relation to a "thing done or action taken" with respect to a rehabilitation grant to a displaced person. Not merely the order of the Regional Settlement Commission rebut the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Deputy Chief Settlement Commissioner. Both the parties were heard on all the points by the Central Government before the orders were passed and it would not therefore be right to consider that the matter in issue before the Central Government was namely the correctness of the order of the Regional Settlement Commissioner, which read in vacuo might not be comprehended within section 39 of the Act. (ii) It is manifest that a Sanad can be lawfully issued only on the basis of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made 104 is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that grant should be valid, it should have been effected by a competent officer under a valid order. If the validity of that order is effectively put an end to, it would be impossible to maintain unless there were any express provision in the Act or in the rules, that the grant still stands. On the facts of this case it was held that where an order making any allotment was set aside the title which was obtained on the basis of the continuance of that order also fell with it. Partumal vs Managing Officer, Jaipur, I.L.R. , distinguished. Balwant Kaur vs Chief Settlement Commissioner (Lands), I.L.R. [1964] Punjab 36, approved.

Appeals Nos. 254 to 256 of 1963. V. A. section Muhammad, for the appellant (in C.A. No. 254/63) J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellants (in C.A. Nos. 255 and 256 of 1963). M. C. Setalvad, Atiqur Rehman, Shureshta Kumari and K. L. Hathi, for the respondent (in all the appeals). March 11, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. Two questions of law have been raised, before us by Dr. Seyid Muhammad on behalf of K. Joseph Augusthi, the appellant in Civil Appeal No. 254/ 1963. Both of them are related to section 45G of the Banking Companies Act, 1949 (No. X of 1949) (hereinafter called the Act). The first question raised has reference to the validity of the said section and the second to its true scope and effect. Dr. Seyid Muhammad contends that the answers given by the Kerala High Court to both these questions are erroneous 139 According to him, section 45 G is unconstitutional inasmuch as it contravenes the fundamental right guaranteed to the citizens of this country by article 20(3) of the Constitution. He also argues that in making an order for the public examination of the appellant, the High Court has misconstrued the scope and effect of the relevant provisions of the said section. The appellant Joseph Augusthi was the Managing Director of the Palai Central Bank Limited from 26 1 1927 to 8 8 1960; K. George Thomas and George Joseph who are the appellants in the two other appeals Nos. 255 and 256 of 1963 respectively, were the Directors of the said Bank , the first of them was the Director from 14 1 1935 to 8 8 1960 and the latter from 26 1 1927 to 8 8 1960. An application for the winding up of the said Bank was made before the Kerala High Court by the Reserve Bank under section 38(3)(b)(iii) of the Act. The said provision justi fies the making of an application by the Reserve Bank in case in the opinion of the Reserve Bank, the continuance of the banking company in question is prejudicial to the interests of the depositors. On the 8th August, 1960, an order was passed on the said application appointing the Official Liquidator of the High Court the Provisional Liquidator of the Bank. The order of winding up then followed on the 5th December, 1960, and on the 8th December, 1960, an Official Liquidator was appointed under section 39 of the Act. After the Official Liquidator came on the scene, he made three reports to the High Court report No. 192 on the 17th August, 1961; report No. 242 on the 29th September, 1961 and report No. 350 on the 4th December 1961. All these reports were made under section 45G(1) of the Act. The appellants filed their objections on the 23rd November, 1961 to the first two reports. The matter was then ,considered by the learned single Judge of the Kerala High Court and after hearing the parties, he made an order directing the public examination of the three appellants under section 45G(2). This order was challenged by the appellants by preferring three appeals before a Division Bench of the High Court. The Division Bench agreed with the view taken by the learned single Judge and dismissed the three appeals. The appellants then applied for and obtained certificates from the High Court and it is with the said certificates that they have come to this Court by the present three appeals. The first point which has been argued before us by Dr. Seyid Muhammad is that section 45G is unconstitutional because it contravenes the fundamental rights guaranteed by article 20(3). In order to appreciate this argument, it is necessary to read section 45G(1) & (2). 140 "(1) Where an order has been made for the winding up of a banking company, the official liquidator shall submit a report whether in his opinion any loss has been caused to the banking company since its formation by any act or omission (whether or not a fraud has been committed by such act or omission) of any person in the promotion or formation of the banking company or of any director or auditor of the banking company. (2) If, on consideration of the report submitted under sub section (1), the High Court is of opinion that any person who has taken part in the promotion or formation of the banking company or has been a director or an auditor of the banking company should be publicly examined, it shall hold a public sitting on a date to be appointed for that purpose and direct that such person, director or auditor shall attend thereat and shall be publicly examined as to the promotion or formation or the conduct of the business of the banking company, or as to his conduct and dealings, in so far as they relate to the affairs of the banking company: Provided that no such person shall be publicly examined unless he has been given an opportunity to show cause why he should not be so examined. " The other sub sections of this section need not be cited, because it would be enough for our purpose to notice, in substance, what their effect is. Sub section (3) allows the Official Liquidator to take part in the examination and to employ such legal assistance as may be sanctioned by the High Court, if he is specially authorised by the High Court in that behalf. Sub section (4) permits the creditor or contributory to take part in the examination either personally or by any person entitled to appear in the High Court. Sub section (5) gives authority to the High Court to put questions to the person who is being examined; sub section (6) empowers oath to be administered to the said person and compels him to answer questions as may be put to him by the High Court, or as the High Court may allow to be put to him. Under sub section (7), such a person is entitled to appear by a lawyer and the lawyer so appointed shall be at liberty to put to him such questions as the High Court may deem fit just for the purpose of enabling him to explain or qualify any answer given by him; there is a proviso to this sub section which authorises the High Court to make an order of costs in its discretion in case the person under examination is exculpated from any charges made or suggested against him. Sub section (8) deals with the procedure to be followed in keeping a record of the examination. Subsection (9) provides that where after the examination of the 141 person,the High Court is satisfied that a person, who has been a Director of the banking company, is not fit to be a director of a company, or an auditor, or a partner who has been acting as such auditor, is not fit to be such an auditor or partner, the High Court may make an order that that person shall not, without the leave of the High Court, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the management of, any company, or, as the case may be, act as an auditor of, or be a partner of a firm acting as auditors of, any company for such period not exceeding five years as may be specified in the order. Thus, it will be clear that the scheme of section 45G is first to decide whether, prima facie, there is a, case for the public examination of a person; then in deciding this question, give an opportunity to the person concerned; if it is decided to hold a public examination of the said person, proceed to hold that examination; if suggestions made against the person examined are found to be unwarranted, make an order of costs in his favour; and if the person concerned is found to have been responsible for acts or omissions which caused loss to the banking company, to make a penal order disqualifying such person from acting as a director or an auditor as indicated by subsection (9). It is in the light of this scheme that the argument about the contravention of article 20(3) falls to be examined. Article 20(3) provides that no person accused of any offence shall be compelled to be a witness against himself. it may be conceded that when a person is compelled to submit to a public examination, that itself. prima facie, looks like pillorying him in the public gaze. It is also true that section 45G(6) compels the person to answer questions which the High Court may put to him, or which the High Court may allow to be put to him, and it is quite likely that in cases where public examination is ordered to be held, some suggestions and even some charges may be levelled against the person examined by reference to his acts or omissions in relation to the promotion, formation or conduct of the banking company of which he was a director or an auditor. Therefore, there is no difficulty in holding that a person examined publicly under section 45G may, in some cases, be compelled to be a witness against himself. Thus, one element of article 20(3) is satisfied , but the question still remains whether the other essential element is satisfied or not. Article 20(3) guarantees to every citizen the fundamental right not to be compelled to be a witness against himself, provided the person who is being compelled in that way, is accused of any offence. In other words, it is only when a person can be said to have been accused of any offence that the prohibition prescribed by article 20(3) comes into operation. If a person who is not accused of any offence, is compelled to give 142 evidence, and evidence taken from him under compulsion ultimately leads to an accusation against him, that would not be a case which would attract the provisions of article 20(3). The main object of article 20(3) is to give protection to an accused person not to be compelled to incriminate himself and that is in consonance with the basic principle of criminal law accepted in our country that an accused person is entitled to rely on the presumption of innocence in his favour and cannot be compelled to swear against himself. Therefore, unless it is shown that a person ordered to be publicly examined under section 45G is, before, or at the time when the order for examining him publicly is passed, an accused person, article 20(3) will not apply. What then is the position with regard to a person against whom an order for public examination is made by the High Court as done against the appellants? All that has happened at the relevant time is that the official liquidator has submitted reports indicating that in his 'opinion, loss has been caused to the banking company under liquidation by the acts or omissions of the appellants, and the High Court, on considering the reports and taking into account the explanation ,given by the appellant, has come to the conclusion that, prima facie, a case has been made out for their public examination. In such a case, how can it be said that the appellants have been accused of any offence? The whole object of the enquiry is to collect evidence and decide whether any acts or omissions caused loss to the banking company. It may be that as a result of the enquiry, the court may reach the conclusion that the alleged acts or omissions did not cause any loss; in such a case, nothing further has to be done. On the other hand, it is likely that the opinion formed by the liquidator may be vindicated and the court may come to the conclusion that some or all of the acts or omissions on which the liquidator 's opinion was based did cause loss to the banking company; and in that case, some action may conceivably be taken against the persons examined in addition to the action contemplated by section 45G(9). That, however, only means that after the examination is over and the material adduced before the court has been examined by the court, an occasion may or may not arise to take any action. In such a case, what may conceivably follow cannot be said to be existing before the order is passed under section 45G; an accusation may follow the enquiry, but an accusation was not in existence at the time when the public examination was ordered; and so, the appellants cannot contend that they were accused of any offence at the time when the order for their public examination was passed by the High Court. The accusation of any offence which is an essential condition for the application of article 20(3) is a condition precedent for the application of the principle prescribed by the said Article, and since this essential condition is lacking in all cases covered by sec 143 tion 45G, it is difficult to sustain the argument that the said section contravenes article 20(3). Therefore, we do not think Dr. Seyid Muhammad is right in contending that section 45G is invalid on the ground that it contravenes article 20(3) of the Constitution. It appears that in the case of Mallala Suryanarayana vs The Vijaya Commercial Bank Ltd.(1), the same view I has been expressed by this Court, though it may be added that this question does not appear to have been then elaborately argued. In this connection, we may refer to a decision of this Court in Raja Narayanlal Bansilal vs Maneck Phiroz Mistry and Anr. (2), where a somewhat similar provision contained in section 240 of the old Companies Act fell to be considered and it was held that it did not contravene article 20(3) of the Constitu tion. That takes us to the question of the construction of section 45G. Dr. Seyid Muhammad contends that section 45G requires that the acts or omissions alleged against a person should be acts which are prohibited by law, or omissions in relation to acts the performance of which is enjoined by law, and he suggested that if this interpretation is put on the words "acts or omissions", it would appear that the reports made by the liquidator in the present case have not made out any case for the public examination of the appellants. We are not impressed by this argument. It is significant that the acts or omissions to which section 45G(1) refers need not be fraudulent acts or omissions, because, in terms, the section provides that the act or omission would attract section 45G(1) if it has led to any loss to the banking company even though fraud may not have been committed by such act or omission. The context also shows that what the Court has to consider, is whether any act or omission on the part of the director or the auditor of the banking company has caused any loss to the company. Now, such an act or omission need not necessarily be criminal; it may even include acts or omissions which are commercially unsound or unwise. In this connection, it may be recalled that section 478 of the Companies Act which deals with a similar problem, requires that the report of the Official Liquidator should disclose his opinion that a, fraud has been committed. To the same effect is the provision contained in section 268 of the English Companies Act (11 & 12 Geo. 6, c 38). Therefore, it would, we think, be unreasonable to put a narrow and restricted construction on the words "acts or omissions" used by section 45G(1). Dr. Seyid Muhammad has then contended that in dealing with the reports made by the liquidator in the present case, the High Court has not given effect to the provision contained in (1) Civil Appeal No. 286 of 1959 decided on 26 10 1961. (2) ; 144 the proviso to section 45G(2). The said proviso requires that no person shall be publicly examined unless he has been given an opportunity to show cause why he should not be so examined, and Dr. Seyid Muhammad argues that unless the matter is fully examined and an opportunity is given to him to show that the facts alleged in the reports are untrue, the requirements of the proviso will not have been satisfied and his grievance is that no such opportunity was given to the appellants in the present case. There is no substance even in this argument. What the Court has to do in exercising its power under section 45G(2) is to consider the report made by the liquidator and decide whether it can reasonably entertain the opinion that any person who has taken part in the promotion or formation ,or conduct of the banking company should be publicly examined. In other words, it is a preliminary stage of the enquiry and the point which the Court has to consider is whether, prima facie, a case has been made out to hold a public examination of the person concerned. It cannot be the object of section 45G(2) read with the proviso that the Court should allow the appellants to lead evidence rebutting the allegations made by the liquidator in his reports, for if such a course was adopted, it would itself develop into a full fledged enquiry and the very object of a limited enquiry at the initial stage would be defeated. What the Court can and should do in such cases is to read the report submitted by the Official Liquidator, consider whether the opinion expressed in the report appears to be, prima facie, reasonable; hear the explanation of the person concerned; and find out prima facie whether the explanation tendered by the person is sufficient to reject the liquidator 's request for such person 's public examination and whether, on the whole, it is just and beneficial to the interest of the banking company that public examination should be held. The subjectmatter of this preliminary investigation is not the whole of the enquiry on the merits; it is an enquiry as to whether the director or the auditor should be publicly examined. Therefore, we do not think Dr. Seyid Muhammad is justified in contending that the High Court has ignored the safeguard afforded to the appellants by the proviso section 45G(2). The question about the construction of section 45G(1) & (2) does not present any serious difficulty. What must be disclosed by the report of the Official Liquidator is the act or omission of the person there specified which has led to loss to the banking company since its formation. The acts or omissions to which section 45G(1) refers, when considered in the light of section 45G (2), are acts or omissions "as to the promotion, or formation, or the conduct of the business of the banking company, or ,is to his conduct and dealings in so far as they relate to the affairs of the banking company", so that after the report is made, the court takes a broad and overall view of the state of 145 affairs disclosed by the report and considers prima facie whether a case has been made out for the public examination of the director or the auditor. We are satisfied that the High Court has dealt with the matter precisely in this way, and no Grievance can be made against its decision on the ground that the provisions of the proviso to section 45G(2) have been ignored. In support of his argument that the High Court has mis construed the effect of the provisions of section 45G(1), Dr. Seyid Muhammad referred to two decisions which may be mentioned at this stage. The first of these is the decision of the House of Lords in Ex parte George Stapylton Barnes(1). In that case, the question which fell to be considered was the scope and effect of section 8(3) of the Companies (Winding up) Act, 1890; Lord Halsbury observed that he entertained not the smallest doubt that the meaning of this legislation is that, in order to give the Court jurisdiction to make an order for public examination, there must be a finding of fraud, and a finding of fraud against an individual who is thereby made subject to being summoned before the Court, and is compelled to answer, whether the answer incriminates him or not, but, being exculpated, receives his costs. He further observed: "I confess I am unable, looking at the whole of the legislation on the subject, to entertain the least doubt that that was what the Legislature intended, and I am a little surprised, I confess, that there should have been any doubt that fraud must be found." In our opinion, this passage is hardly relevant for our purpose, because as we have already indicated, section 45G(1) expressly provides that the act or omission complained of need not necessarily be fraudulent, and so, there can be no question, under section 45G(1), of coming to a conclusion that fraud has been committed before directing public examination of a person. The other decision on which Dr. Seyid Muhammad has relied is the judgment of the Bombay High Court in Sir Fazal Ibrahim Rahimtoola vs Appabhai C. Desai(2). In that case, dealing with the provisions contained in section 196 of the old Companies Act, Chagla C.J. disapproved of the practice of ordering ex parte public examination of persons. In that connection, he quoted with approval the warning sounded by Sir Lawrence Jenkins in the Ahmedabad Advance Spinning and Weaving Company vs Lakshmishanker(3), that the practice of passing ex parte orders involving the person affected in serious liability is much to be deprecated. In that case, the Bombay High Court was called upon to consider whether the allegations made against the director were vague and indefinite. As we will. (1) at P. 152. (2)A.I.R. (3)I.L.R. 146 presently point out, that difficulty does not arise in the present appeals. The allegations made by the liquidator in his reports against the appellants are clear, precise and definite. Let us now refer to the reports submitted by the liquidator in the present case. In his first report, the liquidator has stated that in carrying out the affairs of the bank, the Directors, with the help of officers appointed by them out of their own relatives, have not properly conducted the affairs of the bank. He has also stated that in his opinion, loss had been caused to the bank since its formation by the acts and omissions of the Directors and of the auditor of the bank. The report then proceeds to specify the extent of the loss and the causes for the said loss. It appears from the report that loans were advanced by the bank without regard to the question of any adequate security. In many cases, loans were advanced without any security at all and the inevitable consequence has been that a large number of debts have become barred by time long before the winding up proceedings were started. The bank appears to have paid dividends without earning profits. Similarly, though it did not earn any profits between 1936 to 1958, it submitted reports showing substantial amounts as net income and so, it has paid income tax on the said amounts. A large amount of advances appears to be irrecoverable. At the end of his report, the liquidator has mentioned 10 persons, including the three appellants before us, whose acts and omissions, in his opinion, contributed to loss to the banking company. Two further reports were made by the liquidator and they support the opinion expressed by him in his first report. The third of these reports was filed after this matter was heard by the learned Single Judge but the first two reports themselves fully justify the order made by him, and so, the third report can well be left out of consideration. When we turn to the objections filed by the appellants, it is clear that some of the facts are not seriously disputed. Take, for instance, the allegation that dividends were declared without earning profits. The appellant Joseph Augusthi contended before the High Court that the bank used to treat interests accrued on advances, though not received, as income, and so, income tax and super tax were paid on such income and dividends were also paid on the same basis. He suggested that the Reserve Bank had noticed these facts and had waived its objection. In other words, he relied on a practice which is obviously unsound in a commercial sense and pleaded that at this stage the Reserve Bank cannot challenge the correctness or propriety of the said practice. This practice has been described by the appellant as mercantile system of accounting. It would thus be seen that some of the facts alleged by the liquidator in his report are not disputed; the effect of those facts was a matter of argument between the parties before the High Court. In such 147 a case, we do not see how the appellants can successfully challenge the correctness of the view taken by the High Court that a case had been made out for the public examination of the appellants. That is why we do not think there is any substance in the argument urged before us by Dr. Seyid Muhammad that on the facts, an opportunity had not been given to the appellants to show that their public examination should, not be ordered. We are satisfied that in dealing with the facts of this case, the Courts below have taken into account the reports made by the liquidator and after considering the objections raised by the appellants, they have come to the right conclusion that the appellants should face a public examination. The result is the appeals fail and are dismissed with costs. One set of hearing fees. Appeals dismissed.

IN-Abs

The appellants were directors of Palai Central Bank Ltd. OD an application made by the Reserve Bank of India the High Court of Kerala ordered the winding up of the Bank and appointed an Official Liquidator who filed a number of reports under section 45G(1) of Banking Companies Act, 1949. The appellants filed their objections and the learned single Judge after hearing the parties made an order directing the public examination of the appellants under section 45G(2) of the Act. After appealing without success to a Division Bench the appellants filed the present ,appeals on a certificate granted by the High Court. It was contended on behalf of the appellants that the provi sion of section 45G(2) in as much as it would compel a person ordered to be publicly examined to be a witness against himself is violative of article 20(3) of the Constitution and therefore bad. It was further contended that the acts or omissions alleged as contemplated by section 45G(1) should be acts or omissions which are prohibited by law or enjoined by law and on this basis the reports of the Liquidator have not made out a case for public examination. The third contention was that the High Court has misconstrued the effect of the provisions of section 45G and has refused to give an opportunity to the appellants. Held:A person examined publicly under section 45G may in some cases be compelled to be a witness against himself and thus one elementof article 20(3) is satisfied. But it is only when a person can be said to have been accused of an offence that the prohibition prescribed by article 20(3) comes into operation. If a person who is not accused of any offence, is compelled to give evidence and it ultimately leads to an accusation against him, that would not be a case which would attract the provisions of article 20(3). After the examination under section 45G is over and materials adduced before the court have been examined by the court an occasion may or may not arise to take any action. In such a case, what may conceivably follow cannot said to be existing before the order is passed under section 45G; an accusation may follow the enquiry but an accusation is not in existence at the time when public examination is ordered. Hence the appellant cannot be said to have been accused. Since the essential condition precedent for the application of article 20(3) is absent in all cases covered by section 45C it cannot be said that section 45G is violative of article 20(3) of the Constitution. 138 Mallala Suryanarayana vs Vijaya Commercial Bank Ltd. decided on 26 10 61 (C.A. No. 286/59) and a a Narayaulal Bansilal vs Maneck Phiroz Mistry and Anr., ; , referred to. (ii) The acts or omissions contemplated under section 45G need not necessarily be criminal, they may even include acts or omissions which are commercially unsound or unwise. The court has only to see whether the acts or omissions "as to the promo tion or formation or the conduct of the business of the banking company or as to his conduct and dealings in so far as they relate to the affairs of the banking company" have led to loss to the banking company. For this, what the court can and should do is to read the report submitted by the Official Liquidator, consider whether the opinion expressed in the report appears to be prima facie reasonable, hear the explanation of the persons concerned; and find Out Prima facie whether the explanation tendered by the person is sufficient to reject the liquidator 's ' request for such person 's public examination and whether on the whole it is just and beneficial to the interest of the banking company that public examination should be held. The High Court has dealt with the matter precisely in this way in the present case and hence the appellants cannot have any grievance. Ex parte George Stapylton Barnes, , Sir Fazal Ibrahim Rahimtoola vs Appabhai C. Desai, A.I.R. 1949 Bom. 339 and The Ahmedabad Advance Spinning and Weaving Co. vs Lakshmishankar, I.L.R. , distinguished. (iii) Applying the above principles and examining the reports submitted by the Official Liquidator it is clear that the courts below have taken into account those reports and after considering the objections raised by the appellant, they have come to the right conclusion that the appellants should face a public examination.

: Criminal 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 Court of the Judicial Commissioner, Vindhya 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 Special Judge, Rewa, in Criminal Case No, 1 of 1949. 1191 G. section Pathak (K. B. Asthana, with him), for the, appellant No. 1. K. B. Asthana, for appellant No. 2. M. C. Setalvad, Attorney General for India, (G. N., Joshi, with him), for the respondent. May 22. The Judgment of the Court was delivered by JAGANNADHA DASJ. This is an appeal against the judgment of the Judicial Commissioner of Vindhya Pradesh dated 10th March, 1951, by leave granted under article 134(1) (c) of the Constitution. The first and the second appellant,% were at the material period of time respectively the Minister for Industries and the Secretary to the Government, Commerce and Industries Department of the then United State of Vindhya Pradesh. The case for the prosecution against them is as follows: In the State of Panna (one of the component units of the United State of Vindhya Pradesh) there are certain diamond mines. By an agreement dated the lit of August, 1936, between the Panna Durbar on the one part and the Panna Diamond Mining Syndicate on the other part, the latter obtained a lease for carrying out diamond mining operations for a period of 15 years. It appears that on or about the 31st October, 1947, the Panna Durbar directed the stoppage of the mining work on the ground that the Syndicate was not carrying on the operations properly. Since then the Syndicate was making strenuous efforts to obtain cancellation of the said order. It is alleged that the two appellants in the course of these attempts, with which, at the material time, they were concerned in their official capacity, entered into a conspiracy about the beginning of February 1949 at Rewa (within the United State of Vindhya Pradesh), to obtain illegal gratification for the purpose of revoking the previous order of stoppage of mining work In pursuance of the said conspiracy it is alleged that the second appellant demanded on 8th March, 1949, at Rewa illegal gratification from one Nagindas Mehta, a 1192 representative of the Panna Diamond Mining Syndicate, and that later on 11th April, 1949, the first appellant, in fact, received a sum of Rs. 25,000 towards it at the Constitution House in New Delhi and forged certain documents purporting to be orders passed in official capacity and intended to confer some advantages or benefits on the Panna Diamond Mining Syndicate. On these allegations the two appellants were charged for criminal conspiracy and for the taking of illegal gratification by a public servant for doing an official act and for the commission of forgery in connection therewith. The charges were under sections 120 B, 161, 465 and 466, Indian Penal Code, as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, and the trial was held by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949. At the trial both the appellants were acquitted. The State filed an appeal to the Judicial Commissioner against the same whereupon both were convicted under sections 120 B and 161, Indian Penal Code (as adapted). In addition, the first appellant was convicted under sections 465 and 466, Indian Penal Code (as adapted). He was sentenced to rigorous imprisonment for three years and to a fine of Rs. 2,000 under section 120 B and to rigorous imprisonment for three years under section 161, Indian Penal Code, the two sentences to run concurrently. In respect of his conviction under sections 465 and 466 no separate sentence was awarded. The second appellant was sentenced to one year 's rigorous imprisonment and a fine of Rs. 1,000 under section 120 B, but under section 161 no separate sentence was awarded. The validity of the convictions and sentences has been challenged on the ground that there has been infringement of articles 14 and 20 of the Constitution. In addition, a further point has been raised before us by leave that no appeal lay to the Judicial Commissioner from the acquittal by the special Judge. It is convenient to deal with this point in the first 1193 instance. The question raised depends oil a construction of the provisions of the Vindhya Pradesh Criminal Law Amendment (Special Court) Ordinance No. V of 1949 dated 2nd December, 1949. By section 2 thereof the Vindhya Pradesh Government was given the power by notification to constitute Special Courts of criminal jurisdiction within the State and by section 3 to appoint a Special Judge to preside over the Special Court. By section 4 the Government was authorised to issue notifications from time to time allotting cases for trial by the Special Judge in respect of charges for offences specified in the Schedule to the Ordinance. Sections 5(1), 7 and 8 provide certain departures from the normal procedure or evidence, and section 9 provides for special punishment. Section 5, sub section (2) provides as follows : "Save as provided in sub section (1) the provisions of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, shall, so far as they are not inconsistent with this Ordinance, apply to the proceedings of a Special Court, and for the purposes of the said provisions, the Court of the Special Judge shall be deemed to be a Court of Session trying cases without a Jury or without the aid of Assessors, and a person conducting a prosecution before a Special Judge shall be deemed to be a Public Prosecutor. " Section 6 provides as follows : "The High Court may, subject to the provisions of section 7 regarding transfer of cases, exercise, so far as they may be applicable, all the powers conferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, as adapted in Vindhya Pradesh, on a High Court as if the Court of the Special Judge were a Court of Session trying cases without a Jury within the local limits of the High Court 's juris. dictions. " The argument of learned counsel for the appellants is that section 6 above quoted provides only for the powers of the High Court on appeal preferred to it, but that there is no provision at all confer. ring on an aggrieved party a right of appeal from 1194 the judgment and order of the Special Judge to I the High Court. It is contended that the absence of a right of appeal may be a lacuna, but that inasmuch as it has not been expressly provided, it cannot be implied from the fact that a provision has been made for the exercise of powers by the appellate court. It is conceded that this line of argument, if accepted, would result in there being no appeal even as against a conviction. But it is urged that it is the inevitable consequence of the lacuna. It appears however on careful consideration that no such lacuna exists and that sub section (2) of section 5 of the Vindhya Pradesh Ordinance reasonably construed is an express provision conferring a right of appeal to the aggrieved party, whether an accused or the State, against the judgment of the Special Judge. The section, in terms, says that the provisions of the Code of Criminal Procedure as adapted and in so far as they are not inconsistent with the Ordinance shall apply to the proceedings of a Special Court, and that for the purposes of the said provisions (that is, the adapted provisions which are not inconsistent and hence apply) the court of a Special Judge is to be deemed a Court of Session. The provisions of the Criminal Procedure Code relating to the right of appeal are sections 410 and 417, and there is nothing in the Vindhya Pradesh Ordinance which is inconsistent with the application of these two sections to the proceedings of a Special Court treated as a Court of Session for the purpose. It follows that the said proceedings are subject to appeal. But it is urged that the provisions of the Criminal Procedure Code that are attracted by sub section (2) of section 5 of the Vindhya Pradesh Ordinance to the proceedings of a Special Court are only those provisions which relate to the procedure before the Special Court itself in respect of the proceedings before it and not all the provisions which are connected with or related to those proceedings. There is, in our opinion, no warrant for putting such a limited construction on this sub section. The only limitation on the application of the provisions of the Criminal Procedure Code to the 1195 proceedings of the Special Court is the one arising from the existence of any inconsistent provisions in the, Ordinance and not with reference to ' the conduct of the proceedings before that very court. Once the Special Court is to be deemed a Court of Session the normal right of appeal provided by section 410 or section 417 as the case may be, must be taken to have been expressly provided by reference and not as arising by mere implication. Learned counsel strongly relied on Attorney General vs Herman James Sillem(1) to show that a provision such as the above was meant only to regulate the proceedings in a case within the four walls or limits of the court. The statutory provision which came up for construction in that case was however very differently worded, and was meant to regulate "the process, practice, and mode of pleadings," i.e., the procedure. in the court and not "the proceeding" of the court. While, no doubt, it is not permissible to supply a clear and obvious lacuna in a statute and imply a right of appeal, it is incumbent on the court to avoid a construction, if reasonably permissible on the language, which would render a part of the statute devoid of any meaning or application. The construction urged for the appellant renders section 6 futile and leaves even a convicted person without appeal. We have no hesitation in rejecting it. Out of the constitutional points raised, that which relates to the alleged violation of article 14 has no substance. In reliance on Lakshnwndas Ahuja 's case(2) it was sought to be argued that though the trial in this case under Ordinance No. V of 1949 related to offences committed prior to the commencement of the Constitution, the continuance thereof under the special procedure prescribed by the Ordinance was discriminatory and hence unconstitutional. It is to be noticed that the trial commenced on 2nd December, 1949, the acquittal by the Sessions Judge was on 26th July, 1950, and the conviction by the Judicial Commissioner on appeal therefrom was on 10th March, 1951. In the (1) ; ; xi E. R. 1200. (2) ; 1196 light, however, of the later decision of the Supreme Court in Syed Qasim Razvi vs The State of Hyderabad(1), )it was recognised that this point was unsubstantial, unless some material prejudice in the matter of procedure was shown. In this context the learned Attorney General brought to our notice that even before the Criminal Law Amendment(Special Court) Ordinance No. V of 1949, dated 2nd December, 1949, came into force there was in operation the Code of Criminal Procedure Adaptation (Amendment) Ordinance No. XXVIII of 1949 dated 3rd May, 1949, whereby section 268, Criminal Procedure Code, requiring all trials before a Court of Session to be either by jury or with the aid of assessors was deleted from the Vindhya Pradesh Criminal Procedure Code as adapted. Therefore by the date when the trial in the present case commenced before the Special Court there was no substantial or material prejudice caused to an accused who was tried by the Special Court, and the continuance of such procedure after the Constitution came into force would make no serious difference. What, however, was relied upon was a subsequent change in the situation as a result of section 3 of Central Act No. XXX of 1950 [Part C States (Laws) Act, 1950], whereby Acts and Ordinances specified in the Schedule to the (LIX of 1949) were extended to Vindhya Pradesh, and one of the Acts specified in that Schedule was the entire Code of Criminal Procedure. This therefore had the effect of reviving section 268, Criminal Procedure Code, in its application to Vindhya Pradesh, repealing by section 4 of the Act the pre existing law in this behalf in the State. It was accordingly argued that to the extent the trial continued under the old procedure subsequent to 16th April, 1950, there were inevitable discrimination and necessary prejudice. This argument, however, overlooks the fact that the repealing section 4 of Act No. XXX of 1950 contained a saving clause providing that "the repeal shall not affect (a) the previous operation of any such law, or (b) any penalty, forfeiture or punishment incurred in respect (1) ; 1197 of any offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of any such penalty, for feiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed. " It is to be noticed that the saving provision applies equally to proceedings previously commenced and then pending, whether before the special court or the ordinary court, and that therefore in respect of two persons equally situated in this behalf, one under trial by the ordinary court and the other by the special court, the position continues what it was before, i.e., the continuance of trial does not involve any substantially discriminatory and pre judicial procedure. Learned counsel however attempted to argue that the very saving clause was a discriminatory provision and hence unconstitutional and invalid. But there is no reason, why pending proceedings cannot be treated by the legislature as a class by themselves having regard to the exigencies of the situation which such pendency itself calls for. There can arise no question as to such a saving provision infringing article 14 so long as no scope is left for any further discrimination inter se as between persons affected by such pending matters. The next and the only serious question that arises 'in this case is with reference to the objections raised in reliance on article 20 of the Constitution. This question arises from the fact that the charges as against the two appellants, in terms, refer to the offences committed as having been under the various sections of the Indian Penal Code as adapted in the United States of Vindhya Pradesh by Ordinance No. XLVIII of 1949. This Ordinance was passed on II th September, 1949, while the offences themselves are said to have been committed in the months of February, March and April, 1949, i.e., months prior to the Ordinance. It is urged therefore that the convictions in this case which were after the Constitution came into force 155 1198 are in respect of an ex post facto law creating offences after the commission of the acts charged as such offences and hence unconstitutional. This contention raises two important questions, viz., (1) the proper construction of article 20 of the Constitution, and (2) whether the various acts in respect of which the appellants were convicted constituted offences in this area only from the date when Ordinance No. XLVIII of 1949 was passed or were already so prior thereto. Article 20(1) of the Constitution is as follows: "No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. " This article in its broad import has been enacted to prohibit convictions and sentences under expost facto laws. The principle underlying such prohibition has been very elaborately discussed and pointed out in the very learned judgment of Justice Willes in the well known case of Phillips vs Eyre(1) and also by the Supreme Court of V. section A. in calder vs Bull (2). In the English case it is explained that ex post facto laws are laws which voided and punished what had been lawful when done. There can be no doubt as to the paramount importance of the principle that such ex Post facto laws, which retrospectively create offences and punish them are bad as being highly inequitable and unjust. In the English system of jurisprudence repugnance of such laws to universal notions of fairness and justice is treated as a ground not for invalidating the law itself but as compelling a beneficent construction thereof where the language of the statute by any means permits it. In the American system, however, such ex post facto laws are themselves rendered invalid by virtue of article 1, sections 9 and 10 of its Constitution. It is contended by the learned Attoney General that article 20 of ' the Constitution (1) (1870) 6 Q.B.D. i, at 23,and 25. (2) ; ; I Law. Edition 648 at 649, 1199 was meant to bring about nothing more than the invalidity of such ex post facto laws in the post Constitution period but that the validity of the pre Constitution laws in this behalf was not intended to be affected in any way. The case in Keshavan Madhavan Menon vs The State of Bombay(1) has been relied on to show that the fundamental rights guaranteed under the Constitution have no retrospective operation, and that the invalidity of laws brought about by article 13 (1) of the Constitution relates only to the future operation of the pre Constitution laws which are in violation of the fundamental rights. On this footing it was argued that even on the assumption of the convictions in this case being in respect of new offences created by Ordinance No. XLVIII of 1949 after the commission of the offences charged, the fundamental right guaranteed under article 20 is not attracted thereto so as to invalidate such convictions. This contention, however, cannot be upheld. On a careful consideration of the respective articles, one is struck by the marked difference in language used in the Indian and American Constitutions. Sections 9(3) and 10 of article I of the American Constitution merely say that "No ex post facto law shall be passed. " and " No State shall pass ex Post facto law. But in article 20 of the Indian Constitution the language used is in much wider terms, and what is prohibited is the conviction of a person or his subjection to a penalty under ex post facto laws. The prohibition under the article is not confined to the passing or the validity of the law, but extends to the conviction or the sentence and is based on its character as an ex post facto law. The fullest effect must therefore be given to the actual words used in the article. Nor does such a construction of article 20 result in giving retrospective operation to the fundamental right thereby recognised. All that it amounts to is that the future operation of the fundamental right declared in article 20 may also in certain cases (1) ; 1200 result from acts and situations which had their commencement in the pre Constitution period. In The Queen vs St. Mary Whitechapel (1) Lord, Denman C.J. pointed out that a statute which in its direct operation is prospective cannot properly be called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing. The lgeneral principle therefore that the fundamental rights have no retrospective operation is not in any way affected by giving the fullest effect to the wording of article 20. This article must accordingly be taken to prohibit all convictions or subjections to penalty after the Constitution in respect of ex post facto laws whether the same was a post Constitution law or apre Constitution law. That such is the intended of the wording used in article 20(1) is confirmed by the similar wording used in articles 20 (2) and 20 (3). Under article 20 (2) for instance, it cannot be reasonably urged that the prohibition of double jeopardy applies only when both the occasions there for arise after the Constitution. Similarly. under article 20 (3) it cannot be suggested that a person accused before the Constitution can be compelled to be a witness against himself, if after the Constitution the case is pending. In this context it is necessary to notice that what is prohibited under article 20 is only conviction or sentence under an ex post facto law and not the trial thereof. Such trial under a procedure different from what obtained at the time of the commission of the offence or by a court different from that which had competence at the time cannot ipso facto be held to be. unconstitutional. A person accused of the commission of an offence has no fundamental right to trial by a particular court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved. In this connection our attention has been drawn to the fact that the Vindhya Pradesh Ordinance XLVIII of 1949, though enacted on 11th September, (1) ; at 814. 1201 1949, i.e., after the alleged offences were committed, was in terms made retrospective by section 2 of the said Ordinance which says that the Act " shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948" a date long prior to the date of the commission of the offences. It was accordingly suggested that since such a law at the? time when it was passed was a valid law and since this law had the effect of bringing this Ordinance into force from 9th August, 1949, it cannot be said that the convictions are Dot in respect of "a law in force" at the time when the offences were committed. This, however, would be to, import a somewhat technical meaning into the phrase "law in force" as used in article 20. " Law in force" referred to therein must be taken to relate not to a law "deemed" to be in force and thus brought into force, but the law factually in operation at the time or what may be called the then existing law. Otherwise, it is clear that the whole purpose of article 20 would be completely defeated in its application even to ex post facto laws passed after the Constitution. Every such ex post facto law can be made retrospective, as it must be, if it is to regulate acts committed before the actual passing of the Act, and it can well be urged that by such retrospective operation it becomes the law in force at. the time of the commencement of the Act. It is obvious that such a construction which nullifies article 20 cannot possibly be adopted. It cannot therefore be doubted that the phrase "law in force" as used in article 20 must be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law "deemed" to have become operative by virtue of the power of legislature to pass retrospective laws. It follows that if the appellants are able to substantiate their contention that the acts charged as offences in this case have become such only by virtue, of Ordinance No. XLVIII of 1949 which has admittedly been passed subsequent to the commission thereof, then they would be entitled to the benefit of article 20 of 12O2 the Constitution and to have their convictions set ,aside. This leads to an examination of the relevant pre existing law. But before taking up that examination, it is convenient to deal with a contention which has been repeatedly pressed on us, viz., that the validity of the convictions in this case cannot be upheld on a consideration of the pre existing state of law, because (1) the charges are specifically with reference to the offences under Ordinance No. XLVIII of 1949, and (2) the said Ordinance itself has repealed the preexisting law. This contention is, however, without any substance. An examination of the pre existing state of law in this behalf as on the date of the commission of the offence is not for the purpose of converting the convictions under Ordinance No. XLVIII of 1949 into those under the previous law. The convictions in this case are clearly and legally referable only to Ordinance No. XLVIII of 1949, which was the law applicable to the offence at the time of the commission thereof on account of the retrospective operation validly given to that law by section 2 of the Ordinance. It is only for the purpose of considering the constitutional validity of those convictions that the factual position as regards the previous law in this behalf becomes necessary to be examined. This is a question which arises on the contention of the appellants themselves, and is not an objection to the frame of the charge or the legality of the conviction otherwise than on the footing of constitutional invalidity. Nor is there any question of prejudice involved, since that question has been raised on behalf of the appellants in the trial court itself, and the burden of making out the facts requisite for the constitutional invalidity of the convictions is on them. The argument that on the very terms of Ordinance No. XLVIII of 1949 there is no pre existing law with reference to which the constitutionality of the convictions under article 20 is to be judged is based on sections 2 and 3 (1) of the said Ordinance, which run as follows: 1203 Section 2: "The Indian Penal Code as in force generally in the Provinces of India immediately before the commencement of this Ordinance shall apply, and shall be in force in Vindhya Pradesh, subject to the adaptation and modifications set out in the Schedule, and the said Code as so applied shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948. " Section 3 (1): " If immediately before the commencement of this Ordinance there is in force in Vindhya Pradesh or any part thereof any law corresponding to the Indian Penal Code, such law is hereby repealed. " It is urged that as a result of these two provisions the pre existing law, if any, has been repealed as from 9th August, 1948, and that therefore the period bet. ween 9th August, 1948, and 11th September, 1949, on which date Ordinance No. XLVIII of 1949 came into force must be taken to be a period of no penal law in this territory for judging the constitutionality of any conviction subsequent to 11th September, 1949, for an alleged offence committed during that period. This argument is self contradictory, and proceeds on misconception. What is relevant for the application of article 20 is not the result brought about by repeal and the retrospective operation thereof, but the factual state of law as it existed prior to the date when the repeal came into operation. The repeal itself posits the pre existence of the law, and it is that law which is relevant for our present purpose. It therefore becomes necessary to examine in some detail what was the criminal law factually in force during the months of February, March and April, 1949, when the acts charged as offences against the appellants were committed, and to see whether it wag anything different from what was enacted by Ordinance No. XLVIII of 1949. Since the valid existence of such law has been, in the course of the arguments, contended as depending on the administrative set up at the relevant period and the legislative authority functioning 1204 in that set up, it becomes necessary to have a ,correct appreciation of the events which resulted in bringing about a United State of Vindhya Pradesh. The State of Vindhya Pradesh consists of as many 5 pre existing native States known as Bundelkhand Baghlielkand States of which the State of Rewa apparently the largest unit. Immediately after the passing of the Indian Independence Act of 1947 which by virtue of section 7 thereof resulted in the lapse of the suzerainty of the British Government in India, these various States executed in favour of the Government of India Instruments of Accession under section 6 of the Government of India Act in accordance with the form which is found at pages 165 and 169 of the White Paper on Indian States issued by the Government of India in March 1951. At about the same time they executed also standstill agreements as per form given at page 173 of the White Paper. Shortly thereafter and in pursuance of the policy of the Government of India all these 35 States executed, with the concurrence of the Government of India, an inter se Covenant dated 18th March, 1948, for the establishment of a UnitedState of VindhyaPradesh com prising the territories of these 35 States with a common executive, legislature and judiciary. That Covenant provided for common administrative arrangements and for the election of a Rajpramukh. Article 9 of the Covenant vested in the Rajpramukh the entire legislative authority of the United State of Vindhya Pradesh until a Constitution to be framed by the appropriate body for the said United State of Vindhya Pradesh provided otherwise. The Maharajah of Rewa became the first Rajpramukh of the United State of Vindhya Pradesh, and we are informed that.though the Covenant provided the 1st day of May, 1948, as the date within which the administration is to be made over to the Rajpramukh by each of the States, some did not, and that, as a fact, the integrated administration by the Rajpramukh in respect of all States came into operation only from the 9th of August, 1948, Meanwhile, however, it appears to have 1205 been thought expedient that a fresh Instrument of Accession should be executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh replacing the individual Instruments of Accession which were executed in the months of August, September, October and November, 1947. Consequently a fresh, Instrument of Accession was executed by the Rajpramukh on behalf of the United State of Vindhya Pradesh on the 20th of July, 1948, and was accepted by the Governor General of India on the 13th of September, 1949. It may be incidentally mentioned that one of the important differences between the previous individual Instruments of Accession executed by the various rulers and the later Instrument of Accession executed by the Rajpramukh is that while under the former, accession was only in respect of three matters, viz., Defence, External Affairs and Communications, under the later Instrument dated the 20th of July, 1948, all matters enumerated in Lists Nos. I and III of the Seventh Schedule of the Government of India Act, 1935, were accepted as the matters in respect of which the legislature of India, then called the Dominion Legislature, might make laws for the United State of Vindhya Pradesh. It may also be mentioned that on the 25th November, 1949, the Rajpramukh of the United State of Vindhya Pradesh issued a proclamation whereby he declared that the Constitution of India which was then shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the Vindhya Pradesh as for the other parts of India and specifically superseded and abrogated all other constitutional provisions inconsistent therewith which were then in force in this State. These arrangements brought about an integrated United State of Vindhya Pradesh within the framework of the Dominion of India but only by way of accession. Further steps, however, had the effect of merging these United States as part of the territory of India. It is unnecessary to notice those steps in detail, as they fall beyond the period with which we are concerned for the present purpose, 156 1206 It is against this background of events constituting the integration of these various ruler States into the United State of Vindhya Pradesh within the Union of India by accession thereto that the question as to what was the criminal law in force by February, March and April, 1949, has got to be judged. From the above ,narration it will be noticed that at the relevant period it was the Government of the United State of Vindhya Pradesh constituted by the inter se integration Covenant dated the 18th March, 1948, that was functioning under the authority of the Rajpramukh of Vindhya Pradesh and subject to the Instrument of Accession with the Dominion of India executed by him on the 20th July, 1948. As already stated, the actual integrated administration under these arrangements came into operation for the entire United State only on the 9th of August, 1948. We may now start with the fact above noticed that the various component States became the United State of Vindhya Pradesh on the 18th March, 1948. In the normal course and in the absence of any attempts to introduce uniform legislation throughout the State the pre existing laws of the various component States would continue to be in force on the well accepted principle laid down by the Privy Council in Mayor of Lyons vs East India Company(1). The first step towards the introduction of some uniformity in the laws for the entire State was taken by the Rajpramukh by issuing on the 31st July, 1948, an Ordinance styled the Vindhya Pradesh Application of Laws Ordinance No. IV of 1948. Section 2 of that Ordinance provided as follows: "All Acts, Codes, Ordinances and other laws, and rules and regulations made thereunder, which have, by publication in the Rewa Raj Gazette, been enforced in the Rewa State, and continue to be in force, are extended so as to be applicable to the whole of Vindhya Pradesh, Provided that nothing in this clause shall apply to any local law, rules, regulation or custom having the force of law, which relates to matters connected with land revenue or tenancy. " (1) 1 M.I.A. 175, at 270,,271. 1207 This Ordinance extended to the whole of Vindhya, Pradesh, and was to come into force with effect from the 9th of August, 1948, by virtue of section I thereof. The Ordinance was amended later by another Ordinance No. XX of 1949 which deleted from section 2 of the previous Ordinance the words "by publication in the Rewa Raj Gazette". The effect of these two Ordinances, so far as we are concerned, was to extend ' to the entire State of Vindhya Pradesh the criminal law which was in force previously in the Rewa State. That law is to be found by reference to Orders Nos. IV of 1921 and VI of 1922 issued by the then Regent of Rewa acting for the Maharajah on the 18th February, 1921, and 9th March, 1922, respectively. A perusal of these two Orders and in particular of paragraph 10 of the 1921 Order as interpreted by the 1922 Order makes it perfectly clear "that the Indian Penal Code and the Code of Criminal Procedure were introduced in the Rewa State, in the letter and in the spirit with due adaptation to local conditions. " It is not disputed that this continued to be the position so far as Rewa State was concerned until the United State of Vindhya Pradesh was formed. It follows that the Indian Penal Code and the Code of Criminal Procedure with necessary adaptations were brought into operation in the entire United State of Vindhya Pradesh shortly after the introduction of the integrated administration under the Rajpramukh. It has been urged, however, that though this may have been the intention, the intention did not become operative for reasons to be presently stated. Section 2 of Ordinance No. IV of 1948 while extending the laws of Rewa State to the rest of Vindhya Pradesh refers to the publication of such laws in the Rewa Gazette as a requisite therefor, and it is pointed out that the Rewa Gazette itself came into existence only in October 1930 (vide page 386 of the printed paper book), whereas the Penal Code and the Criminal Procedure Code were brought into operation in the Rewa State in 1921 and 1922. It is also pointed out that the deletion of the 1208 ,requirement of previous publication in the Rewa by Ordinance No. XX of 1949 came into operition only when that Ordinance was published in the Vindhya Pradesh Gazette, i.e., on the 15th May, 1949, sometime after the commission of the offence in this ,case. To substantiate the view that only such of the Rewa laws which were previously published in the Rewa Gazette were understood as having been origi nally extended to Vindhya Pradesh by Ordinance No. IV of 1948, a decision of the Vindhya Pradesh High Court dated the 29th October, 1949, in Criminal Appeal No. 27 has been brought to our notice which assumes that the Prisoners ' Act in force in India was not in force in Vindhya Pradesh as there was no previous publication of it in the Rewa Gazette. On the other side a notification of Vindhya Pradesh Government dated the 19th March, 1949, and published in the Vindhya Pradesh Gazette dated the 30th March, 1949, has been brought to our notice which specifically mentions all the laws by then in force in Vindhya Pradesh and shows "Indian Penal Code mutatis mutandis with necessary adaptations" as item 86 thereof This is relied on to show that there must have been a previous publication thereof in the Rewa Gazette before integration. There seems to be considerable force in this argument that in respect of the various Rewa State laws which have been enumerated in the above mentioned Gazette as having been brought into force in Vindhya Pradesh (some of these are Acts prior to 1930) there must have been previous publication in the Rewa Gazette sometime after 1930, and that neither Ordinance No. XX of 1949 nor the decision of Vindhya Pradesh High Court relating to Prisoners ' Act (which is not one enumerated in the above Gazette) can be taken to negative it. We are prima facie inclined to accept this view and to think that the Indian Penal Code as in force in Rewa became extended to Vindhya Pradesh by Ordinance No. IV of 1948. But even assuming that section 2 of the Ordinance failed to achieve its purpose on account of misconception as to the previous publication of any particular Rewa law in the Rewa Gazette, 1209 it is clear that that Rewa law would continue to be in force in the Rewa portion of the United State of Vindhya Pradesh, as the Vindhya Pradesh law therefor, on the principle recognised in Mayor of Lyons vs East India Company (1), that on change of sovereignty over an inhabited territory the pre existing laws continue to be in force until duly altered. Since in the present case we are concerned with offences committed in relation to the Rewa State portion of Vindhya Pradesh, there can be no reasonable difficulty in holding that the criminal law of Rewa State, i.e., the Indian Penal Code and the Criminal Procedure Code with adaptations mutatis mutandis, was the relevant law for our present purpose by the date of integrated administration, viz., the 9th August, 1948. Now the subsequent alterations therein by Ordinances of the Rajpramukh may be shortly noticed. So far as the substantive penal law is concerned, there was the Anti corruption Ordinance No. XII of 1948 dated the 16th December, 1948, and the Indian Penal Code (Application to Vindhya Pradesh) Ordinance No. XLVIII of 1949 dated the 11th September, 1949. The former being prior to the dates of commission of the offences in the present case does not require any further notice. So far as the Criminal Procedure Code is concerned, there were two Ordinances: (1) the Criminal Procedure Code Adaptation Ordinance No. XV of 1948 dated the 31st December, 1948, and (2) the Criminal Procedure Code Adaptation (Amendment) Ordinance No. XXVII of 1949 dated the 3rd May, 1949. In view of what has been found above, viz., that by virtue of the Orders of the Regent of Rewa dated 1921 and 1922 the Indian Penal Code and Criminal Procedure Code with the necessary adaptations mutatis mutandis were in force in Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948 or continued to be in force in the Rewa portion of Vindhya Pradesh State by virtue of the principle in Mayor of Lyons ' case (1) it is prima facie correct to say that the penal law in force (1) I M. I. A. 175 1210 in the relevant area was substantially the same both before and after the above mentioned amendments made by the Rajpramukh. It is urged however that in two important respects relevant for our present purpose there is a difference. It is pointed out that there is anamendment as regards the definition of "Public servant" by Ordinance No. XLVIII of 1949. It is also urged that sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, which are extra territorial in operation could not have been brought into force into Rewa or Vindhya Pradesh by adaptation or legislation for lack of legislative competence in this behalf at the relevant times. The points thus raised assume importance since the charges against the first appellant, who is a Minister, is in his capacity as a public servant and since also one of the charges against him is in respect of acts done in New Delhi completely outside Vindhya Pradesh. It is true that Ordinance No. XLVIII of 1949 amended the Indian Penal Code by substituting for the previous first clause of section 21 thereof relating to the definition of a "public servant" the phrase "Every Minister of State". But it does not follow that " a Minister of State" was not a public servant as defined in section 21 of the Indian Penal Code even before this amendment. Clause 9 of section 21, Indian Penal Code, shows that every officer in the service or pay of the Crown for the performance of any public duty is a "public servant". The decision of the Privy Council in King Emperor vs Sibnath Banerji(1) is decisive to show that a Minister under the Government of India Act is "an officer" subordinate to the Governor. On the same reasoning there can be no doubt that the Minister of Vindhya Pradesh would be an "officer" of the State of Vindhya Pradesh. Therefore, prior to the passing of Ordinance No. XLVIII of 1949 and on the view that the Indian Penal Code with necessary adaptations mutatis mutandis was in force at least in the Rewa portion of Vindhya Pradesh (if not in the entirety of Vindhya Pradesh) the first appellant was a public servant (1) at 222. 1211 as defined in section 21, Indian Penal Code, as adapted. The amendment of the said section brought about therefore no substantial change in the position of the first appellant. It has been faintly suggested that, even so, under the pre existing law the definition of public servant could have reference only to an officer of the Rewa State, and that the change brought about by Ordinance No. XLVIII of 1949 made only the Minister of Vindhya Pradesh State a public servant. This argument is fallacious. It is implicit in the continuance of Rewa law after integration that from the moment of such continuance it became the Vindhya Pradesh law for the Rewa portion of Vindhya Pradesh territory with the requisite implied adaptation consonant to the new set up. There is therefore no substance in the argument that the amendment of section 21, Indian Penal Code, by Ordinance No. XLVIII of 1949 brought about any change in the situation of the first appellant as a public servant. The further question that remains to be considered is whether under the Vindbya Pradesh law, acts committed outside the State are offences and are triable by Vindhya Pradesh courts, and whether in any case there was any such law in factual operation at the date when the acts charged as offences in this case were committed at New Delhi in April, 1949. Under the normal Indian law the relevant legislative provisions are sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, and the question is whether by express or implied ' adaptation mutatis mutandis these sections can be held to have been validly in force in Vindhya Pradesh at the relevant period. It is contended that the rulers of native States had no authority for extra territorial legislation, and that consequently any adaptation in this behalf cannot be implied and if expressly purporting to be made, cannot be valid. There can be no doubt that the provisions of the Penal Code and the Criminal Procedure Code are in the nature of extra territorial legislation, and that every sovereign legislative authority has the power to pass such laws also. [See Macleod 1212 vs Attorney General for New South Wales (1)]. In the, present case we are concerned only with that portion of the relevant extra territorial law which renders an act committed by a subject of the State outside the limits of the State an offence triable by the courts of state. In the course of the arguments it has suggested that to that limited extent no question territoriality of the relevant legislation arises. concept of extra territorial legislation appears to comprehend such cases also, if the passages relied on before us from Pitt Cobbet 's International Law, 5th Edition, at page 216 as also at pages 225 and 226 paragraphs 101 and 102, are to be accepted as correct. Assuming without deciding that this is so, the argument has been advanced that no ruler of the Indian States, before the 15th August, 1947, and much less the Rajpramukh of Vindhya Pradesh, had any such full sovereign status as to entitle them to pass extraterritorial laws. It is well known that these rulers had no external sovereignty, as it was taken out of them and exercised by the suzerain British power. But for internal purposes or municipal purposes the rulers were generally considered as having full sovereign status except to the extent that the suzerain power assumed to itself any function of such internal sovereignty either on specific occasions, or generally but for specified and limited purposes. In their relation with the rulers of the native States, the suzerain British power acted on the juristic theory propounded by Sir Henry Maine that "sovereignty is divisible, though independence is not"See Ilbert 's Government of India, page 425 a theory accepted in the Butler Committee Report on Indian States (1928 29) at page 25, paragraph 44. The passages at pages 398, 399 and 426 of Ilbert 's Government of India would show that what may have been left of internal sovereignty to a particular ruler may in exceptional cases be nothing more than titular. The general position of these Native States in India prior to 15th August, 1947, appears fairly clearly from certain instructive passages at pages 422 and 423 of Ilbert and is correlative (1) 1213 to the actual exercise of British jurisdiction within those States as appears from the following passages: "In point of fact the jurisdiction of the GovernorGeneral in Council within the territories of Native States is exercised (a) over European British subjects in all cases; (b) over native Indian subjects in certain cases; (c) over all classes of persons, British or foreign, within certain areas. It is the policy of the Government of India not to allow native courts to exercise jurisdiction in the case of European British subjects but to require them either to be tried by the British courts established in the Native State, or to be sent for trial before a court in British India. The Government of India does not claim similar exclusive jurisdiction over native Indian subjects of His Majesty when within Native States, but doubtless would assert jurisdiction over such persons in cases where it thought the assertion necessary. . " "The Government of India does not, except within specified areas, or under special circumstances, such as during the minority of a native prince, take over or interfere with the Jurisdiction of the courts of a Native State in cases affecting only the subjects of that State, but leaves such cases to be dealt with by the native courts in accordance with native laws. " Lee Warner in his book on "Protected Princes of India" states the position at pages 351 and 352. The following extract from paragraph 143 at page 351 is instructive : "But where, as in the case of European British subjects, material distinctions in religion, education, and social habits separate them from the native community, and justify the extension to them of those rights of ex territoriality, which are still obtained for them by Capitulations and agreements with foreign 157 1214 non Christian nations, these distinctions are absent in the case of native Indian subjects of Her Majesty. The systems of native justice, if not similar to those in British territory, are more or less assimilated, and provided that the trial of native Indian subjects by the ordinary tribunals of the States, whose laws they have offended, is supervised by the British agent, the general rule is to leave to the Native States jurisdiction over such British subjects who break their laws, even where the offence committed is also cognisable under the law of India. The British Government goes still farther, since it extradites to the Native State a native Indian subject, who, after the commission of an extraditable offence in the Native principality, seeks shelter in British territory, provided that the political agent is satisfied that the crime can be properly tried in the courts of the Native State. The powers of the sovereigns of the States, in respect of the trial of native Indian subjects, have been generally classified. Some chiefs can try any person, whether their own or a native Indian subject, for a capital offence without express permission; others can only try a native Indian subject for such an offence with permission; and others, again, cannot pass a final sentence of death without the confirmation of Government to it." These passages, while showing that the extent of the exercise of internal sovereignty by each of these rulers in actual practice, is a matter for evidence, when called in question, indicate that full jurisdiction over the rulers ' own subjects was never denied but generally conceded, except where a sentence of death was involved. There is therefore no reason at all to think that the rulers had no authority to pass laws binding their own subjects and regulating their own courts in respect of acts committed outside their State assuming such laws to be extra territorial. In this context an old treaty of 1813 between Rewa State and the British Government and a fairly recent judoment of the Rewa High Court in 1945 have been brought to our notice to show the contrary at least so far as Rewa State is concerned. The treaty is to be found at page 255 of 1215 Volume V of Aitchison 's Treaties, Engagements and ' Sanads. Article 6 thereof which is relied on only provides facilities for the suzerain Government to follow and pursue into Rewa State, offenders who having committed offences in British India escape away into the State. This does not negative the authority of the Rewa State to enact legislation concerning its own subjects when they commit such offences outside the State. 1945 Rewa Law Reports 84 is no doubt a case in which the High Court assumed that the court had no jurisdiction to try an offence committed outside the State by a subject of the State. There is no discussion in the judgment of the question involved, and this single instance is not enough to make out either the absence of the State 's legislative authority in this behalf or the factual non existence of the relevant law. It must therefore be held that the rulers of the native States had prior to 1947, the authority to pass extra territorial laws relating to offences committed by their own subjects and vesting in their own courts the power to try them, except where the contrary is made out by evidence in the case of any individual State, and that so far at least as Rewa State is concerned, the contrary cannot be held to have been proved. The further point that has been raised is that whatever may be the position of the Rewa State before 1947 the attempt of the Rajpramukh of the State of Vindhya Pradesh in so far as he purported to extend the extra territorial portion of any of the Rewa laws to Vindhya Pradesh by Ordinances Nos. IV of 1948 and XX of 1949 and his attempt to introduce into Vindhya Pradesh the extra territorial portion of the Indian Penal Code and the Criminal Procedure Code by Ordinances Nos. XLVIIII of 1949 and XXVIII of 1949 respectively, must fail as he had no such authority for extra territorial legislation with reference to the basic covenants from which his authority was derived. These basic covenants are as already above shown the inter se integration agreement 1216 dated 18th March, 1948, executed by all the rulers of the component States of Vindhya Pradesh and the Instrument of Accession dated 20th July, 1948, executed by the Rajpramukh in favour of the Dominion of India. Under the inter se integration agreement and by article IX, clause (3) thereof, the Rajpramukh was vested with the power to make and promulgate Ordinances for the peace and good government of the United State of Vindhya Pradesh or of any part thereof. Under the Instrument of Accession and by clause (3) thereof the Rajpramukh accepted all matters enumerated in Lists I and III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature may make laws for the United State. It has been strenuously argued before us that in view of these provisions the authority of the Rajpramukh for legislation was in substance reduced to the powers of the Provincial Legislature within the framework of the Constitution of India as it then was. Section 6, subsection (1), of the Indian Independence Act and section 99(2) as amended are relied on to show that the Provincial Legislature has no power to make extra territorial laws. It is accordingly argued that the Rajpramukh had no power at least after the execution of the Instrument of Accession to amend or adapt the Indian Penal Code or the Criminal Procedure Code so as to bring into operation sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, with the necessary modifications in the State of Vindhya Pradesh. Though this argument appears plausible, a careful scrutiny of the scheme of the integration and accession covenants as also of the relevant provisions of the Government of India Act and the Indian Independence Act shows clearly that such an argument is not tenable. The provisions under the Government of India Act under which the Instrument of Accession has been executed keep the position of the Provinces distinct from the position of the acceding States. Section 5(1) of the Government of India Act while making the provinces as well as the acceding States, 1217 part of the Dominion of India enumerates the two under separate categories by clauses (a) and (b). Subsection (2) of section 6 specifically provided that, "An Instrument of Accession shall specify the matters which the Ruler accepts as matters with respect to which the Federal Legislature may make laws for his State, and the limitations, if any, to which the I power of the Federal Legislature to make laws for his State, and the exercise of the executive authority of the Federation in his State, are respectively to be subject. " Section 101 of the Government of India Act in terms says that, "Nothing in the Act shall be construed as empowering the Federal Legislature to make laws for a Federated State otherwise than in accordance with the Instrument of Accession of that State and any limitation contained therein. " If the argument put forward by the appellants ' counsel is correct, viz., that the mere reference to the legislative items in respect of which the Dominion Legislature could make laws applicable to the State of Vindhya Pradesh as Lists I and III carried with it the necessary implication that the Dominion Legislature alone had the power to make laws for the State with extra territorial operation, and to that extent therefore curtailed the legislative authority of the Rajpramukh, it would be tantamount to the importation of all the limitations under sections 99 to 104 into the Instrument of Accession. This would be contrary to section 101 of the Government of India Act. There is no justification for such a view merely because of the reference to the enumerated items as Lists I and III which may have been a matter of convenience for reference. On the other hand, the Instrument of Accession in terms states by clause 9 as follows: "Save as provided by or under this Instrument nothing contained in this Instrument shall affect the exercise of any power, authority and rights enjoyed by the Rajpramukh or the validity of any law for the 1218 time being in force in the United State or any part thereof. " The authority of the Rajpramukh which is referred to in this clause is not only the unfettered legislative authority "to make and promulgate Ordinances for the peace and good government of the United States or any part thereof" Vested in him by Article IX of the integration Covenant dated 18th March, 1948, but also that which is vested in him under article VI of the said agreement. This article vests in him "all rights, authority, and jurisdiction belonging to the ruler of each Covenanting State and incidental to the government thereof," There can be no doubt therefore that if, as has been pointed out above, the various Covenanting States and in particular the State of Rewa, had the power to pass extra territorial laws at least to the extent of making certain acts committed outside the State by its subjects as offences and to vest in the State courts authority to deal with such offences, that power has not in any way been curtailed either by the integration Covenant or the Instrument of Accession. It follows therefore that sections 3 and 4, Indian Penal Code, and section 188, Criminal Procedure Code, at least in so far as it affected the subjects and courts of the State, were entirely within the legislative competence of the States concerned for all purposes of adaptation or amendments. Now, so far as sections 3 and 4 of the Indian Penal Code are concerned, the amendment brought about by Ordinance No. XLVIII of 1949 is nothing more and nothing less than a mere adaptation of these sections for the new set up and this, as shown above, was exactly the law already in force without formal amendment. Hence it would follow that the conviction of the appellants in respect of all the offences of which they are charged including the extra territorial offence said to have been committed by the first appellant at New Delhi is not open to the objection under article 20 on the ground that it is a conviction under an ex post facto law. 1219 As regards the amendments in the Criminal Procedure Code brought about by Ordinances Nos. XV of 1948 dated the 31st December, 1948, and XXVII of 1949 dated the 3rd May, 1949, no detailed consideration is necessary in view of what has been held at the outset that the constitutional objection under article 20 does not apply to a change in procedure or change of court. Items 62 and 63 of section 2 of Ordinance No ' XV of 1948 would seem to indicate that the jurisdiction which the criminal courts of Vindhya Pradesh previously had to try extra territorial offences was probably lost thereby. If so, that jurisdiction,"as restored under Ordinance XXVII of 1949 by the amendment thereby of the said items 62 and 63 thus bringing it into line with section 188, Criminal Procedure Code, with the requisite adaptations. Hence the power of the Vindhya Pradesh courts to hold trials for extra territorial offences which was probably interrupted from 31st December, 1948, was restored on 3rd May, 1949, before the trial in this case commenced with retrospective operation, i.e., as from the date of the prior Ordinance, i.e., 31st December, 1948. In the result, we hold that (1) The appeal to the Judicial Commissioner from the acquittal by the Special Judge was competent; (2) The trial of the appellants under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance No. V of 1949 is not open to objection under article 14 of the Constitution; (3) The criminal law relating to the offences charged against the appellants at the time of their commission was substantially the same as that which obtained at the time of the convictions and sentences by the appellate court. This was so both in respect of offences committed within the limits of the State of Vindhya Pradesh and those committed outside it ; (4) The law relating to the offence committed by the first appellant outside the State of Vindhya Pradesh (at New Delhi) was perfectly within the competence of the appropriate legislative authority at the relevant 1220 time; and (5) Consequent on 3 and 4 above, the objection to the convictions and sentences of the appellants ,under article 20 is not sustainable. The appeal is accordingly directed to be posted for consideration whether it is to be heard on the merits. Order accordingly.

IN-Abs

The appellants, who were during the relevant period, the Minister for Industries and Secretary to the Government respectively of the State of Vindhya Pradesh, were tried by a Special Judge under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance (No. V of 1949) for charges under sections 120 B, 161, 465 and 466 of the Indian Penal Code as adapted by the Vindhya Pradesh Ordinance No. XLVIII of 1949, the facts alleged against them being that they entered into a conspiracy in February, 1949, at Rewa to obtain illegal gratification for revoking a previous Government Order and in pursuance of that conspiracy the second appellant demanded such gratification on 8th March, 1949, at Rewa and the first appellant received Rs. 25,000 towards it on the 11th April, 1949, at New Delhi and forged certain documents purporting to be official orders. They were acquitted by the Special Judge but on appeal the first appellant was convicted by the Judicial Commissioner on all the charges and the second as under sections 120 B and 161 of the Indian 1189 Penal Code. The validity of the trial and convictions was challenged on appeal to the Supreme Court inter alia on the ground that they contravened articles 14 and 20 of the Constitution and on the ground that no appeal lay to the Judicial Commissioner from the order of the Special Judge. Held (i) that, as section 5 (2) of the Vindhya Pradesh Ordinance, 1949, provided that the provisions of the Criminal Procedure Code shall apply to the proceedings of a Special Court and that the Special Judge shall be deemed to be a court of session, the normal right of appeal provided by section 410 or section 417, as the case may be, of the Criminal Procedure Code must betaken to have been expressly provided by reference, and the order of the Special Judge was appealable to the Judicial Commissioner. Attorney General vs Herman James Sillem (11 H. L. C. 704) distinguished. (ii) That the trial of the appellants did not contravene article 14 of the Constitution inasmuch as in the Vindbya Pradesh Criminal Procedure Code (as amended) which was in force at the commencement of the trial (namely 2nd December, 1949) there was no provision requiring all trials before Courts of Sessions to be either by jury or with the aid of assessors, and the fact that the entire Criminal Procedure Code including section 268 thereof was extended to Vindhya Pradesh on the 16th April, 1950, by the Part C States (Laws) Act, 1950, could not affect the validity of the trial after that date as section 4 of the said Act provides that the repeal of the earlier law by that Act shall not affect pending proceedings, and pending proceedings being a class in themselves, a provision saving such proceedings could not contravene article 14. Syed Qasim Razvi vs State of Hyderabad ([1952] S.C.R. 710) referred to. (iii) The prohibition contained in article 20 of the Constitution against convictions and subjections to penalty under ex post facto laws is not confined in its operation to post Constitution laws but applies also to ex post facto laws passed before the Constitution in their application to pending proceedings. [The difference between Indian and American law in this respect pointed out.] (iv) Article 20, however, prohibits only conviction or sentence under an ex post facto law, and not the trial thereof. Such trial under a procedure different from what obtained at the time of the offence or by a court different from that which had competence at that time cannot ipso facto be held to be unconstitutional. (V) The expression " law in force " in article 20 means a law which was in fact in existence and in operation at the time of the commission of the offence (or, in other words, the then existing 154 1190 law) and does not include a law which by subsequent legislation has to be deemed to have been in force at that time. (vi) Though the charges against the appellants were specifically framed with reference to the offence under Ordinance No. XLVIII of 1949, as the acts charged as offences did not become such only by virtue of the said Ordinance and as they were offences even under the law which prevailed at the time when the acts were committed, they could not be regarded as convictions for violation of a law which was not in force at the time of the commission of the acts charged. (vii) By virtue of the Orders of the Regent of Row& of 1921 and 1922, the Indian Penal Code and the Criminal Procedure Code with the necessary adaptations were in force in the Rewa State and either became extended to the entire Vindhya Pradesh State from the 9th August, 1948, by Ordinance No. IV of 1948, or continued to be in force in the Rewa portion of that State by virtue of the principle laid down in Mayor of Lyons vs Bast India Co. (1 M.I. A. 175), and were the penal law in force in the relevant area when the acts were committed. (viii) The amendment of the definition of "public servant" in S.21 of the Penal Code, made by Ordinance No. XLVIII of 1949 brought about no substantial change in the position of the first appellant as a public servant. (ix) The Ruler of the Rewa State had prior to 1947 the authority to pass extra territorial laws relating to offences committed by his own subjects and vesting in his own courts the power to try them, that power was not in any way curtailed either by the integration covenant or the Instrument of Accession, and sections 3 and 4 of the Indian Penal Code and section 188 of the Criminal Procedure Code, at least in so far as they affected the subjects and courts of the State, were within the legislative competence of the State. (x) The conviction of the appellants in respect of all the offences with which they were charged including the extra territorial offence said to have been committed by the first appellant at New Delhi was not illegal under article 220 on the ground that the conviction was under an ex post facto law.

Appeals Nos. 221 & 222 of 1963. Appeals by special leave from the judgment and order dated April 16, 1959 of the Mysore High Court in Writ Petitions Nos. 138 and 139 of 1956. N. D. Kharkhanis and R. N. Sachthey, for the appellants (in both the appeals). K. Srinivasan and R. Gopalakrishnan, for the respondent (in the appeals). March 11, 1964. SARKAR J. and HIDAYATULLAH J. delivered separate opinions dismissing the appeals. SHAH J. delivered a dissenting opinion allowing the appeal. SARKAR J. The question in these two appeals is whether certain proceedings for the recovery of tax from the assessee under the Income tax Act, 1922, were invalid and should be quashed as the assessment order on which they were based had been revised in appeal. The High Court of Mysore held them to be invalid and quashed them. The revenue authorities have now appealed to this Court against that decision. I think it will be helpful to set out the facts chronologi cally. The tax sought to be realise a became due under two assessment orders passed by an Income tax Officer on March 23, 1955, in respect of the years 1953 54 and 1954 55 finding that the assessee 's income for the earlier year was Rs. 61,000/ on which a tax of Rs. 19,808 1 0 was due and that for the other year was Rs. 1,21,000/ creating a tax liability of Rs. 66,601 3 0. Notices of demand under section 29 of the Act were issued in respect of these dues. The assessee tiled appeals to the Appellate Assistant Commissioner against the assessment orders but did not pay the tax as demanded by the notices. On such failure to pay, the Income tax Officer sometime in September 1955 sent certificates to the Deputy Commissioner, Kolar under section 46(2) of the Act for recovery of the tax as arrears of land revenue and the latter in the course of the same month attached various properties of the assessee under the Revenue Recovery Act. Thereafter on December 17, 1955, the appeals filed by the assessee which were till then pending were decided by the Appellate Commissioner. He reduced the assessable income of the assessee to Rs. 27,000/ for the year 1953 54 and to Rs. 45,000/ for the year 1954 55 and directed the Income tax Officer to recompute the tax on the basis of the reduced income and to refund the excess if any collected. It appears that thereafter on February 19, 1956, the Income tax Officer informed the assessee that his tax liability for 1953 54 150 had reduced to Rs. 4,215 9 0 Rs. 13,346 8 0 and called upon him to pay these amounts at once into the local treasury. The assessee filed further appeals against the orders of the Appellate Commissioner and asked that the recovery proceedings might be stayed pending decision of these appeals and on that request being rejected, moved the High Court of Mysore by two petitions under article 226 of the Constitution for quashing the recovery proceedings as invalid with the result earlier mentioned. We are not concerned with the appeals filed by the assessee from the appellate orders and no further reference to them will be made in this judgment. The contention of the assessee is that in view of the orders of the Appellate Commissioner the earlier orders, notices of demand and certificates must be deemed to have been super seded and the attachments therefore ceased to be effective from the date of the appellate orders and could no longer be proceeded with. He contends that the Income tax Officer had to start afresh by serving a new notice of demand and taking the necessary further steps thereon for realisation of the tax which then was due only under the appellate orders. These contentions were accepted by the High Court. The revenue authorities on the other hand, contend in short that the Act does not provide for any such supersession. Now, the scheme of the Income tax Act for realisation of moneys becoming due under it appears to be this. The tax becomes due on the making of an assessment order or an order imposing penalty or requiring interest to be paid. There after a notice of demand in respect of that amount has to, be served. This is provided by section 29 which is set out below: section 29. When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable. The form mentioned contains directions as to the time within which, the person to whom and the place at which the payment is to be made. The consequences that follow a non compliance with a notice of demand served under section 29 are set out in section 45 which so far as material is in the following terms: Section 45. Any amount specified as payable in a notice of demand under sub section (3) of section 23A or under section 29 or an order under section 31 or section 33, shall be paid within the time, at the place and to the person mentioned in the 151 notice or order, of if a time is not so mentioned then on or before the first day of the second month following the date of the service of the A notice or order, and any assessee failing so to pay,,, shall be deemed to be in default, provided that when an assessee has presented an appeal under section 30, the Income tax Officer may in his dis cretion treat the assessee as not being in default as, long as such appeal is undisposed of. It will be noticed that this section is not confined to the effect of a failure to comply with the terms of a notice of demand issued under section 29 but makes the same consequence arise on the failure to carry out the terms of a notice under section 23A(3) and orders under sections 31 and 33. That consequence is that the assessee is to be deemed to be in default. It is after an assessee is so in default that coercive processes for realisation of the amount due start. Provision for this is made in section 46 to which I will immediately come. Before doing so, however, I wish to observe that section 45 gives an Income tax Officer on an appeal being filed, a discretion to treat an assessee as not in default. An argument has been founded on this aspect of the section and to it I will later refer. Passing on now to section 46, it will be enough for the purposes of these appeals to refer only to sub section (2) of that section. This provides that "The Income tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue. " It was under this provision that in the present case the Income tax Officer sent the certificates to the Deputy Commissioner and the latter effected the attachment thereafter under the Revenue Recovery Act. Now there is no dispute that all steps taken in the present case by the revenue authorities were valid when taken for the appellate orders had not till then been made. The only question is as to the effect of the appellate orders. It is contended on behalf of the revenue authorities that the Act does not provide that the consequences of a default incurred under the Act cease to be available to the revenue authorities for realisation of the amount due in case the order which was the basis of the default was later revised in appeal. It is, therefore, said that those consequences are not affected by the revision of the order except where it is annulled and hence all notices and attachments remain in force and can be acted upon for recovering the tax due. I am unable to agree with this proposition. It may be that the Act contains no express provision stating what would 152 happen which it was incurred was later revised in appeal. But within there is enough in the Act to indicate that in some of these cases at least the default comes to an end. If it does, it seems to me to follow inevitably that the consequences of the default also disappear. I would first refer to section 45 which says that when an order under section 31 specifies an amount as payable and the amount is not paid within the time, at the place and to the person mentionect in the order or where no time is mentioned in it, within the time specified in the section itself, the assessee so failing to pay shall be deemed to be in default. The order under section 31 is an order by the Appellate Commissioner. If lie specifies an amount as payable in his order and mentions the time when, the place where and the person to whom the payment is to be made, then noncompliance with that order would create a, default. Now this order is made in an appeal from an order made by the Income tax Officer. Suppose there is already a default as a result of non compliance with a, notice under section 29 given in respect of the Income tax Officer 's order. As clearly there could not be two defaults for there was one liability, the Act must in such a case be taken to have provided by necessary implication that the default incurred as a result of non compliance with the notice to pay the amount mentioned in the Income tax Officer 's order must be deemed to have been superseded by the appellate order. The contention that the Act does not contemplate a default ceasing to be so except when an assessment order is annulled by the appellate order, is, therefore, unfounded. Take another case. Suppose the appellate order says only that a different amount from that mentioned in the Income tax Officer 's order shall be payable on income for a certain period without specifying the person to whom or the place where it is to be paid. The effect of it must be to wipe out the Income tax Officer 's order since the two cannot exist together. In such a case along with the superseded order the default if any incurred in connection with it must also disappear. There will have to be a fresh notice under section 29 in respect of the amount due under the appellate order on breach of which a fresh default may arise. It was, however, said that the Act nowhere requires the appellate order to state the amount payable or to specify the time when, the place where and the person to whom it is to be paid. That may be so but that does not affect what I have said. Section 45 clearly contemplates the appellate order setting out these things and there is nothing in the Act to prevent the Appellate Commissioner from setting them out. Since section 45 cannot be read as contemplating an impossibility, it must be held that the Appellate Commissioner may in his order specify the amount payable and state the other particulars about time of 153 payment etc. If he can do so, that would be enough for my present purpose and it is not necessary for it that the Act must in every case require him to do so. In case where the appellate order specifies an amount as payable, the Income tax officer 's order must be deemed to have been superseded. One other argument to which I have to refer at this stage is that if the assessee 's contention be correct, then the discretion given to the Income tax Officer by section 45 not to treat an assessee in default becomes infructuous for then in every case on the making of the appellate order the default earlier incurred must disappear. This does not seem to me to put the position accurately. It is not in dispute that the filing of an appeal does not stay the operation of the original order. So if before the appellate order is made, the amount due is realised by the coercive process following the default, then those steps do not become invalid. There may be a, liability to refund but none the less what was done was legal when done. Again it would, in my view, depend on the terms of the appellate order whether the earlier default was wiped out or not. If, for example, the appellate order confirms the original order, then the default already incurred may not be affected. In both these cases the discretion to treat the assessee as a defaulter was effectively exercised. The argument that the acceptance of the assessee 's contention would render part of section 45 nugatory and should, therefore, not be accepted, is in my opinion unsound. How then does the matter stand? It seems to me that the crux of it is the effect of the appellate order on the original order. If the original order has been destroyed or replaced by the appellate order, then the notice of demand and all other steps based upon the original order must be deemed to have become ineffective. In such a case the default earlier incurred must be taken to have disappeared and cannot support further action for recovery of any tax. Now the general proposition is that an original order merges in the appellate order: cp. Madan Gopal Rungta vs Secretary to the Government of Orissa(1). But in the present case, it is not necessary to rely on that proposition. Section 31(3) of the Act seems to me to make express provision on the subject. It states that in the case of an appeal from an order of assessment, which is the kind of order with which we are now concerned, the Appellate Commissioner may "(a) confirm, reduce, or enhance or annul the assessment, or (b) set aside the assessment and direct the Income tax Officer to make a fresh assessment after making such further enquiry as the Income tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income tax Officer shall thereupon proceed (1) [1962] Suppl. 3 S.C.R. 906. 154 to make such fresh assessment and determine where necessary the amount of tax payable on the basis of such fresh assess ment. " There will, of course, be no occasion to determine the amount of the tax payable on the basis of the fresh assessment if the income on that assessment appears to be below the taxable level. I will consider the various orders contemplated by section 31(3)(a) & (b) and their effect. It may be that when an appellate order confirms the original order, the default earlier incurred and all steps taken pursuant thereto remain unaffected, for such an order may maintain intact the original order. Now it is not in dispute that when the appellate order annuls the earlier order, the default disappears. It is said that that is because the debt ceases to exist. I do not quite follow this. It has never been questioned that the debt becomes due when demand is made under section 29 and section 45 of the Act: see Doorga Prosad Chamaria vs Secretary of State(1). Therefore if a debt is to cease to exist it must be because the source from which it sprang, namely, the original order, has been annihilated by the appellate order annulling it. In fact section 31(3)(a) contemplates an annulment of the original assessment order itself; the demand under section 29 or section 45 is not annulled directly by it. Therefore, in the case of an order of annulment under section 31 the original order of assessment is itself destroyed. If it disappears, I cannot conceive the default based on it continuing in force. Likewise, where under cl. (b) of section 31(3) the appellate order sets aside the assessment, the same result must clearly follow. There is not much difference between annulling an order and setting it aside; both wipe out 'the original order. I now come to an appellate order enhancing the assessment. With regard to it, it has not been disputed that a fresh notice of demand must issue. If this notice has to be in respect of the entire amount, then clearly the default earlier incurred for the smaller amount found due by the original order must have gone for the liability was one and there could not be two defaults in respect of it. But it was said that the notice has to be issued in respect of the enhanced amount only. Indeed in some of the cases cited at the bar it has been so said. I have very grave doubts about the correctness of this view. The notice of demand can only issue in respect of the amount due in consequence of an order. Unless, therefore, the appellate order specifies only the enhanced amount as due I do not see how a notice in respect of that amount can be issued under section 29. The appellate order has to specify an amount due. If it specifies the entire amount due including the enhancement, then it cannot be said that under it the amount of the enhancement only is due and no notice demanding such an amount (1) 72 I.A. 114. 155 only under section 29 can be issued. If the appellate order specifies only the amount of the enhancement, it will be making an. additional or supplementary assessment. Apart from section 34 of the Act with which we are not now concerned, I am not aware,. of any other provision which permits such an assessment. In any case section 31(3)(a) does not seem to me to contemplate it. Therefore, in my view when an order of enhancement of assessment is made under section 31 the notice must be in respect of the entire amount and in such a case the earlier notice issued in respect of original order must be deemed to have been superseded. But assume I am wrong in this. Assume that an appellate order of enhancement may be confined to the amount of the enhancement only. Even so I am wholly unable to agree that the appellate order cannot specify the entire enhanced amount due. There is nothing in the Act to prevent this being done. When this is done then at least the original order and the notice must be deemed to have been put out of existence along with the default arising from the non compliance with the latter and all its consequences. That leaves only the case of an appellate order reducing the amount. It seems to me that it would be somewhat curious if in all other cases excepting the case of a confirmation, the appellate order destroys the original order it does not do so in the case of a reduction. An order confirming may be different for it confirms and, therefore, does not destroy. It has, however, been said that "if subsequently the demand is modified on appeal and the amount of the tax payable is reduced, all that happens is that the liability sought to be imposed by the notice of demand, in respect of the amount by which the assessment is reduced is found to have never been a liability at all but the liability in respect of the remainder which stands unaffected by the appellate order remains" and also that "where a notice of the demand has, in fact, been issued in respect of a larger amount as determined by the assessment order, it has been issued even in respect of the smaller amount which is ultimately found to be the tax properly payable. That being so, the assessee was under an obligation to pay it by the date fixed and if he did not pay it by that date, he became a, defaulter": see Ladthuram Taparia vs D. K. Ghosh and Ors.(1) With great respect I am unable to accede to this proposition and the conclusion based thereon that the default and its conse quences continue even after the appellate order reducing the original assessment. How does the assessee know before the appellate order the smaller amount which he might ultimately be liable to pay? It would be curious if he did not know what he had to pay and could still have defaulted in paying it. (1) , 423, 424. 156 The order of reduction must, in my opinion, necessarily have the effect of setting aside the original order as a whole. It does not simply strike out a few of the figures appearing in the original order. That would really be a case of rectification for which provision is made in section 35 of the Act. What an appellate order does in a case of reduction is, as in the present case, to go into all the figures and arrive afresh at the assessable income which replaces the amount of the income arrived at by the Income tax Officer. Therefore it seems to me that in all cases of an appellate order reducing the assessment the original order goes and if it goes, of course the notice of demand also falls to the ground and the default based thereupon also ceases to be default anymore. Suppose the appellate order itself stated that a smaller amount of tax was payable after it had reduced the figure of the assessable income at which the Income tax Officer had arrived. Indeed I cannot imagine how else it can be expressed. After such an order the original order must go for the debt being one the two cannot exist together. If that order goes, all default arising out of it must also go. Therefore I think that on the Income tax Officer 's order being revised in appeal, the default based on it and all consequential proceedings must be taken to have been superseded and fresh proceedings have to be started to realise the dues as found by the revised order. Coming now to the present case, in view of the order made in it, it seems to me impossible to contend that the original default continued. What happened in the present case was that on December 17, 1955 the Appellate Commissioner reduced the assessable income of the assessee as found by the Income tax Officer by a large sum and directed him to recom pute the tax due on the basis of the assessable income stated in the appellate order. The assessee was not informed about the recomputed amount of tax till February 14, 1956. The assessee had not paid the tax mentioned in the Income tax Officer 's order. If he had done that then he would under the express terms of the appellate order have become entitled to a refund. What then was the position between these two dates? If the revenue authorities are right, then the assessee continued to be in default even after the appellate order. But what was the amount in respect of which he was so in default? Clearly he could not have continued to be in default in respect of the amount found due by the Income tax Officer in his original order for that amount was no longer due. He could not have been in default in respect of the amount which was found due on recomputation by the Income tax Officer according to the direction of the Appellate Commissioner because be did not know that amount. It would be absurd if the Act contemplated a default without the assessee knowing the amount in respect of which the default occurred and without his having a chance 157 to pay it. It would be impossible to construe the in a way to produce that result. It has, therefore, to be held that between the date of the appellate order and the communication of the recomputed amount of the tax to the assessee by the Income tax Officer there could be no default. Since the, Act does not provide for a default being in suspension for a period it must be held that the original default ceased to exist after the appellate order was made. Proceedings initiated on the original ,default before the appellate order could not, therefore, be continued any more. Indeed the appellate order superseded the original order and its consequences. If the effect of an appellate order reducing the assessment as in the present case did not wipe out the original order, a most anomalous situation would, in my view, arise. Under section 46(1) of the Act after a default has been committed in terms of section 45(1) the Income tax Officer may impose a penalty not ,exceeding the amount of the tax due in respect of which the default has occurred. This penalty may be recovered in the ,same way as the tax due, that is to say, by a notice under section 29 and thereafter by a certificate issued under section 46(2). Now suppose the penalty for the full amount of the tax found due by the Income tax Officer has been imposed and thereafter the appellate order reduces the amount of the tax. What happens to the order of penalty then? Obviously it does not automatically stand reduced to the reduced amount of the tax. It would again be absurd if the penalty could be recovered for the full ,original amount. The only sensible view to take in such a case would be that the order of penalty falls to the ground and the only logical way to support that conclusion would be to say that the original default has disappeared. For these reasons I have come to the conclusion that the decision of the High Court was right and I would, therefore, dismiss the appeals. HIDAYATULLAH, J. These appeals by special leave arise from a common order in two writ petitions under article 226 of the Constitution passed by the High Court of Mysore on April 16, 1959. The Income tax Officer, Kolar and the Commissioner of Income tax, Bangalore are the appellants before us. The assessee Seghu Buchiah Setty, who is the respondent, is a merchant of Srinivaspur, Kolar District. The appeals relate to the assessment years 1953 54 and 1954 55 in respect of which assessments were made under section 23(4) of the Incometax Act. For the assessment year 1953 54, the assessee 's income was estimated to be Rs. 61,000/ and the tax levied was Rs. 19,808 1 0. For the second year, his income was estimated to be Rs. 1,21,000 and the tax levied was Rs. 66,601 3 0. The assessee applied under section 27 of the Income tax Act for the cancellation of these assessments but his applications were 158 rejected. It was stated before us that other proceedings were pending in this behalf; but I am not concerned with them except in so far as a preliminary objection based on those and some other proceedings was made before us to which I shall refer presently. After the assessment was made, the Incometax Officer sent notices of demand asking the assessee to pay Rs. 86,409 4 0 as tax, and on default, issued a certificate under section 46(2) of the Act to the Collector of Kolar District to recover the amount as arrears of land revenue. On December 17, 1955, the Appellate Assistant Commissioner, "A" Range, Bangalore, before whom the assessments were challenged by appeal, passed his order and assessed the income for the two years to be Rs. 28,000/ and Rs. 46,000/ respectively. The Income tax Officer did not issue any fresh notices of demand under section 29 of the Act but wrote a letter demanding the reduced tax for the two years which now stood reduced to Rs. 4,215 9 0 and Rs. 13,346 8 0 respectively. It is significant that the reduction in the tax was from eighty six thousand rupees to seventeen thousand rupees. It appears that the assessee took further appeals to the Income tax Appellate Tribunal and the matter was said to be pending there. The assessee then applied to the High Court under article 226 of the Constitution for quashing the old certificates issued under section 46(2) by the Income tax Officer on the ground that as. no fresh notices of demand were issued against him in respect of the reduced tax, he was not in default. The High Court accepted this contention and the necessary writs quashing the proceedings were issued. After the decision of the High Court, fresh notices of demand for the reduced tax were issued to the assessee on May 8, 1959 and those proceedings were also pending. The preliminary objection which is based on the pendency of the other proceedings and particularly the last fact is really of great force, because these appeals do not now appear to serve any tangible purpose. However, the appeals were heard at length and I must express my decision on the point mooted before us. In these appeals, the Department contends that the original notices of demand issued in September 1955 had not become inoperative after the order of the Appellate Assistant Commissioner. The reason advanced is that there is nothing in the Income tax Act which requires that a fresh notice of demand must issue every time the amount of tax is reduced in appeal. It is pointed out that if a previous notice of demand is not complied with, the assessee becomes a defaulter and it is submitted that he continues to be a defaulter, in respect of the balance. It is however conceded that where the Appellate Assistant Commissioner increases the assessment, a fresh notice 159 of demand must issue. It is urged that proceedings for recovery which may have commenced are likely to become useless if, fresh notices were compulsory, and it is submitted that all that is necessary is to inform the assessee and the Collector by, letters what the reduced amount is and as the default still continues, the reduced amount can straightaway be realised on the old certificates and a refund can be ordered if excess amount has already been recovered. The assessee contends that the original notice of demand lapses and with it the default and the certificate, and that the Income tax Officer is bound to issue a fresh notice of demand. The High Court accepted the assessee 's contention following a decision of the Calcutta High Court in Metropolitan Structural Works Ltd. vs Union of India(1). The appellants contend that the true view of the law is contained in a later decision of the Calcutta High Court reported in Ladhuran Taparia vs D. K. Ghosh and others(2), where the earlier case was explained. The appellants rely further on The Municipal Board, Agra vs Commissioner of Income tax, United Provinces: No. 2(3), Auto Transport Union (Private) Ltd. vs Incometax Officer, Alwave(4) and Hiralal vs Income tax Officer(5) for support. in Metropolitan Structural Works Ltd. Gv. Union of India(1) there were successive demand notices after the Appellate Assistant Commissioner and the Tribunal reduced the assessment and the Income tax Officer finally sent a certificate under section 46(2) of the Act. The assessee in that case, relying upon the seventh sub section of section 46, claimed that the proceedings were barred as according to it, the period of one year could only be calculated from the last day of the financial year in which demand was made and this could only be the first demand. It was contended by the assessee that the Act did not provide that a fresh notice should issue after revision of assessment, though it was admitted that there was no prohibition. Chakravartti, C. J. and Lahiri, J. observed: "The real point, however, is whether a second or a third notice of demand is at all permissible under section 29, even when an assessment is altered in a first or a second appeal. It appears to me that the necessity of issuing a fresh notice of demand in such circumstances is beyond argument." (Italics supplied) (1) (1) (3) (4) (5) 160 The learned Chief Justice gave illustrations of those cases which the earlier notice becomes "inappropriate". Addressing. himself to the necessity of a new notice, the learned Chief Justice observed: "In my view the answer to that could only be in the affirmative." (Italics supplied) The difference between the words 'in consequence of any order ' used in the Act and 'in consequence of any assessment order in pursuance of this Act ' which, he pointed out, could have easily been used, was next stressed and he held that the orders of the Appellate Assistant Commissioner and the Tribunal answered the former description. He expressed his conclusion thus: "If so, when there is some tax due in consequence of an order passed by the Appellate Assistant Commissioner or in consequence of an order passed by the Appellate Tribunal, a clear occasion arise& under the words of the section to serve a notice of demand upon the assessee. That such fresh notice should be issued when the assessment is altered is but common sense and I see no reason to construe the section against reason and against the actual necessities of realisation. " In the next case, Ladhuram Taparia vs D. K. Ghosh and others(1) the facts were the converse. There a demand notice was issued and then the tax was reduced. The assessee contended that there should be a fresh notice of demand before he was deemed to be in default. Chakravartti, C. J. and Das, Gupta, J. held that on reduction of assessment nothing further was required beyond an intimation to the assessee and the. Collector of the reduction of the tax. The reason given was that the demand in respect of the excess stood 'eliminated ' and the demand for the balance remained. It was held that a case of enhancement was different and it needed a fresh notice of demand. It was however not pointed out whether the fresh demand should be for the excess amount or the whole of the amount. Nor was it shown why a letter to the assessee and the Collector would not do in that case also. In either case, speaking arithmetically, a portion of the demand is saved, but speak ing legally, the demand notice, to quote the words of the earlier judgment, 'becomes inappropriate '. Whether the learned Chief Justice was right on the first occasion or on the second can only be said after discussing the relative sections of the Income tax Act, but this much must 161 say (and I say it with considerable hesitation and diffidence since I have always held the learned Chief Justice in high esteem) that he has not been able to get clear of the words used by him on the earlier occasion. It seems anomalous that if the tax is increased from Rs. 10,000/ to Rs. 10,010/ a fresh notice of demand must go, that is to say the earlier default is wiped off; but if it is reduced from Rs. 10,010/ to Rs. 10 / a fresh notice is not required and the assessee must be deemed to be in default for Rs. 10 with all the evil consequences of default because he did not pay an extra ten thousand rupees with the ten rupees. But it may be said, there is no room for logic and mathematics if the Act so requires and the true answer can only be furnished by what the law requires. Before dealing with the pertinent sections to determine how the matter stands there, I may say that the other cases of the other High Courts cited earlier do not add to the discussion, but mention must be made of The Municipal Board Agra vs Commissioner of Income tax, United Provinces: No. 2(1). In that case, though a fresh notice of demand was served after reduction of tax under section 35 of the Income tax Act, calculation of limitation from the date of service of that notice was not allowed because the clauses relating to right of appeal, period of limitation etc. were pencilled through. The reason given was that section 35(4) makes it compulsory to serve a notice of demand only when there is enhancement and as no fresh notice is made compulsory when the tax is reduced, none need issue. An assessee might, on such construction, lose his limitation for appeal in a case under section 27 of the Income tax Act even before the order under section 27 determining the amount of tax is passed. It is contended that there is no provision that a second or third notice of demand must issue. There is no need that the Act must expressly authorise the issue of fresh notices of demand. Even if such a power is not expressly included, it flows from section 14 of the General Clauses Act under which a power can be exercised as often as the occasion demands. I am, however, of the opinion, that (except in cases of demnin is) the Act does contemplate, that a fresh notice of demand shall issue. There are two reasons for it. The first is the language of section 29 and the other is the consequences following the issuance of a notice of demand. I shall deal first with the second ground. After the demand is made, the tax, penalty and interest become a debt due to the Government. This was decided a long time ago by the Privy Council in Doorga Prasad vs Secretary of State(2). Further, by issuing a notice of demand, the (1) (2) at 289. L/P(D)1SCT 6 162 period of limitation for appeals under section 30 of the Act starts in many cases. Further still, when the notice of demand is not complied with, the assessee can be treated as a person in default and he is liable to pay a penalty equal to the tax debt under section 46(1) of the Income tax Act. Lastly, on the failure of the assessee to pay after a notice of demand is issued, the recovery proceedings can be started within a time limit and the amount of tax can be treated as an arrear of land revenue. It follows, therefore, that the notice of demand is a vital document in many respects. Disobedience to it makes the assessee a defaulter. It is a condition precedent to the treatment of the tax as an arrear of land revenue. It is the starting point of limitation in two ways and the breach of obedience to the notice of demand draws a heavy penalty. The notice of demand which is issued must be in a form prescribed by r. 20 and the form includes the following particulars: it shows the amount which has to be paid and indicates the person to whom, the place where and the time within which it has to be so paid. Compare with it section 45 of the Income tax Act which provides: "Any amount specified as payable in a notice of demand. under section 29 or an order under section 31 or section 33 shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the service of the notice or order, and any assessee failing so to pay shall be deemed to be in default, provided that, when an assessee has presented an appeal under section 30, the Income tax Officer may in his discretion treat the assessee as not being in default as long as such appeal is undisposed of:" (Proviso and Explanation omitted). From this section, it follows that an assessee is deemed to be in default if he disobeys either a notice of demand under section 29 or an order under sections 31 and 33. The contents of the notice of demand may be included in these orders and the order then serves the purpose of a notice of demand as well. In both cases, if time is not mentioned, the assessee must pay the tax on or before the first day of the second month following the date of the service of the notice or order. Once a default is incurred, it continues and the filing of an appeal does not save the assessee from the default. The Income ,Lax Officer can start and continue the proceedings for recovery of the tax notwithstanding the filing of the appeal. It is however to be 163 seen that he has been given the power to treat the assessee as not in default as long as the appeal is undisposed of. This power is conferred, because section 46(1) provides: "When an assessee is in default in making a payment. of income tax, the Income tax Officer may in his discretion direct that, a sum not exceeding that amount shall be recovered from the assessee by way of penalty. " To save an assessee from penalty, the Income tax Officer may treat him as not in default but if he does not, he is within his rights. Now take a case in which an assessee is considered to be in default after it notice of demand is served. Assume that the tax which is due is Rs. 10,010. The Income tax Officer, can, in his discretion, add another Rs. 10,010 by way of penalty and issue a certificate against him for recovery as arrears of land revenue of a sum of Rs. 20,020. Suppose the assessment is then reduced and his tax liability is found to be Rs. 10. To say that the old proceedings for the recovery of Rs. 20,020 can still be pursued in respect of Rs. 20 and the petty amount recovered as arrears of land revenue, when, if a notice of demand for Rs. 10 were sent the assessee would have paid the sum readily, is to make the law operate very harshly with out any advantage. To say again that the assessee whose tax is enhanced must receive a fresh notice of demand because the old notice becomes inappropriate is to make the lot of a person whose tax is reduced worse than that of a person whose tax is increased. At least the contumacy of the latter is the same if not greater than that of the former. It is said that all that is necessary is that the Income tax Officer should write a letter informing the assessee that the tax is reduced from Rs. 10,010 to Rs. 10. The question is, why not send him a fresh notice of demand? If there is no provision in the Income tax Act to send a fresh notice there is none authorising the sending of letters. No doubt, the old proceedings for recovery of the tax might become out of date and inappropriate, but it is one thing to use coercion to recover an amount which the assessee did not but probably could not pay, and another to recover an amount which the assessee could and would pay readily. However, if the law requires that a notice of demand need not go, that would be the end of the matter; but, in my opinion, section 29 in its terms is extremely clear and indicates that a notice of demand must always issue. It reads: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve L/P (D) 1 SCI 6 upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable." The learned Chief Justice of the Calcutta High Court, if may say respectfully, was perfectly right in pointing out its meaning in his first case. I cannot add to what he said and I adopt all lie said. But I would add a few words. The mandatory part of the section is quite clear. "The Income tax Officer shall serve a notice of demand upon the assessee" are emphatic words and the earlier part shows that he has to do it when tax is due in consequence of "any order". Any order means not only an order passed by himself, but also an order passed by reason of the success of an appeal which the assessee may file and in which the old assessment is set aside. In view of the consequences that ensue, it is clear to me that when an asssessment is gone through a second time and the amount of tax is reduced, the Income tax Officer must intimate to the assessee the reduced amount of tax and make a demand and give him an opportunity to pay before treating him as a defaulter. 'his is incumbent because the assessment resulting in the tax is itself set aside or modified and as assessee is entitled to a proper assessment and ascertainment of tax before a demand can be made on him. It is said that the Income tax Officer can send a letter but the law says that he 'shall serve upon the assesses a notice of demand in the prescribed form '. When the law requires that a notice of demand should issue, the mode of compliance by a letter is excluded. It may be that the letter is a good substitute for a notice of demand but the section demands that it should be 'in the prescribed form '. If a letter is to be written. why not a notice of demand? In other words, when the assessment is altered, whether it is reduced or it is increased, by reason of any order under the Act, it is the duty of the Income tax Officer to issue a notice of demand in the prescribed form and serve it upon the assessee. The learned Chief Justice of the Calcutta High Court clearly was of the view in the first case that there was only one answer to the question and I respectfully agree with him. He could only depart from his earlier view by finding fault with the drafting of section 45. 1 regret I can not agree with him there. Section 45 intends that the order of the Appellate Assistant Commissioner and the Tribunal may in some cases also serve as notices of demand. Further it is not clear from the later decision whether on the enhancement of the tax, a fresh notice of demand is required for the excess only or for the whole of the sum. That answer is not furnished in any of the other cases to which reference was made at the bar. If default is saved in respect of the reduced amount a 165 165 default would also be saved in respect of the original amount when the demand is increased. If a notice of demand were to issue in respect of the excess only, there will be two notices of demand and two starting points of limitation, both for the purpose of coercive action under section 46(7) as well as for purposes of any appeal that might lie. If, however, a fresh notice of demand is to go in respect of the composite sum, the question to ask would be, what happens to the default which was incurred already '? How does it disappear? In my opinion, there is only one possible answer and it was given by the learned Chief Justice in the earlier case. I would therefore dismiss these appeals and all the more readily because a fresh notice of demand has issued in this case. If it is disobeyed, the Income tax Officer would be able to recall the old certificate issued to the Revenue Officer, amend it and bring it in line with the tax now demandable and return it to him for continuing the recovery proceedings. I would dismiss the appeals but in the circumstances of the case, I would make no order about costs. SHAH, J. The Income tax Officer, Kolar Circle, Kolar, assessed Seghu Buchiah Setty respondent in this appeal to income tax under section 23(4) of the Indian Income tax Act, 1922 for the year 1953 54 on an estimated income of Rs. 61,000 and for the year 1954 55 on an estimated income of Rs. 1,21,000 and served notices of demand under section 29 of the Act for the tax due under the two orders of assessment. On the respondent failing to comply with the notices of demand within the period specified, the Income tax Officer treated the respondent as in default and sent certificates under section 46(2) of the Act to the Deputy Commissioner, Kolar, for recovery of the tax determined by the orders of assessment. The Deputy Commissioner attached certain properties belonging to the respondent. In appeals filed by the respondent against the orders of assessment the Appellate Assistant Commissioner reduced the income assessed for the year 1953 54 to Rs. 28,000 and for the year 1954 55 to Rs. 46,000. The Income tax Officer did not issue fresh notices of demand pursuant to the modification in the orders of assessment made by the Appellate Assistant Commissioner, but by his letter dated February 14, 1956 informed the respondent that he had to pay tax as reduced by the appel late order. The respondent did not pay the amount of tax demanded, and applied to the High Court of Mysore under article 226 of the Constitution for a writ of certiorari quashing the certificates issued by the Income tax Officer treating him as in default and a writ of prohibition prohibiting the Income tax Officer from enforcing the certificates under section 46(2) of the Income tax Act. The High Court of Mysore relying upon the 166 judgment of the Calcutta High Court in Metropolitan Structural Works Ltd. vs Union of India(1) held that the In come tax Officer could not, without issuing fresh notices of demand, after the Appellate Assistant Commissioner of In come tax reduced the taxable income, setting out the tax payable by him for the two years in question, treat the respondent as a defaulter and that the proceedings of the Collector based on the certificates issued pursuant to the order of assessment by the Income tax Officer were illegal. Against the orders passed by the High Court, the Income tax Officer has appealed to this Court, with special leave. The question which falls to be determined in this appeal is about the legal effect of the reduction of the assessable income by the order of the Appellate Assistant Commissioner on the notices of demand previously issued by the Income tax Officer. The respondent contends that by the modifications made in the orders of assessment the notices of demand issued by the Income tax Officer must be deemed cancelled or superseded, and he cannot be regarded as in default, unless fresh notices of demand are issued by the Income tax Officer specifying the amount payable pursuant to the appellate order. The respondent says that there was at the material time no outstanding demand notice or order specifying the amount payable failure to comply with which may be regarded as constituting a default. The respondent strongly relies upon the observations made by Chakravartti, C. J., in his judgment in Metropolitan Structural Works Ltd 's case(1) that where the income assessed by the Income tax Officer is reduced in appeal, the notice of demand issued by the Income tax Officer in respect of the income assessed by him will on such reduction cease to be appropriate, such being the meaning of the statute and any interpretation to the contrary is "against reason" ' and against the actual necessities of realization". The respondent therefore submits that an order of the, Appellate Assistant Commissioner in appeal not only super sedes the order of assessment against which the appeal is carried, but also the notice of demand issued by the Income tax Officer and all proceedings taken for recovery of tax in pursuance of the notice of demand, and therefore default which has resulted from the failure to comply with the notice of demand becomes inoperative, when the Appellate Assistant Commissioner passes his order in appeal against the order of assessment, whether such order is of confirmation or variance. The Income tax Officer may, submits the respondent, issue a certificate under section 46 if there be a fresh default resulting from non compliance of the order of the Appellate authority. If this submission is true, the demand notices must be issued and all ' (1) steps pursuant to an order of assessment for recovery must be completed before the appeal against the order of assessment is disposed of. If the proceedings are not completed, they will be superseded by the order passed by the appellate authority. We may examine the correctness of the plea raised by the respondent in the light of the scheme for recovery of tax, penalty or interest due under the provisions of the Act. After the income of an assessee is computed, and liability to pay tax, penalty or interest is determined in the manner provided by the Act, proceedings for recovery of the amount commence. A notice of demand is the foundation of such proceedings and of the jurisdiction to collect the tax. It is the notice of demand which converts the liability determined by the order of assessment into a debt due by the assessee to the State. There must therefore be a valid order of assessment, on which a notice of demand may be founded. Section 29 invests the Income tax Officer alone with jurisdiction to issue a notice of demand, and no other officer out of the hierarchy of Revenue Officers has that jurisdiction. It provides: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice in the prescribed from specifying the sum so payable. " The notice of demand has to be in the form prescribed under rule 20 which requires that the amount demanded, and the person to whom together with the place where it is to be paid, must be stated in the notice. Section 45 of the Act provides that the amount specified as payable in the notice of demand or an order under section 31 or section 33 shall be paid within the time, at the place and to the person mentioned therein, or if no time be so mentioned, then on or before the first day of the second month following the date of the service of the notice or order and if the assessee fails to pay the tax he shall be deemed to be in default, unless the assessee has presented an appeal 'under section 30 of the Income tax Act and the Income tax Officer in his discretion treats the assessee as not being in default as long as such appeal is undisposed of. Section 45 therefore prescribes the conditions under which a person may be treated as in default. Section 46 provides the mode and time of recovery of the amount due by an assessee. Sub sections (2) to (6) of section 46 lay down the method which may be adopted for recovery of the dues. Sub section (2) authorises the Income tax Officer to forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee. The Collector, on receipt of such certificate has to proceed to 168 recover from such assessee the amount specified therein as if it were an arrear of land revenue. Sub sections (3) to (6) deal with other modes of recovery. But resort to the modes of recovery is subject to sub section (7) which provides that save in accordance with the provisions of sub section (1) of section 42, or of the proviso to section 45, (which are for the purposes of this case not material) no proceedings for recovery of any sum payable under the Act shall be commenced after the expiration of one year from the last day of the financial year in which a demand is made under the Act. The Act therefore provides that if an assessee makes default in complying with the notice of demand or order under sections 31 or 33, proceedings may be taken in the manner provided in section 46 for recovery of the tax due but such proceedings shall not be commenced after the expiration of the period specified in sub section By the determination of tax under section 23, or imposition of penalty in circumstances mentioned in section 28, or liability for payment of interest in circumstances mentioned in section 18 A(4), (6), (7) or (8) obligation to pay tax, penalty or interest arises, and upon service of a notice of demand under section 29 or an order under section 31 or section 33, the tax, penalty or interest become due and payable, and if the tax is not paid within the time specified, the assessee must, unless the Income tax Officer otherwise directs, be treated as in default. Against the assessee in default, the Income tax Officer may take appropriate steps for recovery of tax as prescribed in cls. (2) to (6) of section 46. But the Legislature has not enacted that steps taken by the Income tax Officer for recovery of tax will lapse or be superseded when the appeal against the order of assessment passed by the Income tax Officer is disposed of by the appellate authority. Section 45 in terms provides that when an assessee is served with the notice of demand and has failed to comply with the notice, he shall, unless otherwise ordered, be deemed to be a defaulter. The Act provides a right of appeal against the order of assessment, but on the presentation of the appeal the power of the Income tax Officer to take steps for recovery of tax is not suspended. The Income tax Officer is obliged by the statute to issue a notice of demand for payment of tax, penalty or interest due in consequence of any order passed under or in pursuance of the Act. Lodging of an appeal does not operate as a stay and would not entitle the assessee to withhold payment of tax till the appeal is decided. The Income tax Officer may in his discretion treat the assessee as not in default as long as such appeal is not disposed of, but unless such an order is passed the assessee would, on failure to comply with the order, be a defaulter and proceedings for recovery of tax may be initiated and continued during the pendency of the appeal. 169 It is clear therefore that when tax, penalty or interest is determined and demanded, proceedings shall be commenced for recovery, and these proceedings may be commenced and continued, notwithstanding the presentation of an appeal. By failing to comply with the demand the assessee becomes a defaulter, and it is not provided that he shall cease to be a defaulter on the disposal by the appellate authority of the appeal against the order of assessment. In the absence of such a provision, it is difficult to perceive any ground for holding that the proceedings commenced against a defaulting tax payer for recovery of tax must be abandoned, and fresh proceedings commenced for recovery of tax pursuant to the order of the appellate authority. If on the passing of an order by the appellate authority, the notice of demand previously issued is deemed to be cancelled or superseded, an assessee must be treated as absolved from the consequences of his default even if the appellate authority confirms the order of the Income tax Officer, because the earlier default by the tax payer will in every case go by the board, and the proceedings must be commenced again after service of a fresh notice of demand. The discretion vested in the Income tax Officer to treat or not to treat an assessee pending appeal in default will, in all cases be valueless. The provisions of the Act do not indicate any such legislative intent and express enactment conferring upon the Incometax Officer, in his exercise of discretion, power not to treat a person who has preferred an appeal as a defaulter, contains strong indication to the contrary. Therefore, in my view a person who has failed to comply with a notice of demand would continue to be a defaulter notwithstanding the reduction of liability by order of the appellate authority. There would be only one exception to this rule i.e. when the order of assessment is wholly set aside. But that is not a real exception, for against the assessee no steps can be taken because there is no debt due by him. It was urged that a person can be said to be in default in payment of tax, when he fails to comply with a demand for a specific amount, and when the amount payable by him is reduced in appeal, he is no longer in default because he has had no opportunity to meet the reduced demand. But the status of a defaulter under the Act is a condition for initiation of proceedings for recovery, and by the reduction of liability in appeal the status is not altered. Even if the amount due is modified, the status persists, but the process for recovery will be adjusted according to the modified demand including the imposition of penalty under section 46(1). It is true that the Act contains no express provision which enables the Income tax Officer to modify the certificate which is issued to the Collector, but the absence of such a provision does not detract from 170 the duty of the Income tax Officer to give information to the recovering authority about the reduction in the liability for tax, penalty or interest made by the appellate authority and to request such authority to adjust his proceeding to the modified demand. Such a duty must necessarily be implied. An error in the certificate can always be clarified by an amendment and if that power be granted, there is no reason to suppose that a demand which is reduced because of subsequent events, such as modification of the assessment by the appellate authority, or payment made by the tax payer as directed by the notice of demand may not be enforced in a manner consistent with the outstanding demand. If in an appeal the Appellate Assistant Commissioner enhances the tax, the Income tax Officer may give intimation to the recovering authority about the enhanced demand. No fresh notice is contemplated to be given by the Act in the case either of reduction of assessment or enhancement. The plea that a fresh notice of demand may have to be issued when the assessment is enhanced is not warranted by the statute, and the argument that against the assessee two notices of demand may in certain cases be issued, failure to comply with which may make him doubly a defaulter has no valid basis. Counsel for the respondent urged that it is open to the Appellate Assistant Commissioner to specify by his order the time and place at which the tax determined by him is to be paid, and the person to whom it is to be paid. If the Appellate Assistant Commissioner does so specify the amount, the person to whom and the place at which the payment is to be made, the order of the Income tax Officer would be deemed to be superseded and it would be the duty of the assessee then to pay the tax determined pursuant to the order of the Appellate Authority after a fresh notice is served upon him and he cannot be deemed to be in default unless he has failed to comply with the directions of the Appellate Assistant Commissioner within the period prescribed by that order. Section 45 does undoubtedly refer to the amount specified in an order passed under section 31 which deals with the procedure and the power of the Appellate Assistant Commissioner hearing an appeal from the order of the Income tax Officer, and to the amount specified in an order under section 33 dealing with the procedure and the power of the Income tax Appellate Tribunal in appeal against the order of the Appellate Assistant Commissioner, and provides that default in payment of the amount so specified can only arise if it is not paid within the time at the place and to the person mentioned in the order under section 31 or section 33 or in the demand notice under section 29. But sections 31 & 33 do not provide that in making their respective orders the Appellate Assistant Commissioner and the Appellate Tribunal shall determine the 171 tax, penalty or interest, and shall also prescribe the time within which, the person to whom, and the place at which the amount specified shall be paid, and it would be difficult to accept the contention that the Legislature in enacting section 45 a provision relating to recovery of tax intended to provide that in exercise of the appellate powers, the Appellate Assistant Commissioner and the Income tax Tribunal shall comply with certain requirements. In certain exceptional cases such as those in which an appeal is filed only against the amount of tax determined under section 23 or against imposition of penalty under section 28 or against orders specifying the amount of interest payable under section 18 A, the Appellate Assistant Commissioner or the Tribunal may, in their final orders, specify the amount to be paid and also the time within which and the place at which and the person to whom the amount is to be paid. Such a direction is intended only to effectuate in appropriate cases the order of the Appellate Assistant Commissioner or the Tribunal. It does not take the place of a notice of demand, but if made, may operate if not complied with to make the person liable to pay the amount specified a defaulter. An Appellate Assistant Commissioner may, in an appeal against the order of the Incometax Officer, either confirm the assessment or modify it by reducing or increasing it. Similarly the Tribunal may confirm the assessment of the Appellate Assistant Commissioner or may reduce the assessment. But the Appellate Assistant Commissioner and the Tribunal are not required by statute to specify the amount as payable in their order, nor are they required to direct payment to be made in their order. The Appellate Assistant Commissioner and the Tribunal have power to impose penalty in the conditions specified in cls. (a), (b) or (c) of sub section (1) of section 28 of the Income tax Act. But these orders are passed in exercise of their appellate jurisdiction conferred by sections 31 and 33 of the Act and where the Appellate Assistant Commissioner imposes penalty he may specify the amount thereof. Similarly the Tribunal imposing penalty may specify the amount of penalty. To such cases the provision relating to default arising on failure to comply with the direction to pay may apply if the person to whom, and the place at which, it is to be paid are specified. The assumption that section 45 of the Income tax Act requires the appellate authority to specify the amount payable in the order therefore seems to be unwarranted and the fact that under certain circumstances, having regard to the nature of the order appealed from, the appellate authority may specify in the order such particulars, does not justify the interpretation either that the Income tax Officer has the power to issue the notice of demand only in those cases where by inadvertence the Appellate Assistant. Commissioner or the Tribunal 172 have failed to specify the amount payable or superseding the notices for any provision orders by the Appellate Assistant Commissioner or the Tribunal deciding the appeal has the effect of superseding the notices of demand issued by the Income tax Officer. In the absence of any provision imposing an obligation upon the Income tax Officer to issue successive notices of demand from time to time for recovery of the amount due during the process of assessment, it must be held that the notices of demand issued by the Income tax Officer in exercise of the power under section 29 may be enforced in the manner provided by section 46 and within the period of limitation provided in cl. (7) of section 46, even after the appeal against the order of assessment by the Incometax Officer is disposed of, subject to adjustment of the amount to be recovered in the light of the order of the Appellate Assistant Commissioner. Observations made by Chakravartti, C. J., in the case in Metropolitan Structural Works Ltd 's case(1) do lend support, to the argument that the issue of a fresh notice on modification by the appellate authority was a "matter of reason" and "based on the actual necessities of realisation" and that it is obligatory upon the Income tax Officer to issue such a notice on every occasion when the assessment was modified. But the learned Chief Justice himself explained the observations in his judgment in Ladhuram Taparia vs D. K. Ghosh and others(2) and pointed out that in Metropolitan Structural Works Ltd 's case(1) the sole question which fell to be determined was as to the commencement of the period of limitation under section 46(7) for enforcement of a notice of demand when successive notices of demand were in fact issued by the Income tax Officer, and that the earlier judgment was not intended to lay down and did not lay down that the Income tax Officer was under an obligation to issue a fresh notice of demand merely because the Appellate Assistant Commissioner had modified the assessment. Chakravartti, C. J., after referring to the contention which was advanced and his observations regarding the necessity of issuing a fresh notice of demand where the earlier notice had become inappropriate by reason of reduction in the amount of the tax payable observed at p. 422: "To say that was not to say that a necessary modification of the demand could only be made by issuing a second notice under section 29 and could not be made in any other way, or to put it in other words. it was not to say that the necessity of issuing a fresh notice of demand was an invariable and imperative necessity (1) (2) I am altogether unable to see how that decision can be construed as having laid down that whenever an assessment order was modified by an appellate order, an obligation arose to issue a second notice of demand under section 29, if the,, modified amount was sought to be made payable and if it was sought to establish that a default in respect of the modified demand has been committed. " The observations of Chakravartti, C. J., in the Metropolitan Structural, Works Ltd 's case(1) relating to the necessity of issuing a fresh notice on the modification of the assessment were somewhat wide and literally read may support the argu ment advanced by the counsel for the respondent in this case, but they were, in my judgment, unnecessary for the purpose of deciding the case and did not correctly interpret the provisions of sections 29, 45 and 46. The view which has been expressed by Chakravartti, C. J., in Ladhuram Taparia 's case(2) has been adopted in other cases as well: Auto Transport Union (Private) Ltd. vs Income tax Officer, Alwaye (3) and Hiralal vs Income tax Officers and Mali Ram vs Collector Bhilwara (4). In my view the validity of a certificate issued under section 46(2) to the Collector for recovery of tax must depend upon the power of the Income tax Officer to issue that notice. That power may be exercised only if the assessee is a defaulter, and the proceedings are commenced within the period provided in section 46(7). If because of failure to comply with the notice of demand issued by the Income tax Officer the assessee is in default, I fail to appreciate how such a person can be regarded as not in default, merely because the order of assessment is modified but is not vacated. The High Court was, therefore, in error in holding that it was necessary to issue a fresh notice of demand, if the Appellate Assistant Commissioner modified the assessment so as to reduce the amount of tax due and unless such a notice was issued, the assessee could not be regarded as in default. The appeal will therefore be allowed and the petition filed by the respondent will stand dismissed with costs in this Court and the High Court. ORDER By order of the majority, the appeals are dismissed. But there will be no order as to costs. Appeals dismissed. (1) (2) (3)45 I.T.R. 103.

IN-Abs

The respondent was assessed to income tax for the years, 1953 54 and 1954 55 on estimated incomes of Rs. 61,000/ and Rs. 1,21,000/ respectively and notices of demand under section 29 of the Indian Income tax Act, 1922, were served on him by the Income tax Officer for the tax due. On the respondent failing to comply with the notices of demand within the period specified, the Income tax Officer issued certificates under section 46(2) of the Act and sent them to the Collector for recovery of the tax, treating the respondent as in default. In appeals filed by the respondent against the orders of assessment, the Appellate Assistant Commissioner reduced the income assessed for the year 1953 54 to Rs. 28,000 and for the year 1954 55 to Rs. 46,000. The Income tax Officer did not issue fresh notices of demand pursuant to the modification in the orders of assessment made by the Appellate Assistant Commissioner, but by a letter informed the respondent that he had to pay tax as reduced by the appellate order, The respondent did not pay the amount of tax demanded, but applied to the High Court of Mysore under article 226 of the Constitution of India for quashing the certificates issued by the Income tax Officer. The High Court held that the Income tax Officer could not, without issuing fresh notices of demand, after the Appellate Assistant Commissioner of Income tax reduced the taxable income, treat the respondent as a defaulter and that the proceedings of the Collector based on the certificates issued by the Income tax Officer were illegal. Held:(per Sarkar and Hidayatullah, JJ.). The decision of the High Court was right. Per Sarkar, J. On the Income tax Officer 's order being revised in appeal, the default based on it and all consequential proceedings must be taken to have been superseded and fresh proceedings have to be started to realise the dues as found by the revised order. Per Hidayatullah, J. In view of the terms of section 29 of the Act, where an order is passed in appeal and the amount of tax reduced, the Income tax Officer must intimate to the assessee the reduced amount of tax and make a demand and give him an opportunity to pay before treating him as a defaulter. Per Shah, J. (dissenting) In the absence of any provision imposing an obligation upon the Income tax Officer to issue successive notice , of demand from time to time for recovery of the amount due during the process of assessment, it must be held that the notices of demand issued by the Income tax Officer in exercise of the power under section 29 must be enforced in the manner provided by section 46 and within the period of limitation 149 provide in cl. (7) of section 46, even after the appeal against the order of assessment by the Income tax Officer is disposed of, subject to adjustment of the amount to be recovered in the light of the order of the Appellate Assistant Commissioner.

Appeal No. 543 of 1962. Appeal from the judgement and order dated November 26, 1959 of the Punjab High Court in Civil Writ No. 678 1957. Bishan Narain and N. N. Keswani, for the appellant. B. K. Khanna and B. R. G. K. Achar, for respondent Nos. 1 to 3. D. N. Mukherjee, for respondent No. 4. R. V. section Mani and T. R. V. Sastri, for respondent No. 5. March 12, 1964. The Judgment of the Court was delivered by AYYANGAR, J. This is an appeal on a certificate of fitness granted under article 133 by the High Court of Punjab against the order of that Court dismissing the appellant 's petition to it under article 226 of the Constitution. The point in controversy lies within a narrow compass and hence of the voluminous facts we propose to set out only those which are relevant for appreciating the contentions urged before us. The father of the appellant owned con siderable agricultural property in Pakistan and he with the members of his family moved over to India on partition. The appellant 's father was allotted a considerable extent of land in village Kharar, District Ambala, but we are not concerned with that. He had still some unsatisfied claim for allotment and on December 29, 1955 he was allotted by the Managing Officer on quasi permanent tenure Khasra Nos. 880, 881 and 882 which were within the municipal area of Kharar with the regularity of which allotment alone this appeal is concerned. It may be mentioned that the appellant 's father had died in 1952 and the allotment made was actually to the appellant in lieu of the claim of his father. On the allotment being made, a sanad was issued to the appellant on December 31, 1955 by the Managing Officer. When the appellant tried to take possession of these lands, disputes were raised by respondent& L/P (D) ISCI 7 . . 194 Nos. 4 and 5. They were not displaced persons but they claimed that they had been in possession of this property from a long anterior date from which they could not be disturbed and also that the property could not be the subject of a valid allotment. These respondents moved the Assistant Settlement Commissioner for cancellation of the allotment and this appeal was allowed by the officer who found that the land comprised in these three khasra numbers were within an " urban area" within the meaning of r. 2(h) of the Displaced Persons Compensation and Rehabilitation Rules, 1955 and consequently that the allotment to the appellant was contrary to law. He, therefore, cancelled the allotment. The appellant thereafter applied to the Chief Settlement Commissioner in revision and not being successful there moved the High Court by a, petition under articles 226 and 227 of the Constitution. As stated earlier, this petition was dismissed and it is the correctness of this dismissal that is challenged in the appeal before us. Mr. Bishan Narain, learned Counsel for the appellant urged in the main two contentions in support of the appeal. The first was (1) that after the Managing Officer granted a sanad on December 31, 1955 in the name of the President of India, the appellant obtained an indefeasible title to the property and that this title could not be displaced except on grounds contained in the sanad itself even in the event of the order of allotment being set aside on appeal or revision. We have considered this point in Shri Mithoo Shahani and Ors. vs The Union of India and Ors.(1) which was pronounced on March 10, 1964 and for the reasons there stated this submission has to be rejected. The second point that he urged was, and this was in fact the main contention raised before the High Court, that rule 2(h) of the Displaced Persons Compensation and Rehabilitation Rules, 1955 was unconstitutional as contravening article 14 of the Constitution and so the original allotment to the appellant must be held to be lawful. We consider that there is no substance in this argument. In fact, we are unable to appreciate the ground on which the contention is being urged. Section 40 of the enables the Central Government by Notification in the Official Gazette to make rules to carry out the purposes of the Act, and in particular on an elaborately enumerated list of matters. It was not suggested that the rules of 1955 were not competently made under section 40. These rules were published on May 21, 1955 when they came into force. Rule 2(h) the validity of which is impugned in these proceedings is a rule containing the definitions. Rule 2(h) reads, to extract what is material: (1) ; 195 "2. In these rules, unless the context otherwise requires (a) to (g). . . . . . (h) 'Urban area ' means any area within the limits of a corporation, a municipal committee, a notified area committee, a town area committee, a small town committee, a cantonment or any other area notified as such by the Central Government from time to time; Provided that in the case of the quasi perma nent allotment of rural agricultural lands already made in the States of Punjab and Patiala and East Punjab States Union, the limits of an urban area shall be as they existed on the 15th August, 1947. " The words 'of rural agricultural lands ' occurring in the proviso to this rule were replaced by an amending Notifica tion of 1957 by the words 'in rural area ', but this amendment is obviously of no significance. "Rural area" is defined by rule 2(f) to mean 'any area which is not an urban area '. Pausing here, it would be useful to state two matters which are not in dispute: (1) that the allotment to the appellant was made on December 29, 1955, the sanad being issued two days later. It was therefore an allotment which was made after May 21, 1955 when the rules came into force; (2) the other matter is that Khasra Nos. 880, 881 and 882 were included in urban limits on February 10, 1951 by the municipal area of Kharar being extended to cover these plots. It would, therefore, be obvious that on the date when the allotment was made, the allotted land was in an "urban area" and therefore it could not have been validly allotted. We must confess our inability to comprehend what precisely was the discrimination which the rule enacted which rendered it unconstitutional as violative of article 14. So far as we could understand the submission, the unreasonable discri mination was said to exist because of the operation of the proviso. Under the proviso in regard to quasipermanent allotments 'already made, i.e. made before May 21, 1955 in the States of Punjab and PEPSU, the test of what was to be considered an "urban area" was to be determined on the basis of the state of circumstances which obtained on 15th August, 1947. The allotment in favour of the appellant was after the rules came into force and was not one "already made". Therefore if on the date of the allotment the land was in an urban area, the allotment would be governed by the main para of the definition and so could not have been validly made and that was the reason why it was set L, P(D) 1 SCI , (a). 196 aside. The discrimination is said to consist in the rule having drawn a dividing line at the date when it came into force, or determining whether the allotment was valid or not. It is the discrimination that is said to be involved in this prospective operation of the rule that we find it difficult to appreciate. It is possible that before the rules were framed the land now in dispute could have been allotted, but because of this it is not possible to suggest that the rule altering the law in this respect which ex concessis is within the rule making power under the Act, is invalid. Such a contention is patently self contradictory. Every law must have a beginning or time from which it operates, and no rule which seeks to change the law can be held invalid for the mere reason that it effects an alteration An the law. It is sometimes possible to plead injustice it ', a rule which is made to operate with retrospective effect, but to say that a rule which operates prospectively is invalid because thereby a difference is made between the past and the future, is one which we are unable to follow. There are no merits in this appeal which fails and is dis missed with costs. Appeal dismissed.

IN-Abs

The father of the appellant owned considerable agricultural property in Pakistan and he with the members of his family moved over to India on partition. The appellant 's father had some unsatisfied claim for allotment and on December 29. 1955 he was allotted some plots in Urban area within a certain municipality. The appellant 's father died in 1952 and the allotment made was actually to the appellant in lieu of the claim of his father. On the allotment being made, a sanad was issued to the appellant by the Managing Officer. When the appellant tried to take possession of these lands, disputes were raised by respondents Nos. 4 and 5. These respondents moved the Assistant Settlement Commissioner for cancellation of the allotment on the ground that these disputed plots were within an "urban area" within the meaning of r. 2(h) of the Displaced Persons, Compensation and Rehabilitation Rules, 1955 and, therefore, the allotment to the appellant was contrary to law. The Assistant Settlement Commissioner accepted the contention of the res pondents and allowed the appeal and cancelled the allotment. The appellant then applied to the Chief Settlement Com missioner in revision. He rejected the petition. Then the appellant moved a petition under articles 226 and 227 of the Constitution before the High Court. This petition was also dismissed. the High Court granted certificate of fitness under article 133 of the Constitution and hence the appeal. Held:(i) Where an order making an allotment was set aside by the Assistant Commissioner or Settlement Commissioner the title which was obtained on the basis of the continuance of that sanad or order also fell with it. Shri Mithoo Shahani vs Union of India, ; , relied on. (ii)The contention of the appellant that r. 2(h) of the Displaced Persons Compensation and Rehabilitation Rules, 1955, was unconstitutional as contravening article 14 of the Constitution must fail. This contention is based on the basis of the proviso to Rule 2(h). Rule 2(h) was framed under section 40 of the Act. This rule along with other rules came into force on May 21, 1955. The allotment was made to the appellant on December 29, 1955 and the Sanad was issued two days later. In other words the allotment in favour of the appellant was after the rule came into force and was not one "already made" as stated in the proviso to r. 2(h). Therefore, if on the date of the allotment the land was in an urban area, the allotment would be governed by the main para of the definition and the proviso, had no application. 193 The discrimination is said to consist in the rule having drawn a dividing line at the date when it came into force, for determining whether the allotment was valid or not. Such a contention is patently self contradictory. Every law must have a beginning or time from which it operates, and no rule which seeks to change the law can be held invalid for the mere reason that it effects an alternation in the law. It is sometimes possible to plead injustice in a rule which is made to operate with retrospective effect, but to say that a rule which operates prospectively is invalid because thereby a difference is made between the past and the future, is one which cannot be accepted.

Appeal No. 780 of 1962. Appeal by special leave from the judgment and decree dated November 28, 1960, of the Patna High Court, in Miscellaneous Judicial Case No. 724 of 1958. K. N. Rajagopal Sastri and R. N. Sachthey, for the appel lant. section K. Kapur and B. N. Kirpal, for the respondent. March 13, 1964. The judgment of HIDAYATULLAH and SHAH, JJ. was delivered by HIDAYATULLAH J. SARKAR J. delivered a dissenting opinion. SARKAR, J. This matter has come before us on a case stated by the Income tax Appellate Tribunal. The question is how to determine the cost of acquisition of bonus shares for ascertaining the profits made on a sale of them. The assessment year concerned is 1949 50 for which the accounting year is the calendar year 1948. The assessee held shares by way of investment and also as stock in trade of his business as a share dealer. We are concerned in this case only with its holdings of ordinary shares in Rohtas Industries Ltd. In 1944 the assessee acquired 31,909 of these shares at a cost of Rs. 5,84,283 / and was holding them in January 1945. In that month the Rohtas Industries Ltd. distributed bonus shares at the rate of one ordinary bonus share for each original share and so the assessee got 31,909 bonus shares. Between that time and December 31, 1947, the assessee sold 14,650 of the original shares with the result that on January 1, 1948 it held the following shares: (a) 17,259 original shares acquired in 1944, (b) 31,909 bonus shares issued in January 1945, (c) 59,079 newly issued shares acquired in the year 1945 after the issue of the bonus shares and (d) 2,500 further shares acquired in 1947. The total holding of the assessee on January 1, 1948 thus came to 1,10,747 shares which in its books had been valued at Rs. 15,57,902/ . In arriving at this figure the assessee had valued the bonus shares at the face value of Rs. 10/ each and the other shares at actual cost. On January 29, 1948, the assessee sold all these shares for the total sum of Rs. 15,50,458 / , that is, at Rs. 14/ per share and in its return for the year 1949 50 claimed a loss of Rs. 7,444 on the sale. It is this return which has led to this appeal. 213 The Income tax officer held that the assessee was not en titled to charge as the cost of acquisition of the bonus shares a sum equivalent to their face value for nothing had in fact been paid and he computed their cost at Rs. 6 8 0 per share. He arrived at this price by the following method, which has been called as the method averaging: 584283 x Face value of bonus shares: 319090 x 1/31909. In adopting this procedure the Income tax Officer purported to follow the decision of the Bombay High Court in Commissioner of Income tax vs Maneklal Chunilal and Sons Ltd.(1). The Bombay High Court later followed this case in Emerald and Co. Ltd. vs Commissioner of Income tax, Bombay City, Bombay (2). On that basis he held that the assessee had made a profit of Rs. 2,39,317 by way of capital gains and levied tax on it accordingly. On appeal the Appellate Assistant Commissioner held that these shares were not investment shares but formed the assessee 's stock in trade on which it was liable to pay income tax and not capital gains tax. He also held that the assessee having adopted the method of valuing the stocks at cost and no price having actually been paid for the bonus shares, it must be held that there was an inflation in the opening stock by Rs. 3,19,090. This figure, it may be observed, represented the cost of the bonus shares at their face value. It% his opinion the bonus shares had to be valued at nit. The appellate Commissioner 's conclusion was that the assessee was liable to be taxed on a trading profit of Rs. 3,11.646/ in respect of the sale of shares. Thise view was confirmed on a further appeal to the Appellate Tribunal. It is however not clear whether the Tribunal held that there had been a trading profit or capital gains. This matter does not seem to have been raised at any stage after the Appellate Commissioner 's order and is not material to the real question that has to be decided. After the Tribunal 's judgment the assessee got an order from the High Court directing the Tribunal to refer the following question to it: "Whether on the facts and circumstances of the case the profit computed at Rs. 3,11,646/ on the sale of shares in Rohtas Industries Ltd. was in accordance with law?" The answer to this question admittedly depends on the cost of acquisition, if any, to be properly attributed to the bonus shares. If the Appellate Commissioner 's method of valuing (1) (I.T. Ref. No. 16 of 1948, unreported). (2) 214 them at nil was wrong, the question had to be answered in the negative. The High Court, following the judgment of Lord Sumner in Swan Brewery Company Limited vs The King(1), held that the real cost of the bonus shares to the assessee was the face value of the shares and answered the question in the negative. The observations of Lord Sumner which he later expressed more fully in Commissioner of Inland Revenue vs Blott(2) , no doubt, lend support to the High Court 's view. I shall consider the view expressed by Lord Sumner later. Now, I wish to notice another case on which the High Court also relied and that was Osborne (H.M. Inspector of Taxes) vs Steel Barrel Co. Ltd(3). I do not think that the observations of Lord Greene M. R. in this case to which the High Court referred, are of any assistance. All that was there said was that when fully paid shares were properly issued for a consideration other than cash, the consideration must be at the least equal in value to the par value of the shares and must be based on an honest estimate by the directors of the value of the assets acquired. In that case fully paid shares had been issued in lieu of stocks and the question was as to how the stocks were to be valued. That case had nothing to do with the issue of bonus shares or the ascertainment of the cost of their acquisition. As I have said earlier, Lord Sumner 's observation in Blott 's case (2) certainly supports the view taken by the High Court but in that case Lord Sumner was in a minority. The other learned Judges, excepting Lord Dunedin, who took a somewhat different view to which reference is not necessary because it has not been relied upon, held that when the articles of a company authorise the issue of bonus shares and the transfer of a sufficient amount out of the accumulated profits in its hands representing their face value to the share capital account, what happens when the articles are acted upon is a capitalisation of the profits and the bonus shares issued are not in the hands of the share holder income liable to tax. In Blott 's case (2) the articles gave the power which had been acted upon. Lord Sumner on the other hand held that since a company could not issue shares for nothing nor pay for them out of its profits, it must be held that what happened in such a case was as if the company had issued cash dividend to the shareholder and had set it off against the liability of the shareholder to pay for the bonus share issued to him. I think the preferable view is that taken by the majority of the Judges. When the articles permit the issue of bonus shares and the transfer of undivided profits direct to the share capital account, it cannot be said that a cash dividend must be (1) (3) 215 deemed to have been declared which could be set off against the liability to pay for the shares. This is not what was done in fact. What in fact was done, and legally done, was to transfer the profits to the share capital account by a resolution passed by the majority of the shareholders so that the shareholders never acquired any right to any part of it. The view taken by the majority has since been followed unanimously, and even if it was open to doubt, for myself, at this distance of time, I would not be prepared to depart from it: Commissioners of Inland Revenue vs Fisher 's Executors(1) and Commissioner of Income tax, Bengal vs Mercantile Bank of India Limited(2). It is of some significance to observe that the latter is a case from India. In the present case the record does not contain any refer ence to the resolutions resulting in the issue of the bonus shares nor to the provisions of the articles but the case has proceeded before us on the basis that the bonus shares had been legally issued under powers contained in the articles and the profits had been equally legally transferred to the share capital account without the shareholders having acquired any right in them. Following the majority opinion in Blott 's case(3) I think I must hold that the High Court was in error in the view it took in the present case. There is no foundation for proceeding on the basis as if the bonus shares had been acquired by the assessee at their face value. Its profits cannot be computed on that basis. Two other methods of ascertaining the cost of acquisition of the bonus shares for computing the profits made on their sale have been suggested. One of them is the method of averaging which is the method adopted by the Bombay High Court in the cases earlier mentioned. The other is the method of finding out the fall in the price of the original shares on the issue of the bonus shares and attributing to the latter shares that fall and to value them thereby. The object of these methods seems to me to find out what the bonus shares actually cost the assessee. But this would be an impossible task for they actually cost the assessee nothing; it never paid anything for them. There would be more reason for saying that it paid the face value of the bonus shares because the profits of the Company of a, similar amount which might otherwise have come to it had been directly appropriated to the share capital account on the issue of the bonus shares. But this method I have rejected already and, for the reason that no amount was actually paid for the bonus shares by the assessee. For the same reasons the two suggested methods for ascertaining the actual (1) ; 2) (1936) A.C. 478. (3 ) 216 cost of these shares have also to be rejected. If however it were to be said that these methods were for finding out the market value of the bonus shares the importance of which value for the present purpose will soon be seen I would say that the only way to find out the market value is from the market itself. How then is the cost of the bonus shares to be determined? We start with this that nothing in fact was paid for them. But if the cost of acquisition is nil, the whole of the sale proceeds of the shares would be taxable profits. In Commis sioner of Income tax vs Bai Shirinbai K. Kooka(1) this Court has approved of the Bombay High Court 's view that "obvious ly, the whole of the sale proceeds or receipts could not be treated as profits and made liable to tax, for that would make no sense" (P. 397). So the profits cannot be ascertained on the basis that the bonus shares had been acquired for nothing. The view taken by the Appellate Commissioner and the Tribunal cannot be supported. It seems to me that the cost price of the bonus shares has to be decided according to the principle laid down in Bai Shirinbai Kooka 's case(1). The assessee in that case had purchased shares many years ago by way of investment at a comparatively lower price. She started trading with them from April 1, 1945. The question was how the profits on the sale of these shares were to be ascertained. The sale price was known but what was the cost price? The High Court said that in order to arrive at real profits one must consider the accounts of the business on commercial principles and construe profits in their normal and natural sense, a sense which no commercial man would misunderstand. The High Court 's conclusion was this: When the assessee purchased the shares at a lesser price, that is what they cost her and not the business; but so far as the business was concerned, the shares cost the business nothing more or less than their market value on April 1, 1945. This date, it will be remembered, was the date when the business was started. These observations were fully approved by this Court. Bai Shirinbai Kooka 's case(1) therefore is authority for the proposition that where it cannot be shown what was paid for the acquisition of a trading asset by a trader, it has for tax purposes to be deemed to have been acquired at the market value of the date when it was acquired. I think on the authority of this case, the bonus shares must in the present case be deemed to have been acquired at the market value of the date ,of their issue. I would, therefore, answer the question framed in the negative. (1) [1962] Supp. 3 S.C.R. 391. 217 HIDAYATULLAH, J. This appeal by the Commissioner of Income tax, Bombay raises the important question how bonus shares must be valued by an assessee who carries on business in shares. The assessee here is Dalmia Investment Co. Ltd. (now Shri Rishab Investment Co. Ltd.) which is a public limited company and the bonus shares were issued in the calendar year 1945 by Rohtas Industries Ltd. in the propor tion of one bonus share for one ordinary share already held by the shareholders. In this way, the assessee company received 31,909 bonus shares of the face value of Rs. 10/ per share which shows that its previous holding was 31,909 ordinary shares. The existing ordinary shares were purchased by the assessee company for Rs. 5,85,283/ . We now come to the assessment year 1949 50 which corresponded to the accounting period of the assessee company the calendar year 1948. The assessee company was holding shares as investment and was also dealing in shares. The shares in the trading account, being the stock in trade, were valued at the beginning of the year and also at the end of the year and the book value was based on cost. Between December 31, 1945 and January 1, 1948, the assessee company sold some shares of Rohtas Industries Ltd. and bought others. Its holding on the first day of January 1948 was 1,10,747 shares which were valued in its books at Rs. 15,57,902/ . The assessee company sold these shares on January 29, 1948 to Dalmia Cement and Paper Marketing Company Limited for Rs. 15,50,458/ . This date, it may be pointed cut, fell within the period in which capital gains were taxable. The assessee company returned a loss of Rs. 7,444/on this sale. In its books it had valued these shares as follows: Existing shares Book value (1) 17,259 (out of 31,909 original 13,10,951 Proportionate shares). cost from Rs. 5,84,283. (2) 31,909 Bonus shares 3,19,090. 00 at face value of Rs. 10 per share (3) 59,079 Now Issue shares 8,88,561 00at cost. (4) 2,500 New purchase shares 39,300 00at cost. Total 1,10,747 shares 15,57,902. 00 The amount of Rs. 3,19,090/ which represented the cost of the bonus shares in the above account was debited to the investment account and an identical amount was credited to a capital reserve account. , The loss which was returned was the difference between Rs. 15,57,902/ claimed to be the cost price of 1, 10,747 shares and their sale price of Rs. 15,50,458/. The return was not accepted by the Income tax Officer, Special Investigation Circle, Patna. In his assessment order, the Income tax Officer held that the market value of the existing 218 shares when bonus shares were issued, was Rs. 18/ per share and the value of the shares was Rs. 5.74,362/ (31,909 x Rs. 18). He held that the sale of the shares took place at Rs. 14/ per share. To this data he purported to apply a deci sion of the High Court of Bombay in Commissioner of Income tax vs Maneklal Chunnilal and Sons(1) and held that there was profit of Rs. 7/8/0 per bonus share and the, total profit was Rs. 2,39,317/ which he held was capital gain. He brought Rs. 2,39,317/ to tax as capital gains. Before the Appellate Assistant Commissioner, Patna. reliance was placed upon the decision of the Bombay High Court in Emerald and Co. Ltd. vs Commissioner of Incometax, Bombay City(2) and it was argued that by applying the principle laid down in that case, the average cost was Rs. 9/10/0 per share and total profit Rs. 1,49,355/ . The Appellate Assistant Commissioner did not accept the above calculation. According to the Appellate Assistant Commissioner, the bonus shares had cost nothing to the assessee company. He omitted Rs. 3,19,090/ from the book valuation and held that the actual cost of 1,10,747 shares was Rs. 12,38,812/and that the assessee company instead of suffering a loss of Rs. 7,444/ on the sale of the shares had actually made profit of Rs. 3,11,646/ . He issued a notice to the assessee company and enhanced the assessment. On further appeal to the Tribunal, the assessee company submitted again on the strength of the ruling of the Bombay High Court in Emerald and Co. Ltd. vs Commissioner of Income tax, Bombay City(2) that the actual profit was Rs. 1,57,326/ . This was done by spreading the cost of the 31,909 ordinary shares over those shares and bonus shares taken together and adding to half the cost attributable to the old ordinary shares the cost of new purchases in the same year and finding out the average cost of shares other than bonus shares. The Tribunal did not accept this calculation. According to the Tribunal it was not possible to put a valuation upon shares for which nothing was paid. The Tribunal held that the old shares and bonus shares could not be "clubbed together" and the decision of the Appellate Assistant Commissioner was right. The Tribunal, however, stated a case under section 66(1) of the Income tax Act at the instance of the assessee company suggesting the question for the opinion of the High Court: "Whether on the facts and circumstances of the case, the profit computed at Rs. 3,11,646/ on the sale of shares in Rohtas Industries Ltd. was in accordance with law?" (1) Income tax Reference No. 16 of 1948 dt. 23 3 1949. (2) 219 The reference was heard by V. Ramaswamy, C.J. and Kanhaiya Singh, J. They held that the Income tax authorities were wrong in holding that profit should be computed at Rs. 3,11,646/ or at any other amount. According to them, there was no profit on the sale of 31,909 shares and they answered the question in favour of the assessee. Before the High Court it was contended by the assessee company that the bonus shares must be valued at their face value of Rs. 10/ per share and the Department contended that they should be valued at nil. It appears that the other methods of calculation of the cost price of bonus shares were abandoned at that stage. Ramaswami, C.J. and Kanhaiya Singh, J. held that the issue of bonus shares was nothing but a capitalisation of the company 's reserve account or the profits and the bonus shares could not be considered to be issued free. According to them, the payment for the shares must be found in the bonus which was declared from the undistributed profits and the face value of the bonus shares represented the detriment to the assessee company in respect of the undistributed reserves. The present appeal was brought against the decision of the High Court by special leave granted by this Court. It will be seen from the above that there are four possible methods for determining the cost of bonus shares. The first method is to take the cost as the equivalent of the face value of the bonus shares. This method was followed by the assessee company in making entries in its books. The second method adopted by the Department is that as the shareholder pays nothing in cash for the shares, cost should be taken at nil. The third method is to take the cast of the original shares and to spread it over the original shares and bonus shares taken collectively. The fourth method is to find out the fall in the price of the original shares on the stock exchange and to attribute this to the bonus shares. Before us the assessee company presented for our acceptance the first method and the Department the third method. We shall now consider which is the proper way to value the bonus shares. It is convenient to begin with the contention that the cost of bonus shares must be taken to be their face value. The argument requires close attention, because support for it is sought in certain pronouncements of Lord Sumner to which reference will be made presently. Mr. Kapur contends that a company cannot ordinarily issue shares at a discount, and argues that a fortiori it cannot issue shares for nothing. He submits therefore that the issue of bonus shares involves a twofold operation the creation of new shares and the declaration of a dividend or bonus which dividend or bonus must be deemed to be paid to the shareholder and to be returned by him to acquire the new shares. Since the amount credited in 220 the books of the company as contribution of capital by the shareholder is the face value of the bonus shares, he contends that the cost to the shareholder is equal to the face value of the bonus shares. He relies upon the decision of the Privy Council in Swan Brewery Company Ltd. vs Rex(1). In that case, Lord Sumner observed: "True, that in a sense it was all one transaction, but that is an ambiguous expression. In business, as in contemplation of law, there were two transactions, the creation and issue of new shares on the company 's part, and on the allottees ' part the satisfaction of the liability to pay for them by acquiescing in such a transfer from reserve to share capital as put an end to any participation in the sum of pound 101,450 in right of the old shares, and created instead a right of general participation in the company 's profits and assets in right on the new shares, without any further liability to make a cash contribution in respect of them." Lord Sumner adhered to his view later in the House of Lords in Commissioner of Inland Revenue vs John Blott(2) but Lord Dunedin and he were in a minority, and this view was not accepted by the majority. In view of this conflict, it is necessary to state what really happens when a company issues bonus shares. A limited liability company must state in its memorandum of association the amount of capital with which the company desires to do business and the number of shares into which that capital is to be divided. The company need not issue all its capital at the same time. It may issue only a part of its capital initially and issue more of the unissued capital on a later date. After the company does business and profits result, it may distribute the profits or keep them in reserve. When it does the latter, it does not keep the money in its coffers , the money is used in the business and really represents an increase in the capital employed. When the reserves increase to a considerable extent, the issued capital of the company ceases to bear a true relation to the capital employed. The company may then decide to increase its issued capital and declare a bonus and issue to the shareholders in lieu of bonus, certificates entitling them to an additional share in the increased capital. As a matter of accounting the original shares in a winding up before the increase of issued capital would have yielded to the shareholder the same return as the old shares and the new shares taken together. What was previously owned by the shareholder by virtue of the original certificates is after the issue of bonus (1) (2) 8 Tax Cases 101. 221 shares, held by them on the basis of more certificates. In point of fact, however, what the shareholder gets is not cash but property from which income in the shape of money may be derived in future. In this sense, there is no payment to him but an increase of issued capital and the right of the shareholder to it is evidenced not by the original number of certificates held by him but by more certificates. There is thus no payment of dividend. A dividend in the strict sense means a share in the profits and a share in the profits can only be said to be paid to the shareholder when a part of the profits is released to him in cash and the company pays that amount and the shareholder takes it away. The conversion of the reserves into capital does not involve the release of the profits to the shareholder , the money remains where it was, that is to say, employed in the business. Thereafter the company employs that money not as reserves of profits, but as its proper capital issued to and contributed by the shareholders. If the shareholder were to sell his bonus shares, as shareholders often do, the shareholder parts with the right to participation in the capital of the company, and the cash he receives is not dividend but the price of that right. The bonus share when sold may fetch more or may fetch less than the face value and this shows that the certificate is not a voucher to receive the amount mentioned on its face. To regard the certificate as cash or as representing cash paid by the shareholder is to overlook the internal process by which that certificate comes into being. We may now see what was decided in the Swan Brewery 's(1) case. In that case the company had not distributed all its profits in the past. As a result, it had a vast reserve fund. The company increased its capital and from the reserve fund, issued shares pro rata. These shares, it was held by Lord Sumner, were dividend. It was claimed in that case that there was no dividend and no distribution of dividend, because nothing had been distributed and nothing given. Where formerly there was one share, after the declaration of bonus there were two but the right of participation was the same. This argument was not accepted and the face value of the shares was taken to be dividend. Section 2 of the Act of Western Australia, however, defined dividend to include "every profit, advantage or gain intended to be paid or credited to or distributed among the members of any company. " It is obvious that it was im possible to hold that the bonus shares were outside the extended definition. Swan Brewery 's(1) case has been accepted as rightly decided on the special terms of the section, as indeed it was. In Blott 's(2) case, Rowlatt, J. observed that the bonus shares were included in the expression "advantage" occurring in the (1) (2) 8 Tax Cases 101. 222 highly artificial definition of the word "dividend". In the Court of Appeal, Lord Sterndale, M. R. and Warrington and ' Scrutton, L. JJ. distinguished the case on the same ground. It was, however, pointed out by the Master of Rolls that in Bouch vs Sproule(1) Lord Herschell had observed that in such a case, the company does not pay or intend to pay any sum as dividend but intends to and does appropriate the undivided profits and deals with them as an increase of the capital stock in the concern. Blott 'S(2) case then reached the House of Lords. It may be pointed out at this stage that it involved a question whether super tax was payable on the amount represented by the face value of the bonus share. For purposes of assessment of supertax which was (as it is in our country) a tax charged in respect of income of an individual the total of all income from all sources had to be taken into account and the tax was exigible if the total increased a certain sum. Such additional duty is really nothing but additional income tax and is conveniently described as super tax. Viscounts Haldane, Finlay and Cave held that an amount equal to the face value of the shares could not be regarded as received by the tax payer and that there was no more than the capitalisation of the profits of the company in respect of which certificates were issued to the shareholders entitling them to participate in the amount of the reserve but only as part of the capital. Lords Dunedin and Sumner, however, held that the word "capitalisation" was somewhat "hazy" and the issue of the shares involved a dual operation by which an amount was released to the shareholder but was retained by the company and applied in payment of those shares. In our opinion, and we say it respectfully, the better view is that of the majority and our conclusions set out earlier accord substantially with it. It follows that though profits are profits in the hands of the company but when they are disposed of by converting them into capital instead of paying them over to the share holders, no income can be said to accrue to the shareholder because the new shares confer a title to a larger proportion of the surplus assets at a general distribution. The floating capital used in the company which formerly consisted of subscribed capital and the reserves now becomes the subscribed capital. The amount said to be payable to the shareholders as income goes merely to increase the capital of the company and in the hands of the shareholders the certificates are property from which income will be derived. Lord Dunedin did not rely upon Swan Brewery 's(3) case. He held that as the company could not pay for another, the shareholder must be taken to have paid for the bonus shares himself and the payment was (2 ) 8 Tax Cases 101. (3) 223 the amount which came from the accumulated profits as pro fits. Lord Sumner, however, stated that in Swan Brewery 's(1) case, he did not rely upon the extended definition of dividend in the Australian Statute, but upon the principle involved. He observed that as a matter of machinery, what was done was to keep back the money released to the shareholder for application towards payment for the increased capital. Lord Sumner had already adhered to his view in an earlier case of the Privy Council, but Swan Brewery 's(1) case and Blott 's(2) case were considered by the Privy Council in Com missioner of Income tax, Bengal vs Mercantile Bank of India Ltd. and others(3). Lord Thankerton distinguished Swan Bre wery 's(1) case and followed Blott 's(2) case, though in Nicholas vs Commissioner of Taxes of the State of Victoria(4), Blott 's (2) ,case was distinguished on the ground that the definition in the Unemployment Relief Tax (Assessment) Act, 1933 also included within a person 's assessable income "any dividend, interest, profit or bonus credited, paid or distributed to him by the company from any profit derived in or from Victoria or elsewhere by it", and that bonus shares must be regarded as dividend under that definition. The Indian Income tax Act defines "dividend" and also extends it in some directions but not so as to make the issue of bonus shares a release of reserves as profits so that they could be included in the term. The face value of the shares cannot therefore be taken to be dividend by reason of anything in the definition. The share certificate which is issued as bonus entitles the holder to a share in the assets of the company and to participate in future profits. As pointed out above, if sold, it may fetch either more or less. The market price is affected by many imponderables, one such being the yield or the expected yield. The detriment to the shareholder, if any, must therefore be calculated on some principle, but the method of computing the cost of bonus shares at their face value does not accord either with fact or business accountancy. Can we then say that the bonus shares are a gift and are acquired for nothing? At first sight, it looks as if they are so but the impact of the issue of bonus shares has to be seen to realise that there is an immediate detriment to the shareholder 'in respect of his original holding. The Income tax Officer, in this case, has shown that in 1945 when the price of shares became stable it was Rs. 9 per share, while the value of the shares before the issue of bonus shares was Rs. 18/ per share. In other words, by the issue of bonus shares pro rata, which Tanked pari passu with the existing shares, the market price was exactly halved, and divided between the old and the bonus shares. This will ordinarily be the case but not when the shares (1)(1914) A.C. 231. (3)(1936) A.C. 478. (2) 8 Tax Cases 101. (4) 224 do not rank pari passu and we shall deal with that case separately. When the shares rank pari passu the result may be stated by saying that what the shareholder held as a whole rupee coin is held by him, after the issue of bonus shares, in two 50 nP coins. The total value remains the same, but the evidence of that value is not in one certificate but in two. This was expressed forcefully by the Supreme Court of United States of America, quoting from an earlier case, in Eisner vs Macomber(1) thus: "A stock dividend really takes nothing from the property of the corporation, and adds nothing to the interests of the shareholders. Its property is not diminished, and their interests are not increased. The proportional interest of each shareholder remains the same. The only change is in the evidence which represents that interest, the new shares and the original shares together representing the same proportional interest that the original shares represented before the issue of the new ones In short, the corporation is no poorer and the stock holder is no richer than they were before If the plaintiff gained any small advantage by the change, it certainly was not an advantage of $417,450 the sum upon which he was taxed What has happened is that the plaintiff 's old certificates have been split up in effect and have diminished in value to the extent of the value of the new. necessarily disposes of a part of his capital interest, just as if he should sell a part of his old stock, either before or after the dividend. What he retains no longer entitles him to the same proportion of future dividends as before the sale. His part in the control of the company likewise is diminished. " Swan Brewery 's (2) case, it may be pointed out, was distinguished here also on the basis of the extended definition. it follows that the bonus shares cannot be said to have cost nothing to the shareholder because on the issue of the bonus shares, there is an instant loss to him in the value of his original holding. The earning capacity of the capital employed remains the same, even after the reserve is converted into bonus shares. By the issue of the bonus shares there is a corresponding fall in the dividends actual or expected and the market price moves accordingly. The method of calculation which places the value of bonus shares at nil cannot be correct. (1) L.Ed. 521. (2)(1914) A.C. 231. 225 This leaves for consideration the other two methods. Here we may point out that the new shares may rank pari passu with old shares or may be different. The method of cost .accounting may have to be different in each case but in essence and principle there is no difference. One possible method is to ascertain the exact fall in the market price of the shares already held and attribute that fall to the price of the bonus shares. This market price must be the middle price and not as represented by any unusual fluctuation. The other method is to take the amount spent by the shareholder in acquiring his original shares and to spread it over the old and new shares treating the new as accretions to the old and to treat the cost price of the original shares as the cost price of the old shares and bonus shares taken together. This method is suggested by the Department in this case. Since the bonus shares in this case rank pari passu with the old shares there is no difficulty in spreading the original cost over the old and the new shares and the contention of the Department in this case is right. But this is not the end of the present discussion. This simple method may present difficulties when the shares do not rank pari passu or are of a different kind. In such cases, it may be necessary to compare the resultant price of the two kinds of shares in the market to arrive at a proper cost valuation. In other words, if the shares do not rank pari passu, assistance may have to be taken of other evidence to fix the cost price of the bonus shares. It may then be necessary to examine the result as reflected in the market to determine the equitable cost. In England paragraph 10 of Schedule Tax to the Finance Act, 1962 provides for such matters and for valuing Rights issue but we are not concerned with these matters and need not express an opinion. It remains to refer to three cases to which we have already referred in passing and on which some reliance was placed. In The Commissioner of Income tax (Central), Bombay vs M/s Maneklal Chunnilal and Sons Ltd., Bombay(1), the assessee held certain ordinary shares of the face value of Rs. 100/ in Ambica Mills Ltd. and Arvind Mills Ltd. These two com panies then declared a bonus and issued preference shares in the proportion of two to one of the face value of Rs. 100/ each. These preference shares were sold by the assessee and if the face value was taken as the cost, there was a small profit. The Department contended that the entire sale proceeds were liable to be taxed, because the assessee had paid nothing for the bonus shares and everything received by it was profit. The assessee 's view was that the cost was equal to the face value of the shares. The High Court rejected both these contentions and held that the cost of the shares previously held must be divided between those shares and the bonus shares in the same (1)I.T. Ref. No. 16 of 1948 d. 23rd March 1949. 226 proportion as their face value, and the profit or loss should then be found out by comparing the cost price calculated on this basis with the sale price. In our opinion, there is difficulty in the High Court 's decision. The preference shares and the ordinary shares could hardly be valued in the proportion of their face value. The ordinary shares and the preference shares do not rank pari passu. The next case is Emerald Co. Ltd. vs C.I.T., Bombay City(1). In that case, the assessee had, at the beginning of the year, 350 shares of which 50 shares were bonus shares and all were of the face value of Rs. 250/ each. The assessee sold 300 shares and claimed a loss of Rs. 35,801 / by valuing the bonus shares at face value. The Department arrived at a loss of Rs. 27,766/ by the method of averaging the cost, following the earlier case of the Bombay High Court just referred to. The Tribunal suggested a third method. It ignored the 50 shares and the loss was calculated by considering the cost of 300 shares and their sale price. The loss worked out at Rs. 27,748/ , but the Tribunal did not disturb the order of the Appellate Assistant Commissioner in view of the small difference. The High Court held that the method adopted by the Department was proper but this Court, on appeal, held that in that case the method adopted by the Tribunal was correct. This Court did not decide which of the four methods was the proper one to apply, leaving that question open. The reason was that the assessee originally held 50 shares in 1950; in 1951, it received 50 bonus shares. It sold its original holding three days later and then purchased another 100 shares after two months. In the financial year 1950 51 (assessment year 1951 52), the Income tax Officer averaged the price of 150 shares and found a profit of Rs. 1,060/ on the sale of 50 shares instead of a loss of Rs. 1,365/ which was claimed. The assessee did not appeal. In the financial year 1951 52 (assessment year 1952 53), the assessee started with 150 shares (100 purchased and 50 bonus). It then purchased 200 shares in two lots and sold 300 shares, leaving 50 shares. The assessee company claimed a loss of Rs. 35,801 / . The Income tax Officer computed the loss at Rs. 27,766/ and the Tribunal computed the loss at Rs. 27,748 The Tribunal, however, did not disturb the loss as computed by the Income tax Officer in view of the slender difference of Rs. 18/ . The High Court 's decision was reversed by this Court, because the High Court ignored all intermediate transactions and averaged the 300 shares with the 50 bonus shares. The shares in respect of which the bonus shares were issued were already averaged with the bonus shares. This was not a case of bonus shares issued in the year of account. It involved purchase and sale of some of the shares. The average cost price of the original and bonus shares was (1)(1956) 227 already fixed in an earlier year by the Department and this fact should have been taken into account. No doubt, Chagla, C.J. observed that it was not known which of the several :shares were sold in the year of account, but in the Statement of the Case it was clearly stated that bonus shares were untouched. The decision of this Court in Emerald Company 's(1) case. however, lends support to the view which we have expressed here. The bonus shares can be valued by spreading the cost of the old shares over the old shares and the new issue taken together, if the shares rank pari passu. When they do not, the price may have to be adjusted either in the proportion of the face value they bear (if there is no other circumstance differentiating them) or on equitable considerations based on the ,market price before and after the issue. Applying the principles to the present case, the cost of 31,909 shares, namely, Rs. 5,84,283/ must be spread over those shares and the 31,909 bonus shares taken together. The ,cost price of the bonus shares therefore was Rs. 2,92,141 /because the bonus shares were to rank equal to the original ,shares. The account would thus stand as follows: Share in Rohtas Industries Ltd. Rs. 1 . Old issue of 17,259 shares brought forward from 1945, at (proportionate) cost 1,58, 035 2. Bonus shares 31,909 received in 1945, at (proportionate, spread out) cost 2,92,141 3. New issue 59,079 shares brought forward from 1945 8,88,561 4. New purchases 2,500 shares brought forward from 1947 39,300 Total 1,10,747 shares 13,78,037 Sales of all theabove shares in 1948 15,50,458 Profit 7,444 Profit to be added to the income returned 1,79,865 The answer to the question given by the High Court was therefore erroneous and the right answer would be that the profit computed at Rs. 3,11,646/ was not in accordance with law. The appeal is therefore allowed with costs here and in the High Court. Appeal allowed.

IN-Abs

The assessee company dealt in shares and also held invest ments of shares on January 1, 1948. The assessee held 1,10,747, shares of Rohtas Industries at a book value of Rs. 15,57,902/ . Of these shares 31,909 were bonus shares issued by Rohtas Industries in 1945 at the face value of Rs. lo/, each and the assessee had debited the investment account in respect of the bonus shares by Rs. 3,19,090 with a corresponding entry in the capital reserve account on its credit side for the same amount. The assessee acquired these bonus shares at a cost of Rs. 5,84,283 in 1944. On January 29, 1948, the assessee sold the entire lot of 1,10,747 shares for Rs. 15,50,458. The assessee deducted the sale price from the book value of Rs. 15,57,902 and claimed a loss of Rs. 7,444 on the sale of shares. The appellate Tribunal valued the bonus shares at nil and held that the assessee had made a profit of Rs. 3,11,646/ . On a reference the High Court held that the Tribunal was wrong in holding that the assessee had made a profit of Rs. 3,11,646/ . Held (per Hidayatullah and Shah, JJ.): (i) The Income tax Act defines "dividend" and also extends it in some directions but not so as to make the issue of bonus shares a release of reserves as profits so that they could be included in the term. The face value of the shares cannot therefore be taken to be dividend by reason of anything in the definition. The shares certificate which is issued as bonus entitles the holder to a share in the assets of the company and to participate in future profits. The bonus share when sold may fetch more or may fetch less than the face value, and this shows that the certificate is not a voucher to receive the amount mentioned on its face. The market price is affected by many imponderables, one such being the yield or the expected yield. The detriment to the share holder, if any, must therefore be calculated on some principle, but the method of computing the cost of bonus shares at their face value does not accord either with fact or business accountancy. Swan Brewery Co. Ltd. vs Rex , disapproved. Commissioner of Inland Revenue vs John Blott, 8 Tax Cases 101, approved. Bouch V. Sproule, , referred to. Commissioner of Income tax, Bengal vs Mercantile Bank of India Ltd., and Nicholas vs Commissioner of Taxes of the State of Victoria, , referred to. (ii) The bonus shares cannot be said to have cost nothing to the share holder because on the issue of its bonus shares, there is an instant loss to him in the value of his original holding. The earning capacity of the capital employed remains the same, even after the reserve is converted into bonus shares. By the issue of the bonus shares there is a corresponding fall in the dividends 211 actual or expected and the market price moves accordingly. The method of calculation which places the value of bonus shares, at nil cannot be correct. (iii) The bonus shares can be valued by spreading the cost of the old shares over the old shares, and the new issue taken together, if the shares rank pari passu. When they do not, the price may have to be adjusted either in the proportion of the face value they bear (if there is no other circumstances differentiating them) or on equitable considerations based on the market price before and after the issue taking the middle price not that represented by any unusual fluctuations. On the facts of this case it was held that since the bonus shares in this case rank pari passu with the old shares there is no difficulty in spreading the original cost over the old and the new shares. Commissioner of Income tax vs Maneklal Chunilal and Sons, Income tax Reference No. 16/1948, dt. 23 3 1949, disapproved. Emerald and Co. Ltd. vs Commissioner of Income tax, Bombay City, , distinguished. Eisner vs Macomber, L.Ed. 521, referred to. Per Sarkar, J. (dissenting): (i) The view taken by the majo rity of Judges in Blott 's case is a correct one. In that case the learned Judges held that when the articles of a company authorise the issue of bonus shares and the transfer of a sufficient amount out of the accumulated profits in its hands representing their face value to the share capital account, what happens when the articles are acted upon is a capitalisation of the profits and the bonus shares issued are not in the hands of the share holder income liable to tax. Following the majority opinion in Blott 's case it was held that the High Court was in error in the view it took in the present case. There is no foundation for proceeding on the basis as if the bonus shares had been acquired by the assessee at their face value. Its profits cannot be computed on that basis. Commissioner of Inland Revenue vs Blott (1921)2 A.C. 171, relied on. Swan Brewery Co. Ltd. vs King , disapproved. Osborne (H.M. Inspector of Taxes) vs Steel Barrel Co. Ltd., , inapplicable. Commissioner of Inland Revenue vs Fisher 's Executors, ; and Commissioner of Income tax, Bengal vs Mer cantile Bank of India Ltd., , referred to. Commissioner of Income tax vs Maneklal Chunilal and Sons Ltd., I.T. Ref. No. 16 of 1948 and Emerald and Co. Ltd. vs Commissioner of 1ncome tax, Bombay City, , referred to. (ii) Bai Shirinbai Kooka 's case is the authority for the proposition that where it cannot be shown what was paid for the acquisition of a trading asset by a trader, it has for tax purposes to be deemed to have been acquired at the market value of the date when it was acquired. On the basis of this authority the Bonus shares must in the present case be deemed to have been acquired at the market value of the date of their issue. (iii) On the basis of the same authority, it would not be correct to say that the bonus shares had been acquired for nothing. 212 The view taken by the Appellate Commissioner and the Tribunal cannot be supported. Commissioner of Income tax vs Bai Shirinbai K. Kooka, [1962] Supp. 3 S.C.R. 391, relied on.

125 135, and 233 of 1963. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. A. V. Vishwanatha Sastri, T. A. Ramachandran, B. Par thasarathy, 0. C. Mathur, J. B. Dadachanji and Ravinder Narain, for the petitioner (in W. P. Nos. 125 135 1963). H. N. Sanyal, Solicitor General, N. section Bindra and R. N. Sachthey, for the respondents (in W. P. Nos. 125 135 / 63). O. C. Mathur, J. B. Dadachanji and Ravinder Narain for the petitioner (in W. P. No. 233 / 1963). R. N. Sachthey, for the respondents (in W.P. No. 233/ 63). 187 March 12, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. This group of 12 writ petitions raises a common question about the validity of the( Orissa Sales Tax Validation Act, 1961 (Act No. 7 of 1961) (hereinafter referred to as the Act). The facts on which the petitioners rely are similar, and so, we shall mention the facts in the first group consisting of writ petitions Nos. 125 135 of 1963. The petitioner in this group is Shri Epari Chinna Krishna Moorthy, Proprietor, Epari Chinna Krishna Moorthy & Sons, Berhampur, Orissa. He is a merchant who carries on business in "bullion and specie" and gold and silver ornaments at Berhampur and as such merchant, he has been registered as 'dealer ' under the Orissa Sales Tax Act, 1947 (Act No. 14 of 1947). After the said Act came into force, the Government of Orissa purporting to exercise its authority under section 6 of the said Sales Tax Act issued a notification exempting certain articles from the operation of the charging section of that Act. Under this notification, gold ornaments were ordered to be exempted from sales tax 'when the manufacturer selling them charges separately for the value of gold and the cost of manufacture. ' This notification was issued on July 1, 1949 Durinh the course of his business, the petitioner manufactures gold ornaments by supplying the gold to the artisans and getting ornaments prepared by them under his supervision and when the ornaments are so prepared, he sells them in his shop and has been showing the value of gold and the cost of manufacture separately. That is why the petitioner alleges that he is entitled to claim the benefit of the exemption notification. Consistently with this plea, the petitioner filed his returns before the Sales tax Officer at Berhampur and had been claiming exemption of Sales tax on the sales as being entitled to exemption under the said notification. Upto June, 1952, the claim for exemption made by him was upheld and the amount represented by sales of the said gold ornaments was deducted from the taxable turnover shown by the petitioner in his returns. Subsequently, however, these assessments were re opened under section 12(7) of the Act and it was claimed that the deductions made on certain sales transactions of gold ornaments were not justified and to that extent, the petitioner had escaped assessment. The petitioner resisted this attempt to re open the assessment and he pleaded that he was entitled to claim exemption under the notification, because he belonged to the class of manufacturers to which the notification referred. The Sales tax Officer, however, disallowed the petitioner 's contention and proceeded to levy tax on the sales transac tions in question. The petitioner then challenged the said 188 decision by preferring appeals, but the said appeals were also dismissed. While the appeals were pending similar assessments made in respect of other dealers including the petitioner were challenged by them by writ petitions before the High Court of Orissa. (Nos. 151, 161, 162, 204 209 and 110 of 1957 respectively). The Division Bench of the Orissa High Court which heard the writ petitions upheld the petitioner 's case and issued appropriate writs directing the Sales tax Officer to allow the petitioner 's claim for exemption 'under the notification in question. The main controversy before the High Court was about the precise denotation of the word 'manufacturer ' used in the notification. The High Court hold that the expression manufacturer ' meant the first owner of the finished products for whom it was mad(. either by his paid employee or even by independent artisans on receipt of raw materials and labour charges from him. According to this view, the petitioners before the High Court were found to be manufacturers and as such entitled to claim exemption in respect of sale of old ornaments made by them. This judgement was pronounced on March 13, 1959. Against this judgement the State of Orissa has filed appeals to this Court and they are numbered as Civil Appeals Nos. 92 to 94 of 1963. These appeals are till pending disposal. After the Orissa High Court pronounced its judgement in the writ petitions to which reference has been made, the impugned Act was passed by the Orissa Legislature on August 1, 1961. This Act received the assent of the Governor on September 10, 1961, and was published on September 18, 1961. It contains one operative provision in section 2. Section 2 provides that notwithstanding anything contained in any judgment, decree or order of any court, the word 'manufactu rer ' occurring against item 33 in the schedule to the notification of the Government of Orissa dated July 28, 1947 as amended by another notification of the 1st July, 1949 shall mean and shall always be deemed to have meant a, person who by his own labour works up materials into suitable forms and a person who owns or runs a manufactory for the purpose of business with respect to the articles manufactured therein. It is the validity of this section which is challenged before us by the petitioners in the present writ petitions. It is clear that the object of section 2 of the impugned Act is to make it clear that the legislature 's intention was not, as the High Court had held, to, include within the notification all persons who are first owners of the finished product of gold. Section 2 shows that the legislative intention was to give benefit of the said exemption only to persons who themselves work and produce gold ornaments or who run or own a manufactory for the purpose of business with respect to the articles manufactured therein. In other words, the intention of the Government in issuing the notification was not to give the benefit of the exemption to traders or shop keepers who were no more than commission agents and who did not personally, work for making gold ornaments or who did not own a manu factory employing artisans for that purpose. If this section is valid, it is common ground that the petitioners are not entitled ,to claim the exemption. On the other hand, if this section is invalid, the petitioners would be the first owners of gold ornaments and may be entitled to claim exemption. The first argument which has been urged before us by Mr. Sastri is that since the exemption was granted by the State Government by virtue of the powers conferred on it by section 6, it was not open to the legislature to take away that exemp tion retrospectively. Section 4 of the parent Sales tax Act is the charging section and section 6 is the section which confers on the State Government power to issue a notification exempting from the tax the sale of any goods or class of goods and likewise withdraw any such exemption subject to such conditions and exceptions as it may deem fit. The argument is, the power to grant exemption having been conferred on the State Government, it was validly exercised by the State Government and though the legislature may withdraw such exemption, it cannot do so retrospectively. It is obvious that if the State ,Government which is the delegate of the legislature can withdraw the exemption granted by it, the legislature cannot be denied such right. But it is urged that once exemption was validly granted, the legislature cannot withdraw it retrospectively, because that would be invalidating the notification itself. We are not impressed by this argument. What the legislature has purported to do by section 2 of the impugned Act is to make the intention of the notification clear. Section 2 in substance declares that the intention of the delegate in issuing the notification granting exemption was to confine the benefit of the said exemption only to persons who, actually produce old ornaments or employ artisans for that purpose. We do not see how any question of legislative incompetence can come in the present discussion. And, if the State Government was given the power either to grant or withdraw the exemption that cannot possibly affect the legislature 's competency to make any provision in that behalf either prospectively or retrospectively. Therefore, there is no substance in the argument that the retrospective operation of section 2 of the impugned Act 'is invalid. Then Mr. Sastri contends that this provision is discrimina tory and as such, contravenes the equality before the law, guaranteed by article 14. This argument is also misconceived, is not seriously disputed that the petitioners belong to the 190 class of traders or shopkeepers who are like commission agents. They give gold to the artisans, paying the artisans their labour charges and when the ornaments are thus produced, they charge commission before they are sold to the customers. In such a case, it is not easy to understand how this class of traders can be said belong to same class of persons who produce gold ornaments themselves or run manufactories where artisans are engaged for producing them. The counter affidavit filed on behalf of the respondent State has also averred that the petitioners sometimes sell goods manufactured by firms outside the State of Orissa and in no case had they manufactured ornaments themselves. Whether the gold which they give to the artisans is their own or is supplied to them by customers is not a matter of any significance, because what is important in this connection is that they are not directly concerned with the production of ornaments, and admittedly, they do not produce the said ornaments themselves. Therefore, the persons who get the benefit of the exemption notification as a result of the provisions of section 2 of the impugned Act cannot be said to belong to the same class as that of the petitioners, and if that is so, the main argument on the basis of article 14 does not subsist. Besides, one of the objects of the impugned Act appears to be to make it clear that the legislature intends to benefit the goldsmiths who actually make gold ornaments and that object can be carried out only if exemption is granted to persons who keep in their continuous employment artisans who produce gold ornaments. If a person produces gold ornaments himself and if a person employs artisans to produce gold ornaments for him, they fall within the protection of the exemption. In the case of the petitioners, however, they do not keep any artisans in their continuous employment, and so, if the legislature thought it was not necessary to give them the benefit of the exemption, it cannot be said that the classification made by the legislature has no rational connection with the object intended to be achieved by it. This argument assume,,, that the petitioners belong to the same class as the persons to whom the benefit of the exemption is available. But as we have already stated, these two categories are distinct and there is no sameness or similarity between them. It was also suggested by Mr. Sastri that the result of the impugned provision is to deny the benefit of the exemption to the poorer classes of persons who are engaged in the business of manufacturing gold ornaments, and in that con nection, he has commented on the fact that the notification gives the benefit of the exemption to persons who run manu factories but it denies that benefit to persons who carry on the work of producing gold ornaments on a smaller scale, and 191 so, are unable to run a manufactory. This argument is fal lacious. The notification as interpreted by section 2 of the impugned Act benefits the artisans who produce ornaments themselves and that obviously covers a very large section of independent artisans engaged in the trade. The notification also benefits persons who run manufactories and that ensures the continuous employment of artisans. That is why it seems to us that the main object of ranting exemption can be said to be achieved by holding that 'manufacturer, means either a, manufacturer properly so called or one who engages artisans lo manufacture gold ornaments. Mr. Sastri also argued that the retrospective operation ,of the impugned section should be struck down as unconsti tutional,, because it imposes an unreasonable restriction on the petitioners ' fundamental right under article 19(1)(g). It is true that in considering the question as to whether legislative power to pass an Act retrospectively has been reasonably ,exercised or not, it is relevant to enquire how the retrospective operation operates. But it would be difficult to accept the argument that because the retrospective operation may operate harshly in some cases, therefore, the legislation itself is invalid. Besides, in the present case, the retrospective operation does not spread over a very long period either. Incidentally, it is not clear from the record that the petitioners did not recover sales, tax from their customers when they sold the gold ornaments to them. The counter affidavit filed by the, respondent State alleges that even where sales tax has not been charged separately, the price charged included sales tax because it was the usual practice of every registered dealer ,doing similar business to collect sales tax either by showing it as such separately and thereby claiming deduction of the, ,sales tax from the gross turnover to arrive at the taxable turn , ,over shown separately or by including it in the price and thereby collecting it as a part of the price charged. In any event, we do not think that in the circumstances of this case it would be possible to hold that by making the provision of section 2 of ' the impugned Act retrospective the legislature has imposed a restriction on the petitioners ' fundamental right under article 19(1)(g) which is not reasonable and is not in the interest of the general public. The result is, the petitions fail and are dismissed with costs. One set of hearing fees. Petitions dismissed.

IN-Abs

The petitioner, a merchant, carrying on business in "bullion and specie" and gold and silver ornaments was a registered 'dealer ' under the Orissa Sales Tax Act, 1947. The Government purporting to exercise its authority under section 6 of the said Act issued a notification on July 1, 1949 exempting certain articles from the operation of the charging section of that Act. Under the notification gold ornaments were ordered to be exempted from sales tax when the manufacturer selling them charges separately for the value of gold and the cost of manufacture. The petitioner filed his returns before the Sales tax Officer and claimed exemption of sales tax under the said notification. Up to June 1952, the claim for exemption was upheld. Subsequently, however, these assessments were reopened under section 12(7) of the Act and it was claimed that the deductions made on certain sale transactions of gold ornaments were not justified and the petitioner had escaped assessment. The petitioner pleaded that lie was entitled to exemption, because he belonged to the class of manufacturers to which the notification referred. The Sales tax Officer disallowed the petitioner 's contention. The petitioner then challenged the said decision by preferring appeals, but the said appeals were also dismissed. Pending these appeals, similar assessments made in respect of other dealers including the petitioner were challenged by writ petitions before the High Court. The High Court upheld the petitioner 's case and issued writs directing the Sales tax Officer to allow the petitioners ' claim for exemption. After this judgement was pronounced, the impugned Act was passed by the legislature on August 1, 1961 and was published on September 18, 1961, containing one operative provision in section 2. It provided that notwithstanding anything contained in any judgement, decree or order of any court, the word 'manufacturer ' occuring against item 33 in the schedule to the notification of the Government dated July 28, 1947 as amended by another notification of the 1st July, 1949 shall mean and shall always be deemed to have meant a person who by his own labour works up materials into suitable forms and a person who owns or runs a manufactory for the purpose of business with respect to the articles manufactured therein. The validity of this section was challenged in the present writ petition. 186 It was urged (i) that since the exemption was granted by the State Government by virtue of the Powers conferred on it by section 6, it was not open to the legislature to take away that exemption retrospectively; (ii) that the provision in section 2 of the impugned Act was discriminatory and as such contravened the equality before the law guaranteed by article 14 and (iii) that the retrospective operation of the impugned section should be struck down as unconstitutional, because it imposes an unreasonable restriction on the petitioner 's fundamental right under article 19 (1) (g) Held: (i) What the legislature had purported to do by section 2 of the impugned Act, was to make the intention of the notification clear. And, if the State Government was given the power either to grant or withdraw the exemption, that could not possibly affect the legislature 's competence to make any provision in that behalf either prospectively or retrospectively. (ii) The notification as interpreted by section 2 of the impugned Act benefits the artisans who produce ornaments themselves and who run manufactories. That is why the main object of granting exemption can be said to be achieved by holding that ,manufacturer ' means either a manufacturer properly so called or one who engages artisans to manufacture gold ornaments. In the present case the petitioners were not directly concerned with the production of ornaments, and admittedly, they did not produce the said ornaments themselves. Therefore, the persons who get the benefit of the exemption notification as a result of the provisions of section 2 of the impugned Act cannot be said to belong to the same class as that of the petitioners. The two categories are distinct and there is no sameness or similarity between them, and if that is so, the main argument on the basis of article 14 does not subsist. (ii) It would be difficult to accept the argument that because the retrospective operation may operate harshly in some cases, therefore, the legislation itself is invalid. In the circumstances of the present case it would not be possible to hold that by making the provision of section 2 of the impugned Act retrospective the legislature has imposed a restriction on the petitioner 's fundamental rights under article 19(1) (g) which is not reasonable and is not in the interest of the general public.

iminal Appeal No. 6 of 1962. Appeal by special leave from the judgment and order dated June 1, 1961 of the Judicial Commissioner 's Court for Manipur in Criminal Appeal Case No. 7 of 1961. O. P. Rana and R. N. Sachthey, for the appellant. section C. Agarwal, for the respondent. March 11, 1964. The judgment of the Court was delivered by AYYANGAR, J. This appeal which comes before us by special leave is directed against the judgment and order of the Judicial Commissioner of Manipur acquitting the respondent and setting aside the conviction and sentence passed against him by the learned Sessions Judge. This appeal was originally heard before a Bench of two Judges but has been directed to be placed before this Bench by reason of the learned Counsel for the appellant seeking 125 to question the correctness of the judgment of this Court in the case of Pritam Singh vs The State of Punjab(1) in view of the decision of the English Court of Criminal Appeal in R. vs Connelly(2) and the subsequent decision of this Court in Gurcharan Singh vs State of Punjab(3). The facts giving rise to the appeal are in brief as follows:There was an agitation by certain political parties and groups in Manipur in April, 1960 for establishing res ponsible Government in the Manipur area. The agitation took the form of picketing of Government offices and the residences of Government servants and blocking roads in order to paralyse the administration. After this form of agitation continued for some time, the District Magistrate of Manipur promulgated orders under section 144, Criminal Proce dure Code on the morning of April 25, 1960 banning public meetings and processions and these orders were proclaimed and communicated to the public through loudspeakers. Not withstanding this order, crowds continued to collect and move on the streets shouting slogans. Bira Singh the res pondent was said to have been leading this mob. A lathi charge by the police took place but it is stated that because of this the crowd moved a little away and began to pelt stones. The crowd was thereupon directed to disperse, its attention being drawn to the promulgation of the order under section 144, Criminal Procedure Code and to the fact that the gathering in a public place in violation of the order made it an unlawful assembly; but this command was not heeded and the stone throwing continued. There was firing by the police which resulted in injuries to certain persons including some of the police personnel. The first information report in regard to the incident and the offences committed during its course was lodged at the Imphal Police station at about 7 p.m. that day in which the informant specified the name of the respondent Bira Singh as the leader of this mob. On this a case was registered under sections 114/149/332/342 and 307 of the Indian Penal Code and section 7 of the Criminal Law Amendment Act, and a few days later the respondent was arrested. Charges were framed against the respondent who was placed before the Magistrate and the charge sheet stated that the respondent was in the crowd between 3 and 5 p.m. on that day, that the crowd was an unlawful assembly, that he was among those who pelted stones which caused grievous hurt to one person and simple hurt to others and also caused damage to the Inter State Police Wireless Station. Along with (1) A.I.R. 1956 S.C. 415. ( 2) (3) ; 126 the respondent certain others were included as accused but we are now concerned only with the respondent. The learned Sessions Judge convicted all of them of the offences with which they were charged and sentenced them to varying terms of imprisonment but into the details of these it is not necessary to enter. The question of law that arises in this case is by reason of a prior prosecution of the respondent in which he was acquitted. That prosecution was founded on a complaint against him filed on May 12, 1960 under section 188, Indian Penal Code in connection with his participation is a member of the same crowd in regard to which the charge which is the sub ject matter of the present proceedings is concerned. In that complaint the District Magistrate alleged that the respondent had disobeyed the order passed under section 144 by forming himself along with 2,000 other persons into an unlawful assembly between the hours of 3 and 5 p.m. on April 25, 1960 by shouting slogans and pelting stones at police officers and this was stated to be oil the road in front of the Police Wireless station. This complaint by the District Magistrate was registered and taken cognizance of by the Magistrate. The respondent pleaded in his defence that he was not present at the scene of the occurrence at all and that he had been falsely implicated by the police. The Magistrate rejected the defence and accepting the prosecution case that the respondent was present as the head of the mob on that occasion convicted him of the offence charged and sentenced him by his order dated July 8, 1960 to rigorous imprisonment for six months. Ten days thereafter on July 18, 1960 the charge sheet in the present case was filed. During the pendency of the prosecution from which the present appeal arises the respondent appealed to the learned Sessions judge against his conviction by the Magistrate on the charge under section 188, Indian Penal Code. The learned Sessions Judge allowed the appeal holding that the prosecu tion had not established that the respondent was present at the place and at the time where the occurrence took place at which he was said by the prosecution to have been present or that he disobeyed the order under section 144, Criminal Procedure Code. In the course of his judgment delivered on July 30, 1960 the learned Sessions Judge observed after referring to the delay in the filing of the complaint after the occur rence: "This delay: in the filing of the complaint and in the naming of the appellant. . . throws con siderable doubt on the presence of the appellant among the agitators on 25 4 60. . . if the P. Ws. did not know the appellant from before no 127 reliance can be placed on their identification of the appellant during the trial because that identification was not tested in a test identification parade. This also confirms my suspicion that the appellant might not have been present in the incident of 25 4 60. . The important position which the appellant had in organising the agitation in my opinion, afforded sufficient motive for the P.Ws. to come to a conclusion that the appellant might have been present in the agitation. But that erroneous impression on conclusion would not prove the presence of the appellant among the agitators on 25 4 60. . For reasons given above the appeal is allowed and the conviction and sentence of the appellant under section 188 I.P.C. are set aside and he is acquitted. " This acquittal was confirmed by the Judicial Commissioner on April 29, 1961. Meanwhile, to proceed with the narrative of the proceedings which has given rise to the present appeal, the learned Magistrate committed the respondent and 5 others to take their trial before the Sessions Judge, Manipur on a charge in respect of the offences we have set out earlier. Before the learned Sessions Judge an objection was raised on behalf of the respondent that the trial was barred by section 403, Criminal Procedure Code by reason of the acquittal of the accused under section 188, Indian Penal Code on July 30, 1960. The learned Sessions Judge, however, held, that the terms of the section were not satisfied, in that the ingredients of the two offences with which the accused was charged in the two prosecutions were different and rejected that submission. On the evidence adduced before him be found that it had been established to his satisfaction that the respondent as well as the others were present at the scene of the occurrence and held the accused guilty of the offences under sections 333, 323 and 440 all read with section 149, Indian Penal Code and sentenced him to 4 years R.I. All the six accused filed appeals against their conviction and sentences before the Judicial Commissioner, Manipur and the learned Judicial Commissioner after making some variations in the sentences as regards certain of the accused directed the acquittal of the respondent on the ground that the finding of fact recorded by the learned Sessions Judge in his trial for the offence under section 188, Indian Penal Code that he was not present at the scene of the occurrence on April 25, 1960 between the hours of 3 and 5 p.m. was final and conclusive and binding upon the prosecution and that no evidence could be led to 128 establish a contrary state of affairs in the present proceedings. In so holding the learned the Judicial Commissioner followed the decision of this Court in Pritam Singh vs State of Punjab(1) and certain other decisions and held that the principle of res judicata applicable to criminal proceedings was not confined to cases falling within the bar of section 403, Criminal Procedure Code but was of wider application. It is the correctness of this view of the law that calls for consideration in this appeal. Before referring to the decision of this Court in Pritam Singh vs State of Punjab(1) it would be convenient to refer to and put aside one point for clearing the ground. Section 403, Criminal Procedure Code embodies in statutory form the accepted English rule of autre fois acquit. This section runs: "403 (1) A person who has been once tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any offence for which a different charge from the one made against him might have been made under section 236, or for which he might have been convicted under section 237. (2) A person acquitted or convicted of any offence may be afterwards tried for any distinct offence for which a separate charge might have been made against him on the former trial under section 235, sub section (1). (3) A person convicted of any offence constituted by any act causing consequences which, together with such act, constituted a different offence from that of which he was convicted may be afterwards tried for such last mentioned offence, if the consequences had not happened, or were not known to the Court to have happened, at the time when he was convicted. (4) A person acquitted or convicted of any offence constituted by any acts may, notwithstanding such acquittal or conviction, be subsequently charged with, and tried for, any other offence constituted by the same acts which he may have committed if the Court by which he was first tried was not competent to try the offence with which he is subsequently charged. (1) A.T.R. (5) Nothing in this section shall affect the provisions of section 26 of the , or section 188 of this Code. 129 Explanation The dismissal of a complaint, the stopping of proceedings under section 249, the discharge of the accused or any entry made upon a charge under section 273, is not an acquittal for the purposes of this section. " Section 26 of the which is referred to in section 403 enacts: "26. Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence. " We might also, in this connection, refer to article 20(2) of the Constitution since it makes provision for a bar against a second prosecution in an analogous case. That provision reads: "20(2). No person shall be prosecuted and punished for the same offence more than once. " As has been pointed out by this Court in State of Bombay vs section L. Apte(1), both in the case of article 20(2) of the Consti tution as well as section 26 of the to operate as a bar the second prosecution and the consequential punishment thereunder, must be for "same offence" i.e., an offence whose ingredients are the same. It has been pointed out in the same decision that the V Amendment of the American Constitution which provides that no person shall be subject, for the same offence, to be twice put in jeopardy of life or limb, proceeds on the same principle. It is common ground that the respondent cannot bring his case within the provisions of sub section (1) of section 403 and it was also common ground that the trial of the respondent would be permitted by sub section It should, however, be noticed that sub sections (1) to (3) of this section deal with the trial of an accused for an offence and his conviction therefor. The question raised for decision in Pritam Singh 's(2) case however was different and was whether where an issue of fact has been tried by a competent court on a former occasion and a finding has been reached in favour of an accused, such a finding would constitute an estoppel or res judicata against the prosecution not as a bar to the trial and conviction of the accused for a different or distinct offence but as (1) ; (2) A.I.R. 1956 S.C. 415. L/P(D)1SCI 5 130 precluding the reception of evidence to disturb that finding of fact when the accused is tried subsequently even for a different offence which might be permitted by the terms of section 403(2). As Pritam Singh 's(1) case was based wholly on the decision of the Privy Council in Sambasivam vs Public Prosecutor, Federation of Malaya(2) it would be necessary to examine the basis of the latter decision. The appellant an Indian Tamil was travelling on foot in the company of two Chinese. They met a party of three Malays. A fight ensued between the two groups in the course of which one of the Chinese was killed. The Malays alleged that they had been fired on by the Chinese and that the appellant had with him a revolver which he had held out and pointed at one of them. In connection with this incident the appellant was charged with carrying a fire arm and being in possession of ten rounds of ammunition. Two charges were framed against the appellant: (1) of carrying a fire arm, and (2) of being in possession of ammunition. He was acquitted of the second charge of being in possession of ammunition and that acquittal became final. He was, later convicted of the offence of carrying a fire arm and the appeal before the Privy Council related to the legality of this conviction. Diverse objections branching into several fields of law were raised before the Privy Council in support of the appeal but what is, however, of relevance now, is the one which related to the admissibility of the evidence of the prosecution witnesses who spoke of the revolver carried by the appellant being loaded with bullets and of the appellant carrying four more bullets in a bag. Their Lordships rejected all the other contentions raised on behalf of the appellant but allowed the appeal on the ground that this evidence regarding the revolver being loaded and of the appellant carrying a bag containing some bullets was inadmissible in law. In dealing with this Lord MacDermott speaking for the Board said: "The effect of a verdict of acquittal pronounced by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence. To that it must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to the adjudication." After pointing out that the prosecution witnesses were permitted to depose regarding the possession of ammunition by the appellant and that it was not possible to exclude the (1) A.I.R. 1956 S.C. 415. (2) 131 effect of this evidence on the prosecution case, their Lord ships held that the appellant was seriously prejudiced by the reception of this evidence and therefore allowed the appeal and directed his acquittal. The point in regard to which the observations in Sambasivam 's(1) case was applied by this Court related to the use of the recovery of a revolver from the accused to sustain his conviction of the offence of murder. Previous to the prosecution for an offence under section 302, Indian Penal Code the appellant before this Court had been tried before the Additional Sessions Judge, Faridpur under section 19(f) of the Indian Arms Act `of an offence for possession of that revolver and had been acquitted. This Court speaking through Bhagwati, J. extracted the observations we have quoted from the judgment of Lord MacDermott and pointed out that on the basis of this decision the evidence relating to the recovery of the revolver from the accused should have been excluded. It was not contended by learned Counsel for the appellant that if the principle laid down by this decision was correct, the acquittal of the respondent by the learned Judicial Commissioner by the order now under appeal was erroneous. The argument, however, was that the observations in Pritam Singh 's(2) case required reconsideration. This submission was rested on two separate lines of reasoning: (1) That the rule in Sambasivam 's(1) case on which Pritam Singh IS (2) case was based had been dissented from by the English Court of Criminal Appeal in R. vs Connelly(3) and that, similarly that principle had been departed from by this Court in Grcharan Singh vs State of Punjab(4). (2) That the principle of Common law which was applied by the Privy Council in Sambasivam 's(1) case could have no application in a jurisdiction like ours where the principle of autre fois acquit is covered by a statutory provision framed on the lines of section 403 occurring in a Code which is exhaustive. As regards the first ground, it must be pointed out that learned Counsel for the State admitted that there was noth ing a Gurcharan Singh 's(4) case which militated against the acceptance of the rule laid down in Pritam Singh 's (2) case. Coming next to the point made regarding the decision of the English Court of Criminal Appeal in R. vs Connelly(3), we should make it clear that the decisions of the English Courts being merely of persuasive authority, decisions of such a (1) (2) (3) A.I.R. 1956 S.C. 415. (4) ; L/P(D)1 SCI 5(a) 132 court even if at variance with one of this Court do not by themselves justify an application to reconsider an earlier decision of this Court. Besides, a close examination of the judgment in R. vs Connelly(1) through which learned Counsel for the State has taken us, does not disclose any dissent from the principle stated by Lord MacDermott. The entire case before the Court turned upon whether there had been a specific finding on an issue of fact an issue directly raised regarding an ingredient of the offence charged at the later trial, when the accused was acquitted by the Court of Criminal Appeal in the former proceeding. Except that the Court did not expressly rule that the principle of issue estoppel applied in England, no exception was taken to its soundness and the decision proceeded on the basis of the facts not justifying the application of the principle, the conditions not being fulfilled. Learned Counsel is, therefore, not well founded in his submission that the principle underlying Sambasivam 's(2) case was dissented from in R. vs Connelly(1). Besides, it should be pointed out that the principle underlying the decision in Pritam Singh 's(3) case did come up for consideration before this Court on several occasions, but it was never dissented from though in some of them it was distinguished on facts. (See Banwari Godara vs The State of Rajasthan(4), Mohinder Singh vs State of Punjab(5) and Kharkan vs The State of Uttar Pradesh(6). These two decisions in R. vs Connelly(1) and Gurcharan Singh vs State of Punjab(7) being out of the way, we shall address ourselves to the question as to whether what is termed "issue estoppel" which has been held by this Court in Pritam Singh 's(3) case to be applicable to criminal proceedings is excluded by reason of the provisions of the Criminal Procedure Code. For this purpose learned Counsel invited our attention to section 5(1) which enacts: "All offences under the Indian Penal Code shall be investigated, inquired into, tried, otherwise dealt with according to the provisions hereinafter contained. " This, however, in our opinion, does not afford any assistance to the argument because Pritam Singh 's(3) case did not introduce any variation in the Code as regards either (3) A.I.R. 1956 S.C. 415. (4) G.A. No. 141 of 1960, d/February 7, 1961. (5) A.I.R. 1965 S.C. 79. (6) A.I.R. 1965 S.C. 83. (7) ; 133 investigation, enquiry or trial. As we have pointed out earlier, issue estoppel does not prevent the trial of any offence as does autre fois acquit but only precludes evidence being led to prove a fact in issue as regards which evidence has already been led and a specific finding recorded at an earlier criminal trial before a court of competent jurisdiction. Learned Counsel next drew our attention to the observations of the Privy Council in Yusofalli Mulla vs The King(1) at page 169 where the following observations occur: "The last point urged by Mr. Page was that even if the case did not fall within the terms of section 403 of the Code of Criminal Procedure the appellant could nonetheless rely on the common law rule that no man should be placed twice in jeopardy." After stating that even for the application of the Common Law rule of double jeopardy the earlier order had to be by a court competent to pass a valid order of acquittal or conviction the judgment proceeded: "This argument therefore fails on the facts, and it is not necessary for their Lordships to consider whether section 403 of the Code of Criminal Procedure constitutes a complete code in India on the subject of autre fois acquit and autre fois convict, or whether in a proper case the common law can be called in aid to supplement the provisions of the section." As we have pointed out, we are not now concerned with any extension of the principle of autre fois acquit but as to the admissibility of evidence which is designed to upset a finding of fact recorded by a competent court at a previous trial. The reasoning of Lord MacDermott in Sambasivam 's(2) case was not the first occasion when this rule as to issue estoppel in a criminal trial was formulated or given effect to. That it is not the same as the plea of double jeopardy or autre fois acquit is also clear from the statement of the law by Lord MacDermott himself. The distinction between autre fois acquit and the objection to the reception of evidence to prove an identical fact which has been the subject of an earlier finding between the parties is brought out in the following passage from the judgment of Wright, J. in The Queen vs Ollis(3): "The real question is whether this relevant evidence of the false pretence on July 5 or 6 ought to have been excluded on the ground that it was part of (1) 176 I.A. 158. ( 2 ) (3) , 768 769. 134 the evidence given for the prosecution at the former trial, at which the prisoner was charged with having obtained money from Ramsey on that false pretence, and was acquitted of that charge. " The learned Judge then went on to point out that if the acquittal at the first trial was based on the negativing of this fact the evidence would be inadmissible but if that acquittal was based on other circumstances the evidence would be admissible. That is why he said: "An objection in the nature of a plea of "autre fois acquit" cannot of course be maintained, because on either indictment the prisoner could not have been convicted of the offences, or any of them, which were alleged in the other indictment. Nor can there be an estoppel of record or quasi of record, unless it appears by record of itself, or as explained by proper evidence, that the same point was determined on the first trial which was in issue on the second trial. " Speaking of this type of estoppel Dixon, J. said in The King vs Wilkes(1): "Whilst there is not a great deal of authority upon the subject, it appears to me that there is nothing wrong in the view that there is an issue estoppel, if it appears by record of itself or as explained by proper evidence, that the same point was determined in favour of a prisoner in a previous criminal trial which is brought in issue on a second criminal trial of the same prisoner. That seems to be implied in the language used by Wright, J. in R. vs Ollis which in effect I have adopted in the foregoing statement. . . There must be a prior proceeding determined against the Crown necessarily involving an issue which again arises in a subsequent proceeding by the Crown against the same prisoner. The allegation of the Crown in the subsequent proceeding must itself be inconsistent with the acquittal of the prisoner in the previous proceeding. But if such a condition of affairs arises I see no reason why the ordinary rules of issue estoppel should not apply. Such rules are not to be confused with those of res judicata, which in criminal proceedings are expressed in the pleas of autre fois acquit and autre fois convict. They are pleas which are (1) C.L.R. 511 at pp. 518 519. 135 concerned with the judicial determination of an alleged criminal liability and in the case of conviction with the substitution of a new liability. Issue estoppel is concerned with the judicial establishment of a proposition of law or fact between parties. It depends upon well known doctrines which control the relitigation of issues which are settled by prior litigation. " This decision was rendered in 1948. The matter was the subject of consideration by the High Court of Australia after the decision in Sambasivam 's(1) case in Marz vs The Queen (2) . The question concerned the validity of a convic tion for rape after the accused had been acquitted on the charge of murdering the woman during the commission of the act. In an unanimous judgment by which the appeal of the accused was allowed, the court said: "The Crown is as much precluded by an estoppel by judgment in criminal proceedings as is a subject in civil proceedings. . The law which gives effect to issue estoppels is not concerned with the correctness or incorrectness of the finding which amounts to an estoppel, still less with the process of reasoning by which the finding was reached in fact. . It is enough that an issue or issues have been distinctly raised or found. Once that is done, then, so long as the finding stands, if there be any subsequent litigation between the same parties, no allegations legally inconsistent with the finding may be made by one of them against the other. " It is, therefore, clear that section 403 of the Criminal Proce dure Code does not preclude the applicability of this rule of issue estoppel. The rule being one which is in accord with sound principle and supported by high authority and there being a decision of this Court which has accepted it as a proper one to be adopted, we do not see any reason for discarding it. We might also point out that even before the decision of this Court this rule was applied by some of the High Courts and by way of illustration we might refer to the decision of Harries, C. J. in Manickchand Agarwala vs The State(3). Before parting, we think it proper to make one observation. The question has sometimes been mooted as to whether the same principle of issue estoppel could be raised (1) (2) ; , 68 69. (3) A.I.R. 1952 Cal. 136 against an accused, the argument against its application being that the prosecution cannot succeed unless it proves to the, satisfaction of the Court trying the accused by evidence led before it that he is guilty of the offence charged. We prefer to express no opinion on this question since it does not arise for examination. As stated earlier, if Pritam Singh 's(1) case was rightly decided, it was conceded that the decision of the Judicial Commissioner was right. The appeal, therefore, fails and is dismissed. Appeal dismissed (1) A.I.R. 1956 S.C. 415.

IN-Abs

In the present case. the trial court held the respondent guilty of the offences under sections 333, 323 and 440 all read with section 149, Indian Penal Code. It was alleged by the prosecution that 'the respondent Bira Singh was a member of the unlawful assembly which was formed between 3 and 5 p.m. on 25th April 1960, in contravention of the promulgation of the order under section 144 of the Code of Criminal Procedure. As a member of the mob he was alleged to have pelted Stones at police officers. The respondent pleaded, in his defence that the present trial was barred by section 403, Criminal Procedure Code by reason of the acquittal of the accused under section 188, Indian Penal Code on July 30, 1960. The Trial court did not accept his defence and convicted him. On appeal, the Judicial Commissioner accepted the defence of the respondent and acquitted him on the bases of the decision of this court in Pritam Singh vs State of Punjab. Before the trial of the present case, a complaint was filed against the respondent on May 12, 1960 under section 188 I.P.C. In that complaint the District Magistrate alleged that the respondent had disobeyed the order passed under section 144 by forming himself alongwith other persons into an unlawful assembly between the hours of 3 and 5 p.m. on April 25, 1960. In that case the trial court convicted him of the offence charged and sentenced him to rigorous imprisonment for 6 months. On appeal the Sessions Judge by his judgment dated July 30, 1960 acquitted the respondent, on the ground that the prosecution had failed to establish that the respondent was present at the place and at the time where the occurrence took place. This acquittal was confirmed by the Judicial Commissioner. Held Sub sections (1) to (3) of section 403 of the Code of Criminal Procedure deal with the trial of an accused for an offence and his conviction therefor. The question raised for decision in Pritam Singh 's case however was different and was whether where an issue of fact has been tried by a competent court on a former occasion and a finding has been reached in favour of an accused, such a finding would constitute an estoppel or res judicata against the prosecution not as a bar to the trial and conviction of the accused for a different or distinct offence but as precluding the reception of evidence to disturb that finding of fact when the accused is tried subsequently even for a different offence which might be permitted by the terms of section 403 (2). It would not be correct to say that the principle underlying in Sambasivan 's case was dissented from in R. vs Connelly. Besides, it should be pointed out that the principle 124 underlying the decision in Pritam Singh 's case did come up for consideration before this Court on several occasions, but it was never dissented from though in some of them it was distinguished on facts. Pritam Singh vs State of Punjab, A.I.R. 1956, S.C. 415, R. vs Connelly, and Sambasivam vs Public Prosecutor, Federation of Malaya, , relied on. Gurcharan Singh vs State of Punjab, A.I.R., , referred to. State of Bombay vs section L. Apte, ; , Banwari Godara vs The State of Rajasthan, Cr. A. No. 141 of 1960 dated February 7, 1961, Mohinder Singh vs State of Punjab, A.I.R. 1965 S.C. 79, Kharkan vs The State of Uttar Pradesh, A.I.R. 1965 S.C. 83, Yusofalli mulla vs The King. 76 I.A. 158, referred to. (ii) The rule of issue estoppel does not prevent the trial of an offence as does author fois acquit but only precludes evidence being led to prove a fact in issue as regards which evidence had already been led and a specific finding recorded at an earlier criminal trial before a court of competent jurisdiction. The rule of issue estoppel is not the same as the plea of double jeopardy or autre fois acquit is also clear from the statement of the law by Lord Mac Dermott in Sambasivam 's case. (iii) It is clear that section 403 of the Criminal Procedure Code does not preclude the applicability of this rule of issue estoppel. The rule being one which is in accord with sound principle and supported by high authority and there being a decision of this court in Pritam Singh 's case which has accepted it as a proper one to be adopted, there is no reason for discarding it. The Queen vs Ollis, The King vs Wilkes, ; , Marz vs The Queen, ; and Manick chand Agarwall vs The State, A.I.R. 1952 Cal. 730 relied on.

Appeal No. 316 of 1962. Appeal from the judgment and order dated January 2, 1959 of the Madhya Pradesh High Court (Indore Bench) at Indore in Civil Misc. Case No. 20 of 1955. M. C. Setalvad, G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. B. Sen and I. N. Shroff, for the respondents. February 20, 1964. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave against the judgment of the Madhya Pradesh High Court. It raises the question of the validity of certain provisions of the Indore Industrial Tax Rules, 1947, (hereinafter referred to as the Tax Rules) and assessments made thereunder for the years 1940 to 1948. The appellant is a cotton mill and in 1927 a tax was imposed on cotton mills in Indore in Holkar State by the then Ruler in respect of profits, gains and income of such mills. This was done under the Tax Rules promulgated by the Ruler of Indore. The procedure under 860 the Tax Rules provided for a board of assessing officers. The orders of the board were open to appeal to the Member in charge of Commerce and Industry Department. There after a second appeal was provided to the Government. Rule 17 of the Tax Rules further provided that the power of mak ing rules was vested in the Government and such power shall. except on the first occasion of exercise thereof, be subject to the condition of previous publication. Rule 18 provided that Rules made under r. 17 shall be published in the State Gazette and thereafter shall have the force of law. Rule 19 provided that the Member in charge of Commerce and Industry Department shall have power to make subsidiary rules not inconsistent with the Tax Rules. On May 28, 1948, the Holkar State merged to form the State of Madhya Bharat. On July 19, 1948, the State of Madhya Bharat acceded to India. Ordinance No. 1 of 1948 was promulgated by the Rajpramukh of the new State of Madhya Bharat to provide for the peace and good government of the State. This Ordinance was superseded by Act 1 of 1948 which came into force on December 13, 1948. Section 4 of the Act provided for the continuance of the existing laws of any covenanting States or of any State which merged in the State of Madhya Bharat until repealed or amended under the provisions of the Act. Section 5 of the Act provided that the Government may by notification published in the Government Gazette make regulations for the peace and good government of all the territories which had already been included in the new State or which may be included in it under the provisions of section 3 of the Act. Such regulations were to have the force of law unless they were repugnant to any Act or law or Ordinance made by the Rajpramukh, in which case to the extent of their repugnancy they would be void. Further it was provided that such regulations may repeal or amend any law already in force in any State before its administration was taken over or before it was, as the case may be, merged in the new State. Finally the section provided that the right of the Rajpramukh to make Ordinances for the peace and good government of the new State or of the States which may become merged in the said State would remain unaffected In view of the merger of the Holkar State into the State of Madhya Bharat, some of the provisions of the Tax Rules 861 had to be changed to bring them into line with the new set up. Consequently, on December 28, 1949, the Government of Madhya Bharat issued a notification under r. 18 of the Tax Rules purporting to make rules under r. 17 thereof. These rules made certain amendments in the Tax Rules. It is not necessary to refer to all the amendments as we are concerned here only with three amendments. The first amendment was that instead of the board making the assessment. the assessment was to be made by an assessing officer. The second amendment was that the appeal from the assessing officer was to be heard by an officer appointed from time to time by the Minister in charge of the Finance Department in place of the Member in charge of Commerce and Industry Department. The third amendment was with respect to second appeals. The amendment provided that instead of the Government hearing second appeals which under the old provision lay both on facts and law, second appeals there after were to be heard on a point of law by the High Court. Then came the Constitution of India on January 26, 1950 and the State of Madhya Bharat became one of Part B States. In the Finance Act No, 25 of 1950, which came into force from April 1, 1950 and applied to Madhya Bharat also, a provision was made that any law relating to income tax or super tax or tax on profits of business in any part B State shall cease to have elect except for the purpose of levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purpose of assessment under the Indian Income Tax Act, No. XI of 1922 for the year ending on March 31, 1951 or for any subsequent year or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before March 31, 1949. The effect of this was that the Tax Rules came to be repealed from after the accounting year ending on March 31, 1949. and assessment could only be made under the Tax Rules upto the end of the accounting period ending on or before March 31, 1949. A further provision was also made in the Finance Act, 1950, that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the Income Tax Act. The result of this provision was that even the assessments 862 for the years previous to the accounting year ending on March 31, 1949 could only be made by the corresponding authorities under the Income Tax Act, and the appeals would be to the corresponding authorities under the Income Tax Act; no levy and assessment could be made by the authorities under the repealed law and no appeal would lie to the autho rities or court under that law. It seems however that this provision of the Finance Act as to the authorities competent to make assessments was lost sight of with the result that assessments were made for the years in dispute in the present appeal which are all before the accounting year ending on March 31, 1949, by the authorities under the Tax Rules, as they were before their repeal. Consequently when this mistake was discovered, Parliament passed the Madhya Bharat Taxes on Income (Validation) Act, No. 38 of 1954 (hereinafter referred to as the Validating Act), section 3 of which provided that " notwithstanding anything contained in the first proviso to sub section (1) of section 13 of the Finance Act, all proceedings taken, assessments made and other acts and things done (including orders made) by or before any officer, authority, tribunal or court acting or purporting to act under the relevant Madhya Bharat law in connection with the levy, assessment and collection of any tax due, under any such law in respect of the relevant period shall be deemed always to have been valid and shall not be called in question on the ground only that such proceedings were not taken, assessments were not made or acts or things were not done by or before the corresponding officer, authority, tribunal or court referred to in the said proviso. " Section 4 of the Validating Act further provided that "if immediately before the commencement of this Act, any proceedings of the nature referred to in section 3 are pending before any officer, authority, tribunal or court acting or purporting to act under the relevant Madhya Bharat law, such proceedings may, notwith standing anything contained in the first proviso to sub section (1) of section 13 of the Finance Act, be continued and completed in accordance with the provisions of the re levant Madhya Bharat law, and the provisions of the said proviso shall not apply, and shall be deemed never to have applied, in relation to any such proceedings. " What had happened in the present case and in some other cases relat ing to laws which corresponded to the Indian Income tax 863 Act was that the authorities under the Tax Rules made assessments in spite of the provisions in the Finance Act by which such assessments should thereafter have been made by the corresponding authorities under the Indian Income Tax Act, state and that is why the Validating Act had to be passed. The appellant challenged the validity of the assessments made against it under the Tax Rules by a writ petition filed in the Madhya Bharat High Court in 1955, on the following grounds: (1) The amendments of the Tax Rules on December 28, 1949 were invalid as such amendments could not be made under r. 17 of the Tax Rules, as was purported to be done. (2) Even if the amendments made on December 28, 1949 were good, they could not have retroactive effect and could not take away the vested right of appeal. (3) As after the Finance Act, 1950, assessments were made by the old officers appointed under the Tax Rules and not by the corresponding officers under the Indian Income Tax Act, the assessments were invalid and the Validating Act could not validate them (firstly) because the Validating Act itself was discriminatory and was hit by article 14 and (secondly) because in any case it did not apply to the present assessments. The High Court repelled all the contentions raised on behalf of the appellant and dismissed the writ petition. Thereupon the appellant applied to the High Court for a certificate of fitness, which was granted; and that is how the appeal has come up before us. We propose to deal with the points raised in the order in which they have been set out above. (1): The first question is about the validity of the amendments made in the Tax Rules on December 28, 1949. It is true that the notification by which amendments were made purports to have been published under r. 18 of the Tax Rules read with r. 17. The argument on behalf of the appellant 864 is that r. 17 of the Tax Rules must be treated on a par with provisions in a statute which provide for framing of rules, and these rules are subordinate legislation made for carrying out the purposes of the statute, and the power to frame such rules does not include the power to modify the parent law under which the rules have to be framed. We do not think it necessary for present purposes to consider this argument, for we are of opinion that the amendments which were made in the Tax Rules on December 28, 1949 can be justified on the basis of Act 1 of 1948, which was passed on December 13, 1948 by the Rajpramukh. That Act, as already indicated, provided by section 5 that the Government, by notification published in the Government gazette, may make regulations for the peace and good government of all the territories which had been included in the State of Madhya Bharat or which may be included in it under the provisions of section 3 of the Act. It also provided for the repeal or amendment by regulation of any law already in force in any State before its administration was taken over or before it was. as the case may be, merged in the United States. The Government had therefore the power to amend the Tax Rules under section 5(1) read with section 5 (3) of Act 1 of 1948. The notification of December 28, 1949 by which the amendments were made was published in the gazette of the Madhya Bharat State and the amendments were made by the Government. It is true that in the opening part of the notification it is said that the amendments were made under r. 17 of the Tax Rules; but that in our opinion would not conclude the matter, for if the Government had the power to make amendments under Act 1 of 1948, the amendments in the Rules could be justified under that power in spite of the wrong words used in the opening part of the notification of December 28, 1949. It is well settled that merely a wrong reference to the power under which certain actions are taken by Government would not per se vitiate the actions done if they can be justified under some other power under which the Government could lawfully do these acts. It is quite clear that the Government had the power under section 5 (1) and (3) of Act 1 of 1948 to amend the Tax Rules, for that was a law in force in one of the merged States. The only mistake that the Government made was that in the opening port of the notification section 5 of the Act was not referred to and the noti 865 fication did not specify that the Government was making a regulation under Act 1 of 1948. But that in our opinion would make no difference to the validity of the amendments if the amendments could be validly made under section 5 of Act J of 1948. It is not disputed that the amendments could be validly made under section 5 of Act 1 of 1948. We are therefore of opinion that the mere mistake in the opening part of the notification in reciting the wrong source of power does not affect the validity of the amendments made. It is urged that the Government knew that it could only make regulations under section 5 and it had made regulations under section 5 of Act 1 of 1948 in certain cases. Even if that be so, there can in our opinion be no doubt about the validity of the amendments made if the Government had power to make them, even though there was a mistake in the opening part of the notification publishing the amendments. All that section 5 of Act 1 of 1948 requires is the, publication of the regulation made thereunder and its being made by Government; and that has been complied with in this case. There is no other formality required for making a regulation and we are them fore of opinion that even though there was a mistake in the opening part of the notification of December 28, 1949, the amendments made in the Tax Rules can be upheld under section 5 of Act 1 of 1948 as a regulation. We therefore reject the contention under this head. (2): Then it is urged that even if the amendments to the Tax Rules are good, they could not affect vested rights of appeal provided under the old law before the amendments and therefore insofar as the amendments affect this vested right, they are of no effect. Now it is well settled that even a vested right of appeal can be taken away by express legislation or by legislation which, though it may not expressly repeal the vested right of appeal, has the effect of such repeal by necesary implication. We have already pointed out that in view of the coming into existence of the new State of Madhya Bharat, amendments to the Tax Rules had become necessary in order to bring them into line with the structure of the now State. The three main amendments made in the Tax Rules have already been set ' out by us. ' Learned counsel for the 134 159 S.C. 55 866 appellant does not attack two of them, namely, those relat ing to the assessment officer and the first appeal provided by the amendments. The attack is on the amendment of r. 13 of the Tax Rules providing for a second appeal. Under the old Rules, a second appeal lay to the Government both on fact and law; under the new law, it lay to the High Court only on a question of law. The quarrel is not with the forum of the second appeal; what is urged is that the new rule does not allow a second appeal on a question of fact while the old rule did. That is undoubtedly so. But con sidering the set up in which the amendments had to be made, it seems to us that even if the new rule cannot be read as an express provision taking away the right of second appeal on facts, it must in the circumstances be held that it does take away that right by necessary intendment. The new rule provided for a second appeal like the old rule but confined it to a question of law. The necessary implication of the new rule therefore was that though a second appeal will con tinue to lie as before its scope was cut down only to questions of law. We are therefore of opinion that though the right of second appeal on facts is taken away by the new rule 13 inserted in the Tax Rules, such right is taken away by legislation by necessary intendment. In the circumstances we are of opinion that the right of second appeal after the amendment must be confined in all cases by necessary intendment to questions of law only. The contention under this head also fails. (3): Coming now to the last point with respect to the Validating Act, we have not been able to understand how the Validating Act can be said to be discriminatory in nature. A Validating Act is passed only when certain things have been done which require validation. This is exactly what the present Validating Act has done and we fail to see on what grounds it can be said to be discriminatory. Even when the Finance Act of 1950 was passed it would have been open to Parliament to leave the old assessments to be carried on under the old procedure and by officers appointed under the old law and such action could not be called discriminatory. for the simple reason that the old assessments 867 stand on a different footing from new assessments after the new law comes into force. It is true that Parliament provided otherwise in this case and the Finance Act of 1950 said that the old assessments would be carried on by the corres ponding officers under the Indian Income Tax Act, By mistake however that provision was overlooked and the old assessments were made by the old officers under the old law. All that Parliament did by the Validating Act was to allow the old assessments to be made under the procedure provided under the old law and we can see no discrimination in the Validating Act on account of this fact. We are therefore of opinion that the Validating Act is not hit by article 14. Further we have not been able to understand how the valida tion is of no effect so far as the present cases are concerned. The present cases are with reference to years 1940 48, that is before the accounting year ending on March 31, 1949. The assessments in these cases were carried on by the old officers under the old law and the Validating Act specifically validates such assessments. In these Circumstances we have not been able to understand how it can be said that these assessments have not been validated by the Validating Act. The contention under this head must therefore also fail. The appeal fails and is hereby dismissed with costs. Appeal dismissed.

IN-Abs

The appellant, a Cotton Mill in Indore in Holkar State was taxed in respect of profits, gains and income under the Indore Industrial Tax Rules, 1927 by the then Ruler of Indore. The Holkar State merged into the State of Madhya Bharat which acceded to India. The Rajpramukh of the new State promulgated an Ordinance No. 1 of 1948 to provide for peace and good Government of the State. This Ordinance was superseded by Act 1 of 1948. Thereafter on December 28, 1949, me Government issued a Notification under r. 18 of the Tax Rules purporting to make rules under r. 17 thereof. These rules made certain amendments in the Tax Rules. The State of Madhya Bharat became one of the Part B States on January 26, 1950. From April 1, 1950, Finance Act No. 25 of 1950 came into force and applied to Madhya Bharat also. According to its provision, the Tax Rules came to be repealed from after the accounting year ending on March 31, 1949 and assessments could only be made under the Tax Rules upto the end of the accounting period ending on or before March 31, 1949. It further provided that even the assessments for the years previous to the accounting year ending on March 31, 1949 could only be made by the corresponding authorities under the Income tax Act, and that appeals would lie to the corresponding authorities under the Income tax Act; no levy and assessment could be made by the authorities under the repealed law and no appeal would lie to the authorities or Court under that law. This provision as to the authorities competent to make assessments was lost sight of with the result that assessments were made for the years in dispute which were all before the accounting year ending on March 31, 1949 by the authorities under the Tax Rules, as they were before their repeal. When this mistake was discovered, Parliament passed the Madhya Bharat Taxes on Income (Validation) Act, No. 38 of 1954. The appellant then challenged the validity of the assessments under the Tax Rules, on the grounds: (1) that the amendments of the Tax Rules on December 28, 1949 were invalid as such amendments could not be made under r. 17 of the Tax Rules, as was purported to be done; (2) even if the amendments were good, they could not have retroactive effect and could not take away the vested right of appeal; (3) as after the Finance Act, 1950, assessments were made by the old officers appointed tinder the Tax Rules and not by the corresponding officers under the Income tax Act, the assessments were invalid and the Validating Act could not validate them because, (i) the Validating Act itself was discriminatory and was hit by article 14, and (ii) because in any case it did not apply to the present assessments. The High Court repelled all these contentions and dismissed the writ petition. On appeal by certificate this Court, Held: (i) The amendments which were made in the Tax Rules on December 28, 1948, could be justified on the basis of Act 1 of 1948. All that section 5 of Act 1 of 1948 requires is the publication of the 859 regulation made thereunder and their being made by Government, and that has been complied with in this case. There is no other formality required for making regulations and therefore, even though there was a mistake in the opening part of the Notification of December 28, 1949, the amendments made in the Tax Rules can be upheld under section 5 of Act 1 of 1948 as regulations. (ii) Even a vested right of appeal can be taken away by express legislation or by legislation which, though it may not expressly repeal the vested right of appeal, has the effect of such repeal by necessary implication. Though the right of second appeal on facts is taken away by the new rule 13 inserted in the Tax Rules, such right is taken away by legislation by necessary intendment. Therefore, the right of second appeal after the amendment must be confined in all cases by necessary intendment to questions of law only. (iii) The Validating Act is not hit by article 14. The present cases are with reference to years 1940 48, that is before the accounting year ending on March 31, 1949. The assessments in these cases were carried on by the old officers under the old law and the Validating Act specifically validates such assessments. In these circumstances it cannot be said that these assessments have not been validated by the Validating Act.

minal Appeal No. 179 of 1961. Appeal by special leave from the judgment and order dated October 31, 1960, of the Andhra Pradesh High Court in Criminal Appeal No. 161 of 1960. K. R. Chaudhuri, for the appellant. A. section R. Chari, B. R. G. K. Achar, and R. N. Sachthey, for the respondent. March 16, 1964. The following judgments were delivered SARKAR, J. This is an appeal from a sentence of imprisonment for life imposed on the appellant upon his conviction for the offence of the murder of his wife. The appeal was filed with the special leave of this Court granted under article 136 of the Constitution but the appellant died pending the appeal. His legal representatives now seek leave to continue the appeal. There would seem to be authority for the proposition that revision petitions and some appeals from sentences of fine might be continued by his legal representatives on the death 254 of the accused pending the proceeding: see section 431 of the Code of Criminal Procedure and Pranab Kumar Mitra vs The State of West Bengal(1). It appears that in England appeals from similar sentences are permitted to be continued by the executors of the deceased appellant: see Hodgson vs Lakeman(2). It is true that neither section 431 nor the cases mentioned can be said to apply to the present case proprio vigore, for the present is not an appeal under the Code which is dealt with by section 431 nor is it a revisional application like the one which came up for consideration in Pranab Kumar Mitra 's case, while as for the English case, it is only of persuasive value. All the same however I think it must now be held that appeals from sentences of fine may be permitted to be continued by the legal representatives of the deceased appellant. First, I find no, provision making such appeals abate. If they can be continued when arising under the Code, there is no reason why they should not be continued when arising under the Constitution. If revision petitions may be allowed to be continued after the death of the accused so should appeals, for between them no distinction in principle is possible for the purpose of continuance. It is true that the Code of Criminal Procedure which creates the revisional powers of a Court provides that such powers may be exercised suo motu but it does not seem to me that Pranab Kumar Mitra 's case(1) was based on this for on that ground all revision cases should have been permitted to be continued and the permission should not have been confined to cases of fine. Indeed in that case this Court proceeded on the basis that there was no statutory provision applying to the case. It observed, "even in the absence of any statutory provisions, we have held. . . that the High Court has the power to determine the case even after the death of the convicted person, if there was a sentence of fine also imposed on him, because that sentence affects the property of the deceased in the hands of his legal representative". A sentence of fine affects property equally when the case is taken further up in appeal or in revision, If it is just and proper to continue the hearing in one case after the death of the accused, it would be equally so in the other case. The principle on which the hearing of a proceeding may be continued after the death of an accused would appear to be the effect of the sentence on his property in the hands of his legal representatives. If the sentence affects that property, the legal representatives can be said to be interested in the proceeding and allowed to continue it. A sentence of fine no doubt affects the property. In the present case, however, the sentence was not of fine but of imprisonment which on the death of the accused has become (1) (2) [1943] L.R.K.B. 15. 255 infructuous. There is no one now who can be imprisoned. It is, however, said that though that sentence can no longer be executed, it still affects the property of the deceased and the legal representatives are, therefore, interested in the appeal and should be permitted to continue it. The matter is put in this way. The appellant, who held a high office in the Government of Andhra Pradesh had been suspended during the investigation of the charge against him and he was dismissed from service under certain service rules on his conviction. During this time the appellant had only been given a small allowance. It was said that if the conviction was set aside, the estate would be entitled to receive the full salary from the Government. It seems to me that this contention is not accurate. It may be that if the sentence is set aside that may assist the legal representatives in their effort to obtain the full salary to which the deceased 's estate would have been entitled. But the effect of the sentence imposed in this case being set aside would not directly entitle the legal representatives to the salary. They will have to obtain necessary orders from the Government for the purpose. It has not been shown to us that such order will automatically follow the setting aside of the conviction. Neither has it been shown that the legal representatives cannot move the Government to pass such orders on the ground that the correctness of the conviction could not be tested because of the death of the appellant. For these reasons I am unable to hold that tire justice of the case requires that the legal representatives of the deceased should be permitted to continue the appeal. It would be extending the principle applied to the case of a sentence of fine, if on the basis of it this appeal was allowed to be continued by the legal representatives after the death of the appellant and for such an extension I find no warrant. In my view, for these reasons the legal representatives are not entitled to continue the appeal. That being so and as the sentence was one of imprisonment which would not affect anyone after the death of the accused, it cannot be said that there is anyone interested in the appeal. There is no, question, therefore, in such a case for proceeding further with the appeal. HIDAYATULLAH, J. The appellant was convicted under section 302 of the Indian Penal Code and sentenced to imprisonment for life by the High Court of Andhra Pradesh. He was granted special leave to appeal by this Court. During the pendency of this appeal the appellant died on August 30, 1963. After his death his sons and daughters applied to this Court on October 5, 1963 for permission to continue to prosecute the appeal. Their petition is all that we are concerned with at the present moment. The appellant was working as Superintending Engineer (Electricity) in the service of the Government of Andhra Pradesh. The case against him was that on August 10, 1959 he 256 committed the murder of his wife by shooting her in the back with a revolver. He was acquitted by the Sessions Judge of Krishna Division, Masulipatnam but, on appeal by the State Government the order of acquittal was set aside and he was convicted and sentenced as above. In view of the appellant 's death we are of course not interested any further in considering the details of the offence, if any, unless we allow the heirs of the appellant to prosecute the appeal after his death and this is precisely what the present petitioners claim they are entitled to do. It is admitted, however, that no analogous contention was ever raised in this Court, though appeal on the death of a sole appellant were, before this, treated as abated. One would expect that an appeal of this character would normally abate on the death of the appellant because a criminal prosecution is concerned primarily with the punishment of an offender and not with the trial of an abstract issue about the truth or falsity of a prosecution case. The maxim actio perso nalis moritur cum persona is often invoked in this behalf. The Criminal Procedure Code in section 431 also provides that all appeals filed under section 41 I A sub section 2 or section 417 shall finally abate on the death of the accused and every other appeal under Chapter XXXI shall finally abate on the death of the appellant, except an appeal against a sentence of fine. The section cannot cover a, case such as the present because this appeal was not filed under any of the sections mentioned in section 431 or under Chapter XXXI. It is contended that without the aid of a provision like section 431, Criminal Procedure Code, the appeal must be treated as continuing and it is pointed out that for this reason and for the additional reason that the powers of revision can be exercised suo motu this Court allowed legal representatives t` continue to prosecute criminal revisions under section 439 of the Code in Pranab Kumar Mitra vs The State of West Bengal and Another(1) and Pritam Singh vs The State(2). It is urged that on a parity of reasonig this appeal can be continued by the heirs. It is not my purpose to consider, whether in the absence of any direct injury to the living every criminal proceeding must come to an end after the death of the accused whether before his conviction or after. But there must always be some discernible reason for permitting another person to continue an appeal whether civil or criminal after the death of the appellant. An appeal is not a heritable asset and does not revolve as a matter of course upon an executor or heir. Even under the civil law an express provision is required for substitution of another person in the place of the person deceased before the appeal can be continued and this is again subject to whether the cause of action survives or not. The same principle is again to the (1) (2) ; 257 forefront in section 431 when it allows an appeal in respect of fine to be continued but not appeals involving imprisonment. The intention there too appears to be to afford only those persons a right whose interests are directly jeopardized by the judgment. In so far as personal punishment (other than a fine) is concerned that stands dissolved by the death of the offender and an appeal to get that punishment set aside becomes infructuous and abates. The only question in this case is whether the principle laid down in the two cases of this Court cited above should govern special appeals or the principle underlying section 431. It may be said at once that the former is not a direct precedent applicable to the present matter because there is no analogy between an appeal by special leave and a revision under the Code. The latter can be suo motu but not the former. The petitioners claim that the father, if he were acquitted, would have been entitled to claim his pay for the period upto his death since on his conviction he was removed from service by the Government and the amount thus involved is Rs. 40,000/ . The petitioners say that if the appeal were now allowed they would be able to ask for this amount and in this way claim an interest in the appeal. This is not a case where the legal representatives after the death of the offender have to meet the liability of a fine or are required to protect the assets which they claim should reach them. This is a case where the petitioners claim to have the judgment of the High Court reexamined so that they may be able to prefer a claim to the salary to which their father would have been entitled if he had been acquitted of the criminal charge. In my judgment. no claim of the petitioners is jeopardized directly by the judgment. Their claim is dependent upon the administrative action of Government which may not proceed upon the result of the criminal prosecution. In other words, the claim on the strength of which the present petitioners seek to join in this appeal is too remote and not directly consequential upon the issue to be tried. The appeal was only concerned with the correctness, or otherwise of the conviction and not with any monetary claims depending upon the result of the appeal. In such a situation the ordinary rule that a criminal proceeding against a person comes to an end on his demise must apply also to special appeals in this Court, such as this, even though the provisions of the Criminal Procedure Code may not be directly applicable. At the hearing counsel cited cases from the English Courts and the Supreme Court of the United States. The English cases referred to are collected in Short & Mellor 's Practice of the Crown Office and Griffith 's Guide to Crown Practice and the cases of the United States are referred to in Annotations. L/P(D)ISCI 9 . 258 in 87 Lawyer 's Edition 1234 and 1 Lawyer 's Edition II Series 1879. The English practice appears to be that there must be a, direct monetary liability attaching to the living by reasons of the impugned judgment before they can be allowed to continue an appeal filed by a dead person. See Hodgson vs Lakeman(1) and Regina vs Rowe(2). The American practice also appears to be the same. There is good reason for holding that a criminal prosecution in which the State is anxious to bring an offender to book with a view to getting him punished for a crime comes to an end on the death of the person arraigned. The same principle must apply also to appeals after conviction, except in so far as a judgment already rendered touches assets which would come to the legal representatives or the executor as the case may be. Beyond this it is not possible to conceive of remoter interests because if the law were to take into account such remote interests every appeal would have to be continued after the death of the appellant. In my judgment, the present petitioners do not claim any direct interest and the appeal must, therefore, be taken to have abated. I agree that the petition be dismissed and the appeal held to have abated. MUDHOLKAR, J. This appeal raises an interesting and important question. It is whether the heirs at law of a deceased person who had brought an appeal to this Court by special leave in which he had challenged his conviction and sentence for an offence, are entitled to prosecute the appeal after his death during the pendency of the appeal. The applicants are the children of the deceased who was a Superintending Engineer (Electricity) in the service of the Government of Andhra Pradesh. He was charged with an offence under section 302, Indian Penal Code for having committed the murder of his wife by shooting her with a revolver. During the investigation of the offence he was placed under suspension with effect from August 10, 1959 and was allowed subsistence allowance for some time. His defence at the trial was that while his wife was picking up the revolver from the teapoy on which he had kept it, suspecting that he would shoot himself with it, it went off accidently and killed her. This defence was accepted by the Sessions Judge and he was acquitted. On appeal by the State the High Court of Andhra Pradesh set aside the acquittal and convicted him of an offence under section 302, I.P.C. and sentenced him to undergo imprisonment for life. He thereupon sought and obtained special leave from this Court to prefer an appeal. During the pendency of the appeal he died. According to the applicants a sum of Rs. 40,000/ would be due to the deceas ed, being the difference between the subsistence allowance actually paid by the Government to him and the total emolu ments that would have been payable to him from the date of (2) (1) 259 suspension till his death and that they as his legal heirs would be entitled to act this amount in case the conviction and sentence are set aside by this Court. In support of his contention that the appeal has not abated by reason of the death of the appellant Mr. K. R. Chaudhuri points out that section 431 of the Code of Criminal Procedure (hereafter referred as the Code) which speaks about appeals is limited in its application to appeals under Ch. XXXI of the Code and would not fetter the powers of this Court under article 136 of the Constitution to hear an appeal brought before it by special leave even though the person who brought it is no longer alive. It is no doubt true that section 431 of the Code only says that appeals under section 411A, sub section (2) and section 417 shall finally abate on the death of the accused and every other appeal under Chapter XXXI except an appeal from a sentence of fine shall finally abate on the death of the appellant. It does not, therefore, in terms apply to an appeal permitted to be preferred by this Court in exercise of its discretion under article 136 of the Constitution. The argument of Mr. Chaudhuri is that the power conferred upon this Court by article 136 is wide and discretionary and is analogous to that conferred upon the High Court by section 439 read with section 435 of the Code. Therefore, upon an analogy of the decision of this Court in Pranab Kumar Mitra vs The State of West Bengal and another(1) this Court has the power to hear the appeal and to permit the applicants to prosecute it. He does not contend that the applicants have a right to be brought on the record in place of the deceased appellant but submits that to meet the ends of justice it would be right and proper to permit the applicants to prosecute the appeal because if it succeeds they will be able to claim from the Government the arrears with respect to salary due to their deceased father from the Government. It seems to me that the decision upon which reliance has been placed has no bearing upon an appeal brought to this, Court by special leave. It is no doubt true that the power conferred by section 435 of the Code on the High Court and certain other courts and by article 136 of the Constitution on this Court is discretionary. In so far as the High Court and certain other courts are concerned the discretion is to call for and examine any record of any proceeding before an inferior criminal court situate within the local limits of its jurisdiction for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order passed by the inferior court and as to the regularity of any proceeding of such court. Under section 435 these courts have power to act in this manner suo motu and section 440 provides that no party has a right to be heard either (1) [1959] Supp. 1 S.C.R. 63. L/d)D)ISCI 9,a) . 260 personally or by a pleader before such court, with one exception. That exception is that the High Court cannot make an order under section 439 of the Code to the prejudice of an accused person unless he is given an opportunity of being heard either personally or by pleader in his defence. When the record comes before the High Court it may in its discretion exercise any of the powers conferred on a Court of appeal by sections 423, 426, 427 and 428 or on a Court by section 338 and has also the power to enhance the sentence. Article 136 of the Constitution confers discretion upon this court whether to grant special leave or not. But this Article does not confer any power upon this Court to call for the record of any court or tribunal suo motu for the purpose of examining it and making an appropriate order. It only empowers this Court to grant leave to a person to bring his appeal before it and afford him an opportunity of showing such error as may be existing in the judgment or order appealed from. There is a fundamental difference bet ween a power which is exercisable by a Court suo motu and a power which can be exercised only when it is moved in that behalf by a party. For the exercise of suo motu power the appearance of a, party before the Court concerned is not a prerequisite. Indeed as section 440 provides, it is for the Court to decide whether or not to allow the party to appear before it and be heard. But of course the principle of natural justice would preclude a court even in such a case from making an order to the prejudice of a party without giving the party an opportunity to be heard. In so far as an appeal is concerned, by whichever way it is brought, whether as of right conferred by a provision in the Constitution or by any other law or by special leave the appellant has a right to be heard and a right to prosecute the appeal. A Court exercising suo motu powers may choose at any stage to drop the proceeding and not proceed to examine the records at all. But as long as an appeal is pending before a Court and there is a person legally competent to prosecute it and there is no legal impediment to its being heard, the Court has no discretion to refuse to go on with the appeal even though initially it may have been brought before it by its leave. As soon as the leave is granted a right accrues in favour of the party who has been granted leave. It may be that where this Court finds that leave has been improperly obtained or given it may revoke the leave. But that is quite different from saying that without revoking the leave it can drop the appeal. This distinction between revisional powers and appellate powers has been adverted to in the decision relied upon(1) at p. 70. Sinha, J. (as he then was) has observed: "The revisional powers of the High Court vested in it by section 439 of the Code, read with section 435, do not create any right in the litigant, but only conserve the power of the High Court to see that justice is (1) [1959] Supp. 1 S.C.R. 63. 261 done in accordance with the recognized rules of Criminal Jurisprudence, and that subordinate criminal courts do not exceed their jurisdiction, or abuse their powers vested in them by the Code. On the other hand, as already indicated, a right of appeal is a statutory right which has got to be recognized by the courts, and the right of appeal, where one exists, cannot be denied in exercise of the discretionary powers even of the High Court. " Thus, when the special leave granted by this Court has not been revoked it can exercise with respect to the appeal before it what may be called appellate powers. While hearing an appeal from the decision of a High Court, this Court will, therefore, be competent to exercise only such powers as the High Court itself could exercise in relation to the appeal. In so far as the procedure for hearing a criminal appeal by special leave is concerned this Court has framed certain rules. Order XXI of Supreme Court Rules, 1950 contains those rules. Rule 23 of that Order provides for the entering of appearance by parties in the appeal. Rule 24 provides for the filing of statements of case by the parties. Rule 25 provides for setting down the appeal for hearing. Rule 26 empowers the Court to direct the engagement of an Advocate at the cost of the Government in a proper case where the accused person is not represented by an Advocate 'on record of his choice. Rule 27 provides for giving a notice to the accused where he is not represented on the date fixed for the hearing of the appeal and permits the accused person if he so wishes to present his case by submitting his argument in writing and provides for the consideration of the written argument at the hearing. Sub rule (2) of that rule dispenses with necessity of production of the accused person in custody at the hearing of the appeal. There is no express rule which states as to what has to be done where the accused person who is an appellant is not present or represented at the hearing of the appeal. Order XLV, rule 5, however, preserves the inherent power of the Court to make such orders as may be necessary to meet the ends of justice or to prevent the abuse of the process of the Court. Thus this Court has the power to prevent the abuse of its process and it will be an abuse of its process if the appellant despite service of notice of the date of hearing chooses to remain absent at the hearing. Now, just as the Court can, under r. 18 of 0. XXI dismiss an appeal for non prosecution where the appellant refuses to take the necessary steps for bringing the appeal to hearing, it must be deemed to have similar power to dismiss it where the appellant is not present or is not represented. Where the absence of the appellant is due to the fact that he is dead it would still be a case of non prosecution and, therefore, this Court would have the right and the duty to dismiss the appeal. Since the power 262 to prosecute the appeal inhered in the appellant alone, no one: else can claim to exercise it unless the law conferred such a right upon that other person. This the law may do expressly as. it has done in 0. XXII of the Code of Civil Procedure or impliedly as it has done in section 431 of the Code. Apart from the fact that in a criminal matter the issue is personal between the accused person and the State the fact remains that the right of appeal is also personal to the appellant. It cannot be allowed to be exercised by another unless there is some provision in law which would permit it to be exercised or unless such a course is permissible by reference to a principle. There is admittedly no express provision permitting the substitution of the legal representatives of a deceased appellant in a criminal appeal brought to this Court by special leave. We have, however, to bear in mind the policy of the law as enacted in section 431 of the Code. The policy is that every criminal appeal under chapter XXXI will abate except an appeal from a sentence of fine. Thus, instead of there being any principle on the strength of which the legal heirs of a person could be allowed to prosecute after his death an appeal brought by him challenging his conviction and sentence of imprisonment the policy of the law is definitely opposed to it. Moreover, only a person who can properly represent a deceased appellant can be allowed to be brought on record in his place and prosecute the appeal. That is the principle upon which the provisions of 0. XXII of the Code of Civil Procedure are based. That again is the principle followed by the Courts in England in allowing appeals in which the challenge was to a fine imposed upon the appellant to be continued by the executors and administrators of the deceased appellant. As an instance of this would first refer to Hodgson vs Lakeman(1). In that case Viscount Caldecote C.J., permitted the executors of the deceased appellant claiming an interest in the appeal against his conviction and sentence of fine to prosecute the appeal. The fine, though a small one, would have been a burden on the estate and thus the executors could be said to have had an interest in having that burden removed. This case was distinguished in Regina vs Rowe(2) In that case the widow of the deceased appellant sought leave to prosecute the appeal in which he had challenged his conviction on four counts of obtaining money by false pretences and the sentence of imprisonment to 18 months. The ground on which the widow 's application was supported was that the conviction against her husband affected her chances of employment and her position among her friends and that if interest is the test, then the widow also had an interest. This argument was repelled by Lord Goddard C.J. who said that the Court cannot take notice of that because the interest she (1) (2) 263 has was not a pecuniary one. It was further urged before the Court that where any person might be prejudiced by a conviction against a deceased person, and an appeal was lodged before the death of that person, the Court should allow the appeal to be continued by that person so that if there had been a miscarriage of justice and the heirs of the deceased were living under the shadow of the fact that their relative had died a convict, the interests of justice would require that the appeal be heard. To this argument the answer of the learned Chief Justice was that this would be a case for making an application for a tree pardon. In the course of the judgment he observed: ". . . we cannot allow a widow or an executor or an administrator of a deceased person to appeal to this court unless they can show a legal interest. If a person is sentenced to pay a fine and dies having appealed, or even if he dies after payment of the fine it might be immediately afterwards it may be that the court would allow executors or administrators to appeal merely on the ground that if the conviction were quashed they could recover the fine for the benefit of th e estate of the deceased which they are bound to administer. In Hodgson vs Lakeman(1) to which our attention was called, which was a case before the Divisional Court, but the principle would be the same, the appellant was dead, and the court allowed the executors to continue the appeal because there was a pecuniary interest. Supposing, as sometimes happens, a man is convicted on indictment and fined pound 500; the money has to be paid, and the Crown can recover that money whether he is alive or dead, for it can recover it against his estate, and, therefore, it would be an injustice if the executors were not allowed to appeal and to say that the conviction was wrong, because, if it was wrong, the money would be saved. It may be that it is artificial to say that if there is a pecuniary penalty an appeal might lie, whereas if corporal punishment or imprisonment is imposed there cannot be an appeal, but at the same time I do not see any ground on which we can say in the present case that anybody has an interest. It may be that the widow would be very glad to have her husband 's name cleared, but we cannot take any notice of that sentimental interest. There is nobody affected now by the judgment of the court because 264 the judgment was a sentence of imprisonment and the prisoner has died. It would be a very novel step if, in these circumstances, we said that the court would entertain an appeal. " In Short and Mellor 's (The Practice on the Crown Side of the King 's Bench Division, second edition) it is stated at p. 425 that the practice does not seem to be uniform and reference is made to some cases. In one of them Hesketh vs Atherton(1) the counsel was allowed to argue an appeal after the death of one of the parties. But in Leach vs Wanstead School Board (2) (2) wherein a conviction against the father of a child for not sending the child to school was challenged in appeal and the father and the child had died in the meanwhile, the Court refused to allow the case to be argued on the ground that there was no interest surviving. In Siberry vs Connolly(3) where there was a claim for seaman 's wages, the appellant 's executors were allowed to take the place of the deceased appellant. In Constantine vs Illingworth(4) where the defendant in a criminal case had died, the Court ordered the case to be struck out. The same was done in Jones vs Fallowfield(5). In Rivers vs Glasse(6) where the respondent had died and the appellant had given notice to the executors to support the conviction, the Court heard and determined the case and gave costs to the respon dent 's executors. The position so far as the United States is concerned is set out as follows(7): "The death of an accused ordinarily abates a criminal action, including review proceedings pending at that time. The interest of the deceased 's representatives or next of kin in clearing his good name was held in United States vs Mook(8) not to be sufficient to allow the appellate court, after the defendant 's death pending his appeal from a conviction of violating the Interstate Commerce Act, to decide the appeal on the merits. The court however, added: 'we think it may not be amiss to say that it seems to us that the next of kin of a convicted person who dies pending an appeal have an interest in clearing his good name, which Congress might well believe would justify a change in the law." ' Thus in that jurisdiction also the basis of intervention, when permitted, is a survival of an interest in the heirs or executors of the deceased. That interest would only be a pecuniary one (1)Short and Mellor at p. 425.(2) ibid. (3)ibid. (4) ibid. (5)ibid. (6) ibid. (7) ; Series, p. 1879.(8) 265 and where the estate is not affected by the conviction there would be no ground for allowing the intervention of the heir or executor. It may be that the interest of the heirs of the deceased convict to clear his name should be recognised and they ought to be allowed an opportunity to clear it. But unless it is recognised by the legislature the court cannot take notice of it. So far as the Court is concerned, the only question arising in the appeal before us is whether the conviction and sentence of imprisonment are correct in law. The only person who had an interest in the appeal before the Court in showing that both were not justified was the appellant and since he is dead, the interest which he had ceases to exist and cannot pass to anyone. Another case which was referred to at the bar was The State of Kerala vs Narayani Amma Kamala Devi(1) in which the decision in Pranab Kumar Mitra 's case (2) was relied upon and reference was made to Imperatrix vs Dongaji Andaji(3) In that case also the question was whether the High Court could exercise its revisional powers against an accused person even after his death. There the Court was not concerned with its own powers with respect to a criminal appeal brought before it by special leave. It is then said that the applicants have an interest inas much as the estate of the deceased appellant would be enriched by Rs. 40,000/ if this Court ultimately finds the appellant innocent and if the Government, acting on the basis of the decision of this Court which is binding upon it, rescinds the suspension order passed against the appellant and in conformity with it pays the arrears of salary due to the appellant. This interest is not a direct interest in the sense that it cannot arise out of the decision of this Court even if it is in favour of the appellant. The only interest which the applicants have is a. contingent one and is not one which could flow directly out of the ultimate decision of this Court. If we may mention, the argument advanced in Rowe 's case(4) before Lord Goddard C.J., that by clearing her deceased husband 's name the widow 's chances of securing employment would improve was not accepted as creating a pecuniary interest such as to justify granting her permission to prosecute the appeal. Indeed, the legislature has, by limiting in section 431 of the Code the survival of appeals to appeals against sentences of fine has chosen to recognise only one kind of interest and no other. There could be several other kinds of interest, as was suggested during the arguments at the bar. But this Court, in (1)[1962] Supp. 3 S.C.R. 943. ( 2 ) [1959] Supp. 1 S.C.R. 63. (3) (4) 266 exercise of its inherent powers or discretionary powers, would not be acting according to correct legal principles in recognising a kind of interest which the legislature has not chosen to recognise. In the circumstances, therefore, I am clear that the applicants ought not to be granted leave to prosecute the appeal. Leave to prosecute appeal refused.

IN-Abs

The appellant was convicted under section 302 of the Indian Penal Code and sentenced to imprisonment for life by the High Court for the offence of the murder of his wife. He was granted special leave to appeal by this Court. During the pendency of the hearing of this appeal the appellant died. After his death his sons and daughter applied to this Court for permission to continue to prosecute the appeal. It was pleaded by the legal representatives of the appellant that though that sentence of imprisonment could no longer be executed, it still affected the property of the deceased and the legal representatives were, therefore, interested in the appeal and should be permitted to continue it. The appellant, who held a high office in the Government of Andhra Pradesh had been suspended during the investigation of the charge against him and he was dismissed from service under certain service rules on his conviction. During this time the appellant had only been given a small allowance. On these facts it was pleaded that if the conviction was set aside, the estate of the deceased would be entitled to receive the full salary from the Government. Held (Per Sarkar, J.): (i) Neither section 431 nor the cases men tioned can be said to apply to the present case proprio vigore, for the present is not an appeal under the code of criminal procedure which is dealt with by section 431 nor is it a revisional application like the one which came up for consideration in Pranab Kumar Mitra 's case, while as for the English case, it is only of persuasive value. Pranab Kumar Mitra vs The State of West Bengal, [1959] Supp. 1 S.C.R. 63 and Hodgson vs Lakeman, , distinguished. (ii).The principle on which the hearing of a proceeding may be continued after the death of an accused would appear to be the effect of the sentence on his property in the hands of his legal representatives. If the sentence affects that property, the legal representatives can be said to be interested in the proceeding and allowed to continue it. This principle applies in appeals, revisions, and in petitions under article 136 of the Constitution. A sentence of fine no doubt affects the property. In the present case, however, the sentence was not of fine but of imprisonment which on the death of the accused has become infructuous. In the present case the effect of the sentence imposed in this case being set aside would not directly entitle the legal representatives to the salary. They will have to obtain necessary orders from the Government for the purpose. 252 Held (Per Hidayatullah, J.): (i) This was an appeal against a sentence of imprisonment and an appeal of this character would normally abate on the death of the appellant because a criminal prosecution is concerned primarily with the punish ment of an offender and not with the trial of an abstract issue about the truth or falsity of a prosecution case. The same principle must apply to appeals after conviction, except in so far as a judgment already rendered touches assets which would come to the legal representative. In so far as personal punishment (other than a fine) is concerned that stands dissolved by the death of the offender and an appeal to get that punishment set aside becomes infructuous and abates. Pranab Kumar Mitra vs The State of West Bengal, [1959] Supp. 1 S.C.R. 63, Pritam Singh vs State, ; , distinguished. Hodgson vs Lakeman, [1943] L.R.K.B. 15, Baghis vs Rowes , referred to. (ii).The principle laid down in Pranab Kumar Mitra vs The State of. West Bengal and Another and in Pritam Singh vs The State has.no application to the present matter because there is no analogy between an appeal by special leave and a revision under the code. The present case is not a case where the legal representatives after the death of the offender have to meet the liability of a fine or are required to protect the assets which they claim should reach them. In the present case no claim of the petitioners is jeopardized directly, by the judgment. Their claim is dependent upon the administrative action of Government which may not proceed upon the result of criminal prosecution. This appeal was only concerned with the correctness or otherwise of the conviction and not with any monetary claims depending upon the result of the appeal. In such a situation the ordinary rule that a criminal proceeding against a person comes to an end on his demise must apply also to special appeals in this court, such as this, even though the provisions of the Criminal Procedure Code may not be directly applicable. Held (Per Mudholkar, J.): (i) The decision of this court in Pranab Kumar Mitra vs The State of West Bengal has no, bear ing upon an appeal brought to this court by special leave. It is no doubt true that the power confer red by section 435 of the Code on the High Court and certain other courts and by Article 136 of the Constitution on this Court is discretionary. Under section 439 of the Code the High Court can exercise any of the powers conferred on a court of appeal by sections 423, 426, 427 and 428 or on a court by section 338 and has also the power to enhance the sentence. Under Section 435 of the Code, the High Court can suo motu call for the record of any inferior court but this power cannot be exercised by this court under article 136 of the Constitution. Therefore there is a fundamental difference between the power of the High Court in revision and the power of this Court in article 136 of the Constitution. Pranab Kumar Mitra vs The State of West Bengal, [1959] Supp. 1 S.C.R. 63, distinguished. (ii).In a criminal matter the issue is personal between the accused person and the State and the right of appeal is also personal to the appellant. There is admittedly no express provision permitting the substitution of legal representatives of a decreased appellant in a criminal appeal brought to this Court by 253 special leave. The policy of the law discernible from section 431 of the Code has to be borne in mind. The policy under section 431 of the Code is that every criminal appeal under chapter XXXI will abate except an appeal from a sentence of fine. There is no provision which prescribes the continuation of the appeal on the death of the appellant in cases where the sentence is of imprisonment. The interest of the legal representatives in the present case is not a direct interest in the sense that it cannot arise out of the decision of this court even if it is in favour of the appellant. The only interest which the applicants have is a contingent one and is not one which could flow directly out of the ultimate decision of this Court. Hodgson vs Lakeman, (1943) L.R.K.B. 15, Regina vs Rowe, , Hesketh vs Atherton, Leach vs Wanstead School Board, Siberry vs Connolly, Constantine vs Illingworth, Jones vs Gallowfield, Rivers vs Glasse, (all cited in Short and Mellor, Practice on the Crown Side of the King 's Bench Division 2nd Ed. at p. 425), United States vs Mook, , The State of Kerala vs Narayani Amma Kamala Devi, [1962] Supp. 3 S.C.R. 943 and Imperatrix vs Dongali Andaji, , referred to and discussed. (iii). .The Legislature has by limiting in section 431 of the Code the survival of appeals to appeals against sentences of fine has chosen to recognise only one kind of interest and no other. This Court in exercise of its inherent powers or discretionary powers would not be acting according to correct legal principles in recognising a kind of interest which the legislature has not chosen to recognise. In the circumstances the applicants ought not to be granted special leave to prosecute the appeal.

l Appeal No. 166/1963. Appeal from the judgment and decree dated April 28, 1961 of the Bombay High Court in First Appeal No. 135 of 1958. section T. Desai, section Singhvi, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. Purushottam Trikamdas, M. H. Chhatrapati and I. N. Shroff, for the respondent. March 18, 1964. The judgment of RAGHUBAR DAYAL and AYYANGAR, JJ. was delivered by RAGHUBAR DAYAL J. MUDHOLKAR J. delivered a dissenting Opinion. RAGHUBAR DAYAL, J. This appeal, on a certificate granted by the Bombay High Court, arises out of a petition praying for the annulment of the petitioner appellant 's marriage with the respondent, under section 12 of the (Act XXV of 1955), hereinafter called the Act, on the ground that the respondent was, at the time of marriage, pregnant by some person other than the petitioner. The facts leading to the proceedings are that the appellant and the respondent were betrothed sometime in JuneJuly 1945 and were married on March 10, 1947. The appellant went abroad about the end of April 1947. A daughter was born to the respondent on August 27, 1947. The appellant returned to India some time in November 1947, but the parties did not live together thereafter. The appellant instituted a suit, No. 34 of 1947 48, in the Court of the State of Baroda, at Baroda, for the declaration of nullity of the marriage. The suit was, however, dismissed on September 30, 1949 as the appellant failed to establish that he had his domicile in that State. The Act came into force on May 18, 1955. The appellant took advantage of its provisions and on April 18, 1956 filed the petition for annulment of his marriage with the respondent. The appellant alleged in his petition that on learning of the birth of the child on August 27, 1947, five months and seventeen days after the marriage, he felt surprised and suspected that the child had been conceived long prior to the marriage through someone else, that the respondent was, at the time of their marriage pregnant by someone other than himself, that this fact was concealed from him and that ever since he had learnt of the birth of the child he had not lived or cohabited with the respondent nor had any relations with her whatsoever. The respondent, in her written statement, raised various defences. She admitted therein to have conceived the baby prior to the marriage, but alleged that she had conceived as a result of sex relations with the petitioner after their betrothal, 271 on being assured by him that that was permissible in their community. She further stated that her relations in law, viz., her father in law, mother in law and sister in law knew about such relations between the parties and about her having conceived prior to the marriage. She further alleged that she ' flatly refused to carry out abortion and that therefore, at the instance of the appellant, the marriage was performed in Bombay and not at her parents ' place. She denied that the child born to her was by any person other than the appellant. Due to her allegation about pre marital sexual relations with the appellant and to her having conceived from such relations, she was required to furnish particulars about the time when, and the place or places where, the parties had sexual relations which she alleged to have led to her preg nancy. According to the particulars furnished by her, such sexual relations took place about or after Christmas, 1946, and again after about the middle of January 1947. On the pleadings of the parties, six issues were framed,. but those relevant for our purpose were: 1. Whether the respondent was at the time of them marriage pregnant by someone other than the ' petitioner as alleged in para 9 of the petition? 2. Whether at the time of the marriage the petitioner was ignorant of the aforesaid fact? 3. Whether the petitioner is entitled to have the marriage declared null and void? The petitioner examined himself and his father. The respondent examined herself and one other witness. The documentary evidence adduced by the parties consisted mostly of ' letters written by the petitioner to the respondent and the respondent to the petitioner, since their betrothal, and letters written by other relations of the family to one another. The trial Court did not accept the allegation of the res pondent about the pre marital sex relations with her husband and held that it was not established that she was pregnant by ' the petitioner. It also held that she was pregnant at the time of the marriage by some other person, that the petitioner did not know about her pregnancy at the time of the marriage and that he did not cohabit with her after knowing of her being pregnant by someone else at the time of marriage. On these findings, the petition for annulment of the marriage was allowed. The respondent preferred an appeal to the High Court. ' The High Court agreed with the trial Court in its finding that the respondent had failed to establish that she was pregnant ' by the petitioner at the time of the marriage, as also regarding 672 he petitioner knowing of her pregnancy at that time. The learned Judges however held that the petitioner had not proved to their satisfaction that the respondent was pregnant by someone other than the petitioner at the time of the marriage and that the petitioner was not the father of the child which was born and, considering that the trial Court had not framed an issue about there being no marital intercourse between the parties after the petitioner 's knowing that the respondent had been pregnant at the time of the marriage, framed two issues and remitted them to the trial Court for recording findings. The two issues framed by the High Court were: 1. Is it proved that the respondent was pregnant at the time of the marriage? 2. Is it proved that marital intercourse with the consent of the petitioner has not taken place since the discovery by the petitioner of the existence of the grounds for a decree? Thereafter, the trial Court recorded further evidence. The petitioner, besides examining himself, examined Dr. Champak al, husband of his sister, Madhuben, who was a midwife at the Prantij Municipal Dispensary, Maternity Ward, in 1947 and who attended at the respondent 's confinement and two doctors, Dr. Ajinkya and Dr. Udani as experts. The respondent, for her part, examined Dr. Mehta as an expert witness,Kachrabai who was a compounder at the Pantij Municipal Dispensary in 1947, Khodidas a Doctor, and herself. Khodidas did not state anything material to the case. The trial Court, after considering the fresh evidence recorded by it, found that it was not proved that the respondent was pregnant at the time of marriage. This was on the first issue framed by the High Court. On the other issue it recorded a finding that it was proved that no sexual intercourse with the consent of the petitioner took place since the discovery by the petitioner of the existence of the grounds for a decree. These findings were then submitted to the High Court. In the High Court, objections were filed by the parties to these findings. Patel and Gokhale JJ., heard the appeal and delivered separate judgments. They agreed with the trial Court that it was not proved that the respondent was pregnant at the time of marriage. Patel J., further held that it was proved that the petitioner had marital intercourse with the respondent subsequent to his discovery of the existence of the grounds for the decree. Gokhale J., expressed the view that the finding of the trial Court, on this point, appeared to be correct. In the result, the High Court allowed the respondent 's appeal and dismissed the petition. It is against this judgment and decree of the High Court that the petitioner has 273 preferred this appeal on a certificate granted by the High Court, under article 133(1)(c) of the Constitution, as already mentioned. Before dealing in detail with the contentions of the par , ties, we may set down the relevant provisions of the Act, quoting the various sections: 12. (1) Any marriage solemnized, whether before or after the commencement of this Act, shall be voidable and may be annulled by a decree of nullity on any of the following grounds, namely: (b) that the respondent was at the time of the marriage pregnant by some person other than the petitioner. (2) Notwithstanding anything contained in sub section (1), no petition for annulling a marriage (b) on the ground specified in clause (d) of sub section (1) shall be entertained unless the court is satisfied (i) that the petitioner was at the time of the marriage ignorant of the facts alleged; (ii) that proceedings have been instituted in the case of a marriage solemnized before the commencement of this Act within one year of such commencement and in the case of marriages solemnized after such commencement within one year from the date of the marriage; and (iii) that marital intercouse with the consent of the petitioner has not taken place since the discovery by the petitioner of the existence of the grounds for a decree." "20. (1) Every petition presented under this Act shall state as distinctly as the nature of the case permits the facts on which the claim to relief is founded and shall also state that there is no collusion between the petitioner and the other party to the marriage. (2) The statements contained in every petition under this Act shall be verified by the petitioner or some other competent person in the manner required by law for the verification of plaints, and may, at the hearing, be referred to as evidence." 74 "21. Subject to the other provisions contained in this. Act and to such rules as the High Court may make in this behalf, all proceedings under this Act shall be regulated, as far as may be, by the Code of Civil Procedure, 1908 (V of 1908)." "23(1) In any proceeding under this Act, whether, defended or not, if the Court is satisfied that (a) any of the grounds for granting relief exists and the petitioner is not in any way taking advantage of his or her own wrong or disability for the purpose of such relief, and (c) the petition is not presented or prosecuted in collusion with the respondent, and (d) there has not been any unnecessary or improper delay in instituting the proceeding, and (e) there is no other legal ground why relief should not be granted, then, and in such a case, but not otherwise, the Court shall decree such relief accordingly." "28. All decrees and orders made by the Court in any proceeding under this Act shall be enforced in like manner as the decrees and orders of the Court made in the exercise of its original civil jurisdiction are enforced, and may be appealed from under any law for the time being in force; Provided that there shall be no appeal on the subject of costs only. " It is to be seen that, according to the provisions set out above, statements contained in any petition could be referred to as evidence, the provisions of the Code of Civil Procedure apply to the proceedings under the Act and a Court has to pass a decree in the proceedings only when it is satisfied about certain matters specified in section 23. Two questions of law raised at the hearing of this appeal may now be disposed of as their determination will govern the consideration of the other matter on record with respect to the revelant points to be decided in the case. These are: (i) whether the High Court was right in remitting the two issues for a finding to the trial Court and (ii) what is the standard of proof required for the satisfaction of the Court before it can pass a decree in these proceedings. The High Court had to remit the second issue for a finding as it was necessary for the determination of the case and 275 the trial Court had not framed a specific issue in regard to it. In the absence of such an issue, the parties could not be expected to have produced evidence directed to that point and therefore the High Court rightly remitted that issue for a finding. The High Court remitted the first issue as it was of opinion that it was for the petitioner to prove to their satisfac tion, beyond reasonable doubt, which he had failed to do, that the respondent was pregnant at the time of marriage. He had also to establish that the child could not possibly be born as a result of the petitioner 's marital intercourse with the respondent after the marriage, the learned Judges holding that in these proceedings the Court could not base its decision on the mere admission of parties. The High Court is certainly right in stating that the peti tioner had, in order to succeed, to prove beyond reasonable doubt that the respondent was pregnant by someone else at the time of marriage. It is, however, not correct in law in holding that the Court, in these proceedings, could in no circumstances base its decision on an admission of the parties. On the facts of the present case, however, the decision did not rest on the admissions of the parties alone. In White vs White(1) this Court construed the expression ,satisfied on the evidence ' in section 14 of the Divorce Act and said at p. 1420: "The important words requiring consideration are satisfied on the evidence '. These words imply that the duty of the Court is to pronounce a decree if satisfied that the case for the petitioner has been proved but dismiss the petition if not so satisfied. and it has been there held that the evidence must be clear and satisfactory beyond the mere balance of probabilities and conclusive in the sense that it will satisfy . the guarded discretion of a reasonable and just man. " It approved of the observations in Preston Jones vs Preston Jones(2) to the effect that it would be quite out of keeping with the anxious nature of the provisions to hold that the Court might be 'satisfied ' in respect of a ground for dissolution, with something less than proof beyond reasonable doubt. The Court further observed at p. 1421: "In a suit based on a matrimonial offence it is not necessary and it is indeed rarely possible to prove the issue by any direct evidence for in very few cases can such proof be obtainable." (1) ; (2) , 417. 276 It follows that what the Court has to see in these proceed ings is whether the petitioner has proved beyond reasonable doubt that the respondent was pregnant by some one else at the time of marriage. The petitioner has to establish such facts and circumstances which would lead the Court either to believe that the respondent was pregnant at the time of marriage by someone else or to hold that a prudent man would, on those facts and circumstances, be completely satisfied that it was so. It is true that in divorce cases under the Divorce Act of 1869, the Court usually does not decide merely on the basis of the admissions of the parties. This is a rule of prudence and not a requirement of law. That is because parties might make collusive statements admitting allegations against each other in order to gain the common object that both desire, for personal reasons. A decision on such admissions would be against public policy and is bound to affect not only the parties to the proceedings but also their issues, if any, and the general interest of the society. Where, however, there is no room for supposing that parties are colluding, there is no reason why admissions of parties should not be treated as evidence just as they are treated in other civil proceedings. The provisions of the Evidence Act and the Code of Civil Procedure provide for Courts accepting the admissions made by parties and requiring no further proof in support of the facts admitted. Section 58 of the Evidence Act inter alia provides that no fact need be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing or which by any rule of pleading in force at the time they are deemed to have admitted by their pleading. Rule 5 of O. VIII, C.P.C., provides that every allegation of fact in the plaint, if not denied specifically or by necessary implication or stated to be not admitted in the pleadings of the defendant, shall be taken to be admitted except as against a person under disability. Both these provisions, however, vest discretion in the Court to require any fact so admitted to be proved otherwise than by such admission. Rule 6 of O. XII of the Code allows a party to apply to the Court at any stage of a suit for such judgment or order as upon the admissions of fact made either on the pleadings or otherwise he may be entitled to, and em powers the Court to make such order or give such judgment on the application as it may think just. There is therefore no good reason for the view that the Court cannot act upon the admissions of the parties in proceedings under the Act. 277 Section 23 of the Act requires the Court to be satisfied on certain matters before it is to pass a decree. The satisfaction of the Court is to be on the matter on record as it is on that matter that it has to conclude whether a certain fact has been proved or not. The satisfaction can be based on the ' admissions of the parties. It can be based on the evidence, oral or documentary, led in the case. The evidence may be direct or circumstantial. In Arnold vs Arnold(1) Woodroffe J., said: "In the present case admissions have been proved. Doubtless, caution is required in cases of divorce to see that there is no collusion and an admission must be examined from this point of view. But if, as here, there is no reason to suspect collusion an admission may be as cogent evidence i n these as in any other cases. In Robinson vs Robinson (1859 1 Sw. & Tr. 362), Sir Alexander Cockburnsays: The Divorce Court is at liberty to act and is bound to act on any evidence legally admissible by which the fact of adultery is established. If, therefore, there is evidence not open to exception of admissions of adultery by the principal respondent, it would be the duty of the Court to act on these admissions although there might be a total absence of all other evidence to support them. The admission of a party charged with a criminal or wrongful act, has at all times and in all systems of jurisprudence been considered as most cogent and conclusive proof; and if all doubt of its genuineness and sincerity be removed, we see no reason why such a confession should not, as against the party making it, have full effect given to it. " Reference may also be made to Over vs Over(2). It was a suit for dissolution of marriage. The respondent did not appear throughout the proceedings. The evidence originally consisted of affidavits by the petitioner and his son to prove the letters the respondent had written to the petitioner. Later, their statements were also recorded. The letters were held to be sufficient evidence of her having committed adultery. Sir Lallubhai Shah, Ag. C. J., observed at p. 255: "I have dealt with this case at some length in view of the difficulty which we have felt on account of there being no other corroborative evidence of the admissions of the wife. But, having regard to the (1)I.L.R. , 912. (2)27 B.L.R. 251. 278 circumstances, as disclosed in the evidence, I see no reason to doubt the genuineness of the admission made by the wife, and in the words of Cockburn C. J., it is our duty to act upon such admissions, although there might be a total absence of all other evidence to support them." Marten J., said at p. 261 : "As already stated, I think that such a confession is admissible in evidence, and I agree that there is no rule of law which absolutely precludes the Court from acting upon it. But as a rule of prudence the practice of the Divorce Courts has been in general not to act upon such confessions, unless corroborated. The aforesaid rule of prudence loses its importance when certain provisions of the Act enjoin upon the Court to be satisfied with respect to certain matters which would enable the Court to avoid passing a decree on collusive admissions. Section 12(2)(b) provides that no petition for the annulment of the marriage shall be entertained unless the Court be satisfied that the petitioner was at the time of marriage ignorant of the facts alleged and that no marital intercourse with the consent of the petitioner had taken place since his discovering the existence of the grounds for the decree. Such a finding necessarily implies that before reaching it the Court has satisfied itself that there had been no connivance of the petitioner in the coming into existence of the ground on which he seeks annulment of the marriage. Besides, section 23 also provides that the Court can pass a decree only if it is satisfied that any of the grounds for granting relief exists, that the petition is not presented or prosecuted in collusion with the respondent and that there was no legal ground on which the relief claimed could not be granted. In these circumstances, it would be placing undue restriction on the Court 's power to determine the facts in issue on any particular type of evidence alone, specially when there be no such provision in the Act which would directly prohibit the Court from taking into account the admissions made by the parties in the proceedings. We are of opinion that in proceedings under the Act the Court can arrive at the satisfaction contemplated by section 23 on the basis of legal evidence in accordance with the provisions of the Evidence Act and that it is quite competent for the Court to arrive at the necessary satisfaction even on the basis of the admissions of the parties alone. Admissions are to be ignored on grounds of prudence only when the Court, in the circumstances of a case, is of opinion that the admissions of the parties may be collusive. If there be no ground for such a view, it would be proper for the Court to act on those admissions without forcing the parties to lead other evidence to 279 establish the facts admitted, unless of course the admissions are contradicted by the facts proved or a doubt is created by the proved facts as regards the correctness of the facts admitted. s The trial Court had recorded a finding on the basis of the statements of the respondent in the written statement, , statements which were supported by her on oath when examined as a witness. Support for these statements was found from certain circumstances which the Court held established on the basis of the correspondence between the parties and certain oral evidence. The respondent 's case that the child born to her on August 27, 1947 was begotten by the petitioner as they had intercourse at the relevant time sometime in December 1946 or January 1947, left no room for the Court to consider the new case that that child was conceived sometime after the marriage of the parties on March 10, 1947. In these circumstances, it was not really right for the High Court to remit an issue to the trial Court for recording a finding on the basis of such further evidence including expert evidence as be led by the parties on the question. In this connection, the remarks of Lord Simonds in Preston Jones ' case(1) at p. 402, are very pertinent: "Your Lordships would, I think, regard it as undesirable that the burden should be imposed upon litigants in this class of case of adducing evidence of the character which in Gaskill vs Gaskill Lord Birkenhead thought it expedient for the Attorney General to ask for the assistance of the court. That may be unavoidable where medical evidence in regard to the period is called by the respondent; there is nothing to prevent a case becoming the battle ground of experts. But I am dealing with such a case as that out of which this appeal arises, in which the substantial issue between the parties was whether the husband had at what was considered the relevant times any opportunity of intercourse with his wife and no question of an abnormal period of gestation had been raised until the trial and then only by the commissioner himself. " However, as evidence has been led by both the parties and the Courts below have considered it, we do not propose to decide the case on the basis of the evidence originally recorded and would content ourselves by simply stating our view that the High Court might well have decided the case on that basis without remitting the first issue to the trial Court. We may now deal with some general aspects of the case. The petitioner has been consistent throughout. He took the (1) 280 position that he was not the father of the child born to the respondent in August 1947 as the period of gestation between the date of marriage and the date of birth was too short for a mature child to be born. This does not mean that his case was as has been considered by the Court below that the child born was a fully mature child in the sense that it was born after the normal period of gestation of about 280 days. He could not have stated so positively as that could not be known to him. Even the doctors are probably not in a position to state that the child was born after a full period of gestation i.e., after 280 days. The petitioner 's case was that the child born was not a child whose period of gestation was 171 days from the date of conception or who could be said to be a premature child, but was a child born after almost the full period of gestation. He steadily stuck to this position. His conduct and the conduct of his relations from the time they learnt of the respondent 's giving birth to the child had been consistent with this view. The petitioner had no correspondence or connection with the respondent since he was informed of the birth of the child. His parents too did not enter into any correspondence with the respondent 's parents. The peti tioner 's sister Sharda, however, appears to have written just one letter in acknowledgment of the respondent 's sister 's letter conveying the news of the birth of the child. She has not been examined as a witness. She appears to have written that letter when she was emotionally happy on the receipt of the news and had not given any thought to the matter. In 1948, the petitioner instituted a suit for the annulment of the marriage in the Court at Baroda and there too pleaded what he pleaded in the petition giving rise to this appeal. The respondent, however, put up a different case there. Any way, that suit was dismissed on the preliminary ground that the petitioner did not have the necessary domicile to institute a suit in that Court. The respondent, on the other hand, has not been consistent. In her written statement filed in the Baroda Court she stated that she had become pregnant as a result of the sexual intercourse she had with the petitioner after marriage. The same line was not adopted in her written statement in this case, in which she admitted that she was pregnant at the time of the marriage, but stated that this was due to sexual intercourse with the petitioner prior to her marriage. She supported this statement vigorously on oath. Later, after the close of the petitioner 's evidence, and practically of her statement in examination in chief, she wanted to change her case by an amendment of the written statement to what had been said in the Baroda Court. This was not allowed by the trial Court. The High Court too did not allow this formally, but in effect had that point tried by remitting an issue. 281 No good motive was suggested for the petitioner and his parents taking the view so firmly held by them about the child, being not of the petitioner from the very moment they learnt of the birth of the child on August 27, 1947. Their attitude was not an attitude of mere suspicion in connection with which enquiries and observations could be made. The attitude was firm from the very beginning. They did not respond to letters from either the respondent or her father. What could be the motive for them to take such an attitude? The respondent stated in her written statement: "The petitioner 's father has stayed in Europe for a very long time and holds very advanced views so also the petitioner but this entirely false litigation has been put forward at the instance of the petitioner 's mother who wants to sacrifice the respondent knowing full well the part played by her son the petitioner and the other members of the family. " Nothing like this was said in her written statement filed in the Court at Baroda. In her deposition before the findings were called for on the issues, she stated that the relations between herself and her mother in law were not very cordial. She said in her deposition, after the remission of the issues, that "The parents of the petitioner were not on good term& with my parents as at the time of pheramani the petitioner 's parents were not satisfied with the presents given by my parents. " This cause for bad relations has not been indicated in any of the letters by the respondent or by the petitioner. It was not stated in the written statement. We cannot take this to be a correct statement. In her letter dated June 11, 1947 she merely stated: ". the nature of my mother in law had become peevish on account of ill health and that I should not take anything to my heart. Respected papa used to advise me well and had also feelings for me . She (mother in law) would sometimes become peevish, only and then she herself would feel sorry. Mamma would speak very highly of me before our neighbours. " The ordinary usual expressions of disapproval between mothers in law and daughters in law would not lead the rela tions in law to make such accusations against their daughterin law lightly, both on account of notions of family honour and on account of the natural love grand parents would feel towards their grand child. 282 The respondent 's letters prior to the marriage and subse quent thereto indicate her affection for the petitioner and her feeling of being bound by her husband 's desires. But, in one respect at least, and for no good reasons, she ignored those desires. We refer to the direction by the petitioner in his letter dated June 22, 1947 asking her to destroy that particular letter and the letters received earlier. She did not do so. Why? She has not given any explanation for keeping those letters with her in spite of the directions of the husband to the contrary. It can be said, in the circumstances of the case, that she was retaining the letters for using them if possible in her defence when any accusation of her having gone wrong prior to the marriage be made against her. It has been considered by the Court below that the res pondent 's letters to Sharda and her father 's letters to Dr. Champaklal in July 1947 had been suppressed. It did not believe the statements of Dr. Champaklal that these letters could not be traced. These persons had no reason to retain those letters. Two letters of Sushila to Sharda have been produced and their production has been relied upon in sup port of the view that other letters had been deliberately suppressed. We do not agree with this view. There was reason to retain these two letters which were sent after the birth of the child and which must have been taken to be letters of some importance as written at a time when it had been realised that the respondent 's relations in law felt that the child born was not of the petitioner. The main question for determination in this case is whether the child born to the respondent on August 27, 1947 could be the child of the petitioner, who, on the finding of the Courts below which was accepted by learned counsel for the respondent before us, did not cohabit with the respondent earlier than March 10, 1947. Counting both the days, i.e., March 10 and August 27, the total period between those dates comes to 171 days. The child born to the respondent is said to have weighed 4 pounds, the delivery being said to be nor mal. The child survived and is said to be even now alive. It is not disputed that the usual period of gestation from the date of the first coitus is between 265 and 270 days and that delivery is expected in about 280 days from the first day of the mensturation period prior to a woman conceiving a child. We shall later be examining the point urged before us by learned counsel for the respondent, as regards the possibility of a living child being delivered after a gestation of this duration, but it is sufficient at this stage to point out that, if the delivery was normal, the child born also normal and alive, it was not suggested that it was possible in the course of nature for such a child being born unless the conception took place long before March 10, 1947. 283 In this connection, reference may again be made to what was said by Lord Simonds in Preston Jones ' case(1) at p. 402, when considering the question whether a normal child born 360 days after the last intercourse of a man and a woman "as the child of that man or not. He said: "It would, I think, appear a fantastic suggestion to any ordinary man or woman that a normal child born 360 days after the last intercourse of a man and a woman was the child of that man and it is to me repugnant that a court of justice should be so little in accord with the common notions of mankind that it should require evidence to displace fantastic suggestions. " Of similar effect is the observation of Lord Normand at p. 407, it being: "I have felt great doubt whether the House ought not to say that, though it is not possible to draw the line at an actual number of days, 360 days is too long a period, unless evidence of medical knowledge is adduced by the respondent to show the contrary. " Lord Morton of Henryton also said, at p. 413: "If a husband proves that a child has been born 360 days after he last had an op portunity of intercourse with his wife, and that the birth was a normal one, and if no expert evidence is called by either side, I am of opinion that the husband has proved his case beyond reasonable doubt." In W. vs W. (No. 4) (2) a similar observation was made by Cairns, J. in proceedings on an application for ordering the wife and child to undergo blood tests in order to furnish evidence that the child was not the petitioner 'section The child was born 195 days after the marriage. He said: "The marriage was on October 7, 1961. The child was born on April 19, 1962. It is, therefore, obvious that the wife was pregnant at the time of the marriage. " We have then to see whether the evidence on the record is such which would justify the Court 's holding against what it should normally hold on proof of the fact that the child was born after 171 days of the first coitus between the parties. We shall consider the statements of the doctors relating to different matters when dealing with them. As doctors Ajinkia and Mehta do not agree on several points we have (2) (1) 284 to decide whose statement should be ordinarily preferred. We however consider that the Court should not leave the questions undecided merely because the two doctors differ, as has been done, practically, by the learned Judges of the High Court. Dr. Ajinkia is undoubtedly an expert in the subject of obstetrics and gynaecology. He took a Master 's degree in midwifery in London in 1937 and passed the F.R.C.S. exami nation in Edinburgh in 1939 in midwifery and gynaecology. He holds a diploma in child health of London University. He is a member of the Royal College of Obstetricians and Gynae cologists. He returned to India in 1939. He was attached to the Nair Hospital as a specialist. He was Professer of the Medical College at Agra and was in charge of the Department of Midwifery and Gynaecology from 1942 to 1944. Since 1949 he was attached to the J. J. Hospital as an Honorary Doctor for Midwifery and Gynaecology and later at the Wadia Maternity Hospital. He has three maternity homes with 60 beds in all. He can therefore be rightly called a specialist in midwifery and gynaecology, with an experience of over 20 years. Dr. Mehta states that he has been practising as a Gynae cologist and Obstetrician since 1926. His qualifications, however, are much less than those of Dr. Ajinkia and his experience too, as an obstetrician and gynaecologist, is much less. He has passed the F.R.C.S. Examination in 1906 at Edinburgh. He was a Police Surgeon for about 10 years during which period he had no special means to acquire knowledge in midwifery, gynaecology or obstetrics. He was a doctor in the Army for 13 years from 1907 to 1920 and could not possibly have such experience during that period. He was an Associate Professor in Midwifery at Grant Medical College during 1928 to 1937. He states that as a professor he was concerned both with giving lectures to students and doing practical work of attending to cases and labour operations. During this period he was in charge of 6 beds at Motlibai Hospital. At the time of his deposition he was attached to the Parsee General Hospital and Parsee Lying in Hospital for Women. He carried on private practice and had three consulting rooms. He states that most of his cases were gynaecology and midwifery. Where Dr. Ajinkia and Dr. Mehta differ, we would prefer to rely on Dr. Ajinkia due to his superior qualifications and experience. We do not consider it material that there exists some slight difference of opinion in matters, not of great significance, between what the doctors state and what is stated in certain well recognized books on the subject, as the statements are on the basis of the theoretical knowledge as modified by 285 their actual experience and what is stated in books is based on conclusions derived from various reports by various doctors working in the field. Certain facts were urged before the High Court in support of the petitioner 's case. Mr. Desai, learned counsel for the petitioner, has again submitted them for our consideration. They are: 1. The child was born 171 days after marriage and has lived. It was confirmed by about April 2, 1947, that the respondent was pregnant. The appearance of the respondent 's belly. The symptoms of toxemia from which the respondent suffered. Normal delivery. Condition and weight of the child. We shall first deal with points Nos. 2 to 4 which relate to, the respondent 's pregnancy and symptoms of its development at various periods. The relevant facts are to be determined mainly from the contents of the letters between the parties and between them and some other persons. Some letters make mention of the health of the respondent and the relevant letters in this respect are of the period April to August 1947. The parties were, as already stated, married on March 10, 1947. The respondent remained at the house of her relations in law till about March 27, when she returned to her father 's place at village Prantij. The first letter from the petitioner to the respondent is dated March 31, 1947 and expresses the hope that she had reached her place hale and hearty. The next letter from him is dated April 5. It refers to a letter received from the respondent and indicates that her letter had conveyed the news of her getting some fever and that she had gone to consult a doctor. Her letter might have also given some indication of her possibly being pregnant as the petitioner asked her to inform him about the opinion of the doctor. There is nothing in this letter to show that the respondent had informed the petitioner about her suffering from nausea. The petitioner 's letter dated April 8, 1947 refers to the receipt of a letter from the respondent which probably intimated that she was definitely pregnant, according to the opinion of the doctor, as the letter contains an expression 'knowing that you are pregnant ' and indicates the petitioner 's desire that the child be removed. 286 The respondent 's letter dated April 13, 1947 states: "I am not keeping good health at present, I am still getting fever. I get vomits also . But fever does, not leave me and I am not allowed to take food also. I am bed ridden at present . Well and good if the child survives and it will be still better if it does not. " The petitioner 's letter dated April 15 has nothing parti cular in this connection. On April 17, the parties wrote to each other. The petitioner 's letter said: "I have been feeling very much anxious as your health is not remaining well. Write about your health. If you are not keeping good health and if you are not feeling disposed to come then you remain at your place. I won 't take it ill at all. " The respondent 's letter acknowledged the receipt of two, letters of the petitioner, probably of April 8 and April 15, and said: "I am keeping well now. I have no fever for the last two days. I am allowed to take light food. I get two or three vomits in a day. But I am better than, before. So, please do not worry. I will start on the 22nd and reach (there) on the 23rd. " Her letter of April 20, just intimates about her leaving for Bombay on April 22. She reached Bombay on April 23 ' and stayed there till the petitioner left for America on April ' 27. According to the contents of these letters, the respondent suffered from morning sickness of a severe type. She had fever and several vomits in the day. In her deposition she stated: "Before I left for Prantij for the first time after my, marriage, I had nausea and vomiting. When I left for Prantij my health was ordinarily good. At Prantij I started vomiting. I consulted a lady doctor at Himatnagar. After I consulted the doctor at Himatnagar, I came to know that I was preg nant. " In cross examination she stated: "I had a vomit on the day on which I left for Prantij from Bombay about 17 or 18 days after marriage. At the time when I had a vomit, I did not suspect or imagine that I was carrying. I consulted the lady doctor at Himatnagar within two or three days after I reached Prantij. I told the lady 287 doctor at Himatnagar that I was feeling uneasiness. I was vomiting and I had no appetite. The lady doctor examined my body including my abdomen. As a result of the opinion given by the lady doctor at Himatnagar I intimated to the petitioner that I was pregnant. " It is contended for the petitioner that such a condition of the respondent could not be on account of pregnancy taking place on or after March 10, 1947. Morning sickness of such type does not ordinarily take place soon after conception and a doctor cannot, without a biological examination, definitely state that she was pregnant. Re: morning sickness, Dr. Ajinkia stated that it occurred in the first and second month and expressed agreement with Modi 's statement in his text book on Medical Jurisprudence that nausea or vomiting commences about the beginning of the second month and lasts generally till the end of the fourth month. It follows that the commencement of the morning sickness at the end of March or the beginning of April 1947 may be possible from the respondent 's conceiving after marriage, but that the severe type of morning sickness, viz., fever and vomiting several times a day should have also developed so early after the conception is rather unlikely in view of what authorities state. Williams in his 'Obstetrics ' states at p. 275, 12th Edition: "The so called morning sickness of pregnancy, as the name implies, usually comes on in the earlier part of the day and passes off in a few hours, although it occasionally persists longer or may occur at other times. It usually appears about the end of the first month and disappears spontaneously six or eight weeks later, although some patients suffer from it for a longer period. " At p. 706 he states: "Nausea and vomiting of mild degree constitute the most common disorder of the first trimester of pregnancy. About one half of pregnant women complain of some degree of nausea at this time, and, of these, perhaps one third experience some degree of vomiting. In the present era, however, it is uncommon for nausea and vomiting to progress to a serious extent, that is, to a stage in which systemic effects such as acetonuria and substantial weight loss are produced. . and the condition is called hyperemesis gravidarum. " 288 He states at pp. 708 and 709: "The disease varies in degree of severity from nausea and morning sickness to the severe or pernicious type of vomiting which may have a fatal outcome, Usually the condition begins about the sixth week of gestation and abates around the twelfth week." "A small number of these patients develop persistent vomiting, lasting four to eight weeks or longer and resulting in a loss of body weight of 10 to 20 pounds or more. These patients vomit two, three, or more times a day and may be unable to retain any nourishment by mouth." "In the later stages of the disease rarely seen today a low grade fever frequently develops. This seldom exceeds 101 degree F but may persist despite adequate hydration." Dugald Baird states at p. 323 of the 7th Edition of the Combined Text Book on Obstetrics and Gynaecology: "Morning sickness occurs in about 50 per cent of women during the early weeks of pregnancy. In many cases there is only a feeling of nausea, with perhaps the ejection of a mouthful of fluid. In, others, some partly digested food may be expelled. In graver cases vomiting may persist throughout the day, and apparently all the ingested food is. returned. This latter type is a very serious condition and is described as hyperemesis gravidarum. It is extremely difficult to draw any hard and fast line between the mor e severe form of morning sickness and a condition which should be labelled as hyperemesis. As soon as a patient suffering from morning sickness feels nauseated and is sick later in the day, she must be regarded as a mild case of hyperemesis and treated accordingly. " The respondent does not state about fever and about several vomits in a day in her deposition, but such a condition was expressed in her letters. The respondent stated in cross examination that when she went to Gamdevi, she continued to, have vomiting, no appetite and uneasiness. None of the letters written subsequent to April 17 by either party make any mention of this condition continuing. Champaklal was not questioned about such a condition of hers at Gamdevi. The petitioner was not questioned and the res pondent does not state that she had nausea and vomiting when at Bombay between April 23 and 27. She did not have vomit or nausea so long as she was at Bombay in March, though she happened to state in examination in chief that 289 she had a vomit on the day she left. The petitioner was not questioned about it. It appears: to be too good to be true, that she suffered from morning sickness of such a type only for a short period of a little over two weeks. These can be two, possibilities. Either she did not suffer from any such sickness during that period and just mentioned about it to build up her case regarding the development of pregnancy or that her ' pregnancy was of a longer period at first she may have had ordinary morning sickness which usually consists of a feeling of nausea without any actual vomiting and could therefore be not known to others and that the serious type of actual vomiting and fever developed later in the third or fourth month of pregnancy which would indicate that in April the pregnancy was about four months old and not one month. We may refer to her first statement in Court. She then stated : "The petitioner 's father and his sister might be suspicious prior to the marriage that I was pregnant because I was not keeping good health." This may refer to her suffering from morning sickness prior to marriage. Re: confirmation of pregnancy, Dr. Ajinkia deposed that it was not possible to confirm pregnancy by April 3, 1947 if a woman married on March 10, 1947 had conception subsequent to the wedding, except by performing some special biological test. Similar is the opinion of Dr. Mehta examined for the respondent. The Court below attached no importance to the doctor 's telling the respondent that she was pregnant about 3 weeks after she was married, by saying that what was conveyed to the respondent was not a definite diagnosis of pregnancy but only a suspicion about pregnancy as anybody would suspect after a woman 's missing of the monthly course and suffering from morning sickness. It is not justified in so construing what the respondent stated in Court and what she appeared to have conveyed to the petitioner. The doctor 's informing her definitely after examination of the body that she was preg nant again points to the fact that her pregnancy noticed in the first few days of April was of a longer duration than that of about 4 weeks. From Bombay, the respondent went to Gamdevi where the petitioner 's sister Sharda lived and spent a few weeks there. Letters written in May are not of any importance. Her letter dated May 12, 1947 to the petitioner is on record. She L/P(D)ISCI 10 290 expressed her intention to go to Bombay within a few days and to stay there for two months and stated: "Then, when my fifth month (of pregnancy) will be about to be over I will go to Prantij. " There is nothing particular in this letter. She, however, did not stay at Bombay for two months but left for Prantij before June 4, 1947 for some reason which was possibly not true. The petitioner wrote letters to her on May 2, 6 and 14. In his letter of May 2, he says that she must have told about her pregnancy to Sharda and that he, himself had not told anyone about it. In his letter of May 6 he said: "You tell Sharda that you are pregnant so that Mama can know it. Consult Sharda about food and reading who will also guide you. So you should not become anxious at all. Convey to Champaklal through Sharda so that he may prescribe medicine for you, hence you may not have any trouble ahead. " In his letter of May 14, he said: "You must be taking good food and I think you must have consulted Champaklal." In his letter dated May 31, he, for the first time, acknow ledges receiving a letter from her. It must be the letter of May 12, as therein he refers to her intention to go to Bombay from Gamdevi. There is nothing particular in this letter either. The petitioner 's first letter to the respondent in June is dated June 3, 1947. It refers to the receipt of her air mail letter from Bombay after a long time. It appears that letters of May 12 and May 24 were not sent by air mail. Her sending a letter by air mail 'on or about May 30 from Bombay indicates that she felt the urgency of communicating something to the petitioner. The contents of his letter dated June 3 indicate that she had mentioned what she had been suffering from and wanted to leave Bombay for her paternal home. The letter does not disclose what sort of sufferings there were. Probably they were due to domestic affairs, as it appears that the relations between the mother in law and the daughter inlaw were not good. He writes: "If you tell me that I may write a letter to revered mother and father or write a letter to your father to call you at Prantij." Why this urgency? The conditions of living at Bombay could not have been intolerable. Parents in law would have taken good care of her troubles due to pregnancy. The urgency of her returning to Prantij could have been due to her feeling 291 that it would be difficult to keep her unduly advanced state of pregnancy a secret for any more appreciable time at Bom bay. The next letter of June 4 was written by the petitioner, on receipt of the respondent 's letter dated May 24. This letter too must have been from Bombay, as she appeared to have informed him about the adjoining neighbours talking about them. Again, it is not clear what was the talk. The talk might have had reference to their marital relations with particular reference to her pregnant condition, as it is said in the letter: "Let people talk about me and you, but as long as we each have complete confidence over one another which is there to fear for us. " On June 11, the respondent wrote to the petitioner. It appears that she returned to Prantij from Bombay on or about June 4, as she said: "A week has passed since I came to Prantij". She states that she told her mother in law that she wanted to go back to her paternal house, as she was not keeping good health. There is no reference in this letter to what type of bad health she was keeping. She makes a significant statement in this letter. It is: "She (namely the mother) asks me to take away the ornaments, take care of my health and to return in the 7th Month . I said I did not want to take ornaments because I would have to take care of them on my way." Another statement of hers which is of some significance is: "My health has improved very much. Blood in my body has very much increased. " It appears that her excuse to her mother in law for going to her parents ' house was not a true one. Her reference to im proved health and increase of blood in the body seems to indicate that she was feeling the enlargement of her abdomen. The contents of this letter were interpreted in some such way by the petitioner who, in his letter dated June 22, wrote in the very second paragraph: "I am asking you what is the month of your pregnancy". Such a question indicates that lie probably felt surprised at this condition of her abdomen and having studied sex litera ture, as appears from his letters to her, he had his doubts how within such a short period of the marriage the respondent could have such an enlarged abdomen. This letter contains some very intimate details. The petitioner asked her to destroy it after she had read it and also to destroy his previous letters. L/P(D)ISCI 10(a) . 292 Such a suspicion expressed in his letter makes the respondent write a very curt letter on July 2, 1947. In that letter she said: "How are you to know how many months I have advanced in pregnancy. I am really so very angry with you today that I cannot understand what I should do with such a man. Do you not yourself know that you ask me how many months I have advanced in pregnancy. Calculate (months) in your own mind only. " In between, the petitioner had written another letter to her on June 27, on receipt of her letter dated June 17. This letter also contains some significant statements: "Now belly appears big and I feel what kind of baby would be born . At present I appear very fat. I do not understand from where so much blood has come. . This letter was acknowledged by the petitioner by his letter dated June 27. In this letter again the petitioner wrote: "Please write how many months of pregnancy you have passed". The letter was comparatively a very formal letter. On June 28, 1947 the respondent writes to the petitioner in her letter: "I am keeping good health etc . Now I have to pass only five months . The belly gives the appearance of a big water pot and one becomes nervous to see it . A nurse comes to examine me every Sunday. I had once told her that something was moving in my belly and had asked her as to after how many mont hs these movements must be starting. She said that my baby to be born would be very healthy because a child would make movements after the fourth month only if it was healthy. I am very much worried. If the child would be strong I myself would die. How then would it be born? . I go for a walk daily. I walk two miles one mile while going and one while coming back". It is clear from this correspondence which passed between the parties in the month of June that the respondent noticed her belly to have enlarged sufficiently between June 11 and June 17, i.e., between the 107th and 114th day, counting from March 10 and adding 14 days to the total, that she had felt the quickening of the foetus sometime before June 28 and that the petitioner had some doubts about her condition being compatible with conception having taken place on or after 293 March 10, 1947. Patel J., made an error in ignoring the letter of June 17, 1947 and in calculating the days upto June 28 to be 155 instead of 124. The respondent thus noticed the .enlarged abdomen at the end of the 4th lunar month of pregnancy. She appears to have felt it before June 16 as she had .spoken about it to the nurse on a Sunday. The Sundays previous, fell on June 23 and June 16. It appears that she did not speak on the 23rd as she did not say so in her letter of June 28 and said there: 'I had once told her '. She must have told the nurse latest on Sunday, June 16. Two other statements in her letters also tend to indicate that her condition in the beginning of June had been such as probably gave rise to suspicions in the minds of persons about her pregnancy. These are her statement in the letter dated June 11 that her mother in law asked her to take away all ornaments. Ordinarily a mother in law would not have liked her daughter in law to take away all her ornaments when she be going to her maternal place for a few months. Such a request might have been on account of her suspecting that she was in a much more advanced stage of pregnancy, than would 'have been expected in a case of pregnancy subsequent to marriage. The other statement is in the petitioner 's letter of June 4 referring to her letter of May 24 stating that adjoining neighbours talked about it. Why should neighbours talk about the petitioner and the respondent prior to May 24, 1947? The talk must have been in connection with her pregnancy and its stage. The relations between the husband and wife are of no concern to the other people, except when they provide matter for scandal. This means that her abdomen had enlarged noticeably by May 24 and therefore could indicate to people that her pregnancy was of a duration much larger than of about 74 days, which, on addition of 14 days, would be deemed to be pregnancy of 88 days, i.e., about 3 lunar months. None of the doctors examined in the case deposes that the enlargement of the abdomen would be of such an extent in 3 calendar months of pregnancy, the period being counted from the first day of the last menstruation previous to the conception. Dr. Ajinkia states that there cannot be perceptible abdo minal enlargement within 3 months and 7 days of pregnancy in ordinary cases and that such perceptible abdominal enlarge ment would be after the 4th month. He further states that when a woman is pregnant for the first time, the enlargement might not be visible as late as 5 months, and that a huge abdominal enlargement might occur within 3 months and 18 days of pregnancy in certain complications which, we may mention, do not appear to have occurred in the case of the respondent. On the other hand, Dr. Mehta states that the enlargement of the abdomen is manifest from the 4th month 294 and in any event will be manifest in the 5th month, even if ' the pregnancy is for the first time. He did not agree with what Alan Brews states in his 'Manual of Obstetrics ', 1957 Edition, p. 84: ". . enlargement of the abdomen usually does not become manifest to the patient until the uterus rises well above the pubes, and therefore seldom attracts attention until the close of the first half of pregnancy. A multigravida owing to the laxity of the abdominal wall, usually notices abdominal enlargement earlier than a primigaravida. " We prefer to rely on Dr. Ajinkia 's statement in this respect. The respondent felt the quickening of the foetus before June 16, i.e., before the 112th day, or before the end of the fourth lunar month from the first day of the menstrual period prior to conception. That is too short a period. Dr. Ajinkia stated that the perceptible foetal movement in a woman pregnant for, the first time does not take place before the 20th week from the date 'of her conception and that the expectant mother begins to feel the movement of the child after the 20th week or end of the 7th month of pregnancy. He further stated that he would not consider it possible for a woman pregnant for the first time to have a marked perception of foetal movement by the 15th week of conception. When referred to a statement in Modi 's Medical Jurisprudence to the effect that the first perception of the foetal movement occurred at any time between the 14th and 18th week, Dr. Ajinkia expressed his disagreement and referred to statements in the text book of 'Obstetrics & Gynaecology ' by Dugald Baird, and in Eden & Holland 's 'Manual of ' Obstetrics '. In the former it is stated: "These are generally first felt about mid term . The movements are often not felt by primigravidae till the end of the twentieth week while multiparae may recognize them as early as the end of the 16th week. " In the latter it is stated: "Definite history can be obtained. Quickening is usually found to occur between the 18th and 20th weeks. Multiparae from former experience, notice the movements earlier than women pregnant for the first time. " We are therefore of opinion that the statements by the, respondent in her letters to the petitioner about the enlargement of her abdomen and the quickening of the foetus fits, 295 in with her pregnancy being of a longer duration than one starting on or after March 10, 1947, or notionally starting 14 days earlier. The only thing said against the pregnancy really having been of a greater duration is that the respondent had her body examined by Dr. Champaklal, husband of Sharda, sister of the petitioner, sometime in May 1947, when she was at Gamdevi. She states that she had some bleeding and therefore consulted Dr. Champaklal who examined her body including the abdomen. Dr. Champaklal denies having done so. The High Court has preferred the statement of the respondent to that Dr. Champaklal, as the petitioner himself had advised the respondent in his letters to consult Champaklal. There is nothing in the letters of the petitioner which he wrote to the respondent from USA in May 1947 which would indicate that she was to show her body to Champaklal. He simply advised her to consult him so that she may not have any trouble later on. This was a general advice and in view of her having suffered from morning sickness in the month of April. In none of the letters by her or by the petitioner in reply is any reference to her bleeding at Gamdevi and to her showing the body to Dr. Champaklal. Unless absolutely necessary, Dr. Champaklal would not have examined her abdomen and there is nothing on the record to establish anything so unusual in the condition of the respondent as to persuade Champaklal to examine the body of a close relation of his. We are not prepared to prefer her statement to that of Champaklal in this respect. It is true that Dr. Cham paklal does not depose to have noticed anything unusual about her condition. But that does not mean that her preg nancy was not more advanced than what it would have been if the conception had taken place on March 10, or later. A male relation is not expected to notice such a condition. We do not therefore consider any non observation by Champak lal of any such enlargement of the respondent 's abdomen as would indicate her pregnancy to be from a date anterior to March 10, to affect adversely the inferences to be drawn from her own statements in her letters referred to above. In her letter of January 8, 1948, to Sharda, written long after her delivery, for the first time the respondent mentioned that her body was examined by Dr. Champaklal and that if there had been any deceit in her heart she could not have shown her body to him. There is no mention of bleeding in this letter which was written over four months after the delivery of the child. The respondent stated about her bleeding and being ,examined by Dr. Champaklal for the first time in her letter to the petitioner dated February 16, 1948, months after she 296 was delivered of the child and the petitioner had in a way severed his connection with her. This belated statement is, not sufficient to discredit Champaklal. The respondent suffered from symptoms of toxemia. She had blood pressure, passed albumen in urine and had swellings on the body. According to Dr. Ajinkia, there are two types of toxemia, one appearing in the early months, i.e.,, between the 2nd and 3rd month of pregnancy, and the other from the 7th month onwards, and that in the first case there is severe vomiting, dehydration and jaundice which may result in death due to liver necrosis, while in the latter case there is swelling of the tissues due to water retention. (oedema), rise of blood pressure, passage of albumen in the urine, headache, disturbance of vision, sometimes culminating in fits. He further stated that oedema, high blood pressure and passing of albumen in urine may take place in the 4th month of pregnancy in a case of chronic kidney disease suffered by a women previously, but not in other cases. There is no evidence in the present case that the respondent had suffered from any chronic kidney disease. Dr. Ajinkia stated that he would call it a severe type of toxemia, if a pregnant woman suffering from oedema all over the body, passing albumen in the urine and having high blood pressure does not respond to treatment. In cross examination he states that the first type of toxemia does not occur again and again during the period of pregnancy and that it does not appear after the third month, and that if the second type of toxemia appears in the early stage of pregnancy it can be concluded that the woman is suffering from chronic nephritis. Dr. Mehta states in examination in chief that passage of albumen in urine and oedema usually occur at the second period of pregnancy which he described to be after the 3rd month and before the 7th month of pregnancy, but in cross examination states that these can occur at any time and that it is not the case that these occur only in the last two or three months of pregnancy. When referred to a passage in Williams on 'Obstetrics ', which contained the statement. "It is a disease of the last two or three months of ' gestation for the most part and rarely occurs prior to the twenty fourth week. It is most often seen in young primigravidae. Pre eclampsia is the fore runner of prodromal stage of eclampsia. In other words, unless the pre eclamptic process is checked by treatment or by delivery, it is more or less likely that eclampsia (convulsions and coma) will ensue." he said that he agreed with what was stated there. He argeed with the statement in "Progress in Clinical Obstetrics and 297 Gynaecology" by Lews to the effect that the condition ,appears in between 3 and 10 per cent of pregnancies, gen erally later than the thirty second week. He also agreed with the statement in British Obstetric and Gynaecological Practice by Holland, 11 Edition, P. 256: "In the majority of cases of pre eclampsia signs of the disease do not appear until after mid term and in the majority not until after the thirtieth week of pregnancy." He agreed with what was stated in Dugald Baird 's Combined Text Book of Obstetrics & Gynaecology, 6th Edition, to Ike effect: "Sometime about the thirtieth week of pregnancy the patient, most commonly a primigravida, will be found to have some elevation of blood pressure and she may have noticed some puffiness of her ankles and hands. After the lapse of days or a week or two, the blood pressure may rise further and albumen, often not more than a trace, can be demonstrated in the urine. There may be a progressive rise in the blood pressure and oedema becomes more marked. In severe cases the face, abdominal wall and libia are effected. " It is thus clear that this type of severe toxemia which results in increased blood pressure, passing of ablumen in urine and swelling of the body appears in the later stages of pregnancy and not usually before the end of the 6th month, i.e., not during the period of 168 days of pregnancy, that is to say, not to take place before August 10, 1947 in the case of the respondent who was married on March 10, even if for the purpose of duration 14 days are added to the period following March 10. The respondent stated in the examination in chief that when she went to Prantij from Bombay, which was about the 4th of June 1947, she had swelling on her feet, hands and face. In cross examination she further stated that she had swelling over these parts and also high blood pressure in June and that the passing of albumen and swelling of hands and feet continued till delivery but there was no high bloodpressure at the time of delivery. The Court below did not act on the statement of the respondent about her having the symptoms of toxemia in the month of June as none of the letters on record written in June makes reference to such a condition of hers. This is true, but that does not necessarily mean that she did not have such symptoms in the month of June. They might not have been very severe that month and the severity appeared in the month of July. Letters on record amply make out that she was suffering from a severe type 298 of toxemia in July. It has been urged for the respondent in connection with her alleged toxemic condition in the month of June that her statement in her letter dated June 28 about her walking 2 miles a day is not compatible with her state ment in Court and the suggestion for the petitioner that she was suffering from toxemia in the month of June. The statements of the respondent in her letters can be used against her as her admissions, but cannot be used in her favour accepting them to be correct statements. If she was pregnant at the time of marriage she must take such steps up to the time of delivery as to allay the suspicion that she had been really pregnant at the time of marriage. She may therefore be inclined to make wrong statements in her letters to prepare for any plausible explanation when the delivery took place before the expected time on the basis of her conception after marriage. There is therefore no reason not to believe her statement that she did have such trouble of a milder kind in the month of June. Severe trouble does not usually come at once. It develops from a mild stage. By June 4, 1947, the duration of pregnancy, if. due to coitus on or after March 10, can be at most 100 days, a little over 3 1/8 lunar months, and according to the medical opinion, toxemia in the form of blood pressure, oedema and passing of albumen in urine does not occur after such a short period of pregnancy. It is to be concluded that by the end of May the duration of her pregnancy was of about 6 months. This fits in with the petitioner 's contention that she was pregnant on March 10, when the marriage took place. A brief reference to the correspondence which shows that she was suffering from toxemia from the month of June 1947 may be made now. The first letter in this connection is dated July 12, 1947. It is Champaklal 's letter to Kodarlal, father of the respondent, and was written on receipt of the respondent 's letter addressed to Sharda. The respondent must have written that letter on or about July 10. Champaklal expresses worry on having the news about her health. He states: "It is not a good sign if she has oedema on the legs and abdomen in passing the urine, and hence you keep Sushilabehn immediately under the treatment of a doctor either in Ahmedabad or at Bombay. Dr. Pandya at Ahmedabad is also a good doctor. continue the medicine as long as she advises. You can consult her and then inform us immediately. " Sharda had herself written to the respondent on July 13, 1947 suggesting that she should go to Bombay for consultation about her health. Champaklal again wrote to 299 Koderlal on July 20, after receipt of letter from him and stated : "The medicine prescribed by Dr. Pandya is proper and I am sure that there will be complete cure. Follow her advice as regards medicine and food directions. If she has given advice for her not. taking salt do follow it and if advised to live entirely on fruits and milk do follow the same because if proper care is not taken for this disease there will be epileptic fits at the time of child birth and the case will be serious. Your doctor has warned you from now by examining the urine and it is good that you have taken a warning and you have taken good precautions from now and hence I am sure that she will definitely improve. " Champaklal 's letter dated July 28, again on receipt of a letter from the respondent 's father, asks the latter to in form him as to how the respondent 's oedema stands. On July 24, the respondent 's father wrote to the peti tioner 's father stating therein: "My daughter Sushilaben was got examined by Miss Pandya and her opinion is that she is passing albumen in her urine and that she is suffering from blood pressure. Her health is good. This is all. " Manilal, the petitioner 's father replies to this letter on July 27 and writes: "Very pleased to learn that Sushilabai has been 'shown ' to the doctor and the medicine has been continued and that she is keeping good health. Very pleased to learn that you and the members of your family are keeping well. Here we all of us are keeping well, so much". With affection of Manilal 's Jai Gopal. " The letter in a way, is a cold one. He has not stated what would have been both an expression of his feeling at the time and would also have been very polite in the circum stances. He expressed no concern and did not write that he be informed about the respondent 's condition from time to time just as Champaklal happened to write in each of his letters. It is to be noted, however, that both Kodarlal and Manilal use language which could not have been correct factually. Kodarlal says her health is good ' and Manilal expresses his pleasure on receipt of the letter. 300 The respondent 's letter dated July 2, 1947 was the only letter written to the petitioner in the month of July. No other letter is on the record and the petitioner states in his letter dated July 27 that he had not received any letter from her for a long time and was therefore very much worried. The petitioner wrote to the respondent on August 6, 1947 stating that he was awaiting her letter and that Champaklal and Sharda had informed him that her health was very bad and she was not in a position to write a letter. He asks for further news of her health by wire. It is his letter dated August 12, 1947 which makes a reference to the respondent 's letter dated August 4 which he thought was received after about a month of her previous letter. Thus it is clear that for about a month between July 2 and August 4, 1947, the respondent 's condition was such that she was not even able to write a letter. It was when her condition had become very bad that news of her ill health was conveyed to Sharda by letter on or about July 10. The last letter which the respondent writes to the peti tioner is dated August 13. In this letter she writes: "As my health was very bad, a letter was sent to Shardaben and my father also wrote a letter to Champaklal. At that time he had written that Dr. (Miss) Pandya would be called in and treatment by her would be started; so we are taking her the treatment by her accordingly. We did not write to you for the simple reason that that would have caused you anxiety. The treatment is still continued. But there is no change. There are swellings all over my body and I am feeling extremely weak. Consequently, I have not even the strength to write a letter. We had consulted Miss Pandya and Dr. De Monte and Doctor Anklesaria at Ahmedabad. So according to them poison is passing in the urine and along with it there is also the blood pressure and so it is likely that the case may be serious case of delivery and I might get convulsions at that time. That is why, right from now they have altogether stopped me from taking salt and they have also stopped me taking food, so as to avoid the rise of blood pressure. I am on the diet of mere milk and fruit. Also my medicines are continued. My dear, the exertions of writing even this much are causing a severe giddiness in my head and so I now stop. " 301 As a post script to this letter she had further written: "They are attending all right on me here. Possibly, they are going to take me to Ahmedabad or. Bombay, for the delivery, because in a village ' like this, there is not sufficient equipment available. " The petitioner 's letter dated August 25, 1947 makes reference to the letter from the respondent 's sister dated August 17. The respondent 's letter dated August 13 is a very good synopsis of her condition and of the reasons for not inform ing the petitioner of her ill health. It is clear from this letter that Shardaben was informed in about the first week of July only when her health had deteriorated to a large extent as she said in the letter that a letter was sent to Shardaben as her health was very bad. Kodarlal informed Manilal even later,. on July 24. There is therefore no reason not to accept the respondent 's statement on oath that she had suffered from blood pressure, swellings and passing of albumen in the urine in the month of June and that she had oedema on her legs, ankle and feet when she left Bombay for Prantij on or about June 4, 1947. The doctors who examined her and whose names are given in her letter dated August 13, have not been examined. No explanation has been given for not examining Dr. De Monte and Dr. Anklesaria. It is said that Miss Pandya refused to appear as a witness as she had not kept notes about the respondent 's condition, remembered nothing about it and would not be able to depose anything in Court. We do not consider this to be a good explanation for not calling a relevant witness. Under the stress of oath and cross exami nation Dr. Pandya might have recollected things which could have a bearing on the case. Madhuben, the nurse examined for the petitioner, deposed about the respondent 's condition and that is not much different from what the respondent her self stated in Court and in her letters. Madhuben states in this connection: "About two months before the date of the delivery of the respondent I was called at the house of Sushilabai. At that time I had examined Sushilabai. At that time I noticed that there was swelling over the hands and feet of Sushilabai. I also noticed that Sushilabai was weak in her health and she had trouble about the passing of the urine. Her urine was examined. It was noticed that she was passing albumen in urine. At the 302 time when I examined Sushilabai at her house, she had the 7th month. She was not taking proper food. " As the delivery took place on August 27, Madhuben was describing the respondent 's condition in about the last week of June. She has been disbelieved for remembering this con dition of the respondent as she was not expected to remember this after such a lapse of time. We see no reason to disbe lieve her when the respondent herself admits her suffering from these symptoms of toxemia. If Madhuben concluded from these symptoms that the respondent was in the 7th month of her pregnancy, there is nothing to be surprised at that, as, according to the medical opinion already discussed, such symptoms do not appear before the 7th month. Madhuben deposes that she used to visit the respondent at intervals of 8 or 10 days during those two months. The respondent denies that Madhuben ever attended on her except at the time of her delivery. According to her, a lady doctor of Himat nagar used to look her up every Sunday. This lady doctor has not been examined. It is alleged that she had left the place and her address could not be known. The respondent said in her letter to the petitioner, dated June 28, 1947: "A nurse comes to examine (me) every Sunday". There is some dispute about the word 'nurse '. The original word in Gujarati was 'bai '. The correctness of the official translation of that word does not appear to be questioned before the trial Court or in the grounds of appeal to the High Court. We see no reason to disbelieve Madhuben 's statement which, so far as the condition of the respondent goes, finds support from what the respondent herself states and also from the medical opinion about the stage of preg nancy when the symptoms observed by her occur. The respondent 's letter dated August 13, 1947 indicates the extreme severity of the toxemic condition she was in at that time. Doctors were contemplating the possibility of the respondent 's suffering from convulsions at the time of de livery and therefore of moving her to Ahmedabad or Bombay where there was sufficient equipment to deal with a compli cated case of delivery. Now, we may consider the expected condition of the child, born after 171 days of conception, as a result of the respondent 's suffering from mild toxemia for about a month and thereafter from severe toxemia for about 8 weeks prior to delivery. With respect to the effects of toxemia from which a mother suffers, on the expected baby, Dr. Ajinkia states that if toxemia starts at the end of the 4th month of pregnancy 303 and in spite of the treatment there is no change in toxemia for a period of 7 weeks thereafter, the condition of the child delivered 169 days after the marriage would most probably be a still birth. Dr. Mehta states that the effect of toxemia in the mother, speaking generally, is that the baby will be under sized and feeble, though if toxemia be 'of a short duration, the baby may not be affected. He, however, states that toxemia starting at the end of the 4th month of pregnancy and showing no change in spite of treatment for a period of 7 weeks thereafter, would result either in the child 's dying in the womb or in being delivered of on a premature date. The respondent 's suffering from toxemia for about 2 1/2 months at least prior to the delivery and from a very severe type of toxemia for about 7 weeks before the delivery, according to the medical opinion, would be an important factor in reducing the weight of the child born. There was nothing in the progress of the pregnancy of the respondent which could be conducive to the increase in weight of the foetus which would result from conception on or after March 10. A child born of a mother, who had so suffered from toxemia, after the full period of gestation can be 4 lbs. but a child born of such a mother after a period of 171 or 185 days of gestation cannot be 4 lbs. and will be less than 2 lbs. In fact, according to the medical opinion, the child born in such circumstances, should have been either dead already, or one which would die soon after delivery. The High Court relied on the statement of Dr. Mehta that though Such is the normal expectation, certain children may survive on account of their ' inherent vitality. We do not think that an extremely premature baby born of a mother who had suffered from severe toxemia has any chance of having such inherent vitality. The delivery took place at the Prantij Municipal Dispensary, Maternity Ward. Madhuben, witness No. 2 for the petitioner. was working as a mid wife at the hospital and had attended to the delivery of the respondent. She states that she had weighed the child and it weighed 4 or 4 1/2 pounds, that it was a mature child which was born after the expiry of the full period of gestation and that the child was a normal one. Her statement finds support from Exhibit K, one of the in door case papers relating to the respondent at the hospital. Madhuben states that Kachrabhai, the compounder, made entries in this paper under her instructions. Exhibit K, as printed, shows that the portion of the column under 'disease ' was torn. We have seen the original and could clearly read the word 'normal ' and the other word may be 304 either 'labour ', as stated by Madhuben, or 'delivery '. It records. 'Female child, weight 4 pounds '. The details noted about the interval between the starting of the labour pains and the delivery do not indicate that there was anything abnormal. Kacherabai, the compounder, was examined by the respondent as witness No. 2. According to him, a white paper known as 'the maternity card ' is also prepared along with the brown paper, which Exhibit K is, and that the white paper which must have accompanied Exhibit K was missing from the record. A photo copy of the pro forma white paper was taken on record. It requires entries about previous obstetric history and various other matters observed at the time of admission of a maternity case. There is no reason to suppose that the relevant white paper was removed from the records by the petitioner or by someone at his instance and that it contained matters which would show the entries in Exhibit K to be wrong or the statement of Madhuben to be inaccurate. Kachrabai states that all the records at the hospital remain in the custody of the Doctor, that they are kept under lock and key, that the key remains with the doctor or with him and that they were the only two responsible persons in the dispensary. he has also stated that in the file there were some other brown papers also for which there were no corresponding white papers and that he did not charge the petitioner with the removal of any white paper from this file and that it was no fault of the petitioner if any white paper was not on the file. He has also proved the entry with respect to the respondent 's delivery in the Maternity Admission Register. The entry is Exhibit 15. It also mentions the weight of the child to be 4 lbs. It has a 'dash ' in the column for 'conditions of the child '. Kacherabai states that this 'dash ' meant that the condition was good. A 'dash ' which is found in the column 'still born, miscarriage, abortion ' cannot mean 'good '. 'Dash ' in the column of 'condition of child ' may mean 'good ' as deposed to by Kacherabai. Any way, it must mean that there was nothing particular to note about the condition of the baby. Gokhale J., accepted Mahuben 's statement about the weight of the baby and its condition but did not accept the statement that the baby was born after a full period of gestation. He considered the delivery to be premature. Patel J., considered Madhuben to be unreliable, assumed the weight of the baby to be 4 lbs. and accepted the res pondent 's statement about the condition of the baby and its being born premature. Patel J. remarked, in meeting the submission for the peti tioner that Madhuben was living at Vrindaban and was leading a pious life and had no reason to make untrue statements 305 that sometimes such persons might be bigoted and narrow minded. He did not believe her statement that the child was kept on glucose for two days in accordance with the practice ' followed in the Prantij Hospital, as normally mother 's milk is available only after two days after the birth of the child. The statement is said to be contrary to those of most of the standard books referred to by the experts on behalf of the parties. Madhuben was not questioned about it and we have not been referred to any statement to the contrary in any book on the subject. He did not rely on the entry about the condition of the child as the various entries in Exhibit 17 showed that the condition of children weighing 3 lbs. or 4 lbs. or 6 lbs. was similarly noted. The description of the condition of a child as good, need not have a necessary relation with the weight of the child born. It is to be noted that, according to the entries in the Maternity Admission Register, Exhibit 17, most of the children born in the Prantij Hospital weighed 4 lbs. or less. The condition of all the children could not have been such as to require special mention. It may, however, be pointed out that no entry in Exhibit 17 shows the weight of the child to be 6 lbs. Patel J., suspected the genuineness of the entries in the hospital records as he mis read Kacherabai 's statement and so erroneously thought that the hurry with which the papers were produced by the Doctor raised some suspicion. Kacherabai, the compounder, examined for the respondent on May 7, 1950, stated: "Doctor has returned to Prantij yesterday. He had gone to attend some marriage about 3 or 4 days ago." Patel J., however, happened to mis read this statement and observed, in dealing with the question of normal delivery, "Keshavbhai (Kacherabai?), the witness of the respondent, the compounder, said that the doctor left only a day before his giving evidence, i.e. he, left on the 6th. The hurry with which the papers were produced by the doctor may raise some suspicion. " The fact is that Dr. Modi who was attached to the Prantij Municipal Dispensary in May 1959 was present in Court on May 2, 1959 to produce the documents summoned from him. He was not in a position to be present in Court between 3rd and 6th May on account of a marriage which was to take place on May 4. He, therefore, filed an affidavit that day stating the facts and requesting the Court to excuse his absence from Monday, May 4, 1959, till the morning of Thurs 306 day, May 7, and expressing his readiness to leave the records in the custody of the Court or such other person as the Court directed. The order sheet of the trial Court dated May 2, 1959shows that the petitioner 's counsel requested the Court to take the papers in its custody as the Doctor had come with the relevant papers. Counsel for the respondent had no objec tion. The records came in the custody of the Court in this. Patel J., says: "The white paper in respect of the respondent is missing. The petitioner and his advisers had the first glimpse of the hospital record in connection with this case if any one had it and it is a mystery that the white paper should disappear. " The order sheet of May 2, 1959 shows that counsel for the; petitioner had tendered in Court Entry No. 63 for the year 1947, i.e., Exhibit J. and indoor case papers of the respondent, Exhibit K. It adds: "Shri Mehta says that Dr. Modi (the doctor at the Prantij Municipal Dispensary who produced Exs. J & K) does not know of his personal (knowledge) and he is producing the records (maintained) in the ordinary course of business. Mr. Shah (counsel for the respondent) has no objection. " It appears that Dr. Modi did not file in Court any white paper. There is no evidence that the petitioner had the first glimpse of the hospital record and this is clear from the learned Judges using the expression 'if anyone had it '. The petitioner is not to blame for the missing of the white paper. When the learned Judge suspected the bonafides of Dr. Modi and the petitioner in connection with the missing of the white paper relating to the respondent 's delivery and was to base a finding on such a suspicion, he should have summoned Dr. Modi and examined him in that connection and should not have left the matter by a mere observation: 'The doctor who produced it could not be cross examined, as he produced the papers in a hurry '. We should, however, point out that what transpired when Exhibits J & K were produced gave no room for the comment made by the learned Judge. Patel J., was further of opinion that it was not expected of Madhuben to remember the condition of the child after so many years of the event and because the respondent herself described the condition of the child very much differently and the latter could be expected to have better reasons for remembering its condition than the mid wife. We may quote the statements of the respondent and Madhuben about the condition of the child. The respondent said: "The child born to me was a very weak one. It was a very. small one. She was not in a position to cry at 307 the time of her birth. She did not cry for two days after her birth. Her eyes were closed. There were, no hair on her head. She had no nails on her fingers and toes. She was not able to suck my milk. She was reddish in colour. As the baby was unable to suck my milk, milk was pumped out. That, milk was thrown away. The baby was given glucose and brandy. 12 or 13 days after delivery the baby was able to feed from the breast. " Madhuben said: "After the delivery Sushilabai appeared to be weak but the child was normal. It was crying. The movement of the limbs was normal. The eyes of the child were open and the child was taking glucose. The cries of the child indicated that the child was a healthy one." "At the time of the delivery of Sushilabai, Dr. Chimanlal was not present. No other doctor or nurse was called at the time of Sushilabai 's delivery. I alone attended to the delivery of Sushilabai. " Madhuben was not cross examined regarding her statement about the condition of the child and the respondent 's version about the condition of the child was not put to her. The only explanation suggested for this omission has been that the respondent herself was not present in Court that day and therefore could not have instructed the counsel in that regard. The explanation is feeble. The respondent was in Bombay on the day Madhuben was examined. She must have known that Madhuben had been summoned for evidence on that particular day and if she did not attend the Court that day it must have been with a purpose. A party has to give instructions to his counsel in good time and has not to put that off till the actual date of hearing. Madhuben was questioned as to how she remembered these facts and stated that during the proceedings of the case at Baroda, somebody had made enquiries from her and therefore she was reminded of the respondent 's delivery. This too must have happened in 1.948. It appears to us that the reason for her remembering the details of the respondent 's delivery could be the very fact which is the matter in issue in this case. The respondent belonged to a respectable family of the place which is not a large one. The date or at least the month of the marriage would be known in the locality. The delivery took place within an unusually short period of the marriage. It appears that people of the locality talked about it. In these circumstances, Madhuben could have recollected of this particular delivery when questioned about it. 308 It is very difficult for a witness to state on oath why he remembers a certain fact which took place long ago and the witness therefore makes his best to answer it at the spur of the moment. We do not consider the long period lapsing between the delivery and Madhuben 's statement in Court sufficient to justify ignoring her statement or consider her to be an unreliable witness when there is no reason for her to depose falsely, nor the fact that she stayed at the place of Manilal, fattier of the petitioner, in Bombay when she came to give evidence sufficient to discredit her. She went to Bombay from Vrindaban where she had been residing after she gave up service and bad been living the life of a devotee. It is true that a mother is not likely to forget the condition of the child born to her, but the value of the respondent 's statement depends on her veracity. Both the trial Court and the High Court in their judgements held her to be an unreliable witness. Patel J., relies on her statement only so far as it is about the condition of the child. We do not consider her statement about the condition of the child born to her to be worth reliance. She describes this condition to be practically exactly what ought to be the condition of a child after a period of gestation amounting to 171 days. The description given by her exactly fits in with the details of the descriptions found in text books on obstetrics. She was examined after the doctors examined for the petitioner and for her had made their statements. Apart from this, she could know from other sources what condition a baby born after that period of gestation should have and could therefore mould her statement accordingly. Before the remand of the issues by the High Court, it was not her case that the child was born prematurely or that its condition was such as would have been the condition of a child born after that period of gestation. If the condition described now was the real condition of the child born, there could have been no reason for her to think that her true story of having conceived by her husband after the marriage might not be accepted by the Court. She could have doubts about it only when the condition of the child did not fit in with the expected condition of a child born after that period of gestation. If the condition of the child was such as described by her, there was no reason why Madhuben would not have given instructions about the condition to the compounder, for noting in the Hospital records. That was not the normal condition of the child born, be it after the full expiry of the usual period of gestation or after almost the full period of gestation. There is no difference in the statements of the doctors examined in the case with respect to the care and attention necessary to be given to a baby born after such a period of gestation. The respondent was in the hospital till September 8, 309 1947. She states that great care was taken of the child, but if that extreme care was taken, there would have been some note about it in the hospital records and that itself would have been a very good reason for Madhuben to remember about the. , child 's condition. We see no reason why Madhuben be not believed when the available hospital records support her. She has no reason to depose falsely. In these circumstances, we are of opinion that Patel J., was in error in preferring the statement of the respondent to that of Madhuben. The weight of a child born, is again a factor which tends to support the statement of Madhuben about the condition of the child and goes against the statement of the respondent. The child weighed 4 lbs. Again, there is no difference in the opinion of the doctors examined for the parties that the weight of a child born at about the 6th month of pregnancy would be about 2 pounds. Such a statement is borne out from what is noted in the various books on that subject. We see no reason to doubt the statement of Madhuben about the weight of that child. The entries in Exhibits K and 15 support it. We do not see any reason to disbelieve the statement of Madhuben that the child was a mature child. The normal weight of a child born after the full period of gestation is, said to be 6 to 7 pounds, according to Dr. Ajinkia and 5 to 7 pounds, according to Dr. Mehta, but the weight of a normal child depends upon various circumstances. In this connection, it is worth noticing that Exhibit 17 contains entries about 35 cases of births at the Prantij Hospital between December, 1942 and August 1952, about which Kacherabai was questioned by the respondent 's counsel in the examination inchief. Out of these the majority of children weighed less than 4 lbs. Only one weighed 5 lbs. , one 4 lbs. and 8 ounces, and twelve weighed 4 lbs. Only one out of them appears to have died. It can be taken that the normal weight of the children born at this hospital is about 4 lbs. It is too much to expect that all these were cases of premature deliveries. It should not therefore be a matter for surprise and for disbelieving Madhuben when she states that the child born to the respondent was a mature child born after the expiry of the full period of gestation. Of course, her statement cannot be taken to be literally correct. What it amounts to is that the child was born after practically the full period of gestation and was definitely not a child born in the 6th or 7th month of pregnancy. There had been some difference of opinion between Dr. Ajinkia and Dr. Mehta examined for the petitioner and the respondent respectively, about the definition of 'normal labour ' or 'normal delivery '. Both are agreed with what the 310 expression 'labour ' means. Dr. Ajinkia states that normal labour would mean a series of processes by which the mature or almost mature products of conception are expelled from the mother 's body and referred to, in this connection, the definition of 'labour ' in Williams ' 'Obstetrics ', 10th Edition, p. 324. Dr. Mehta agrees with the definition but would not associate maturity or almost maturity of the child with the expression 'normal labour ' and would restrict that expression to mean labour during which no artificial means are used. He had to admit later that labour has connection with maturity. When questioned whether normal labour could be compatible with premature birth, Dr. Mehta stated in examination inchief : "It may be termed as a normal labour, but one specifies the term that it was a. premature one. " We are inclined to prefer Dr. Ajinkia 's view on this point. However, nothing, much turns on it in view of, our opinion about the weight of the child born and the weight being consistent with the weight of a child born after almost a full period of gestation, as would be discussed later. We, therefore, accept as true the statement of Madhuben and hold that the child born to the respondent on August 27, 1947 was after normal labour and weighed 4 lbs. We also believe her statement that it was a mature child and had been born after almost a full period of gestation for reasons we now state. We now deal with the question whether the child born after 171 days of marriage could survive and live for years, and if so, whether the respondent 's child was born premature or after almost the full period of gestation and refer to what Dr. Ajinkia and Dr. Mehta had said in this connection Dr. Ajinkia states that if special care is taken at the time of delivery and also in the treatment of a child prematurely born at the 28th week of conception, then it may survive. The special care he refers to is not just giving more attention to the baby by the relations, but of a particular type. He has described the special care to be taken in the process of delivery and the care required after the delivery. During the delivery the special care required is in regard to the following matters: 1. The labour should not be allowed to be prolonged. As soon as the baby is delivered, its temperature should be maintained. Oxygen should be given to the child, by special incubators. Some respiratory and circulatory stimulants will also be required. Baby will be required to be handled very gently. Since its resistance to fight infection is low, all the care is taken to prevent infection. The care required after delivery is in these respects: 1. Maintenance of warmth. Maintenance of proper nourishment. Prevention of cyanotic attacks by giving oxygen. Prevention of infection as stated before. The respondent remained in the hospital for about 12 days till September 8. Madhuben does not state of any such care being taken either during the delivery or afterwards. In fact. the hospital did not have the requisite equipment. Madhuben has stated that abnormal cases of delivery were not attended to at the hospital. Dr. Ajinkia further deposed that in his opinion even with the skilled care, a child born within the 7th calendar month cannot survive, and in this he is not fully supported by what Taylor states at p. 32 in his 'Principles & Practice of Medical Jurisprudence ', 11th Edn., Vol. II: "In the absence of any skilled care Hunter 's dictum on the unlikelihood of survival when born before the 7th calendar month remains as true as it was. " There cannot be any positive definite statement in these matters by any one including a doctor and especially when there have been exceptional cases of whatever veracity men tioned in medical books. Possibly there had been no such case in the personal experience of Dr. Ajinkia where a child born before the 7th calendar month survived in spite of the care given to the child presumably at the hospital. Dr. Mehta states that lie had not applied his mind to the question whether a child born after 169 or 171 days after conception would be born alive, but had applied his mind on the footing of 184 days counted from the first day of the last menstruation. He was not, therefore, in a position to challenge the statement of Dr. Ajinkia that a child born after 169 days from the date of conception would be born dead. Williams, in his book on Obstetrics, states at p. 186 that at the end of the 6th month, the foetus weighs about 600 grains and a foetus born at this period would attempt to breath, but almost always perishes within a short time. He further states that in the 7th month the foetus attains a weight of about 1,000 grams and that a foetus born at this time moves its feet quite energetically and cries with a weak voice and as. 312 a rule it cannot be reared, but occasionally expert care is rewarded by a, successful outcome. Williams, however, states that generally speaking the length affords a more accurate criterion of the age of the focus than its weight. The weight of the child, however, is a good index of the period of gestation, though it is not as good and accurate as the length of the child born. The baby 's weight of 4 lbs. at birth is not consistent with its being born after a gestation period of 185 days. It is, therefore, reasonable to conclude that the child born to the respondent and weighing 4 lbs. was not a child born on the 6th or 7th month of pregnancy. This supports Dr. Ajinkia 's statement. Madhuben does not state that the child was weak. The respondent states so. We do not believe her. Reference to certain letters may be made in this connection. Tile respondent 's sister sent a letter to Sharda on August 27 or 28 to which Sharda replied on August 3 1. It appears from Sharda 's letter that the respondent 's sister 's letter had said that the health of the respondent as well as of the baby was good. The sister 's letter does not, in any way, convey the information that the baby was very weak and of such a condition as is now described by the respondent. On August 30, the respondent 's father sent a telegram to the petitioner and said that both the respondent and the baby were well. On September 3, seven days after the birth of the child, Koderlal sends a letter to the petitioner. It is in this letter that he states: "After I had been to Marwar, our daughter Sushila has given birth to a daughter prematurely on 27th August 1947, at 'about 10 A.M. in the morning . . and the health of both is very well Intimation has been given to your father by wire and through letter but there is no reply from him." This letter was written after the petitioner 's parents had not responded in any way except by showing extreme indifference to the news of the birth of a grandchild. That, along with local gossip, must have put Koderlal on guard and even then he does not write anything with respect to the extremely weak condition of the child and simply states that the delivery was premature. Sushila also writes to Sharda, on the same day, i.e., September 3. She was still in the hospital and ordinarily the mother of a baby 6 or 7 days old would not have written a letter to anyone. She writes in this letter: "The health of myself, and my baby is all right. The baby is very weak Two letters and a telegram about the birth of the baby were sent to the respected Mamma, but there is no reply at all from the respected Pappa. Hence, all here are 313 very much worried as to why there is no reply from the 'Vevai ' (in laws) even to the telegram. And as I did not keep good health, the baby was born prematurely before the full period which of course is a matter over which the Almighty has dispensation. I do not know what idea he (PappaVevai) must be entertaining about me. To whom, but to you, can I write?. . A telegram was sent to London to your brother, informing him about the birth of the baby but God knows why there is no reply from him. " The contents of this letter tend to confirm what we have said in connection with the letter of the respondent 's father to the petitioner. The respondent and her people had a definite feeling that the petitioner and his people were not responding to the communications probably on account of the idea that the child born was not the petitioner 's child. The respondent indirectly gave expression to such a feeling by saying that she did not know what idea her father in law was entertaining about her. Any way, her letter does not state in what respect the baby was very weak. The expression that the baby was weak in no way conveys the idea that the baby 's condition was such as has been now described by the respondent. For a baby of mature period, the respondent 's child was certainly weak, but for a baby born after a period of about 6 months ' gestation, the baby born was not weak at all. The respondent sends a letter to the petitioner on December 22. She expresses her grievance at not being informed first of the petitioner 's return to the country, and states, "No one can be a match for nature; God alone stands for truth. Please forgive my mistakes if any. " These expressions also make out that she was fully conscious by this time that the indifference of her husband towards her was on account of the feeling that the child born was not his. Still in this letter she does not give a full picture of the condition of the child born to her in order to impress the correctness of her implied statement that the child was really of the petitioner. That was the time when she and her people, could have placed facts and evidence in the form of either statements from the doctors or references to the doctors to whom the petitioner could refer for such information which could have supported the respondent 's assertion. When no reply was received to this letter, it was then that the respondent wrote a letter to Sharda on January 8, 1948 and over a month later to the petitioner on February 16, 1948. 314 Reference has been made to these letters earlier in connection with the allegation that Champaklal had examined the respondent 's body in May 1947. In her letter to Sharda, she is more explicit than what she was in her letter to the petitioner on December 27. She said: "Hence I open out my heart to you this very day (and say) that I am absolutely innocent. I was in M.C. about ten days before the marriage It did not occur to me, even in my dream, that an accusation of such a roguery would be brought against me . To throw such an infamy on a person coming of a respectable family would indeed be the limit; Behen: You are kind and please think full well over this matter and bring it to end. As to whether it is your child or not, well, you may see it and satisfy yourself as to whether or not its appearance and features tally (with yours). " It is clear now, from this letter that she was fully con scious of the accusation against her, conveyed through silence if not through letters. Yet, in this letter, except for asserting her innocence, she does not come out with the facts about the condition of the baby and the extreme care taken by her. She wrote in similar strain to tier husband on February 16, and stated in that letter: "I was keeping weak health and was suffering from blood pressure and only on account of that the delivery has taken place earlier It is, therefore only the feeling of revenge entertained by the persons who have poisoned your ears towards me and the members of my family. Further, if I were at fault and if I wanted to hide something from you then I would not have taken proper care of the child who was and is still weak due to its premature birth and consequently it would have died and I would have told (you) that there was some thing like miscarriage. But as my conscience was clear and as I had trust in you I took proper care of it and brought about improvement in its health. It may well be that as you have not known me fully that you have got suspicious. But if you live with me you will be convinced that out of jealousy and revenge an absolutely false charge has been put on an innocent woman. " It is for the first time in this letter that something is said of taking proper care of the child who was weak. Even in this letter she had not given a description of the condition of the 315 child at the time of its birth a condition which would have sufficed to convey the idea that the child born was really am, child of about 6 months ' pregnancy. The letters of the respondent and her relations subsequent to the birth of the child do not bear out the respondent 's statement about the condition of the child at the time of its birth and. therefore, do not in any way discredit the statement of Madhuben about the condition of the child born and its weight. True that there had been instances of children born after a comparatively short period of gestation and that they had survived a few for some years too. But such cases are few and it may be open to doubt whether the period of gestation reported was absolutely correct. In this connection we may refer to Table No. 2 at p. 560 of 'British Obstetric & Gynaecological Practice ' by Holland & Bourne, 11 Edn., which relates to Total Consecutive Births, Male, Classified by Birth Weight & Gestation Time. It also mentions still births and neo natal deaths among them. It appears from this table that out of 7,037 cases of births, there were 3 births i.e., .043 per cent with a gestation period between about 155 and 175 days, that all those three were cases of still births or neo natal deaths and that the weight of each child was 1 lb. or so. There were 4 births i.e. 057 per cent with a gestation period between 170 and 185 days. All the four of them, were cases of still births and neo natal deaths. Only one of them weighed 6 lbs. Two weighed 2 lbs. each and one weighed 1 lb. 13 i.e., .19 per cent were births with a period of gestation between 185 and 200 days. 12 of them were cases of still births and neo natal deaths. Only two weighed 5 lbs. each, one of them surviving; one weighed 4 lbs. Three weighed 3 lbs. Six weighed 2 lbs. each and one weighed 1 lb. Dr. Mehta states that a baby born 169 days after conception would weigh between 1 1/2 and 2 lbs. A child whose weight at birth is 4 lbs. might in rare cases be a full term baby, but ordinarily it was taken to be a premature baby, according to him. and a 4 lbs. full term baby was a rare occurrence. The learned Judges considered the delivery premature on account of the respondent suffering from toxemia. We do not agree. Dr. Ajinkia states that a premature delivery is one which takes place between the 28th week and the 40th week from the date of conception and that miscarriage means the expulsion of the product of conception before the 28th week of con ception. He has also stated that the shorter the period of gestation, the more feeble would be the child and fewer would be the hours of its survival, while a child born out of miscarriage could not survive even with special care because it 316 was not a viable child. By viable he meant that the child has been sufficiently developed to continue separate existence from the mother. He is emphatic that a child could not be viable even before the 28th week, say 25th or 26th week. Dr. Mehta, on the other hand, states that a child is sup posed to be normally viable about the 28th week, that there can be exceptions and a child might be viable before the 28th week and could be born alive and could survive. He said that he made this statement on the basis of knowledge which he had acquired from the standard books and referred to three cases mentioned in De Lee 's Book. Dr. Mehta has further stated with respect to premature deliveries that premature delivery could be before the 28th week. At first he stated that he could not say how long before such a delivery could be, but when pressed in cross examination he stated that a 20 weeks ' foetus, if ejected alive or dead from the body of a woman it would be a premature birth. He admitted that abortion was different from premature delivery and also stated that if the delivery took place before the 28th week it was termed either miscarriage or abortion, but added that if the child born was a viable child, then such a delivery would be called a premature delivery. He could not contradict Dr. Ajinkia 's statement that a child born after 169 days from the date of conception would be born dead. We may refer to what is stated about premature termination of pregnancy in British Obstetric Practice by Holland, at pp. 559 561, 2nd Edition: "Premature termination of pregnancy may be defined as termination of the pregnancy after the twentyeighth week (accepted date of viability of the foetus) and before the fortieth week, counting from the first day of the last menstrual period. On the other hand, most writers on the subject of prematurity tend to define the condition in terms of the weight of the baby rather than in terms of the maturity of the pregnancy. It was first laid down by the American Academy of Pediatrics in 1935 that a premature infant is one that weighs 5 1/2 lb. (2,500 gm) or less, regardless of the period of gestation. This definition was accepted by the International Medical Committee of the League of Nations and has gained universal acceptance, in spite of its scientific inaccuracy. Most obstetricians have seen babies of less than 5 1/2 lb. born after a gestation period of more than 280 days. Indeed, birth weight and duration of pregnancy are far from perfectly correlated. Infants weighing less than 5 1/2 lb. at birth may even be post mature. This 317 is well shown in Table 2 constructed by Kane and Penrose from 7,037 live births from University College Hospital records. It is seen that 470 babies weighed less than 5 1/2 lb., but that III (23.6 per cent) of these under weight babies were born at term or later, according to the ordinary method of calculation. The term immaturity has been suggested as an alternative in view of these discrepancies, but it has not received universal acceptance. There is, however, more than academic significance in the difference because maturity as such, irrespective of weight, is of the greatest importance in relation to foetal survival. A baby whose birth weight is 4 lb., if born at thirty eight weeks stands a far better chance of survival, and is more likely to develop into a healthy child, both mentally and physically, than one of the same weight born a month earlier. " What has been said above about the viability of a child or its premature birth is with respect to a child born of a mother whose pregnancy progressed normally. The chances of survival of a baby born, of a mother who had suffered from severe toxemia for about two months prior to the delivery, are bound to be much less and would be further less if no special care is taken during delivery and thereafter. The weight of the respondent 's baby, its condition at birth and its having lived as a mature child born after full period of gestation does, together with the other circumstances connected with the progress of the pregnancy, amply support the petitioner 's case that the child born to the respondent could not be of the petitioner. We have been referred to several cases in which the question about a child being conceived from the husband or not arose. Suffice it to say that cases fall into two categories. One where delivery takes place much more than 280 days after the husband had last opportunity to cohabit with his wife and the other where it takes place much earlier than 280 days from the first day of menstruation prior to conception. The first type of cases, to which reference need not be made, involve the determination of the question as to the period it took for a sperm to fertilize the ovum. Nothing precise about the period was known when cases prior to the decision of Preston Jones ' case(1) came up for consideration. It was considered to vary much and so children born so long as 349 days after the known period of cohabitation were held to be legitimate, as not proved to be the results of adultery. No such question however arises in the other type of cases as the decision is to be given on the assumption that there had been fertilisation on the first day possible for the coitus between the husband and wife. The question to determine in such cases is (1)(1951) A.C. 391. 318 whether the short period of gestation would justify the con clusion that the child was born of conception from that coitus or was born as a result of some other sexual relations between the woman and someone prior to that coitus between the husband and wife. One such case was Clark vs Clark(1) on which much reliance has been placed by the Court below. In this divorce case, on the petition of the husband there was no evidence of misconduct on the part of the wife and the only evidence of adultery was the fact of the birth of a child the period of gestation of which, assuming the husband to be the father, could not have exceeded 174 days. The child lived, and,. at tile date of the hearing was about 3 years old. The medical evidence was to the effect that a child of so short a period of foetal life would not survive for more than day or two. In view of tile fact that the date of conception could be fixed very rarely, it was considered that the periods of gestation generally spoken of were notional periods and that therefore where the (late of conception could be fixed and thus the actual period of gestation be ascertained, such period was comparable to the longer notional period and consequently a six months ' child might be comparable to what was called a 7 months ' child. The facts of that case were very much different from the present case and must have naturally influenced the view that a six months ' child be comparable to a 7 months ' child. The Court considered the allegation of the husband who lived quite close to where the wife lived for about a year after the delivery, that the child when born was a fully developed 9 months ' child, grotesque. The Court believed the evidence of the nurse with 30 years ' experience that the child born was one of the two most extreme cases of premature births she had seen. The wife 's mother deposed about the condition of the child which corresponded to a child born after 174 days of the conception. The Court believed the statement of the mother of the child. The lower limbs of the child were in irons even about 3 year& after its birth. Tile delivery was hastened on account of an accident. The mother of the child had fallen a day earlier. The weight of the child, though noted as 3 1/2 lbs. was not more. than 2 1/2 lbs., as the former weight included the weight of the towel. The notional period of pregnancy is calculated from the first day of the menstruation preceding the conception and it is on this account that 14 days are added to the period of pregnancy from the actual date of conception. On the basis of notional calculation, the fully mature child is born after 280 days. On the basis of the date of conception, the child is born (1) [1939] 2 All E.P. 59. 319 between 265 and 2 '70 days. The development of the foetus undoubtedly depends on its age as counted from the date of conception and it is for this reason that the books on Obstetrics mostly deal with the development of the foetus on the basis of, days or weeks after conception, for a period of about 2 months and thereafter they begin to note its development with respect, to the end of the 3rd and consecutive months. This must be due to the fact that by that time a difference of about a fortnight in the period of gestation does not bring about a substantial difference in tile description of the development of the foetus. After all, the entire knowledge with respect to the development of the foetus with respect to the period of gestation is based on a consideration of a large number of cases and then arriving at some generalized conclusion about the develop ment of the foetus corresponding to its age from the date of conception. It would not therefore be very correct to add 1 lunar month to the ascertained period of gestation in cases of a known date of conception merely on the ground that when books speak of a foetus of a certain number of months that foetus might be due to a conception taking place on any day of the lunar month corresponding to the menstruation prior to the conception and the miss period after conception. In the present case, however, it is known that the earliest ,date for conception can be March 10, 1947. It is the statement of the respondent herself that about 10 days prior to the marriage she had her monthly course. It is clear therefore that the notional period of pregnancy in the present case cannot execeed the period from March 10 by more than 10 days. This means that the notional period of gestation of the respondent 's child cannot be more than 181 days. We have, however, considered the case on the footing of 185 days which is equal to the period between March 10 and August 27 (both days inclusive) plus 14 days. There can therefore be no justification in the present case to consider that the respondent 's child, though of 171 days ' gestation after conception, if it be taken to be conceived on March 10, could be notionally equivalent to an age of 171 days plus 28 days, i.e., 199 days. We are therefore of opinion that Clark 's case(1) cannot be a good guide, both on facts and law, for the determination of the question before us about the legitimacy of the respon dent 's child. It may be mentioned that Clark 's case(1) was distinguished in Guardianship of Infants Act, 1886 & 1925. In re. and In re. section B. an Infant.(2)B. vs B. where it was held that a period of 188 days is too short to be accepted in law as a period of :gestation on the ground that in Clark 's case(3) the child was (1) (2) 1949(1) Ch. 320 not held to be a fully developed nine months ' child but was held, in view of the evidence of the experienced mid wife, to be an extreme case of premature birth. It was said at P. 110: "There is, as I have said, no such evidence of prematurity here, and it would be straining the facts to assume that the birth was the result of intercourse that took place only 188 days previously. " It is true that no allegation of any kind has been made about the respondent 's general immorality or about her mis conducting with someone at the time when the child born to her could be conceived. The mere fact that her character in general is not challenged does not suffice to rebut the conclusion arrived at from the various circumstances already discussed. The only question before us is whether on the evidence led it is possible for the petitioner to be the father of the child. The facts and matters we have set out earlier clearly establish that the conception to produce a child of the type delivered must have taken place before March, 10, 1947, and if, as is now the case, the petitioner 's first sexual contact with the respondent was on March 10, 1947, it follows that the respondent was pregnant by someone other than the petitioner at the time of her marriage. The respondent, in her letter dated February 16, 1948 to her husband said: "Further, you know that one has to insult wicked persons in order to remain chaste. Therefore those wicked persons who have been insulted are ready to take revenge. Hence it is only out of jealousy that they poison your ears. " If this statement is correct, it shows that persons in her village had evil eyes on her and that she had to reject their advances. We may also now mention certain other circumstances on which the respondent relied to show that however unusual it might be, the child born to her was by the petitioner 's marital intercourse with her after their wedding. They are: 1. Reluctance of the respondent to meet even the petitioner before the marriage though the engagement continued for a period of two years and she loved him. Suggestion to break off the engagement as late as January and February. Reluctance to abort the child. Symptoms of vomiting and nausea immediately after the miss of period. 321 5. The fact that Champaklal, the brother in law of the petitioner did not notice the pregnancy of the respondent which would be sure to have far advanced if the allegation were true, though she lived with him,, and was examined by him. She stayed up to the end of May at Vile Parle in the house of the petitioner 's father and yet the pregnancy was not noticed. The progress of pregnancy from the beginning which was consistent only with pregnancy by marriage. The child being very weak and under weight. Sudden delivery. The first circumstance can only indicate that she was moral and did not want to have any irregular connection with the petitioner prior to the marriage. The petitioner has not challenged her character. A good general character does not necessarily mean that nobody could have had sexual inter course with her even by force, a possibility indicated by her letter just quoted. The second circumstance urged is that if she had become pregnant, she could have accepted the suggestion of breaking off the engagement when the petitioner had been expressing his dissatisfaction at his engagement with her. She could not have been very independent about it. The engagement was brought about by the parents of the parties though, possibly, with the implied or express consent of theirs. Breaking off the engagement might have led to scandals. She wrote to the petitioner in her letter dated May, 15, 1946 that people asked her as to why marriage was not taking place. A betrothal period of about 2 years is ordinarily a long period, when the parties were of marriageable age. So this circumstance, again, is of no force. The third circumstance about her reluctance to abort the child, again, is not of any value. Abortion, as suggested by the petitioner in his letters of April 5 and 8, too would have led to complications and scandal and it could not have been certain that the abortion would not disclose the longer age of the foetus than what it ought to have been if it was of a connection after the marriage. We have already dealt with the symptoms of nausea and vomiting appearing immediately after the first miss of the period and ceasing suddenly about the middle of April and held that they appeared to be more consistent with the peti tioner 's case than with the respondent 'section L/P(D) ISCI 11 322 We have also dealt with the possibility of Champaklal 'section observing the stage of her pregnancy when she was at Gamdevi in the month of May and have held that he could not possibly have noticed it. It is true that there is no evidence that her parents in law noticed during her stay at Bombay, from about the middle of May to June 4, that she was in an unduly advanced stage of pregnancy. Reference has already been made to the implica tion of the statement in her letter that her mother in law asked her to take all the ornaments with her when she was leaving, for her paternal place on or about June 4. We have also referred to a letter of her father in law ex pressing no surprise and showing coldness on his part on learning of her condition in the last week of July 1947 and to persons talking about her and the petitioner by May 24, 1947. It is therefore not possible to say that the advanced stage of pregnancy wits not noticed when she was at Bombay in the month of May. We have already dealt with the progress of the pregnancy and. need not say anything more in that connection. It is not established that the child was very weak and was under weight. The last circumstance urged on behalf of the respondent. is the fact of sudden delivery. The only circumstance alleged in this regard is that her father was not at Prantij on August 27. Koderlal stated in his letter to the petitioner on September 3 that after lie had been to Marwar their daughter Sushila had given birth to a daughter. If this statement, as translated, is correct, it shows that Koderlal had returned from his visit to Marwar and not that the delivery took place when he was away from Prantij. The respondent 's bare statement that her father was not in the village that day, therefore, does not suffice to lead to the conclusion that the delivery was sudden and that no arrangements had. been made for the delivery and that the delivery did take place after six months of pregnancy. Further, a sudden delivery need not be a delivery of the six months ' child. It may be a delivery sometime before the ex pected date. Even in such a case, no particular arrangements for the confinement might be made by the relations. We have already referred to the respondent 's statement in her letter dated August 13, 1947 that the doctors were contemplating arrangements for the respondent 's confinement in view of expected delivery, be it on account of the normally expected time of delivery approaching or of expecting an early delivery on account of the toxemic condition of the respondent. She said in that letter that they were going to take her to Ahmedabad or Bombay for the delivery since in a village like hers there was not sufficient equipment available. It cannot therefore be said that the delivery was so sudden as to bear out the. 323 respondent 's case that the delivery took place when she bad just completed 6 months of pregnancy. On the basis of the evidence discussed above and the pro babilities of the case, we are of opinion that the child born to,, the respondent on August 27, 1947 was practically a mature child and weighed 4 lbs in weight and that therefore it could not have been the result of a conception taking place on or after March 10, 1947. It follows that it was conceived prior .to March 10 and that therefore the respondent was pregnant at the time of marriage. Lastly, we may refer to sections 112 and 114 of the Evidence Act. Section 114 provides that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to facts of the particular case. The conclusion we have arrived at about the child born to the respondent being not the child of the appellant, fits in with the presumption to be drawn in accordance with the provisions of this section. People in general consider that the child born, being of a gestation period of 185 days, cannot be a fairly mature baby and cannot survive like a normal child. Medical opinion, as it exists today and as is disclosed by text books on Obstetrics and Gynaecology, however, refer to some rare exceptions of livebirths even with a gestation period of a few days less than 180 days. But we have not found it possible to accept the respondent 's case of the conception having taken place from and after March 10, 1947 for several reasons which we have explained in detail at the relevant place. We should observe that in the case before us the earliest date on which conception through the husband could have taken place is fixed with certainty, a matter which could not be said of the freak cases referred to in medical literature, for in them the earliest date of conception was a matter of guess or inference. Besides, we have the feature in the present case, of evidence regarding the various phenomena and bodily changes attending on pregnancy at different stages of its course, and the combined effect of these does preclude any argument of a conception on or after March 10, 1947. Lastly, we have definite evidence, oral and documentary, of the condition of the child at birth which is wholly inconsistent with a gestation of less than six months ' duration, assuming that a live birth and the child healthy enough to survive is possible with such short duration of pregnancy. In passing, we might add that we consider it probable that it was because the physical condition of the child at birth approximated to a normal mature child, that the respondent originally put forward a case of pre marital intercourse with the husband a story she could not sustain and which she ultimately abandoned. 1/P(D)ISCI 11 324 Section 112 of the Evidence Act provides that the fact that any person was born during the continuance of a valid marriage between his mother and any man shall be conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at any time when he could have been begotten. The question of the legitimacy of the child born to the res pondent does not directly arise in this case, though the conclusion we have reached is certain to affect the legitimacy of the respondent 's daughter. However, the fact that she was born during the continuance of the valid marriage between the parties cannot be taken to be conclusive proof of her being a legitimate daughter of the appellant, as the various circumstances dealt with by us above, establish that she must have begotten sometime earlier than March 10, 1947, and as it has been found by the Courts below, and the finding has not been questioned here before us. that the appellant had no access to the respondent at the relevant time. It has been found by the Courts below that the petitioner had no sexual intercourse with the respondent prior to mar riage on March 10. This finding has not been challenged be fore us and appears to us to be well founded. The only con clusion is that the respondent was pregnant at the time of marriage by someone other than the petitioner. The next question to determine is whether the petitioner had marital intercourse with the respondent after he had dis covered that she was pregnant at the time of marriage by someone other than himself. The trial Court found that the petitioner did not have such intercourse after he had discovered about the respondent being pregnant at the time of marriage. Patel J., did not agree with that finding. Gokhale J., considered the view of the trial Court to be correct. The petitioner states that he discovered the respondent being pregnant at the time of marriage by another person when he learnt of her delivering the child on August 27, 1.947 and when be felt that could not be his child. He has further stated that since his return from abroad he had no intercourse with her and that is not disputed. The respondent admits it. There is no evidence to the contrary either. The last marital intercourse the petitioner bad with his wife was at Bombay, before he left for abroad. That was between April 23 and 27. The question then is whether he could have known during those days about the respondent 's being pregnant at the time of marriage. The respondent does not state at that time she had such ostensible symptoms which could have led the petitioner discover that she bad been pregnant at the time of marriage. The opinion of the experts on 325 this point is not very decisive. Dr. Ajinkia has stated in crossexamination that ordinarily the petitioner should have been aware about the respondent 's condition who was in advanced pregnancy when he had coitus with her on April 26 when the foetus would have been 157 days old on the assumption ' that it had started its life i.e., the ovum had fertilised on ember 20, 1946. He however added that it would not be possible for the petitioner to detect that the respondent was pregnant if the coitus took place in darkness. He further stated that the woman who is pregnant for the first time has her abdominal tissues so tense that a non medical. person coming into contact by act of coitus might not be able to detect the enlargement of the abdomen. A husband, without having medical knowledge, can feel abdominal enlargement without any difficulty during coitus only when the pregnancy is advanced above 6 months. Dr. Mehta, stated in examination in chief that a man having Coitus with his wife 157 days after pregnancy begins, would immediately know about her being in a fairly advanced stage of pregnancy and added in answer to the Court 's question that he would not know that she had been pregnant for 157 days but only know that she was merely pregnant. When asked by the respondent 's counsel whether the, husband would or would not have noticed the difference between 1 1/2 months ' pregnancy and pregnancy of 5 months and 17 days he replied that the husband would not notice a pregnancy of 1 1/2 months ' but would certainly notice 5 1/2 months ' pregnancy. We consider these statements to be of no help in coming to a finding on the point whether the petitioner could discover on April 26 that his wife was not only pregnant but was pregnant from some day much earlier than the tenth day of March 1947 when they were married. Neither of the two doc tors was questioned as to whether the petitioner could have known that his wife 's pregnancy was of more than 1 1/2 months ' duration, and, unless the petitioner knew that, he could not be said to have discovered on April 26 that the respondent had been pregnant by someone else at the time of marriage, irrespective of the fact whether the coitus that night took place in darkness or in light. In this connection, we may again refer to what Williams says in his 'Obstetrics ', 12th Edition, at p. 270 : "It should also be borne in mind, that the abdomen changes its shape materially according as the woman is in the upright or horizontal position, being much less prominent when she is lying down. " We may also say that the mere fact that the petitioner alleges that the respondent gave birth to the child after a full 326 period of gestation, does not actually mean that the child was born after such a period. The petitioner could not have known when the child was conceived. By that statement he simply expresses his view, based on the fact that a fairly mature child was born on August 27, 1947 though the marriage had taken place on March 10. The fact that the child born to the respondent was a mature baby does not mean that it was conceived on November 20, 1946. We have already indicated that the weight of the child and the surrounding circumstances could only indicate that the child was born after almost the usual period of gestation, though it could not be said that it must have been conceived 280 days earlier. We therefore hold that the petitioner did not have marital intercourse with the respondent after he had discovered that she had been pregnant by someone else at the time of marriage. We have already said that there is no collusion between the parties. The petitioner filed the petition within time. There is no legal ground which would justify refusing the petitioner a decree for declaring the marriage between the parties to be null and void. We therefore allow the appeal, set aside the decree of the Court below and annul the marriage between the parties by a decree of nullity. We direct the parties to bear their own costs throughout. MUDHOLKAR, J I regret my inability to agree with the judgment proposed by my brother, Raghubar Dayal, J. The appeal arises out of a petition for divorce instituted by the appellant on April 18, 1956 in the City Civil Court of Bombay against his wife, the respondent under s.12(1) (d) of the . The petition was decreed by the City Civil Court, but on appeal, the High Court dismissed it. Certain broad facts which are not in dispute are briefly these: The appellant is a resident of Bombay, while the res pondent 's father was a resident of Prantij in the former State of Baroda. They were betrothed to each other in June or July, 1945, and their marriage was celebrated at Bombay according to Hindu rites on March 10, 1947. Thereafter, the couple lived together as husband and wife for a short while, and the respondent then went to her parents ' house at Prantij where she stayed till the third week of April, 1947. During her stay there she wrote to her husband informing him that she was in the family way. The appellant was to leave for the United States in connection with the family business, and, therefore, the respondent returned to Bombay towards the end of April of 327 that year. The husband and wife admittedly had martial relations during this visit of the respondent to Bombay. After them appellant 's departure. for the United States, the respondent stayed with the appellant 's father for a few days, and thereafter at Gamdevi in the hous of the appellant 's sister, Sharda and her husband. She stayed there for about four weeks, and then again returned to her father in law 's house at Vile Parle. From the correspondence between the parties, it appears that the respondent and her mother in law were not getting on well, and the appellant, therefore, advised her to arrange for her return to her father 's house as early as she could manage it. In pursuance of this, the respondent returned to her father 's house along with some one who had been sent by her father to fetch her. There was considerable correspondence between the parties subsequent to this until August 27, 1947, on which date the respondent gave birth to a female child at Prantij. Information about this was communicated telegraphically as well as by a letter to the appellant 's father and also to the appellant himself. According to the appellant, he was shocked when he learnt that the child was born to the respondent only 5 months and 17 days after their marriage, and he suspected that this child had been conceived before the marriage through some one else. After his return to India in November, 1947 he instituted a suit in a Baroda Court for the annulment of the marriage under the Baroda State Divorce Act, but that suit, which was defended on merits by the respondent, was dismissed by the Baroda Court on the ground of want of jurisdiction. The came into force on May 18, 1955. Under this Act, it was competent to a person, though married prior to the commencement of the Act, to apply for divorce upon certain grounds including those set out in s.12((1)(d) within one year of the commencement of the Act. Availing himself of this provision, the appellant preferred a petition, out of which this appeal arises. In the petition the appellant made allegations against the respondent to the effect that the child born to her was conceived by her through a person other than himself, and that she was actually in the family way before the marriage, of which fact he was not aware at that time. In her written statement the respondent denied these allegations. She stated that after their betrothal she succumbed to the entreaties and representations made by the appellant and permitted him to have sex relations with her, and that as a result of this, she had conceived from him. She further averred that the appellant, his sister and her husband were all aware of this before the marriage, and thus no fraud had been practised upon the appellant and the members of his family by her. It may be mentioned that such a plea was not taken by the respondent in the written 328 statement which she had filed in the proceedings, which bad been instituted in the Baroda Court. In her evidence, however, she has confined her averment only to having had sex relations with the appellant before the marriage, and stated that she was not aware at the time of the marriage that she was pregnant. She added that she came to know of her pregnancy only when she started vomiting, which was after her return to Prantij subsequent to the marriage. She has not repeated in her evidence the allegations that the appellant or any members of the family were aware of the fact of her pregnancy before the marriage. Upon the pleadings of the parties, the City Civil Court raised the following six issues: "(1) Whether the Respondent at the time of the marriage was pregnant by some one other than the Petitioner as alleged in para 9 of the Petition '? (2) Whether at the time of the marriage the petitioner was ignorant of the aforesaid fact? (3) Whether the petition is not maintainable for the reasons alleged in para 2 of written statement? (4) Whether the Petitioner 's claim in the petition is barred by the Law of Limitation for the reasons alleged in paras 3 and 4 of the written statement? (5) Whether the Petitioner is entitled to have the marriage declared null and void? (6) To what relief the petitioner is entitled?" The Court answered issues (1), (2) and (5) in the affirma tive, and issues 3 and 4 in negative, and granted a decree to the appellant in terms of the prayer in the plaint. When the matter went up in appeal before the High Court, the two learned Judges. Gokhale and Patel, JJ. who heard it did not feel satisfied that the appellant had proved that the respondent was pregnant by some one other than the appel lant, and that the appellant was not the father of the child which was born to the respondent. In his judgment, Patel, J. observed : "The question then is whether we should dismiss the petition on this ground. As mentioned before the evidence is not decisive of the pregnancy of the respondent before her marriage. The effect of a decree of nullity might be very serious to the child who is living and who is now 10 years old as also to the respondents. " Gokhale, J. expressed his agreement generally with the view taken by Patel, J, and after pointing out the necessity of obtaining on record expert evidence, said that the case should be sent down to the trial Court to record a finding as to whether 329 it was proved that the respondent was pregnant at the time of marriage. Accordingly, the following two issues were framed by the High Court and the case was remitted to the City Civil Court for recording a finding: 1. Is it proved that the respondent was pregnant at the time of the marriage? 2. Is it proved that marital intercourse with the consent of the petitioner has not taken place since the discovery by the petitioner of the existence of the grounds for a decree ?". It may be mentioned that Mr. Amin, who appeared for the present appellant, contended that a great injustice would be done to him if these issues were required to be determined now. His objection was, however, overruled by the Court. Patel, J. pointing out that it would be the respondent who would be in greater difficulty, as her father was dead, and the Munim who was attending to the affairs of the family was dead, and the doctor, who attended on her during her pregnancy, was also dead. After the matter went back to the trial Court, five additional witnesses were examined by the appellant, including his brother in law, who is a doctor and a Gynaecologist, Dr. Ajinkya and a pediatrician Dr. Udani. The respondent examined herself as well as Dr. Mehta, a Gynaecologist and two other witnesses. Upon a consideration of the additional evidence, the High Court allowed the appeal. Before us, the first point urged by Mr. section T. Desai appear ing for the appellant is that the High Court was in error in ordering the recording of fresh evidence. It is indeed surprising that the High Court which has correctly stated the legal position obtaining in divorce petitions, should have, upon its considered view that the evidence already adduced by the appellant was not sufficient to justify a passing of decree for annulment of marriage, sent down, despite the opposition of Mr. Amin on behalf of the appellant, two issues for recording fresh findings by the City Court after permitting the parties to adduce additional evidence. It may be mentioned that the High Court thought that it was doing so to afford to the respondent, whose whole life was at stake, as observed by Patel, J., an opportunity to defend her honour and chastity. This question, however, did not really arise, if, in fact, the High Court felt that the appellant had not discharged the burden which the law had placed upon him to satisfy the Court beyond doubt that the respondent was pregnant by a person other than himself before the marriage, and that he was not aware of it. The two issues sent down for retrial by the High Court would seem to suggest that these essential points had been missed by the trial Court. I have quoted in extenso the 330. issues framed by the trial Court, and issues (1), (2) and (5) seem to cover both. the additional issues settled by the High Court. No doubt, the first issue reads thus: "Whether the respondent at the time of the marriage was pregnant by some one other than the petitioner as alleged in para 9 of the Petition?". This itself consists of two parts, the first being whether the respondent was pregnant at the time of the marriage, and the second being whether she was pregnant through a person other than the appellant. The fifth issue is undoubtedly couched in general terms, but it certainly includes the content of the second additional issue. The High Court was itself cognisant of this because after reproducing (see judgment of Patel, J.) the terms of s.23(1) it has set out what, according to it, would be the issues which would arise. Section 23(1) so far as relevant reads as follows: "In any proceeding under this Act, whether defended or not, if the court is satisfied that (a) any of the grounds for granting relief exists and the petitioner is not in any way taking advantage of his or her own wrong or disability for the purpose of such relief, (b) the petition is not presented or prosecuted in collusion with the respondent, (c) there has not been any unnecessary or improper delay in instituting the proceedings, and (d) there is no other legal ground why relief should not be granted, then and in such a case, but not otherwise, the Court shall decree such relief accordingly. " The issues which would arise, therefore, would be, as pointed out by Patel, J. the following: "(1) Whether the respondent was pregnant at the date of marriage. (2) If she was whether she was pregnant by some one other than the petitioner. (3) Whether the petitioner was at the time of marriage ignorant of the facts alleged. (4) Whether marital intercourse with the consent of the petitioner has not taken place since the discovery by the petitioner of the existence of the grounds for a decree. " That the trial Court was itself aware of this, would be clear from paragraph 43 of its judgment. It has dealt with the argument of Mr. Shah on behalf of the respondent that the 331 condition precedent laid down in s.12(2)(b)(iii) was not complied with by the appellant. 1, therefore, agree with Mr. Desai that the remission of the issues was wholly unjustified and should not have been allowed. The effect of this, however, would be that the entire evidence adduced thereafter including the evidence upon which Mr. Desai has placed such strong reliance before us will have to be completely left out of consideration. No doubt, an appellate Court has the power under section 107 of the Civil Procedure Code to remand a case or to frame issues and refer them for trial, or to take additional evidence or require such evidence to be taken. But the exercise of these powers is regulated by the provisions of 0.41, rr. 23 to 25 and 27. Under r.23, an appellate Court has the power to remand a case where the suit has been disposed of by the trial Court upon a preliminary point and its decision is reversed by the appellate Court. Rule 24 provides that where the evidence upon the record is sufficient to enable the appellate Court to pronounce judgment, it may do so and may proceed wholly upon the ground other than that on which the appellate Court proceeds. For this purpose it can also re settle the issues if it finds it necessary so to do. A power to frame additional issues is conferred by r.25, which reads as follows: "Where the Court from whose decree the appeal is preferred has omitted to frame or try any issue, or to determine any question of fact, which appears to the Appellate Court essential to the right decision of the suit upon the merits, the Appellate Court may, if necessary, frame issues, and refer the same for trial to the Court from whose decree the appeal is preferred, and in such case shall direct such Court to take the additional evidence required; and such Court shall proceed to try such issue and shall return the evidence to the Appellate Court together with its findings thereon and the reasons therefor. " Rule 27 deals with production of additional evidence in the appellate Court and prescribes the conditions upon which additional evidence can be allowed to be adduced in the appellate Court. Rule 25 circumscribes the powers of the appellate Court to frame an issue and refer the same for trial to the Court below, if need be by taking additional evidence, and permits it to adopt this course only if (a) the trial Court had omitted to frame an issue, (b) try an issue or (c) to determine any question of fact which appears to the appellate Court essential to the right decision of the suit upon the merits. In this case, the High Court his purported to exercise its powers 332 upon the ground that proper issues were not framed by the trial Court. I have already indicated above that the content of the two additional issues framed by the High Court is to be found in three of the issues raised by the City Civil Court. Therefore, there was no scope for the exercise of the High Court of its power under r. 25. No doubt, the High Court has made no reference to r. 25 when it framed the additional issues and sent them down for a finding; but its action must be referable to r. 25, because that is the provision of law which deals with the question of remitting issues for trial to the trial Court. I may add that in view of the express provisions of this rule the High Court could not have had recourse to inherent powers, because it is well settled that inherent powers can be availed of ex debito justitiae only in the absence of express provisions in the Code. Upon this view it would, therefore, follow that this appeal must be decided only on the basis of the evidence which was before the City Civil Court prior to the interlocutory judgement of the Hight Court remitting to it two issues for findings, leaving altogether out of consideration the evidence subsequently brought on record by the parties. Before I deal with that evidence, it would be desirable to set out in brief the requirements of the law in a petition of this kind. The appellant had sought annulment of his marriage with the respondent upon the ground that she was pregnant by a person other than himself before the marriage, and that he was not aware of this fact. The law of divorce in India, is broadly speaking, modelled on the law of England. It will, therefore, be useful to refer to the decisions of the Courts in England. In Ginesi vs Ginesi(1), it was said that in matrimonial cases the same strict proof of adultery is required as in criminal cases, and that the matrimonial offence must be proved beyond all reasonable doubt to the satisfaction of the tribunal of fact. This decision was criticised in Gower vs Gower(2). Ginesi vs Ginesi(l) was actually followed in Fairman vs Fairman (3), where it was observed that when a witness gives evidence in matrimonial proceedings that he or she has committed adultery with a party to those proceedings that evidence must be treated with the same circumspection as the evidence of an accomplice in a criminal case. The view taken in Ginesi 's case(1) has also been accepted in Preston Jones vs Preston Jones(4) and Galler vs Galler(5). In the first of these two cases, which is a decision of the House of Lords, it was established by evidence that during the period between 186 and 360 days before the birth of the child (1)(1948) (2) (3)L.R. (4) (5) 333 to the wife the husband had been continuously absent abroad and that there had been no opportunity for intercourse bet ween them. The child was normally delivered, and appeared a normal, healthy and full time child. It was contended on behalf of the husband that in these circumstances the child must be deemed to have been born of adulterous intercourse by the wife with some one else. With the exception of Lord Oaksey, the view of the House of Lords was that the onus of proof on the husband in a case of this kind did not extend to establishing the scientific impossibility of his being the father of the child. Lord Simonds. Lord Oaksey and Lord Mac Dermott were of the view that in the case of an interval of 360 days between intercourse with her husband and the birth of a child the court cannot, in the absence of further evidence, regard adultery by the wife as established. Lord Normand was dubitante, and Lord Morton of Henryton dissented from this view. In the course of his speech, Lord Simonds observed; "The result of a finding of adultery in such a case as this is in effect to bastardize the child. That is a matter in which from time out of mind strict proof has been required. But that does not mean that a degree of proof is demanded such as in a scientific enquiry would justify the conclusion that such and such an event is impossible. In this context at least no higher proof of a fact is demanded than that it is established beyond all reasonable doubt; see Head vs Head(1). The utmost that a court of law can demand is that it should be established beyond all reasonable doubt that a child conceived so many days after a particular coitus cannot be the result of that coitus." He then added that since writing his opinion he had had the advantage of reading that of Lord MacDermott and he concurred in what Lord MacDermott bad to say. It would be convenient now to refer to the observations of Lord MacDermott. At page 417 of the Report are his relevant observations: "The evidence must, no doubt, be clear and satisfactory, beyond a mere balance of probabilities, and conclusive in the sense that it will satisfy what Lord Stowell, when Sir William Scott, described in Loveden vs Loveden(2) as 'the guarded discretion of a reasonable and just man '; but these desiderata appear to me entirely consistent with the acceptance of proof beyond reasonable doubt as the standard required. . I am unable to subscribe to the view which, though not propounded here, has its adherents, namely, that on (1)Sim and section 150. (2) (1810) 2 Hag. Con., 13. 334 its true construction the word 'satisfied ' is capable of connoting something less than proof beyond 'reasonable doubt '. The jurisdiction in divorce involves the status of the parties and the public interest requires that the marriage bond shall not be set aside lightly or without strict inquiry. The terms of the statute recognize this plainly, and I think it would be quite out of keeping with the anxious nature of its provisions to hold that the court might be 'satisfied ', in respect of a ground for dissolution, with something less than proof beyond reasonable doubt." After saying that he did not base his conclusion as to the appropriate standard of proof on any analogy drawn from criminal law since the two jurisdictions are distinct, he observed The true reason, as it seems to me, why both accept the same general standard proof beyond reasonable doubt lies not in any analogy, but in the gravity and public importance of the issues with which each is concerned." Lord Oaksey, after pointing out that the only thing sug gested against the wife was that her child was born 360 days, after her husband had access to her, observed: " In such circumstances the law, as I understand it, has always been that the onus upon the husband in a divorce petition for adultery is as heavy as the onus which rests upon the prosecution in criminal cases. That onus is generally described as being a duty to prove guilt beyond reasonable doubt but what is reasonable doubt is always difficult to decide and varies in practice according to the nature of the case and the punishment which may be awarded. The principle upon which this rule of proof depends is that it is better that many criminals should be acquitted than that one innocent person should be convicted. But the onus in such a case as the present, is not founded solely upon such considerations but upon the interest of the child and the interest of the State in matters of legitimacy, since the decision involves not only the wife 's chastity and status but in effect the legitimacy of her child. " One of the decisions relied upon before the House of Lords was Gaskill vs Gaskill(1), in which the birth of the child had taken place after an interval of 331 days between it and 335 the coitus with the husband Lord Birkenhead, L.C., who tried the case sitting as a judge of first instance, said, in regard to the wife: "I can only find her guilty if I come to the conclusion that it is impossible, having regard to the present state of medical knowledge and belief, that the petitioner can be the father of the child. The expert evidence renders it manifest that there is no such impossibility. 'In these circumstances I accept the evidence of. the respondent, and find that she has not committed adultery, and accordingly I dismiss the petition." Referring to this decision, Lord Morton of Henryton observed in Preston Jones vs Preston Jones(1): "My Lords, in the case of Gaskill vs Gaskill(2) the birth was far from being a normal one, but I think that Lord Birkenhead placed too heavy a burden of proof upon the husband. It is not the law to day, in my view, and with all respect to Lord Birkenhead I do not think it was the law in 1921, that a husband is bound to prove that he cannot possibly be the father of the child and I do not think that the case of Morris vs Davis(3), cited by Lord Birkenhead, established the strict rule which he laid down." He then referred to Wood vs Wood(4), in which the interval was 346 days and Hadlum vs Hadlum(5), where the interval was 349 days, and observed: "But I think that the cases of Gaskill(2), Wood(4) and Hadlum(5) put an unwarranted and increasing burden upon a husband who seeks to prove his wife 's adultery. " On the other hand, he expressed his agreement with the view of Ormerod, J., in M T vs M T(6), where the interval was 340 days, and acting upon the medical evidence to the effect that the husband could not have been the father of the child, the learned Judge without saying anything about the burden of proof granted a decree to the husband. In Galler vs Galler(7), Hodson L.J. has observed at p. 540: "I have used the language which I have, because, since Fairman vs Fairman(8) was decided, the much debated question whether the standard of proof in a divorce suit, which is a kind of civil action, is the same as that ina criminal case, and whether the (1) (2)(1921) P. 425. (3)5 Cl. & F. 163. (4) (5)(1949) P. (7)(1954) 1 All E.R. 536.(8)L.R, (1949) P. 341. 336 case rules apply, has been considered by the House of Lords in Preston Jones vs Preston Jones(1)." and has quoted with approval the opinions expressed by Lord Simonds and Lord MacDermott. He then observed: "It might appear from the passages which I have read from the judgment in Fairman vs Fairman(2) that the anology of criminal law was the ratio of that decision, but I think the result is the same by whichever road one travels. In divorce, as in crime, the court has to be satisfied beyond reasonable doubt. " A similar view has been expressed by Sir Lallubhai Shah in John Over vs Murial A.I. Over(3). The learned Judge has said: "I desire to make it clear that in divorce cases, great care and caution are necessary in dealing with the admissions of parties and it is only the exceptional circumstances of a given case that could justify the Court in acting upon the admissions of party as to adultery without any corroboration. Generally speaking as a matter of prudence it is desirable to insist upon evidence corroborative of the admissions. " Martin, J., has observed in the same case at p. 259: "No doubt section 15 provides that subject to the provisions herein contained, all proceedings under this Act between party and party shall be regulated by the Code of Civil Procedure. But that provision, in my opinion, does not override the express directions in sections 7, 12, 13 and 14 to which I have already alluded." (The provisions referred to are those of the ). Indeed, in White vs White(4), which was a case under the , this Court has held that the words "satisfied on the evidence" in s.14 of the Act implied that it is the duty of the Court to pronounce a decree only when it is satisfied that the case has been proved beyond rea sonable doubt as to the commission of a matrimonial offence. After pointing out that the evidence must be clear and satisfactory beyond the mere balance of probabilities, this Court had said that the rule laid down in Preston Jones vs PrestonJones(1) should be followed by the Courts while dealing with cases under section 7 of the , Section 23(1) of the which deals with the powers of the Court in a proceeding under the Act also provides that the Court shall decree the relief claimed by the petitioner, whether the petition is defended or not, if the Court is (1) (2)L.R. (3) (4)1958 [S.C.R.] 1410. 337 satisfied that any of the grounds for granting relief exists and certain other conditions are satisfied. Thus, under the as well as under , the condition for the grant of a relief is the satisfaction of the Court as to the existence of the grounds for granting the particular relief. The satisfaction must necessarily be founded upon material which is relevant for the consideration of the Court, and this would include the evidence adduced in the case. Therefore, though in the former Act the words used are "satisfied oil the evidence" and the legislature has said in the latter Act "if the court is satisfied", the meaning is the same. In my judgment, what the Court has said in White 's case(1) about the applicability of the rule in Preston Jones vs Preston Jones(2) must also apply to a case under the . Now, let us consider the evidence which was originally tendered at the trial of the proceedings before the City Civil Court. In support of his case, the appellant examined himself and his father. The gist of his evidence, when he was examined in chief, is that he did not see the respondent between the date of the betrothal and his marriage either at Bombay or at any other place, i.e., between November 1, 1946 and March 10, 1947, that he did not know at the date of the marriage that the respondent was pregnant, that he and the respondent lived together for 10 or 12 days at Vile Parle after the marriage, that during this period she did not disclose to him that she had been pregnant prior to the marriage, that he left for U.S.A. in the last week of April, 1947, that the respondent who had gone to Prantij in the meanwhile returned to Bombay only a day prior to his departure, that he was aware before he left for U.S.A. that the respondent had become pregnant, and that he did not disclose this fact to any one, because he was not sure whether she was pregnant or not. lie further stated that he returned to India towards the end of the year 1947 and that he only learnt IO to 15 days prior to his departure to India and while he was in London, of the birth of a child to the respondent. and that he was shocked at the news and began to suspect her. He denied having made any demand upon the res pondent for having pre marital sex relations or had said to her that betrothal was as good as marriage and that the marriage ceremony was merely a legal formality for "legalising children". In his cross examination, he admitted that he had seen the respondent before the marriage on three occasions, two of which were subsequent to the betrothal. He denied a suggestion made to him in cross examination that he visited Ahmedabad where his father owns a house, on many occasions between November, 1946 and March, 1947. He also denied having (1) ; (2) 338 expressed his desire to see the respondent. He, however, admitted that he had written to her suggesting that she should come to Bombay where his sister was residing and that he made this suggestion immediately after the betrothal had taken place. A number of letters written by the appellant to the respon dent in which he had suggested that they should meet and come in closer contact with each other were put to him, and he admitted them. He admitted having stated in his letter dated July 11. 1945 that the object of betrothal two years prior to marriage was that both should come in contact with each other so that they might be "accommodative to each other and not for the sake of betrothal." He was asked to explain what he meant by this and his explanation was "I meant that I and the respondent should try to know each other by writing letters and by knowing the views of each other. By the word 'Sugan ' used in that sentence (which is in Gujarathi), he said that I meant that the marriage life may be smoothened after (sic) each other." He admitted that in, one of her letters the respondent had stated that her father was objecting to her coming into contact with the appellant before marriage. He has admitted in his cross examination that after he came to know that the respondent had conceived he had written to her that she should arrange for an abortion. In cross examination,the following questions were put to him: "Q. In the letter dated 17th April 1947, you have stated 'I had already told you from the beginning but you did not pay any attention to my say. ' What do you mean by that sentence? A. (The witness refers to the letter dated 17th April 1947 written by him to the respondent part of Ex No. 3 and gives the answer after reading the same). By that sentence I meant to convey that I had told the respondent after the marriage when I had sexual intercourse with her that we should not have a child and for that purpose we should take precautions but in spite thereof no precautions were taken and therefore I had stated what is written in my letter dated 17th April 1947 part of exhibit No. 3. " He has also made admissions to the effect that he had sug gested abortion to the respondent several times. According to him, she also expressed a similar desire. I have already pointed out that the appellant had said that he wanted to keep the fact of respondent 's pregnancy a secret, though he knew about it before his departure to U.S.A. He had to admit that he had suggested to the respondent that she should intimate the fact to his sister, Sharada. In that letter he had also said "Explain 339 all things to my sister Sharada". According to him, however, what he meant was that she should explain to Sharada" in connection with the posting of the letters to be written by Sharada to me. " That is all his evidence. There is nothing in the evidence of his father, which has any bearing upon the Question of the respondent 's pregnancy before the marriage. In her evidence, the respondent has reiterated her denial of having conceived from a person other than the appellant. She has, however, deposed to the fact that she had visited Bombay before the marriage about the Christmas days in the year 1946 and stayed in the house of Ramanlal, Witness No. 2 for the respondent, who is a friend of her father. According to her, the appellant used to visit his house and take her from there either to her father in law 's house or to pictures or to some hotel. Then she has deposed. "On those occasions I had sexual intercourse with the petitioner. I agreed to submit to the sexual intercourse by the petitioner because he threatened to break off the betrothal if I refused to permit him to have sexual intercourse. Prior to the date of my marriage with the petitioner, I had no sexual intercourse with any man other than the petitioner. " She has further said categorically in her evidence that she did not know at the time of her marriage that she was pregnant and that she became aware of this after the marriage only when she started vomiting. This was after she had returned to Prantij from Vile Parle. She has also stated in her evidence, "After I went to Prantij after my visit to Bombay in Christmas 1946, 1 had monthly course. After I left for Prantij after my visit to Bombay in January 1947 and before the marriage I had monthly course. But on those occasions the bleeding was less. " She was cross examined at length with regard to her story that she had sex relations with the appellant before the marriage, and after asserting once again that she had met the appellant in Bombay in December 1946 or January 1947 she said in answer to the next question: "It is not true that prior to the marriage I knew that I was pregnant. It is not true that I deliberately suppressed the fact of my pregnancy from the petitioner and performed marriage with him. It is not true that I was not pregnant as a result of the sexual intercourse with the petitioner prior to the marriage. " And then in answer to the question "Before 10th March 1947 Mahendra, the petitioner, his sister Sharada and his father did not know that you were pregnant?", her answer, after certain hesitation was: "It is not true that the petitioner, his sister Sharadaben and his father did not know that I was pregnant 340 prior to the marriage. According to me the petitioner, his father and his sister knew prior to our marriage that I was pregnant." In the letter dated January 8, 1948 written by her to the appellant 's sister she had stated "I am innocent", and in crossexamination, she was asked as to what was the necessity for her to write that in her letter if the child which was born to her was conceived from the appellant, her answer was: "We came to know that a scandal was raised by my father in law and mother in law at Vile Parle and that is why I had written to my sister in law that I was innocent. The scandal which I have referred to in my earlier answer was that the baby born to me was premature and was not the child of the petitioner. " She was then asked why she did not inform the appellant 's sister, Sharadaben, that she had pre marital sexual intercourse with the appellant, her answer was that she did not do so in obedience to an injunction from her husband. It may be mentioned that in the letter of January 8, 1948 the respondent had stated that she had her menstrual period 10 days prior to the marriage. The question put to her in cross examination was whether she stated this in her letter with the object of showing that she had no sexual intercourse with any one before the marriage and her answer was: "Even if the woman is pregnant she would be in monthly course. It is not true that the object of my writing the aforesaid statement in my letter was as you suggest. " When again pressed to state what was the object in saying "I am innocent" in that letter, she answered: "By saying that I was innocent, I meant to suggest that the scandal which was spread about the child being not of the petitioner was a false scandal." When asked why she did not write in that letter that this child was conceived as a result of the sex relations she had with the appellant in December 1946 and January 1947, her answer was that the appellant knew the fact and knew that lie was the father of the child. When asked why she had then described the child as premature in that letter, her answer was that that was because the child was weak, Eventually, however, she admitted that the child born to her was premature. The only other witness examined was Ramanlal, with whom the respondent claims to have stayed during her visit to Bombay in December 1946 January, 1947. He supports her statement in that regard as well as the other statement that during her stay there the appellant used to visit her and take her out. 341 That is all the evidence in the case, and the question is whether upon this evidence it was open to a Court to make a. decree under section 23 of the annulling the marriage upon the ground that the respondent had conceived, from a person other than the appellant before her marriage and that the appellant was not aware of this fact at the time of the marriage. It is contended on behalf of the appellant that the respondent has admitted both in her pleading and in her evidence in the Court that she had had pre marital sex relations and that this admission by her should be construed against her. An admission in a pleading must be taken as a whole, and, therefore, if we are to act upon that admission, then that part of it which is to the effect that she had such sex relations with the appellant and not anyone else must also be regarded. No doubt, what applies to an admission in the pleading would not apply to statements made by a witness in evidence. It seems to me, however, that the defence taken by the respondent of having had pre marital sex relations with the appellant as well as the evidence given by her in the Court was false. Had there been any truth in this, she would certainly have taken that defence in the earlier suit, which was filed in the Baroda Court. Apparently, faced with the fact that the child was born to her only five and half months after her marriage she and her advisers found themselves in a difficult situation. For, having regard to the generally accepted notions of people regarding the normal period of gestation it would be difficult to convince any one of the fact that the child was legitimate, particularly in view of the fact that it has in fact survived and so would be presumed to have been normal. It may be because of this that she and her advisers thought of an obviously false defence. Would this, however, make any difference either in the incidence or the discharge of the burden which the law casts upon the petitioner in a proceeding like this, of establishing affirmatively the existence of the ground relied upon by him? I would say with Lord Normand that apart from the objection of principle, it would in the circumstances of this case be unjust to the respondent to infer or assume that the false defence is tantamount to an admission of guilt. If it is possible that an apparently normal child may be born 171 days after coitus (or even 186 days as contended by Mr. Purshottam Trikamdas) and would survive, and if that was what had happened in this case, then in the words of Lord Normand "the departure from the normal course of things is so extraordinary that the mother, conscious of innocence but believing herself the victim of a sport of nature, might, despairing of establishing the true defence, allow herself to palter with the truth, and might induce others closely connected with her to lend themselves to prevarication 342 or worse. " I would, therefore, wholly leave out of account the false defence set up by the respondent. Even if the appellant 's evidence is believed completely, the facts which can be said to have been established by him are only these:(a) that the child was born 171 or 186 days after the marriage;(b) that he never had pre marital intercourse with the respondent; and (c) that he was not aware of her pregnancy before the marriage. Can it be said that this evidence justifies the conclusion that the child must have been conceived before the marriage, and since, if the appellant 's statement is believed, it could not be conceived from him, but from some one else? It was urged by Mr. Desai, apparently on the strength of an observation made in one of the speeches in Preston Janes ' case(1) that where the period of gestation deducible in respect of a child deviates markedly from the normal, the burden on the husband who denies being its father of establishing the matrimonial offence alleged by him against his wife is a very light one. With respect I would say that the argument is untenable. When the law places the burden of proof upon a party it requires that party to adduce evidence in support of his allegation, unless he is relieved of the necessity to do so by reason of admissions made by or in the evidence adduced on behalf of his opponent. The law does not speak of the quantum of burden but only of its incidence and to my mind it is mixing up the concepts of the incidence of burden of proof with that of the discharge of the burden to say that in one case it is light and in another heavy. Looked at that way, the argument would amount, in effect, to be that the appellant has fully discharged the burden of proving hi , wife 's pre marital conception because, admittedly, the child was born only 171 or at most 186 days after the marriage. While it would be relevant to bear in mind the fact that the child was born within 171 or 186 days of the marriage for deciding the question whether the conception was pre marital, other relevant factors and circumstances cannot be excluded. For, it cannot be assumed that the delivery was normal, the child was born at the end of the full period, that it was a normal and mature child, that the mother maintained normal health throughout the period and so on. Again, there is no evidence whatsoever that the respondent was a woman of loose character. On the other hand, such little evidence as there is bearing on the point would show that the respondent was a member of a family which had strong ideas regarding association between betrothed couples and was herself reluctant even to meet the appellant during the long period of their betrothal. There is nothing in the evidence to indicate that the respondent could have had an opportunity of coming in contact with male persons at Prantij, where she lived before her marriage. (1) 343 The second thing is that if as contended on behalf of the .appellant, the respondent 's delivery was after the full period of gestation, her pregnancy must have been of about four months ' duration at the time of the marriage. If that were, so, it is difficult to believe that this fact would not come to ' the notice of the female relatives of the appellant or the appellant himself, or of Dr. Champaklal the appellant 's brother inlaw who has been found by the High Court to have examined her. Moreover, had that been so, she would not have shown readiness to break off her engagement till as late as in February, 1947 and thus taken the risk of becoming an unmarried mother. The third thing is that if the respondent 's nausea started three weeks after returning to Prantij, how could it be related to a pregnancy of five months ' duration? Fourthly, if the respondent had her menstrual period 10 days before the marriage, then despite what she herself says, how could she be said to be pregnant at that time? Indeed, the progress of the pregnancy as appearing from the evidence which was not challenged before us is consistent only with post marital conception. There is also the circumstance that despite exhortation by the appellant she refrained from having an abortion, which is more consistent with the pregnancy being post marital than pre marital. As against this, all that is relied upon on behalf of the appellant is the circumstance that it would be against the generally accepted notions of mankind to hold that a normal child would be delivered after 171 or 186 days after conception. Can it reasonably be said that this circumstance is sufficient in itself to outweigh the other circumstances taken cumulatively? At the stage with which I am dealing, there was no medical evidence in the case. But it was said that the live birth of a child 171 or 186 days after conception is impossible and it must be presumed that the child was conceived before marriage and further that such a presumption can be competently drawn even in a proceeding of this nature. If the birth of an apparently normal child 171 or 186 days after conception is an impossible phenomenon and if its impossibility is notorious, then alone a Court can take notice of it and the question of drawing a presumption would arise. All that can be said is that such an occurrence can at best be said to be unusual; but it is a far cry to say that it would be impossible. No doubt, courts have taken notice of the fact that the normal period of gestation is 280 days, but the courts have also taken notice of the fact that there are abnormal periods of gestation depending upon various factors. It would appear from the medical evidence in this case that one of such factors is a short cycle of menstruation. Another is that where the mother is suffering from oedema and high blood pressure and passing albumen in her urine the period of gestation of the child will be shortened (see evidence of Dr. B. section Mehta). 344 There may also be other factors which have not been brought out in the evidence or which may not have yet come to the notice of obstetricians. Therefore, while the courts ought in cases which largely turn upon medical evidence, to have regard to the existing state of medical knowledge they should not overlook the fact that there is still a good deal which is not known. So when a court is called upon to decide a matter like the one before us mainly, if not wholly, on the opinion of medical men it must proceed warily. Medical opinion even of men of great experience and deep knowledge is after all a generalisation founded upon the observation of particular instances, however numerous they may be. When further the Court finds that in individual cases departure from the norm has in fact been observed by some experts and when again the experts themselves do not speak with the same voice the need for circumspection by the court becomes all the more necessary. It may land itself into an error involving cruet consequences to innocent beings if it were to treat the medical opinion as decisive in each and every case. The responsibility for the decision of a point arising in a case is solely upon the court and while it is entitled, nay bound, to consider all the relevant material before it, it would be failing in its duty if instead, it acts blindly on such opinion and in disregard of other relevant materials placed before it. Initially no attempt was ever made before the City Civil Court to adduce any scientific evidence i.e., evidence of experts, and in the absence of such evidence, can it be said that there was anything else of which the City Civil Court ought to have taken judicial notice? Should it have drawn any presumption? The only relevant provisions regarding presumption are sections 112 and 114 of the Evidence Act. Section 112 reads thus: "The fact that any person was born during the continuance of a valid marriage between his mother and any man, or within two hundred and eighty days after its dissolution, the mother remaining unmarried, shall be conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at any time when he could have been begotten. " It refers to the upper limit of the duration of pregnancy for the purpose of determining the legitimacy of a child but not to the lower limit. Section 114 enables the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, etc., in their relation to facts of the particular case. The question would then be whether from the circumstance that the child was born five and half months or so after the marriage it could be presumed to have been conceived before the 345 marriage, regard being had to the common course of natural events. If the only fact known was that the child was born on August 27, 1947 and nothing else was known, it would be open to the Court to presume that it was conceived so many days prior to its birth. If, however, in addition to this there was evidence to show that the mother was suffering from eclempsis or that the child was weak and premature such a presumption would not arise. In this case, there is evidence of both these facts. This consists of the testimony of the respondent herself and of her letter to the appellant, exhibit 6 dated August 13, 1947 and of that to Sharadaben, exhibit F dated September 3, 1947 produced by the appellant. This is further supported by the letters exhibit 11 written by Dr. Champaklal to the respondent 's father on July 12, 1947 and September 20, 1947. It would, therefore, not be legitimate to raise the presumption that the child was born after the normal period of gestation and must, therefore, have been conceived 'before the marriage. Such was the material before the City Civil Court at the conclusion of the trial and before High Court when it first heard the appeal. This material is insufficient for discharging the burden placed on the petitioner by section 23 of the Act. On the basis of this material, no Court could reasonably come to a finding that the respondent was pregnant at the time of her marriage and that, therefore, the appellant was entitled to the annulment of the marriage. As already pointed out by me, this is what the High Court itself felt, and having formed this view, it is a matter of surprise to me that the High Court should have proceeded to frame additional issues and send them down for findings to the City Civil Court. The only thing the High Court could properly do was to allow the appeal and dismiss the appellant 's petition for annulment of the marriage. Now, the High Court has, after receipt of the additional evidence and the fresh findings of the City Civil Court accepted one of those findings and dismissed the appellant 's petition. If, therefore, I am right in my view that the letting in of the additional evidence for which the appellant had not even asked, was not permissible by law, then upon my view that the evidence originally adduced in the proceedings is inadequate for the purpose of granting the relief under section 23 of the Act, the appeal must be dismissed. I would accordingly dismiss it with costs in this Court, and direct that the appellant shall pay the respondent 's costs in the High Court as well as in the City Civil Court. This really ends the matter, but as my learned brother Raghubar Dayal J., has considered the medical and other evidence in great detail, I should at least make a brief reference to it, even though, in my view, it has been illegally admitted. I will only refer to the evidence of those witnesses 346 upon whose statements reliance was placed before us by one party or the other. One is Madhuben, who claims to have been working in the Prantij Municipal Dispensary from 1939 to 1955. She said that she atte nded to the delivery of the respondent, and that she had examined her two months before the date of delivery, when she noticed swelling all over her hands and feet. She also says that the respondent had ad vanced seven months in the pregnancy when she first examined her and that the weight of the child which was born was 4 to 4 1/2 lbs. According to her, it was a mature child born after the full period of gestation. Her evidence was discarded not only by the High Court but also by the City Civil Court on the ground that she was deposing to these facts 12 years after the delivery is supposed to have occurred, and deposed without reference to any records made by her. No doubt, the Hospital Indoor case paper, exhibit K. was produced by a witness, Kacharabai, also examined at that stage; but in the absence of a white paper, which is normally a part of this particular record, it loses its value. It is true that there was No. crossexamination on behalf of the respondent regarding Madhuben 's statement that she had examined the respondent two months before the delivery, but it seems to me that from the fact that she deposed 12 years after the event and the further fact that she had to attend to at least 150 labour cases every year a total of 2,400 cases during the time she worked in the hospital her evidence cannot be regarded otherwise than as artificial. Indeed, she had long ceased to be in the service of the hospital, and had even left Prantij, before she was summoned as a witness in the case. According to her, she was contacted by some bania and it is obvious that she has been induced to speak to facts which would assist the appellant in this case. Her evidence was rightly rejected by the courts below. The next witness is the appellant himself. He has stated in his evidence that his case was that the child born to the respondent was born after the expiration of the full period of gestation, and that the respondent must have conceived somewhere in November or December, 1946. He has, however, admitted that when he had sex relations with the respondent, her clothes used to be removed, though he said that lights used to be switched off in the room in which they slept. We cannot lose sight of the fact that in Bombay after sunset the streets are well illuminated and since the windows are usually kept open the light coming from outside is sufficient to illuminate the rooms adjacent to the streets. They therefore are not totally dark even at night. Apart from that, the appellant has admitted that he did not feel anything abnormal when he came in contact with her. If her pregnancy had actually advanced to four months, in the normal course it would have been possible for him to notice her condition. 347 Then there is the evidence of Dr. Ajinkya. He has deposed to a large number of things, and the only points which it is necessary to mention are: (a) the normal period of gestation is 280 days, which period is calculated from the first day,,,,, of the last menstrual period; (b) where the hospital record .shows that the woman delivered of a child has normal labour and the child weighed 4 lbs and is living, it must have been conceived 270 days before the date of birth; (c) if a child is born within 169 days from the date of marriage it would not be of sufficient maturity to survive; (d) confirmation of a pregnancy within three weeks of conception is possible only by a biological test; (e) abdominal enlargement would be perceptible after the fourth month of pregnancy; (f) viability is described as the critical period of maturity and that this period is the 28th week of conception and explained that the viable period is called critical period because it denotes the development of the child 's tissues to the extent that it can have independent existence from its mother only after that and not before; and (g) a child born after the 28th week from conception would survive when special care and treatment is given to it. He has then described the special care which has to be taken in regard to such child. The following passage from Taylor 's Principles and Practice of Medical Jurisprudence, Vol 2, 11th Edn. p. 32 was put to him: "It was the opinion of William Hunter that few children born before 7th calendar month (or 210 days) are capable of living to manhood, but with advances in methods of Neonatal Resuscitation and maintenance, this dictum has gradually receded into history. It remains, nevertheless, that the less mature the infant the less likely is it to survive and the critical period of maturation appears to be somewhere between the 5th and 6th month. In the absence of any skilled care, Hunter 's dictum on the likelihood of survival when born before the 7th calendar month remains as true as it was." According to him, this dictum was not wholly true, and what was attributed to Hunter was really the opinion of the author. I may mention here that Dr. Mehta has agreed with the above quotation from Taylor 's book. Now, since the month of pregnancy is a lunar month the respondent 's child which was born 26 weeks and four days after the marriage could be said to be one born in the 7th month. The fact that such a child has survived its birth is no significant evidence of matu rity. Taylor points out that though infants born before the seventh month of pregnancy are less likely to survive they commonly do so. The following cases of survival of less mature infants are referred to in this connection: 348 Bernardi described the survival of a 1 lb. 9 oz. infant in 1951, and Nanayakkara, in the same year, recorded a birth at 1 lb. 4 oz. which survived. MacDonald reported the survival of a 14 in. long 2 lb. 7 oz. infant thought to be a gestation of 6 to 61 monthsthat, six months later, weighed 5 lb. 6 1/2 oz. The considerable experience of Victoria Crosse in problems of prematurity resulted in the publication of the following table, emphasising the high mortality of prematurity: Weight of Infant (lb)Percentage leaving Hospital 0.2 3 2 3 27 3 4 60 4 5 78 5 5 1/2 94 The author then refers to a case attended by Barker in which a female child born 22 weeks after intercourse was observed by him to have attained the age of II. Similarly the author refers to a case from America when a child born 192 days, after intercourse was found alive at the time of report which was 16 months after its birth. In the well known Kinghorm case the doubt cast on the legitimacy of a child born 174 days after the marriage between the parents was found not to have been substantiated. It would be convenient to quote here two passages from the article by J. H. Peel at p. 557 onwards of British Obstetric Practice (22nd edn.) on "Duration of Pregnancy and its variations". He begins by saying that the problem of the exact duration of pregnancy has not yet been solved that this is due to a large number of variable factors. He points out that the common method of calculating the date of delivery ignores all the variables. Dealing with premature termination of pregnancy he says: "Premature termination of pregnancy may be defined as termination of the pregnancy after the twentyeighth week (accepted date of viability of the foetus) and before the fortieth week, counting from the first day of the last menstrual period. On the other hand, most writers on the subject of prematurity tend to define the condition in terms of the weight of the baby rather than in terms of the maturity of the pregnancy. It was first laid down by the American Academy of Pediatrics in 1935 that a premature infant is one that weighs 5 1/2 lbs. 349 or less, regardless of the period of gestation. This definition was accepted by the International Medical Committee of the League of Nations and has gained universal acceptance, in spite of its scientific inaccuracy. Most obstetricians have seen babies of less than 51 lbs. born after a gestation period of more than 280 days. Indeed, birth weight and duration of pregnancy are far from perfectly correlated. Infants weighing less than 5 1/2 lb. at birth may even be postmature. This is well shown in Table 2 constructed by Kane and Penrose from 7,037 live births from University College Hospital records. It is seen that 470 babies weighed less than 5 1/2 lb., but that III (23.6 per cent) of these underweight babies were born at term or later, according to the ordinary method of calculation. The term immaturity has been suggested as an alternative in view of these discrepancies, but it has not received universal acceptance. There is, however, more than academic significance in the difference, because maturity as such, irrespective of weight, is of the greatest im portance in relation to foetal survival. A baby whose birth weight is 4 lb., if born at thirty eight weeks stands a far better chance of survival, and is more likely to develop into a healthy child, both mentally and physically than one of the same weight born a month earlier. " I am not reproducing the table constructed by Kane and Penrose but I may only mention that the table shows a few cases of deliveries in which the duration of pregnancy was 177 days, though they ended either in still births or neonatal deaths. The conditions associated with premature labour are many and varied and Peel has classified themthus: (1) Maternal causes. (a) Pre existing (b) Complications of Pregnancy. (2) Foetal and Placental causes. (3) Idiopathic causes. " He has then dealt with these causations of premature labour but I would content myself by quoting a portion of what he has said regarding 'Idiopathic causes '. This is what he says: "In about 50 per cent of premature labours no definite cause can be found. Thus Sandifer (1944), analysing premature births at Queen Charlottee 's Hospital, found no definite cause in 372 out of a total of 681 spontaneous premature labours. 350 doubt correlated with nutrition dependent upon social status. " What does all this show? It brings out the fact that while the natural phenomenon of human birth follows a general pattern it does not do so invariably. There are variations in it. A few have been recorded but in the nature of things the observations cannot be exhaustive, bearing in mind the fact that every minute a new human is being born in this world or may be even more than one. Section 45 of the Indian Evidence Act makes the opinion of scientists relevant when the court has to decide a point of science. But it does not make the opinions conclusive. Therefore, while the courts ought to pay due regard to the existing knowledge of scientists it does not necessarily follow that the opinions expressed by scientists must be always accepted without scrutiny. Every phenomenon is the result of numerous factors and where all such factors are known to science an opinion of an expert concerning the particular phenomenon ought ordinarily to be accepted. But when all the factors which come into play in a phenomenon are not known, an uncritical acceptance of an expert 's opinion would be a dangerous thing. Medical scientists do not lay claim to a knowledge of every factor involved in human birth. One of the factors they have to contend with is the operation of the life principle. The mystery of its behaviour has yet to be unravelled and, therefore, if an expert makes a dogmatic assertion about any matter concerning child birth dismissing contrary opinions based upon the observations of departures from the so called norm with supersilious disdain as Dr. Ajinkya has done or is unable to give a satisfactory explanation for the departure from the normal observed by other scientists, I would put aside his opinion on the ground that his whole approach is unscientific. In this evidence Dr. Ajinkya has further deposed about toxaemia in pregnancy, enlargement of abdomen, weight of the child born after the full period of gestation. When he was asked the question: "If toxaemia starts at the end of 4th month of pregnancy and in spite of the treatment, there is no ,change in toxaemia for a period of seven weeks thereafter what would be the condition of the child born 169 days after marriage?" His answer was, "most probably it would be a still birth." From this last statement of the witness it would appear that if, when the respondent 's toxaemia as evidenced by vomiting and nausea started, she was in the fourth month of pregnancy and not in the second month of pregnancy the child delivered by her on August 27, 1947 would be still born but in fact it was alive and is now 16 years of age. 351 The following passage from Mody 's Medical Jurispru dence and Toxicology, 12th edn. p. 305 was put to him: "It has been observed in women whose intermenstrual period is shorter than the usual time, pregnancy has terminated in the 8th or 9th month or even earlier the child having attained full development." (Italics are mine). Dr. Ajinkya, however, expressed disagreement with it. According to him, the weight of the child born in the 5th or 6th month after the marriage would be 2 1/2 lbs. and the child would not survive, whereas here the evidence, if accepted, is that the weight of the child was 4 to 41/2 lbs. In the table constructed by Kane and Penrose three Cases have been recorded in which the infant born in the 7th month of pregnancy weighed between 5 and 6 lbs. Dr. Ajinkya 's opinion cannot, therefore, be accepted. He also said that if a pregnant woman is suffering from oedema all over the body, is passing albumen in the urine, has high blood pressure and does not respond to treatment, it would be a severe type of toxaemia and the child born to her would be still born. If this opinion is accepted, then considering it along with the fact that the child born to the respondent is still alive, the evidence of Madhuben that the respondent was suffering from eclempsia and therefore she had to attend on her for two months before the delivery stands falsified. The witness has also said that the period of gestation is usually counted in lunar months, meaning a month of 28 days and that as doctors do not know the date of the fruitful coitus, they calculate the period of gestation from the first day of the last menstruation of the woman. As regards nausea during pregnancy, he said that morning sickness occurs in the 1st or 2nd month and has expressed agreement with the following passage from Mody 's Text Book: "Nausea or vomiting usually as a sign of pregnancy, most frequently occurs soon after the woman rises from bed in the morning. It commences about the beginning of the second month and lasts generally till the end of the fourth month. It may, however, commence soon after conception." Another passage from Mody was also put to him. A passage from Taylor, Vol. 2, 6th ed. at p. 152 was read out to him. It runs as follows: "It would be in the highest degree unjust to impute illegitimacy to offspring, or a want of chastity to parents merely from the fact of a six months child being born living and surviving its birth. There are, indeed, no justifiable medical grounds for 352 adopting such an opinion a fact clearly brought out by the answer to a question put to the principal medical witness in favour of the alleged antenuptial conception. He admitted that he had him self seen the case of a six months child who had survived for several days. He could not assign anyreason why, if after such a period of gestation it is possible to prolong life for days, it should not be possible to extend it to months. " His only answer was that he was aware of this case, and ob served: "If such speculation can take you away from truth in one direction, it may also take you away from truth in the other direction. " In re examination, the following passage from Taylor 's Book, 2nd Vol. 10th ed. at p. 37 was shown to him: "On the other hand, when a child is born with the full signs of maturity, at or under seven months, from possible access of the husband, then there is a strong presumption that it is illegitimate." He expressed agreement with this passage. The evidence of This witness no doubt contains certain statements, which support the appellant but I agree with the view of Mr. Justice Patel that the witness though undoubtedly a leading obstetrician and gynaecologist, appears to have fenced while answering questions which tended to throw doubt on some of the opinions expressed by him. His evidence, however, also shows that if the respondent was in the fourth month of pregnancy at the time of the marriage her nausea would not have started soon after her return to Prantij. In fact, her nausea could have started much earlier, and even at the time of the marriage she should have been suffering from it. There is no evidence whatsoever to the effect that she had any such nausea at the time of the marriage. It is not disputed by the appellant that she was suffering from nausea from the time deposed to by her and for a considerable period thereafter. She could, therefore, not have been in the fourth month of pregnancy towards the end of April, 1947. For, according to Dr. Ajinkya nausea starts in the first or second month of pregnancy or again in the seventh month of pregnancy. Therefore, upon this part of Dr. Ajinkya 's opinion, the appellant 's definite case that the pregnancy commenced in November or December, 1946 falls to the ground. No doubt, the opinions of this witness regarding viability of a child born after five and half months and the weight of such child at birth and the impossibility of its survival support the appellant 's contention. But these are matters upon which there is divergence amongst experts. I have 353 already referred to a passage from Taylor which was brought to the notice of this witness with which he disagreed. This passage as well as that in Peel 's article show that abnormal cases do occur. Dr. Mehta 's opinions run counter to Dr. Ajinkya 's on certain crucial points. He has spoken not merely from his own observations as an obstetrician but on the strength of the findings of other scientists. In this state of affairs can the court say that the appellant has discharged The burden which the law has cast upon him to prove that the respondent was pregnant at the time of the marriage? It is not enough for him to throw a doubt. He has to establish he fact affirmatively. No doubt the appellant has examined Dr. Udani, a Pediatrician, but even his evidence does not take the matter any further. Therefore, I am referring to those passages in his, evidence on which reliance was placed at the hearing and would only say this that what I have said about Dr. Ajinkya 's evidence on similar matters applies equally to Dr. Udani 's evidence. According to him, a child born 5 months and 17 days after conception would die immediately after birth, though very often it would be a case of miscarriage. The weight of such a child, according to him, would be 1 1/2 to 2 lbs. He has agreed with Dr. Ajinkya regarding the normal period; of gestation as well as the period after which a baby becomes viable. He has admitted in his cross examination that where the weight of a child at birth is 4 lbs. it would definitely be an indication of premature birth. The following question was put to him in cross examination: "You were asked by the counsel for the petitioner a little while ago that you could call certain signs as signs of maturity. Now, as a responsible doctor, I take it that you can do so on the assumption that such symptoms are reliably established or found?" His answer was: "All the signs and symtoms must be established before I can opine on them. If a baby can take the breast feed well by 3rd day of its life and that baby cries well, even though such a child may according to international definition be a premature one, nonetheless it is a fairly well developed child as far as functions are concerned. So far as its functions are concerned it is a matured child. This is particularly true if the mother of the child has the disease like Toxaemia then that baby even if born between 36 and 40th week of pregnancy, that baby will be under weight but it will be a matured child in function. " L/P P(D) ISCI 12 . 354 Mr. Vimadalal objected to the last part of the answer given By the witness on the ground that it was volunteered by him. Even, however, if this is taken into account, it makes no difference, because there is no positive evidence to show that them respondent was suffering from toxaemia right till the termination of the pregnancy. When asked whether in his experience or knowledge he has come across any case in which a child born 26 weeks and four days had survived, his answer was: "I have seen two babies surviving between 27th and 28th weeks. One in London and one in Boston. But in these cases exceptional care was required both for delivery as well as for bringing it up. " This answer to some extent, goes against the opinion of Dr. Ajinkya, though he has qualified it by adding that in most cases such child would be still born and that in exceptional cases it would survive if special care and attention is paid to it. There remains the evidence of Dr. Mehta who was examined as a witness on behalf of the respondent. He has also deposed that the period of gestation is counted from the first day of the last menstruation, and in this connection, he relied upon the following passage from British Obstetric and Gynaecological Practice by Sir Eardley Holland and Aleck Bourne, 1955 ed.: "According to Naegele 's rule, which is almost universally employed, seven days are added to the first day of the last menstrual period and nine months added, in order to arrive at the expected date of delivery. This is really a simple way of adding 280 days of the first day to the last menstrual period, because experience has shown that this is the average duration of pregnancy. " He also agreed with the following passage from Dougald Baird 's Combined Text Book of Obstetrics and Gynaecology, 6th ed: "It has long been known that the length of gestation in the human is almost ten lunar months (280 days) if calculated from the first day of the last menstrual period." According to him, a four pound full term baby that is one born 280 days after the first day of the last menstrual period, is a rare occurrence. He was asked the question: "Doctor, if a woman suffers from swelling, i.e. oedema, high blood pressure and passing of albumen in urine, would that have any effect on the period of delivery?", and his 355 answer was that the child would be premature. He further deposed that oedema, high blood pressure and passage of albumen in urine occur in the second period of pregnancy, but that it might occur earlier if the woman had some trouble, with the kidneys or high blood pressure. By the second period of pregnancy, he meant after the third month of pregnancy and before the seventh month of pregnancy. He further stated that nausea in pregnancy usually occurs at the time of the .second missed period, but it might occur before or about the time of the first missed period. While he agreed with the other medical witnesses examined in this case that the child is supposed to be normal and viable after 28 weeks, he said that there are some exceptions to this and that a child born earlier than the 28th week may be born alive and can survive. He stated that his statement is based upon the following two passages in De Lee 's book: "De Lee delivered a viable child one hundred and eighty two days after the day of conception and Green Hill delivered a baby one hundred and ninety one days after the beginning of the last menses and one hundred and seventy six days after the last coitus. The baby weighed 735 gms (1 pound 10 ounces) and survived. The child is now normal in every way. The French law recognizes the legitimacy of a child born one hundred and eighty days after marriage and "three hundred days after the death of the husband, the German law one hundred and eighty one and three hundred and two days, respectively. " He then said the he was familiar with the case of Cark vs Clark,(1) which is also referred to in Taylor 's Medical Jurisprudence, 2nd vol. 10th ed. at p. 36. Referring to it, he said: "I agree with the proposition at page 35 of Taylor. It is as follows: 'Hence it is established that the children born at the 7th or even at the 6th month may be reared. ' I believe the expression month used by the author is Lunar Month. It also agree with the proposition of Taylor at the same page which runs as under 'It would be in the highest degree unjust to impute illegitimacy to offspring or a want of chastity 356 to the parents merely from the fact of a six months child being born living and surviving its birth '. " He has also deposed about various matters such as normal labour, calculation of period and so on but it is not necessary to refer to that part of the evidence. Mr. Desai referring to the opinion of the witness regarding the mode of confirmation of pregnancy within three weeks or so of conception said that the respondent 's admission in a letter of 3rd April, 1947 that her pregnancy was confirmed that day by a doctor who had apparently not performed a biological test would show that conception must have taken place long before the date of marriage. The letter was not produced by the appellant and so we do not know what exactly she had said in it. Apart from that it is quite possible that the doctor whom the respondent consulted, as she was having nausea may have tentatively opined that it was pro bably due to the fact that she had conceived. The opinion of that doctor cannot be placed higher than that. Relying upon the admissions made by the respondent in the evidence that there was swelling on her hands and feet in the month of June it was argued that she must have then been in the 7th month of pregnancy because according to Dr. Ajinkya this kind of toxaemia appears after the 7th month of pregnancy. It is to be remembered that she was deposing about this 12 years after the occurrence and as there was no reference to such an important matter in her letters of the 14th June and 2nd July, but only in a subsequent letter, she appears to have made a mistake about the month while depos ing in court. In fact she first complained about the swellings and high blood pressure only in her letter of the 13th August. Again even according to Dr. Ajinkya a pregnant woman may develop such troubles in the 4th month if she were suffering from chronic kidney trouble. There is no evidence about her suffering from such trouble but the possibility of her having such trouble has not been ruled out. Dr. Mehta has also said that while swellings and high blood pressure usually occur in the second period of pregnancy, he stated that this period would be after the 3rd and before the 7th month of pregnancy and supported his view by reference to a passage at P. 225 from the 'British Obstetric and Gynaecological Practice '. In this state of evidence, it would not be reasonably safe to conclude that the respondent was in the 7th month of pregnancy in the month of June. No doubt Dr. Ajinkya has said that there would be a perceptible abdominal enlargement in ordinary cases after the 4th month and the respondent has remarked in her letter 357 of the 28th June that her abdomen had the appearance of a big water pot. But that was nothing more than innocent exaggeration and ought not to be taken literally. A good deal of argument was advanced on the footing that the delivery of the respondent being normal, the birth of a premature baby cannot be regarded as a 'normal delivery ' in the medical parlance. Apart from the fact that Dr. Ajinkya and Dr. Mehta have given different meanings to the expression 'normal delivery ', there is no reliable evidence to the effect that the birth of a child to the respondent was regarded as normal delivery. As already observed, Madhuben 's evidence is false and artificial and the hospital records consisting of indoor case papers are incomplete. It would also appear that the column of 'disease ' is torn and attempts to reconstruct it seem to have been made. Moreover it would seem that entries used to be made in the hospital papers mechanically without reference to actualities. On these grounds the entry regarding the weight of the child at birthstated as 4 lbs cannot be accepted at its face value. Even accepting it, there is unanimity of opinion amongst all the three experts examined in this case that this would be the weight of a premature baby and not that of a mature one. Considered along with the circumstances that the delivery was sudden and the respondent was then in a poor state of health the appellant 's case that the baby was a full term one and, therefore, illegitimate stands disproved. All that I would say is that the medical evidence adduced in this case for establishing that the respondent had conceived before the marriage can in no sense be regarded as of a definite or conclusive nature. Indeed, in the case of Clark vs Clark(1). if the husband was assumed to be the father, the pregnancy could not have exceeded 174 days, and the child which was born, was alive at the hearing and was three years old. The medical evidence was to the effect that a child of so short a period of foetal life would not survive for more than a day or two. At the same time, the medical witnesses agreed that only rarely could the date of conception be fixed, and that the periods of gestation generally spoken of were notional periods. There was no evidence of misconduct on the part of the wife, and the only evidence of adultery was the fact of the birth of a child, the period of gestation of which could not have exceeded 174 days. The Court held that the husband had not discharged the burden of proof in respect of the adultery and that it was sufficiently proved that the child was conceived in wedlock. It was further held that "where the date of con ception can be fixed, and the actual period of gestation is (1) (1939) 2 All ~E.R. 59. 358 ascertained, this ascertained period is comparable to the longer notional period, and for this reason what is in fact a six month child may be comparable to what is called a seven months child. " To sum up, the substance of the medical evidence led on behalf of the appellant is that the normal period of gesta tion of a child is 280 days, that a child born 180 days after the last menstruation is not likely to be born alive or if born alive it will survive only if special care is taken, that such a case would not be that of normal delivery and its weight would be 1 1/2 to 2 lbs. With the aid of the evidence of Madhuben the appellant has sought to establish that the delivery was a normal one, that the respondent appeared to have delivered at full term and the child born was a normal one. He has further sought to prove with the aid of the hospital papers that the child weighed four lbs. or so and was found to be normal one. Madhuben 's evidence has been rejected by both courts of fact and for very good reasons. The hospital papers cannot be relied upon in the absence of the white paper. Besides, a look at the hospital records would suggest that entries therein were made in a casual manner regardless of actualities. Thus all that we are left with is the evidence of the experts and the case records in text books. There is no unanimity amongst the three experts and even the text books refer to abnormal cases. Bearing in mind that the normal period of gestation evolved by the obstetricians is a generalisation deduced from particulars it cannot be regarded as an inflexible law of nature from which there can be no deviation. Indeed, reputed obstetricians have recorded cases where the period of gestation was found to be shorter in cases of mothers whose menstrual cycles were of three weeks. Again where toxaemia of pregnancy is found to be considerable the development of a child in the womb has been found to take place more rapidly than in normal pregnancies. There may be conceivably other factors contributing to the shortening of the period of gestation and a more rapid development of a child in the womb than that which medical science has so far been able to notice. In these circumstances it would not be reasonably safe to base a conclusion as to the illegitimacy of a child and unchastity of its mother solely on the assumption that because its birth and condition at birth ap peared to be normal its period of gestation must have been normal, thus placing its date of conception at a point of time prior to the marriage of its parents. Thus, even if the additional evidence is taken into consi deration, the appellant stands on no stronger grounds. 359 It has also to be remembered that on the question as to whether the respondent was pregnant before her marriage not only the High Court but also the City Civil Court has come to the conclusion that she was not. We have thus concurrent findings of fact on this crucial question. It is settled law that this Court does not interfere with such a finding merely on the ground that another view of the evidence adduced in the case commends itself to this Court. The appeal has come before us by a certificate granted by the High Court under article 133(1)(b) of the Constitution. One of the requirements of cl. (1) of article 133 is that in a case other than the one referred to in sub cl. (c) the appeal must involve a substantial question of law where the judgment appealed from affirms the decision of the Court immediately below. No doubt, strictly speaking, the judgment of the High Court cannot be regarded as judgment of affirmance of the City Civil Court because initially the City Civil Court had granted a decree for annulment of marriage to the appellant. Substantially, however, the decree of the High Court must be regarded as one of affirmance if we take into consideration the fact that the High Court had affirmed the finding rendered by the City Civil Court on the additional issue framed by the High Court in regard to the question whether the respondent was pregnant at the time of the marriage. No doubt, technically, the High Courts ' decision is not one of affirmance because it has reversed the decree of the City Civil Court. But we must have regard to the substance of the matter. It is true that the City Civil Court had originally granted a decree but the basis of that decree disappeared after it gave a contrary finding to the one rendered by it earlier on the crucial fact concerning the respondent 's pregnancy before her marriage. The High Court having accepted that finding there can be no escape from the position that we have here a case where upon the crucial question of fact, there are concurrent findings. Unless it is shown that a concurrent finding is vitiated by an error of law or procedure or unless it is shown that important or relevant evidence has been overlooked or misconstrued it would not be in consonance with the practice of this Court to re examine that finding, particularly when, as here, the findings are based upon an appreciation of evidence. The Privy Council firmly adhered to this rule and this Court has accepted the Privy Council 's practice in this regard. There are numerous decisions on the point but I may refer only to the following as instances of cases in which this Court has refused to disturb concurrent findings of fact: Narayan Bhagwantrao Gosavi Balajiwale vs Gopal Vinayak Gosavi & ors.(1); Gherulal Parakh vs Mahadeodas Maiya & ors.(2); Bhinka & others vs (1) (2) [1959] Supp. 2 S.C.R. 406. 360 Charan Singh(1); and Shamrao Bhagwanrao Deshmukh vs Dominion of India(2). No case has been brought to our notice in which this Court or the Privy Council has re appreciated evidence in an appeal by special leave or disturbed a pure finding of fact concurrently made by the courts below. To do so now would be to ignore all precedents. As already held by me the appeal must be dismissed with costs. (1) [1959] Supp. 2 S.C.R. 798. (2) A.I.R. 1955 S.C. 249.

IN-Abs

The appellant is a resident of Bombay while the father of respondent was a resident of Prantij in the former State of Baroda. They were betrothed in 1945 and their marriage was solemnised at Bombay according to Hindu rites on March 10, 1947. On August 27, 1947, respondent gave birth to a daughter after 5 months and 17 days of their marriage. In April 1956. the appellant filed a petition for annulment of his marriage with respondent on the ground that the child had been conceived long prior to his marriage through someone ,else, the respondent was, at the time of marriage, pregnant by some one other than himself, that that fact was concealed from him and that ever since he had learnt about the birth of the child he had not cohabited with the respondent nor had he any relation with her whatsoever. The defence of respondent was that she conceived the baby as a result of sex relations with the appellant after their betrothel on being assured by him that that was permissible in their community, and that the parents of the appellant knew about the relations between the parties and also about her having conceived prior to her marriage. The trial court accepted the allegations of the appellant and held that the respondent was not pregnant by the appellant but by a person other than the appellant even before marriage. Respondent went in appeal to the High Court against the order ,of annulment passed by the trial court. The High Court was not satisfied with the findings of the trial court and remanded the case to the trial court after framing the following two new issues: 1. Is it proved that the respondent was pregnant at the time of marriage? 2. Is it proved that marital intercourse with the consent of the petitioner has not taken place since the discovery by the petitioner of the existence of the grounds for a decree? Respondent further alleged that the child was the result of conception after the marriage. The trial court recorded additional evidence and came to the conclusion that the respondent 268 was not pregnant at the time of marriage and that no sexual intercourse with the consent of appellant took place after the discovery by appellant of the grounds for a decree. These findings were submitted to the High Court which held that it was not proved that respondent was pregnant at the time of marriage and that it was proved that petitioner had marital intercourse with the respondent subsequent to his discovery of the existence of the grounds for the decree. The High Court allowed the appeal of respondent and dismissed the petition for annulment of marriage. Appellant came to this Court after obtaining a certificate of fitness from the High Court. Accepting the appeal, Held (Mudholkar, J. dissenting). (i) The child born to res pondent on August 27, 1947 was practically a mature child and weighed 44bs. in weight and therefore it could not have been the result of conception taking place on or after March 10, 1947. The child was conceived prior to March 10, 1947 and therefore respondent was pregnant at the time of marriage by some one other than appellant. Hence, appellant was entitled to annulment of his marriage. (ii) The appellant did not have marital intercourse with respondent after he discovered that she had been pregnant by some one else at the time of marriage. In divorce cases, the court usually does not decide merely on the basis of the admissions of the parties. This is a rule of prudence and not a requirement of law. However, where there is no room for supposing that parties are colluding decision can be based on the admission of the parties. It is undesirable that the burden should be imposed on litigants in this class of cases, in which the substantial issue between the parties was whether the husband had at what was considered the relevant times any opportunity of intercourse with his wife and no question of an abnormal period of gestation had been raised until the trial and then only by the commissioner himself, of adducing medical evidence re: the period of gestation. However, that may be unavoidable where medical evidence in regard to the period is called by respondent and then the case becomes the battle ground of experts. (iii) The case of Clark vs Clark is not a good guide both on facts and law for the determination of the question about the legitimacy of the child of the respondent. In that case, delivery after 174 days of the conception was proved to be on account of the fact that the mother of the child fell a day before delivery. It is not correct to add a lunar month to the ascertained period of gestation in cases of a known date of conception merely on the ground that when books speak of foetus of a certain number of months, that foetus might be due to a conception taking place on any day of the lunar month corresponding to the menstruation prior to the conception and the missperiod after conception. Per Mudholkar, J. if the birth of an apparently normal child 171 or 186 days after conception is an impossible phenomenon and if its impossibility is notorious, then alone a court 269 can take notice of it and the question of drawing a presumption arises. All that can be said is that such an occurrence is at best unusual but it is a far cry to say that it is impossible. It is true that courts have taken notice of the fact that the normal period of gestation is 282 days but courts have also taken note of the fact that there are abnormal periods of gestation depending on various factors. It is not safe to base a conclusion as to the illegitimacy of a child and unchastity of its mother solely on the assumption that because its birth and condition at birth appeared to be normal, its period of gestation must have been normal, thus placing its date of conception at a point of time prior to the marriage of its parents. When a court is called upon to decide a matter mainly, if not wholly, on the opinion of medical men, it must proceed, warily. Medical opinion. even of men of great experience and deep knowledge, is after all generalisation founded upon the observation of particular instances, however numerous they may be. When the Court finds that in. individual cases departure from the norm has in fact been observed by some experts and when again the experts themselves do not speak with the same voice, the need for circumspection by the court becomes all the more necessary. It may land itself into an error involving cruel consequences to innocent beings if it were to treat the medical opinion as decisive in each and every case. The responsibility for the decision of a point arising in a case is solely upon the court and while it is entitled to consider all the relevant materials before it, it would be failing in its duty if it acts blindly on such opinion and in disregard of other relevant, materials placed before it. Under the and the Divorce Act, 1869, the condition for the grant of relief is the satisfaction of the court as to the existence of the grounds for granting the particular relief. The satisfaction as to the existence of the ground must be, as in a criminal proceeding beyond reasonable doubt and must necessarily be founded upon material which is relevant for consideration of the court which would of course include evidence adduced in the case. Although in the the words used are "satisfied on the evidence" while in the , the legislature has used the words "if the court is satisfied" their meaning is the same. When the law places the burden of proof upon a party, it requires that party to adduce evidence in support of his allegations, unless he is relieved of the necessity to do so by reason of admissions made or the evidence adduced on behalf of his opponent. The law does not speak of the quantum of burden but only of its incidence and it would be mixing up the concepts of the incidence of the burden of proof with that of the discharge of the burden to say that in one case it is light and in another heavy. Unless it is shown that important or relevant evidence has been overlooked or misconstrued, it is not in consonance with the practice of Supreme Court to re examine a concurrent finding of fact, particularly when the findings are based on appreciation of evidence. Case law referred to. 270

ons Nos.112 and 113 of 1961 etc. Petition under article 32 of the Constitution of India for enforcement of, Fundamental rights. N. A. Palkhivala, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos. 112 and 113 of 61 and 79 to 80 of 1962). M. C. setalvad, D. P. Singh, m. K. Ramamurthi, R. K. Garg and section C. Agarwal. for the respondents (in W.P. Nos. 112 and 113 of, 1961). 887 section V. Gupte, Additional Solicitor General, N. section Bindra and R. H. Dhebar, for the respondents (in W.P. Nos. 79 and 80 of 62). G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos. 202 204/1961). A. Ranganadham Chetty and T. V. R. Tatachari, for the respondents (in W.P. Nos. 202 and 203 of 1961). Lal Narain Sinha, M. K. Ramamurthi, R. K. Garg and section C. Agarwal, for the respondent (in W.P. 204 of 1961). February 25, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C.J. These writ petitions have been placed for hearing before us in a group, because they raise a common question of law in regard to the validity of the demand for sales tax which has been made against the respective petitioners by the Sales tax Officers for different areas. The facts in respect of each one of the writ petitions are not the same and the years for which the demand is made are also different; but the pattern of contention is uniform and the arguments urged in each one of them are exactly the same. Broadly stated. the case for the petitioners is that the appropriate authorities purporting to act under the different Sales Tax Acts are attempting to recover from the petitioners sales tax in respect of transactions to which the petitioners were parties, though the said transactions are not taxable under article 286 of the Constitution. article 286(1) (a) provides that no law of a Sales shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place outside the State; and the argument is that the sales in question are all sales which took place outside the State and as such, are entitled to the protection of article 286(1) (a). The authorities under the respective Sales Tax Acts have rejected the petitioners ' contention that the transactions in question are inter State sales and have held that article 286(1)(a) is not applicable to them. A similar finding has been recorded against the petitioners under article 286(2). The petitioners ' grievance 888 is that by coming to this erroneous conclusion, a tax is being levied against them in respect of transactions protected by article 286(1)(a) and that constitutes a breach of their fundamental rights under article 3 1 (1). It is this alleged infringement of their fundamental rights that they seek to bring before this Court under article 32(1). It has been urged on their behalf that the right to move this Court under article 32(1) is itself a fundamental right, and so, under article 32(2) an appropriate order should be passed setting aside the directions issued by the Sales tax Authorities calling, upon the petitioners either to pay the sales tax, or to comply with other directions issued by them in that behalf. For dealing with the points raised by these writ petitions, it is not necessary to set out the facts in respect of each one of them. For convenience we will refer to the facts set out by the Tata Engineering & Locomotive Co. Ltd., the petitioner in W.Ps. Nos. 112 and 113 of 1961. The peti tioner is a company registered under the Indian Companies Act, 1913 and carries on the business of manufacturing, inter alia, Diesel Truck and Bus chassis and the spare parts and accessories thereof at Jamshedpur in the State of Bihar. The company sells these products to dealers, State Transport Organisations and others doing business in various States of India. The registered office of the petitioner is in Bombay. In order to promote its trade throughout the country, the petitioner has entered into Dealership Agree ments with different persons. The modus adopted by the petitioner in carrying on its business in different parts of India is to sell its products to the dealers by virtue of the relevant provisions of the Dealership Agreements. Accordingly, the petitioner distributes and sells its vehicles to dealers, State Transport Organisations and consumers in the manner set out in the petition. The petitioner contends that the sales in respect of which the present petitions have been filed were effected in the course of inter State trade and as such, were not liable to be taxed under the relevant provisions of the Sales Tax Act. The Sales tax Officer, on the other hand, has head that the sales had taken place within the State of Bihar and were intra State sales and as such, were liable to assessment under the Bihar Sales Tax 889 Act. In accordance with this conclusion, further steps are threatened against the petitioner in the matter of recovery of the sales tax calculated by the appropriate authorities. The petitioner is a company and a majority of its share holders are Indian citizens, two of whom have joined the present petitions. The petitioners in W.Ps. 79 and 80/ 1962 are the Automobile Products of India Ltd. and Another. The majority of the share holders of this company are also citizens of India and one of them has joined the petitions. Writ petitions Nos. 202 204/1961 have been filed by the State Trading Corporation of India Ltd. The shareholders of this Corporation are the President of India, and two Additional Secretaries, Ministry of Commerce and Industry, Government of India; one of these Secretaries, has joined the petitions. It may incidentally be stated at this stage that these writ petitions were heard by a Special Bench of this Court on the 26th July, 1963 in order to determine the constitutional question as to whether the State Trading Corporation Ltd. can claim to be a citizen within the meaning of article 19 of the Constitution. The majority decision rendered in these writ petitions on the preliminary, issue referred to the Special Bench was that the petitioner as a State Trading Corporation is not a citizen under article 19, and so, could not claim the protection of the fundamental rights guaranteed by the said Article [vide State Trading Corporation of India Ltd. vs The Commercial Tax Officer and Others(1)]. That is why this petitioner along with other petitioners have made the petitions in the names of the companies as well as one or two of their shareholders respectively. It is argued on behalf of the petitioners that though the company or the Corporation may not be an Indian citizen under article 19, that should not prejudice the petitioners case, because, in substance, the Corporation is no more than an instrument or agent appointed by its Indian share holders and as such, it should be open to the petitioners either acting themselves as companies or acting through (1) ; , 890 their shareholders to claim the relief for which the present petitions have been filed under article 32. These petitions are resisted by the respective States on the ground that the petitions are not competent under article 32. The respondents contend that the main attack of the petitioners is against the findings of the Sales tax Officers in regard to the character of the impugned sale transactions and they urge that even if the said findings are wrong, that cannot attract the provisions of article 32. The validity of the respective Sales tax Acts is not challenged and if purporting to exercise their powers under the relevant provisions of the said Acts, the appropriate authorities have, during the course of the assessment proceedings, come to the conclusion that the impugned transactions are intra State sales and do not fall under article 286(1)(a), that is a decision which is quasi judicial in character and even an erroneous decision rendered in such assessment proceedings cannot be said to contravene the fundamental rights of a citizen which would justify recourse to article 32. In other words, the alleged breach of the petitioners ' fundamental rights being referable to a quasi judicial order made by a Tribunal appointed under a valid Sales tax Act, does not bring the case within article 32. That is the first preliminary ground on which the competence of the writ petitions is challenged. In support of this plea, reliance is placed by the respondents on a recent decision of a Special Bench of this Court in Smt. Ujjam Bai vs State of Uttar Pradesh(1). There is another preliminary objection raised by the respondents against the, competence of the writ petitions, and that is based upon the decision of this Court in the case of the State Trading Corporation of India Ltd. (2). It is urged that the decision of this Court that the State Trading Corporation is not a citizen, necessarily means that the fundamental rights guaranteed by article 19 which can be claimed only by citizens cannot be claimed by such a Corporation, and so, there can be no scope for looking at the substance of the matter and giving to the shareholders indirectly the right which the Corporation as a separate (1) [1963] 1 S.C.R. 778. (2) ; 891 legal entity is not directly entitled to claim. The respondents have urged that in dealing with the plea of the petitioners that the veil worn by the Corporation as a separate legal entity should be lifted and the substantial character of the Corporation should be determined without reference to the technical position that the Corporation is a separae entity, we ought to bear in mind the decision of this Court in the case of the State Trading Corporation of India Ltd.(1). Basing themselves on this contention, the respondents have also argued that if the fundamental rights guaranteed by article 19 are not available to the petitioners, then their plea that the sales tax is being collected from them contrary to article 31(1) must fail and in support of this contention reliance is placed upon a recent decision of this Court in the case of Indo China Steam Navigation Co. Ltd. vs The Additional Collector of Customs and Others(2). Logically, the second preliminary objection would come first, because if the petitioners cannot claim the status of citizens and are not, therefore, entitled to base their petitions on the allegation that their fundamental rights under article 19 have been contravened, that would be the end of the petitions. It has been conceded before us by all the learned counsel appearing for the petitioners that it is only if both the preliminary objections raised by the respondents are over ruled that the hearing of the writ petitions would reach the stage of considering the merits of their pleas that the sales which are sought to be taxed fall under article 28 6 (1) (a) of the Constitution. If the respondents succeed in either of the two preliminary objections raised by them, the writ petitions would fail and there would be no occasion to consider the merits of the pleas raised by them. Since we have come to the conclusion that the second preliminary objection raised by the respondents must be upheld, we do not propose to pronounce any decision on the first preliminary objection. However, as the point covered by the said objection has been elaborately argued before us, we would prefer to indicate briefly the broad arguments urged fry both the parties in that behalf. (1) ; (2) ; 892 The controversy between the parties as to the scope and effect of the provisions contained in article 32 on which the validity of the first preliminary objection rests, substantially centres round the question as to what is the effect of the decision of this Court in Smt. Ujjam Bai 's case(1). The petitioners argue that though the majority view in that case was that the writ petition filed by Ujjam Bai was incompetent, it would appear that the reasons given in most of the judgments support the petitioners ' case that where the fundamental rights of a citizen are contravened, may be by a quasi judicial order, in pursuance of which a tax is attempted to be recovered from a citizen, the erroneous conclusion in regard to the nature of the transaction must be held to contravene the fundamental right of the citizen, and as such, would justify the petitioners in moving this Court under article 32. On the other hand, the respondents urge that the effect of the decision. in Ujiam Bai 's case plainly tends. to show that if a quasi judicial decision has determined a matter in regard to the taxability of a given transaction, there can be no question about the breach of fundamental rights which would justify an application under article 32. The argument is that the intervention of a quasi judicial order changes the complexion of the dispute between the parties, and in cases of that character, the only remedy available to an aggrieved citizen is to take recourse to the appeals and other proceedings prescribed by the taxing statute in question. article 32 is not intended to confer appellate jurisdiction on this Court so as to review or examine the propriety of quasi judicial orders passed by appropriate authorities purporting to exercise their powers and jurisdictions under the several taxing statutes. It may be that after exhausting the remedies by way of appeals and revisions prescribed by the statute, the party may come to this Court under article 136, but article 32 is inapplicable in such cases. In Ujjam Bai 's case(1), the first issue which was referred to the Special Bench was whether an order of assessment made by an authority under a taxing statute which is intra vires is open to challenge as repugnant to (1) [1963] 1 S.C.R. 778. 893 article 19 (1)(g), on the sole ground that it was based on a misconstruction of a provision of the Act or of a notification issued thereunder; and the second question was, can the validity of such an order be questioned in a petition under article 32 of the Constitution? The majority view expressed in this case was against the petitioner. section K. Das J. who delivered the main judgment on behalf of the majority view observed that where a quasi judicial authority makes an ,order in the undoubted exercise of its jurisdiction in pursuance of a provision of law which is intra vires, an error of law or fact committed by that authority cannot be impeached otherwise than on appeal, unless the erroneous determination relates to a matter on which the jurisdiction of that body depends; and so, he held that if the impugned order of assessment is made by an authority under a valid taxing statute in the undoubted exercise of its jurisdiction it cannot be challenged under article 32 on the sole ground that it is passed on a misconstruction of a provision of the Act or of a notification issued thereunder. Subba Rao J., on the other hand, took the view that article 32 confers wide jurisdiction on this Court to enforce the fundamental rights, and he held that it is the duty of this Court to entertain a writ petition wherever a fundamental right of a citizen is alleged to have been contravened, irrespective of whether the question raised involves a question of jurisdiction, law, or fact; this is the minority view pronounced in Ujjam Bai 's case. Hidayatullah J., who agreed broadly with the majority view, expressed the opinion that if a quasi judicial tribunal embarks upon an action wholly outside the pale of the law he is enforcing, a question of jurisdiction would be involved and that would justify an application under article 32. Ayyangar J. held that if it appeared that the impugned order of assessment was based upon a plain and patent misconstruction of the provisions of the taxing statute, that itself would give rise to a plea that the authority was acting beyond its jurisdiction and in such a case, a petition under article 32 may be justified. Proceeding on this view, the learned Judge held that the construction placed by the taxing authority was not shown to be patently erroneous. 894 and so, he was not prepared to grant any relief to Ujjam Bai. That is how the learned Judge agreed with the majority decision. Mudholkar J., who also agreed with the majority decision, was disposed to make an exception in cases where an erroneous construction of the law would lead to the recovery of a tax which is beyond the competence of the legislature, or is violative of the provisions of Part III or of any other provisions of the Constitution. It would, thus, be seen that though the majority decision was that Ujjam Bai 's petition should be dismissed, the reasons given in the judgments pronounced by the learned Judges who agreed with the majority decision are not all uniform and do not disclose an identity of approach or of reasons, and that naturally has given rise to the arguments in the present writ petitions, both parties suggesting that the majority decision in the case of Ujjam Bai supports the rival views for which they contend. Mr. Setalvad has strongly urged that if a misconstruction of the notification on which Ujjam Bai rested her case, was not held to justify a petition under article 32, that would necessarily mean that the misconstruction of the nature of the transaction would be no better, even though in this 'latter case, the wrong decision on the question as to the character of the sale transaction may involve taxing a transaction which is protected by article 286(1) (a). One can understand the argument, said Mr. Setalvad, that a breach of the fundamental rights, however it is caused would justify recourse to article 32; that would be consistent and logical; but once it is held that a breach of the fundamental rights alleged to have been caused by a misconstruction of a notification or a statute placed by an appropriate authority acting under the provisions of a valid taxing law does not attract article 32, it is not logically possible to urge that another kind of breach alleged to have been caused by a misappreciation of the nature of the transaction and an erroneous conclusion as to its taxable character would make any difference. In the first case, the erroneous construction of the notification violates the provisions of article 265 of the Constitution and thereby brings in the breach of article 895 31 (1); in the other case, the misconstruction as to the taxable character of the transaction violates article 28 6 (1 ) (a) and thereby brings in article 31 (1). Therefore, it is urged that he necessary consequence of the decision in Ujjam Bai is that even if the Sales tax Officer has held wrongly that the impugned transactions are not inter State transactions, the remedy of petition under article 32 is not open to the aggrieved citizen. On the other hand, Mr. Palkhivala has strenuously urged that the decision in Ujjam Bai rested on the basis that the misinterpretation of the notification did not involve the violation of any constitutional limitations or prohibitions and he has referred us to some passages in the judgments of Das, Kapur and Mudholkar JJ. In support of his argument that where an erroneous decision of a salestax officer results in the violation of a constitutional prohibition or limitation, different considerations would arise and an aggrieved citizen would be entitled to move this Court under article 32, Mr. Palkhivala has emphasised the fact that whereas Das J. expressly held that the view taken in Kailash Nath vs State of U.P.(1) was not right, he approved of the other decisions which were cited at the Bar and exhaustively discussed on the ground that those decisions 'fall under the category in which an executive authority acts without authority of law, or a quasi judicial authority acts in transgression of a constitutional prohibition and without jurisdiction"(2). These decisions are: Thakur Amar Singhji vs State of Rajasthan(3); M/s. Mohanlal Hargovind Dass vs The State of Madhya Pradesh(4); Y. Mahaboob Sheriff vs Mysore State Transport Authority(5); J. V. Gokar & Co. (Private) Ltd. vs The Assistant Collector of Sales tax (Inspection) (6); and Universal Imports Agency vs Chief Controller of Imports and Exports ( 7 ) . To the same effect is the observation made by Kapur J. when the learned Judge stated that in the case of M/s. Mohanlal Hargovind Dass ( 4 ) ':he dispute did not turn upon a misconstruction of any statute by any quasi judicial authority, but that was a case (1) A.I.R. 1957 S.C. 790(2) [1963] 1 S.C.R. at 842. (3) ; [1955] 8 S.C.R. 303.(4) (5) ; (7) ; 896 in which the very transaction was outside the taxing powers of the State and any action taken by the taxing authorities was one without authority of law. In support of the same argument, both Mr. Pathak and Mr. Palkhivala strongly relied upon the two subsequent decisions of this Court where writ petitions filed under article 32 were entertained on grounds somewhat similar to those on which the present writ petitions are founded, The State Trading Corporation of India Ltd. and Another vs The State of Mysore and Another(1) and The State Trading Corporation of India Ltd. and Others vs The State of Mysore and Another(2). Basing himself on these decisions, Mr. Pathak has argued that the question as to whether a particular transaction of sale attracts the protection of article 286(1) (a) is a collateral fact the decision of which confers jurisdiction on the Sales tax Officer; and he contends that the decision of the Sales tax Officer, who is a Tribunal of limited jurisdiction, on a collateral jurisdictional point can always be challenged under article 32 of the Constitution if the said decision impinges upon the citizen 's right protected by article 28 6 (1) (a). Mr. Palkhivala urged the argument of jurisdiction in a slightly different way. He contended that the concept of jurisdiction on which he relied was not based on the view that jurisdiction means authority to decide. According to him, the concept of jurisdiction was of a different category and was of a vital character when constitutional limitations or prohibitions were involved in the decision of any case brought before a Sales tax Officer. On the other hand, Mr. Setalvad has urged that the Sales tax Officer is not a Tribunal of limited jurisdiction and the charging sections in the respective Sales tax Acts leave it to the Sales tax Officer and the heirarchy of officers contemplated by them to decide the question about the taxability of any given transaction and impose a tax on it in accordance with the provisions of the Acts. Where a tribunal is entitled to deal with transactions which fall (1) 14 S.T.C. 188. (2) 14 S.T.C. 416. 897 under the charging sections of the statute, it would be erroneous to contend that the decision of the Tribunal on the said question about the taxability of the transaction is the decision on a collateral jurisdictional fact. If the said argument is accepted, logically, it may mean that all questions the decision of which inevitably precedes the imposition of the tax, would be collateral jurisdictional fact; and that clearly cannot be the effect of the charging sections of the different Acts. In regard to the point of constitutional limitations and prohibitions raised by Mr. Palkhivala, Mr. Setalvad contends that if the provisions of article 286(1) (a) makes the decision of the Sales tax Officer on the character of the sale trans action one of jurisdiction, then it is difficult to see why his decision on other points should also not partake of the same character. In that connection, he emphasised the fact that the provisions of article 286(1) (a) cannot be distinguished from the provisions of article 265. As we have already indicated, having regard to the fact that we have come to the conclusion that the other preliminary objection urged by the respondents must be upheld, we do not propose to express any opinion on this part of the controversy between the parties. That takes us to the question as to whether the petitioners, some of whom are companies registered under the Indian Companies Act and one of whom is the State Trading Corporation, can claim to file the present writ petitions under article 32 having regard to the decision of this Court in the case of the State Trading Corporation of India Ltd. (1). The petitioners argue that the said decision merely held that the State Trading Corporation of India Ltd. was not a citizen. The question as to whether the veil of the Corporation can be lifted and the rights of the shareholders of the said Corporation could be recognised under article 19 or not, was not decided, and it is on this aspect of the question that arguments have been urged before us in the present writ petitions. The true legal position in regard to the character of a corporation or a company which owes its incorporation to (1) ; 134 159 S.C. 57 898 a statutory authority, is not in doubt or dispute. The corporation in law is equal to a natural person and has a legal entity of its own. The entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation. This position has been well established ever since the decision in the case of Salomon vs Salomon & Co. (1) was pronounced in 1897; and indeed, it has always been the well recognised principle of common law. However, in the course of time, the doctrine that the corporation or a company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the corporation. As a result of the impact of the complexity of economic factors, juidical decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more. But the question which we have to consider is whether in the circumstances of the present petitions, we would be justified in acceding to the argument that the veil of the petitioning corporations should be lifted and it should be held that their shareholders who are Indian citizens should be permitted to invoke the protection of article 19, and on that basis, move this Court under article 32 to challenge the validity of the orders passed by the Sales tax Officers in respect of transactions which, it is alleged, are not taxable. (1) ; H.L. 899 Mr. Palkhivala has very strongly urged before us that having regard to the fact that the controversy between the parties relates to the fundamental rights of citizens, we should not hesitate to look at the substance of the matter and disregard the doctrinaire approach which recognises the existence of companies as separate juristic or legal persons. If all the shareholders of the petitioning companies are Indian citizens, why should not the Court look at the substance of the matter and give the shareholders the right to challenge that the contravention of their fundamental rights should be prevented. He does not dispute that the shareholders cannot claim that the property of the companies is their own and cannot plead that the business of the companies is their business in the strict legal sense. The doctrine of lifting of the veil postulates the existence of dualism between the corporation or company on the one hand and its members or shareholders on the other. So, it is no good emphasising that technical aspect of the matter in dealing with the question as to whether the veil should be lifted or not. In support of his plea, he has invited our attention to the decision of the Privy Council in The English and Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax, Assam(1), as well as the decision of the House of Lords in Daimler Company Ltd. vs Continental Tyre and Rubber Company (Great Britain) Ltd.(2). It is unnecessary to refer to the facts in these two cases and the principles enunciated by them, because it is not disputed by the respondents that some exceptions have been recognised to the rule that a corporation or a company has a juristic or legal separate entity. The doctrine of the lifting of the veil has been applied in the words of Palmer in five categories of cases : where companies are in the relationship of holding and subsidiary (or sub subsidiary) companies; where a shareholder has lost the privilege of limited liability and has become directly liable to certain creditors of the company on the ground that, with his knowledge, the company continued to carry on business six months after the number of its members was reduced (1) (2) 900 below the legal minimum; in certain matters pertaining to the law of taxes, death duties and stamps, particularly where the question of the "controlling interest" is in issue; in the law relating to exchange control; and in the law relating to trading with the enemy where the test of control is adopted(1). In some of these cases, judicial decisions have no doubt lifted the veil and considered the substance of the matter. Gower has similarly summarised this position with the observation that in a number of important respects, the legislature has rent the veil woven by the Salomon case. Particularly is this so, 'says Gower, in the sphere of taxation and in the steps which have been taken towards the recognition of enterprise entity rather than corporate entity. It is significant, however, that according to Gower, the courts have only construed statutes as "cracking open the corporate shell" when compelled to do so by the clear words of the statute; indeed they have gone ' out of their way to avoid this construction whenever possible. Thus, at present, the judicial approach in cracking open the corporate shell is somewhat cautious and circumspect. It is only where the legislative provision justifies the adoption of such a course that the veil has been lifted. In exceptional cases where courts have felt "themselves able to ignore the corporate entity and to treat the individual shareholders as liable for its acts",(2) the same course has been adopted. Summarising his conclusions, Gower has classified seven categories of cases where the veil of a corporate body has been lifted. But it would not be possible to evolve a rational, consistent and inflexible principle which can be invoked in determining the question as to whether the veil of the corporation should be lifted or not. Broadly stated, where fraud is intended to be prevented, or trading with an enemy is sought to be defeated, the veil of a corporation is lifted by judicial decisions and the shareholders are held to be the persons who actually work for the corporation. That being the position with regard to the doctrine of the veil of a corporation and the principle that the said (1) Palmer 's Company Law 20th Ed. p. 136. (2) Gower" Modern Company Law, 2nd Ed. pp. 193 & 195. 901 veil can be lifted in some cases, the question which arises for our decision is; can we lift the veil of the petitioners and say that it is the shareholders who are really moving the Court under article 32, and so, the existence of the legal and juristic separate entity of the petitioners as a corporation or as a company should not make the petitions filed by them under article 32 incompetent? We do not think we can answer this question in the affirmative. No doubt, the complaint made by the petitioners is that their fundamental rights are infringed and it is a truism to say that this Court as the guardian of the fundamental rights of the citizens will always attempt to safeguard the said fundamental rights; but having regard to the decision of this Court in State Trading Corporation of India Ltd. (1) we do not see how we can legitimately entertain the petitioners ' plea in the present petitions, because if their plea was upheld, it would really mean that what the corporations or the companies cannot achieve directly, can be achieved by them indirectly by relying upon the doctrine of lifting the veil. If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19. It is no doubt suggested by the petitioners that though article 19 is confined to citizens, the Constitution makers may have thought that in dealing with the claims of corporations to invoke the provisions of article 19, courts would act upon the doctrine of lifting the veil and would not treat the attempts of the corporations in that behalf as falling outside article 19. We do not think this argument is well founded. The effect of confining article 19 to citizens as distinguished from persons to whom other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under article 19 are guaranteed. If the legislature intends that the benefit of article 19 should be made available to the corporations, it would not be difficult for it to adopt a proper measure in that behalf by enlarging the definition of 'citizen ' prescribed by the Citizenship Act passed by the Parliament by virtue of the powers conferred on it by Articles 10 and 11. On the other hand, the fact that the Parliament has not chosen to make any such provision indicates that it was not the intention of the (1) ; 902 Parliament to treat corporations as citizens. Therefore, it seems to us that in view of the decision of this Court in the case of the State Trading Corporation of India Ltd.(1) the petitioners cannot be heard to say that their shareholders should be allowed to file the present petitions on the ground that, in substance, the corporations and companies are nothing more than associations of shareholders and members thereof. In our opinion, therefore, the argument that in the present petitions we would be justified in lifting the veil cannot be sustained. Mr. Palkhivala sought to draw a distinction between the right of a citizen to carry on trade or business which is contemplated by article 19(1)(g) from his right to form associations or unions contemplated by article 19 (1) (c). He argued that article 19(1)(c) enables the citizens to choose their instruments or agents for carrying on the business which it is their fundamental right to carry on. If citizens decide to set up a corporation or a company as their agent for the purpose of carrying on trade or business, that is a right which is guaranteed to them under article 19(1)(c). Basing himself on this distinction between the two rights guaranteed by article 19(1)(g) and (c) respectively, Mr. Palkhivala somewhat ingeniously contended that we should not hesitate to lift the veil, because by looking at the substance of the matter, we would really be giving effect to the two fundamental rights guaranteed by article 19(1). We are not impressed by this argument either. The fundamental right to form an association cannot in this manner be coupled with the fundamental right to carry on any trade or business. As has been held by this Court in All India Bank Employees ' Association vs National Industrial Tribunal and Others(2), the argument which is thus attractively presented before us overlooks the fact that article 19, as contrasted with certain other articles like articles 26, 29 and 30, guarantees rights to the citizens as such, and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens, that is to say, the right of the citizens composing the body. The respective rights guaranteed by article 19(1) (1) ; (2) ; 903 Cannot be combined as suggested by Mr. Palkhivala, but must be asserted each in its own way and within its own limits; the sweep of the several rights is no doubt wide, but the combination of any of those two rights would not justify a claim such as is made by Mr. Palkhivala in the present petitions. As soon as citizens form a company, the right guaranteed to them by article 19(1)(c) has been exercised and no restraint has been placed on that right and no infringement of that right is made. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the ,citizens who get the company or corporation formed or incorporated, and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of individual citizens. Therefore, we are satisfied that the argument based on the distinction between the two rights guaranteed by article 19(1)(c) and (g) and the effect of their combination cannot take the petitioners ' case very far when they seek to invoke the doctrine that the veil of the corporation should be lifted. That is why we have come to the conclusion that the petitions filed by the petitioners are incompetent under article 32, even though in each of these petitions one or two of the shareholders of the petitioning companies or corporation have joined. The result is, the second preliminary objection raised by the respondents is upheld and the writ petitions are dismissed as being incompetent under article 32 of the Constitution. There would be no order as to costs. Petitions dismissed.

IN-Abs

The petitioners were ordered to pay sales tax on account of certain transactions made by them in the State of Bihar. Their contention was that the sales in question took place outside the state and hence they were entitled to the protection of article 286(1)(a). Their plea was rejected by the Sales tax authorities and it was held that article 286(1)(a) did not apply to them. The petitioners challenged the orders of the sales tax authorities by writ petitions filed by them under article 32 of the Constitution. A preliminary objection was taken on behalf of respondents that the petitions were not competent as those were filed by corporations or companies and the provisions of article 19 did not apply to them as corporations were not citizens. Dismissing the writ petition, Held. The petitions under article 32 were incompetent although in each of them one or two of the share holders of the petitioning companies or corporations had also joined. Article 19 guarantees rights to citizens as such and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who got the company or corporation formed or incor porated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the right attributable to the business of individual citizens. The petitioners cannot be heard to say that their share holders should be allowed to file the present petitions on the ground that in substance, the corporations and companies are nothing more than association of share horders and members thereof. If their contention is accepted, it would really mean that what the corporations or companies cannot achieve directly, they can achieve indirectly by relying upon the doctrine of lifting the veil. If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19. 886 The position of a corporation is that it is in law equal to a natural person and has a legal entity of its own. That entity is entirely separate from that of its shareholders. It bears its own name and has a seal of its own. Its assets are separate and distinct from those of its members. It can sue and be sued exclusively for its own purpose. Its creditors cannot obtain satisfaction from the assets of its members. The liability of the members or share holders is limited to the capital invested by them. The creditors of the members have no right to the assets of the corporation. However. there are some exceptions to the rule that the corporation or a company has a jurisfic or legal entity and the doctrine of lifting the veil of a corporation and examining its face in substance has been applied in many cases but the same does not apply in the present case. State of Trading Corporation of India Ltd. vs The Commercial Tax Officer & Ors. ; , Smt. Ujjam Bai vs State of Uttar Pradesh. [1963] 1 S.C.R. 778, Indo China Steam Navigation Co. Ltd. vs Additional Collector of Customs. ; , Kailash Nath vs State of U.P. A.I.R. 1957 S.C. 790, Thakur Amar Singhji V. State of Rajasthan, ; , M/s. Mohanlal Hargovind vs State of Madhya Pradesh. ; , Y. Mahaboob Sheriff V. Mysore State Transport Authority. [1960] 2 S.C.R. 146, J. V. Gokar & Co. (P) Ltd. vs Assistant Collector of Sales tax (inspection), ; , Universal Imports Agency vs Chief Controller of Imports & Exports , State Trading Corporation of India Ltd. vs State of Mysore, 14 S.T.C. 188, State Trading Corporation of India Ltd. vs State of Mysore. 14 S.T.C. 416, Salomon vs Salomon & Co. ; , H.L. The English & Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax Assam. , Daimler Company Ltd. vs Continental Tyre and Rubber Co. (Great Britain) Ltd. and All India Bank Employees ' Association vs National Industrial Tribunal & Ors. ; , referred to.

Appeal No. 77 of 1952. Appeal from the Judgment and Order dated the 9th January, 1951, of the High Court of Judicature at Calcutta (Harries C. J. and Banerjee J.) in its Special Jurisdiction (Income tax) in Income tax Reference No. 70 of 1950. C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for the appellant. N. C. Chatterjee (B. Sen, with him) for the respondents. September 24. The Judgment of the Court was delivered by MAHAJAN J. This is an appeal from a judgment of the High Court of Judicature at Calcutta delivered in a reference under section 66(1) of the Indian Incometax Act, whereby the High Court answered the question referred in the affirmative. The assessee is a partnership concern. When income tax was paid under the Act of 1918, the partnership concern consisted of three partners, Mathews, Figgies and Notley. The name of the firm was A. W. Figgies & Co., and its ' business was that of tea brokers. There were several changes in the constitution of the firm resulting in a change in the shares of 173 the partners. In 1924, Mathews went out and his share was taken over by Figgies and Notley. In 1926 another partner Squire was introduced. In 1932 Figgies went out, and from 1932 to 1939 the partnership consisted only of Notley and Squire. In 1939 Hillman was brought in and the partnership consisted of these three partners. In 1943 Notley went out and the partnership business was carried on by the two partners, Squire and Hillman. In 1945 Gilbert was brought in. This arrangement continued up to 31st May, 1947, when the partnership was converted into a limited company. For the assessment year 1947 48 the assessee claimed that it was entitled to relief under section 25(4) of the Act as the partnership firm had been succeeded by a private limited company. There was a provision in the partnership deed of 1939 that on the retirement of any partner the partnership would not be determined but would be carried on by the remaining partners. It appears that a fresh partnership deed was drawn up in the year 1945 when Gilbert was brought in. The partnership constituted by these three partners continued to carry on the same business that had been started when the tax was paid under the Act of 1918. From the statement of the case it does not appear that apart from the mere change in the personnel of the partners and in their respective shares there was any actual dissolution of the firm, and any division of its assets and liabilities or a succession to its business by any outside person. The Income tax Officer disallowed the claim of the assessee on the ground that the partners of the firm in 1939 being different from the partners of the firm in 1947, no relief could be given to the applicant. The Appellate Assistant Commissioner upheld this view. On appeal to the Income tax Tribunal, this decision was reversed and relief was granted to the applicant under section 25(4). Before the Tribunal it was argued on behalf of the Commissioner that the partnership was nothing but an association of persons and therefore, in 24 174 order to get relief under section 25(4) of the Act the partners of 1939 must be the same as the partners of 1947 when the firm was succeeded by the company. The Tribunal repelled this contention and held that the relief contemplated by section 25(4) of the Income tax Act was to be given to the business and not to the persons carrying on the business and that mere changes in the constitution of the firm had to be ignored. It was not disputed before the Tribunal that the business of the partnership firm of A. W. Figgies & Co. continued as tea brokers right from its inception till the time it was succeeded by the limited company. The Tribunal took the view that for purposes of incometax the firm was to be regarded as having a separate juristic existence apart from the partners carrying on the business and that the firm could be carried on even if there was a change in its constitution. At the instance of the appellant the Tribunal stated a case and referred the following question to the High Court under section 66(1) of the Act : "In the facts and circumstances of the case, was the firm as constituted on 31st May, 1947, entitled to the relief under section 25(4) of the Indian Incometax Act ?" The High Court answered the question referred in the affirmative. It upheld the view taken by the Tribunal. It was contended before us that the construction placed by the High Court upon section 25(4) of the Act was erroneous and was not warranted by the language of the section and that by reason of the change in the composition of the firm the same firm did not continue throughout and hence there was no right to relief under section 25(4) of the Act in the changed firm. In our opinion, this contention is without force. Section 25 (4) is in these terms: "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939, carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being 175 merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference. " The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change. It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole. It is true that under the law of partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners but it is also equally true that under that law there is no dissolution of the firm by the mere incoming or outgoing of partners. A partner can retire with the consent of the other partners and a person can be introduced in the partnership by the consent of the other partners. The reconstituted firm can carry on its business in the same firm 's name till dissolution. The law with respect to retiring partners as enacted in the Partnership Act is to a certain extent a compromise between the strict doctrine of English common law which refuses to see anything in the firm but a collective name for individuals carrying on business in partnership and the mercantile usage which recognizes the firm as a distinct person or quasi corporation. But under the Income tax Act the position is somewhat different. A firm can be charged as a distinct assessable entity as distinct from its 176 partners who can also be assessed individually. Section 3 which is the charging section is in these terms: 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 the members of the association individually. " The partners of the firm are distinct assessable entities, while the firm as such is a separate and distinct unit for purposes of assessment. Sections 26, 48 and 55 of the Act fully bear out this position. These provisions of the Act go to show that the technical view of the nature of a partnership under English law or Indian law cannot be taken in applying the law of incometax. The true question to decide is one of identity of the unit assessed under the Income tax Act, 1918, which paid double tax in the year 1939, with the unit to whose business the private limited company succeeded in the year 1947. We have no doubt that the Tribunal and the High Court were right in holding that in spite of the mere changes in the constitution of the firm, the business of the firm as originally constituted continued as tea brokers right from its inception till the time it was succeeded by the limited company and that it was the same unit all through, carrying on the same business, at the same place and there was no cesser of that business or any change in the unit. Reference was made by Mr. Daphtary to the partnership deed drawn up in 1945. It was argued that a different firm was then constituted. The High Court refused to look into this document as it had not been relied upon before the Tribunal and no reference bad been specifically made to it in the order of the Incometax Officer or the Assistant Commissioner. The Tribunal in spite of this document took the view that under the Partnership Act a firm could be carried on even if there was a change in its constitution. This 177 document is silent on the question as to what happened to the assets and liabilities of the firm that was, constituted under the deed of 1939. To all intents and purposes the firm as reconstituted was not a different unit but it remained the same unit in spite of the change in its constitution. The result is that we see no substantial grounds for disturbing the opinion given by the High Court on the question submitted to it. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

For purposes of assessment to income tax, a firm is a different entity distinct from its partners, and a mere change in the constitution of the firm does not bring into existence a new assessable unit or a distinct assessable entity. (1) 67 I.A. 464,481. 172 A firm consisting of three partners, A, B and C, carried on the business of tea brokers and paid income tax under the Income tax Act of 1918. There were several changes in the personnel of the partners and in 1939 the firm consisted of C, D and E. C retired and in 1945 a new partnership deed was written up between D, E and F and they carried on the business. In 1947 the partnership was converted into a limited company. The Income tax authorities refused to give relief under section 25(4) of the Income tax Act as the partners of the firm in 1939 were different from the partners of the firm in 1947: Held, that in spite of the changes in the constitution of the firm, the business of the firm as originally constituted continued right from its inception to the time it was succeeded by the limited company and the firm was the same unit all through; the reconstitution of the firm in 1945 did not make it a different unit, and the firm was therefore entitled to relief under section 25(4) of the Act.

iminal Appeal No. 58 of 1962. Appeal by special leave from the judgment and order dated June 27, 1961 of the Gujarat High Court in Criminal Appeal No. 656/1960. B. K. Banerjee, for the appellant. D. R. Prem, R. H. Dhebar and B. R. G. K. Achar, for the respondent. March 19, 1964. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal raises the question of the defence of insanity for an offence under section 302 of the Indian Penal Code. The appellant was the husband of the deceased Kalavati. She was married to the appellant in the year 1958. On the night of April 9, 1959, as usual, the appellant and his wife slept in their bed room and the doors leading to that room were bolted from inside. At about 3 or 3.30 a.m. on the next day Kalavati cried that she was being killed. The neighbours collected in front of the said room and called upon the ac cused to open the door. When the door was opened they found Kalavati dead with a number of wounds on her body. The accused was sent up for trial to the sessions on the charge of murder. Before the Additional Sessions Judge, Kaira, a defence was set up that the accused was insane when the incident was alleged to have taken place and was not capable of understanding the nature of his act. The learned Additional Sessions Judge considered the entire evidence placed before him, and came to the conclusion that the accused had failed to satisfy him that when he committed the murder of his wife he was not capable to knowing the nature of the act and that what he was doing was either wrong or contrary to law. Having rejected his plea of insanity, the learned Additional Sessions Judge convicted him under section 302 of the Indian Penal Code and sentenced him to undergo rigorous imprisonment for life. On appeal 363 the High Court agreed with that finding, though for different reasons, and confirmed the conviction and sentence of the accused. Hence the present appeal. Learned counsel for the appellant contended that the High Court, having believed the evidence of the prosecution witnesses, should have held that the accused had discharged the burden placed on him of proving that at the time he killed his wife he was incapable of knowing the nature of his act or what he was doing was either wrong or contrary to law. He further contended that even if he had failed to establish that fact conclusively, the evidence adduced was such as to raise a reasonable doubt in the mind of the Judge as regards one of the ingredients of the offence, namely, criminal intention, and, therefore, the court should have acquitted him for the reason that the prosecution had not proved the case beyond reasonable doubt. Before we address ourselves to the facts of the case and the findings arrived at by the High Court, it would be convenient to notice the relevant aspects of the law of the plea of insanity. At the outset let us consider the material provisions without reference to decided cases. The said provisions are: INDIAN PENAL CODE Section 299 Whoever causes death by doing an act with the intention of causing death, or with the intention of causing such bodily injury as is likely to cause death, or with the knowledge that he is likely by such act to cause death, commits the offence of culpable homicide. Section 84 Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act, or that he is doing what is either wrong or contrary to law. INDIAN EVIDENCE ACT Section 105 When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Indian Penal Code (XLV of 1860) or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the Court shall presume the absence of such circumstances. 364 Section 4 "Shall presume": Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such facts as proved unless and until it is disproved. "Proved" A fact is said to be "proved" when after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. "Disproved" A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. Section 101 Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of fact which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact. it is said that the burden of proof lies on that person. It is a fundamental principle of criminal jurisprudence that an accused is presumed to be innocent and, therefore, the burden lies on the prosecution to prove the guilt of the accused beyond reasonable doubt. The prosecution, therefore, in a case of homicide shall prove beyond reasonable doubt that the accused caused death with the requisite intention described in section 299 of the Indian Penal Code. This general burden never shifts and it always rests on the prosecution. But, as section 84 of the Indian Penal Code provides that nothing is an offence if the accused at the time of doing that act, by reason of unsoundness of mind was incapable of knowing the nature of his act or what he was doing was either wrong or contrary to law. This being an exception, under section 105 of the Evidence Act the burden of proving the existence of circumstances bringing the case within the said exception lies on the accused; and the court shall presume the absence of such circumstances. Under section 105 of the Evidence Act, read with the definition of "shall presume" in section 4 thereof, the court shall regard the absence of such circumstances as proved unless, after considering the matters before it, it believes that said circumstances existed or their existence was so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that they did exist. To put 365 it in other words, the accused will have to rebut the presumption that such circumstances did not exist, by placing material before the court sufficient to make it con sider the existence of the said circumstances so probable that a prudent man would act upon them. The accused has to satisfy the standard of a "prudent man". If the material placed before the court. such as, oral and documentary evidence, presumptions, admissions or even the prosecution evidence, satisfies the test of "prudent man", the accused will have discharged his burden. The evidence so placed may not be sufficient to ' discharge the burden under section 105 of the Evidence Act, but it may raise a reasonable doubt in the mind of a judge as regards one or other of the necessary ingredients of the offence itself. It may, for instance, raise a reasonable doubt in the mind of the judge whether the accused had the requisite intention laid down in section 299 of the Indian Penal Code. If the judge has such reasonable doubt, he has to acquit the accused, for in that event the prosecution will have failed to prove conclusively the guilt of the accused. There is no conflict between the general burden, which is always on the prosecution and which never shifts, and the special burden that rests on the accused to make out his defence of insanity. The textbooks placed before us and the decisions cited at the Bar lead to the same conclusion. In Halsbury 's Laws of England, 3rd edn., Vol. 10, at p. 288, it is stated thus: "The onus of establishing insanity is on the accused. The burden of proof upon him is no higher than which rests upon a party to civil proceedings. " Glanville Williams in his book 'Criminal Law", The General Part, 2nd Edn., places the relevant aspect in the correct perspective thus, at p. 516: "As stated before, to find that the accused did not know the nature and quality of his act is, in part, only another way of finding that he was ignorant as to some fact constituting an ingredient of the crime; and if the crime is one requiring intention or recklessness he must, on the view advanced in this book, be innocent of mens rea. Since the persuasive burden of proof of mens rea is on the prose cution, on question of defence, or of disease of the mind, arises, except in so far as the prisoner is called upon for his own safety to neutralise the evidence of the prosecution. No persuasive burden of proof rests on him, and if the jury are uncertain whether the allegation of mens rea is made out . . the benefit of the doubt must be given to the prisoner, for, in the words 366 of Lord Reading in another context, "the Crown would then have failed to discharge the burden imposed on it by our law of satisfying the jury beyond reasonable doubt of the guilt of the prisoner. " This Court in K. M. Nanavati vs State of Maharashtra(1) had to consider the question of burden of proof in the context ofa defence based on the exception embodied in section 80 of the Indian Penal Code. In that context the law is summarized thus: "The alleged conflict between the general burden which lies on the prosecution and the special burden imposed on the accused under section 105 of the Evidence Act is more imaginary than real. Indeed, there is no conflict at all. There may arise three different situations: (1) A statute may throw the burden of proof of all or some of the ingredients of an offence on the accused: (see sections 4 and 5 of the Prevention of Corruption Act). (2) The special burden may not touch the ingredients of the offence, but only the protection given on the assumption of the proof of the said ingredients: (see sections 77, 78, 79, 81 and 88 of the Indian Penal Code). (3) It may relate to an exception, some of the many circumstances required to attract the exception, if proved, affecting the proof of all or some of the ingredients of the offence: (see section 80 of the Indian Penal Code). . . . In the third case, though the burden lies on the accused to bring his case within the exception the facts proved may not discharge the said burden, but may affect the proof of the ingredients of the offence. " After giving an illustration, this Court proceeded to state: "That evidence may not be sufficient to prove all the ingredients of section 80 of the Indian Penal Code, but may prove that the shooting was by accident or inadvertence, i.e., it was done without any intention or requisite state of mind, which is the essence of the offence, within the meaning of section 300, Indian Penal Code, or at any rate may throw a reasonable doubt on the essential ingredients of the offence of murder. . . In this view it might be said that the general burden to prove the ingredients of the offence, unless there is a specific statute to the contrary, is always on the prosecution, but the burden to prove the circumstances coming under the exceptions lies upon the accused." (1) [1962] Supp. 1 S.C.R. 567, 597, 598. 367 What is said of section 80 of the Indian Penal Code will equally apply to section 84 thereof. A Division Bench of the Patna High Court in Kamla Singh vs The State (1) invoked the same principle when the plea of insanity was raised. A Division Bench of the Nagpur High Court in Ramhitram vs State(1) has struck a different note inasmuch as it held that the benefit of doubt which the law gives on the presumption of innocence is available only where the prosecution had not been able to connect the accused with the occurrence and that it had nothing to do with the mental state of the accused. With great respect, we cannot agree with this view. If this view were correct, the court would be helpless and would be legally bound to convict an accused even though there was genuine and reasonable doubt in its mind that the accused had not the requisite intention when he did the act for which he was charged. This view is also inconsistent with that expressed in Nanavati 's case(3). A Scottish case, H.M. Advocate vs Fraser(4), noticed in Glanville Williams ' "Criminal Law", The General Part, 2nd Edn., at p. 517, pinpoints the distinction between these two categories of burden of proof. There, a man killed his baby while he was asleep; he was dreaming that he was struggling with a wild beast. The learned author elaborates the problem thus: "When the Crown proved that the accused had killed his baby what may be called an evidential presumption or presumption of fact arose that the killing was murder. Had no evidence been adduced for the defence the jury could have convicted of murder, and their verdict would have been upheld on appeal. The burden of adducing evidence of the delusion therefore lay on the accused. Suppose that, when all the evidence was in, the jury did not know what to make of the matter. They might suspect the accused to be inventing a tale to cover his guilt, and yet not be reasonably certain about it. In that event the accused would be entitled to an acquittal. The prosecution must prove beyond reasonable doubt not only the actus reus but the mens rea. " The doctrine of burden of proof in the context of the plea of insanity may be stated in the following propositions: (1) The prosecution must prove beyond reasonable doubt that the accused had committed the offence with the requisite mens rea, and the burden of proving that always rests on the prosecution from the beginning to the end of the trial. (2) There is a rebuttable presumption that the accused was not insane, when he committed the crime, in the sense laid down by section 84 of the (1)A.I.R. 1955 Pat. 209. (2) A.I.R. 1956 Nag. (3)[1962] Supp. 1 S.C.R. 567. (4) 368 Indian Penal Code: the accused may rebut it by placing be fore the court all the relevant evidence oral, documentary or circumstantial, but the burden of proof upon him is no higher than that rests upon a party to civil proceedings. (3) Even if the.accused was not able to establish conclusively that he was, insane at the time he committed the offence, the evidence placed before the court by the accused or by the prosecution may raise a reasonable doubt in the mind of the court as regards one or more of the ingredients of the offence, including mens rea of the accused and in that case the court would be entitled to acquit the accused on the ground that the general burden of proof resting on the prosecution was not discharged. Now we come to the merits of the case. Ordinarily this, Court in exercise of its jurisdiction under article 1.36 of the Constitution accepts the findings of fact arrived at by the High Court. But, after having gone through the judgments of the learned Additional Sessions Judge and the High Court, we are satisfied that this is an exceptional case to depart from the said practice. The learned Additional Sessions Judge rejected the evidence of the prosecution witnesses on the ground that their version was a subsequent development designed to belly the accused. The learned Judges of the High Court accepted their evidence for two different reasons. Raju, J., held that a court can permit a party calling a witness to put questions under section 154 of the Evidence Act only in the examination inchief of the witness; for this conclusion, he has given the following two reasons: (1) the wording of sections 137 and 154 of the Evidence Act indicates it, and (2) if he is permitted to put questions in the nature of cross examination at the stage of re examination by the adverse party, the adverse party will have no chance of cross examining the witness with reference to the answers given to the said questions. Neither of the two reasons, in our view, is tenable. Section 137 of the Evidence Act gives only the three stages in the examination of a witness, namely, examination in chief, cross examination and re examination. This is a routine sequence in the examination of a witness. This has no relevance to the question when a party calling a witness can be permitted to put to him questions under section 154 of the Evidence Act: that is governed by the provisions of section 154 of the said Act, which confers a discretionary power on the court to permit a person who calls a witness to put any questions to him which might be put in cross examination by the adverse party. Section 154 does not in terms, or by necessary implication confine the exercise of the power by the court before the examination in chief is concluded or to any particular stage of the examination of the witness. It is wide in scope and the discretion is entirely left to the court to exercise the power when the circumstances demand. To confine this power to the stage of examination in chief is to make 369 it ineffective in practice. A clever witness in his examination in chief faithfully conforms to what he stated earlier to the police or in the committing court, but in the cross examination introduces statements in a subtle way contradicting in effect what he stated in the examination in chief. If his design is obvious, we do not see why the court cannot, during the course of his cross examination, permit the person calling him as a witness to put questions to him which might be put in cross examination by the adverse party. To confine the operation of section 154 of the Evidence Act to a particular stage in the examination of a witness is to read words in the section which are not there. We cannot also agree with the High Court that if a party calling a witness is permitted to put such questions to the witness after he has been cross examined by the adverse party, the adverse party will not have any opportunity to further cross examine the witness on the answers elicited by putting such questions. In such an event the court certainly, in exercise of its discretion, will permit the adverse party to crossexamine the witness on the answers elicited by such questions. The court, therefore, can permit a person, who calls a witness, to put questions to him which might be put in the crossexamination at any stage of the examination of the witness, provided it takes care to give an opportunity to the accused to cross examine him on the answers elicited which do not find place in the examination in chief. In the present case what happened was that some of the witnesses faithfully repeated what they had stated before the police in the examination inchief, but in the cross examination they came out with the story of insanity of the accused. The court, at the request of the Advocate for the prosecution, permitted him to cross examine the said witnesses. It is not suggested that the Advocate appearing for the accused asked for a further opportunity to cross examine the witnesses and was denied of it by the court. The procedure followed by the learned Judge does not conflict with the express provisions of section 154 of the Evidence Act. Mehta, J., accepted the evidence of the witnesses on the ground that the earlier statements made by them before the police did not contradict their evidence in the court, as the non mention of the mental state of the accused in the earlier statements was only an omission. This reason given by the learned Judge is also not sound. This Court in Tahsildar Singh vs The State of U.P.(1) laid down the following test for ascertaining under what circumstances an alleged omission can be relied upon to contradict the positive evidence in court: ". . . (3) though a particular statement is not expressly recorded, a statement that can be deemed to be part of that expressly recorded can be used (1)[1959] Supp. 2 S.C.R. 875, 903. 370 for contradiction, not because it is an omission strictly so called but because it is deemed to form part of the recorded statement; (4) such a fiction is permissible by construction only in the following three cases: (i) when a recital is necessarily implied from the recital or recitals found in the statement . . ; (ii) a negative aspect of a positive when the statement before the police and that before the Court cannot stand together ". Broadly stated, the position in the present case is that the witnesses in their statements before the police attributed a clear intention to the accused to commit murder, but before the court they stated that the accused was insane and, therefore, he committed the murder. In the circumstances it was necessarily implied in the previous statements of the witnesses before the police that the accused was not insane at the time he committed the murder. In this view the previous statements of the witnesses before the police can be used to contradict their version in the court. The judgment of the High Court, therefore, in relying upon some of the important prosecution witnesses was vitiated by the said errors of law. We would, therefore, proceed to consider the entire evidence for ourselves. When a plea of legal insanity is set up, the court has to consider whether at the time of commission of the offence the accused, by reason of unsoundness of mind, was incapable of knowing the nature of the act or that he was doing what was either wrong or contrary to law. The crucial point of time for ascertaining the state of mind of the accused is the time when the offence was committed. Whether the accused was in such a state of mind as to be entitled to the benefit of section 84 of the Indian Penal Code can only be established from the circumstances which preceded, attended and followed the crime. The first question is, what is the motive for the appellant to kill his wife in the ghastly manner he did by inflicting 44 knife injuries on her body? Natverlal Atmaram, the father of the deceased Kalavati, was examined as P.W. 13. He said that about 20 days before his daughter was murdered he received a letter from the accused asking him to take away his daughter on the ground that he did not like her, that he went to Bherai with that letter, showed it to Chhaganbhai, the father of the accused, and had a talk with him about it; that Chhaganbhai took that letter from him and promised to persuade the accused not to discard his wife , that, after a week be again went to Bherai and asked the accused why he did not like the deceased and the accused replied that he did not like her as she was not working properly; and that thereafter he went back to his village and sent a message through someone that he would go 371 to Bherai to take his daughter on Chaitra Sudi 1. The murder took place on the night before Chaitra Sudi 1. In the cross examination he admitted that he did not tell the police that he ' had given the letter to the father of the accused, but he told the Sub Inspector that he had shown the letter to him. Chhaganlal, the father of the accused, as P.W. 7, no doubt denied that Natverlal gave him the letter written by the accused, but he admitted that Natverlal came to his village 10 or 15 days before the incident to take his daughter away. The evidence of Natverlal that he went to the village of the accused is corroborated by the evidence of P.W. 7. It is, therefore, likely that the accused wrote a letter to Natverlal to take away Kalavati and it is also likely that Natverlal gave that letter to P.W. 7 to persuade his son not to discard his wife. P.W.s 2 to 7 said in the cross examination that the accused and his wife were on cordial terms, but, as we will indicate later in our judgment, all these witnesses turned hostile in the sessions court and made a sustained attempt to support the case of insanity. That apart, their evidence does not disclose what opportunities they had to notice the cordial relation that existed between the accused and the deceased. The learned Additional Sessions Judge rightly disbelieved their evidence. The learned Additional Sessions Judge, who had seen Natverlal in the witness box, has accepted his evidence. We, having gone through his evidence. see no reason to differ from the opinion of the learned Additional Sessions Judge. It is also not denied that though the accused was in Ahmedabad for ten months, he did not take his wife with him. We accept the evidence of Natverlal and hold that the accused did not like his wife and, therefore, wanted his father in law to take her away to his home and that his father in law promised to do so before Chaitra Sudi 1. The next question is, what was the previous history of the mental condition of the accused? Here again, the prosecu tion witnesses, P.W.s. 2 to 7, deposed for the first time in the sessions court that 4 or 5 years before the incident the accused was getting fits of insanity. But all these witnesses stated before the police that the accused had committed the murder of his wife, indicating thereby that he was sane at that time. Further, their evidence is inconsistent with the facts established in the case. During this period, it was admitted by P.W. 7, the accused was not treated by any doctor. Prior to the incident he was serving in Ahmedabad in Monogram Mills for about a year and a half. Though the father of the deceased was staying in a village only a few miles away from the village of the accused and though the betrothal was fixed 5 years before the marriage, he did not know that the accused was insane, for if he had known that such was the mental condition of the accused he would not have given his daughter in marriage to 372 him. It is impossible to conceive that he would not have known that the accused was insane if he was really so, and particularly when it is the case of the accused that it was not kept secret but was well known to many people and to some of the witnesses, who came to depose for him. A month and a half prior to the incident Chhaganlal had one to Ahmedabad for medical treatment and during that period the accused came from Ahmedabad to manage his father 's shop in his absence. The fact that he was recalled from Ahmedabad was not disputed: but, while Natverlal said that the accused was recalled in order to manage Chhaganlal 's shop in his absence, Chhaganlal said that he was recalled because he was getting insane. The best evidence would have been that of the relative in whose house the accused was residing in Ahmedabad. But the relative was not examined. It appears to us that the accused was serving in Ahmedabad in Monogram Mills and he was asked to come to the village of his father to attend to the latter 's business a month and a half before the incident, as the father was leaving for Ahmedabad for medical treatment. Before the commencement of the trial in the sessions court on June 27, 1959, an application was filed on behalf of the accused, supported by an affidavit field by the father of the accused, praying that, as the accused had become insane, he should be sent for proper medical treatment and observation. In that affidavit it was not stated that the accused was getting fits of insanity for the last 4 or 5 years and that he had one such fit at that time. If that was a fact, one would expect the father to allege prominently the said fact in his affidavit. These facts lead to a reasonable inference that the case of the accused that he had periodical fits of insanity was an afterthought. The general statements of witnesses, P.W.s 1 to 6 that he had such fits must, therefore, necessarily be false. therefore, hold that the accused had no antecedent history of insanity. Now coming to the date when the incident took place, P.W. 7, the father of the accused, said that the accused was insane for 2 or 3 days prior to the incident. His evidence further discloses that he and his wife had gone to Ahmedabad on the date of the incident and returned in the same evening. If really the accused had a fit of insanity a day or two before the incident, is it likely that both the parents would have left him and ,,one to Ahmedabad" To get over this incongruity P.W. 7 said that he went to Ahmedabad to see a bridegroom for his daughter and also to get medicine for the accused. But he did not say which doctor he consulted and wherefrom he purchased the medicines or whether in fact he bought any medicines at all. If the accused had a fit of insanity. is it likely that the wife would have slept with him in the same room? We must, therefore, hold that it had not been established that 2 or 3 days before the incident the accused had a fit of insanity. 373 Now we come to the evidence of what happened on the night of the incident. Nobody except the accused knows what happened in the bed room. P.W.s 2 to 7 deposed that on the 10th April, 1959, corresponding to Chaitra Sudi 1, between 3 and 4 a.m. they heard shouts of the deceased Kalavati to the effect that she was being killed; that they all went to the room but found it locked from inside; that when the accused was asked to open the door, he said that he would open it only after the Mukhi (P.W. 1) was called; that after the Mukhi came there, the accused opened the door and came out of the room with a blood stained knife in his hand; that the accused began talking irrelevantly and was speaking "why, you killed in ,; mother?" "why, you burnt my father 's house?"; that afterwards the accused sat down and threw dust and mud at the persons gathered there; and that he was also laughing without any cause. In short, all the witnesses in one voice suggested that the accused was under a hallucination that the deceased had murdered his mother and burnt his father 's house and, therefore, he killed her in that state of mind without knowing what he was doing. But none of these witnesses had described the condition of the accused immediately when he came out of the room, which they did so graphically in the sessions court, at the time when they made statements before the police. in effect they stated before the police that the accused came out of the room with a blood stained knife in his hand and admitted that he had murdered his wife; but in the witness box they said that when the accused came out of the room he was behaving like a mad man and giving imaginary reasons for killing his wife. The statements made in the depositions are really inconsistent with the earlier statements made before the police and they are, therefore, contradictions within the meaning of section 162 of the Code of Criminal Procedure. We cannot place any reliance on the evidence of these witnesses: it is an obvious development to help the accused. The subsequent events leading up to the trial make it abundantly clear that the plea of insanity was a belated after thought and a false case. After the accused came out of the room, he was taken to the chora and was confined in a room in the chora. P.W. 16, the police sub inspector, reached Bherai at about 9.30 a.m. He interrogated the accused, recorded his statement and arrested him at about 10.30 a.m. According to him, as the accused was willing to make a confession, he was sent to the judicial magistrate. This witness described the condition of the accused when he met him thus: "When I went in the Chora he had saluted me and he was completely sane. There was absolutely no sign of insanity and he was not behaving as an insane man. He was not abusing. He had replied to 374 my questions understanding them and was giving relevant replies. And therefore I had sent him to the Magistrate for confession as he wanted to confess. " There is no reason to disbelieve this evidence, particularly when this is consistent with the subsequent conduct of the accused. But P.W. 9, who attested the panchnama, exhibit 19, recording the condition of the accused 's body and his clothes, deposed that the accused was murmuring and laughing. But no mention of his condition was described in the panchnama. Thereafter, the accused was sent to the Medical Officer, Mater, for examination and treatment of his injuries. The doctor examined the accused at 9.30 p.m. and gave his evidence as P.W. 11. He proved the certificate issued by him, exhibit 23. Nothing about the mental condition of the accused was noted in that certificate. Not a single question was put to this witness in the cross examination about the mental condition of the accused. On the same day, the accused was sent to the judicial Magistrate, First Class, for making a confession. On the next day he was produced before the said Magistrate, who asked him the necessary questions and gave him the warning that his confession would be used against him at the trial. The accused was given time for reflection and was produced before the Magistrate on April 13, 1959. On that date he refused to make the confession. His conduct before the Magistrate, as recorded in exhibit 31, indicates that he was in a fit condition to appreciate the questions put to him and finally to make up his mind not to make the confession which he had earlier offered to do. During the enquiry proceedings under Ch. XVIII of the Code of Criminal Procedure, no suggestion was made on behalf of the accused that he was insane. For the first time on June 27, 1959, at the commencement of the trial in the sessions court an application was filed on behalf of the accused alleging that he was suffering from an attack of insanity. On June 29, 1959, the Sessions Judge sent the accused to the Civil Surgeon, Khaira, for observation. On receiving his report, the learned Sessions Judge, by his order dated July 13, 1959, found the accused insane and incapable of making his defence. On August 28, 1959, the court directed the accused to be sent to the Superintendent of Mental Hospital, Baroda, for keeping him under observation with a direction to send his report on or before September 18, 1959. The said Superintendent sent his report on August 27, 1960, to the effect that the accused was capable of understanding the proceedings of the court and of making his defence in the court. On enquiry the court held that the accused could understand the proceedings of the case and was capable of making his defence. At the commencement of the trial, the pleader for the accused stated that the accused could understand the proceedings. The proceedings before the 375 Sessions Judge only show that for a short time after the case had commenced before him the accused was insane. But that fact would not establish that the accused was having fits of insanity for 4 or 5 years before the incident and that at the time he killed his wife he had such a fit of insanity as to give him the benefit of section 84 of the Indian Penal Code. The said entire conduct of the accused from the time he killed his wife upto the time the sessions proceedings commenced is inconsistent with the fact that he had a fit of insanity when he killed his wife. It is said that the situation in the room supports the ver sion that the accused did not know what he was doing. It is asked, why the accused should have given so many stabs to kill an unarmed and undefended woman? It is said that it discloses that the accused was doing the act under some hallucination. On the other hand the existence of the weapons in the room, the closing of the door from inside, his reluctance to come out of the room till the Mukhi came, even if that fact is true, would indicate that it was a premeditated murder and that he knew that if he came out of the room before the Mukhi came he might be manhandled. Many sane men give more than the necessary stabs to their victims. The number of blows given might perhaps reflect his vengeful mood or his determination to see that the victim had no escape. One does not count his strokes when he commits murder. We, therefore, do not see any indication of insanity from the materials found in the room, on the other hand they support the case of premeditated murder. To summarize: the accused did not like his wife; even though he was employed in Ahmedabad and stayed there for about 10 months, he did not take his wife with him; he wrote a letter to his father in law to the effect that the accused did not like her and that he should take her away to his house; the father in law promised to come on Chaitra Sudhi 1; the accused obviously expected him to come on April 9, 1959 and tolerated the presence of his wife in his house till then; as his father in law did not come on or before April 9, 1959, the accused in anger or frustration killed his wife. It has not been established that he was insane; nor the evidence is sufficient even to throw a reasonable doubt in our mind that the act might have been committed when the accused was in a fit of insanity. We, therefore, though for different reasons, agree with the conclusion arrived at by the High Court and dismiss the appeal.

IN-Abs

The appellant was charged with murdering his wife. Before the Sessions Judge a defence was set up that the appellant was insane when the incident took place and was not capable of understanding the nature of his act. The Sessions Judge rejected the plea of insanity and convicted him under section 302 of the Indian Penal Code. On appeal the High Court confirmed the conviction. Held (i) There is no conflict between the general burden to prove the guilt beyond reasonable doubt, which is always on the prosecution and which never shifts, and the special burden that restson the accused to make out his defence of insanity. (ii) The doctrine of burden of proof in the context of the plea of insanity may be stated in the following propositions:(1).The prosecution must prove beyond reasonable doubt that the accused had committed the offence with the requisite, mensrea; and the burden of proving that always rests on the prosecution from the beginning to the end of the trial. (2) There is a rebuttable presumption that the accused was not insane, when he committed the crime, in the sense laid down by section 84 of the Indian Penal Code: the accused may rebut it by placing before the court all the relevant evidence oral, documentary or circumstantial, but the burden of proof upon him is no higher than that which rests upon a party to civil proceedings. (3) Even if the accused was not able to establish conclusively that he was insane at the time he committed the offence, the evidence placed before the court by the accused or by the prosecution may raise a reasonable doubt in the mind of the court as regards one or more of the ingredients of the offence, including mens rea of the accused and in that case the court would be entitled to acquit the accused on the ground that the general burden of proof resting on the prosecution was not discharged. K. M. Nanavati vs State of Maharashtra, [1962] Supp. 1 S.C.R.567. followed. Ramhitram vs State, A.I.R. 1956 Nag. 187, disapproved. Kamla Singh vs State, A.I.R. 1955 Pat. 209, approved. H. M. Advocate vs Fraser, (1878)4 Couper 70, referred to. (iii)The court can permit a person, who calls a witness, to put questions to him which might be put in cross examination, at any stage of the examination of the witness, provided it takes care to give an opportunity to the accused to cross examine him on the answers elicited which do not find place in the examination in chief. 362 Section 137 of the Evidence Act, gives only the three stages in the examination of a witness, and it has no relevance to the question when a party calling a witness can be permitted to put to him questions under section 154 of the Evidence Act: that is governed by the provisions of section 154 of the said Act, which confers a discretionary power on the court to permit a person who calls a witness to put any questions to him which might be put in cross examination by the adverse party. Tahsildar Singh vs The State of U.P., [1959] SUPP. 2 S.C.R. 875, followed.

Appeals Nos. 678 and 679 of 1963. Appeals from the judgment and order dated April 4, 1961 of the Kerala High Court in Tax Revision Nos. 52 & 53 / 1959. G.B. Pai, T. N. Ramachandra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants (in all the appeals). Govinda Menon and V. A. Seyid Muhammad, for the respondent (in both the appeals). C.S. Pathak, section N. Andley, Rameshwar Nath and P. L. Vohra, for the interveners (in both the appeals). March 20, 1964. The judgment of GAJENDRAGADKAR,C.J., WANCHOO, RAJAGOPALA AYYANGAR AND SIKRI, JJ. was delivered by AYYANGAR J. SHAH, J. delivered a separate Opinion. AYYANGAR, J. The appellant owns several estates wherein inter alia tea is grown and was assessed to sales tax in respect of the tea sold by it during the years 1954 55 and 1955 56, by the Sales Tax Officer, First Circle, Quilon in the State of Travancore Cochin by his order dated December 23. In the taxable turnover on which sales tax was computed by the assessing authority were included two items which are the subject of complaint in these two appeals which relate to these two years of assessment. Before the assessing officer the appellant claimed that certain sales of its tea which were 393 conducted by auction at Fort Cochin a place which at the relevant date was in the Madras State, were sales "outside" the Travancore Cochin State and that consequently these sales were exempted from taxation by the State of Travan core Cochin under article 286(l) (a) of the Constitution. The Sales Tax Officer rejected this contention and included the sum involved in these sales in the taxable turnover. An appeal filed to the Appellate Assistant Commissioner also failed, this authority holding that as the tea sold was, at the date of the auction, admittedly in godowns in Willingdon Island in the State of Travancore Cochin, the sales must be deemed to have taken place within taxing State by virtue of a provision in the State Sales Tax Act to which we shall refer later and hence liable to be included in the taxable turnover. There was a further appeal taken by the Appellant to the Sales Tax Appellate Tribunal which upheld the appel lant 's contention and set aside the assessment in so far as it included the turnover relating to the auction sales of tea held at Fort Cochin, this turnover amounting to Rs. 56,43,184/11/in regard to the assessment year 1954 55 and Rs. 62,13,604/3/in regard to the assessment year 1955 56 and remanded the case for fresh disposal by excluding these sums from the computation of the taxable turnover. A revision petition was thereafter filed before the High Court by the State under section 15(b) of the General Sales Tax Act of Travancore Cochin and the learned Judges allowed the Revision and upheld the order of the assessing officer and the Appellate Commissioner holding the turnover represented by these auction sales to be validly taxable under the State law relating to sales tax. The appellant thereafter applied to the High Court for a certificate of fitness and this having been granted the appeals are now before us. Before proceeding further it is necessary to set out the statutory provision contained in the taxing enactment of the State. The General Sales Tax Act (Act XI of 1125 (ME) 1950) which imposed a sales tax on sales by dealers defines a "sale" by section 2(j) in these terms: " '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 a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge; x x x x Explanation (2) Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in 394 force, the sale or purchase of any goods shall be deemed for the purpose of this Act, to have taken place in the State wherever the contract of sale or purchase might have been made (a) if the goods were actually in the State at the time when the contract of sale or purchase in respect thereof was made . or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in the State at any time after the contract of sale or purchase in respect thereof was made. " When the Constitution came into force a new section numbered section 26 was inserted by the Adaptation Order bringing the Act into line with article 286(1) of the Constitution and this read: "No law of a State shall impose. or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place(a) outside the State or (b). . . . . . Explanation For the purposes of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. " The position, therefore, was that though cl. (a) to Explana tion 2 to section 2(j) enacted that "notwithstanding anything contrary in the Sale of Goods Act, the sale or purchase of goods shall be deemed to take place in the State if the goods were actually in the State at the time the contract for sale or purchase of goods thereof was made", still by the non obstante provision contained in section 26 a tax on the sale or purchase of goods could not be imposed where such sale or purchase took place "outside" the State of Travancore Cochin. It is only necessary to add that even if section 26 were ignored still by the terms of article 286(1)(a) the position would be the same and the State could not validly levy a tax on a sale which is "outside" that State. Now the question is can a sale of the tea effected by the Appellant by auction at Fort Cochin and which were included in its taxable turnover be said to be "outside" the State? The facts in relation to the transaction relating to the sale of the tea and which the learned Judges of the High Court held not to be an "outside" sale may be stated in their own words: "The sales of teas were concluded at Fort Cochin and the goods were stocked in godowns situated in the 395 Travancore Cochin State. The deliveries of the goods were also made to the buyers from the godowns in Willingdon island in the Travancore Cochin State. The Appellate Tribunal has come to the conclusion that the ownership of the commodity having passed in Fort Cochin, the property had not passed within the taxing State, accordingly they would be 'outside ' sales for purpose of article 286(1) and exempt from taxation. " The Appellate Tribunal had recorded a finding that the property in the goods sold passed at Fort Cochin on the fall of the hammer at the auction and the learned Judges of the High Court proceeded on the same basis. The point on which the, learned Judges differed from the Tribunal was only as regards the effect of the circumstance that the tea sold, was at the point of sale, physically in godowns situated in the State of Travancore Cochin. The Appellate Tribunal had, in reaching the conclusion in favour of the appellant, as to the taxable character of the turnover represented by these auction sales, referred to a large number of decisions of this Court and to the observations contained in them as well as to several decisions of the various High Courts. When the matter came up before the High Court the position was, that that Court had after a review of most of the earlier cases which had been referred to by the Tribunal, held in Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum vs A.V. Thomas & Co.(1) that the word 'outside sale ' in article 286(1)(a) had no reference exclusively to the transfer of the property in the goods according to the provisions of the Sales of Goods Act, and therefore that Explanation 2 to section 2(j) was not violative of article 286(1)(a) and that if at the moment when the property passed, it not being very relevant where the property passed, the goods were in the State of Travancore Cochin, then it was not an "outside" sale quoad Travancore Cochin and could be subjected to salestax by that State. Before the learned Judges a decision of this Court in India Copper Corporation Limited vs State of Bihar(2) was however relied on as leading to a different result but the learned Judges held that the decision of this Court could be distinguished on the facts and they held that their previous decision reported in A.V. Thomas 's case(1) was still good law and entirely covered the point raised. The question for consideration in the appeal is the cor rectness of the view expressed by the High Court. The decision in Deputy Commissioner of Agricultural Income tax and Salestax, Trivandrum vs A. V. Thomas & Co.(1) was brought before this Court on appeal and has been reversed (See A.V. Thomas & CO. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum(3). In so doing this Court pointed (1) I.L.R. [1960] Kerala 1395. (2) ; (2)[1963] supp. 2 S.C.R. 608. 396 out that the decision of this Court in the Indian Copper Corporation case(1) had settled the law by laying down that the State (other than a "delivery cum consumption" State) which could tax a 'non explanation sale ' (to adopt the phraseology used in these cases to identify a sale falling outside the explanation to article 286(1)(a)) could only be that State in which the property in the goods passes. Now, as regards the facts, there is no distinction between the facts in the A. Y. Thomas 's case(2) and the case now under appeal and, indeed, the learned Judges of the High Court have proceeded on that basis. Dealing with the question as to what is an "outside" sale Kapur, J. speaking for the Court said in the case of A. Y. Thomas & Co.(2) Ltd.: "It has been foundand it has not been disputed that the title to the goods in the present case passed at Fort Cochin the question is whether the sale was 'outside sale ' or 'inside sale ' as the expressions have been compendiously used in various judgments to indicate sales taking place within a State or without it. The Explanation to article 286(1) (a)explains what a sale outside the State is where the Explanation applies the difficultyabout the situs is resolved but in a case like the present one the difficulty still remains because the Explanation does not operate in the sense that the rival States claiming to tax the same taxable event are not the States of delivery for consumption in that State and those where the title in the goods passes. " After referring to the decision in the India Copper Corpo ration Ltd. vs State of Bihar (1) the Court held that the sale in the case before them was an "outside" sale quoad TravancoreCochin, because the title passed at Fort Cochin in the State of Madras. On this reasoning this Court reversed the decision in the case of the High Court and held that the sale there in question being an "outside" sale was not taxable by reason of the prohibition contained in article 286(1)(a). Dealing with the connotation of the expression 'outside ' in article 286(1)(a) this Court had observed, in India Copper Corporation Ltd. vs State of Bihar.(1): "If a single State was designed to have the power to tax any particular transaction of sale, the question that next falls to be considered is the determination of that State in regard to which it could be predicated that the sale in question was not 'outside ' that State or in other words, the determination of the (1) ; (2) [1963] Supp.2 S.C.R.698 397 particular State in regard to which it could be said that the sale was 'inside ' that State. The key to the problem is afforded by two indications in the Article itself: (1) the opening words of Article 286(1) which speak of a sale or purchase taking place and (2) the non obstante clause in the Explanation which refers to the general law relating to sale of goods under which property in the goods has, by reason of such sale or purchase, passed in another State '. These two together indicate that it is the passing of property within the State that is intended to be fastened on, for the purpose of determining, whether the sale in question is 'inside ' or outside ' the State, and therefore subject to the operation of the 'Explanation ' that State in which property passes would be the only State which would have the power to levy a tax on the sale. As was explained in the recent decision of this Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. vs The Commercial Tax Officer. " It was the principle of law laid down in this passage that was given effect to by this Court in A. V. Thomas 's case(1) and it was on this basis that the appeal was allowed. it would therefore follow that the present appeals which are wholly dependent on the correctness of the meaning of the expression 'outside sales ' in article 286(1)(a) which High Court adopted in A. V. Thomas 's case have necessarily to be allowed. Learned Counsel for the respondent State, however, urged that in the present case a point had been raised before the High Court as to whether on the facts the property in the goods sold by auction conducted at Fort Cochin really passed at Fort Cochin in the Madras State or whether it passed in Willingdon island in Travancore Cochin when the goods were actually delivered to the buyer. As regards this question of fact or of mixed fact and law the position is this. The Sales Tax Appellate Tribunal recorded a finding on this matter in these terms: "The question whether the sales took place outside the State or not will have to be decided on the basis of the general law relating to sale of goods. We hold that in the case of auction sales of full lots the sales were of ascertained goods and hence became complete on the fall of the hammer and that the sales took Place within the Madras State." In the revision application which the department filed to the High Court this question Whether the property in the goods (1) [1963] Supp. 2 S.C.R. 608. 398 did pass at Fort Cochin was raised but nevertheless the argument before the High Court proceeded wholly on the basis; of the correctness of the finding by the Appellate Tribunal that the property in the teas did pass on the fall of the hammer at Fort Cochin. The point about the property not having passed in the Madras State does not appear to have been even argued before the High Court. Even in the statement of the case filed by the respondent it is not stated that this point about the property not having passed at Fort Cochin in Madras was urged before the High Court during the course of the argument. Before concluding it might be mentioned that in A. Y. Thomas 's case (supra) where, as we have stated earlier, the nature of the trans action was identical with the one in the appeals before us this Court observed: "It has been found and it has not been disputed that the title to the goods in the present case passed at Fort Cochin. " In these circumstances, we declined to permit learned Counsel for the respondent to urge any ground relating to the property in the goods in the teas sold not having passed in Fort Cochin in the Madras State to be raised, as the point which is not one of pure law was not urged before the learned fudges of the High Court. The appeals are, therefore, allowed ' and the, order of the High Court reversed and that of the Sales Tax Appellate Tribunal restored. The appellant will have his costs here and in the High Court one hearing fee. If the question raised in these appeals were res integra, I would hold that the price obtained at auction sales of tea held at Fort Cochin when the goods were lying in warehouses in the Travancore Cochin State was liable to be taxed under the General Sales Tax Act (11 of 1125 M.E.), for in my view article 286(1)(a) Explanation, before it was amended by the Constitution (Sixth Amendment) Act, did not altogether exclude the doctrine of territorial nexus in its application to salestax legislation. It is settled law in this Court that under the Government of India Act, 1935, the Provincial Legislatures could, relying upon the territorial nexus, levy sales tax upon transactions of sale, not wholly completed within their territory, fixing upon one or more ingredients of a sale furnishing a territorial connection with the taxing Province: Poppat Lal Shah vs The State of Madras(1) and The Tata Iron & Steel Company Ltd. vs The State of Bihar (2). By the Constitution certain restrictions were placed upon the power of the States (1) ; (2) 399 to legislate in respect of taxes on sales and purchases. By article 286(1)(a) read with the Explanation, an Explanation sale i.e. a sale in which goods sold were actually delivered in a State for the purpose of consumption in that State was made taxable only by the State in which the goods were delivered for consumption. But article 286 was, in my view, not intended to exclude the operation of the doctrine of territorial nexus in the field not covered by the legislative prohibitions. In dealing with the effect of section 33 of the Bihar Sales Tax Act which incorporated the prohibitions imposed by article 286(1) & (2). with the concurrence of section K. Das J., it was observed by me in Indian Copper Corporation Ltd. vs The State of Bihar and others(1) at P. 293: " x x x by enacting that a tax shall not be imposed under the Act when the sale takes place outside the State of Bihar x x, "Only the power to tax "Explanation sales" which do not take place within the State of Bihar is taken away, but not the power to tax "non Explanation sales" in which though under the general law of sale of goods the property passes outside the State, there exists between the taxing power of the State and the sale a nexus as contemplated by the definition of sale in section 2(g). If the sale is one in which the goods have been delivered outside the State of Bihar, but not as a direct result of the sale or not for the purpose of consumption in the State of first delivery, the sale will not be covered by the Explanation, and the right to tax the sale, if arising otherwise under the Act relying upon the territorial nexus, will not be impaired by the prohibition imposed by cl. (1)(a)(i) of section 33. " It may be mentioned that section 33 of the Bihar Sales Tax Act was enacted to give effect expressly to the legislative restrictions imposed by article 286 of the Constitution. In Indian Copper Corporation Ltd. 's case(1) certain transactions of sale were effected by the assessee after the promulgation of the Constitution, under which the property in the goods passed in the State of Bihar but delivery was effected outside the State of Bihar for consumption also outside Bihar. In some of these transactions goods were delivered in the State of first destination for consumption therein whilst in others the goods were delivered not for consumption in the State of first delivery. The assessee contended that both these categories of transactions were exempt from tax under article 286(1)(a) as they were (1) ; 400 outside sales. This Court unanimously negatived the conten tion of the assessee in respect of sales in which delivery in the State of first destination was not for consumption therein, and the transactions were on that account not "Explanation sales". It was held that the State of Bihar was competent to tax those "Non explanation sales" in which the property in the goods had passed in the State of Bihar. But two different grounds were given in support of the conclusion in that case. My brethren Hidayatullah, Das Gupta and Rajagopala Ayyangar, JJ., were of the view that passing of property within the State alone was intended after the Constitution to be fastened upon for the purpose of determining whether the sale is inside or outside the State, and therefore subject to the operation of the Explanation that State in which the property passes would be the only State, which had the power to tax the sale. section K. Das. J., and I were of the view that sale transactions not falling within the constitutional prohibitions remained taxable because in adjudging whether a "non Explanation" sale transaction was "outside the State", the doctrine of territorial nexus could not be wholly excluded from consideration. In a recent judgment of this Court in A.V. Thomas & Co. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum(1) this Court held in construing article 286(1)(a) in the light of the Explanation before that Article was amended by the Constitution (Sixth Amendment) Act, that: Where the Explanation to Article 286(1)(a) of the Constitution of India is inapplicable, it is the 'passing of property within the State ' that is intended to be fastened on for the purpose of determining whether a sale is 'inside ' or 'outside ' the State. Therefore subject to the operation of the 'Explanation ', that State in which the property in the goods passes would be the only State which would have the power to levy a tax on the sale. " In A. V. Thomas & Co. Ltd. 's case(1) chests of tea were stored in warehouses at Willingdon Island in the Travancore Cochin State, but auctions of the tea chests were held at Fort Cochin which was at the material time within the State of ' Madras, and after the price was paid at Fort Cochin delivery orders were given to the purchasers addressed to the warehouse keepers at Willingdon Island and actual delivery was given at the warehouses. The chests of tea were then sent from Willingdon Island for consumption in other parts of India or were exported out of India. It was held by the Court in that (1) [1963] Supp. 2 S.C.R. 608. 401 case that the property in the goods passed at Fort Cochin and as the goods were delivered not for the purpose of consumption in any particular State, the sales were not inside the State of Travancore Cochin but were outside that State and were not liable to be taxed under the Travancore Cochin General Sales Tax Act (11 of 1125 ME). The Court observed that in sales which were not "Explanation sales" passing of property within the State was decisive of the liability to pay sales tax. No opinion was expressed on the question whether the doctrine of territorial nexus as investing the State with the right to tax a sale transaction outside the legislative restrictions imposed by article 286, was, since the promulgation of the Constitution, rendered ineffective. As the fact which give rise to this case are substantially the same as the facts on which a. V. Thomas & Co. Ltd. 's case(1) was decided, the decision of the appeals must be in favour of the assessee. It is necessary to record this judgment, lest it be assumed that I agree with the view that the doctrine of territorial nexus in its application to sales tax legislation has, since the enactment of the Constitution, been completely abrogated. It may be pertinent to note that since the amendment of the Constitution by the Constitution (Sixth Amendment) Act, article 286(1)(a) (which remains unamended) is now free from the shackles of the Explanation which is deleted and by cl. (2) the Parliament is invested with power to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in cl. (1), namely, outside the State or in the course of the import of the goods into, or export of the goods out of, the territory of India. Exercising the power under cl. (2) the Parliament has enacted the (74 of 1956), and by section 4(2) the doctrine of territorial nexus has been given legislative recognition, though in somewhat limited form. That subsection provides: "A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods. at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation. Where there is a single contract of sale or purchase of goods situated at more places than [1963] Supp. 2 S.C.R. 608. 402 one, the provisions of this sub section shall apply as if there were separate contracts in respect of the goods at each of such places. " The doctrine of territorial nexus had full play in sales tax legislation under the Government of India Act, 1935: it also applies subject to certain modifications since the amendment of the Constitution by the Constitution (Sixth Amendment) Act. And I am unable to persuade myself that by the enact ment of article 286 of the Constitution, it stood abrogated in the interregnum between the promulgation of the Constitution and the amendment of article 286 by the Constitution (Sixth Amendment) Act. Appeal allowed.

IN-Abs

The appellant company owns several estates wherein tea is grown and it was assessed to sales tax by the Sales Tax Officer in respect of the tea sold by it during the years 1954 55 and 1955 56. An appeal filed by the appellant was rejected by the, Appellate Assistant commissioner on the ground that the tea when sold was admittedly in godowns in the State of Travancore Cochin and that consequently the sales must be deemed to have taken place within the State of Travancore Cochin and hence liable to be included in the taxable turn over. When a further appeal was taken to the Sales Tax Appellate Tribunal, it was held that the property in the goods sold passed at Fort Cochin in Madras State on the fall of the hammer at the auction and hence the same was not taxable. The State filed a revision petition to the High Court. While the High Court accepted the finding of the Tribunal that the property in the goods sold passed at Fort. Cochin on the fall of the hammer at the auction, it differed from the Tribunal as regards the effect of the circumstance that the tea sold was, at the point of sale, physically in godowns situated in the State of Travancore Cochin and held the sales to be taxable. The appellant came to this Court after obtaining a certificate of fitness from the High Court. The only question argued before this court was whether a sale of tea effected by the appellant by auction at Fort Cochin in Madras State was a sale outside the State of Travancore Cochin orinside it and whether the same was taxable or not. Accepting.the appeal. HELD: No sales tax was to be levied in this case as the sales took place outside the State of Travancore Cochin. The test for determining whether a sale is inside or outside a State is where the property in the goods passed and in the present case the property in the goods passed in Fort Cochin in Madras State on the fall of the hammer at the auction. The point about the property not having passed in the Madras State was not argued before the High Court and was also not urged in the statement of case filed by respondent and hence the same was not allowed to be argued in the Supreme Court. Per Shah. The property in the goods passed at Fort Cochin in Madras State and as the goods were delivered not for the purpose of consumption in any particular State, the sales were not inside Travancore Cochin but were outside the 392 State and were as held by this Court in A. V. Thomas & Co. vs Deputy Commissioner of Agricultural Income tax and Sales Tax Trivandrum, 14 S.T.C. 363, not liable to be taxed under the Travancore Cochin General Sales Tax Act, 1950. The doctrine of territorial nexus had full play in sales tax legislation under the Government of India, Act, 1935 and was not abrogated by the enactment of Art, 286 of the Constitution. It continued to be in operation in the interregnum between the promulgation of the Constitution and the amendment of article 286 by the Constitution (Sixth Amendment) Act, 1956. It also applies now subject to certain modifications. Parliament has been given the power to formulate principles for determining when a sale or purchase of goods takes place outside the State or in the course of the import of the goods into or export of the goods out of the territory of India. Exercising the power under cl. (2) Parliament has enacted the and by section 4(2) the doctrine of territorial nexus has been given legislative recognition though in somewhat limited form. Deputy Commissioner of Agricultural Income tax and Salestax, Trivandrum vs A.V. Thomas & Co., I.L.R. 1960 Kerala 1395; India Copper Corporation Limited vs State of Bihar, ; ; A. V. Thomas & Co. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum 1953 Supp. 2 S.C.R. 608 363; Poppat Lal Shah vs The State of Madras, ; ; and the Tata Iron & Steel Company Ltd. vs The State of Bihar , referred to.

Appeal No. 546 of 1962. Appeal by special leave from the judgment and decree dated December 17, 1958 of the Allahabad High Court in Misc. Case No. 152 of 1952. C. B. Agarwala and C. P. Lal, for the appellant. section K. Kapur, section K. Mehta and K. L. Mehta, for the respondent. March 20, 1964. Under the U.P. Sales Tax Act (15 of 1948) which came into force on April 1, 1948, sales tax became payable on sales of diverse commodi ties including cotton yarn at a uniform rate of three pies in a rupee. By Act 25 of 1948, section 3 A was incorporated in Act 15 of 1948 conferring upon the Provincial Government power to declare by notification that the proceeds of sale of any goods or class of goods shall not be included in the turnover of any dealer except at such single point in the series of sales by successive dealers as the State Government may specify. By section 7 as amended by Act 25 of 1948, a dealer had the option to submit his return on the basis of the turnover of the sales in the previous year or on the basis of turnover of the sales in the current year. The respondent company opted to be assessed on the basis of the turnover of the previous year ending March 31, 1948. In exercise of the power under section 3 A of the Act the Government of U.P. issued a notification declaring that with effect from June 9, 1948, the proceeds of goods entered in column 2 of the schedule to the said notification (which included cotton yarn) shall not be included in the turnover of any dealer except at the point in the series of sales by successive 385 dealers, and that with effect from June 9, 1949, the rate of tax in respect of the turnover of the aforesaid goods shall be as set out in the schedule. As a result of the notification the sale of cotton yarn became taxable at a single point i.e. at a point of sale by the importer if the goods were imported from outside Uttar Pradesh and at a point of sale by the manufacturer, if manufactured in Uttar Pradesh, and the rate of tax in respect of cotton yarn was fixed, since the date of notification, at six pies per rupee. The Sales tax Officer, Hathras in assessing the respondent company to sales tax for the assessment year 1948 49 held that because of the notification issued by the Government, the rate of three pies per rupee in respect of sales of cotton yarn was to apply in the year of assessment for the first 69 days and for the remaining part of the year the rate of six pies per rupee was to apply, and on that account notwithstanding that the assessee had opted under section 7 to be assessed on the basis of the turnover of the previous year, the rate of three pies was applicable to the assessable turnover for the first 69 days and for the rest of the year the rate applicable was six pies per rupee. This order was modified in appeal by the Judge (Appeals) Sales Tax, Meerut, who directed assessment of tax on the turnover at a uniform rate of three pies per rupee. But the order of the ap pellate court was reversed by the Judge (Revisions) Sales Tax, U.P. who restored the order of the Sales tax Officer. The Judge (Revisions) Sales Tax at the instance of the respondent company then referred to the High Court of Judicature at Allahabad the following question: "Whether the assessees who had elected the previous year are liable to pay tax in the assessment year 1948 49 according to the rates prevailing during the year", and the High Court following its judgment in Modi Food Products Ltd. vs Commissioner of Sales Tax, U.P.(1) answered the question as follows: "all sales of the assessee during the previous year which corresponded with the calendar year 1947 have to be taxed at the flat rate of 3 pies per rupee when making the assessment for the assessment year 1948 49". With special leave, the Commissioner of Sales Tax, U.P. has appealed to this Court against the order of the High Court. It may be observed that the judgment of the Allahabad High Court in Modi Food Products Ltd. 's case(1) was confirmed by this Court: Commissioner of Sales Tax, U.P. vs The (1) A.I.R. 1956 All. 35. L P(D)ISCI 13 386 Modi Sugar Mills Ltd.(1) But the Legislature of the State of Uttar Pradesh has, since that judgment was pronounced, en acted validating legislation by Act III of 1963 which has provided by section 7 of the Amending Act that: "After section 30 of the Principal Act, the following, shall be added and be deemed to have been added with effect from the first day of April, 1948, as new section 31 : '31 (1) Where any dealer has, in accordance with the provisions of section 7, as it stood prior to its amendment by section 7 of U.P. Act XIX of 1956, opted to be assessed to tax on the basis of his turnover of the previous year, he shall be assessed to tax at such rates as are prevalent during the year for which the assessment is being made, and if the rates of tax on any goods or class of goods arc altered during such assessment year, the dealer, in respect of the turnover of such goods, shall be liable to pay tax at the altered rates, as if the altered rates were in force during the previous year also proportionately for the same number of days as, they are in force during the assessment year. (2) Notwithstanding any judgment, decree or order of any court, all assessments or orders made, actions. or proceedings taken, directions issued, jurisdictions exercised or tax levied or collected by any officer or authority purporting to act under the provisions of sub section (1) of section 7, as it stood prior to its amendment by section 7 of U.P. Act XIX of 1956, shall be deemed to be good and valid in law as if such assessments, orders, actions, proceedings, directions, jurisdictions and tax have been duly made, taken, issued, exercised, levied or collected, as the case may be, under or in accordance with the said provisions of this Act as amend ed by the Uttar Pradesh Bikri Kar (Sanshodhan) Adhiniyam, 1962 and as if the amendment so made had been in force on all material dates. Explanation For the purpose of this section the expression "previous year" shall have the meaning assigned to it in sub clause (ii) of clause (j) of section 2 of this Act, as it stood prior to its amendment by section 2 of the U.P. Act XIX of 1956. ' " Section 31 makes sales tax exigible from an assessee who has, opted to pay tax on the turnover of the previous year, as if the altered rates were in force during the previous year. The turnover of the previous year must therefore be broken up, the new rate of tax being applicable proportionately for the (1) ; 387 same number of days in the previous year as were in force in the assessment year. The amendment is retroactive, and applies to assessments pending or closed, as if the validating Act had been in force at the material date. This Court had in the Modi Sugar Mills Ltd. 's case(1) held that where the assessee had elected to submit his return on the turnover of the previous year under section 7 of Act 15 of 1948 as amended by Act 25 of 1948 he was liable to be assessed to sales tax at the rate in force on the first day of the year of assessment, because the liability arises on that date, and any subsequent enhancement of the rate by virtue of a notification under section 3 A does not alter that liability. The view expressed by the Court has been modified by express legislation operative retrospectively. The liability to tax of the turnover of the previous year which is regarded as the fictional turnover of the year of assessment has to be determined on the basis that the rates applicable in the year of assessment were fictionally projected on the taxable turnover. Mr. Kapur appearing on behalf of the respondent company submitted that in answering the question referred by the Judge (Revisions) this Court was bound to give its opinion in the light of the law applicable to the transaction as it prevailed at the date on which the reference was made and not of any subsequent amendment of the Act. Counsel submits that as the High Court exercises an advisory jurisdiction, so does this Court in appeal against the order of the High Court, and its advice can only be tendered on the question referred and in the light of the law as was applicable at the date when the reference was made. Counsel says that if the law as amended is to be taken into consideration, in substance this Court would be answering a question other than the one which was referred by the Judge (Revisions) Sales Tax. In our view there is no substance in this contention. The question referred to the High Court posed a problem as to the liability of the respondent company to be assessed for the assessment year 1948 49. Two rival views were propounded before the Judge (Revisions) Sales Tax. One was that the rates applicable to the fictional turnover for the year of assessment were those prevalent in the year 1948 49 and for the purpose of assessment they had to be applied to the turnover in the same proportion in which they would have applied if the option had not been exercised. That was the contention of the Sales Tax X X Department. The contention of the assessee was that having opted for the turnover of the previous year, the rates applicable to the turnover would be crystalised on the first day of the year of assessment and any modification since the commencement of the year in the rates would be inapplicable. This Court in the Modi Sugar (1) ; 388 Mills Ltd. 's case(1) accepted the contention raised by the assessee. But for the amendment, the question which was posed by the Judge (Revisions) Sales Tax would have to be answered as it was answered by the High Court. The Legislature has,. however, amended the Act and has declared that notwithstanding the option exercised by the assessee the tax would have to be computed in the light of the rates prevailing in. 1948 49 as. if they were projected upon the turnover of the previous year. The Legislature has expressly stated that this rule will prevail as if it was in force during the assessment year and all assessments will be made in the light of this amended rule. In answering the question which was submitted by the Judge (Revisions) Sales Tax, therefore, the law enacted by the Legislature is the law found incorporated in section 31 by Amending Act III of 1963. This Court in giving its opinion on the question in the light of the amending Act is seeking to apply a legislative provision which was, by express enactment, in force at the time when the liability arose, for section 31 enacted by Act III of 1963 is to be deemed to have been in operation at all material times in supersession of the previous rule declared by this Court. This Court is, therefore, not seeking to apply any law to the question posed before the High Court which was not in force. on the date of the transaction which is the subject matter of the reference. The following observation made by Jagannadhadas J., in Messrs Chatturam Horilram Ltd. vs Commissioner of Incometax, Bihar and Orissa(2) on which reliance was placed by counsel for the respondent company: "The High Court 's jurisdiction was only to answer the particular question that was referred to it by the Income tax Appellate Tribunal and it is extremely doubtful whether they could have taken notice of a subsequent legislation and answered a different question. ", does not suggest a different rule. In Messrs Chatturam Horilram Ltd. 's case ( 2 ) a previous assessment to income tax of the assessee fell through because the Indian Finance Act of 1939 was not in force in Chota Nagpur area where the assessee was carrying on business during the relevant assessment year. Thereafter Bihar Regulation IV of 1942 was promulgated by the Governor of Bihar with the assent of the Governor General and thereby the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from March 30, 1939. On February 8, 1944, the Income tax Officer issued a fresh notice under section 34 of the Indian Income tax Act, 1922, which resulted in the assessment of the appellant to income tax, and the question which fell to be determined was whether the (1) ; (2 ) ; 389 notice was properly issued under section 34 of the Act. It was argued that when the High Court answered the earlier reference which negatived the claim of the Revenue to assess the assessee, Bihar Regulation IV of 1942 had in fact been enacted, and if the High Court had applied that Regulation the result would have been different, and in meeting that argument the Court observed that it was doubtful if the High Court had jurisdiction to take into consideration the subsequent legislation for answering a question other than the one which was actually raised. The doubt expressed was therefore in respect of the power of the Court to decide a question other than the question which was actually referred and not in respect of the power and indeed the duty of the High Court to apply to the question referred the law enacted with retroactive operation. In support of his contention Mr. Kapur relied upon the observation of Desai, C.J., in M/s Rampur Distillery Chemical Works Ltd. vs The Commissioner of Income tax, U.P.(1) to the following effect: "The argument was that though the High Court has to answer the question referred to it with reference to the law in force in 1957 (when the Tribunal disposed of the appeal), what that law was has to be discovered today with reference to the law existing today. What was the law in 1957 on the basis of which the Tribunal disposed of the appeal has certainly to be decided by this court today but what has to be decided is the law existing in 1957 and not deemed to exist in 1957 by virtue of an amendment in the law made in 1962. " But in that case, in the view of the High Court the amendment made by the amending statute of 1962 which came into force after the reference was made by the Income tax Tribunal had no retrospective operation, and the question referred by the Tribunal had to be answered by the High Court in the light of the relevant law applicable at the date of the transaction. The observation relied upon has to be read in the context of the finding of the High Court as to the character of the amending legislation. The observation therefore does not assist the contention that even in cases where the relevant statute has been amended with retroactive operation, so as to apply to the transaction which forms the subject matter of the reference, and the High Court or this Court is bound in recording its opinion on the question referred to ignore the amended law. If what counsel contends is true. the answer given by the High Court or by this Court would have no value whatever in cases where by retroactive amendment of the law, the old law has (1) I.T. Reference No. 362 of 1958 decided on Jan. 17, 1964. 390 been superseded and is substituted by a new statutory provision. Undoubtedly the Tribunal called upon to decide a taxing dispute must apply the relevant law applicable to a particular transaction to which the problem relates, and that law normally is the law applicable as on the date on which the transaction in dispute has taken place. If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly when the question has been referred to the High Court and in the meanwhile the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended if it applies. By taking notice of the law which has been substituted for the original provision, the High Court is giving effect to legislative intent and does no more than what must be deemed to be necessarily implicit in the question referred by the Tribunal, provided the question is couched in terms of sufficient amplitude to cover an enquiry into the question in the light of the amended law, and the enquiry does not necessitate investigation of fresh facts. If the question is not so couched as to invite the High Court to decide the question in the light of the law as amended or if it necessitates investigation of facts which have not been investigated, the High Court may refuse to answer the question. Application of the relevant law to a problem raised by the reference before the High Court is not normally excluded merely because at the date when the Tribunal decided the question the relevant law was not or could not be brought to its notice. There is nothing so peculiar in the nature of a reference under the Indian Income tax Act or the Sales Tax Acts that in deciding it the High Court is restricted to the application of the law which has been superseded by legislation since the date when the reference was made by the Tax Tribunal and is obliged to refuse to apply the law which by legislative direction has to be applied to a particular transaction which is the subject matter of the reference. On the view taken by us this appeal must be allowed and the question raised by the Judge (Revisions) Sales Tax must be answered in the affirmative. Having regard to the circum stances of the case, the parties will bear their own costs both in this Court and the High Court. Appeal allowed.

IN-Abs

The respondent is a manufacturer of cotton yarn and is registered as a dealer under the U.P. Sales Tax Act, 1948. This act came into force on April 1, 1948. Under this Act, sales tax was payable on sales of cotton yarn at a uniform rate of 3 pies in a rupee. Under section 3(A) of the Act the Government of U.P. issued a notification declaring that with effect from June 9, 1948, the Sales Tax would be charged at the rate of six pies per rupee in respect of sales of the cotton yam. In the present case, the assessee had opted under section 7 of the Act to be assessed on the turnover of previous year. The Sales Tax Officer held on the basis of the notification dated June 9, 1948, that the rate of three pies per rupee in respect of sales of cotton yarn was to apply in the year of assessment for the first 69 days and for the remaining part of the year the rate of six pies per rupee was to apply. The decision of the Sales Tax Officer was affirmed by the Judge (Revisions) Sales Tax. The Judge referred the case to the High Court. On reference the High Court held on the basis of its judgment in Modi Food Products Ltd. that the rate of three pies per rupee would apply for the assessment of 1948 49 because the assessee had opted under section 7 to be assessed on the basis of the turnover of the previous year. In the meantime the legislature of Uttar Pradesh by Act III of 1963 enacted section 31 which makes Sales tax exigible from an assessee who has opted to pay tax on the turnover of the previous year, as if the altered rates were in force during the previous year. The amendment is given retroactive operation and applies to assessments pending or closed. The question for consideration before this Court was whether this Amending Act would apply to the present assessment. Held:(i) The law found incorporated in section 31 by Amending Act III of 1963 would apply to the present case. This Court in giving its opinion on the question in the light of the amending Act is seeking to apply a legislative provision which was, by express enactment, in force at the time when the liability arose, for section 31 enacted by Act III of 1963 is to be deemed to have been in operation at all material times in supersession of the previous law declared by this Court in Modi Sugar Mills Ltd. 's case. This Court is, therefore, not seeking to apply any law to the question posed before the High Court which was not in force on the date of the transaction which is the subject matter of the reference Modi Food Products Ltd. vs Commissioner of Sales tax, U.P. A.I.R. 1956 All. 35 and Commissioner of Sales tax, U.P. vs Modi Sugar Mills Ltd.; , explained. 384 (ii)When the question has been referred to the High Court and in the meantime the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended as if it applies. By taking notice of the law which has been substituted for the original provision, the High Court is giving effect to the legislative intent and does no more than what must be deemed to be necessarily implicit in the question referred by the Tribunal, provided the question is couched in terms of sufficient amplitude to cover an enquiry into the question in the light of the amended law, and the enquiry does not necessitate investigation of fresh facts. M/s. Chatturam Horilram Ltd. vs Commissioner of Incometax, Bihar and Orissa, ; and M/s. Rampur Distillery Chemical Works Ltd. vs Commissioner of Income tax, U.P., I.T. Reference No. 362/58 dt. 17 1 64, distinguished.

minal Appeals No. 14 of 1963. Appeal by special leave from the judgment and order dated November 9, 1962 of the Rajasthan High Court in D.B. Criminal Appeal No. 502 of 1961. section Shaukat Hussain, for the appellant. H. R. Khanna and section P. Nayar, for the respondent. March 24, 1964. The Judgment of the Court was delivered by AYYANGAR, J. This appeal, by special leave, against the judgment of the High Court of Jodhpur raises for considera tion the legality of the conviction of the appellant for a contravention of section 3 of the (Act XXXI of 1946) which is an offence under section 14 of that Act. The relevant portion of section 3 enacts: (3) (1) The Central Government may be order make provision, either generally or with respect to all foreigners or with respect to any particular foreigner or any prescribed class or description of foreigners, for prohibiting regulating or restricting the entry of foreigners into India or other de parture therefrom or their presence or continued presence therein. (2) In particular and without prejudice to the generality of the foregoing power, orders made under this section may provide that the foreigner: (a) shall not enter India or shall enter India only at such times and by such route and at such port or place and subject to the observance of such conditions on arrival as may be prescribed , . . . . . . . Section 14 reads: "14. If any person contravenes the provisions of this Act or of any order made thereunder, or any direction given in pursuance of this Act or such order, he shall be punished with imprisonment for a term which may extend to five years and shall also be liable to fine; and if such person has entered into a bond in pursuance of clause (f) of subsection (2) of section 3. his bond shall be forfeited, and any person bound thereby shall pay the penalty thereof, or show cause to the satisfaction of the convicting Court why such penalty should not be paid. " 443 The facts giving rise to the appeal are briefly these: The case of the prosecution was that the appellant Ibrahim, s/o Miru a resident of Rajgarh in Bikaner Division was a Pakistani national who had originally come over to India on a Pakistani passport issued to him in 1954 and on the strength of a visa granted in December, 1956. He was then found to be overstaying in India since February 18, 1957 and an order was thereupon passed in March, 1957 for his deportation. This order was given effect to and on April 21, 1957 be was taken across the Pakistan border at the Check Post Munabao by the Indian police officials and deported. Then followed the events which have given rise to the present proceedings. Subsequent to his deportation to Pakistan and on a date as regards which the prosecution had no information, the appellant had, unknown to the Indian authorities, managed to come over to India clandestinely and he was found again in made a report to the Station House Officer of Rajgarh by which he drew the latter 's attention to the fact that the appellant who had been deported had managed to cross the border on the side of Ganganagar and had re entered India and he, brought this to his notice for the purpose of action being taken. The accused was thereupon apprehended and was charged with an offence of having entered India without a passport in contravention of section 3(2)(a) of the . The defence of the appellant was simple. He said he had been in India all the time since birth, had never gone to Pakistan and so had never come here in 1957 with a Pakistani passport, was never deported therefrom and therefore there was no question of his having entered India without a passport. in other words, his defence was that he was not the person who had come over in 1957 and had been deported to Pakistan in April 1957. In support of their case the prosecution proved the order of Government by which Ibrahim, son of Meeru of Rajgarh had been directed to be deported in which is found a reference to his having come over to India with a passport and having overstayed the time permitted by the visa, the general diary of the Emigration Check Post, Munabao dated April 21, 1957 which recited that on April 21, 1957 the deportee Ibrahim had come with a Head Constable and that the deportation order had been given effect to, and an entry in the deportation register of the Check Post which recited the date and number of the Pakistani passport and the authority by which the order of deportation had been passed and the carrying out of the actual deportation. In order to establish the identity of the appellant with Ibrahim mentioned in these documents the prosecution examined two witnesses Shiv Rattan who was the Police Inspector in charge of the 444 Munabao Check Post at the relevant date (P.W. 2) and Govind Singh who was a peon who was posted at the police lines at Churn and who accompanied Dube Singh, Head Constable when Ibrahim was taken from Rajgarh to the Check Post at Munabao for being deported. These two witnesses identified the appellant who was present in Court Ibrahim whom they had seen off at the border Check Post in execution of the order to deport. The learned Magistrate, however, was not satisfied with this proof of identity, because he was of the view that the two prosecution Witnesses P.Ws 2 and 3could not, after the lapse of 4 years, be believed when they said that they remembered that the appellant was Ibrahim whom they had seen deported at the Check Post. The learned Magistrate also held that there was some discrepancy in the father 's name of Ibrahim in one of the documents produced by the prosecution which, according to him, did not tally with the name of the appellant 's father. On these grounds the learned Magistrate acquitted the accused. The respondent State filed an appeal to the High Court against this order of acquittal and the learned Judges holding that there could be no doubt about the identification by P.W.s 2 and 3 of the appellant as the Ibrahim whom they had deported, reversed the order of acquittal and held the appellant guilty of the offence charged and sentenced him to a term of imprisonment. It is from this judgment of the High Court that the present appeal has been filed pursuant to leave granted by this Court. The first point urged by learned counsel for the appellant was as regards the identity of the appellant with Ibrahim. On this we are quite satisfied that the learned Judges were correct in their appreciation of the evidence in the case. Both the witnesses P.W.s 2 and 3 are public servants and there is no reason why they should depose falsely against the appellant. The documents produced as regards which there is no challenge give the name of the person deported as Ibrahim, his father as Miru and besides, they specify his age as 27 which, it is conceded, tallies with the description of the appellant. The only point that was suggested by learned Counsel was that in exhibit P 1 the deporting register at the Check Post the name of Ibrahim 's father was stated to have been entered as Murra and not Miru. When, however, it was pointed out to learned Counsel during the course of the arguments that there was a possibility of these words written in Urdu being wrongly transliterated in the English learned Counsel did not persist in the point. If then Ibrahim s/o Miru, aged 27 was deported and there is evidence adduced which has been accepted by the High Court that it was the appellant that was deported on the former occasion, we find no substance in the argument as regards this question of identity. 445 The second submission of learned counsel was based on the fact that under section 2(a) of the , as originally enacted, a citizen of Pakistan which was a member of the British Commonwealth was not "a foreigner" within that Act :and that citizens of Pakistan became "foreigners" only by virtue of the amendment effected by Central Act XI of 1957 which came into force on January 19, 1957. The argument based on this feature was as follows: A person who can be held guilty of a contravention of section 3 of the is only a "foreigner". Even according to the case of the prosecution the appellant had come over to India on the strength of a Pakistani. passport issued in 1954 and under a visa of December, 1956. It must, therefore, be taken that he had crossed over to India before the 19th January, 1957. On that date he was not a foreigner, though a Pakistani, as he was a citizen of a Common wealth country. He could not, in law, become a "foreigner" subsequently and no action could be taken against him on the footing that he had become a "foreigner". We see no merit in this submission. A prima facie reading of the would show that if on the date when the offence is committed a person is a "foreigner", as defined by the Act, it would be no excuse for him to say that on an earlier date he was not a foreigner. But it is, however, unnecessary to consider this point further because, firstly, there is no proof on the record before us that the appellant entered India before January 19, 1957. But even if he had it would only mean that the earlier order of deportation which was passed in March/April 1957 was a wrong order and that certainly is not a matter with which we are concerned, because it is common ground, if the identity of the appellant is held to be established, that the appellant was deported to Pakistan in April, 1957. He could come over to India only subsequent to April, 1957 and if he did come over it is also common ground that he came over without a passport. As the date upon which he could have come over was certainly after April, 1957 by which date section 2(a) of the containing the definition of "Foreigner" had been amended, the appellant was a foreigner when he came into India without a valid passport and visa in contravention of the provisions of section 3 of the , and that is the offence with which he is now being charged. We find therefore that there is no substance in this point. Lastly, it was submitted that the Courts could have no jurisdiction to determine whether the appellant was a "foreigner" and that their jurisdiction in that regard was barred by the provisions of section 9(2) of the . This argument proceeds upon a misapprehension of the legal position. In the first place, under section 9 of the the onus is upon the person who is accused tinder that Act to 446 prove that he is not a foreigner. In the present case once the plea regarding the absence of identity of the appellant with the deportee of April, 1957 was rejected it could not be suggested that the appellant was ever an Indian citizen. It is only where there is proof that a person is to start with, a citizen of India and it is alleged that he has lost his Indian citizenship by reason of acquiring the nationality of a foreign State that they question of invoking the provisions of section 9(2) of the arises. That is not the case here. The case of the pro secution was that the appellant was a Pakistani national who had come over to India on a valid Pakistani passport in 1957 and had been legally deported out of India in April, 1957. Or, those facts there is no question of section 9(2) of the being invoked or coming into play. The offence charged was that having been deported once out of India, he again entered India without proper travel documents in violation of the provisions of section 3(2)(a) of the . There was one further point that was mentioned by learned Counsel but which we did not permit him to argue. Learned Counsel said that the order now passed was one by the State Government and that there was no proof that the Central Government had delegated this power to the State Government. Apart from the point being without substance in view of the terms of section 3(2)(a) we have extracted earlier, and which was the offence with which the appellant was charged, this point about delegation was never urged in the Courts below and consequently no evidence was led to establish delegation under section 12 of the Act if that was necessary for sustaining the prosecution in the present case. As this point was not raised in the Courts below we declined to permit learned Counsel to raise it before us. We consider that the learned Judges were right in holding that the prosecution had established the offence charged against the accused. There are no merits in the appeal which fails and is dis missed.

IN-Abs

The appellant, a Pakistani National originally came over to India on a Pakistani Passport and on the strength of visa. He was found to be overstaying in India and he was deported on April 21, 1957. Subsequently on finding him again in India he was charged with an offence of having entered India without a passport in contravention of section (2)(a) of the . His defence was that he had been in India from his birth and that the person who was said to have been deported in 1957 was some other and riot himself. The trial court accepted this defence and acquitted him. The State appealed to the High Court and the High Court reversed the finding of the lower court and held him guilty of the offence charged. The present appeal was filed on a special leave granted by this Court. The first contention of the appellant was that the High Court was wrong in reversing the finding of the trial court on the issue of the identity of the appellant. Secondly it was submitted that under section 2(2) of the as it stood before the Amendment which came into force on January 19, 1957 the appellant though a Pakistani citizen was not a "foreigner" and hence his entry into India before that date would not constitute an offence. It was contended further that the courts had no jurisdiction to determine whether the appellant was or was not a foreigner by reason of the provision of section 9(2) of the Indian Citizen ship act 1955. Held: The appellant was the person who was deported on April 21, 1957 and the finding of the High Court on the question of his identity was correct. (ii) If on the date when the offence is committed a person is "a foreigner" as defined by the Act, it would be no excuse for him to say that on an earlier date he was not foreigner. Since the appellant was deported in April 1957 and he came back to India subsequently without a passport he was a foreigner under the amendment provision which came into force on January 19, 1957 had committed an offence under s, 3 of the . (iii) Under section 9 of the the onus is upon the person who is accused under the Act to prove that he is not a foreigner. It is only where there is proof that a person is, to start with a citizen of India and it is alleged that he has lost his Indian Citizenship by reason of acquiring the nationality of the foreign State that any question of invoking the provisions of section 9(2) of the Citizenship Act arises. In the present case the appellant a Pakistani national came to India originally with a Pakistani Passport and after his deportation in April 1957 came back to India without a passport and hence he cannot invoke section 9(2) of the Citizenship Act and lie had committed an offence under section 3(2)(a) of the . 442

Appeals Nos. 107 111 of 1963. Appeals by special leave from the judgment :and order dated March 23, 1961 of the Punjab High Court in Income tax Reference No. 14 of 1960. R. Ganapathi Iyer and R.N. Sachthey, for the appellant (in all the appeals). S.T. Desai, R.K. Gauba, B.P. Singh and Naunit Lal, for the respondent (in all the appeals). March 24, 1964. The Judgment of the Court was delivered by SARKAR, J. We think that these appeals are covered by ;the judgment of this Court in Punjab Distilling Industries Ltd. vs Commissioner of Income tax(1) and the High Court (1) [1959] Supp. 1 S.C.R. 693. 448 was in error in its view that the ratio decidendi of that judgment was not applicable to them. The earlier case had arisen out of the assessment of the same assessee but it was concerned with the years 1947 48 and 1948 49 while the present appeals are concerned with the years 1946 47, 1949 50, 1950 51, and 1951 52. The accounting period of the assessee was from December 1, in one year to November 30 of the following year. In both the cases the assessments were for income tax, excess profits tax and business profits tax. The point for consideration in respect of all these taxes was, however, the same. A full statement of the facts will be found in the Judgment in the earlier case and it is unnecessary to state them at length over again. The assessee who was a distiller and seller of bottled country liquor, started collecting from its customers from the year 1945 besides the price of the liquor and the bottles in which the liquor was sold, a further charge called empty bottles return security deposit". This charge was made at a certain rate per bottle delivered depending on its size on the term that it would be refunded as and when the bottles were returned to the assessee and that the entire sum collected on this account in respect of any one transaction would be refunded in full on return of 90 per cent of the bottles covered by it. The question is whether this charge is a trading receipt asses sable to tax. In the earlier case this Court held it to be assessable. This Court then said (p. 687), "the trade consisted of sale of bottled liquor and the consideration for the sale was constituted by several amounts respectively called, the Price of the liquor, the price of the bottles and the security deposit. Unless all these sums were paid the appellant would not have sold the liquor. So the amount which was called security deposit was actually a part of the consideration for the sale and, therefore part of the price of what was sold. " In respect of the years now under consideration the Income tax Officer taxed these charges and on appeal the Appellate Assistant Commissioner confirmed the Income tax Officer 's view. On further appeal, however, the Income tax Tribunal reversed the decisions of the authorities below and held that these charges were loans and not trading receipts. It may be stated that all this had happened before the afore said earlier judgment was delivered. After the Tribunal 's decision, the Commissioner of Income tax obtained a reference of the following question to the Punjab High Court: "Whether on the facts and circumstances of the case the collections by the assessee company described in its accounts as 'empty bottle return security deposits ' were income assessable under Section 10 of the Income tax Act. " 449 It is of interest to note that the earlier case also concerned an identical question and had been answered both by the High Court and this Court in the affirmative. If the judgment in the earlier case covered the present ap peals, then the question referred would, of course, have to be ,answered in the affirmative. The High Court, however, took the view that as a result of the amendment of the rules made under the Punjab Excise Act, 1914 which came into effect from April 1, 1948, the charges collected after that date were not covered by that judgment. It held that the amended rule made the ratio decidendi of our judgment inapplicable to the charges collected after that date. The rule referred to is r. 40(14)(f) and the relevant part of it on which the High Court based its view is as follows: (v) It is compulsory for the licensee to return at least 90 per cent. of the bottles issued to him by the licensed distiller. (vi) The licensed distiller may, at the time of issue, demand security at the rates of three rupees, two rupees or one rupee and eight annas per dozen quart, pint or nip bottles respectively upto 10 per cent. of the bottles issued by him and confiscate the security to the extent falling short of the 90 per cent. limit. The licensee referred to in the earlier of the rules quoted is the wholesaler to whom the distiller sold his liquor. It is not very clear what is meant by the words "upto 10 per cent. of the bottles issued" or the words "falling short of the 90 per cent. limit". It is not necessary, however, to pursue this matter for we shall not be concerned with the precise meaning of these words. It is not in dispute that some charge described as a deposit was realised on the term that it would be refunded in certain eventualities and that is enough for our purpose for the only question is whether this charge was a trading receipt. The High Court thought that the earlier judgment of this Court had been based on three considerations, namely (1) that the charge concerned had been made without Government 's sanction and entirely as a condition imposed by the assessee itself for the sale of its liquor; (2) that it could not be security deposit for the return of the bottles for there was no right to their return and (3) that it was refundable under the contract of sale itself. In the High Court 's view if these circumstances were not there, our decision would have been different. The High Court held that since the amended rules came into force, none of these considerations was available and, therefore, the LP(D) ISCI 15a 450 charges could not be held to be trading receipts. The following quotation from the judgment of the High Court fairly summarises its reasoning: "The amended rules were given effect from 1st April, 1948. To securities demanded in accordance with the above rules the three considerations which prevailed with their Lordships of the Supreme Court and which have been mentioned above will not apply to the instant case. It cannot, therefore, be said, as was the case in the appeal before their Lordships of the Supreme Court, that the 'additional amounts had been taken without Government 's sanction and entirely as a condition imposed by the appellant itself for the sale of its liquor '. Again it cannot be said that the 'wholesalers were under no obligation to return the bottles. ' Lastly, in view of the statutory rule amended in 1948 it cannot be said that the deposit 'was part of each trading transaction a) id was refundable under the terms of the contract relating to trading transaction under which it had been made. " It is not in dispute that if the High Court was in error in this reasoning, the present case will be governed by the earlier decision. With respect to the learned Judges of the High Court, we think that the earlier judgment of this Court has been misunderstood by them. That judgment had not been based on the three points mentioned by the High Court and this we now proceed to show. The first point of distinction between the two cases was based on the observation in the earlier case that the additional amounts had been taken without Government 's sanction and entirely as a condition imposed by the appellant itself for the sale of its liquor '. The High Court apparently thought that by this observation it was suggested that if the amounts had been taken under Government 's sanction, then they would not have been taxable. We are wholly unable to agree that this is a correct reading of that judgment. That observation contained only a recital of fact and was made for the purpose of distinguishing these amounts from the other amounts charged by the assessee as price of bottles to which we have earlier referred. The other amount was charged under a scheme framed by the Government and called the "buy back scheme". We find nothing in the earlier judgment to show that the conclusion there arrived at was based on the fact that the charge had not been made with the sanction of the Government. That nothing turned on whether a charge was made under a Government scheme or purely as a matter of contract would indeed appear to have always been the common case. Thus even before the 451 amended rules had come into force, the assessee had been 'collecting under the aforesaid "buy scheme" which had the sanction of the Government, from its customers as price of the bottles, a charge which was refundable on the return of the bottles. The charge now under consideration is a charge additional to that collected under the 'buy back scheme ' and this we have earlier said. It has never been in dispute, either in the earlier case or now, that the charge under the 'buy back scheme ' which was collected under Government 's sanction constituted a taxable income. This Court had never said, nor was it ever contended by the assessee that a collection would not be taxable if it had been made with the sanction of the Government. The first point of distinction sought to be made by the High Court is, therefore, unfounded. The second point made by the High Court was that the observation in the earlier judgment that the charge could not be a security for the return of the bottles as there was no right to such return, was no longer applicable as under the amended rules there was a right to the return of the bottles. We do not agree for reasons to be stated later, that under the amended rules there was such a right but we will assume for the present that there was. Now, the argument in connection with which that observation was made was that if the charges were deposits for securing the return of the bottles, they were not trading receipts. By the aforesaid observation this Court dealt with the first part of this argument and said that the assumption that the charges were for securing the return of the bottles was unfounded for there was no right to such return. If the charges were not by way of security deposit the argument must, of course, fail. So that was one answer that was given to the argument. But this Court did not stop there and proceeded to consider the argument as a whole, namely, whether if the charges were security deposits, they were not trading receipts. Now, the reason why it was said that if the charges were security deposits they were not trading receipts is to be found in two cases on which the argument was based. The first was the case of Davies vs Shall Company of China Ltd.(1). In that case the Company had delivered its product to certain agents for sale and payment of the sale proceeds to it. The Company took money from each agent as deposit to secure itself against the risk of default by him to account for the sale proceeds. It was observed by Jenkins L.J., "Mr. Grant described the agents ' deposits as part of the Company 's trading structure, not trade receipts but anterior to the stage of trade receipts, and I think that is a fair description of them. It seems to (1) LP(D)ISCI 15 452 me that it would be an abuse of language to describe one of these agents, after he had made a deposit, as a trade creditor of the Company in respect of the deposit, not on account of any goods supplied or services rendered by him in the course of its trade, but simply by virtue of the fact that he has been appointed an agent of the Company with a view to him trading on its behalf, and as a condition of his appointment has deposited with or, in other words, lent to the Company the amount of his stipulated deposit. " That was the kind of security deposit which Mr. Sastri appearing for the assessee on the earlier occasion said the "empty bottles return security deposits" were. The real point, therefore, in contending that the deposits were security deposits was to establish that they were not part of the trading transactions at all but related to a stage anterior to the trading transactions. This contention was rejected and it was held that the "empty bottles return security deposits" were not the kind of deposits considered in the Shall Company case. The other case on which Mr. Sastri then relied was K.M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax Madras(1). That case dealt with three trade arrangements. Mr. Sastri contended that the "empty bottles return security deposits" were the kind of deposits dealt with in the third arrangement considered in that case but this argument also failed. Under the third arrangement, the trader took from its constituent at the commencement of an expected series of trading transactions with it a deposit and kept the same till the business connection came to an end whereupon the deposit was refundable to the Constituent with interest at 3 per cent per annum after deduction thereout of any amount remaining due, from the constituent on the trading transactions. The understanding was that the constituent would pay for each purchase made by him from the trader during the continuance of the business connection and it was only where he failed to make the payment that the amount due became liable to be deducted from the deposit. This deposit was held by this Court to be a loan for these reasons: "The amount deposited by a customer was no longer to have any relation to the price fixed for the goods to be delivered under a forward contract either in installment or otherwise. Such price was to be paid by the customer in full against delivery in. respect of each contract. . . It was only at the end of the 'business connection ' with the appellants that an adjustment was to be made towards any possible liability arising out (1) ; 453 of the customer 's default. . The transaction had thus all the essential elements of a contract of loan." (P. 1063). None of these cases, therefore, was concerned with the question whether a security deposit was by its very nature such that it could not be a trading receipt. The first case dealt with an actual security deposit but it was held that that deposit was not a trading receipt not for the reason that it was a security deposit but for the reason that it formed, the structure under which trading transactions producing trading receipts were conducted and was not itself connected with any trading transaction. In the second case the receipt was held to be a loan; that it might be also a security deposit was not even mentioned. It was held not to be a trading receipt because it had no connection with the trading transactions but related to a stage anterior to the trading transactions. It is, therefore, clear that the contention that the charges formed a security deposit had been advanced only for the purpose of showing that they were not a part of the trading transactions. The question was not really whether the charges were security deposits but whether they were part of the trading transactions or had been made at anterior stages. This Court decided that they were part of the trading transactions and were not relatable to an anterior stage. That is all that it was called upon to decide and did decide. That on the earlier occasion this Court was not concerned with the question whether the charges made were security deposits or not would appear from the following observations occurring at p. 690. "Mr. Sanyal was prepared to argue that even if the amounts were securities deposited for the return of the bottles, they would still be trading receipts, for they were part of the trading transactions and the return of the bottles was necessary to enable the appellant to carry on its trade, namely, to sell liquor in them. As we have held that the amounts had not been paid as security for the return of the bottles, we do not consider it necessary to pronounce upon this contention. " This Court, therefore, did not decide that if the deposits bad been made to secure the return of the bottles, they could not be a trading receipt. The High Court was in error in distinguishing the present case from the earlier one on the basis that this Court had then so decided. We now turn to the question whether under the amended rules there was any right in the distiller to the return of the bottles. We think there was not and in this respect the two cases are identical; in none was the charge in fact a security deposit. The reason for that view is this. The liquor passed through three sales before it reached the consumer; first the distiller sold it to wholesaler then the wholesaler to a retailer and lastly, the retailer to the consumer, If the 454 rules created an obligation on the wholesaler to return the bottles to the distiller, then the rules would provide for a return of the bottles to the wholesaler by the retailer and to the retailer by the consumer; without such rules it would be idle to require the wholesaler to return the bottles to the distiller. We have not been shown anything creating a right in the wholesaler or the retailer to a return of bottles. Clearly, the consumers were under no obligation to return the bottles in which they bought liquor. Sub clause (v) of the rule on which the High Court based itself, referred to the return of the bottles in which liquor was sold. In the absence of P. right in the wholesaler to a return of the bottles from the retailer, it would be insensible to read that provision as creating an obligation on the wholesaler to return the bottles. He had no means under the rules to perform that obligation. That rule, therefore, must be read as intending only to lay down that if the wholesaler could not return the bottles, his deposit was liable to be confiscated under sub cl. Again, the rules do not lay down any procedure by which the distiller might enforce the return of the bottles to him, which they would have undoubtedly done if it was intended to give him a right to the return of the bottles. Indeed there is nothing to show that he can obtain such a return. Whether the wholesaler would be liable to punishment under the Act for breach of his obligation to return the bottles or not is to no purpose, for we are now concerned with the right of the distiller to obtain a return of the bottles. It seems to us that the only reason why the rules required a wholesaler to return the bottles to the distiller was to authorise the imposition of a term of the sale upon the breach of which, the charges made for the bottles would cease to be refundable. We now come to the last point of distinction made by the High Court. On the earlier occasion this Court had said that the amount deposited was refundable under the terms of the contract constituting the trading transaction and was, therefore, a trading receipt. The learned Judges of the High Court seem to 'have been of the opinion that since the rule was amended, the deposits had to be made under it and, therefore, were not thereafter received under the contract or as part of the trading transaction constituted by it. With great respect to the learned Judges, there appears to be some confusion here. The rule by its own force does not compel a deposit to be made. The terms of the rule make this perfectly clear. All that it does is to empower a distiller to take a deposit. But the deposit must be taken under a contract in regard to it; it is not taken under the rule itself. In other words, all that the rule does is to authorise the making of a contract concerning the deposit on the terms mentioned in it, the object apparently 455 being to avoid any question as to its validity arising later. We may here point out that the trade in liquor is largely control ( led by Government regulations. It must, therefore, be held that the deposit was actually taken under a contract; it was none the less so though the contract was authorised by the stationery rules. The third point of distinction on which the High Court relied was, therefore, also without foundation. Whether if the deposits had been made without a contract and Indirectly under the rules and in respect of a trading transaction made by a contract they would have been trading receipts or not, is not a question that arises in the present appeals and on that question we express no opinion now. For these reasons we think that these appeals are completely governed by the earlier judgment of this Court and we answer the question referred in the affirmative. We should state that even according to the High Court the amounts collected as "empty bottles return security deposit" prior to April 1, 1948, were chargeable to tax. The appeals are allowed and the respondent will pay the costs here and below. There will be one set of costs allowed as hearing fee. Appeals allowed.

IN-Abs

The assessee, a distiller of country liquor, carried on the business of selling liquor to licensed whole salers. The assesses :started collecting from its customers from the year 1945 besides the price of the liquor and the bottles in which the liquor was sold a further charge called "empty bottles return security deposit. " The entire sum collected on this account in respect of any one transaction would be refunded in full on return of 90 per cent. of the bottles covered by it. The question for consideration before this Court was whether the charge "security deposit" amounted to a trading receipt assessable to Income Tax. Held: The amounts paid to the assessee and described as 'security deposit ' were trading receipts and therefore income of the assessee assessable to tax. These amounts were paid as an integral part of the commercial transaction of the sale of liquor in bottles and represented an extra price charged for the bottles. They were not security deposits as there was nothing to secure, there being no right to the return of bottles. These appeals are covered by the judgment of this Court in Punjab Distilling Industries Ltd. vs Commissioner of Income tax. Punjab Distilling Industries Ltd. vs Commissioner of Income. tax [1959] Supp. 1 S.C.R. 693, relied on. Davies vs Shell Company of China Ltd. (1951)32 T.C. 133 and K.M.S. Lakshmanier & Sons vs Commissioner of Incometax and Excess Profits Tax, Madras [1953] S,. C.R. 1057, distingushed.

No. 208 of 1963Petition under article 32 of the Constitution of India for the en forcement of fundamental rights. B. D. Sharma, for the petitioner. S.V.Gupte, Additional Solicitor General, S.P. Varma and R. H. Dhebar, for the respondent. March 23, 1964. The Judgment of the Court was delivered by WANCHOO, J. This is a petition under article 32 of the Con stitution. The petitioner was appointed as a Telegraphist by the Post Master General Nagpur in 1949. In July 1960. he was serving as an officiating Teleprinter Supervisor at Jaipur. The employees of the Posts and Telegraphs Department (hereinafter referred to as the Department) went on strike from the midnight of July 11, 1960 throughout India and there was a similar strike at Jaipur. The petitioner was on duty on that day from 12 noon to 8 p.m. He says that after his duty was over, he did not go home but went to the dormitory where he fell asleep as he was tired. At about 11 30 p.m. he woke up on hearing some noise and discovered that it was very late and then he wanted to go home. But as he came out, he was arrested by the police on the ground that he was also one of the demonstrators, who were demonstrating outside in connection with the strike. The arrest was made under the Essential Services Maintenance Ordinance, No. 1 of 1960, (hereinafter referred to as the Ordinance). 'On July 13, the petitioner was suspended on the ground that a criminal charge was pending against him in a criminal court. 405 However, the criminal charge was withdrawn on July 18, 1960. On July 21, 1960, a charge sheet was served on the petitioner in the following terms: "That Shri Radhey Shyam Sharma I C/S Telegraphist, CTO Jaipur committed gross misconduct in that on the midnight of the 11th July 1960, he took part in a demonstration in furtherance of the strike of the P. & T. Employees in violation of the orders dated 8 7 1960 issued by the Government of India under the "Essential Services Maintenance Ordinance, 1960 (1 of 1960)" prohibiting strike in any postal, telegraph or telephone Service." An inquiry was made in the matter by the Post Master Gene ral, Central Services Nagpur to whom it was transferred as the petitioner had been appointed by that officer. The enquiry officer found the petitioner guilty of the charge framed against him and thereupon a notice was issued to him to show cause why the penalty of reduction in the time scale by three stages for a period of two years affecting the future increments be not imposed upon him. Thereafter the Post Master General after taking into account the explanation submitted by the petitioner to the show cause notice ordered that the pay of the petitioner should be reduced in the time scale by three stages for a period of two years and on restoration the period of reduction was not to operate to postpone his future increments. Thereupon the petitioner filed an appeal to the Director General, Posts and Telegraphs. The Director General directed further evi dence to be taken on certain lines before deciding the appeal. However, no further evidence was given on behalf of the Department and the matter was re submitted to the Director General as it was Finally, the Director General considered the whole matter on the merits and rejected the appeal. The present petition is a sequel to the order of the Director General, and the petitioner contends that the punishment imposed upon him is violative of his fundamental rights under articles 19(1)(a) and 19 (1) (b) and should be quashed. Reliance is placed on his behalf on two cases of this Court in Kameshwar Prasad vs State of Bihar,(1) and O. K. Ghosh vs E. X. Joseph(2), Further it is contended that sections 3, 4 and 5 of the Ordinance are ultra vires, as they contravene sub clauses (a) and (b) of article 19 (1). Lastly, it is urged that in any case there was no evidence on which it could be found that the charge against the petitioner had been proved. (1) [1962] Supp. 3 S.C.R. 369. (2) [1963]. Supp. 1 S.C.R. 789. 406 The petition has been opposed on behalf of the Union of India and it is urged that the Ordinance is perfectly constitutional and does not violate any fundamental rights. It is further urged that the two cases relied upon by the petitioner are of no assistance to him, as they were concerned with R.4 A and Rule 4 B of the Central Civil Services (Conduct) Rules, 1955. Lastly it is urged that there was evidence on which the authorities concerned could find the charge proved against the petitioner. The first question that arises is whether ss.3, 4 and 5 of the Ordinance are violative of any fundamental rights en shrined in the Constitution. The Ordinance as its name shows was passed in order that essential services may be maintained. Its necessity had arisen because of a threat of strike inter alia by the employees of the Department. Among "Essential Service" as defined in section 2 (1) is included the postal, telegraph or telephone service. Section 3 of the Ordinance provides that "if the Central Government is satisfied that in the public interest it is necessary or expedient so to do, it may, by general or special order, prohibit strikes in any essential service specified in the Order". Further upon the issue of such an order no person employed in any essential service to which the order relates shall go or remain on strike; and any strike declared or commenced, whether before or after the issue of the order, by persons employed in any such service, shall be illegal. Section 4 provides that any person who commences a strike which is illegal under the Ordinance or goes or remains on or otherwise takes part in, any such strike shall be punished with imprisonment. Section 5 provides that any person who instigates, or incites other persons to take part in, or otherwise acts in furtherance of, a strike which is illegal under the Ordinance shall be punishable with imprisonment. The constitutionality of these sections is attacked on the ground that they violate the fundamental rights guaranteed by cls. (a) and (b) of article 19 (1). Under cl. (1) (a) all citizens have the fundamental right to freedom of speech and expression and under cl. (1) (b) to assemble peaceably and without arms. Reasonable restrictions on these fundamental rights can be placed under the conditions provided in cls. (2) and (3) of article 19. We are of opinion that there is no force in the contentiton that these provisions of the Ordinance violate the fundamental rights enshrined in sub cls. (a) and (b) of article 19(1). A perusal of article 19(1) shows that there is no fundamental right to strike, and all that the Ordinance provides is with respect to any illegal strike as provided in the Ordinance. This aspect has been elaborately discussed in the Bank Employees ' case(1) and it has been held that there is no fundamental right to strike (1) ; 407 (see All India Bank Employees ' Association V. National Industrial Tribunal(1)). There is no provision in the Ordinance which in any way restricts freedom of speech and expression, nor is there any provision therein which restricts any one from assembling peaceably and without arms. The Ordinance thus has nothing to do with restricting the fundamental rights enshrined in sub cls. (a) and (b) of article 19(1), and there is therefore no necessity of even considering whether the provisions of the Ordinance can be justified under cls. (2) and (3) of article 19. It is not disputed that Parliament had the competence to make a law in the terms of the Ordinance and therefore the President had also the power to promulgate such an Ordinance. The competence of the legislature therefore being not in dispute we fail to see how the Ordinance can violate the fundamental rights guaranteed under sub cls (a) and (b) of article 19(1) for there is no provision in it which in any way restricts those fundamental rights. Learned counsel for the petitioner in this connection relies on two cases of this Court to which reference has already been made. Kameshwar Prasad 's case (2) related to R. 4 A of the Bihar Government Servants ' Conduct Rules, 1956, which provided that no government servant shall participate in any demonstration or resort to any form of strike in connection with any matter pertaining to his conditions of service. This Court held in that case that R 4 A insofar as it prohibited any form of demonstration, be it however innocent or however incapable of causing a breach of public tranquility was violative of articles 19(1) (a) and 19(1) (b) of the Constitution. This Court also held that insofar as that rule prohibited a strike it was good, since there was no fundamental right to resort to strike. In O. K. Ghosh 's case(3) this Court was concerned with r. 4 A and r. 4 B of the Central Civil Services (Conduct) Rules, 1955, and following the decision in Kameshwar Prasad 's case(4), 4 A was struck down in part so far as it related to demonstrations and r. 4 B was also held to be invalid. That case did not deal with the Ordinance at all and the charge in that case did not seem to have been in the same terms as the charge in the present case. No argument appears to have been urged either in the High Court or before this Court about the validity of the Ordinance or about the validity of the impugned order in relation to the Ordinance or the illegal character of the strike. In the circumstances that case is also of no assistance to the petitioner and there was nothing decided there which would in any way affect the validity of the provisions of the Ordinance. We are therefore of opinion that the Ordinance is valid. (1) ; , 292.(2) (2) [1962] Supp. 3 S.C.R. 369. (3) [1963] Supp. 1 S.C.R. 789. 408 We have already set out the charge framed against the petitioner. it will be seen that the charge is based entirely on the Ordinance and has no connection with rr. 4 A and 4 B which were considered in the O.K. Ghosh 's case(1). The petitioner is charged with gross misconduct on the ground that on the midnight of July 11, 1960, he took part in a demonstration in furtherance of the strike of the employees of the Department in violation of the order of July 8, 1960. It is not disputed that on July 8, 1960, the Central Government had issued an order under section 3 of the Ordinance prohibiting any strike in the Department. The strike therefore that started on the midnight of July 11, 1960 was an illegal strike in view of section 3 (4)(b) of the Ordinance. Section 5 of the Ordinance provides inter alia that any person who acts in furtherance of a strike which is illegal is punishable thereunder. The charge against the petitioner was that he had acted in furtherance of the strike which was to commence on the midnight of July 11, 1960 and was therefore guilty of gross misconduct. It is this charge of gross misconduct which has been found to be proved against the petitioner and which has led to the punishment inflicted on him. This charge as already indicated has nothing to do with r. 4 A and r. 4 B and therefore the two cases on which the petitioner relies have no relevance in connection with this charge. The punishment given to the petitioner cannot therefore be set aside on the ground that the charge was in violation of the fundamental rights guaranteed under sub cls. (a) and (b) of article 19(1), which deal with freedom of speech and expression and the right to assemble peaceably and without arms. The charge does not deal with these two matters at all. On the other hand it deals with acting in furtherance of the illegal strike which started on the midnight of July 11, 1960, and the petitioner was charged with gross misconduct inasmuch as he acted in furtherance of the illegal strike on July 11, 1960 after the strike had been prohibited by the Central Government by order dated July 8, 1962. Whether the "acting" in furtherance of the strike took the form of speeches or demonstrations would make no difference. In either case it can be said that there is a violation of article 19 (1) (a). The only question that remains for consideration therefore is whether the petitioner 's contention that there was no evidence at all on which the authorities concerned could find the petitioner guilty of the charge is correct. So far as that is concerned, the authorities had the following undisputed facts before them: (1) The petitioner was the Secretary of the local union of the employees of the Department; (1) [1963] Supp. 1 S.C.R. 789. 409 (2) On that day the petitioner 's duty finished at 8 p.m. and he should have normally gone home; but he stayed on in the dormitory till 11 30 p.m. which was just half an hour before the strike was to commence; (3) The demonstration was held in connection with the strike by the employees of the Department at 11 30 p.m. just half an hour before the strike was to commence; (4) The petitioner took part in that demonstration and was actually arrested amongst the demonstrators. If on these undisputed facts the authorities came to the conclusion that the petitioner acted in furtherance of the strike which was to commence half an hour later and was thus guilty of gross misconduct it cannot in our opinion be said that there was no evidence on which the authorities concerned could find the charge framed against the petitioner proved. The contention therefore that there was no evidence on which the authorities concerned could find the charge proved must fail. We therefore dismiss the petition. In the circumstances ,of this case we pass no order as to costs. Petition dismissed.

IN-Abs

The petitioner was serving as an officiating Teleprinter Supervisor at Jaipur when the employees of the Posts and Telegraphs Department went on strike from the midnight of July 11, 1960, throughout India and there was a similar strike at Jaipur. The petitioner 's case was that he was on duty that day from 12 noon to 8 p.m. and after his duty was over, he did not go home but went to the dormitory where he fell asleep as he was tired. On hearing some noise he woke up at 11 30 p.m. and wanted to go home but was arrested by the police under the Essential Services Maintenance Ordinance, No. 1 of 1960. The criminal charge was however withdrawn. On July 21, 1960, a chargesheet was served on the petitioner in the following terms: "That Shri Radhey Shyam Sharma I C/S Telegraphist, CTO Jaipur committed gross misconduct in that on the midnight of the 11th July, 1960, he took part in a demonstration in furtherance of the strike of the P. & T. Employees in violation of the orders dated 8 7 1960 issued by the Government of India under the 'Essential Services Maintenance Ordinance, 1960 (1 of 1960) ' prohibiting strikes in any Postal, telegraph or telephone service". The enquiry officer found him guilty of the charge and ordered that his pay should be reduced in the time scale by three stage,% for a period of two years and on restoration the period of reduction was not to operate to postpone his future increments. 0n appeal, the Director General considered the whole matter on merits and rejected the appeal. In this Court it was urged that the punishment imposed upon the petitioner was violative of his fundamental rights under articles 19(1)(a) and (b), reliance being placed on two cases of this court in Kameshwar Prasad vs State of Bihar and O. K. Ghosh vs E. X. Joseph; that sections 3, 4 and 5 of the Ordinance were ultra vires, as they contravened article 19(1.)(a) and (b) and that in any case there was no evidence on which it could ' be found that the charge against him had been proved. Held: The provisions of the Ordinance in sections 3, 4 and 5 did not violate the fundamental rights enshrined in article 19(1)(a) and (b). A perusal of article 19(1) shows that there is no fundamental right to strike, and all that the ordinance provided was with respect to any illegal strike as provided in the Ordinance. There was no provision in the Ordinance which in any way restricted those fundamental rights. It was not in dispute that Parliament had the competence to make a law in the terms of the Ordinance and therefore the President had also the power to promulgate, such an Ordinance. 404 The competence of the legislature therefore being not in dispute it cannot be held that the Ordinance violated the fundamental rights guaranteed under article 19(1)(a) and (b). All India Bank Employees Association vs National Industrial Tribunal, ; , referred to. The two cases relied on by the petitioner have no relevance in connection with the charge in the present case. The punishment given to the petitioner cannot therefore be set aside on the ground that the charge was in violation of the fundamental rights guaranteed under article 19(1)(a) and (b). Kameshwar Prasad vs State of Bihar, [1962] Supp. 3 S.C.R. 369 and O. K. Ghosh vs E. X. Joseph, [1963] Supp. 1 S.C.R. 789, held inapplicable. If on the undisputed facts the authorities came to the con clusion that the petitioner acted in furtherance of the strike 'Which was to commence half an hour later and was thus guilty of gross misconduct, it could not be said that there was no evidence on which the authorities concerned could find the charge framed against the petititoner proved.

il Appeals Nos. 399 403/1962. Appeal from the judgment and order dated February 17, 1961 of the Andhra Pradesh High Court in Writ Petitions Nos. 400, 431 to 433 and 495 of 1958. K.Srinivasamurthy and Naunit Lal, for the appellants (in all the appeals). K.R. Chaudhuri and B. R. G. K. Achar, for the respon dents (in all the appeals). March 20, 1964. The Judgment of the Court was delivered by WANCHOO, J. These are five connected appeals on certi ficates granted by the High Court of Andhra Pradesh. They involve a common question of law and will be dealt with to gether. The brief facts necessary to understand the question of law raised in these appeals are these. The appellants manufacture medicines in which they have to use alcohol. Before Parliament passed the Medicinal and Toilet Preparations (Excise Duties) Act, No. 16 of 1955, (hereinafter referred to as the Act), the appellants were working under licences granted under the Hyderabad Abkari Act, No. 1 of 1316 F. Under that Act certain rules called the Medical Preparations and Spirituous Rules, 1345 F were framed and r. 36 thereof provided that "the expenses of the establishment for the supervision of the work shall be borne by the pharmaceutical laboratory (licensee) as per the decision of the Commissioner Excise". It appears that for the manufacture of medicines, the appellants used to be supplied with alcohol. Further the State Government posted on the bonded manufacturies of the appellants certain supervisory excise staff, and r. 36 was obviously framed to reimburse the Government for expenses incurred in that behalf. After the Act came into force from April 1, 1957, the appellants who were manufacturing medicinal preparations were governed by it and the Rules framed thereunder and took licences under the Act. The appellants then contended that as the Act had repealed all previous provisions with respect to medicinal preparations, they were no longer bound to pay the charges prescribed under r. 36 of 1345 F Rules. Their contention was that this rule along with such provisions of the Hyderabad Abkari Act, which concerned medicinal prepara tions were repealed by the Act and the Rules framed there under. The State Government could therefore no longer ask them to pay the costs of the establishment posted at their 378 bonded manufacturies for supervision*. The appellants thereupon filed writ petitions in the High Court challenging the levy of these charges. The petitions were opposed on behalf of the State and its contention was that even though the Act and the Rules framed thereunder had come into force from April 1, 1957, r. 36 of the 1345 F Rules continued and was not repealed by the Act and the Rules framed thereunder, and the State was entitled to the expenses of the supervisory staff and could realise it from the appellants. The High Court held that r. 36 could not be said to have been repealed by the Act and the Rules framed thereunder and was still good law. In this connection the High Court pointed out that the Hyderabad Abkari Act was not concerned only with medicinal preparations but was a general Act dealing with excise including alcohol, and that alcohol in the ultimate analysis was liquor; therefore the State Government which supplied alcohol to the appellants for the purpose of making medicinal and toilet preparations for which no duty was paid was entitled to see that the alcohol was not used for purposes other than that for which it was supplied to the appellants. Accordingly the High Court held that r. 36 of the 1345 F Rules was designed to achieve this object, under the general law of excise contained in the Hyderabad Abkari Act, and was therefore good. In consequence the writ petitions were dismissed. The appellants then applied for certificates to appeal to his Court, which were granted; and that is how the matter has come up before us The only question that falls for consideration therefore is whether after the coming into force of the Act and the Rules,r. 36 of the 1345 F Rules can still be said to survive. There is no doubt that the Hyderabad Abkari Act was a general Act and before the Constitution came into force, r. 36 of the 1345 F Rules would be good law. Under the Constitution, however, medicinal and toilet preparations came under entry 84, List I of the Seventh Schedule to the Constitution, which provides for duties of excise on tobacco and other goods manufactured or produced in India, except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance containing opium, Indian hemp and other narcotic drugs and narcotics. No charge could thereafter be levied on the manufacture of medicinal preparations except by the Union in the shape of duties under item 84 of List I. * The State Government however insisted on the payment of the charges. 379 But under article 277 of the Constitution "any taxes, duties, cesses or fees, which, immediately before the commencement of this Constitution were being lawfully levied by the Government of any State may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law". In view of this provision, all duties and charges levied by the State before the coming into force of the Constitution on the manufacture of medicinal preparations could continue to be levied until law was made by Parliament otherwise. It is not in dispute that the Act came into force from April 1, 1957 and is a law made otherwise by Parliament within the meaning of article 277, and therefore duties and other charges levied by the State in connection with medicinal preparations could no longer be levied by it. Further the Act specifically provides in section 21 that "if, immediately before the commencement of this Act, there is in force in any State any law corresponding to this Act, that law is hereby repealed". It is true that the Hyderabad Abkari Act was a general law which was concerned with liquor and intoxicating drugs generally; it thus applied to alcohol also (treating it as liquor) used for manufacturing medicinal preparations. The effect of section 21 therefore is that so far as the Hyderabad Abkari Act applied to the use of alcohol, treating it to be liquor, in the manufacture of medicinal and toilet preparations, the Hyderabad Abkari Act must be deemed to have been repealed to that extent only by section 21. Reliance is placed on behalf of the State on the proviso to section 21, which lays down that "all rules made under any law hereby repealed shall, so far as they are not inconsistent with this Act, have the same force and effect as if they had been respectively made under this Act and by the authority empowered hereby is in that behalf. " It is therefore con tended that by virtue of the proviso to section 21, r. 36 of the 1345 F Rules must be deemed to continue. We are of opinion that there is no force in this contention. Rules were framed under the Act in 1956 and came into force along with the Act. Rule 143 of these Rules provides that all rules made under any law corresponding to the Act in force in any State are hereby repealed except as respects things done or omitted to be done before such repeal. Consequently all rules framed for the purpose of the manufacture of medicinal preparations came to an end in view of r. 143 of 1956 Rules. Therefore r. 36 of 1345 F Rules, which appears in the Medicinal Preparations and Spirituous Rules must be held to be no longer good law so far as it applies to medicinal preparations. That is one reason why we consider that r. 36 must be held to have been repealed after the coming into force of the Act and the Rules framed thereunder. The proviso to section 21 on which reliance has been placed 380 cannot change the position ciew of the new Rules framed in 1956 with respect to medicinal preparations. As soon as the new Rules came into force the old rules must fall and there is a specific provision in the new Rules (namely r. 143) which says that all rules made under any law corresponding to the Act are hereby repealed. We may refer in this connection to the construction of r. 36 of the Rules of 1345F. It provides that the expenses of the establishment for the super vision of the work shall be borne by the pharmaceutical laboratory. The establishment which has to be paid for under r. 36 therefore is for the supervision of the work done by the pharmaceutical laboratories. Now the work done by a pharmaceutical laboratory is to manufacture medicinal preparations. Rule 36 therefore provides that expenses of the establishment for the supervision of the work of medicinal preparations manufactured by pharmaceutical laboratories have to be paid by the laboratory concerned. The supervisory staff which has to be paid for under r. 36 therefore is meant for the supervision of the manufacture of medicinal preparations and it is for that purpose only that expenses have to be borne by the laboratory concerned. The purpose of the rule therefore is clearly covered by the Act and the Rules framed thereunder and it cannot survive the Act and the Rules in view of section 21 of the Act and r. 143 of the 1956 Rules, and the proviso to section 21 cannot be availed of by the State. This brings us to the alternative argument on behalf of the State, namely, that in any case the rule still remains good because it is meant to carry out the general purpose of the Hyderabad Abkari Act, namely to see that unauthorised sale of alcohol is not made for human consumption by the labora tory to which it is supplied for purposes of manufacture of medicinal preparations. Therefore it is said that the rule is good inasmuch as it is concerned with the enforcement of the general law relating to alcohol and intoxicating drugs contained in the Hyderabad Abkari Act. We are of opinion that there is no force in this contention either. In the first place, as we have already indicated, the main object of the supervisory staff mentioned in r. 36 is to supervise the manufacture of medicinal preparations. In that connection the supervisory staff will certainly see that the alcohol supplied is used for the purpose for which it is supplied and is not used in any other manner. Rule 36 is only concerned with seeing that the manufacture of medicinal preparations is made properly and is done under the supervision of the establishment attached to each laboratory,, and it is only incidentally that in that connection the establishment is also to see that the alcohol supplied is not used otherwise than for the purpose of manufacture. That however will not make the rule good under the Hyderabad Abkari Act, which deals with alcohol and intoxicating drugs generally. 381 What we have said above is borne out if we look at the 1956 Rules. Rule 20 provides that in case of manufacture in bond (and we are concerned in the present appeals with such manufacture) alcohol on which duty has not been paid shall be used under excise supervision. Rule 42 provides that "it shall be open to the Excise Commissioner to determine the size of the supervisory staff in consultation with the licencee. " It is clear therefore that under the 1956 Rules supervisory staff is attached to bonded manufacturies which manufacture medicinal preparations. This is also the purpose of r. 36. Further r. 141 provides that "the licencee of a bonded manufactory or warehouse shall, where so required by the Excise Commissioner, provide the officer and the staff posted to the manufactory or bonded warehouse with suitable lodging conveniently situated to the factory or bonded warehouse premises at a rent not exceeding 10 per cent of the pay of each officer so accommodated. If for any reason the licencee is not able to provide such accommodation he shall provide suitable accommodation to the satisfaction of the Excise Commissioner near the manufactory or bonded warehouse recovering only 10 per cent of the pay of the occupant. " Then r. 45 provides that "tile officer in charge shall exercise such supervision as is required to ensure that alcohol issued for a certain preparation is added to the materials which go to make that preparation and that no portion of such alcohol is diverted to other purpose. " It is clear therefore from these rules that the supervisory staff is attached to a bonded manufactory for the purpose of supervision to see that the manufacture is carried on properly and also to see that alcohol issued for the purpose of manufacture is not diverted to any other use. We cannot therefore accept the argument that simply because the supervisory staff has got to see that alcohol supplied, assuming it to be liquor, is not misused, r. 36 is still good law because its purpose is to see that the general law relating to alcohol and intoxicating drugs contained in the Hyderabad Abkari Act is carried out. As the 1956 Rules show it is the duty of the supervisory staff attached to a bonded manufactory to see that the manufacture is properly made and that alcohol supplied is not diverted to any use except that of the manufacture of the preparation. This being the purpose of the 1956 Rules, the levy under r. 36 of 1345 F cannot be justified on the ground that under that rule the supervisory staff has to see that the general law relating to alcohol and intoxicating drugs is not violated. There is no doubt that the field covered by r. 36 of the 1345 F Rules is completely covered by the Rules framed under the Act and therefore r. 36 can no longer be justified as good under the general law relating to alcohol and intoxicating drugs. We may add that the Act or the 1956 Rules make no provision for any such charge as is provided in r. 36 of 1345 F Rules, the intention being that the duty under the Act will cover all expenses 382 for enforcing it. The fact that members of the supervisory staff are the servants of the respondent makes no difference because they function under the Act and the rules framed thereunder and not under the Hyderabad Act. We are therefore of opinion that reading section 21 of the Act and r. 143 of the Rules framed thereunder, r. 36 of 1345 F Rules must be held to have been repealed and that it is not saved by the proviso to section 21. We therefore allow the appeals, set aside the orders of the High Court, and direct the issue of writs as prayed for. The appellants will get their costs from the respondents One set of hearing costs. Appeals allowed.

IN-Abs

The appellants are manufacturers of medicine in which they have to use alcohol. According to r. 36 of the Medical Preparation and Spirituous Rules, 1345 F framed under the Hyderabad Abkari Act, 1316 F the appellant used to pay certain fees to the State Government for the supervision of the use of alcohol by the appellants. After the coming into force of the Medical and. Toilet Preparations (Excise Duties) Act, 1955 and the Rules framed thereunder the appellants contended that since R. 36 was repealed by this Act they had not to pay that fee. On the refusal of the State Government to accept their contention the appellants filed writ petitions before the High Court challenging the power of the Government to levy the fee. But the High Court held that R. 36 was not repealed and dismissed the writ petitions. Thereupon the appellant filed the present appeals on certificates granted by the High Court. Before this Court it was contended on behalf of the appel lant that section 21 of the 1955 Act in terms repealed any corresponding State law and therefore R. 36 stood repealed. The respondent contended that the proviso to that section saved all previous rules which were not inconsistent with the Act and hence R. 36 should be deemed to be in force. It was further contended by the respondent State that R. 36 remained in force because it was meant to carry out the general purpose of the Hyderabad Abkari Act which was a general Act relating to alcohol and intoxicating drugs. Held:(i) By virtue of Entry 84 List I of the VII Schedule to the Constitution no charge could be levied on the manufacture of medicinal preparations except by the Union of India and since the 1955 Act is a law made otherwise by Parliament within the meaning of article 277 the duties and other charges which used to be levied by the State in connection with medicinal preparations could no longer be levied by it. Further the effect of section 21 of the Act is that so far as the Hyderabad Act applied to the use of alcohol in the manufacture of medicinal and toilet preparations, the Hyderabad Act must be deemed to have been repealed. (ii)By reasons R. 143 of the 1956 Rules r. 36 must be held to have been repealed after the coming into force of the 1955 Act and the rules framed thereunder. The purpose of R. 36 is clearly covered by the 1955 Act and the rules framed thereunder and it cannot survive the said Act and Rules in view of section 21 of the Act and r. 143 and the proviso to section 21 cannot be availed of by the State. 377 (iii)The field covered by R. 36 is completely covered by the Rules framed under the Act and therefore R. 36 can no longer be justified as good under the general law relating to alcohol and in ,, toxicating drugs as contended by the State.

minal Appeal No. 134 of 1962. Appeal by special leave from the judgment and order dated July 17, 1962 of the Andhra Pradesh High Court in Criminal Revision Case No. 298 of 1961. A. section R. Chari, G. D. Gupta, section Balakrishnan, R. K. Garg, section C. Agarwala, D. P. Singh and M. K. Ramamurthi, for the appellant. section G. Patwardhan and B. R. G. K. Achar, for the respon dent. March 23, 1964. The Judgment of the Court was delivered by J. RAGHUBAR DAYAL, J. The facts leading to this appeal, by special leave, are these: The Madras Public Service Commission, hereinafter referred to as the Service Commission, by its notification published 411 in the Fort St. George Gazette dated August 3, 1948, invited applications for appointment of Assistant Surgeons in the Madras Medical Service (Men 's Section), from persons who had rendered temporary service as Assistant Surgeons in that Service at any time between September 3, 1939 and December 31, 1947 and from persons who had rendered War Service and possessed the qualifications mentioned in paragraph 3 of the notification. Paragraph 3 of the notification, inter alia, reads: "Applicants must satisfy the Commission (a) that they are registered practitioners within the meaning of the Madras Medical Registration Act, 1914; (b) that they possess the L.M.S. degree or the M.B., B.S., degree of a University in the Province or an equivalent qualification. " The appellant, who was at the time serving as a Civil Assistant Surgeon in the Madras Medical Service on a tempo rary basis, applied for the permanent appointment to the posts notified by the Public Service Commission. In this application 'he made the following representations, which have been found ;to be false, by the Courts below: (i) that his name was Kaza Krishnamurthy; (ii) that his place of birth was Bezwada, Krishna district; (iii) that his father was K. R. Rao of Bezwada; and (iv) that he held the degree of M.B.B.S., II Class, from the Andhra Medical College, Vizagapatam, Andhra University. On these facts, the appellant was convicted of the offence under section 419 I.P.C. for having cheated the Madras Public Service Commission by personating as Kaza Krishnamurthy and misrepresenting that he had the necessary qualifications for the post advertised inasmuch as he held the degree of M.B.B.S., and that this deception of the Service Commission was likely to have caused damage to its reputation. It may now be mentioned that the appellant was also tried for offences under section 420 and section 465 I.P.C. in connection with certain acts committed by him in June and October, 1944. The trial Court acquitted him of the offence under section 465, but convicted him of the other offence. He was, however, acquitted on appeal, by the Sessions Judge, of the offence under section 420 I.P.C. The appellant 's conviction under section 419 I.P.C. was confirmed by the Sessions Judge and the revision against that 412 order was dismissed by the High Court. it is against this order of the High Court that the appellant has preferred this appeal after obtaining special leave. It has been contended for the appellant that on the facts, established in the case, no offence under section 419 I.P.C. is made out against him, as the appellant 's efficiency as a surgeon is not in dispute, he having secured good reports from his superiors during the period of his service and as therefore there could be no question of the Service Commission suffering damage in its reputation. On the contrary, it is urged for the State that the offence of cheating is made out against the appellant as he deceived the Service Commission and that such deception was likely to damage its reputation as he deceived the Service Commission and obtained from it 'property ' viz., the admission card entitling him to sit at the Competitive Examination for the appointment of candidates for these posts, and as the appellant also deceived the Government of the State by his false representations, and dishonestly induced it to appoint him in service and pay him salary during the period of his service. Section 415 I.P.C., defines 'cheating ' and reads: "Whoever, by deceiving any person, fraudulently ordishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat '. Explanation A dishonest concealment of facts is a deception within the meaning of this section". Cheating can be committed in either of the two ways des cribed in section 415 I.P.C. 'Deceiving a person ' is common in both, the ways of cheating. A person deceived may be fraudulently or dishonestly induced to deliver any property or to consent to the retention of any property by any person. The person deceived may also be intentionally induced to do or to omit to do anything which he would not have done if not deceived and which act of his caused or was likely to cause damage or harm in body, mind, reputation or property. The Courts below, as already stated, found that the appel lant cheated the Service Commission by deceiving that he held the degree of M.B.B.S. and by intentionally inducing the: 413 Commission to recommend his appointment to the post of Civil Assistant Surgeon, 11 Class, and that this act of the Service Commission was likely to damage its reputation as the appellant did not really possess the degree of M.B.,B.S. Assuming, without deciding, that such a deception of the Service Commission and its recommendation could, in certain circumstances, cause damage to its reputation, we are of opinion that in the circumstances of this case there was no likelihood of the causing of such damage to its reputation. There is nothing on the record to show that the Service Commission could have ordinarily detected the deception or that the appointment of the applicant to the post in the Medical Service was the appointment of a person who proved to be inefficient. On the contrary, the evidence on the record shows that for about 10 years between his appointment and the institution of this case, he served efficiently and obtained good reports from the Departmental Superiors. His incompetency for the post was due to his having not obtained the minimum academic qualifications prescribed for the candidates for these posts. We are therefore of opinion that the appellant has not committed the offence of 'cheating ' as defined in the latter part of section 415 I.P.C., even though he had deceived the Service Commission by re presenting himself to be a duly qualified candidate, and thus induced it to select him for the post. It was argued for the State that the Public Service Commission held a competitive examination and must have therefore issued an admission card to the appellant entitling him to sit at that competitive examination and that therefore the appellant having induced by deception the Service Commission to deliver to him the admission card which is 'property ', committed the offence of 'cheating ' as defined in the first part of section 415 I.P.C. There is no force in this contention for the simple reason that there is nothing on the record to indicate that an admission card was issued entitling the appellant to sit at the competitive examination. In fact, no examination as such took place, and the contention for the respondent appears to have been made under a misapprehension arising out of the letter of the Secretary of the Service Commission to the Surgeon General with the Government of Madras stating that he was enclosing the list containing the names and other particulars of 45 candidates who were successful at the competitive examination held by the Commission for the direct recruitment of Civil Assistant Surgeons, Class II (Men) in the Madras Medical Service. It is however clear from the record that the candidates were simply interviewed by the Commission. There is nothing on the record to show that any written examination to which admission was by admission cards, took place. The judgment of the Magistrate states: 414 "The accused was interviewed by the Service Commission as seen from Exhibit P 70, extract of Service Commission particulars". The same statement is made in the judgment of the Sessions Judge who said: "The accused sent an application exhibit P 72. . showing that he passed M.B.,B.S. degree examination, and on receiving it and interviewing him, the Public Service Commission selected him as Civil Assistant Surgeon, Class 1". The High Court states the same in its judgment. It said: "In 1948 he sent an application to the Madras public Service Commission for selection as class 11 Civil Assistant Surgeon and was selected as such following an interview by the said body". In these circumstances, we cannot hold merely on the basis of suggestions, that any competitive written examination was held and that any admission card was issued to the appellant entitling him to sit at the examination and, consequently, cannot hold that the offence of cheating by dishonestly inducing the Service Commission to deliver him property was committed by the appellant. The only other question to determine now is whether the appellant deceived the Government of Madras and dishonestly induced it to deliver something in the form of salary to the appellant. It is urged that the appointment to the post lay with the Government and not with the Service Commission and that 'the Government would not have appointed him to the post in the Medical Service if it had not believed that the appellant possessed the necessary qualifications which, in his case, would be a degree of M.B., B.S., and that such a belief was entertained by the Government on account of the deception practised by the appellant in misrepresenting in his application that he held such a degree. On the other hand, it is contended for the appellant that the delivery of 'property ' is to be by the person deceived, in view of the language of section 415 I.P.C., and that the person deceived, if any, was the Service Commission and not the Government, the application containing the misrepresentation having been made to the Service Commission and not to the Government. We accept the contention for the respondent. The ap pointments to the Medical Services are made by Government. The Service Commission simply selected the candidates and recommends their names to Government for appointment. This is clear from letter Exhibit P. 47 from the Secretary to the Service Commission to the Surgeon General with the Government of Madras. The letter refers to the enclosing 415 of a list containing the names and other particulars of the candidates who were successful at the examination, their names being arranged in order of merit. It refers to the relaxing of a certain rule in view of the paucity of candidates and states that they may be appointed, if necessary, pending receipt of the certificate of physical fitness and a further communication from the commission. This is also clear from the provisions of the Government of India Act, 1935. Section 241 provided that appointments in connection with the affairs of a Province will be made by the Governor of the Province. Sub section (1) of section 266 makes it a duty of the Provincial Public Service Commission to conduct examinations for appointments to the Services of a Province. Clause (a) of sub section (3) provides that the Provincial Public Service Commission shall be consulted on all matters relating to methods of recruitment to civil services and for civil posts and cl. (b) provides that it shall be consulted on the principles to be followed in making appointments to civil services and posts and on the suitability of candidates for such appointments. The Public Service Commission is constituted in pursuance of the provisions of section 264. It is thus a statutory body and independent of the Government. This aspect of a Public Service Commission was emphasized in State of U.P. vs Manbodhan Lal Srivastava(1) when considering the corresponding provisions of article 320 of the Constitution. This Court said: "Once, relevant regulations have been made, they are meant to be followed in letter and in spirit and it goes without saying that consultation with the Commission on all disciplinary matters affecting a public servant has been specifically provided for in order, first, to give an assurance to the Services that a wholly independent body, not directly concerned with the making of orders adversely affecting public servants, has considered the action proposed to be taken against a particular public servant, with an open mind; and, secondly, to afford the Government unbiassed advice and opinion on matters vitally affecting the morale of public services". It is in view of these provisions that the Public Service Commission invites applications for appointment to the various posts under the Government and subsequently makes a selection out of the candidates for appointment to those posts. The selection may be after holding a written examination Dr after interviewing candidates or after doing both. Names oil the candidates selected are arranged in order of merit and forwarded to the Government. The Government is expected, as a rule, (1) ; 543. 116 to make appointments to the posts from out of the list, in the same order. It has, however, discretion not to appoint any part of the persons so selected and securing a place in the order of merit which would have ordinarily led to his appointment. Any representation made in an application for appointments is really a representation made to the Government, the appointing authority, and not only to the Public Service Commission to which the application is presented and which has to deal with that application in the first instance. up to the stage ,of selection. The object of the applicant was to secure an appointment and not merely to deceive the Public Service Commission and sit at the examination or to appear at the interview. The deception was practised for that purpose and therefore there seems to be no good reason for holding that the deception came to an end once the Service Commission was deceived and had taken action on it as a result of the deception. A false representation in an application to the Service Commission continues and persists to be so till the application is considered by the final authority responsible for making the appointments and must therefore be deemed to be made to that final authority as well. In the instant case, when the recommendation of the Service Commission was sent to the Government, the qualifications of the recommended candidates, including the fact that the appellant had passed the M.B.,B.S. examination were mentioned. The Government therefore believed that the appellant possessed the degree of M.B.,B.S., that as the Service Commission had scrutinized the application in that regard and had satisfied itself that the appellant possessed that degree. The consequence of that is that the Government were led to believe that fact, which thus became a false representation. We are therefore of opinion that the appellant 's misre presentation to the Service Commission continued and persisted till the final stage of the Government passing an order of appointment and that therefore the Government itself was deceived by the misrepresentation he had made in his application presented to the Service Commission. The fact that the Service Commission is an independent statutory authority has no relevant bearing on this question. It is a statutory body as it is constituted under he provisions Of a statutes. It is independent of the Government in the sense that in its selection of candidates or in its tendering advice to the Government it does not take any hint or instructions or due from the Government. It brings to bear its own independent mind to judge the comparative merits of the candidates and their suitability to the posts they apply for. Its function is to advise the Government on the suitability of the candidates. It is therefore a statutory adviser to Government in the matter of appointment to the Services. Deception of such an adviser is 417 deception of the Government which is expected to pay heed to its advice and act accordingly. There have been cases in which servants or agents of an authority have been deceived while the loss has been suffered by the authority concerned. In such cases, the person deceiving the servants or agents has been held to have deceived the authority concerned, though no direct question was raised about the deception being made not to the authority but to is servant. The principle of the cases, to our mind, fully applies to the case of candidates deceiving the Public Service Commission and thereby deceiving the Government in believing that they satisfied the various conditions prescribed for candidates for those appointments. We may refer to some such cases. In the Crown vs Gunput(1) the accused who had produced a railway pass with an altered number before the ticket collector when traveling by a train, was held to have thereby dishonestly induced the railway company to do or omit to do what they otherwise would not have done or omitted by the production of the altered pass. The deception of the ticket collector was considered to be deception of the railway company. In P. E. Billinghurst vs H. P. Blackburn(2) certain bills were presented by a company for payment. They were checked by Government officials who were deceived by certain repre sentations made by subordinate officials through whom the bills had passed, and consequently payments were made in satisfaction of the demands under the bills. The persons concerned in causing the deception were convicted of cheating the Government. In Legal Remembrancer vs Manmatha Bhusan Chatterjee and Legal Remembrancer vs Hridoy Narain(3) it was held that if the evidence showed that responsible officers of the East Indian Railway Company and its Asansol Office were deceived and induced either to allot wagons to a certain colliery which would not otherwise have been allotted or to make out wagon chalans for the colliery which would not otherwise have been made, it was sufficient to support the allegations in the charges that the railway company was, by reason of deceipt, induced to act in a certain way. The deception of the responsible officers was thus taken to be the deception of the railway company, the possible damage to whose reputation was remote. In Emperor vs Fazal Din(4) it was held that the deception practised was likely to cause damage or harm to the person on (1)1868 Punj. Col. Case No. 6. (2) (3)I.L.R. (4)1906 L/P(D)ISCI 14 418 whom it was practised or to the railway authorities whose agent he was in the matter of appointments. In Queen Empress vs Appasaimi(1) the act of the accused in obtaining, by personation, a hall ticket from the Superintendent at a University Examination and in signing the name of another person on the examination papers was held to indicate an intention on his part to lead the University authorities to believe that the examination papers were answered by the other person. This again is on the principle that the deception of the Superintendent who was working for the University was a deception of the University itself. Similarly, in Ashwini Kumar Gupta vs Emperor(2) the accused personated another person at a University examination cheating the Registrar. It was held that this not only damaged the reputation of the Registrar, but also that of the University. Reference may also be made to the case reported as In re: Hampshire Land Company(3) in which a Society had lent money to a company on the borrowing of the directors of that company who were not competent to borrow, the resolution conferring on them the power of borrowing being invalid for certain reasons. It was held that the Society had a right to assume, in a case like that, that all the essentials of internal management had been carried out by the borrowing company. On the same principle it can be said that the Government of the State had a right to assume that the Service Commission had verified that the candidates selected by it for appointment by the Government possessed the necessary qualifications and in that view the scrutiny by the Service Commission can be said to be on behalf of the Government. The Government appointed the appellant to a post in its Medical Service on being induced by deception that he was fully qualified for the appointment. In consequence of the appointment, Government had to pay him. the salaries which fell due. It is clear therefore that the appellant, by deceiving the Government, dishonestly induced it to deliver property to him and thus committed the offence of cheating under section 415 I.P.C. as he pretended to be Kaza Krishnamurthy which he was not. The offence really committed by him was 'cheating ' by personation, punishable under section 419 I.P.C. The conviction of the appellant for this offence is therefore correct. We accordingly dismiss his appeal and order that he will surrender to his bail and serve out the sentence. Appeal dismissed.

IN-Abs

The appellant applied for a post advertised by the Madras Public Service Commission, making certain representations in his application which were found to be false. He was convicted under section 419 Indian Penal Code for having cheated the commission. This conviction was confirmed by the Sessions Judge and the revision was dismissed by the High Court. Held: (i) Cheating can be committed in either of the two ways described in section 415 Indian Penal Code. 'Deceiving a person ' is common in both the ways of cheating. (ii) The appellant 's misrepresentation to the Service Com mission continued and persisted till the final stage of the Government itself was deceived by the misrepresentation made in the application presented to the Service Commission. The Service Commission is a statutory adviser to the Government in the matter of appointment to the Service. Deception of such an adviser is deception of the Government which is expected to pay heed to its advice and act accordingly. State of U.P. vs Manbodhan Lal Srivastava ; , The Crown vs Gunput, 1868 Punj. Case No. 6, P. E. Billinqhurst vs H. P. Blackburn, , Legal Remembrancer vs Manmatha Bhusan Chatterjee, & Legal Remem brancer vs Hridoy Narian I.L.R. , Emperor vs Fazal Din , Queen Empress vs Appasami, I.L.R. Mad. 151. Ashwani Kumar Gupta vs Empreror. I.L. R. and In re: Hampshire Land Company, referred to.

Appeal No. 490 ,of 1962. Appeal by special leave from the judgment and order dated October 20, 1959 of the Punjab High Court in Regular Second Appeal No. 1591 of 1959. Kartar Singh Chawla and Harbans Singh, for the appellants. I. M. Lal and M. R. K. Pillai, for the respondents. March 24, 1964. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is a defendants ' appeal by special leave against the order of the High Court of Punjab dated October 20, 1959 dismissing summarily second appeal filed by the appellants. The suit was filed by the respondents for possession of a plot, a house and a Kaur and half share in certain lands as preferential heirs of one Pohla after the death 431 of Pohla 's widow Punjab Kaur on February 7, 1952. The plaintiffs are Mst. Nikko, sister of Pohla and Jarnail Singh, son of Mst. Har Kaur who was another sister of Pohla. The first appellant Mara is a collateral of 4th degree of Pohla and the other two appellants are Mara 's sons. The following genealogy gives the relationship of the parties: Sualtani : : : : : : Sohela Baghaila : : : : Mara defendant No.1 : : Pir Bux Jaimal Sunder : : died sonless : : and wifeless : : : : : Mohinder Singh Major : : : Singh Pohla Mst. Har Kaur Mst. Nikku defendant defendant (son) (daughter) alias Punjab No.2 No.3 : : Kaur (daughter) : : wife of Santa Shrimati Jarnail son Singh Jat, Punjab of Arjun resident of widow Plaintiff Ayali Kalan, No.2 No.2 Plaintiff No.2 The parties are Jhalli Jats of village Chomon, Tehsil and District Ludhiana. The plaintiffs claimed that the property was non ancestral and according to the Riwaj applicable to the family, sisters excluded collaterals in respect of both ancestral and non ancestral properties. It appears that after the death of Panjab Kaur, Mara got one of the fields mutated in his own name and thereafter took possession of the whole property. He made gifts to his sons of some of the properties and that is why they were joined in the suit. Mara and his elder son Mohinder Singh filed a joint written statement in which they raised many pleas the details whereof need not be given here. They claimed that according to the custom applicable to the family, sister and sister 's sons were excluded from inheritance in respect of properties whether ancestral or nonancestral. They however claimed that the property was ancestral and denied the genealogy. The Subordinate Judge, Second Class, Ludhiana framed six issues of which issues No. 2, 3 and 4 alone are important in this appeal. Those issues are: "2. Whether the property is ancestral qua Pohla and Mara?" "3. Whether the question of the nature of the property is material for the decision of tons case?" 432 "4. Whether the plaintiffs are preferential heirs to the estate of Mst. Panjabo widow of Pohla?" The parties led voluminous oral evidence in the case but the Subordinate Judge did not rely upon it. We have not been referred to any portion of this evidence in this appeal. The learned Subordinate Judge held that the suit lands were not ancestral and further that no evidence was produced to prove that the other properties were ancestral. On the third issue he referred to question No. 52 from the Riwaj i am relating to the settlements of 1882 and 1909 1910 (Exts. and D 2) in which it is stated that among the Jhalli Jats of Tehsil Ludhiana sisters or sisters ' sons never succeed. He, however, held on the authority of Ahmad vs Mohammad and others(1) that since question refers only to ancestral property and that the nature of the property was thus material. On the fourth issue he held on the strength of the answer to question No. 52 that sisters and their sons were excluded from ancestral property but as the answer was not applicable to non ancestral property the personal law would apply unless special custom was proved. He therefore placed the burden on ,he defendants relying upon Harnam Singh vs Mst. Gurdev Kaur, (2) MSt. Sukhwant Kaur vs section Balwant Singh and others(3) and Mst. Jeo vs Ujagar Singh.(4) As he had already rejected the oral evidence and there was no other proof that the property was ancestral, he decreed the suit. On appeal the District Judge, Ludhiana remitted three issues to the trial Judge and they were as follows: "Issue No. 4: Whether there is any custom by which the parties are governed according to which the plaintiffs are entitled to succeed to the ancestral as well as non ancestral left by the Pohla in preference to Mara defendant?" "Issue No. 4A: Whether under the custom by which parties are governed the defendant Mara is a preferential heir to the plaintiffs in respect of the ancestral as well as non ancestral property of Pohla deceased?" (1) A.I.R. 1936 Lah. (2) (3) A.I.R. 1951 Simla 242. (4) 433 "Issue No. 4B: If the custom set out by the parties is not proved, whether the plaintiffs are preferential heirs to Mara defendant under personal law applicable to the parties?" On these issues the report of the Subordinate Judge, First Class, Ludhiana was against the contention of the defendants. The learned District Judge held, in agreement with the Subordinate Judge, that the lands in suit were not ancestral and he held also that there was no evidence to show that among the Jhalli Jats of Ludhiana collaterals excluded sisters and sisters ' sons in respect of non ancestral property. He referred to Exts. 9, 10, 12 and 13 which were judgments in other cases as evidencing the contrary. He accordingly dismissed the appeal. The Second appeal filed thereafter was dismissed summarily by the High Court. The first question to decide is whether these lands are ancestral or non ancestral. The concurrent finding of the two courts below is that none of the properties in dispute is ancestral. The High Court prima facie saw no reason to differ from any of the conclusions of the courts below. It is contended on the strength of a Kafiat of Thulla Malla prepared at the settlement of 1882 that this land came into possession of one Sekhu who was admittedly a common ancestor in the family and the property, which is now in dispute, must be regarded as ancestral. It is contended that the finding is vitiated because the two courts below did not read this Kafiat alongwith the extracts from the Records of rights of the years 1882 and 1909 1910 in which the names of Jaimal and Sunder, sons of Baghela, and of Pir Bux son of Sohila are shown as persons in enjoyment of half shares in these lands. It is argued that the lands in suit are thus proved to be ancestral as they belonged to Sekhu the common ancestor and the Riwaj i am as disclosed in question No. 52 applies to the case. It appears, however, from the Kafiat as well as the Record of Rights that these lands were once abandoned and when people came back Sekhu got possession of some lands but in addition to these Sekhu 's descendants had acquired the share of one Dalpat in the Thulla and subsequently the entire estate of another holder, namely, Maidas was purchased by Jaimal, Sunder and Sohila. This shows that the lands in dispute are not entirely ancestral but are made up of lands which may be described as ancestral and non ancestral. Now, it has been ruled in the Punjab consistently that where lands are so mixed up that the ancestral and nonancestral, portions cannot be separated they must be regarded 434 as non ancestral, unless it is shown which are ancestral and which are not. This was laid down by the Privy Council in Avtar Singh vs Thakar Singh(1). It was held by Mr. Justice Kapur (as he then was) in Indar Singh vs Gulzara Singh and others(2) basing himself upon Saif ul Rahman vs Mohammand Ali Khan(3) and Jagtar Singh vs Raghbir Singh(4) that land ceases to be ancestral if it comes into the hands of an owner otherwise than by descent. Once these conclusions are reached, it is quite obvious that the decision of the District Judge not to apply the answer to question No. 52 to non ancestral land was right. It may be mentioned that the answers to questions refer to ancestral property only and this is now firmly established. In fact, it was not denied at the hearing. It is, however, contended that there are decisions to show that the right of the collaterals was recognised in respect of even non ancestral land to the exclusion of sisters and their sons. No ruling from the Law Reports has been brought to our notice. Some cases from the Ambala and Amritsar Dis tricts are cited but those obviously cannot be any authority, because, as is well known, custom in the Punjab changes from district to district, tehsil to tehsil and pargana to pargana. It has been ruled in this Court that paragraph 24 of Rattingan 's Digest which excludes sisters from inheritance from non ancestral property is too widely stated. (See Ujagar Singh vs Mst. Jeo(5) and (Waryam Singh and Others vs Smt. Sukhi and another) (Civil Appeal No. 452 of 1961 decided on April 23, 1963). The learned District Judge cited some instances in which the sisters and sisters ' sons were allowed to succeed in preference to collaterals. One of the documents filed by the defendants in the suit (Ext. D 6) also supports the contention of the respondents. In this view of the matter it cannot be said that the application of the personal law to the family by the courts below was erroneous. It is contended lastly that the rulings only show that collaterals of 5th degree are excluded and there is no case showing that a collateral of 4th degree was excluded. If personal law applies, as it does, a collateral of the 4th degree is also excluded. In our judgment this appeal must fail and is accordingly dismissed with costs. Appeal dismissed. (1) 35 I.A. 206. (2)A.I.R. (3) I.L.R (4) I.L.R. (5) (1959 Supp. 2 S.C.R. 781.

IN-Abs

Claiming inheritance to the properties of one P a Jhalli Jat of Ludhiana Tehsil, the respondents, who were P 's sister and sister 's son filed a suit against the appellants P 's collaterals. The Subordinate Judge decreed the suit and an appeal to the District Judge was dismissed. They held that the lands in suit were not ancestral and that there was no evidence to show that among the Jhalli Jats of Ludhiana collaterals excluded sisters and sister 's son in respect of non ancestral property. An appeal to the High Court was also dismissed. Held: (i) Where lands are so mixed up that the ancestral and non ancestral portions cannot be separated they must be regarded as non ancestral unless it is shown which are ancestral and which are not. Avtar Singh vs Thakar Singh, 35 I.A. 206, applied. Land ceases to be ancestral if it comes into the hands of any owner otherwise than by descent. Inder Singh vs Gulzara Singh, A.I.R, 1951 Punj. 345, Saif ulRahman vs Mohammad Ali Khan, I.L.R. and Jagtar Singh vs Raghbir Singh, I.L.R. , referred to. (ii) The application of the personal law to the family by the courts below was correct and paragraph 24 of Rattingan 's Digest which excludes sisters from inheritance from non ancestral property is too widely stated. Ujagar Singh vs Mst. Jeo, [1959] Supp. 2 S.C.R. 781 and Waryam Singh vs Smt. Sukhi, CA No. 452/61 decided on 23 4 1963 (non reportable) referred to.

Appeals Nos. 71 to 76 of 1953. Appeals under article 132(1) of the Constitution of India from the Judgment and Order dated 30th January, 1953, of the Orissa High Court in Original Jurisdiction Cases Nos. 13, 14, 15, 16, 25 and 26 of 1952. The facts of the case appear in the judgment. B. Somayya (K. B. Krishnamurthi, with him) for the appellant in Civil Appeal No. 71 of 1953. B. Somayya (D. Narasaraju and N. Y. Ramdas, with him) for the appellant in Civil Appeal No. 72 of 1953. D. Narasaraju and A. Krishnaswami (N. V. Ramdas, with them) for the appellant in Civil Appeal No. 73 of 1953. D. Narasaraju (N. V. Ramdas, wit him) :for the appellant in Civil Appeal No. 76 of 1953. D. V. Narasinga Rao for the appellant in Civil Appeal No. 75 of 1953. R. Patnaik for the appellant in Civil Appeal No. 74 of 1953. M. C. Setalvad, Attorney General for India, and Pitambar Misra, Advocate General of Orissa (P. A. Mehta, with them) for the respondent. May 29. The Judgment of the Court was delivered by MUKHERJEA J. 4 MUKHERJEA J. These six appeals arise out of as many applications, presented to the High Court of Orissa, under article 226 of the Constitution, by the proprietors of certain permanently settled estates within the State of Orissa, challenging the constitutional validity of the legislation known as the Orissa Estates Abolition Act of 1952 (hereinafter called "the Act") and praying for mandatory writs against the State Government restraining them from enforcing the provisions of the Act so far as the estates owned by the petitioners are concerned. The impugned Act was introduced in the Orissa State Legislature on the 17th of January, 1950, and was passed by it on the 28th September, 1951. It was reserved by the State Governor for consideration of the President and the President gave his assent on 23rd January, 1952. The Act thus receives the protection of articles 31(4) and 31A of the Constitution though it was not and could not be included in the list of statutes enumerated in the ninth schedule to the Constitution, as referred to in article 31B. The Act, so far as its main features are concerned, follows the pattern of similar statutes passed by the Bihar, Uttar Pradesh and Madhya Pradesh Legislative Assemblies. The primary purpose of the Act is to abolish all zemindary and other proprietary estates and interests in the State of Orissa and after eliminating all the intermediaries, to bring the ryots or the actual occupants of the lands in direct contact with the State Government. It may be convenient here to refer briefly to some of the provisions of the Act which are material for our present purpose. The object of the legislation is fully set out in the preamble to the Act which discloses the public purpose underlying it. Section 2(g) defines an "estate" as meaning any land held by an intermediary and included under one entry in any of the general registers of revenue paying lands and revenue free lands prepared and maintained under the law for the time being in force by the Collector of a district. The expression "intermediary" with reference to any estate is then defined and it 5 means a proprietor, sub proprietor, landlord, landholder . thikadar, tenure holder, under tenure holder and includes the holder of inam estate, jagir and maufi tenures and all other interests of similar nature between the ryot and the State. Section 3 of the Act empowers the State Government to declare, by notification, that the estate described in the notification has vested in the State free from all encumbrances. Under section 4 it is open to the State Government, at any time before issuing such notification, to invite proposals from "intermediaries" for surrender of their estates and if such proposals are accepted, the surrendered estate shall vest in the Government as soon as the agreement embodying the terms of surrender is executed. The consequences of vesting either by issue of notification or as a result of surrender are described in detail in section 5 of the Act . It would be sufficient for our present purpose to state that the primary consequence is that all lands comprised in the estate including communal lands, non ryoti lands, waste lands, trees, orchards, pasture lands, forests, mines and minerals, quarries, rivers and streams, tanks, water channels, fisheries, ferries, hats and bazars, and buildings or structures together with the land on which they stand shall, subject to the other provisions of the Act, vest absolutely in the State Government free from all encumbrances and the intermediary shall cease to have any interest in them. Under section 6, the intermediary is allowed to keep for himself his homestead and buildings and structures used for residential or trading purposes such as golas, factories, mills, etc., but buildings used for office or estate purposes would vest in the Government. Section 7 provides that an intermediary will be entitled to retain all lands used for agricultural or horticultural purposes which are in his kha 's possession at the date of vesting. Private lands of the intermediary, which were held by temporary tenants under him, would however vest in the Government and the temporary tenants would be deemed to be tenants under the Government, except where the intermediary himself holds less than 33 acres of land in any capacity. As 6 regards the compensation to be paid for the compulsory acquisition of the estates, the principle adopted is that the amount of compensation would be calculated at a certain number of years ' purchase of the net annual income of the estate during the previous agricultural year, that is to say, the year immediately preceding that in which the date of vesting falls. First of all, the gross asset is to be ascertained and by gross asset is meant the aggregate of the rents including all cesses payable in respect of the estate. From the gross asset certain deductions are made in order to arrive at the net income. These deductions include land revenue or rent including cesses payable to the State Government, the agricultural 'income tax payable in the previous year, any sum payable as chowkidary or municipal tax in respect of the buildings taken over as office or estate buildings and also costs of management fixed in accordance with a sliding percentage scale with reference to the gross income. Any other sum payable as income tax in respect of any other kind of income derived from the estate would also be included in the deductions. The amount of compensation thus determined is payable in 30 annual equated instalments commencing from the date of vesting and an option is given to the State Government to make full payment at any time. These in brief are the main features of the Act. There was a fairly large number of grounds put forward on behalf of the appellants before the High Court in assailing the validity of the Act. It is to be remembered that the question of the constitutional validity of three other similar legislative measures passed, respectively, by the Bihar, Uttar Pradesh and Madhya Pradesh Legislative Assemblies had already come for consideration before this court and this court had pronounced all of them to be valid with the exception of two very minor provisions in the Bihar Act. In spite of all the previous pronouncements there appears to have been no lack of legal ingenuity to support the present attack upon the Orissa legislation, and as a matter of fact, much of the arguments put forward on behalf of the appellants purported to have been based 7 on the majority judgment of this court in the Bihar appeals, where two small provisions of the Bihar Act were held to be unconstitutional. The arguments advanced on behalf of the appellants before the High Court have been classified by the learned Chief Justice in his judgment under three separate heads. In the first place, there were contentions raised, attacking the validity of the Act as a whole. In the second place, the validity of the Act was challenged as far as it related to certain specified items of property included in an estate, e.g., private lands, buildings, waste lands, etc. Thirdly, the challenge was as to the validity of certain provisions in the Act relating to determination of compensation payable to the intermediary, with reference either to the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income. The learned Chief Justice in a most elaborate judgment discussed all the points raised by the appellants and negatived them all except that the objections with regard to some of the matters were kept open. Mr. Justice Narasimham, the other learned Judge in the Bench, while agreeing with the Chief Justice as to other points, expressed,, in a separate judgment of his own, his suspicion about the bona fides of the Orissa Agricultural Income tax (Second Amendment) Act, 1950, and he was inclined to hold that though ostensibly it was a taxation measure, it was in substance nothing else but a colorable device to cut down drastically the income of the intermediaries so as to facilitate further reduction of their net income as provided in clause (b) of section 27(1) of the Act. He, however, did not dissent from the final decision arrived at by the Chief Justice, the ground assigned being that whenever there is any doubt regarding the constitutionality of an enactment, the doubt should always go in favour of the legislature. The result was that with the exception of the few matters that were kept open, all the petitions were dismissed. The proprietors have now come before us on appeal on the strength of certificates granted by the High Court under articles 132 and 133 8 of the Constitution as well as under section 110 of the Code of Civil Procedure. No contention has been pressed before us on behalf of the appellants attacking the constitutional validity of the Act as a whole. The arguments that have been advanced by the learned counsel for the appellants can be conveniently divided under three heads: In the first place, there has been an attack on the validity of the provisions of two other statutes, namely, the Orissa Agricultural Income tax (Amendment) Act, 1950, and the Madras Estates Land (Amendment) Act, 1947, in so far as they affect the calculation of the net income of an estate for the purpose of determining the compensation payable under the Act. In the second place, the provisions of the Act have been challenged as unconstitutional to the extent that they are applicable to private lands and buildings of the proprietors, both of which vest as parts of the estate, under section 5 of the Act. Lastly, the manner of payment of compensation money, as laid down in section 37 of the Act, has been challenged as invalid and unconstitutional. Under the first head the appellants ' main contention relates to the validity of the Orissa Agricultural Income tax (Amendment) Act of 1950. This Act, it is said, is not a bona fide taxation statute at all, but is a colorable piece of legislation, the real object of which is to reduce, by artificial means, the net income of the intermediaries, so that the compensation payable to them under the Act might be kept down to as low a figure as possible. To appreciate this contention of the appellants, it would be necessary to narrate a few relevant facts. Under section 27 (1)(b) of the Act, any sum payable in respect of an estate as agricultural income tax, for the previous agricultural year, constitutes an item of deduction which has to be deducted from the gross asset of an estate for the purpose of arriving at its net income, on the basis of which the amount of compensation is to be determined. The Estates Abolition Bill was published in the local gazette on 3rd January 1950, As has been said 9 already, it was introduced in the Orissa Legislative Assembly on the 17th of January following and it was passed on the 28th September, 1951. There was an Agricultural Income tax Act in force in the State of Orissa from the year 1947 which provided a progressive scale of taxation on agricultural income, the highest rate of tax being 3 annas in the rupee on a slab of over Rs. 30,000 received as agricultural income. On 8th January, 1950, that is to say, five days after the publication of the Abolition Bill, an amended agricultural income tax bill was published in the official gazette. At that time Mr. H. K. Mahtab was the Chief Minister of Orissa and this bill was sponsored by him. The changes proposed by this Amendment Act were not very material. The highest rate was enhanced from 3 annas to 4 annas in the rupee and the highest slab was reduced from Rs. 30,000 to Rs. 20,000. For some reason or other, however, this bill was dropped and a revised bill was_ published in the local gazette on 22nd July, 1950, and it passed into law on 10th of August following. This new Act admittedly made changes of a very drastic character regarding agricultural income tax. The rate of taxation was greatly enhanced for slabs of agricultural income above Rs. 15,000 and for the highest slab the rate prescribed was as much as 12 annas 6 pies in the rupee. It was stated in the statement of objects and reasons that the enhanced agricultural income was necessary for financing various development schemes in the State. This, it is said, was wholly untrue for it could not be disputed that almost all the persons who came within the higher income group and were primarily affected by the enhanced rates were intermediaries under the Estates Abolition Bill which was at that time before the Select Committee and was expected to become law very soon, and as the legislature had already definitely decided to extinguish this class of intermediaries, it was absurd to say that an increased taxation upon them was necessary for the development schemes. The object of this amended legislation, according to the appellants, was totally different from what it ostensibly purported 2 10 to be and the object was nothing else but to use it as a means of effecting a drastic reduction in the income of the intermediaries, so that the compensation payable to them may be reduced almost to nothing. This change in the provisions of the Agricultural Income tax Bill, it is further pointed out, synchronized with a change in the Ministry of the Orissa State. The original amended bill was introduced by the then Chief Minister, Mr. H. K. Mahtab, who was in favour of allowing suitable compensation to expropriated zemin. dars; but his successor, who introduced the revised bill, was said to be a champion of the abolition of zemindary rights with little or no compensation to the proprietors. In these circumstances, the argument of the learned counsel is that the agricultural income tax legislation being really not a taxation statute but a mere device for serving another collateral purpose constitutes a fraud on the Constitution and as such is invalid, either in its entirety, or at any rate to the extent that it affects the estate abolition scheme. We have been referred to a number of decisions on this point where the doctrine of colourable legislation came up for discussion before courts of law; and stress is laid primarily upon the pronouncement of the majority of this court in the case of The State of Bihar vs Maharaja Kameshwar Singh and Others (1) which held two provisions of the Bihar Land Reforms Act, namely, sections 4(b) and 23 (f) to be unconstitutional on the ground, among others, that these provisions constituted a fraud on the Constitution. The fact that the provisions in the amended Agricultural Income tax Act were embodied in a separate statute and not expressly made a part of the Abolition Act itself should not, it is argued, make any difference in principle. As the question is of some importance and is likely to be debated in similar cases in future, it would be necessary to examine the precise scope and meaning of what is known ordinarily as the doctrine of "colourable legislation". It may be made clear at the outset that the doctrine of colourable legislation does not involve any question (1) of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the, question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power( ' (1). A distinction, however, exists between a legislature which is legally omnipotent like the British Parliament and the laws promulgated by which could not be challenged on the ground of incompetency, and a legislature which enjoys only a limited or a qualified jurisdiction. If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression "colorable legislation" has been applied in certain Judicial pronouncements. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere presence or disguise. As was said by Duff J. in Attorney General for Ontario vs Reciprocal Insurers and Others(2), "Where the law making authority is of a limited or qualified character it may be necessary to examine with some strictness the substance of the legislation (1) Vide Cooley 's Constitutional Limitations Vol. I. p. 379. (2) at 337. 12 for the purpose of determining what is that the legislature is really doing. " In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject matter in substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation. The legislature cannot violate the constitutional prohibitions by employing an indirect method. In cases like these, the enquiry must always be as to the true nature and character of the challenged legislation and it is the result of such investigation and not the form alone that will determine as to whether or not it relates to a subject which is within the power of the legislative authority(1). For the purpose of this investigation the court could certainly examine the effect of the legislation and take into consideration its object, purpose or design(1). But these are only relevant for the purpose of ascertaining the true character and substance of the enactment and the class of subjects of legislation to which it really belongs and not for finding out the motives which induced the legislature to exercise its powers. It is said by Lefroy in his well known work on Canadian Constitution that even if the legislature avow on the face of an Act that it intends thereby to legislate in reference to a subject over which it has no jurisdiction, yet if the enacting clauses of the Act bring the legislation within its powers, the Act cannot be considered ultra vires(3). In support of his contention that the Orissa Agricultural Income tax (Amendment) Act of 1950 is a colorable piece of legislation and hence ultra vires the Constitution, the learned counsel for the appellants, as said above, placed considerable reliance upon the majority decision of this court in the case of The State of Bihar vs Sir Kameshwar Singh(4), where two clauses (1) Vide Attorney General for Ontario vs Reciprocal Insurers and Others, at 337. (2) Vide Attorney General for Alberta vs Attorney General for Canada, [19391 A.C. I 17 at 130. (3) See Lefroy on Canadian Constitution, page 75. (4) 13 of the Bihar Land Reform Act were held to be un constitutional as being colourable exercise of legislative power under entry 42 of List III of Schedule VII of the Constitution. The learned counsel has also referred us, in this connection, to a number of cases, mostly of the Judicial Committee of the Privy Council, where the doctrine of colourable legislation came up for consideration in relation to certain enactments of the Canadian and Australian legislatures. The principles laid down in these decisions do appear to us to be fairly well settled, but we do not think that the appellants in these appeals could derive much assistance from them. In the cases from Canada, the question invariably has been whether the Dominion Parliament has, under colour of general legislation, attempted to deal with what are merely provincial matters, or conversely whether the Provincial legislatures under the pretence of legislating on any of the matters enumerated in section 92 of the British North America Act really legislated on a matter assigned to the Dominion Parliament. In the case of Union Colliery Company of British, Columbia Ltd. vs Bryden( ), the question raised was whether section 4 of the British Columbian Coal Mines Regulation Act, 1890, which prohibited China men of full age from employment in under ground coal working, was, in that respect, ultra vires of the Provincial legislature. The question was answered in the affirmative. It was held that if it was regarded merely as a coal working regulation, it could certainly come within section 92, sub section (10) or (13), of the British North America Act; but its exclusive application to Chinamen, who were aliens or naturalised subjects, would be a statutory prohibition which was within the exclusive authority of the Dominion Parliament, con ferred by section 91, sub section (25), of the Act. As the Judicial Committee themselves explained in a later case(2), the regulations in the British Columbian Act "were not really aimed at the regulation of coal mines at all, but were in truth a device to deprive the Chinese, (1) (2) Vide Cunningham vs Tomeyhomma at 157. 14 naturalised or not, of the ordinary rights of the inhabit ants of British Columbia and in effect to prohibit their continued residence in that province since it prohibited their earning their living in that province. " On the other hand, in ReInsurance Act of Canada(1), the Privy Council had to deal with the constitutionality of sections 11 and 12 of the Insurance Act of Canada passed by the Dominion Parliament under which it was declared to be unlawful for any Canadian company or an alien, whether a natural person or a foreign company, to carry on insurance business except under a licence from the Minister, granted pursuant to the provisions of the Act. The question was whether a foreign or British insurer licensed under the Quebec Insurance Act was entitled to carry on business within that Province without taking out a licence under the Dominion Act? It was held that sections 1 1 and 12 of the Canadian Insurance Act, which required the foreign insurers to be licensed, were ultra vires, since in the guise of legislation as to aliens and immigration matters admittedly within the Dominion authority the Dominion legislature was seeking to intermeddle with the conduct of insurance business which was a subject exclusively within the provincial authority. The whole law on this point was thus summed up by Lord Maugham in Attorney General for Alberta vs Attorney General for Canada(2): "It is not competent either for the Dominion or a Province under the guise, or the pretence, or in the form of an exercise of its own powers to carry out an object which is beyond its powers and a trespass on the exclusive power of the other." The same principle has been applied where the question was not of one legislature encroaching upon the exclusive field of another but of itself violating any constitutional guarantee or prohibition. As an illustration of this type of cases we may refer to the Australian case of Moran vs The Deputy Commissioner of Taxation for New South Wales(3). What happened (1)[1932] A.C. 41. (3) [1940]A.C.838. (2)[1939] A.C. 117 at 130. 15 in that case was that in pursuance of a joint Commonwealth and States scheme to ensure to wheat growers in all the Australian States "a payable price for their produce " a number of Acts were passed by the Commonwealth Parliament imposing taxes on flour sold in Australia for home consumption, so as to provide a fund available for payment of moneys to wheat growers. Besides a number of taxing statutes, which imposed tax on flour, the Wheat Industry Assistance Act No. 53 of 1938 provided for a fund into which the taxes were to be paid and of which certain payments were to be made to the wheat growers in accordance with State legislation. In the case of Tasmania where the quantity of wheat grown was relatively small but the taxes were imposed as in the other States, it was agreed as a part of the scheme and was provided by section 14 of the Wheat Industry Assistance Act that a special grant should be made to Tasmania, not subject to any federal statutory conditions but intended to be applied by the Government of Tasmania, in paying back to Tasmanian millers, nearly the whole of the flour tax paid by them and provision to give effect to that purpose was made by the Flour Tax Relief Act No. 40 of 1938 of the State of Tasmania. The contention raised was that these Acts were a part of a scheme of taxation operating and intended to operate by way of discriminating between States or parts of States and as such were contrary to the provisions of section 51(ii) of the Commonwealth Australian Constitution Act. The matter came up for consideration before a full court of the High Court of Australia and the majority of the Judges came to the conclusion that such legislation was protected by Section 96 of the Constitution, which empowered the Parliament of the Commonwealth to grant financial assistance to any State on such terms and conditions as the Parliament thought fit. Evatt J. in a separate judgment dissented from the view and held that under the guise of executing the powers under section 96 of the Constitution, the legislature had really violated the constitutional prohibition laid down in section 51(ii) of the Constitution. There was an appeal taken to the Privy Council. The Privy Council 16 affirmed the judgment of the majority but pointed out that " cases may be imagined in which a purported exercise of the power to grant financial assistance under section 96 would be merely colourable. Under the guise and pretence of assisting a State with money, the real substance and purpose of the Act might simply be to effect discrimination in regard to taxation. Such an Act might well be ultra vires the Commonwealth Parliament. " We will now come to the decision of the majority of this court regarding two clauses in the Bihar Land Reforms Act which seems to be the sheet anchor of the appellants ' case(1). In that case the provisions of sections 23(f) and 4(b) of the Bihar Land Reforms Act were held to be invalid by the majority of this court not on the ground that, in legislating on these topics, the State legislature had encroached upon the exclusive field of the Central legislature, but that the subjectmatter of legislation did not at all come within the ambit of item No. 42 of List III, Schedule VII of the Constitution under which it purported to have been enacted. As these sections did not come within entry 42, the consequence was that half of the arrears of rent as well as 12 '% of the gross assets of an estate were taken away, otherwise than by authority of law and therefore there was a violation of fundamental rights guaranteed by article 31 (1) of the Constitution. This was a form of colourable legislation which made these provisions ultra vires the Constitution. It may be stated here that section 23 of the Bihar Land Reforms Act lays down the method of computing the net income of an estate or a tenure which is the subject matter of acquisition under the Act. In arriving at the net income certain deductions are to be made from the gross asset and the deductions include, among others, revenue, cess and agricultural income tax payable in respect of the properties and also the costs of management. Section 23 (f) provided another item of deduction under which a sum representing 4 to 121 % of the gross asset of an estate was to be (1) Vide The State of Bihar vs Sir Kameshwar Singh, 17 deducted as "costs of works for benefit to the raiyat". The other provision contained in section 4 (b) provides that all arrears of rent which had already accrued due to the landlord prior to the date of vesting shall vest in the State and the latter would pay only 50% of these arrears to the landlord. Both these provisions purported to have been enacted under entry 42 of List III Schedule VII of the Constitution and that entry speaks of" principles on which compensation for property acquired is to be determined and the form and manner in which that compensation is to be given. " It was held in the Bihar case(1) by the majority of this court that the item of deduction provided for in section 23(f) was a fictitious item wholly unrelated to facts. There was no definable pre existing liability on the part of the landlord to execute works of any kind for the benefit of the raiyat. What was attempted to be done, therefore, was to bring within. the scope of the legislation something which not being existent at all could not have conceivable relation to any principle of compensation. This was, therefore, held to be a colourable piece of legislation which though purporting to have been made under entry 42 could not factually come within its scope. The same principle was held applicable in regard to acquisition of arrears of rent which had become due to the landlord prior to the date of vesting. The net result of this provision was that the State Government was given the power to appropriate to itself half of the arrears of rent due to the landlord without giving him any compensation whatsoever. Taking the whole and returning the half meant nothing more or less than taking the half without any return and this, it was held, could not be regarded as a principle of compensation in any sense of the word. It was held definitely by one of the learned Judges, who constituted the majority, that item 42 of List III was nothing but the description of a legislative head and in deciding the com petency of the legislation under this entry, the court is not concerned with the justice or propriety of the (1) 3 18 principles upon which the assessment of compensation is directed to be made; but it must be a principle of compensation, no matter whether it was just or unjust and there could be no principle of compensation based upon something which was unrelated to facts. It may be mentioned here that two of the three learned Judges who formed the majority did base their decision regarding the invalidity of the provision, relating to arrears of rent, mainly on the ground that there was no public purpose behind such acquisition. It was held by these Judges that the scope of article 31(4) is limited to the express provisions of article 31(2) and although the court could not examine the adequacy of the provision for compensation contained in any law which came within the purview of article 31(4), yet that clause did not in any way debar the court from considering whether the acquisition was for any public purpose. This view was not taken by the majority of the court and Mr. Narasaraju, who argued the appeals before us, did not very properly pursue that line of reasoning. This being the position, the question now arises whether the majority decision of this court with regard to the two provisions of the Bihar Act is really of any assistance to the appellants in the cases before us. In our opinion, the question has, got to be answered in the negative. In the first place, the line of reasoning underlying the majority decision in the Bihar case(1) cannot possibly have any application to the facts of the present case. The Orissa Agricultural Income tax (Amendment) Act of 1950 is certainly a legislation on " taxing of agricultural income " as described in entry 46 of List II of the Seventh Schedule. The State legislature had undoubted competency to legislate on agricultural income tax and the substance of the amended legislation of 1950 is that it purports to increase the existing rates of agricultural income tax, the highest rate being fixed at 12 annas 6 pies in the rupee. This may be unjust or inequitable, but that does not affect the competency of the legislature. It cannot be said, as was said in the Bihar case(1), that the legislation purported to be based (1) 19 on something which was unrelated to facts and did not exist at all. Both in form and in substance the Act was an agricultural income tax legislation and agricultural income tax is certainly a relevant item of deduction in the computation of the net income of an estate and is not unrelated to it as item No. 23(f) of the Bihar Act was held to be. If under the existing law the agricultural income tax was payable at a certain rate and without any amendment or change in the law, it was provided in the Estates Abolition Act that agricultural income tax should be deducted from the gross asset at a higher rate than what was payable under law, it might have been possible to argue that there being no pre existing liability of this character it was really a non existing thing and could not be an ingredient in the assessment of compensation. But here the Agricultural Income tax (Amendment) Act was passed in August, 1950. It came into force immediately thereafter and agricultural income tax was realised on the basis of the amended Act in the following year. It was, therefore, an existing liability in 1952, when the Estates Abolition Act came into force. It may be that many of the people belonging to the higher income group did disappear as a result of the Estates Abolition Act, but even then there were people still existing upon whom the Act could operate. The contention of Mr. Narasaraju really is that though apparently it purported to be a taxation statute coming under entry 46 of List II, really and in substance it was not so. It was introduced under the guise of a taxation statute with a view to accomplish an ulterior purpose, namely, to inflate the deductions for the purpose of valuing an estate so that the compensation payable in respect of it might be as small as possible. Assuming that it is so. still it cannot be regarded as a colourable legislation in accordance with the principles indicated above, unless the ulterior purpose which it is intended to serve is something which lies beyond the powers of the legislature to legislate upon. The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do 20 directly. If a legislature is competent to do a thing directly, then the mere fact that it attempted to do it in an indirect or disguised manner, cannot make the Act invalid. Under entry 42 of List III which is a mere head of legislative power the legislature can adopt any principle of compensation in respect to properties compulsorily acquired. Whether the deductions are large or small, inflated or deflated they do not affect the constitutionality of a legislation under this entry ' The only restrictions on this power, as has been explained by this court in the earlier cases, are those mentioned in article 31(2) of the Constitution and if in the circumstances of a particular case the provision of article 31(4) is attracted to a legislation, no objection as to the amount or adequacy of the compensation can at all be raised. The fact that the deductions are unjust, exorbitant or improper does not make the legislation invalid, unless it is shown to be based on something which is unrelated to facts. As we have already stated, the question of motive does not really arise in such cases and one of the learned Judges of the High Court in our opinion pursued a wrong line of enquiry in trying to find out what actually the motives were which impelled the legislature to act in this manner. It may appear on scrutiny that the real purpose of a legislation is different from what appears on the face of it, but it would be a colourable legislation only if it is shown that the real object is not attainable to it by reason of any constitutional limitation or that it lies within the exclusive field of another legislature. The result is that in our opinion the Orissa Agricultural Income tax (Amendment) Act of 1950 could not be held to be a piece of colourable legislation, and as such invalid. The first point raised on behalf of the appellants must therefore fail. The other point raised by the learned counsel for the appellants under the first head of his arguments relates to the validity of certain provisions of the Madras Estates Land (Orissa Amendment) Act of 1947. This argument is applicable only to those estates which are 21 situated in what is known as ex Madras area, that is to say, which formerly belonged to the State of Madras but became a part of Orissa from 1st April, 1936. The law regulating the relation of landlord and tenant in these areas is contained in the Madras Estates Land Act of 1908 and this Act was amended with reference to the areas situated in the State of Orissa by the amending Act XIX of 1947. The provisions in the amended Act, to which objections have been taken by the learned counsel for the appellants, relate to settlement and reduction of rents payable by raiyats. Under section 168 of the Madras Estates Land Act, settlement of rents in any village or area for which a record of rights has been published can be made either on the application of the landholder or the raivats. On such application being made, the Provincial Government may at any time direct the Collector to settle fair and equitable rents in respect of the lands situated therein. Sub section (2) of section 168 expressly provides that in settling rents under this section, the Collector shall presume, until the contrary is proved, that the existing rate of rent is fair and equitable, and he would further have regard to the provisions of this Act for determining the rates of rent payable by raiyats. Section 177 provides that when any rent is settled under this chapter, it can neither be enhanced nor reduced for a period of 20 years, except on grounds specified in sections 30 and 38 of the Act respectively. The amending Act of 1947 introduced certain changes in this law. A new section, namely, section 168 A was. introduced and a further provision was added to section 177 as sub section (2) of that section, the original section being renumbered as sub section (1). Section 168 A of the amended Act runs as follows: (1) Notwithstanding anything contained in this Act the Provincial Government may, on being satisfied that the exercise of the powers hereinafter mentioned is necessary in the interests of public order or of the local welfare or that the rates of rent payable in money or in kind whether commuted, settled or 22 otherwise fixed are unfair or inequitable invest the Collector with the following powers: (a) Power to settle fair and equitable rents in cash; (b) Power, when settling rents to reduce rents if in the opinion of the Collector the continuance of the existing rents would on any ground, whether specified in this Act or not, be unfair and inequitable. (2) The power given under this section may be made exercisable within specified areas either generally or with reference to specified cases or class of cases. " Sub section (2) which has been added to section 177 stands thus: " 2(a) Notwithstanding anything in sub section (1) where rent is settled under the provisions of section 168 A, the Provincial Government may either retrospectively or prospectively prescribe the date on which such settlement shall take effect. In giving retrospective effect the Provincial Government may, at their discretion, direct that the rent so settled shall take effect from a date prior to the commencement of the Madras Estates Land (Orissa Amendment) Act, 1947. " The appellants ' contention is that by these amended provisions the Provincial Government was authorised to invest the Collector with power to settle and reduce rents, in any way he liked, unfettered by any of the rules and principles laid down in the Act and the Provincial Government was also at liberty to direct that the reduction of rents should take effect retrospectively, even with reference to a period for which rents had already been paid by the tenant. Under section 26 of the Orissa Estates Abolition Act, the gross asset of an estate is to be calculated on the basis of rents payable by raiyats for the previous agricultural year. According to the appellants, the State Government made use of the provisions of the amended Madras Estates Land (Orissa Amendment) Act to reduce arbitrarily the rents payable by raiyats and further to make the reduction take effect retrospectively, so that the diminished rents could be reckoned 23 as rents for the previous year in accordance with the provision of section 26 of the Estates Abolition Act and thus deflate the basis upon which the gross asset of an estate was to be computed. It is conceded by the learned counsel for the appellants that the amendments in the Madras Estates Land Act are no part of the Estates Abolition Act of Orissa and there is no question of any colourable exercise of legislative powers in regard to the enactment of these provisions. The legislation, however, has been challenged, as unconstitutional, on two grounds. First of all, it is urged that by the amended sections mentioned above, there has been an improper delegation of legislative powers by the legislature to the Provincial Government, the latter being virtually empowered to repeal existing laws which govern the relations between landlord and tenant in those areas. The other ground put forward is that these provisions offend against the equal protection clause embodied in article 14 of the Constitution. It is pointed out that the Provincial Government is given unfettered discretion to choose the particular areas where the settlement of rent is to be made. The Government has also absolute power to direct that the reduced rents should take effect either prospectively or retrospectively in particular cases as they deem proper. It is argued that there being no principle of classification indicated in these legislative provisions and the discretion vested in the Government being an uncontrolled and unfetter ed discretion guided by no legislative policy, the pro visions are void as repugnant to article 14 of the Con stitution. In reply to these arguments it has been contended by the learned Attorney General that, apart from the fact as to whether the contentions are well founded or not, they are not relevant for purposes of the present case. The arguments put forward by the appellants are not grounds of attack on the validity of the Estates Abolition Act, which, is the subject matter of dispute in the present case, and it is not suggested that the provisions of the Estates Abolition Act relating to 24 the computation of gross asset on the basis of rents payable by raiyats is in any way illegal. The grievance of the appellants in substance is that the machinery of the amended Act is being utilised by the Government for the purpose of deflating the gross asset of an estate. We agree with the learned Attorney General that if the appellants are right in their contention, they can raise these objections if and when the gross assets are sought to be computed on the basis of the rents settled under the above provisions. If the provisions are void, the rents settled in pursuance thereof could not legitimately form the basis of the valuation of the estate under the Estates Abolition Act and it might be open to the appellants then to say that for purposes of section 26 of the Estates Abolition Act, the rents payable for the previous year would be the rents settled under the Madras Estates Land Act, as it stood unamended before 1947. The learned counsel for the appellants eventually agreed with the views of the Attorney General on this point and with the consent of both sides we decided to leave these questions open. They should not be deemed to have been de cided in these cases. The appellants ' second head of arguments relates to two items of property, namely, buildings and private lands of the intermediary, which, along with other interests, vest in the State under section 5 of the Act. There are different provisions in the Act in regard to different classes of buildings. Firstly, dwelling houses used by an intermediary for purposes of residence or for commercial or trading purposes remain with him on the footing of his being a tenant under the State in respect to the sites thereof and paying such fair and equitable rent as might be determined in accordance with the provisions of the Act. In the second place, buildings used primarily as office or kutchery for man agement of the estates or for collection of rents or as rest houses for estate servants or as golas for storing of rents in kind vest in the State and the owner is allowed compensation in respect thereof. In addition to these, there are certain special provisions in the Act 25 relating to buildings constructed after 1st January, 1946, and used for residential or trading purposes, in respect to which the question of bona fides as to its construction and use might be raised and investigated by the Collector. There are separate provisions also in respect to buildings constructed before 1st January, 1946, which were not in possession of the intermediary at the date of coming into force of the Act. The questions arising in regard to this class of cases have been left open by the High Court and we are not concerned with them in the present appeals. No objection has been taken by the appellants in respect to the provisions of the Act relating to buildings used for residential or trade purposes. Their objections relate only to the building used for estate or office purposes which vest in the State Government under the provisions of the Act. In regard to these provisions, it is urged primarily that the buildings raised on lands do not necessarily become parts of the land under Indian law and the legislature, therefore, was wrong in treating them as parts of the estate for purposes of acquisition. This contention, we are afraid, raises an unnecessary issue with which we are not at all concerned in the present cases. Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State legislature from providing as a part of the estates abolition scheme that buildings, lying within the ambit of an estate and used primarily for management or administration of the estate. would vest in the Government as appurtenances to the estate itself. This is merely ancillary to the acquisition of an estate and forms an integral part of the abolition scheme. Such acquisition would come within article 31(2) of the Constitution and if the conditions laid down in clause (4) of that article are complied with, it would certainly attract the protection afforded by that clause. Compensation has been pro. vided for these buildings in section 26(2) (iii) of the 4 26 Act and the annual rent of these buildings determined in the prescribed manner constitutes one of the elements for computation of the gross asset of an estate. The contention of the appellants eventually narrows down to this that the effect of treating the annual valuation of the buildings as part of the gross asset of the estate in its entirety, leads to unjust results, for if these buildings were treated as separate properties, the intermediaries could have got compensation on a much higher scale in accordance with the slab system adopted in the Act. To this objection, two answers can be given. In the first place, if these buildings are really appurtenant to the estate, they can certainly be valued as parts of the estate itself. In the second place, even if the compensation provided for the acquisition of the buildings is not just and proper, the provision of article 31 (4) of the Constitution would be a complete answer to such acquisition. As regards the private lands of the proprietor, the appellants have taken strong exception to the provisions of the Act so far as they relate to private lands in possession of temporary tenants. In law these lands are in possession of the proprietor and the temporary tenants cannot acquire occupancy rights therein, yet they vest, under the Act, in the State Government on the acquisition of an estate, the only exception being made in cases of small land holders who do not hold more than 33 acres of land in any capacity. Section 8(1) of the Act gives the temporary tenants the right to hold the lands in their occupation under the State Government on the same terms as they held them under the proprietor. Under the Orissa Tenants Protection Act, which is a temporary Act, the landholder is not entitled to get contractual or competitive rents from these temporary tenants in possession of his private lands and the rent is fixed at two fifths of the gross produce. It is on the basis of this produce rent which is included in the computation of the gross asset of an estate under section 26 of the Act, that the land holder gets compensation in respect to the private lands in occupation of temporary tenants. The appellants ' main contention is that although in these lands 27 both the melvaram and kudivaram rights, that is to say, both the proprietor 's as well as the raiyat 's interests are united in the land holder, the provisions of the Act indicated above have given no compensation whatsoever for the kudivaram or the tenant 's right and in substance this interest has been confiscated without any return. This, in our opinion, is a wrong way of looking at the provisions for compensation made in the Act. The Orissa Act, like similar Acts passed by the legislatures of other States, provides for payment of compensation on the basis of the net income of the whole estate. One result of the adoption of this principle, undoubtedly is, that no compensation is allowed in respect of potential values of properties; and those parts of an estate which do not fetch any income have practically been ignorned. There is no doubt that the Act does not give anything like a fair or market price of the properties acquired and the appellants may be right in their contention that the compensation allowed is inadequate and improper; but that does not affect the constitutionality of the provisions. In the first place, no question of inadequacy of compensation can be raised in view of the provision of article 31(4) of the Constitution and it cannot also be suggested that the rule for payment of compensation on rental basis is outside the ambit of entry 42 of List Ill. This point is concluded by the earlier decision of this court in Raja Suriya Pal Singh vs The State of U.P.(1) and is not open to further discussion. Mr. Narasaraju is not right in saying that the compensation for the private lands in possession of temporary tenants has been given only for the landlord 's interest in these properties and nothing has been given in lieu of the tenant 's interest. The entire interest of the proprietor in these lands has been acquired and the compensation payable for the whole interest has been assessed on the basis of the net income of the property as represented by the share of the produce payable by the temporary tenants to the landlord. It is true that the Orissa Tenants Protection Act is a temporary statute, but whether or not it is renewed in future, the (1) 28 rent fixed by it has been taken only as the measure of tile income derivable from these properties at the date of acquisition. Mr. Narasaraju further argues that his clients are not precluded from raising any objection on the ground of inadequacy of compensation in regard to these private lands by reason of article 31(4) of the Constitution, as the provision of that article is not attracted to the facts of the present case. What is said is, that the original Estates Abolition Bill, which was pending before the Orissa Legislature at the time when the Constitution came into force, did not contain any provision that the private lands of the proprietor in occupation of temporary tenants would also vest in the State. This provision was subsequently introduced by way of amendment during the progress of the Bill and after the Constitution came into force. It is argued, therefore, that this provision is not protected by article 31(4). The contention seems to us to be manifestly untenable. Article 31(4) is worded as follows: "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). " Thus it is necessary first of all that the Bill, which ultimately becomes law, should be pending before the State Legislature at the time of the coming into force of the Constitution. That Bill must be passed by the Legislature and then receive the assent of the President. It is the law to which the assent of the President is given that is protected from any attack on the ground of non compliance with the provisions of clause (2) of article 31. The fallacy in the reasoning of the learned counsel lies in the assumption that the Bill has got to be passed in its original shape without any change whatsoever, before the provision of clause (4) of article 31 could be attracted. There is no 29 warrant for such assumption in the language of the clause. The expression "passed by such Legislature" must mean "passed with or without amendments" in accordance with the normal procedure contemplated by article 107 of the Constitution. There can be no doubt that all the requirements of article 31(4) have been complied with in the present case and consequently there is no room for any objection to the legislation on the ground that the compensation provided by it is inadequate. The last contention of the appellants is directed against the provision of the Act laying down the manner of payment of the compensation money. The relevant section is section 37 and it provides for the payment of compensation together with interest in 30 annual equated instalments leaving it open to the State to make the payment in full at any time prior to the expiration of the period. The validity of this provision has been challenged on the ground that it is a piece of colourable legislation which comes within the principle enunciated by the majority of this court in the Bihar case referred to above. It is difficult to appreciate this argument of the learned counsel. Section 37 of the Act contains the legislative provision regarding the form and the manner in which the compensation for acquired properties is to be given and as such it comes within the clear language of entry 42 of List III, Schedule VII of the Constitution. It is not a legislation on something which is non existent or unrelated to facts. It cannot also be seriously contended that what section 37 provides for, is not the giving of compensation but of negativing the right to compensation as the learned counsel seems to suggest. There is no substance in this contention and we have no hesitation in overruling it. The result is that all the points raised by the learned counsel for the appellants fail and the appeals are dismissed. Having regard to some important constitutional questions involved in these cases which needed clearing up, we direct that each party should bear his own costs in these appeals. Appeals dismissed. 30 Agent for the appellant in Civil Appeal Nos. 71, 72, 73, 75 & 76: M. section K. Sastri. Agent for the appellant in Civil Appeal No. 74: R.C. Prasad.

IN-Abs

The Bill relating to the Orissa Estates Abolition Act, 1952, was published in the Gazette on the 3rd January, 1950. It contained a provision that any sum payable for agricultural incomes Tax for the previous year should be deducted from the gross asset of an estate for the purpose of arriving at its not income on the basis on which compensation was payable to the estate owners. On the 8th January, 1950, a Bill to amend the Orissa Agricultural Income tax Act of 1947 so as to enhance the highest rate of tax from 3 annas in the rupee to 4 annas and reduce the highest slab from Rs. 30,000 to Rs. 20,000 was published in the Gazette. This Bill was dropped by the next Chief Minister who introduced a revised Bill on the 22nd July, 1950, enhancing the highest rate to 12 annas 6 pies in the rupee and reducing the highest slab to Rs. 15,000 and this was passed into law in August, 1950. It was contended that the Orissa Agricultural Income tax (Amendment) Act of 1950 was a fraud on the Constitution and as such invalid as it was a colourable legislation to effect a drastic reduction in the compensation payable under the Estates Abolition Act: Held" (i) that the question whether a law was a colourable legislation and as such void did not depend on the. motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgression being veiled by what appears, on proper,examination, to be a mere pretence or disguise. The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do directly. 2 (ii) The impugned Act was in substance and form a law in respect to the "taxing of agricultural income", as described in entry 46 of List 11 of the Seventh Schedule to the Constitution and, as the State Legislature was competent to legislate on this subject, the Act was not void, and the fact that the object of the legislature was to accomplish another purpose, viz., to reduce the compensation payable under the Estates Abolition Act, cannot render this law a colourable legislation and void as such, as the ulterior object itself was not beyond the competence of the legislature. (iii) Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State Legislature from providing as part of an estate abolition scheme that buildings lying within the ambit of an estate and used primarily for the management or administration of the estate should vest in the Government as appurtenances to the estate itself. Such acquisition would come within article 31(2) of the Constitution and if the conditions laid down in clause (4) of that article are complied with, it would be protected by that clause even if the compensation provided for is not just and proper. (iv) The provisions in the Orissa Estates Abolition Act, 1950, relating to private lands in the possession of temporary tenants are not unconstitutional. Merely because compensation was based on the produce rent payable by the tenants it cannot be said that the landholder was given compensation only for the landholder 's rights and not for the kudivaram (tenant 's) rights also. (v) The expression "passed by such legislature" in article 31(4) of the Constitution means passed with or without amendments and the fact that the provisions relating to vesting of private lands did not form a part of the Estates Abolition Bill as originally introduced but were added to the Bill after the new Constitution had come into force would not deprive those provisions of the protection of article 31(4) of the Constitution. (vi) The provision contained in section 37 of the Orissa Estates Abolition Act, 1950, for payment of compensation by 30 annual instalments is not a piece of colourable legislation. It comes clearly within entry 42 of List III of Schedule VII of the Constitution. [The question whether the provisions of the Madras Estates Land (Orissa Amendment) Act, 1947, which empowered the Collector to settle and reduce rents were void because they involved an improper delegation of legislative powers to the executive and contravened article 14 of the Constitution was raised, but with the consent of the counsel, their Lordships decided to leave the question open as it did not relate to the validity of the Orissa 3 Estates Abolition Act, which was the subject matter in dispute in the present case]. State of Bihar vs Maharajah Kameshwar Singh and Others ([1952] S.C.R. 889) distinguished. Surya Pal Singh vs The State of Uttar Pradesh ([1952] S.C.R. 1056) followed. Attorney General for Ontario vs Reciprocal Insurers and Others ([1924] A.C. 328), Attorney General for Alberta vs Attorney General for Canada ([1939] A.C. 117), Union Colliery Co. of Br. Columbia Ltd. vs Bryden ([1899] A.C. 580), Cunningham vs Tomeyhomma ([1903] A.C. 151), Be Insurance Act of Canada ([1932] A.C. 41), Moran vs Deputy Commissioner for Taxation, New South Wales ([1940] A.C. 838) referred to.

MINAL APPEAL No. 193 of 1962. Appeal from the judgment and order dated March 12,1962 of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Reference No. 21 of 1961. O. P. Rana, Atiqur Rehman and C. P. Lal, for the appellant. The respondent did not appear. March 24, 1964. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal by certificate granted by the High Court of Allahabad (Lucknow Bench) against its order dated March 12, 1962 quashing the trial of the respondents for an offence under section 15(1) of the Uttar Pradesh Private Forests Act (VI of 1949). This trial com menced on February 11, 1959 on a complaint by the District Magistrate Bahraich. The charge against the first respondent was that he sold one tamarind tree to respondent No. 2 for the purpose of felling and removing it without obtaining permission from the competent authority and that against respondent No. 2 was that he felled the tree and removed it. The complaint was transferred from one Magistrate to another 437 till it came on the file of Mr. T. B. Upadhaya who was a Magistrate of the Second Class. After Mr. Upadhaya had re corded all the evidence and examined the two respondents the powers of Magistrate, First Class were conferred on him. Thereafter he pronounced judgment in the case and finding respondents guilty he sentenced them to pay a fine of Rs. 501 each or to, undergo simple imprisonment for one month. The respondents filed an appeal before the Additional Sessions Judge, Bahraich which was later converted into a revision. The learned Additional Sessions Judge made a reference to the High Court recommending that the trial before the Magistrate, First Class be quashed as he had no jurisdiction to try the offence. This reference was heard by Mulla, J. who did not agree with the opinion of Beg, J. In Jaddu and others vs State,(1) on which the Additional Sessions Judge had relied. Beg, J. had taken the same view in a subsequent case also Harbans Singh and others vs State.(2) Mulla, J. was of the opinion that the trial was proper, but as these rulings stood in his way, he made a reference of the case to a larger Bench. The case was heard by a Division Bench consisting of B. N. Nigam and section D. Singh, JJ. The learned Judges differed amongst themselves: Mr. Justice Nigam was of the view that the trial was valid but Mr. Justice Singh did not agree with him. The case was then placed before Mr. Justice Verma who agreed with Mr. Justice Singh. As a result, the conviction and sentence passed on the respondents were set aside. The case was, however, certified by the High Court as fit for appeal and the present appeal has been filed. Which of the two views is the right one is the short question in this appeal. Section 15(2) of the Uttar Pradesh Private Forests Act confers jurisdiction to try offences under the first sub section on Magistrates of the Second and the Third Class. The trial in the present case was by a Magistrate of the First Class, and if there was no jurisdiction in him to try the offence then the proceedings were rightly declared void under section 530(p) of the Code of Criminal Procedure. According to the opinion of Mr. Justice Nigam which finds support from the order of reference made by Mulla, J., there is nothing to prevent the First Class Magistrate from trying an offence under section 15(1) of the Act, because under Schedule III of the Code of Criminal Procedure the ordinary powers of a Magistrate, First Class include the ordinary powers of a Magistrate of the Second Class. According to the other view, the Forests Act confers jurisdiction on Magistrates of the Second and the Third Class and this excludes jurisdiction of any superior Magistrate. (1) A.I.R. 1952 All.873. (2) A.I.R. 1953 All.179. 438 Section 15 of the Forests Act reads as follows "15, Offences under this Chapter and trial of such offences and penalties thereof: (1) Any person who contravenes any of the provisions of this Chapter or deviates from the prescriptions of a sanctioned working plan without the previous sanction of the Forest Officer shall be punishable with fine not exceeding one hundred rupees for the first offence and with fine not exceeding one thousand rupees or simple imprisonment not exceeding three months or both for the second or any subsequent offence. (2) Offences under this section shall be triable by a Magistrate of the Second or Third Class, and proceedings under this section may be instituted on a complaint made by the landlord of the notified area or forest in respect of which the offence is alleged to have been committed or by any right holder of such a notified area or forest or by the Forest Officer or by any officer specially empowered by the Provincial Government in this behalf. (3) (4) The question is one of interpretation of the first part of sub section (2) which says that offences under section 15 shall be triable by a Magistrate of the Second or Third Class. It does riot use the phrase "any Magistrate" nor does it specify "a Magistrate of the First Class". The question is whether the words of the sub section exclude a First Class Magistrate. The answer to this, in our opinion, is furnished by sections 28 and 29 of the Code of Criminal Procedure. They provide as follows: "28. Offences under Penal Code Subject to the other provisions of this Code any offence under the Indian Penal Code may be tried (a) by the High Court, or (b) by the Court of Session, or (c) by any other Court by which such offence is shown in the eighth column of the second schedule to be triable". Offences under other laws (1) Subject to the other provisions of this Code, any offence under any other law shall, when any Court is mentioned in this behalf in such law, be tried by such court. 439 (2) When no Court is mentioned, it may be tried by the High Court or subject as aforesaid by any Court constituted under this Code by which such offence is shown in the eighth column of Second Schedule to be triable". The scheme of the Criminal Procedure Code is that it Provides separately for trial of offences under the Penal Code and for offences under any other law. The court which is to try them is indicated in the Code in the eighth column of the Second Schedule. The first part deals with offences under the Penal Code and the second part with offences under any other law. The last entry in the Second Schedule provides for the trial for offences under any other law which are punishable with imprisonment for less than one year or with fine only and they are made triable by "any Magistrate". If the matter were governed by the Second Schedule, the last entry would undoubtedly have comprehended a Magistrate, First Class. But section 29 says that offences under any other law shall be tried by that court which that law mentions and it is only when no court is mentioned that the eighth column of the Second Schedule is applicable. Here sub section (2) of section 15 mentions the courts by which offences under section 15(1) are triable and section 29(1) excludes the application of the second part of the Second Schedule. The words of sub section (1) of section 29 are peremptory. There is no escape from them. They say that 'subject to the other provisions of the, Code ' any offence under any other law shall be tried by the court when such court is mentioned in that law. A case under section 15(1) therefore, is triable only by the two courts named therein, namely, Magistrates of the Second and the Third classes and not by any other Magistrate. The appellant relies upon the words 'subject to the other provisions of the Code ' and refers to the Third Schedule. But that Schedule deals with the ordinary powers of the Magistrates under the Criminal Procedure Code. The words of the second sub section of section 15 are not rendered ineffective by the prescription of the ordinary powers of the Magistrates. To call in aid Schedule III would render the provisions of section 29 redundant and useless at least in those cases where the second part of the Second Schedule applies. What section 15(2)) does is to prescribe a particular court and in view of the words of section 29(1) no other court can try offences under section 15(1) even though the powers of those courts may be superior to those of Magistrates of the Second and the Third Class. If the Second Schedule itself, which prescribes the courts for the trial of offences under laws other than the Penal Code, is excluded, the Third Schedule cannot bring about the same result indirectly. The provisions of the Third Schedule must 440 therefore be taken to define general powers and not to create jurisdictions to try offences which the Second Schedule does. It was argued before us that there is no point in prescrib ing that the Magistrates of the Second and the Third Class can try subsequent offences because their powers under section 32 do not extend as far as the punishment prescribed by section 15(1). This question does not arise directly but it may be said that two views are possible: one is that by implication the powers of these Magistrates are extended beyond what is prescribed under section 32. The other is that in a case where the Magistrate feels that a heavier punishment should be imposed he can take recourse to the provisions of section 349 of the Code and make a recommendation to a Magistrate who can impose adequate punishment in the case. The words "subject to the other provisions of the Code" would enable this to be done. In our opinion, therefore, the scheme of the Code read with the provisions of section 15 of the Forests Act clearly show that offences under section 15 are not triable by any Magistrate as it would be if the Second Schedule were applicable. They are therefore triable by such Magistrates as have been named in the second sub section. There is good reason for holding this, because a conviction by a Magistrate of the Second or the Third Class, as the case may be, is open to an appeal whereas a conviction by a Magistrate of the First Class and a sentence of fine of Rs. 501 or under or a fine of Rs. 200/ after a summary trial is not appealable. It is possible that it was intended that a right of appeal should be conferred and therefore the trial of these offences was restricted to Magistrates of the Second and the Third Class. This was pointed out by Mr. Justice Beg in Harbans Singh and others vs State(1) and was also referred to by Mr. Justice Verma in the opinion in the present case. In our opinion, it is a circumstance which may be taken into account. It is forcefully illustrated in this case. An appeal would have lain against the same decision if the Magistrate had not been given the powers of a First Class Magistrate during the trial. The respondents were robbed of a right of appeal. In any event, in view of the clear words of section 29(1), the trial of these cases ought to have been before a court designated in section 15(2) and as the trial was before a Magistrate who was not empowered to try the offence the proceedings were rightly declared void under section 530(p) of the Code of Criminal Procedure. We accordingly hold that the decision under appeal was correct. The appeal fails and is dismissed. Appeal dismissed. (1) A.I.R. 1953 All.

IN-Abs

On a complaint by the District Magistrate the respondents were put on trial for an offence under section 15(1) of the Uttar Pradesh Private Forests Act, 1949. The charge against the first respondent was that he sold one tamarind tree to respondent No. 2 for the purpose of felling and removing it without obtaining permission from the competent authority and that against respondent No. 2 was that he felled the tree and removed it. The complaint was transferred from one Magistrate to another till it came on the file of Mr. Upadhya, a Magistrate of Second Class. After he had recorded all the evidence and examined the two respondents, the powers of Magistrate, First Class were conferred on him. Thereafter, by his judgment the respondents were found guilty and sentenced to pay a fine of Rs. 50/ each or to undergo simple imprisonment for one month. On appeal, which was later converted into a revision the Additional Sessions Judge made a reference to the High Court recommending that the trial before the Magistrate, First Class be quashed as he had no jurisdiction to try the offence. The reference was heard by Mulla, J., who was of the opinion that the trial was proper but as the rulings of the same Court stood in his way, he referred the case to a larger Bench. The case was heard by a Division Bench and the learned Judges differed amongst themselves. Mr. Justice Nigam was of the view that the trial was valid but Mr. Justice Singh did not agree with him. The case was then placed before Mr. Justice Verma who agreed with Mr. Justice Singh and the conviction and sentence passed on the respondents were set aside. According to the opinion of Mr. Justice Nigam which found support from the order of reference made by Mulla, J., there was nothing to prevent the First Class Magistrate from trying an offence under section 15(1) of the Act, because under Schedule III of the Code of Criminal Procedure the ordinary powers of a Magistrate, First Class include the ordinary powers of a Magistrate of the Second Class. According to the other view, the Forests Act confers jurisdiction on Magistrates of the Second and Third Class and this excludes jurisdiction of any superior Magistrate. On appeal by certificate: Held: (i) The words of the second sub section of section 15 of the Act or not rendered ineffective by the prescription of the ordinary powers of the Magistrates. To call in aid Schedule III would render the provisions of section 29 of the Code of Criminal Procedure redundant and useless at least in those cases where the second part of the second schedule applies. What section 15(2) does is to prescribe a particular court and in view of the words of section 29(1) no other court can try offences under section 15(1) even though the powers of those courts may be superior to those of 436 Magistrates of the Second and Third Class. In the Second Schedule itself, which prescribes the courts for the trial of offences under law other than the Penal Code, is excluded, the Third Schedule cannot bring about the same result indirectly. The provisions of the Third Schedule must therefore be taken to define general powers and not to create jurisdiction to try offences which the second schedule does. (ii) The scheme of the Code read with the provisions of triable by any Magistrate as it would be if the Second Schedule were applicable. They are therefore triable by such Magistrates as have been named in the second sub section. There is good reason for holding this, because a conviction by a Magistrate of the second or the third class, as the case may be is open to an appeal whereas a conviction by a Magistrate of the First Class and a sentence of fine of Rs. 50/ or under a fine of Rs. 200/after a summary trial is not appealable. It is a circumstance which must be taken into account. It is forcefully illustrated in this case. An appeal would have laid against the same decision if the Magistrate had not been given the powers of a First Class Magistrate during the trial. The respondents were robbed of a right of appeal. In any event, in view of the clear words of section 29(1) the trial of these cases ought to have been before a court designated in section 15(2) and as the trial was before a Magistrate who was not empowered to try the offence the proceedings were rightly declared void under section 530(p) and of the Code of Criminal Procedure. Jaddu vs State, A.I.R., 1952 All.372 and Harbans Singh vs State, A.I.R. 1953 All. 179, referred to.

Appeals Nos. 429 439, 591, 592, 597, 689, 694, 724, 725 and 727 of 1962 and 15, 139, 140, 159, 267 to 269, 331, 334, 337, 340, 342, 343, 347, 352, 389, 746 and 748 of 1963. Appeals from the judg ments and order dated December 19, 1958, March 7, 1959, March 11, 1959, April 22, 1959, April 24, 1959 in Writ Appeals Nos. 135, 122 of 1957 etc. T. V. R. Tatachari, for the appellants (in C.A. Nos. 429 to 434 and 694 of 1962 and C.A. No. 269/63). M. C. Setalvad, P. Kodandaramayya, E. V. Bhagarathi Rao and T. V. R. Tatachari, for the appellants (in C.A. Nos. 438 and 439/62). M. C. Setalvad, and R. Ganapathi Iyer, for the appellants (in C. A. Nos. 436, 437, 724, 725 and 727/62). 458 K. Srinivasamurthy and Naunit Lal, for the appellants (in C. As. Nos. 591, 582, 597, and 689/62 and 140, 267 and 268/63). K. Jayaram and R. Thiagarajan, for the appellants (in C.A. Nos. 139, 159, 330, 334, 337, 340, 342, 343, 347 and 352/63). K. R. Chaudhuri, for the appellants (in C.A. Nos. 15 and 389 of 63). A. Vedavalli and A. V. Rangam, for the appellant (in C. As. 746, and 748 of 63). D. Narsaraju, T. Anantha Babu, M. V. Goswami and B. R. G. K. Achar, for the respondents (in C. As. 435437, 724, 725 and 727/62). D. Narsaraju, T. Anantha Babu, Yogeshwar Prasad and B. R. G. K. Achar, for the respondents (in C. As. Nos. 429434, 438, 439 and 694/62 and 269 of 63). D. Narsaraju, T. Anantha Babu, M. section K. Sastri and B. R. G. K. Achar, for the respondents (in C.A. Nos. 591, 597 and 689/62 and 140, 267 and 268/63) and respondent No. 1 (in C.A. No. 592/62). J.V.K. Sharma and T.Satyanarayana, for respondent No. 2 (in C.A. No. 592/62). D. Narsaraju, T. Anantha Babu, R. Gopalakrishnan and BR. G. K. Achar, for the respondents (in C. As. Nos. 15, 139, 331, 334, 337, 340, 342, 343, 347, 352, 159, 389 and 746 748 /63). March 25, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C. J. The principal question of law which arises in this group of 37 civil appeals relates to the construction of section 3 of the Madras Essential Articles Control and Requisitioning (Temporary Powers) Act, 1949 (No. 29 of 1949) (hereinafter called 'the Act '). The dispute which has given rise to these appeals centres round the validity of two notified orders issued by the respondent, State of Andhra Pradesh on the 28th January, 1955, and 30th January, 1955 respectively, and it is the contention of the appellants that the said notified orders are outside the purview of section 3. The appellants in all these appeals are supplied electricity by the respondent for many years past, and several individual agreements have been passed between them and the respondent during the period 1946 to 1952 prescribing the terms and conditions on which the said supply would be made to them. One of these terms stipulated the rate at which the supply of electricity had to be charged 459 against the consumers. The impugned orders have purported to increase this rate, and the appellants contend that the respondent had no authority to change this important term of the contract to their prejudice by taking recourse to section 3(1) and issuing notified orders in that behalf. That, in substance, is the nature of the controversy between the parties before us. It appears that the Government of Madras, and subsequently, its successor, the respondent, had a single power grid system for the whole State comprising Tungabhadra and Machkund Hydro Electric System and the Thermal System of Nellore. The entire energy was integrated into one power system. The Government of Madras entered into agreements with several consumers in the State, including the appellants, for the supply of energy in bulk at the specified rates which were called tariffs, for the years 1951 and 1952. These agreements were to be in operation for ten years. It is common ground that these agreements did not contain any provision authorising the Government to increase the rates during their operation. The charges fixed were calculated at graded regressive rates according to increasing slabs of consumption units, and the overall unit rates including the demand charge were not to exceed 66 annas without prejudice to the monthly minimum payment and the guaranteed consumption. The Government of Andhra then issued the two impugned orders relating to Machkund and Nellore, and Tungabhadra and Chittoore District areas respectively, enhancing the agreed rates. These enhanced rates were specified in Schedules A and B attached to the said orders. According to these orders, these increased tariffs were to take effect from the date on which meter readings were to be taken in the month of February, 1955 and were to operate for the future. The increase in the rates effected by these orders was thus to operate not retrospectively, but prospectively. The impugned orders indicate that the main reason which inspired the said orders was the knowledge that the existing electricity tariffs which were formulated nearly 15 years before, had become completely uneconomic; the charges of labour and the price level of all material had enormously increased; and that in evitably meant continuously growing loss to the Government. The Accountant General made queries in respect of this recurring loss and drew pointed attention of the State Government to the deficits in the working of the Power System. Accordingly, the question of revision of tariffs was considered in the State of Madras, but was not decided because reorganisation of the States was then in contemplation. After the respondent State wits born, its Chief Engineer sumbitted proposals for 460 revisions of tariffs in all the areas covered by the relevant schemes. That is how the impugned notified orders came to be issued by the respondent. The appellants were naturally aggrieved by these orders, because they added to their liability to pay the rates for the supply of electricity by the respondent to them. Accordingly, a large number of consumers moved the Andhra Pradesh High Court under article 226 of the Constitution, and challenged the validity of the two impugned orders. The learned single Judge who heard these writ petitions upheld the appellants ' plea and came to the conclusion that the impugned orders were not justified by the authority conferred on the respondent by section 3 of the Act, and were unauthorised, illegal and inoperative. In the result, the writ petition filed by some of the appellants before us were allowed and an appropriate order was issued against the respondent restraining it from enforcing the revised tariff rates. These decisions were challenged by the respondent by preferring several Letters Patent Appeals. The Division Bench which heard these Letters Patent Appeals took a different view; it held that on its fair and reasonable con struction, section 3 did confer authority on the respondent to issue the impugned orders, and so, the challenge made to the validity of the said orders could not be sustained. That is why the Letters Patent Appeals preferred by the respondent were allowed and the writ petitions filed by the appellants were dismissed. It is against these orders that the appel lants have come to this Court with a certificate issued by the said High Court. After the Division Bench had pronounced its decision on this point, several other writ petitions were filed by other consumers, and naturally the single Judge who heard them followed the decision of the Division Bench and dismissed the said writ petitions. The consumers who were aggrieved by the decision of the learned single Judge were then allow ed to come to this Court directly by special leave, because the points which they wanted to raise were exactly the same as were raised by the other consumers who had come to this Court against the principal decision of the Division Bench. The present group of appeals thus consists of matters which have been decided by a Division Bench of the Andhra Pradesh High Court, as well as those which have been decided by a learned single Judge, and they all raise the same common question about the construction of section 3 of the Act, and the validity of the impugned notified orders. Before addressing ourselves to the question of construing section 3, it is necessary to recapitulate the legislative history of the Act. It will be recalled that during the Second World 461 War, the Government of India passed the Defence of India Act (No. 35 of 1939) on the 29th of September, 1939. By virtue of the powers conferred on the Central Government by section 2 of the said Act, several Rules came to be framed by Central Government known as the Defence of India Rules. Amongst these Rules was Rule 81(2) which clothed the Central Government with power to issue orders which may appear to the Central Government to be necessary or expedient for securing "the defence of British India, or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community". These Rules were in operation during the continuance of the war. After the war came to an end, it was realised that the eco nomic situation in the country continued to be serious, and for the proper regulation of economic affairs, it was thought necessary to continue the orders issued under the Defence of India Rule 81(2), because shortage of supply of essential articles was very much in evidence then. The purpose of continuing the orders was to ensure the supply of essential articles to the community at large at reasonable prices and to secure their equitable distribution. In due course, the Defence of India Act came to an end in 1946, but the Central Legislature thought it necessary to pass another Act to take its place and that was the Essential Supplies (Temporary Powers) Act, 1946 (No. 24 of 1946). On the same lines, the Madras Legislature passed an Act in 1946 (No. 14 of 1946). Later, it was replaced by Act No. 29 of 1949 with which we are concerned in the present appeals. After the respondent State was created under the Scheme of Reorganisation of States, it passed Act No. 1 of 1955 and this Act received the assent of the President on the 21st of January, 1955. By this Act, the Legislature of the respondent State virtually adopted the Madras Act. As a result, the impugned orders are, in substance, referable to section 3 of the Madras Act. Before we part with this topic, it may be mentioned that when the Madras Act was passed, its Schedule gave a list of the essential articles as defined by section 2(a) and these articles were 12 in number. When the Andhra Legislature passed Act No. 1 of 1955 and adopted the Schedule of essen tial articles for its purpose, the number of these articles was reduced to two; they are charcoal and electrical energy. The Andhra Act was originally intended to be in operation until the 25th January, 1956, but it was later continued from time to time. It is common ground that when the impugned orders were passed, section 3 of be Act was in operation and the present appeals have been argued on the basis that the said section is constitutionally valid, so that the main point which calls for our decision is the construction of the said section. 462 Mr. Setalvad for the appellants contends that in construing section 3, we ought not to concentrate on the words used in section 3 in isolation, but must look at the said section along with the other provisions of the Act. The rule of harmonious construction, he urges, requires that we must so construe all the provisions of the Act as to avoid any conflict or repugnancy between them. So construed, section 3, according to him, cannot be said to confer power on the respondent to enhance the tariff rate chargeable against the appellants in respect of the supply of energy made by the respondent to them. The whole scheme of the Act indicates clearly that the power to regulate the supply of an essential article which has been conferred on the State Government has to be applied in regard to transaction between citizens and citizens and cannot be applied to an essential article: which the State itself supplies. It would be odd, he suggests, if the State Government is given the power to issue a notified order regulating the rates at which it should supply energy which it itself produces. Therefore, the dealings by the State Government in the matter of supply of energy to the consumers should be deemed to be outside the provisions of section 3, and that would make the impugned orders invalid. The question as to whether the State Government would be bound by the provisions of legislative enactments passed by the State Legislature has sometimes led to difference in judicial opinion; but the decision of this Court in the Director of Rationing and Distribution vs The Corporation of Calcutta and Ors.(1) must be taken to have settled this question. The effect of the majority decision rendered in that case is to recognise the validity of the rule of interpretation of statutes enunciated by the Privy Council in Province of Bombay vs Municipal Corporation of the City of Bombay (2) and that rule is that the State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying this rule, it is obviously necessary that the Court must attempt to ascertain the intention of the Legislature by considernig all the relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute between the parties. If, after reading all the relevant provisions of the statute, the Court is satisfied that by necessary implication the obligation imposed by the statute should be enforced against the State, that conclusion must be adopted. If there are express terms to that effect, there is, of course, no difficulty. In dealing with this vexed question, sometimes it is necessary also to enquire whether the conclusion that the State is not bound by the specific provision of a given statute, (1) ; (2)73 I.A. 271. 463 would hamper the working of the statute, or would lead to the anomalous position that the statute may lose its effi cacy, and if the answer to either of these two questions indicates that the obligation imposed by the statute should be enforced against the State, the Court would be inclined to infer by necessary implication that the State, in fact, is bound by the statute. Where, however, the question is not so much as to whether the State is bound by the statute, but whether it can claim the benefit of the provision of a statute, the same rule of construction may have to be applied. Where the statute may be for the public good, and by claiming the benefit conferred on it by its provisions the State may allege that it is serving the public good, it would still be necessary to ascertain whether the intention of the legislature was to make the relevant provisions applicable to the State. This position is also established by the decision of the Privy Council in Province of Bomboy(1) and it still continues to be a law in this Country. Incidentally, we may add that where the Crown seeks to take advantage of a statute and urges that though it is not bound by the statute, it is at liberty to take advantage of it, English Law does not easily entertain such a plea, though there are observations made in some judicial pronouncements to the contrary. As Halsbury points out, "it has been said that, unless it is expressly or impliedly prohibited from doing so, the Crown may take advantage of a statute not withstanding that it is not bound thereby. " Having made this statement, Halsbury has added a note of caution by ,,saying that "there is only slender authority for this rule, and since both the rule and such authority as does exist have also been doubted, the rule cannot, perhaps, be regarded as settled law(2)". To the same effect is the comment made by Maxwell when be quotes with approval the view expressed by Sir John Simon that the decisions which recognise the right of the Crown to take advantage of a statutory provision "start with a passage in an unsuccessful argument of a law officer which was not even relevant to the case before the court, but which has been taken out by a text writer and repeated for centuries until it was believed that it must have some foundation(3)". Therefore, in construing section 3 of the Act, we cannot permit the respondent to rely upon the artificial rule that since (1) 73 T.A. 271. (2)", Halsbury 's Laws of England, Vol. 36, p. 432, para 654. (3) Maxwell on Interpretation of Statutes, 11th Ed. p. 136 464 the respondent claims a benefit under section 3, that construc tion should be adopted which supports such a claim. Thus, the position is that when we construe section 3, we must adopt the usual rule of construction; we must not read section 3 in isolation, but must consider it in its proper setting and must have due regard for the other provisions of the Act, and its general scheme and purpose. Reverting then to Mr. Setalvad 's main argument, it may be conceded that when the Act was passed in 1949, mainly and primarily the power conferred by section 3 on the State Government must have been intended to regulate the supply of essential articles made by one citizen to another. The State had not then entered commercial activities on a large scale and when section 3(1) contemplated notified orders issued for the purpose of securing equitable distribution and availability at fair prices of essential articles, the legislature could not have in its mind supply of essential articles made by the State itself. That is one point in favour of Mr. Setalvad 's construction. If we examine the scheme of the Act, it may also have to be conceded that some of the provisions may not be applicable to the State. Take, for instance, the provision of section 4 which relate to the powers of requisitioning and acquisition of properties, and the subsequent two sections that deal with payment of compensation and release from requisition respectively; these provisions may not be applicable to the State. Take, again, the control of agriculture which is contemplated by section 7; it would not be applicable to the State. Section 12 which deals with penalties may also be inapplicable to the State, and so, would section 13 be inapplicable, because it deals with abetment and assistance of contravention of the provisions of the Act. Therefore, the general scheme of the Act and some of its provisions seem to suggest that the State may not have been within the contemplation of the Act. But it is obvious that the rule of harmonious construction on which Mr. Setalvad has solely rested his case, can be invoked successfully by him only if the words used in section 3 are capable of the construction which he suggests. If the said words are capable of two constructions one of which supports the appellants ' case and the other that of the res pondent, it would be legitimate to adopt the first construc tion, because it has the merit of harmonising the provisions of section 3 with the general scheme and purpose of the Act. On the other hand, if the words used in section 3(1) are not reason ably capable of the construction for which the appellants contend, then it would be unreasonable and illegitimate for the Court to limit the scope of those words arbitrarily solely for the purpose of establishing harmony between the 465 assumed object and the scheme of the Act. Therefore, it is necessary to examine the words used in section 3 very carefully. Let us first read section 3(1): "The State Government so far as it appears to them to be necessary or expedient for maintaining, increasing or securing supplies of essential articles or for arranging for their equitable distribution and availability at fair prices may, by notified order, provide for regulating or prohibiting the supply, distribution and transport of essential articles and trade and commerce therein". Sub section (2) provides that without prejudice to the gene rality of the powers conferred by sub section (1), an order made thereunder may provide for objects specified in clauses (a) to (k). The majority of these objects may not be appli cable to the State, while, conceivably, some may be appli cable to it. Section 3(1) is obviously intended to secure supplies of essential articles and to arrange for their equitable distribution and availability at fair prices. If electrical energy is one of the essential articles mentioned in the Schedule, there can be no difficulty in holding that a notified order can be issued under section 3(1) for regulating the supply of the said energy and making it available at a fair price. Indeed, it is not disputed and cannot be disputed that if electrical energy is produced by a private licensee and is then supplied to the consumers, such a supply would fall within the mischief of section 3(1), and the terms on which it can and should be made to the consumers can be regulated by a notified order. There can also be no serious dispute that the terms of a contract entered into between a private supplier of electrical energy and the consumer could be modified by a notified order. Section 3(1) undoubtedly confers power on the State Government to vary and modify contractual terms in respect of the supply or distribution of essential articles. If that be so, on a plain reading of section 3(1) it seems very difficult to accept the argument that the supply of electrical energy which is included in section 3(1) if it is made, by a private producer should go outside the said section as soon as it is produced by the State Government. The emphasis is not on who pro duces and supplies, but on the continuance of the equitable distribution and supply of essential articles at fair prices. If the object which section 3(1) has in mind is such equitable distribuiton and availability at fair prices of essential articles, then that object would still continue to attract the provisions of section 3(1) even though the essential article may be produced by the State and may be supplied by it to the consumers. 466 The words used in section 3(1) are so clear, unambiguous and wide that it would be unreasonable to limit their scope arti ficially on the ground that by giving effect to the wide language of the section, we might reach a result which is not completely harmonious or consistent with the assumed object and purpose of the Act. Indeed, as we have just indicated, if the purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. Therefore, we are not prepared to accede to Mr. Setalvad 's argument that section 3(1) does not confer on the respondent the power to modify the terms of agreements between it and the appellants. Mr. Setalvad, no doubt, contended that in construing section 3(1), we may have regard to the fact that most of the clauses under section 3(2) would be inapplicable to the respondent State, and so, he virtually suggests that even though the words in section 3(1) may be wide, their width should be controlled by the limited scope of the clauses prescribed by subsection (2). We are not prepared to accept this argument. After the decision of the Privy Council in King Emperor vs Sibnath Banerjee(1), it is well settled that the function of a clause like clause (2) of section 3 merely illustrative (vide also Santosh Kumar Jain vs The State(3)). In other words, the proper approach to adopt in construing clauses (1) and (2) of section 3 is to assume that whatever is included in clause (2) is also included in clause (1). That is not to say that if the words of clause (1) are wide enough to include cases not included in clause (2), they must, for that reason, receive a narrower construction. Therefore, we must ultimately go back to clause (1) to decide whether the supply of electrical energy made by the respondent to the appellants can be regulated by a notified order issued under it or not, and the answer to that question must, in our opinion, be in the affirmative. In this connection, it may be pertinent to refer to section 3(2)(b) which provides for controlling the prices at which any essential article may be bought or sold. It is not easy to see why this clause cannot take in articles which may be purchased or sold by the State. The clause is so worded that the transactions of sale and purchase of all essential articles would be included in it. It is true that where the State wants to sell its essential articles, it may be able to regulate the prices and control them by means of an executive order; but that is not relevant and material in construing the effect (1) 72 I.A. 241 at p. 248. (2) ; 467 of the words; if the words take within their sweep essential articles sold by the State, there is no reason why it should not be competent to the State to issue a notified order con trolling the prices in that behalf. In regard to the purchase of essential articles by the State, the position is still clearer. If the State wants to purchase essential articles, power to regulate the prices of such, articles would seem to be clearly included in section 3(2)(b). In ' deed, during the course of his arguments, Mr. Setalvad did not seriously dispute this position. Therefore, when the State wants to purchase essential articles, it can regulate the price in that behalf by means of a notified order issued under section 3(1) and that shows that in the cases of both sale and purchase of essential articles by the State, section 3(2)(b) read with section 3(1) would clothe the State with the power to issue the relevant notified order. Then, it was faintly argued by Mr. Setalvad that the power to regulate conferred on the respondent by section 3(1) cannot include the power to increase the tariff rate; it would include the power to reduce the rates. This argument is en tirely misconceived. The word "regulate" is wide enough to confer power on the respondent to regulate either by in creasing the rate, or decreasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase, or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices. The concept of fair prices to which section 3(1) expressly refers does not mean that the price once fixed must either remain stationary, or must be reduced in order to attract the power to regulate. The power to regulate can be exercised for ensuring the payment of a fair price, and the fixation of a fair price would inevitably depend upon a consideration of all relevant and economic factors which contribute to the determination of such a fair price. If the fair price indicated on a dispassionate consideration of all relevant factors turns out to be higher than the price fixed and prevailing, then the power to regulate the price must necessarily include the power to increase the price so as to make it fair. That is why we do not think Mr. Setalvad is right in contending that even though the respondent may have the power to regulate the prices at which electrical energy should be supplied by it to the appellants, it had no power to enhance the said price. We must, therefore, hold that the challenge to the validity of the impugned notified orders on the ground that they are outside the purview of section 3(1) cannot be sustained. That takes us to the next question as to whether the im pugned notified orders are invalid, because they contravene 468 the provisions of article 19(1)(f) and (g) of the Constitution. The impugned orders have been notified by virtue of the fore, be treated as law for the purpose of article 19. We may also assume in favour of the appellants that the right to receive the supply of electricity at the rates specified in the agreements is a right which falls within article 19(1)(f) or (g). Even so, can it be said that the impugned notified orders are not reasonable and in the interests of the general public '? That is the question which calls for an answer in dealing with the present contention. It is true that by issuing the impugned notified orders, the respondent has successfully altered the rates agreed between the parties for their respective contracts and that, prima facie, does appear to be unreasonable. But, on the other hand, the evidence shows that the tariff which was fixed several years ago had become completely out of date and he reports made by the Accountant General from time to time clearly indicate that the respondent was supplying electricity to the appellants at the agreed rates even though it was incurring loss from year to year. Therefore, it cannot be said that the impugned notified orders were not justified on the merits. The prices of all commodities and labour charges having very much increased meanwhile, a case had. certainly been made out for increasing the tariff for the supply of electrical energy. But it could not be possible to hold that the restriction imposed on the appellants ' right by the increase made in the rates is reasonable and in the interests of the general public solely because the impugned orders have saved the recurring loss incurred by the respondent under the contracts. If such a broad and general. argument were accepted, it may lead to unreasonable and even anomalous consequences in some cases. This question, however, has to be considered from the point of view of the community at large; and thus considered, the point which appears to support the validity of the impugned orders is that these orders were passed solely for the pur pose of assuring the supply of electrical energy and that would clearly be for the good of the community at large. Unless prices were increased, there was risk that the supply of electrical energy may itself have come to an end. If the respondent thought that the agreements made with the appel lants were resulting in a heavy loss to the public treasury from year to year, it may have had to consider whether the supply should not be cut down or completely stopped. It may well be that the respondent recognised its obligation to the public at large and thought that supplying electrical energy to the consumers who were using it for profit making purposes, at a loss to the public exchequer would not be reasonable and legitimate, and it apprehended that the legislature may well question the propriety or wisdom of such 469 a course; and so, instead of terminating the contracts, de cided to assure the supply of electrical energy at a fair price and that is why the impugned notified orders were issued. We ought to make it clear that there has been no suggestion before us that the prices fixed by the impugned notified orders are, in any sense, unreasonable or excessive, and it is significant that even the revised tariff has to come into operation prospectively and not retrospectively. Therefore,( having regard to all the circumstances in this case, we are disposed to hold that the change made in the tariff by the notified orders must be held to be reasonable and in the interests of the general public. Mr. Setalvad also attempted to challenge the validity of the impugned orders on the ground that they contravene article 14 of the Constitution. In support of this contention, he invited our attention to the allegation made in Writ Petition No. 923 of 1956. In that writ petition, one of the petitioners stated that the rate prescribed under the agree ments had not changed and had remained stationary as far as consumers under the State Government 's licensees were concerned. The affidavit appears to concede that certain ,other licensees had increased their rates, but that increase, it is claimed, was negligible or nominal; and so, the argument was that the rates which are widely divergent between consumer and consumer constitute a contravention of article 14. Mr. Setalvad fairly conceded that these allegations are vague and indefinite and no other material has been pro duced either by the petitioner who has made this affidavit, or by any of the other petitioners who moved the High Court for challenging the validity of the impugned orders. In fact, we do not know what the rates charged by other licensees are and have been, and how they compare with the rates prescribed by the original contracts as well as the rates enhanced by the impugned notified orders. We ought to add that the Division Bench of the High Court appears to be in error when it assumed that the respondent was the sole supplier of electrical energy in the State of Andhra. It is true that the bulk of the energy is supplied by the respon dent; but there are some other private licensees which are licensed to supply electrical energy to the consumers and in that sense, at the relevant time the respondent was not a monopolist in the matter of supply of electricity. This Court has repeatedly pointed out that when a citizen wants to challenge the validity of any statute on the ground that it contravenes article 14, specific, clear and unambiguous alle gations must be made in that behalf and it must be shown that the impugned statute is based on discrimination and that such discrimination is not referable to any classification 470 which is rational and which has nexus with the object in tended to be achieved by the said statute. Judged from that point of view, there is absolulety no material on the record of any of the appeals forming the present group on which a plea under article 14 can even be raised. Therefore, we do not think it is necessary to pursue this point any further. The result is the appeals fail and are dismissed with costs. One set of hearing fees. Appeals dismissed.

IN-Abs

Electricity was supplied to the appellants by the respon dent state for many years past, and several individual agreements were passed between them prescribing the terms and conditions for the supply. One of these terms stipulated the rate at which the supply had to be charged. These agreements did not contain any provision authorising the State to increase the rates during their operation. The respondent state issued two notified orders enhancing the agreed rates. The orders indicated that the main reason which inspired the increase was that the existing electricity tariffs which were formulated several years before, had become completely uneconomic and meant continuously growing loss to the State. A large number of consumers challenged the validity of the two orders in the High Court under article 226. The writ petitions were allowed and the respondent was restrained from enforcing the revised rates. These decisions were challenged by the respondent by appeals in the High Court, which took a different view and dismissed the writ petitions. On appeals to this Court, it was contended, inter alia that the respondent had no authority to increase the rate changing this important term of the contract by taking recourse to section 3(1) of the Madras Essential Articles Control and Requisitioning (Temporary) Powers Act, that the power to regulate the supply of essential articles had to be applied in regard to transactions between citizens and citizens and could not be applied to an essential article which the State itself supplied; that the power to regulate conferred on the respondent by section 3(1) could not include the power to increase the tariff rate, that the notified orders were invalid as they contravened the provisions of article 19(1)(f) and (g) and that of article 14 of the Constitution. Held: (i) The challenge to the validity of the notified orders on the ground that they were outside the purview of section 3(1) of the Act could not be sustained. The State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying this rule, the court must attempt to ascertain the intention of the Legislature by considering all the relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute. Where the question is not so much as to whether the State is bound by the statute, but whether it can claim the benefit of the provision of a statute, the same rule of construction 457 may have to be applied ' Where the statute may be for the public good and by claiming the benefit conferred on it by its provisions the State may allege that it is serving the public good, it would still be necessary to ascertain whether the intention of the legislature Was to make the relevant provisions applicable. Director of Rationing and Distribution vs Corporation of Calcutta, ; and Province of Bombay vs Municipal Corporation of the City of Bombay, [1945 46] L.R. 73 I.A. 271, applied. (ii) In construing section 3 of the Act of the usual rule of con struction must be adopted, section 3 must not be read in isolation, but must be considered in its proper setting and due regard must be had for the other provisions of the Act and its general scheme and purpose. (iii) The purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. (iv) It is well settled that the function of a clause like cl. (2) of section 3 is merely illustrative. In other words the proper approach to adopt in construing cls. (1), and (2) of section 3 is to assume that whatever is included in cl. (2) is also included in cl. King Emperor vs Sibnath Banerjee, 72 I.A. 241 and Santosh Kumar Jain vs State, ; , applied. (v) The word 'regulate ' is wide enough to confer power on the State to regulate either by increasing the rate or de creasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices. (vi) Having regard to all the circumstances in this case, the change made in the tariff were reasonable and in the in terests of the general public. (vii) There was absolute no material on the record of the appeals on which a plea under article 14 of the Constitution could even be raised.

Appeal No. 529 of 1963. Appeal by special leave from the judgment and order dated September 24, 1958, of the Madhya Pradesh High Court in Misc. Petition No. 82 of 1958. I. N. Shroff, for the appellant. M. C. Setalvad B. Narayanaswamy, J. B. Dadachanji, Ravinder Narain and O. C. Mathur, for respondent No. 1. M.S.K. Sastri and M. section Narasimhan, for respondent No. 2. March 25, 1964. The judgment of the Court was delivered by DAS GUPTA, J. Two main questions arise in this appeal. The first is whether section 42(1)(g) of the Central Provinces and Berar Industrial Disputes and Settlement Act, 1947 prohibits an employer from taking action against a workman for participation in an illegal strike before it is so declared under section 41 of the Act. The second question is whether in an application made under section 16(3) of the Act the Labour Commissioner has jurisdiction to decide the legality or illegality of the strike. On September 21, 1956 the first respondent in this appeal, the Burhanpur Tapti Mills Ltd., served a charge sheet on one of the employees Sulemankhan Mullaji, who is the second res pondent in the appeal alleging that he had instigated workers of the Weaving Department to go on an illegal strike earlier that day. After holding an enquiry into the matter the Manager came to the conclusion that the charge had been established being of opinion that this constituted misconduct under cl. 25(b) of the Standing Orders. Thereafter, the Manager ordered Sulemankhan to be summarily dismissed without notice and without compensation in lieu of notice. Sulemankhan made an application against this order to the Labour Commissioner, Madhya Pradesh under section 16 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. The Labour Commissioner was of opinion that the authority to decide the legality of a strike had been entrusted by section 41 of the Act by the legislature to the State Industrial Court or the District Industrial Court. He also held that before a strike had been held by either of these authorities to be illegal the employer had no right to take any action against his workmen on his own view that a strike was illegal. The Labour Commissioner further held that there was no legal evidence to prove the allegations against Sulemankhan and that in inflicting the punishment of dismissal the Manager had not paid due regard to sub cl. 4 of cl. 26 of the Standing Orders. Accordingly, he ordered 486 the reinstatement of Sulemankhan with full wages from the date of dismissal to the date of reinstatement. The revision application by the first respondent proved un successful. The State Industrial Court, which is the revisional authority, disagreed with the Labour Court 's view that the employer could not take action before a decision from the State Industrial Court or the District Industrial Court declaring the strike to be illegal had been obtained. Being however of opinion that the enquiry had not been held in accordance with the Standing Order in cl. 26(2) and also that in awarding the punishment the Manager had not taken into consideration the matters mentioned in the Standing Orders in cl. 26(4), the Industrial Court concluded that the Labour Commissioner was justified in examining the evidence for itself. It further held that the finding of fact given by the Labour Commissioner could not be challenged in revision. The final conclusion of the State Industrial Court, as already indicated, was that the order of reinstatement made by the Labour Commissioner was fully justified. Against this order the employer (the first respondent) moved the High Court of Madhya Pradesh under article 226 of the Constitution. The High Court indicated its view that though the Labour Commissioner may not have the jurisdication to decide the question of illegality of a strike, it may decide the question incidentally for the purposes mentioned in section 16 of the Act if in an enquiry under section 16 a question is raised that the dismissal was wrongful as there was no incitement of an illegal strike under cl. 25(b) of the Standing Orders. After expressing this view the High Court, however, added the words: "That aspect of the matter need not be considered because the strike instigated here was not held to be a legal strike. " The High Court was of opinion that the Industrial Court had fallen into an error in thinking that the charge sheet served on the workmen was defective. It also held that neither the Labour Commissioner nor the State Industrial Court had any jurisdiction to examine the findings of the domestic tribunal as an appellate authority and to come to a contrary conclusion on the same evidence. Accordingly, the High Court quashed the orders of the Labour Commissioner and the State Industrial Court. The present appeal has been preferred by the Labour Commissioner, Madhya Pradesh, No appeal has been preferred by the workman himself. It is therefore unnecessary for us to consider in this appeal the correctness or otherwise of the High Court 's decision on the merits of the case. What we have to decide, as already indicated is whether sec. 42 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947 487 stood in the way of the employer taking action against a workman for participation in an illegal strike before it had been declared to be so under section 41; and secondly, whether when there has been no such decision the Labour Commissioner has jurisdiction to decide the question of legality or illegality of the strike in an application made to him under section 16 of the Act. The relevant provisions of section 42 which require consideration for a decision of the first question are that: "No employer shall dismiss, discharge, suspend or reduce any employee or punish him in any other manner solely by reason of the cir cumstance that the employee has participated in a strike which is not "rendered illegal" under any provision of this Act. " The provisions of the Act rendering a strike illegal are set out in section 40. Prima facie it appears that it is only where the strike in which an employee has participated does not come within any of the provisions of section 40 that the employer is prohibited from taking action against him. The prohibition operates only when a strike is not "rendered illegal" under any provisions of the Act. That, it is urged by the respondent employer, is the same thing as saying that the prohibition operates only where the strike is not illegal within the meaning of the provisions of section 40 of the Act. The argument on behalf of the appellant is that the words "rendered illegal" in section 42 (1)(g) should properly be construed as "held illegal". It has to be noticed in this connection that section 41 of the Act provides a machinery under which not only the State Government but any employer or employee can approach the State Industrial Court or a District Industrial Court for a decision whether a strike or a lockout of which notice has been given or which has taken place is illegal. According to the appellant, it is only after on such an application the State Industrial Court or a District Industrial Court has decided that a strike is illegal, that the employer can take action. We are unable to see any justification for such a construction. It is clear to us that the phrase "rendered illegal" in section 42(1)(g) has been deliberately used in contradistinction to the words "held illegal" used in sections 43, 44 and 45. Section 43 provides penalty on an employer who " declares a lockout which is held by the State Industrial Court or the District Industrial Court to be illegal". Section 44 provides penalty against an employee "who goes on a strike or who joins a strike which is held by the State Industrial Court or the District Industrial Court to be illegal". Section 45 provides penalty for instigation or incitement to or participation or acting in furtherance of a strike or lockout "which is held to be illegal by the State Industrial Court or the District Industrial Court". When the legislature used the words "held illegal" by the State Industrial Court or the District Industrial Court in sections 43, 44 and 45 but used different phraseology, 488 viz., "rendered illegal" in section 42(1`)(g) the conclusion is irresistible that this was done deliberately. The reason for this is not far to seek. However, quickly the State Industrial Court or the District Industrial Court may act on an application under section 41 the decision on the legality or otherwise of a strike is bound to take a considerable time. It would be an impossible position for industrial management if after notice has been given of a strike or a strike has started which the employer considers to be illegal within the meaning of section 40 he should be compelled to stay his hand and wait till a State Industrial Court or a District Industrial Court has given a declaration on the question. It also appears clear that these authorities are not bound to give a decision on an application by the employer. The Section runs thus: Court shall, on a reference made by the State Government, and may, on an application by any employer or employee concerned or by a representative of the employees concerned or by the Labour Officer, decide whether any strike or lockout or any change of which notice has been given or which has taken place is illegal. " it has to be noticed that while on a reference by the State Government the State Industrial Court or a District Industrial Court "shall" decide the question of legality of the strike or lockout, it "may" decide the question on an application by the employer or employee or any other person mentioned in the section. The use of the word "shall" in connection with the action to be taken on a reference by the State Government and "may" in connection with the action on an application by others in the same section compels the conclusion that on an application by anybody other than the State Government, the State Industrial Court or a District Industrial Court may also refuse to take action. The suggested construction of the words "rendered illegal" as "held illegal" might therefore have the curious result that even though the strike is in fact illegal within the meaning of section 40 of the Act no action can at any time be taken against an employee for participation in it. We have accordingly come to the conclusion that the words "rendered illegal" does not mean "held illegal" and the employer is free to take action against the employee as soon as he thinks that the strike in which he has participated comes within the provisions of section 40 of the Act. When the employer takes such action against the employee by dismissing, discharging, removing or suspending him, it will be open to the employee to apply to the Labour Commissioner for reinstatement and payment of compensation for loss of 489 wages. This is provided in section 16(2) of the Act. Section 16(3) provides that if on receipt of such application the Labour Commissioner after such enquiry as may be prescribed finds that the dismissal, discharge, removal or suspension was in contravention of any of the provisions of this Act or in contravention of a Standing Order made or sanctioned under this Act or was for a fault or misconduct committed by the employee more than six months prior to the date of such dismissal, discharge, removal or suspension, he may direct reinstatement of the employee or other relief. The question has been raised whether when the order of dismissal, discharge, removal or suspension purports to have been made for participation in or instigation to an illegal strike it is open to the Labour Commissioner to decide the question of illegality of a strike. On behalf of the appellant it has been suggested that exclusive jurisdiction to decide the question of legality or illegality of a strike has been given by the Act to the two authorities, viz., the State Industrial Court or a District Industrial Court, as mentioned in section 41. There is no doubt that section 41 which has been set out above empowers the State Industrial Court or a District Industrial Court to decide the question of legality of a strike on a reference by the Government, or application by employer or employee or others mentioned in the section. Mr. Shroff argues that it could not have been the intention of the legislature to have two parallel bodies the Labour Commissioner as well as the State Industrial Court or a District Industrial Court having jurisdiction to decide such a matter. For, as he points out, it may well be that while on an application under section 16(3) the Labour Commissioner holds that the strike was not illegal the contrary view may be taken by the State Industrial Court or the District Industrial Court on an application under section 41 or vice versa. This argument is plausible at first sight. There is, however, one great difficulty in accepting it. That consists in the fact, already pointed out, that the State Industrial Court or a District Industrial Court is not bound to give any decision at all on application by any party other than the State Government. There being thus cases where the authorities mentioned in section 41 may refuse to decide the question of legality or illegality of a strike, it is not possible to say that exclusive jurisdiction is given by section 41 to these authorities to decide the question of legality or illegality of a strike. It is reasonable to held therefore that for performing its functions under section 16(3) of the Act the Labour Commissioner has jurisdiction to decide the question of legality or illegality of a strike when that question is raised before it. The appeal is accordingly dismissed. No order as to costs. Appeal dismissed.

IN-Abs

An employee was summarily dismissed by the respondent employer after holding an enquiry on the allegation that he had instigated workers to go on an illegal strike. The employee applied under section 16 of Central Provinces and Berar Industrial Disputes Settlement Act to the Labour Commissioner, who held that authority to decide the legality of a strike had been entrusted by section 41 of the Act to the State Industrial Court or the District Industrial Court and that before a strike had been held by either of these authorities to be illegal the employer had no right to take any action against his workmen on his own view that a strike was illegal and ordered the reinstatement of the employee with full wages. The revision application by the respondent employer to the State Industrial Court proved unsuccessful through it disagreed with the Labour Court 's view that the employer could not take action before a decision from the State Industrial Court or the District Industrial Court declaring the strike to be illegal had been obtained. Thereafter, the employer moved the High Court under article 226. The High Court was of the view that though the Labour Commissioner may not have the jurisdiction to decide the question of illegality of a strike, it may decide the question incidentally for the purposes mentioned in section 16 if in an enquiry such a question is raised, and quashed the orders of the Labour Commissioner and the State Industrial Court. On appeal preferred by the Labour Commissioner in this Court. Held: (i) The employer is free to take action against the employee as soon as he thinks that the strike in which he has participated comes within the provisions of section 40 of the Act. The phrase "rendered illegal" in section 42(1)(g) has been deliberately used in contradistinction to the words "held illegal" used in sections 43, 44 and 45. It would be an impossible position for industrial management if after notice has been given of a strike or a strike ha,,, started which the employer considers to be illegal within the meaning of section 4o he should be compelled to stay his hands and wait till a State Industrial Court or a District Industrial Court has given a declaration on the question. The use of the word "shall" in section 41 in connection with the action to be taken on a reference by the State Government and "may" in connection with the action on an application by others in the same section compels the conclusion that on an application by anybody other than the State Government, the State Industrial Court or a District Industrial Court may also refuse to take action. 485 (ii) For performing its functions under section 16(3) of the Act the Labour Commissioner has jurisdiction to decide the question of legality or illegality of a strike when that question is raised before it.

Appeal No. 583 ,of 1963. Appeal by special leave from the Award dated June 18, 1962 of the Industrial Tribunal, Ernakulam, in Industrial Dispute No. 38 of 1960. 478 G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. Janardan Sharma, for the respondents. March 25, 1964. The judgement of the Court was delivered by WANCHOO, J. This is an appeal by special leave from the award of the Industrial Tribunal, Ernakulam. A dispute arose between the appellant and its workmen as to payment of bonus for the years 1957 58 and 1958 59, and was referred for adjudication to the tribunal. The respondents claimed bonus on two grounds: (i) on the basis of profits earned by the appellant, and (ii) on the basis that payment of some bonus at Christmas had become an implied condition of ser vice between the appellant and its workmen. It may be men tioned that the claim was for four months ' wages for each year on the basis of profit bonus. The alternative claim was for 1 1/2 months ' wages for each year on the basis of an implied term of service. We may also mention that the appellant had paid two months ' basic salary as bonus for the year 1957 58, and one month 's basic pay as bonus for the year 1958 59. The appellant contended that there was no surplus available on the basis of the Full Bench formula applied in such cases and therefore no profit bonus could be paid. It also contended that no bonus was payable as an implied term of service. The tribunal found on an application of the Full Bench formula that there was no available surplus in either of the two years and therefore no bonus was payable as profit bonus. It then went into the question whether any bonus was payable as an implied condition of service and relying on the decision of this Court in Messrs. Ispahani Ltd. vs Ispahani Employees ' Union(1) held that payment of bonus at the rate of 1 1/21 months ' salary as an implied condition of service had been established. It therefore ordered the appellant to pay that amount after taking into account one month 's salary already paid by it. It is this award of the tribunal which has been brought before us by special leave. The main contention on behalf of the appellant are two fold: (1) It is urged that the tribunal erred in holding that payment of bonus as an implied condition of service need not be attached to any festival; (2) On the undisputed facts of this case, the tribunal was not right in holding that a case had been made out for (1) [1960] 1 S.C.R. 24. 479 payment of some bonus as an implied condition of service, and in any case, even if a case had been made out for pay ment of some bonus, it could not be at the rate of 1 1/2 months ' salary. Turning to the first contention raised on behalf of the appellant, we are of opinion that the tribunal was not right in holding that there could be an implied condition of service as to payment of bonus unconnected with any festi val. In Ispahani 's case(1) the question raised was whether there was an implied condition of service for payment of some bonus at the time of puja festival in Bengal. In that connection this Court laid down the tests for holding when it could be said that there was an implied condition of ser vice for payment of some bonus in connection with some festival. This Court also pointed out that it was not necessary in order to establish an implied condition of service as to payment of some bonus at the time of a festival like puja in Bengal that the amount paid in connection with the festival should be uniform, and that in the absence of a uniform rate an implied agreement to pay something could be inferred. Now where the payment is connected with a festival it is possible to infer that there is an implied condition to pay something at the time of the festival, even though the evidence discloses that in previous years payment has not been made at a uniform rate. But it is difficult to see how the principle which applies to a case of payment at the time of a festival can be extended to infer an implied term of payment where the payment has been made entirely unconnected with any festival and at rates which have varied from year to year. We are therefore of opinion that when this Court laid down that there was an implied condition of service to pay something about the time of puja festival in Ispahani 's case(2), it was clear that such implied condition of service could be inferred where the rate of payment was not uniform only when such payment was obviously connected with some festival. In the present case also, the payment has not been uniform over the years and therefore before an implied term of service to pay bonus can be inferred it must be shown that the payment was connected with some festival. It would in our opinion be impossible to infer an implied condition of service where payment has not been uniform in the past, unless such payment can be connected with some festival. We are therefore of opinion that the tribunal was wrong in holding that an inference could be, drawn for payment of bonus as an implied condition of service in the circumstances of the present case when the payment was not uniform in the past even though it was not connected with any festival. (1) [1960] 1 S.C.R. 24. 480 But that in our opinion does not dispose of the matter. The evidence shows that payment of some bonus began to be made from the year 1945 46 in which year bonus varying from one month to 3 1/2 months ' salary was paid in this branch. It may be added that the appellant has a number of other branches in other parts of the country. What we are saying in this case is only concerned with the Cochin branch and may not necessarily be applicable to other branches of the appellant, the facts of which are not before us. From 1946 47 to 1949 50, it appears that some lumpsum was paid, though the amount is not exactly known. It is also not clear whether during the years 1945 46 to 1949 50 payment was made about Christmas time, as there is no evidence either way. In 1950 51 it appears that 1 1/2 months ' salary was paid as bonus. No payment appears to have been made in that year about Christmas time, though it is said that 1 1/2 months ' salary was paid as bonus sometime afterwards. From 1951 52 right upto 1958 59, payment was made at the rate of one month 's salary to two months ' salary about Christmas time. It is clear therefore that at any rate since 1951 52 payment is connected with Christmas festival, though there is no clear evidence as to the earlier payments being connected with Christmas. At the same time there is no clear evidence that those payments were not connected with Christmas even though payment for the year 1950 54 might have been made sometime after Christmas. On the whole therefore it seems to us that it is possible to infer that the payments which began from 1945 46 and have been made throughout upto 1958 59 were in all probability connected with Christmas festival. This inference in our opinion is strengthened by the fact that from 1951 52 undoubtedly payments were connected with Christmas and were always made about Christmas time, even though there was adjustment on some occasions later on by payment of more amount or by reduction of the amount already paid by deducting some part of it from later salary. We are therefore of opinion that we can infer from the evidence on the record that the payment in the present case is connected with Christmas festival. Therefore even though the tribunal was wrong in holding that the payment need not be connected with any festival in a case like the present where the rate has not been uniform, the respondents have made out a case of payment of some bonus as an implied condition of service connected with a festival subject to what we say on the second contention raised on behalf of the appellant. The appellant however contends that it has not been proved that the, payment of bonus was in connection with the Christmas festival on the undisputed evidence in this 481 case. Now the evidence is that something used to be invari ably paid at least from 1951 52 about Christmas time. Later on something mote was paid in some years. In one year nothing more was paid and in three years the appellant took back part of the payment which had been made. The appel lant 's contention is that the payment before Christmas which has been established in this case was only an advance in connection with the festival which was later adjustable from the salary of the workmen. It is true that when the payment was made it was designated as an advance. For example, when payment was made in December 1953, it was designated as an advance and it was stated in the notice that it would be treated as advance against any bonus and in the event of no bonus as advance against salary. Even so, the evidence shows that the so called advance was never recovered in full. Sometimes more was paid in addition to what had been paid in December. Once nothing more was paid but the amount already paid in December was not recovered. Three times something was recovered from what was paid in December; even so a minimum of one month 's salary out of the so called advance in December was always left with the workmen. So though the amount paid in December was originally called an advance, at least one month 's salary out of the so called advance always remained with the workmen and was treated as bonus connected with Christmas festival. The fact that the payment was originally called advance would not detract from the conclusion that some amount was really paid as bonus in connection with Christmas festival. There is no evidence to show that this amount was paid ex gratia. In this connection our attention is drawn to what happened in April 1954. Then a notice was given about pay ment of additional bonus which was called ex gratia. The evidence however shows that in 1953 54 one month 's salary was paid in December and in addition half a month 's salary was paid later on and it was this additional half month 's salary which was designated as ex gratia payment. There is nothing to show that the payment made in December was ever designated as ex gratia payment. It could hardly be so designated for it was usually called an advance which was claimed as recoverable though the whole of it was never recovered. In spite of the payment made in December being called an advance, we are of opinion that on the evidence in this case it is clear that part of the advance was made as a bonus in connection with Christmas festival. It is there fore established on the evidence that there was an implied condition of service between the appellant and its workmen that something would be paid every year about Christmas time as festival bonus. L/P(D)ISCI 16 482 The next question to which we turn is the minimum amount which has to be paid as an implied condition of service. Here again the evidence shows that the minimum that has been paid, at any rate since 1951 52, is one month 's salary. Sometimes more has been paid, but one month 's salary seems to have been paid in connection with Christmas for an unbroken period of time, which is long enough to permit an inference that there is an implied condition of service for payment of one month 's salary as festival bonus. connected with Christmas in this branch of the appellant. We cannot agree with the tribunal that the evidence shows a minimum payment of 1 1/2 months ' salary at the time of Christmas. It is true that if we take into account what was. paid later also over the entire period from 1950 51, the minimum is 1 1/2 months ' salary , but in a case of payment which is not at a uniform rate we have to connect the payment with a festival (in this case Christmas). We can therefore only look at the payment made in December to decide what is the minimum which may be treated as a condition of service. Once it is proved that there was an implied condition of service, some amount has to be paid under the said implied term; what the minimum would be in that behalf must be decided as a question of fact. On the evidence in this case it is clear that the minimum is only one month 's salary payable about Christmas time and this was actuallypaid in 1951 52 and 1953 54, though in other years more was paid which was later liable to adjustment. We therefore hold that there is an implied condition of service between the appellant and its workmen that one month 's salary as the minimum would be paid as Christmas bonus to the workmen about Christmas time. The decision of the tribunal therefore allowing 1 1/2 months ' salary as the minimum must be modified and We hold that payment of one month 's salary as Christmas bonus is proved as an implied condition of service between the appellant and its workmen on the admitted facts of the case. The minimum of one month 's, basic salary has to be paid even if there is loss in any given year. We may add that though this is the minimum, it would be open to the appellant to pay more if its profit position justifies the payment of more. But we cannot agree with thetribunal that in the year 1958 59, the profit position of the appellant justifies payment of more than the minimum. It has been found that in that year there was actually a small loss of Rs. 8,000/ suffered by the appellant. Therefore even though the tribunal may be justified in awarding a reasonable amount as festival bonus once it is proved that something has to be paid as an implied condition of service towards such bonus, it cannot be said in this case that the tribunal was justified in giving anything beyond the minimum for 483 this was a year of loss. We are therefore of opinion that the amount awarded as festival bonus for the year 1958 59 should be reduced to one month 's salary and order accord ingly. Before we part with this appeal we should like to add that there was no stay order by this Court in this case. The extra amount of 15 days ' salary awarded by the tribunal has already been paid to the workmen. Mr. Pai has assured us that he would advise his client that the additional amount so paid may not be recovered back in the circumstances. We therefore partly allow the appeal in the manner indi cated above. In the circumstances we pass no order as to costs. Appeal partly allowed.

IN-Abs

An industrial dispute arose between the appellant and its workmen as to payment of bonus for the years 1957 58 and 1958 59. The dispute was referred for adjudication to the tribunal. The respondents claimed bonus on the basis that payment of some bonus at Christmas had become an implied condition of service between the appellant and its workmen. The workmen claimed 1 1/2 months wages for each year on the basis of an implied term of service. On these facts the tribunal held on the basis of the decision of this Court in M/s. Ispahani Ltd. vs Ispahani Employees Union that payment of bouns at the rate of 1 1/2 months ' salary as an implied condition of service had been established. It is this award of the tribunal which ha, , been challenged before this Court. Held: (i) Where the payment of bonus is connected with a festival it is possible to infer that there is an implied condition to pay something at the time of the festival, even though the payment has not been made at a uniform rate in previous years. In the present case, the payment has not been uniform over the years and before an implied term of service to pay bonus can be inferred it must be shown that the payment was connected with some festival. Therefore the tribunal was not right in holding that there could be an implied condition of service as to payment of bonus unconnected with any festival. In the present case, though the amount paid in December was originally called an advance, at least one month 's salary out of the so called advance always remained with the work men and was treated as bonus connected with Christmas festival. On the facts of this case it was held that there was an implied condition of service between the appellant and its workmen that something would be paid every year about Christmas time as festival bonus. M/s. Ispahani Ltd. vs Ispahani Employees ' Union, [1960] 1 S.C.R. 24, relied on. (ii) In a case of payment which is made at different term and is not at a uniform rate the duty of the court is to connect the payment with a festival (in this case Christmas). On the evidence in this case it is clear that the minimum is only one month 's salary payable about Christmas time and this was actually paid in 1951 52 and 1953 54. Therefore the payment of one month 's salary as Christmas bonus is proved as an implied condition of service between the appellant and its workmen on the admitted facts of this case.

Appeals Nos. 590591 of 1963 Appeals from the judgment and decree dated February 6, 1963 of the Mysore High Court in Second Appeals Nos. 471 and 472 of 1960. H. N. Sanyal, Solicitor General, M. M. Gharekhan and I.N. Shroff, for the appellant (in C.A. No. 590/1963). H. N. Sanyal, Solicitor General, M.C. Setalvad, M.M. Gharekhan and I.N. Shroff, for the appellant (in C.A. No. 591/ 63). Naraindas C Malkani, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents (in both the appeals). March 30, 1964. The judgment of DAs GUPTA and AyYANGAR JJ. was delivered by AYYANGAR J. SARKAR J. delivered a separate opinion. SARKAR, J. The appellant is a company carrying on business as supplier of electricity in a certain area in the State of Bombay. The respondents Bhathena and Tendulkar were consumers of electrical energy supplied by the appellant. The 505 present appeals arise out of disputes between these consumers and the appellant concerning the legality of the charges made by the appellant for electricity supplied by it. The supply of electrical energy is controlled by two statutes and the questions involved in the present cases will turn on them. These statutes are the Electricity Act, 1910 and the . 1 will first consider the Act of 1910. Section 3 of this Act gives power to the Government to grant a licence to a party to supply electrical energy in any specified area and to prescribe in the licence the limits of price to be charged by it for the supply. This section further provides that the provisions in the Schedule to the Act would, unless otherwise directed, be deemed to be incorporated in the licence. Paragraph XI of that Schedule states that a licensee would not be entitled to exceed the limits of price fixed in his licence. This paragraph, however, gives power to the Government to alter these limits on the recommendation ,of an Advisory Board appointed under section 35 of the Act. It is not necessary to refer to the other provisions of this Act. The appellant had been supplying electricity under a licence issued in 1932 by the Government of Bombay under the Act of 1910. The licence fixed the limits of the prices which the appellant could charge but these limits were altered by an order made by the Government on December 30, 1942 under paragraph XI of the Schedule and stood thereafter as follows: A. For lights and fans annas /5/ (= 31 nP.) per unit and, B. For motive power, (i) upto 4 B.H.P. anna /1/ (=O.06 nP.) per unit in addition to standing charge of Rs. 2 / per month per B.H.P connected. (ii)over 4 B.H.P. / /19 pies (=O.05 nP.) per unit in addition to the standing charge at the same rate of Rs. 2/ per B.H.P. per month. Due to the conditions brought about by the Second World War, certain orders were made from time to time permitting the licensees to add a surcharge not exceeding 33 1/2 per cent to the existing charges. Lastly, on September 30, 1946 an Act was passed by the Bombay legislature called the Bombay Electricity (Surcharge) Act, 1946, hereinafter referred to as the Surcharge Act, which continued the surcharge specified therein for a period of three years. This Act expired on September 30, 1949. It is said that even thereafter the appellant continued charging the consumers at rates which included the surcharge under the Surcharge Act, and, therefore, at rates in excess of those fixed by the Order of December 30, 1942 and that was illegal. The appellant on its part claims 506 that its charges after the expiry of the Surcharge Act were all Justified under the Act of 1948 the relevant provisions of which came into force on September 10, 1948. This Act will be referred to later. The respondent Bathena commenced taking electricity from the appellant sometime in 1954. Soon thereafter he started disputes about the legality of the charges realised from him by the appellant in respect of energy supplied for purposes of motive power of over 4 B.H.P. and in 1955 filed a suit against the appellant for refund of amounts alleged to have been illegally collected from him in excess of the limits. fixed by the order of December 30, 1942, namely, an excess standing charge of 0.69 nP. per B.H.P. per month over that fixed by the Order of December 30, 1942 and a similar excess unit charge of 0.01 nP. per unit. That suit is still pending and with the disputes involved in it I am not concerned in this judgment. On September 25, 1958, the appellant gave notice to its customers that with effect from November 1, 1958 it would charge for motive power 0.09 nP. per unit plus a standing charge of Rs. 2.69 per B.H.P. per month. The unit charge mentioned in the notice was in excess of that prescribed in the order of December 30, 1942 by 0.04 nP. per unit. There is no dispute that this notice revised the unit charge existing at its date but it seems that it did not enhance the then existing standing charge. The notice gave rise to further disputes as a result of which two suits were filed against the appellant on March 31, 1959 in the court of the Civil Judge, Belgaum. The first of these suits was filed by the respondent Bathena acting for himself and all other consumers of electricity supplied by the appellant for purposes of motive power over 4 B.H.P. for the following reliefs: "(a) That a declaration be granted by this Hon 'able Court that the standing charges of 2.69 nP. per B.H.P. per month and the excess sum of 0.04 nP. per unit of energy consumed, for motive power whether connected or otherwise, are illegal and unauthorised, inoperative and ultra vires of the Defendant company and the Plaintiff is not bound to pay the same and that the Defendant Company have no authority to control or interfere in the supply of electric energy or its use, and that the restrictions imposed in Notice dated 25 9 58 are illegal, bad in law, and, (b) an injunction restraining the Defendant Company, its servants, its agents or its representatives from levying and recovering the excess and illegal charges, (such as standing charges and per unit 507 of consumed energy at 0.04 nP.) from the plaintiff, by means of any coercive measures and from interfering or controlling with the electric Supply". The other suit was filed by the respondent Tandulkar also in a representative capacity in respect of the charge of 0.37 nP. per unit for electricity supplied for lights and fans, and it sought the following reliefs: "(a) That a declaration be granted by this Hon 'able Court that the excess sum of 0.06 nP. per unit of energy consumed for lights and fans, are and unauthorised, inoperative and ultra vires of the Defendant Company and the plaintiff is not bound to pay the same. (b) An injunction restraining the Defendant Company its servants, its agents or its representatives from levying and recovering the excess and illegal charges, i.e. 0.06 nP. per unit of consumed energy from the plaintiff by means of any coercive measures and from interfering or controlling with the electric supply". Various persons were on their own applications later added as plaintiffs in these suits. The suits were decreed by the trial Court but that decision was reversed on appeal by a District Judge. On second appeal, however, the High Court of Mysore set aside the decision of the learned District Judge and restored that of the trial Court. The present appeals are against the judgment of the High Court. I will first take up the suit relating to the charges for motive power. To clear the ground it may be stated that this suit is not concerned with any charge made prior to the date that it was filed. As earlier stated, it asks for a declaration and art in junction. An injunction cannot of course be in respect of a past period and the declaration sought must also, therefore, be confined to the future. In any case, since the declaration is sought in respect of the charges as revised by the said notice as from November 1, 1958 it is clear that no question as to the legality of any charge made before November 1, 1958 was sought to be raised. It would have been noticed that the suit was concerned with disputes about two charges, namely, the unit charge of 0.09 nP. per unit fixed by the notice of September 25, 1958 and the standing charge of Rs. 2.69 per B.H.P. per month. I will first consider the dispute about the unit charge. Could the appellant enhance the charge? It is not disputed that a licensee can on his own enhance his charges upto the maximum limit fixed in the licence or otherwise fixed by the Government. The dispute is as to the right to enhance them 508 beyond that limit, and in this judgment I will be discussing such enhancement only. It is not in controversy that under the Electricity Act of 1910 it could not do so but as already stated, the appellant bases its claim to enhance the charge on the as amended by Act 10th of 1956 with effect from December 30, 1,956. It will be noticed that this amendment was in force When the revised rate came into force under the notice of September 25, 1958. The relevant provisions of this Act so amended are these: section 57. "The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority (a) in the case of a licence granted before the commencement of this Act, from the date of the commencement of the licensee 's next succeeding year of account; and, (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the (9 of 1910), and the licence granted to him thereunder and of another law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules". section 57A. "(1) Where the provisions of the Sixth Sche dule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to) the said licensee, namely:,(a) the Board or where no Board is constituted under this Act, the State Government (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule; and, (ii) shall, when so requested by the licensee in writing, constitute a rating committee to examine the licensee 's charges for the supply of electricity and to make recommendations in that behalf to the State Government: (c) a rating committee shall report to the State Government making recom mendations regarding the charges for electricity which the licensee may make 509 (d) within one month after the receipt of the report under clause (c), the State Government may make an order in accordance therewith fixing the licensee 's charges for the sup ply of electricity and the licensee shall forthwith give effect to such order". Sixth Schedule 1. "Notwithstanding anything contained in the (9 of 1910), and the provisions in the licence of a licensee, the licensee shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return; Now the first paragraph of the Sixth Schedule to the Act of 1948 clearly gives a licensee the power to adjust and there fore also to enhance his. rates on his own. It, however, fixes a limit for the enhancement and that, is, so as not, as far as possible, to make his "clear profit", for the year exceed the amount of "reasonable return". The methods of determining "clear profit" and "reasonable return" are stated respectively in cls. (2) and (9) of paragraph XVII of the Schedule but it will not be necessary for me to go into, their details. Now under paragraph 1 of the Sixth Schedule the rates can be enhanced "Notwithstanding anything contained in the (9 of 1910), , and the provisions in the licence of a licensee". Nothing to the contrary, therefore, contained in the Act of 1910 or the licence can make the enhancement of the rates by the licensee in terms of this paragraph illegal. It would follow that the power under paragraph 1 of the Sixth Schedule would justify an enhancement of the rate beyond that fixed by the licence or any order of the Government. This seems to me to be perfectly plain. It will be remembered that paragraph XI of the Schedule to the Act of 1910 prohibited a licensee from charging a rate in excess of the maximum fixed by the licence. That provision, however, was repealed by Act 101 of 1956. This was obviously done because it was realised that paragraph 1 of the Sixth Schedule to the Act of 1948 made the prohibition in paragraph XI of the Schedule to the Act of 1910 quite ineffective. Then we have section 70(1) of the Act of 1948 which provides that "No provision of the (9 of 1910), or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of this Act, have any effect". This provision also supports the view that the power to 510 enhance the rates given by the Act of 1948 is not in any way affected by anything in the Act of 1910 or the licence granted Under it. Learned counsel for the respondents, however, first con tended that the power to enhance cannot be exercised by the licensee on its own. If, it wants an increase in its rates it has first to ask the Government under section 57A of the Act of 1948 to constitute a rating committee. This contention appears to me to be entirely unfounded. No doubt a licensee can ask the Government to constitute a rating committee under that section and if the Government does so and fixes rates on the basis of the recommendations of that committee, the licensee would be bound by such fixation of rates. But I find nothing in section 57A or anywhere else in the Act of 1948 to lead to the view that the licensee cannot increase his rates except after a rating committee has recommended such increase and the Government has permitted it. Such a view would largely render paragraph 1 of the Sixth Schedule nugatory. Nor do think that there is any conflict between section 57A and paragraph 1 as was contended by the respondents. Quite clearly section 57A gives a licensee the power to call for the constitution of rating committee. If he does so. he does not take the risk of fixing an enhanced rate on his own with the possible consequences of having to refund Dart of the amounts collected under provisions to which reference will be made later. That seems to be the only reason why the licensee has been given the right to ask for the constitution of a rating committee. If he does not mind taking the risk of these consequences, I find nothing in the Act of 1948 requiring him to ask for the constitution of a rating committee before he can proceed to enhance the rates on his own. Learned counsel for the respondents then relied on subs. (2) of section 70 of the Act of 1948 which states that "Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the ". He contended that this showed that an attempt has to be made to harmonise the two Acts and, therefore, the power to enhance the rates given by the Act of 1948 must be confined to an enhancement upto the maxima limits specified in the licence granted or any order made by the Government. I am wholly unable to agree that sub section (2) of section 70 of the Act of 1948 requires the two Acts to be harmonised. In fact sub section (1) of section 70 of the Act of 1948 provides that when there is inconsistency between the two Acts, the earlier Act is not to have effect. There can be no question of harmonising unless there is inconsistency and sub section (1) says what is to happen in case of inconsistency; it is that one is to give way to the other and not that 511 an attempt should be made to harmonise the two. Furthermore sub section (2) of section 70 of the Act of 1948 says that "Save as otherwise provided in this Act" the later Act is not to be read as in derogation of the earlier Act. When, therefore, it is otherwise provided in the Act of 1948, this Act might be read as in derogation of the Act of 1910. Now section 57 of the Act of 1948 and paragraph 1 of the Sixth Schedule to it clearly provide that the provisions therein contained are to override the provisions of the earlier Act. It would thus be against the express terms of the Act of 1948 to attempt to harmonise the power to enhance the rates given to the licensee by it with any of the provisions of the licence or the Act of 1910. Lastly, learned counsel for the respondents relied on Babulai Chaganlal Gujerathi vs Chopda Electric Supply Co. Lid.(1) to support his contention that under paragraph 1 of the Sixth Schedule to the Act of 1948 a licensee had the power to enhance the rates only upto the maxima limits specified in the licence or Government 's order but not beyond those limits. It was no doubt so decided in that case but then it turned on paragraph 1 of the Sixth Schedule as it stood before the amendment in 1956. Before the amendment, that paragraph did not contain the words "Notwithstanding anything contained in the (9 of 1910) and the provisions in the licence of a licensee". It seems to me plain that these words have made a material change in the provision and as it now stands, it cannot be said that the enhancement permitted must be restricted to the limit fixed in the licence or an order by the Government. The decision cited, therefore, is of no assistance in interpreting paragraph 1 of the Sixth Schedule as it stands after the amendment in 1956. Whether Chhaganlal 's case(1) was correctly decided in view of the terms of paragraph 1 as it stood before the amendment is not a question which arises for determination in this case and on that question I express no opinion. I think that it must be held on the terms of paragraph 1 of the Sixth Schedule to the Act of 1948 as it stood at the time of the notice that a licensee had power to enhance the rates and such power was not limited to an enhancement up to the limits fixed by the licence or otherwise by any order of the Government. On the question whether under paragraph I of the Sixth Schedule to the Act of 1948 a licensee could enhance his rates beyond the limits fixed by the Government or in the licence the High Court took the same view as I have done and held that the respondents could not claim any relief solely on the ground that the rates charged had exceeded those limits. The High Court, however, observed that the appellant had failed to establish that it had revised its rates (1) I.L.R. 512 as provided by the Act of 1948 before its amendment in 1956 and, therefore, held that the appellant must be taken to have illegally continued the surcharge which it was levy ing under the Surcharge Act, 1946 even after its expiry on October, 1, 1949. It is somewhat difficult to understand these observations. As I have earlier said, no question as to the legality of any charge made before the suit or at any rate, before November 1, 1958, arises in this case. Therefore, even if the appellant had not revised its charges prior to the amendment, no grievance on that account can be made on the plaint on which the present suit is based. Furthermore I do not see why the burden of proving that those charges were the charges duly revised under the Act of 1948 prior to its amendment should be upon the appellant. No issue on this question also appears to have been framed by the trial Court at all. Even the plaint does not say that what the appellant had done was to continue an illegal charge. I repeat that whether the charges made before November 1, 1958 were illegal or not, is not a question that arises for decision in these cases. Admittedly the notice of September 25, 1958, revised the unit charge and, therefore, in fact there was no continuation of an earlier illegal charge, assuming the earlier charge to have been illegal. The High Court, however, also held that the appellant was under a statutory duty under the Act of 1948 to adjust its rates so that its clear profit did not exceed the amount of reasonable return and it had not established that it had done so after the Act was amended, nor bad it proved that the enhancement mentioned in the notice of September 25, 1958 would not result in its clear profits exceeding the amount of reasonable return. Lastly, the High Court observed that "even otherwise the enhancement is the continuation of the illegal charges and that by itself is invalid". It was on these grounds that the High Court decided the cases in favour of the respondents. I am unable to agree with the High Court on any of these points. I will take the last point first. With respect to the learned Judges of the High Court, I do not understand what exactly is meant by the enhancement being the continuation of the illegal charge. That there was a revision of the rates by the notice of September 25, 1958 is the respondent 's own case in the plaint. I will assume that the revision raised the rates to the figures that were chargeable under the expired Surcharge Act of 1946. But the identity of the figures cannot by itself make the enhancement illegal if it was legal under the Act of 1948 as amended. Indeed as there was admittedly a revision there was really no continuation of a previous charge. This point must, therefore, be rejected. 513 The other points on which, as stated above, the High Court based itself, appear me to be equally untenable. These points are really one and that is whether the appellant has established that the revised rate fixed by the notice of September 25, 1958 would not make its clear profit exceed the amount of reasonable return. As already stated, it is admitted in the plaint that there was a revision of the unit ,charge by the notice. So it is not in dispute that after the amendment of paragraph 1 of the Sixth Schedule the appellant had revised its unit charge. I am unable to agree that the onus of establishing that the revision did not make the appellant 's clear profit exceed the amount of a, reasonable return should be on the appellant. I think that onus should be on the respondents because it is they who allege that "the rates mentioned by the defendant are exceeding the reasonable return". The more serious objection to this point, however, is that it does not seem to me that it is competent for a Civil Court to go into the question whether the enhanced rates are illegal because they take the clear profit beyond the amount of the reasonable return, and to give any relief on that basis. The reasons for this view will now be stated. Paragraph 1 of the Sixth Schedule to the Act of 1948 no doubt prohibits the licensee from enhancing his rates beyond a figure which would make his clear profit exceed the amount of reasonable return. The Act, however, at the same time provided the consequences of a breach of the prohibition. Thus the fourth and the last proviso in paragraph 1 of the Sixth Schedule to the Act of 1948 states, "Provided further that if the rates of supply fixed in pursuance of the recommendations of a rating committee constituted under section 57A are lower than those notified by the licensee under and in accordance with the preceeding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them". One consequence of the breach of the prohibition, therefore, is the liability to refund the difference between the enhanced rate which has to be notified under the third proviso and that fixed by the rating committee. But a rating committee may not have been constituted for it is constituted only where the licensee wants it, or the Government is entitled to constitute it under section 57(1) of the Act of 1948. Where a rating committing is not constituted, there is no liability to refund but the provisions of paragraph II of the Schedule would then apply and this equally whether there is an en hancement of the charge under paragraph 1 and where there is none. That paragraph is in these terms: Paragraph 11. (1) If the clear profit of a license, in any year of account is in excess of the amount of L/P(D)ISCI 17 514 reasonable return, one third of such excess, not exceeding five per cent of the amount of reasonable return, shall be at the disposal of the undertaking. Of the ,balance of the excess. One half shall be appropriated to a reserve which shall be called the 'tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct. This provision shows that where there was a, revised rate and that rate exceeded the limit prescribed in paragraph 1, a consumer might get a refund of a part of the excess but that too only at the discretion of the government. He had clearly no right to any refund even in such a case. Quite obviously if the consumer could obtain refund of the whole excess as determined by a civil court, these provisions would be completely meaningless. Equally obviously if a civil court could decide that the charge made had exceeded the limit and was, therefore, illegal, it could also direct a refund of the amount illegally realised. Therefore, it seems to me clear that the question of a breach of the terms of the first part of paragraph 1 of the Sixth Schedule was not intended to be canvassed in a civil court; a civil court has no power to decide that question nor can it give any relief in respect thereof. Indeed if this were not so, the consequences would be most anomalous. If the Civil Court could decide the question whether the enhanced rate resulted in the clear profit exceeding the amount of the reasonable return, then it is conceivable that different courts might come to different conclusion on different materials placed before them and the result of that would be to destroy the uniformity of rate chargeable by a licensee. Such a situation could not have been intended. Again the Act of 1948 did not give to the consumer the right to have a rating committee constituted. This was obviously because it would be impossible to work a public utility concern like an electric supply business if every consumer could get a rating committee to go into the question of rates. There may then be a continuous succession of rating committees and there would be no fixity of the rates chargeable. The convenience of all had to be kept in mind. Power was hence given only to the Government to take steps when a licensee committeed a breach of its obligations. Therefore, in my opinion, the High Court was in error in holding that the appellant should have shown that the enhancement did not result in its clear profit exceeding the amount of reasonable return and in deciding in favour of the 515 respondents on that basis. I hold that the respondents were not entitled to canvass in a Civil Court any question as to the rates of a licensee being in excess of the limit pres cribed in paragraph 1 of the Sixth Schedule to the Act of 1948. A Civil Court could not declare that the rates charged by a licensee were illegal as they made its clear profit exceed the reasonable return. If there was such excess. the relief could be obtained only if the Government set up a, rating committee, a refund became due thereupon under the last proviso to paragraph 1 of the Sixth Schedule to the Act of 1948 or if relief was available under paragraph 11 (1) of that Schedule. Then it was said that the revision by the notice of Septem ber 25, 1958 was bad in any case because under the third proviso to paragraph I in the Sixth Schedule there could be no revision of rates under that paragraph unless a notice in writing of the intention to enhance was given by the licensee to the Government or to the State Electricity Board and no such notice was in fact given. That proviso no doubt requires a notice to be given but the contention is none the less clearly without foundation for, as I shall immediately show such a notice was in fact given. Now exhibit 62 is a copy of a letter received by the appellant from the Secretary of the State Electricity Board and it refers to a letter "No. AMAL/BEL/ C 2, dated 7 8 1958" written by the appellant to the Board and the letter last mentioned, which is exhibit 60, is the notice by the appellant to the Board expressing its intention to revise the, rates. It is quite clear, therefore, that notice had been given to the Board of the proposed enhancement. This point it may be stated does not seem to have been taken in the High Court. It was also said that the notice was bad as it did not state that the standing charge was being increased from Rs. 2/to Rs. 2.69 per B.H.P. per month. This again is an unfounded contention for the standing charge had not been increased by the notice at all. Indeed the plaint itself in paragraph 5 states that prior to November 1, 1958 the appellant had been levying standing charges at the rate of Rs. 2.69. So there was no enhancement of this charge by the notice and, hence no question of giving any notice of any enhancement of the standing charge arises. Lastly, it was said that in the notice to the consumers it was stated that the power supply would be restricted between certain hours but the notice to the Government did not mention this restriction in the supply. The notice to the consumers no doubt stated that the revised unit charge would be in respect of restricted hours of supply but that does not make the contention of any substance. There was nothing in the notice to show that the supply would be restricted. Further L/P(D)ISCI 17(a) . 516 it is neither alleged in the plaint nor does it appear from anything on the record, that there was in fact any restriction in the supply. That being so, the failure to give notice to the Government of the restriction in the supply is wholly immaterial. I have not, further been shown any provision under which notice to the Government of a restriction in the supply of electricity is necessary. It is certainly not required by anything in paragraph 1 in the Sixth Schedule to the Act of 1948. I am, therefore, of the opinion that there is no reason to hold that the appellant was not entitled to levy the charge mentioned in its notice of September 25, 1948. I come now to the standing charge of Rs. 2.69 per B.H.P. per month. As in the case of the other charge and for the same reasons, I am not concerned with any question as to its legality in respect of any period prior to the suit. It has to be remembered that there is no complaint that this rate had been increased by the notice. Lastly, as already stated, a Civil Court cannot go into the question whether a charge is illegal inasmuch as it has been revised to an amount exceeding the limit mentioned in paragraph 1 of the Sixth Schedule to the Act of 1948. The only ground on which this charge is questioned is put in paragraph 23 of the plaint in these words: "any standing charges along with the usual Unit Charges is against equity and law, it being double charge for the industry to pay for the enrichment of the defendants"; the legality of the standing charge is not challenged on any other ground. Now where a charge is permitted by a statute no question of its being inequitable can be raised in a Court of law, neither can the question whether the charge is in excess of the limit justified by the statute be canvassed in such a Court. Therefore, the respondents cannot in these cases challenge the legality of the standing charge. What I have said so far disposes of the appeal in the suit concerning the rates charged for the supply of motive power. That appeal must, therefore, be allowed. The appeal in the suit with regard to the charges for light and fans can be disposed of substantially on the grounds earlier discussed. The High Court also placed its decision in respect of this matter on the same ground on which it had disposed of the other matter. The only point made in this case is that the appellant had been wrongfully charging a rate in excess of the limit fixed by the order of December 30, 1942 by 0.06 nP. per unit. On this basis a declaration that the excess charge was illegal was sought and also an injunction restraining the appellant from levying it. It will be observed that in this case there was no notice given by the appellant of any increase in the charge. No question of the charge being illegal by reason of any enhancement, therefore, arises. The only complaint is 517 that the charge is illegal as it is in excess of the limit fixed by the Government. As I have said, under paragraphs 1 and 11 of the Sixth Schedule to the Act of 1948 a licensee can charge any amount so that his clear profit does not exceed his reasonable return and if he exceeds the limit he only exposes himself to the consequences mentioned in them and a consumer cannot go to a court of law for relief on the round that the licensee had exceeded this limit. Therefore, the respondent cannot ask for any relief in a civil court on the basis that the appellant had exceeded the limit. As in the other case, in this case also I am not concerned with the legality of any charge made prior to the date of the suit; the only question is the legality of the charge made since March 31, 1959. That question has to be decided under the Act of 1948 as amended in 1956. It follows that in this case also the respondents can get no assistance from the decision in Babulal Chhaganlal(1) even if that case was rightly decided. 1, therefore, think chat this appeal also succeeds. In the result I would allow both the appeals with costs throughout. AYYANGAR, J. These two appeals which come before us by virtue of special leave granted by this Court are against a common judgment of the High Court of Mysore in two Second Appeals preferred to it by the respective respondents in the two appeals. They raise for consideration a question of the legality of certain rates charged by the Appellant company for the supply of electricity to the respondents for power and for light and fans respectively. The Appellant company is a licensee who is engaged in the business of supplying electricity in the town of Belgaum and other places. A licence for the supply of electricity in the town of Belgaum was ranted in 1932 to two persons B. section Ankle and A.S. Ankle. These two assigned their licence to a concern by name the Belgaum Electricity Co. Ltd. and by a further assignment by these assignees, the licence came to be owned by the Appellant who are now effecting the distribution and supply of electricity in Belgaum. The original licence was granted by the Government of Bombay under section 3 of the of 1910 (Act IX of 1910) which we shall hereafter refer to as the "Electricity Act, 1910" to whose provisions some reference would be necessary to be made later. Broadly speaking, under the provisions of this enactment the maximum and minimum rates which a licensee might charge its consumers were fixed by Government and licensees were afforded freedom to fix the rates to be actually charged within these limits. Under the powers so vested in them in that behalf the Government of (1) I.L.R. 518 Bombay within whose jurisdiction Belgaum then was, passed an order on December 30, 1942 fixing the maximum rates which could be charged by licensees for supply to consumers and these rates which applied to the Appellant were to be effective from February 1, 1943. The maximum rates for the supply of energy under the licence were, under this order, to be (1) where the energy was supplied for lights and fans 5 annas per unit; (2) where energy was supplied for power purposes i.e., for purpose other than lights and fans the maximum rate was to be (a) upto and including 4 B.H.P. one anna per unit in addition to a standing charge of Rs. 2/ per month per B.H.P. connected, and (b) for over 4 B.H.P. rate was 0.75 annas unit in addition to a standing charge of Rs. 2/ per month per B.H. P. connected. Thereafter charges at the maximum permitted rate were levied and collected by the Appellant. While so, on March, 11, 1943 a notification was issued by the Government of Bombay in exercise of powers conferred by rule 81(2)(b) of the Defence of India Rules by which relaxation was made as regards the maximum rates for the supply of electrical energy chargeable by a licensee under the Electricity Act. Such licensees were permitted to charge amounts not exceeding 33 1/2 per cent over the permitted maximum rates. Later this surcharge under the Defence of India Rules fixed by the notification of 1943, was withdrawn and simultaneously what is known as "War Costs Surcharge" was permitted to be levied, but it did not make any practical difference as the permitted increases over the mnaximum was identical. The War Costs Surcharge was continued up to the year 1946 when the Government of Bombay enacted a statute entitled the Bombay Electricity (Surcharge) Act of 1946 which came into force on September 30, 1946. It was a temporary enactment which under sub s.(4) of section 1 was to be in force for a period of three years only so that it lapsed on October 1, 1949. The Provincial Government was under section 3 of that Act empowered to fix rates of surcharge and under section 5 of that Act the existing surcharge viz., the War Cost Surcharge were to be deemed surcharges fixed under section 3. As a result of this piece of legislation the position that emerged was that though the original licence issued under the Electricity Act, 1910 which empowered the Government to fix the maximum of the rates that could be charged by licensees for the supply of energy was determined by the order dated December 30, 1942, still practically almost from the commencement of the operation of that order a 33 1/2 per cent. surcharge was permitted to be levied by the licensees over the permitted maximum charge and this state of things continued until October 1, 1949. Notwithstanding the lapse of the Act of 1946 the Appellant has continued to demand and collect practically the same charges for the supply of energy as it had done during the 519 period when it was in force, with a slight variation by way of increase in regard to the supply of power to which we shall immediately advert. In the case of supply for power, while the standing charges are being levied at the maximum permitted by the notification of December 30, 1942, with the addition of the surcharge, the unit charge has been increased even beyond this figure by resort to the provisions of the Electricity Supply Act, 1948 (Central Act 54 of 1948) which it will be convenient to refer to as the Supply Act. The legality of the continuance of the surcharge in regard to the standing charge from and after 1st October, 1949 and of the increase in the unit rate even beyond it are challenged in the suit which has given rise to Civil Appeal 590 of 1963. In the case of the charge for the supply of energy for lights and fans there has been no chance since the 30th September 1949, but the maximum as increased by 33 1/3 per cent still continues and it is the legality of this continuance of the surcharge that is impugned in Civil Appeal No. 591 of 1963. The levy or the rates impugned is in every case justified by the Appellant by reference to the terms of the Supply Act to the relevant provisions of which we shall have to make detailed reference later. Pausing here, we might advert to the fact that the Supply Act was enacted to provide "for the rationalisation of the purchase and supply of electricity and generally for taking measures conducive to the electrical development". The Act came into force from September 10, 1948. The principal question that arises for decision in these appeals relates to the effect of the Supply Act, 1948 and the provisions that it contains on the ,rates to be charged by licensees which had been fixed under the Electricity Act, 1910 a matter which we shall examine in its proper place. We might even at this stage refer to section 70 of the Supply Act which enacts, .lm15 (1) No provision of the , 19 1 0, or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of this Act, have any effect; deemed to prevent the State Government from granting, after consultation with the Board, a licence not inconsistent with the provisions of the , to any person in respect of such area and on such terms and conditions as the State Government may think fit. (2) Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the . " 520 We are drawing attention to this provision to indicate the inter relation between the two Acts the Electricity Act, 1910 and the Supply Act, 1948. We shall now briefly narrate the course of the proceedings which have led to the present appeals. Two suits were filed by consumers of electrical energy in Belgaum receiving their supplies from the Appellant in the court of Civil Judge, Belgaum, both being representative suits under O.I.r.8 (if the Civil Procedure Code. The first suit No. 133 of 1959 was in relation to the supply of energy for power. In the plaint it was pointed out that before November 1, 1958 the Appellant was charging the plaintiffs Rs. 2 /11 / per B.H. Power per month as standing charges plus one anna per unit of energy consumed. It was stated that the Appellant had by a notice to the consumers dated September 25, 1958 whose terms were set out, proposed to raise from and after Novomber 1, 1958 the unit charge from one anna per unit to 1 1/2 anna or 9 naye paise per unit. It recited that the plaintiffs had protested and addressed letters to the Government of Mysore, (Belgaum having been made part of this State by the State Reorganisation Act) but without any result. Reference was made to the circumstance that the Appellant justified the increase with reference to the provisions of the Supply Act, particularly after the same was amended by Central Act 101 of 1956. The material averment on the basis of which relief was claimed in the plaint was that the revision effected by the notice of September 25, 1958 was illegal because it exceeded the maximum prescribed by the Government of Bombay in its order dated December 30, 1942 which, it was stated, still bound the Appellant. The plaintiffs, therefore, sought a declaration that any increase beyond the rates fixed by the notification of the year 1942 was illegal and sought a declaration (a) that the standing charge was illegal to the extent of the excess of 0.69 nP. per B.H.P. over the 2 rupees and the increase by 4 naye paise per unit of energy consumed was also illegal and prayed for an injunction restraining the Appellant from levying or collecting these illegal and excess charges. The other suit in relation to supply of energy for lights and fans was No. 135 of 1959. That plaint pointed out that under the order of Government of Bombay dated December 30, 1942 the Appellant could charge only 5 annas per unit or decimal coinage 31 nP. and taking advantage of the surcharges that were permitted during the war period and subsequently under the Bombay Electricity (Surcharge) Act, 1946 it bad been charging 6 annas per unit, and after the decimal coinage came into force 37 nP. The main point that was urged in the plaint was that on the ]at )se of the Bombay Electricity (Surcharge) Act, 1956 on September 30, 1959 the right of the Appellan to charge anyhting above 31 nP. ceased but that notwith 521 standing this want of legal sanction it had continued to levy the same rates even afterwards. On this basis a prayer was made seeking a declaration about the invalidity of any charge beyond 31 nP. per unit and an injunction restraining the Appellant from charging this illegal excess. The defence of the Appellant was based on the provisions contained in the Supply Act of 1948, the contention being that the charges they continued to levy or which they intended to levy by virtue of the notice of September 25, 1958, were well within the limits prescribed by the Supply Act of 1.948 and consequently the plaintiffs in neither suit were entitled to any relief. The learned trial Judge held on an examination of the pro visions of the two Acts the Electricity Act and the Supply Act and their schedules that even after the coming into force of the Supply Act the maximum limit of charge fixed by Government under the Electricity Act of 1910 continued to govern the maximum rate that could be cleared and as admittedly the rates charged or threatened to be charged by the Appellant were in excess of those rates, it granted to the plaintiffs in each suit the declaration and injunction they sought. The Appellant thereupon filed appeals to the learned Dis trict Judge and contended that the Supply Act of 1948 effected such a radical change in the method of determining the reasonable rate as to completely supersede the rates and the maxima fixed under the Electricity Act of 1910. This contention was accepted by the Appellate Court and the appeals were allowed and the suits directed to be dismissed. The plaintiffs thereafter filed second appeals to the High Court. The learned Single Judge of the Mysore High Court who heard the appeals accepted in part the submission made by the Appellant that the maxima prescribed by the Government under the powers vested in them by the Electricity Act of 1910 ceased to be in force on the enactment of the Supply Act. He nevertheless held that the procedure prescribed for the fixing of rates to be charged by the licensees by the Supply Act of 1948 had not been followed by the Appellant with the result unit it could not sustain the contention that the charges levied or to be levied were legal. On this reasoning the learned Judge allowed the appeals and restored the decrees of the trial Court in the two suits. It is from these judgments of the High Court that the present appeals have been brought by special leave of this Court. Before setting out the arguments addressed to us on behalf of the Appellant and to appreciate them it is necessary to read the statutory provisions which bear upon the controversy in the appeal. The Appellant was, as stated earlier, the transferee of a licence granted under the Electricity Act, 1910. Section 3 of 522 this Act enables the State Government, on application made to it, to grant to any person a licence to supply energy in any specified area. Under sub s.(2) of that section "the provisions which shall have effect on licences granted under the Act" are set out and of these those relevant for our purpose are those contained in cl. (d) and cl. (f) which read: " (d) a license under this Part: (i) may prescribe such terms as to the limits within which. and the conditions under which, the supply of energy is to be compulsory or permissive, and as to be limits of price to be charged in respect of the supply of energy, and generally as to such matters as the state Government may think fit. . . . . . . . "(f) the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every license granted under this Part, save in so far as they are expressly added to, varied or excepted by the license, and shall, subject to any such ad ditions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license: (the clause contains a proviso which is omitted as immaterial). Section 23 requires the licensee not to show undue preference to any person and enacts that "save as aforesaid, make such charges for the supply of energy as may be agreed upon, not exceeding the limits imposed by his license". In the schedule that is referred to in s.3(2)(f) which is headed "Provisions to be deemed to be incorporated with, and to form part of, every license granted under Part 11, so far as not added to, varied or excepted by the license", Paragraph XI which is the one material for our purpose reads: "Save as provided by clause IX, sub clause (3) (a saving not now relevant) the prices charged by the licensee for energy supplied by him shall not exceed the maxima fixed by his license, or, in the case of a method of charge approved by the State Government, such maxima as the State Government shall fix on approving the method. " It was in exercise of the powers conferred by the State Government under s.3(2) of this Act that the notification dated December 30, 1942 to which reference has already been made was issued and under it the charges for supply were fixed. 523 While narrating the facts we have already set out the maximum rate which was fixed as that which could be levied by licensees under the Act both for the supply of energy for power as well, as for lights and fans. This notification came into force on and was effective from February 1, 1943. We have already seen how by virtue first of the notification under the Defence of India Rules and later under the War costs Surcharge and still later under the Bombay Act of 1946, the maximum was raised by 33 1/3 per cent. of that specified in the notification of December 30, 1942 and how these rates continued to be validly charged by the Appellant till September 30, 1949 when the Bombay Act of 1946 lapsed. The question that now falls to be considered is as regards the legality of the continuance of this rate beyond the maximum prescribed by the notification of December 30, 1942 subsequent to September 30, 1949. For this purpose, it is necessary to refer to the Supply of 1948 and it is on the proper construction of it ', provisions and their effect on the limitations prescribed by the previous law on the rates to be charged that the decision of these appeals turns. Reference has already been made to section 70 of the Supply Act, 1948 and this provision would show that where there is any inconsistency between the two Acts, the Supply Act, 1948 would prevail and it is only to the extent that the two enactments do not cover the same field that the provisions of the Electricity Act, 1.910 would continue in operation. Coming now to the provision relating to the fixation of the rates to be charged by a licensee for the supply of energy the relevant provisions of the supply Act dealing with it are those contained in ss.57 and 57A and read with Sch. VI to the Act. Pausing here it is necessary to mention that some of the provisions of the Supply Act of 1948 were amended by Central Act 101 of 1956 and among them was section 57. Section 57, as originally enacted, contained substantially the same provisions as are after amendment contained in section 57 and 57A, and as thus there has been no material change effected by the Amendment for the purposes of the present appeal, we shall set out sections 57 and 57A which were in force when the present proceedings were commenced: "57. The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority (a) in the case of a licence granted before the commencement of this Act, from the date or the commencement of the licensee 's next succeeding year of account; and 524 (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the , and the licence granted to him thereunder and of any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules." "57A. (1) Where the provisions of the Sixth Schedule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely: (a) the Board or where no Board is constituted under this Act, the State Government (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule; and (ii) shall, when so requested by the licensee in writing, constitute a rating committee to examine the licensee 's charges for the supply of electricity and to make recommendations in that behalf to the State Government. Provided that where it is proposed to constitute a rating committee under this section on account of the failure of the licensee to comply with any provisions of the Sixth Schedule, such committee shall not be constituted unless the licensee has been given a notice in writing of thirty clear days (which period if the circumstances so warrant may be extended from time to time) to show cause against the action proposed to be taken. Provided further that no such rating committee shall be constituted if the alleged failure of the licensee to comply with any provisions of the Sixth Schedule raises any dispute or difference as to the interpretation of the said provisions or any matter arising therefrom and such difference or dispute has been referred by the licensee to the arbitration of the Authority under paragraph XVI of that Schedule 525 before the notice referred to in the preceding proviso was given or is so referred within the period of the said notice: Provided further that no rating committee shall be constituted in respect of a licensee within three ,,cars from the date on which such a committee has reported in respect of that licensee. unless the State Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendations of the previous rating com mittee unfair to the licensee or any of his consumers; (b) (c) (d) within one month after the receipt of the report under clause (e), the State Government shall cause ,he report to be published in the Official Gazette, and may at the same time make an order in accordance therewith fixing the licensee 's charges for the supply of electricity with effect from such date, not earlier than two months or later than three months, after the date of publication of the report as may be specified in the order and the licensee shall forthwith give effect to such order ; (e) (The other sub sections (2) to (8) are not material and so are omitted). Schedule VI referred to in ss.57 and 57A has underdone modification as a result of the amendment effected by Act 101 of 1956 and some argument has turned on these changes. We shall set out para 1 and also para 11 of this Schedule as they stood when originally enacted and as they now read. As enacted the first two paragraphs ran: "1. The licensee shall so adjust his rates for the sale of electricity by periodical revision that his clear profit in any year shall not as far as possible exceed the amount of reasonable return: Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the amount of the reasonable return by more than thirty per centum of the amount of the reasonable return. (1) If the clear profit of a licensee in any year of ac count is in excess of the amount of reasonable return, one third of such excess, not exceeding 7 1/8 per 526 cent. of the amount of reasonable return, shall be at the disposal of the undertaking. Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct. (2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear profit is less than the reasonable return in any year of account. (3) On the purchase of the undertaking under the terms of its license any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve. " These paragraphs were amended in 1956 to read: " Not withstanding anything contained in the , except sub section (2) of section 32A, and the provisions in the licence of a licensee, the licensee shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonabe return: Provided that such rates shall not be enhanced more than once in any year of account: Provided further that the licensee shall not be deemed to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the amount of reasonable return by fifteen per centum of the amount of reasonable return: Provided further that the licensee shall not enhance the rates for the supply of electricity until after the expiry of a notice in writing of not less than sixty clear days of his intention to so enhance the rates, given by him to the State Government and to the Board: Provided further that if the rates of supply fixed in pursuance of the recommendations of a rating committee constituted under section 57A are lower 527 than those notified by the licensee 'under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them. (1) If the clear profit of a licensee in any year of ac count is in excess of the amount of reasonable return, one third of such excess, not exceeding five per cent. of the amount of reasonable return, shall be at the disposal of the undertaking. Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct. (2) The Tariffs and Dividends Control Reserve shall be available for disposal by The licensee only to the extent by which the clear profit is less than the reasonable return in any year of account. (3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends "Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve. " Paragraph 17 of this Schedule contains the definitions and among the terms there defined is 'clear profit ' an expression used in paragraphs 1 & 11. As nothing material turns on the manner in which the 'clear profit ' is to be computed which is described in para 17 we do not think it necessary to refer to the details contained there. The questions raised before us are principally three: (1) The effect of the Supply Act, 1948 on the maxima of rates fixed by Government under section (2) of the Electricity Act, 1910 which could be charged by a licensee. The submission of the appellant which was accepted by the High Court but which was contested by the respondents before us was that any changes that might be effected by a licensee acting under the provisions under s.57 of the Supply Act read with paragraph 1 of Sch. VI in revising his rates so as to derive the reasonable return permitted by these provisions, had still to be within the maxima prescribed by Government under the Electricity Act of 1910; (2) The next point was that assuming that the Appellant was right on point No. 1, whether the charges demanded by ,the appellant company from the respondents were legal and 528 justified by the Supply Act. It is on this point that the learned Single Judge in the High Court has upheld the contention urged by the respondent; (3) Closely related to the 2nd point, the limits of the Jurisdiction of a Civil Court to afford relief to consumers who complained of excessive charges being demanded by licensees. So far as the 1st point is concerned viz., whether the maxima prescribed by Government under the Electricity Act. 1910 still continues to bind the licensee after the coming into force of the Supply Act, we feel no hesitation in agreeing with the submission of the Appellant which found favour with the High Court. Section 57 of the Supply Act, 1948 both as originally enacted and as amended in 1956 expressly provide that the provisions of the Vlth Schedule shall be deemed to be incorporated in the license of every licensee and "that the provisions of the and the license granted thereunder and any other law, agreement or instrument applicable to the licensee shall be void and of no effect in so far as they are, inconsistent with the provisions of the section and the said Schedule". Read in the light of s.70 of the supply Act it would follow that if any restriction incorporated in the licence granted under the Electricity Act, 1910 is inconsistent with the rate which a licensee light charge under para 1 of Sch. VI of the Supply Act, 1948, the former would, to that extent, be superseded and the latter would prevail. Para 1 of Sch. VI both as it originally stood and as amend ed, as seen already, empowered the licensee "to adjust his rates, so that his clear profit in any year shall not, as far ,is possible, exceed the amount of reasonable return". We shall reserve for later consideration the meaning of the expression "so adjust his rates". But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force, since the "clear profit" and "reasonable return" which determined the rate to be charged was to be computed on the basis of very different criteria and factors than what obtained under the Electricity Act. In support of the submission that notwithstanding the Supply Act the maxima fixed by the State Government was still binding on the licensee and that any adjustment within 1st paragraph of Sch. VI should be within the limits of this maxima we were referred to a decision of the Bombay High 529 Court reported as Babulal vs Chopda Electricity Supply Co.(1) It is sufficient to extract the headnote to understand the point of the decision: "Section 57(1) of the , or cl. 1 of the Sixth Schedule to the Act, does not confer a right upon a licensee unilaterally to alter the terms and conditions on which supply may be made by a licensee of electrical energy to consumers in the area of supply irrespective of the res trictions contained in the license and the . Not only does section 57(1) of the , impose an obligation upon the licensee to conform to the provision is of the Sixth Schedule and the table appended to the Seventh Schedule to the Act, but the first clause of the Sixth Schedule imposes a further obligation to make periodical revisions and to adjust the profits so that his profits in any year do not as far as possible exceed a rea sonable return on his investment. There, is nothing in s.57 or in the first clause of the Sixth Schedule which either expressly or by implication amends the provisions of the , contained in s.3(2)(d) or in section 21(2) of that Act or the rates and methods of charging the same as fixed by the licence. The provision contained in s.3(2)(d) of the , which requires the State Government to prescribe the terms and conditions under which the supply of energy is to be made is not affected by the . The right to amend the license is conferred by the , upon the State Government and that right is not affected by the Eectricity (Supply) Act, 1948. " With great respect to the learned Judge we are unable to agree with this decision, for, in our opinion, the provisions of the Supply Act, 1948 to which we have adverted ,ire too strong to permit the construction, that the maxima prescribed under the Electricity Act of 1910 survives as a fetter on the rights of the licensee under paragraph 1 of the Vith Schedule. If there was any room for any argument of this kind on the terms of para 1 of Sch. VI as originally enacted, the matter is placed beyond possibility of dispute by the amendment effected by Act 101 of 1956 to the Vlth Schedule where the opening paragraph commences with the words 'notwithstanding anything (1) 56 Bom, L R. 994 530 contained in the and the provisions in the licence of a licensee '. We, therefore, consider that the first submission of learned Counsel for the Appellant that the limit imposed by the maxima prescribed by the State Government ceased to be in force after the Supply Act of 1948 came into force is well founded. The next question for consideration is whether the action of the appellant company in continuing to charge the rates that it was permitted to charge by virtue of the War Cost (Surcharge) Rules and the Bombay Electricity (Surcharge) Act, 1946 i.e., by making an addition of 33 1/3 per cent. to the maxima which he was permitted by the notification dated December 30, 1942 is lawful. This would have a vital bear ing on the point involved in Civil Appeal 591 of 1963 which relates to the unit charge for light and fans for domestic consumption as well as on the legality of the standing charges for the supply of power which is raised in Civil Appeal 590 of 1963. It would be recalled that in these cases the Appellant has merely continued the charges that it was making before September 30, 1949 even after that date, there being no variation in the rates charged. On October 1, 1949 the position was this. The Bombay Act of 1946 having lapsed by efflux of time, the previous charge which was 33 1/3 per cent. in excess of the maxima permitted could not be Continued unless recourse was had to the provisions of paragraph 1 of Sch. VI of the Supply Act of 1948. It was not suggested that on or before that day there was any conscious act on the part of the Appellant to determine (a) the "clear profit" on the basis formulated in Sch. VI and (b) an adjustment of its rates so as not to exceed the amount of the reasonable return permitted by paragraph 1 of that Schedule. In this connection there was some debate in the courts below as to the date the Appellant 's license came to be governed by the provisions of section 57(1) and the Vlth Schedule. Section 57(a) fixes the period from which licenses previously in existence would be governed by Sch. VI as "the commencement of the licensee 's next succeeding year of account". The controversy was as to the period which would be the date of the commencement of the Appellant 's "next succeeding year of account". Two possible interpretations were suggested of this provision: (1) As the year of account of the Appellant was the financial year it was contended on behalf of the respondents that the Act became applicable to it from April 1, 1949 onwards, the contention on the side of the Appellant being that it became applicable only on April 1, 1950, but for the purposes of the cases before us it makes little difference, because assuming that section 57 and the Supply Act 1948 became ap plicable to the Appellant from April 1, 1950 onwards, still the same question would arise as to whether at the commencement 531 of that year the requirements of paragraph 1 of the Vlth Schedule had been complied with. The material words of paragraph 1 of the VIth Schedule are "The licensee shall so adjust his rates". The normal inter pretation of these words would imply that there should be a conscious act on the part of the licensee, for the Act and the Schedule for the first time specified the criteria for determining the maximum profit that shall be made by a company and gave elaborate calculations as to how the 'clear profit ' and the reasonable return ' were to be computed and determined. It is, however, possible to read the paragraph as meaning that it was only in those cases where either an increase or a decrease of the charge was necessary in order to ensure (a) that a licensee obtained a reasonable return or that the profit that he made exceeded or fell below the amount of reasonable return that the rates had to be modified. In other words, where no change is needed, it might be presumed that no adjustment was needed. In view of the machinery that is provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by the Vlth Schedule we consider that the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously does not constitute a failure "to adjust the rates" as required by paragraph 1. This leads us to the further questions (1) as to whether as suming that the rates had been adjusted by the licensee as required by paragraph 1 and the licensee is charging the rates so adjusted whether the rates now charged (a) for lights and fans, and (b) as standing charges for the Supply Of motive power, could be successfully impugned as not conforming to the requirements of the Vlth Schedule, (2) and closely related to this, and that is the third question we have specified earlier, whether having regard to the provisions contained in sections 57 and 57A of the Supply Act, a Civil Court would have jurisdiction to entertain a suit for the reliefs claimed in the present plaints. Taking up, first, the question of lights and fans (and the standing charges for the supply of power would be governed by similar considerations) the position would be that the Appellant must be deemed to have adjusted his rates under paragraph 1 of the Vlth Schedule when after the lapse of the Bombay Act of 1946 it continued to levy the same charges. When in 1949 or 1950 it is deemed to have made this adjust ment paragraph 1 which empowered it to make this adjustment contained a proviso which we shall recall: "Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit 532 in any year of account has not exceeded by more than 30 per cent of the amount of the reasonable return". The proviso, no doubt, uses a double negative "not be considered to have failed" but expressed in positive terms it would mean that where the licensee adjusted his rates so that his clear profit exceeds by more than 30 per cent the reasonable return to which it was entitled, it could not be said to have adjusted his rates. In other words, such an adjustment would not be an adjustment at all as is contemplated by paragraph 1. Paragraph 2 of the VIth Schedule proceeds on the basis that there is an adjustment within paragraph 1 in other words, that the rate charged would yield to the licensee a clear profit which would not exceed the reasonable return by more than 30 per cent. It is only on that basis that the percentages specified in paragraph 2 could be properly appreciated, for it proceeds to take the excess over the reasonable return, divide it by 3 and of that 1/3rd allot a proportion not exceeding 7 1/2 per cent. over to the licensee himself. Of the balance half is to be appropriated to the Tariffs and Dividend Control Reserve and the other half is directed to be given to the consumers by granting them proportional rebates. From the percentage named in para it read in conjunction with the absolute prohibition against a rate which would yield more than 30 per cent. over the reasonable return it appears to us that the lawfully adjusted rate contemplated by paragraph 1 is one where the amount of clear profit does not exceed the "reasonable return" by more than the maximum specified i.e., 30 per cent. The other paragraphs of the Vlth Schedule deal with the creation and disposal of certain funds and reserves to which it is not necessary to refer. We thus reach the position that there could be a unilateral adjustment of the rates by a licensee but that such an ad justment must not leave him with more than the reasonable return plus another 30 per cent, this being an absolute limitation on the power to "adjust". Where the amount of "reasonable return" is exceeded paragraph 2 comes into play and the excess over the reasonable return is distributed in the manner laid down in that paragraph. We have next to consider that effect of the amendment to para 1 of the Vlth Schedule brought about by Central Act 101 of 1956 by which the maximum rate permitted to a licensee became reduced from one which yielded him not more than 30 per cent. beyond the "reasonable return" to one which yielded him not more than 15 per cent. The result of this would obviously be that there should have been a further 533 adjustment by licensees so as to conform to the revised pat tern. Here again, the question would arise whether there should be a conscious readjustment. Applying the rule of construction we have explained earlier in relation to "adjustment" in 1949 or 1950 it would be seen that if the rate previously charged yielded a profit over the "reasonable return" of 15 per cent. or less there need be no readjustment and if the rate charged yields more than this permitted profit there should be a readjustment. The result would, therefore, be that unless it is established that the rate charged by the Appellant for lights and fans and for the standing monthly charge for supply of power resulted in a profit to it of more than 15 per cent. over the "reasonable return", the Appellant would be held to have properly adjusted these rates in conformity with the requirements of the relevant provisions of the Supply Act as amended by Act 101 of 1956. We shall. when dealing with the question relating to the jurisdiction of a Civil Court to entertain suits relating to infractions by licensees of their obligations under Para 1 of the VIth Schedule which is the last of the matters debated before us, also examine the question as to the party on whom the burden of proof would lie to establish that the adjustment which is made or which could be deemed to be made by a licensee by the continuance of a preexisting rate contravenes the statutory provisions. Coming next to the unit charge for supply for power, the impugned rate was that which had been stepped up from that which had been continued from before September 1949, by action taken in compliance with the 3rd proviso to paragraph 1 of Sch. VI as amended by Act 101 of 1956. The licensee notified to the consumers on September 25, 1958 his intention to enhance the unit rate for the supply of power. Previous thereto in terms of that proviso a notice in writing had been issued to the State Government intimating its intention to enhance the rate, and thereafter the consumers were notified of this increase in rates. It would be seen that the 3rd proviso to para 1 requires a notice to the State Government of the intention of the licensee to enhance the rates. On August 7, 1958 the Appellant intimated the Government 'of Mysore setting out the clear profit it had made in 1957 58 and the estimated working position in 1958 59 and its intention to increase the unit rate for supply of power from 6 nP. to 9 nP. unit. Thereafter, on September 25, 1958, it notified the consumers that on and after November 1, 1958 it would be charging the enhanced unit rate together with the previously existing standing charges of Rs. 2.69 per B.H.P. per month The only point that was suggested as invalidating the notice to the Government was that the Government were not informed that the licensee was effecting an 534 enhancement of the rates as regards the standing charges and that the notice was, therefore, bad. We do not consider that there is any substance in this objection. Rs. 2.69 was the charge which had been made prior to the notice as standing charges and if, as we have held, that was the rate which must be deemed to have been adjusted and which the appellant was entitled to charge when Sch. VI as it originally stood, the continuance of the same charge after the amendment of the Schedule would not make it an enhancement. There is however one circumstance to which it is necessary to advert. As already stated, the rate charged prior to the Supply Act, 1948 and which was continued thereafter would be a lawful rate only if the profit that it left to the licensee was less than 30% over the reasonable return. This was the position when the Supply Act, 1948 came into force. By reason of the amendment effect by Act 101 of 1956 the percentage of permissible profit was reduced to 15% and so the adjusted rate Would be valid if it was within this per missible limit. Unless the adjusted rate prior to the amendment of 1956 was in excess of 15 per cent permitted by the 1st proviso to paragraph 1 the continuance of such rate could not be objected to as an enhancement or as a violation of paragraph 1 of the Vlth Schedule. The question as to the burden of proof as regards this requirement and whether the same has been discharged in these cases we shall reserve for later consideration. Subject to this so far as regards the unit charge, the requirement of the third proviso to paragraph 1 was complied with. There was thus no illegality or invalidity attaching to the notice to the Government issued under proviso 3 to paragraph 1 and the contention raised in that behalf by the respondents must be rejected. The question next to be examined is as to the jurisdiction of the Civil Court to entertain the suits from which these appeals arise for the reliefs prayed for therein. Section 57 of the Supply Act, 1948 which incorporates the Vlth Schedule in the licence of every licensee lays an obligation on the licensee to comply with the provisions of the said Schedule. Then comes section 57 A under which where the Board or the State Government, where there is no Board, "if satisfied that the licensee has failed to comply with any of the provisions of the Vlth Schedule and shall when so requested by the licensee in writing, constitute a Rating Committee". It is unnecessary to refer to the provisions relating to the procedure to be followed by the Rating Committee but it is sufficient to recall that the Rating Committee is empowered to fix the rates to be charged by licensees and the duty is cast on the Rating Committee to recommend a rate which would ensure to the licensee a clear profit sufficient to afford it a reasonable return as defined in the Vlth Schedule during the 535 next three years of account. The provisions in section 57 A have to be read in conjunction with the last proviso to paragraph 1 of the Vlth Schedule under which where the rates are fixed in pursuance of the recommendations of the Rating Committee and they are lower than those adjusted by the licensee under the Schedule, the licensee is directed to refund to the consumers the excess amount recovered by him from them. The argument of the learned Solicitor General was that as the Supply Act had by section 57A made special provision and ,created a special machinery for the determination of a pro per rate to be charged by a licensee on its consumers, a suit in a civil court by the consumer for obtaining the same relief was impliedly barred. The procedure prescribed by section 57A was (1) where a consumer complained that a rate charged was excessively high he should first approach the Board or where there was no Board, the State Government, (2) the Board or the State Government should, on considering the ,complaint, be prima facie satisfied about the reasonableness of the complaint and it was in their discretion to appoint a Rating Committee, (3) if the Board or the State Government decided that it was not necessary to appoint a Rating Committee there was an end of the matter. If, however, a committee was appointed the Rating Committee would take evidence and, applying the provisions of the Act and the Schedules, would arrive at a rate which would yield the licensee an amount not less than the reasonable return that is provided for him under the Act. It was submitted that this procedure was wholly incompatible with the continued existence of the jurisdiction of the civil court to determine any question as to whether a licensee had failed to comply with the requirements of Sch. VI and in particular as to the reasonableness of the rate to be charged. Besides, attention was also drawn to the last proviso to paragraph 1 of the Vlth Schedule under which provision is made for refund to consumers in cases where an excess amount is collected from them beyond what was fixed as a reasonable rate by the Rating Committee. It is undoubted that these provisions have laid down a specific procedure for violations by the licensee of the re quirements of Sch. There being no express bar to the jurisdiction of the Rating Committee; or expressed in other scope and extent of the bar that could be implied from the existence of these provisions. One thing, however, is clear; the bar cannot extend beyond the scope and limits of the jurisdiction of the Rating Committee; or expressed in other words, the jurisdiction 'of the civil court could not be held to be excluded in respect of those matters which are not assigned by section 57A to the Rating Committee, or in regard to which the Rating Committee cannot afford the consumer relief against an infraction of a statutory provision by which he is aggrieved 536 Before turning to the facts of the present case with a view to examine whether the relief sought by the respondents viz., a declaration and injunction could be granted by a civil court, we shall deal with the major argument of the learned Solicitor General that for no infraction by a licensee of his obligations under the schedule could a suit be filed in a civil court. This was based on the words of section 57A (1)(a)(i) which empowers the Board or the State Government to appoint a Rating Committee if satisfied "that the licensee has failed to comply with any of the provisions of the Sixth Schedule". The learned Solicitor General further contended that the provisions contained in section 57A were wholly incompatible with the existence of a right in a consumer to move a civil court for obtaining a refund even of an illegal collection which the licensee is prohibited from charging. It was in this connection that he invited our attention to the provision for refund contained in the last proviso to paragraph 1 of Sch. VI and relying on this he submitted that the scheme of section 57A could obviously not have contemplated a procedure by which one consumer went to a civil court and obtained redress, the civil court holding that the rate charged so far as the particular plaintiff was concerned was illegal and therefore entitling him to a refund of a particular sum, while another consumer approached the Government who appointed a Rating connection that he invited attention to the provision for it did provide, for a different amount of refund. This is doubtless a serious argument which requires careful examination. In this context and in support of this submission stress was laid down on the words "the licensee has failed to comply with any of the provisions of the Sixth Schedule" occurr in in section 57A (1)(a)(i) and it was urged that for any and every default of the licensee resort must be had to the Board or the Government and could not be had to the civil courts. But from these provisions it does not, in our opinion, follow that the jurisdiction of a civil court is barred in respect of the infraction of every obligation cast on a licensee by Sch. Broadly speaking, the utmost that could be urged would be that the bar to the jurisdiction of a civil court would be co extensive with and be restricted to the powers of the Rating Committee and the reliefs which the committee could grant under section 57A. A few examples of breaches of Sch. VI which a licensee may commit and in regard to which a reference to the Rating Committee is not contemplated would make our meaning clear. The first proviso to paragraph 1 specifies that "such rates shall not be enhanced more than once in any year of account". Let us suppose that the licensee contra venes this prohibition and enhances the rate more than once. There is no provision in section 57A for the Rating Committee to control the licensee in the event of his transgressing a positive 537 prohibition of this sort and, indeed, it would be most anomalous to say that the statute having made a provision that the rates shall not be enhanced more than once in a year, the consumer is left without a remedy if the Government does not choose to appoint a Rating Committee which, as we said earlier, has no power to afford redress to the affected consumer. In such a case it appears to us that by no principle of construction can the jurisdiction of a civil court to grant a declaration and an injunction be denied. It would also follow that if that rate is collected, the court could order a refund of the illegal collection. Take next the case where a licensee in contravention of the 3rd proviso enhances the rates for the supply of electricity without giving the requisite notice of his intention to the Government and to the Board. Here again, the Rating Committee does not come into the picture for preventing the continued charging of the rates in contravention of the 3rd proviso and here we consider it impossible to contend that the jurisdiction of the civil court to grant a declaration and an injunction are affected by the provisions of section 57A. We therefore arrive at this position that notwithstanding the generality of the words in section 57A(1)(a)(i) referring to the failure on the part of the licensee in complying with the requirements of the Sixth Schedule" there are some "failures" in regard to which the jurisdiction of the civil court it is clear, not barred. The next question would be whether the same principle is not applicable to a case where the 2nd proviso is contravened i.e., where the licensee so adjusts his rates as to yield him a profit beyond 15% over the reasonable return. The proviso casts an absolute obligation on the licensee not to exceed this limit. There is thus a statutory prohibition against the licensee of fixing a rate which would yield such excessive profit, and if he does so he would not be acting in terms of the Vlth Schedule at all or by virtue of a power conferred by that Schedule and therefore he would be amenable to the jurisdiction of the court which would be competent to issue an in junction restraining him from charging that rate. No doubt, the proviso also adds that if he does so he would be failing to comply with the requirement 'of the main part of paragraph 1. It would therefore follow that in a case where in adjusting his rate the licensee fixes it so high as to contravene this proviso, it would be open to the a ,grieved consumer to approach the Board or the State Government to appoint a Rating Committee. But from this circumstance we are not prepared to hold (a) that the action of the licensee in charging a prohibited rate is any the less an illegality not countenanced by the statute and (b) that where such an illegality is made out the jurisdiction of a civil court to afford relief is ousted. It is possible to hold, and we do not desire 538 to express a final opinion on a point which is not directly involved in these appeals, that the jurisdiction of the court may be confined to granting a declaration as to the invalidity of the adjustment and injunction against the violation of the statutory prohibition, and not to grant a refund. It is only necessary to add that the relief sought in these 2 suits was merely a declaration regarding the invalidity of the rates. charged and an injunction restraining the Appellant from continuing to charge them. We are, therefore, satisfied that the mere existence of section 57A does not by itself, and without reference to the parti cular violation complained of by the licensee, bar the jurisdiction of a civil court and the argument in the extreme form presented to us by the learned Solicitor General must be rejected. The next and the last question that arises is whether the respondents have established that the appellant has violated any of the provisions of the Supply Act and in particular those contained in Sch. VI, paragraph 1 of the Supply Act. We have already dealt with the objection that there was no ,,adjustment" of rates in 1949 or 1950. Again, we have al ready held that in regard to the unit rate for power in regard to which alone there was an enhancement there was a valid notice issued to Government as required by the 3rd proviso to paragraph 1. In the circumstances of this case the only ground upon which the respondents would have been entitled to the relief of declaration and injunction that they claimed was that they had established that the rate charged by the Appellant offended the second proviso, in that it yielded a profit in excess of 15 per cent of the reasonable return. The learned Judge in the High Court has held that the onus of proving that the rate which the Appellant charged was within this limit was on it and that as no evidence had been led by it on this point he granted the plaintiffs the declaration and injunction they sought. We consider that the learned Judge was in error in this respect. There is no presumption that the rate charged by a licensee contravenes the statutory prohibition. It is for the party who alleges his right to relief to establish the facts upon which such relief could be obtained. It was, therefore, for the plaintiffs to prove by facts placed before the court that the rate charged offended the statutory provision. This they admittedly failed to do and we, therefore, hold that they were not entitled to the declaration and injunction which the learned Judge of the High Court granted. We accordingly allow the appeals and direct the dismissal of the suits. The appellant would be entitled to its costs here and in the High Court one hearing fee.

IN-Abs

The appellant company was supplying electricity under a licence issued in 1932 by the Government of Bombay under the . The 'licence fixed the limits of the prices which the appellant could charge but these limits were altered by an order made by the Government on December 30, 1942, acting under para XI of the Schedule to that Act, Due to the conditions brought about by the second world war, the licensee was permitted to add a surcharge not exceeding 33 1/3% to the existing charges. On September 30, 1946, the Bombay Electricity (Surcharge) Act, 1946, was passed which continued the surcharges for a period of three years. Though the Surcharge Act of 1946 expired on September 30, 1949, the appellant continued charging the consumers at rates which included the surcharge and this was sought to be justified by resort to the provisions of the Electricity Supply Act, 1948, which came into force on September 10, 1948. On September 25, 1958, the appellant gave notice to its customers that with effect from November 1,1958, it would charge them at certain rates which the customers considered to be illegal and unauthorised on the ground that they were in excess of those prescribed in the order of December 30, 1942. In the suits instituted on behalf of the consumers challenging the legality of the rates levied by the appellant in excess of the maximum pres cribed by the Government of Bombay in its order dated Decem ber 30, 1942, the defence of the appellant was that the charges were well within the limits prescribed by the Electricity Supply Act, 1948, which according to its contention, effected such a radical change in the method of determining the reasonable rate as to completely supersede the rates and the maxima fixed under the Electricity Act of 1910. The question was also raised as to whether having regard to the provisions contained in sections 57 and 57A of the Act of 1948 a civil court would have jurisdiction to en tertain a suit challenging the legality of the rates levied by the appellant. Held (i) The maxima prescribed by the State Government which bound the licensee under the , no longer limited the amount which he could charge after the Electricity Supply Act, 1948, came into force and that the licensee had a statutory right to adjust his rates as provided by Part 1 of Sch. VI of the latter Act. (ii) Where a party challenged the legality of the rates on the ground that they contravened the provisions contained in Sch. VI of the Act of 1948 there was no duty on the licensee to prove that the rates were within the limits indicated in Sch. VI and it was for the party alleging his right to relief to prove his case. 504 Per Sarkar, J. The respondents were not entitled to canvass in a civil court any question as to the rates of a licensee being in excess of the limit prescribed in para 1 of Sch. VI to the Act of 1948. A civil court could not declare that the rates charged by a licensee were illegal as they made, its clear profit exceed the reasonable return. If there was such excess, the relief could be obtained only if the Government set up a rating committee, a refund became due thereupon under the last proviso to para 1 of Sch. VI or if relief was available under para II(1) of that Schedule. Per Das Gupta and Rajagopala Ayyangar, JJ. (i) There could be unilateral adjustment of the rates by a licensee but such an adjustment must not leave him with more than the reason able return. Where the amount of reasonable return is exceeded, para II of Sch. VI comes into play and the excess over the reasonable return is to be distributed in the manner laid down in that paragraph. (ii) In view of the machinery that is provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by Sch. VI, the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously did not constitute a failure to adjust the rates as required by para 1. (iii) There being no express bar to the jurisdiction of the civil court, its jurisdiction could not be held to be excluded in respect of such matters which were not assigned by section 57A of the Act of 1948 to the rating committee, or in regard to which the rating committee could not afford the consumer relief against an infraction of a statutory provision by which he was aggrieved.

ion No. 211 of 1963. Petition under article 32 of the Constitution of India for the enforcement of the Fundamental Rights. R. K. Garg, for the petitioner. C. K. Daphtary, Attorney General, B. R. L. Iyengar and B.R. G. K. Achar, for the respondents. March 31, 1964. The Judgment of the Court was delivered by SIKRI, J. This is a petition under article 32 of the Consti tution for enforcing the fundamental rights of the petitioner under articles 14, 16 and 19 of the Constitution. Although the petition raises various points, before us only two points have been argued by Mr. Garg, on behalf of the petitioner. We are grateful to Mr. Garg, who has argued as amicus curiae, for the assistance he has given. The two points may be formulated as follows: (1) That the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959, were not made with the previous approval of the Central Government under section 115(7) of the State 551 Re organisation Act, and, therefore, do not govern the petitioner insofar as the conditions of service have been varied to his disadvantage; (2) That the Madras Government had, prior to, November 1, 1956, by various orders, reduced the petitioner in rank in violation of article 311(2) of the Constitution and article 16. In order to appreciate the arguments addressed to us, it is necessary to give a few facts. The petitioner was selected by the Madras Public Service Commission as a Lower Division Clerk under the Madras Ministerial Service Rules in 1949, and was allotted to the Revenue Department and posted in South Kanara District. He was promoted as Upper Division Clerk on April 2, 1956. According to the petitioner, he should have been promoted much earlier as he had rendered outstanding and meritorious service. According to the State, the petitioner was considered for inclusion in the eligibility list from 1955 onwards, but was not selected as he was not considered fit. The State admits that he was promoted as Upper Division Clerk with effect from April 2, 1956, but alleges that this was on a temporary basis. He was later reverted and then again posted as a temporary Upper Division Clerk. In August 1957, the petitioner was considered and included in the eligibility list at Serial No. 14. This list was regularised on December 12, 1957, in accordance with Rules 39(e) and 35 of the Madras State and Subordinate Service Rules, with effect from October 19, 1957. According to the petitioner this resulted in the loss of benefit of service and increments. In the meantime, reorganisation of States took place under the State Reorganisation Act (XXXVII of 1956) South Kanara District, except Kasaragod Taluk, went to the new Mysore State and the petitioner was allotted to it. On May 11, 1957, the Government of India addressed a memorandum (No. S.O. SRDI 1. APM 57) to all State Governments. Broadly speaking, the Central Government said that some conditions of service should be protected, e.g., substantive pay of permanent employees, certain type of special pay, lave rules unless the Government servant opts for new leave rules, etc. But in respect of departmental promotion it said that "the question whether any protection should be given in respect of rules and conditions applicable to Government servants affected by reorganisation immediately before the date of reorganisation in the matter of travelling allowance, discipline, control, classification, appeal, conduct, pro bation and departmental promotion was also considered. The Government of India agree with the view expressed on behalf of the State representatives that it would not be appropriate 552 to provide for any protection in the matter of these condi tions. " Therefore, it is evident from this memorandum that the Central Government had told the State Government that they might, if they so desire, change service rules as indi cated in the memorandum. But Mr. Garg argues that even so this does not amount to previous approval within section 115(7) of the to the making of the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959. What then is the true meaning of the expression "previous approval" in the proviso to section 115(7). Sub section (7) of section II 5 provides that: Nothing in this section shall be deemed to affect after the appointed day the operation of the provisions of Chapter 1 of Part XIV of the Constitution in relation to 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) of subsection (2) shall not be varied to his disadvantage except with the previous approval of the Central Government. " The effect of this sub section is, inter alia, to preserve the power of the State to make rules under article 309 of the Constitution, but the proviso imposes a limitation on the exercise of this power, and the limitation is that the State cannot vary the conditions of service applicable immediately before November 1, 1956, to the disadvantage of persons mentioned in sub ss (1) and (2) of section 115. It is not disputed that the petitioner is one of those persons. Mr. Garg has submitted that the very fact that the Mysore General Services (Revenue Subordinate Branch) Recruitment Rules, 1959, as framed, were not sent to the Central Government for approval before being promulgated shows that previous approval has not been obtained. The memorandum, he says, is not approval but an abdication of the powers of the Central Government. In this connection he relies on the decision of the Court of Appeal in the case of In re Bosworth and Corporation of Gravesend(1), but this, decision has no bearing on the point under discussion. An Order in Council had been made under the provisions of the Burial Act, 1853, whereby it was ordered that no new burial ground shall be opened in (amongst other places) Gravesend, without the previous approval of one of Her Majesty 's Principal Secretaries of State. Permission was sought of the Secre tary of State to add additional land to an existing cemetery (1) [19051 2 K.B. 426. 553 The Secretary of State replied that his sanction to the pro posed addition was not required. It is this reply which was characterised by Collins, M. R., as renouncing of jurisdiction. We cannot appreciate how this assists us in interpreting the proviso to section 115(7). He further relied on the unreported ' judgment of the High Court of Mysore in C. K. Appanna vs State of Mysore(1), but this proceeds on a concession made by the Government Pleader and does not advance petitioner 's case. In our opinion, in the setting in which the proviso to section 115(7) is placed, the expression "previous approval" would include a general approval to the variation in the conditions of service within certain limits, indicated by the Union Government. It has to be remembered that article 309 of the Constitution gives, subject to the provisions of the Constitution, full powers to a State Government to make rules. The proviso to section 115(7) limits that power, but that limitation is removable by the Central Government by giving its previous approval. In this context, we think that it could not have been the intention of Parliament that Service Rules made by States would be scrutinised in the minutest detail by the Central Government. Conditions vary from State to State and the details must be filled by each State according to its re quirements. The broad purpose underlying the proviso to section 115(7) of the Act was to ensure that the conditions of ser vice should not be changed except with the prior approval of the Central Government. In other words, before embarking on varying the conditions of service, the State Governments should obtain the concurrence of the Central Government. In the memorandum mentioned above, the Central Government, after examining various aspects, came to the conclusion that it would not be appropriate to provide for any protection in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion. In our opinion, this amounted to previous approval within the proviso to section 115(7). It may be mentioned that by this memorandum the State Governments were required to send copies of all new rules to the Central Government for its information. Therefore ' in our opinion, there is no force in the first contention of the learned counsel for the petitioner, and we hold that the ruler, were validly made. There are two preliminary hurdles in the way of the petitioner regarding the second point taken on his behalf. Firstly, the State of Madras has not been made a party to this petition. Secondly, he never raised these points while he was serving under the State of Madras. It is difficult at this stage to challenge orders, which if quashed, would affect the rights of other civil servants who are not (1) W.P. No 88 of 1962 ; judgement dated January 13,1964. 554 parties to this petition. At any rate, the petitioner has not been able to show how article 16 was infringed before he was allotted to the new Mysore State. The State in its reply has asserted that all the orders complained against were passed by competent authorities, after considering the merits of the petitioner on each occasion. It was for the competent authorities to judge the merits of the petitioner. We find no force in this contention and hold that no infringement of article 16 has been established. Accordingly, in the result, the petition fails. In the circumstances of the case we order that the parties will bear their own costs in this Court. Petition dismissed.

IN-Abs

The petitioner was selected as a Lower Division Clerk under the Madras Ministerial Service Rules in 1949, and was posted in South Kanara District. He was promoted as upper division clerk on April 2, 1956 and according to him, he should have teen promoted much earlier. According to the State, the Petitioner was considered for inclusion in the eligibility list from 1955 onwards, but was not selected as he was not considered fit. The State admitted that he was promoted as Upper Division clerk with effect from April 2, 1956, but alleged that this was on a temporary basis. He was later reverted and then again posted as temporary Upper Division clerk. In August, 1957, the petitioner was considered and included in the eligibility list at serial No. 14. This list was regularised on December 12, 1957, in accordance with Madras State and Subordinate Service Rules, with effect from October 19, 1957. According to the petitioner this resulted in the loss of benefit of service and increments. In the meantime, reorganisati;on of States took place under the and South Kanara District went to the new Mysore and the petitioner was allotted to it. On May 11, 1957, the Government of India addressed a memorandum to all State Governments and in respect of departmental promotion it said that "the question whether any protection should be given in respect of rules and conditions applicable to Government Servants affected by reorganisation immediately before the date of reorganisation in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion was also considered. The Government of India agree with the view expressed on behalf of the State res presentatives that it would not be appropriate to provide for any protection in the matter of these conditions. It was urged on behalf of the petitioner (i) that the Mysore General Services Recruitment Rules, 1959, were not made with the previous approval of the Central Government under section 115(7) of the States Re organisation Act, and, therefore, do not govern the petitioner in so far as the conditions of service have teen varied to his disadvantage and (ii) that the Madras Government had, prior to November 1, 1956, by varoius orders, reduced the petitioner in rank in violation of article 311(2) of the Constitution and article 16. 550 Held: (i) In the setting in which the proviso to section 115(7) of the Act is placed, the expression "previous approval" would in clude a general approval to the variation in the conditions of service within certain limits, indicated by the Union Government. article 309 of the Constitution gives, subject to the provisions of the Constitution, full powers to a State Government to make rules. The proviso to section 115(7) of the Act limits that power, but that limitation is removable by the Central Government by giving its previous approval. The broad purpose underlying the Proviso to section 115(7) of the Act was to ensure that the conditions of service should not be changed except with the prior approval of the Central Government. In the memorandum, the Central Government, after examining various aspects, came to the conclusion that it would not be appropriate to provide for any protection in the matter of travelling allowance, discipline, control, classification, appeal, conduct, probation and departmental promotion. This amounted to previous approval within the proviso to section 115(7). By this memorandum the State Governments were required to send copies of all new rules to the Central Government for its information. Therefore, it must be held that the rules were validly made. In re Bosworth and Corporation of Gravesend, [1905] 2 K.B. 426 and C. K. Appamna vs State of Mysore, W.P. No. 88 of 1962, held inapplicable. (ii) The petitioner failed to show, how article 16 was in fringed before he was allotted to the new Mysore State. The State in its reply had asserted that all the orders complained against were passed by competent authorities, after considering the merits of the petitioner on each occasion. It was for the competent authorities to judge the merits of the petitioner. Therefore, it must be held that infringement of article 16 was not established.

Appeal No. 223 of 1964. Appeal by special leave from the Judgment and order dated December 6, 1963 of the Mysore High Court in Writ Petition No. 2273 of 1963. S.K. Venkataranga Iyengar and R. Gopalakrishnan, for the appellant. N.S. Krishna Rao and Girish Chandra, for respondents No. 1, 2, 4 10, 12 15. April 1, 1964. The Judgment of the Court was delivered by DAS GUPTA, J. Is the requirement of three clear days ' notice for the holding of a special general meeting as embodied in section 27(3) of the Mysore Town Municipalities Act 1951, a mandatory provision? That is the main question which arises for decision in this appeal. The appellant was elected as the President of Holenarsipur Municipality on September 11, 1962. At a special general meeting of the Municipal Council held on October 14, 1963, a resolution was passed in the following terms: "This Council has no confidence in the Municipal President of Holenarsipur Municipality. " On November 2, 1963 Mr. Narasimhiah, the President of the Council applied to the High Court of Mysore under article 226 of the Constitution praying for the issue of an appropriate writ quashing the proceedings of the meeting which culminat ed in the resolution of no confidence against him. Prayer; were made also for some consequential reliefs. Holenarsipur Municipality has twenty Councillors. Thirteen out of the them sent a request to the President to convene a special general meeting to discuss a resolution expressing no confidence in him as President. This request was handed over to the President on 25th September 1963. As however he did not take any steps for convening the meeting the Vice President acted in the matter calling a meeting to discuss the resoulation to express no confidence in the President. A notice under the Vice President 's signature stating that it was proposed to hold a special general body meeting 620 of the Municipality on the 14th October 1963 at 10 A.M. in the office premises and asking the members to be present in time was served on the Councillors. One copy of the notice was also posted up at the Municipal Office as required by 27(3) of the Mysore Town Municipalities Act, 1951 (herein after referred to as "the Act"). The notice bore the date 10th October 1963. On fifteen of the twenty Councillors the notice was personally served on that very date, i.e., the 10th October. On three of the Councillors, viz., the President Narasimhiah, Mr. Dasappa and Mr. Sanniah, the notice was served on the 13th October. It was served on Councillor Mirza Mohammad Hussain on the 12th October and on the Councillor R. G. Vaidyanatha on the 11th October 1963. When the meeting was held on October 14, 1963, nineteen of the twenty Councillors were present. The President, Mr. Narasimhiah was among them. He claimed to preside over the meeting. But, ultimately, he appears to have left the meeting. The meeting was then held under the presidentship of the Vice President Mr. Singri Gowda. The no confidence motion against the President was moved and was passed, fif teen members having voted for it. In challenging the legality of the proceedings of this meeting of 14th October and the validity of the resolution of no confidence passed there, the petitioner urged three principal grounds. The first is that the requisite three days ' notice was not served on all the members and so the meeting was not validly held. The second ground urged was that the meeting cannot be said to be properly held as he was not allowed to preside and the Vice President presided. and thus s.24(1)(a) of the Act was contravened. Thirdly, it was urged that the requisition for moving the resolution of no confidence did not comply with the proviso to s.23(9) of the Act as 15 days ' notice was not given of the intention to move the resolution. The High Court held that on the materials before it, it was not possible to pronounce as to the circumstances under which the Vice President presided at the meeting. So, the High Court rejected the contention that there was any contravention of s.24(1)(a) of the Act. The case made in the petition that 15 days ' notice had not been given of the intention to move the resolution does not appear to have been pressed at the hearing; as there is no mention in the judgment of any such argument. On the question regarding the failure. to serve three days ' notice of the meeting on all the Councillors, the High Court followed its own decision in another Writ Petition No. 2280 of 1963 and rejected the petitioner 's contention. The judgment in Writ Petition No. 2280 of 1963 which was produced before us shows that the High Court took the view that 621 as the notices were sent on the 10th October they must he held to have been given on that date even though they were ,actually served on the 11th, 12th and 13th; but, apart from that the High Court was of opinion that the provision about ' three days ' notice was only directory and not mandatory and so the omission to give notice would not affect the validity of the resolution. All the three grounds raised in the petition were urged before us in support of the appeal. As regards the petitioner 's contention that the meeting was not held in accordance with law as he was not allowed to preside, we are of opinion, on a consideration of what material there is on the record, that it was after he left the meeting that the Vice President took the chair and thereafter the no confidence resolution was moved and passed. There can therefore be no question of any contravention of the requirement that the President shall preside. There is. our opinion, no substance also in the contention that the proviso to s.23(9) was contravened. The proviso runs thus: "Provided that no such resolution shall be moved unless notice of the resolution is signed by not less than one third of the whole number of the Councillors and at least fifteen days ' notice has been given of the intention to move the resolution. " Admittedly, the notice was signed by more than one third of the whole number of Councillors. It is said, however, that fifteen days ' notice of the intention to move the resolution was not given. This argument which Mr. lyengar addressed to us, but which does not appear to have been urged before the High Court proceeds on the assumption that fifteen days ' notice of the intention to move the resolution has to be given not only to the President but also to the other Councillors. We do not think that that assumption is justified. In our opinion, what is required is that fifteen days ' notice of the intention to move the resolution has to be given to the President. In other words, all that is required is that before the resolution is actually moved the President has got fifteen days ' notice. In the present case, the meeting was held on October 14 and the President received the notice on the 25th September. There was thus more than 15 days ' notice given to him. This brings us to the main contention that three days ' notice of the special general meeting was not given and so the meeting is invalid. We find it difficult to agree with the High Court that "sending" the notice amounts to "giving" the notice. 622 "Giving" of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law however giving is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses to accept it. We can find however no authority or principle for the proposi tion that as soon as the person with a legal duty to give the. notice despatches the notice to the address of the person to whom it has to be given, the giving is complete. We are therefore of opinion that the High Court was wrong in thinking, that the notices were given to all the Councillors on the 10th October. In our opinion, the notice given to, five of the Councillors was of less than three clear days. The question then is: Is the provision of three clear days ' notice mandatory, ie., does the failure to give such notice make the proceedings of the meeting and the resolution pas sed there invalid? The use of the word "shall" is not conclusive on the question. As in all other matters of statutory construction the decision of this question depends on the ascertainment of the legislature 's intention. Was it the legislature 's intention in making the provision that the failure to comply with it shall have the consequence of making what is done invalid in law? That is the question to be answered. To ascertain the intention the Court has to examine carefully the object of the statute, the consequence that may follow from insisting on a strict observance of the particular provision and above all the general scheme of the other provisions of which it forms a part. In the State of U.P. vs Manbodhan Lal Srivastava (1) where the question arose whether the provisions of article 320(3)(c) of the Constitution are mandatory (which provides that the Union Public Service Commission or the State Public Service Commission shall be consulted on certain disciplinary matters), this Court laid stress on the fact that the proviso to the Article contemplates that the President or the Governor as the case may be make regulations specifying the matters in which either in general or in any particular class or in any particular circumstances, it shall not be necessary for the Public Service Commission to be consulted. Speaking for the Court Sinha J. observed: "If the provisions of article 320 were of a mandatory character, the Constitution would not have left it to the discretion of the Head of the Excutive Government to undo those provisions by making regulations to the contrary." (1) ; 623 This appears to have been the main reason for the court 's decision that the provisions of Article 320 (3)(c) are not mandatory. Naturally, strong reliance has been placed on this decision on behalf of the respondents. It is pointed out that while providing that three clear days ' notice of special general meeting shall be given to the Councillors, the legislature said in the same breath that "in cases of great urgency, notice of such shorter period as is reasonable should be given to the Councillors of a special general meeting. " The decision of what should be considered to be a case of "great urgency" was left ,entirely to the President or the Vice President on whom the duty to call such a meeting is given under s.27(2). It is urged by the learned Counsel that if the intention of the legislature had been to make the service of three clear days ' notice man datory it would not have left the discretion of giving notice for a shorter period for some of the special general meetings in this manner. We see considerable force in this argument. The very fact that while three clear days ' notice is not to be given of all special general meetings and for some such meetings notice only of such shorter period as is reasonable has to be given justifies the conclusion that the "three clear days". mentioned in the section was given by the legislature as only a measure of what it considered reasonable. It is necessary also to remember that the main object of giving the notice is to make it possible for the Councillors to so arrange their other business as to be able to attend the meeting. For an ordinary general meeting the notice provided is of seven clear days. That is expected to give enough time for the purpose. But a lesser period of three clear days ' is considered sufficient for "special general meetings" generally. The obvious reason for providing a shorter period for such meetings is that these are considered more important meetings and Councillors are expected to make it convenient to attend these meetings even at the cost of some inconvenience to themselves. Where the special general meeting is to dispose of some matter of great urgency it is considered that a period ,of even less than three clear days ' notice would be sufficient. A consideration of the object of these provisions and the manner in which the object is sought to be achieved indicates that while the legislature did intend that ordinarily the notice as mentioned should be given it could not have intended that the fact that the notice is of less than the period mentioned in the section and thus the Councillors had less time than is ordinarily considered reasonable to arrange his other business to be free to attend the meeting, should have the serious result of making the proceedings of the meeting invalid. 624 It is important to notice in this connection one of the pro visions in s.36 of the Act. It is in these words: "No resolution of a municipal council or any committee appointed under this Act shall be deemed invalid on account of any irregularity in the service of notice upon any councillor or member provided the proceedings of the municipal council or committee were not prejudicially affected by such irregularity. " It is reasonable to think that the service of notice mentioned in this provision refers to the giving of notice to the Councillors. Quite clearly, any irregularity in the manner of giving the notice would be covered by the words "irregularity in the service of the notice upon any Councillor". It appears to us however reasonable to think that in making such a provision in s.36 the legislature was not thinking only of irregularity of the mode of service but also of the omission to give notice of the full period as required. It is interesting to notice in this connection that the English law as regards meetings of borough councils and county councils contain a specific provision that want of service of a summons to attend the meeting (which is required to be served on every member of the council) will not affect the validity of the meeting. It may be presumed that the legislature which enacted the Mysore Town Municipalities Act,. 1951, was aware of these provisions in English law. It has not gone to the length of saying that the failure to serve the notice will not make the meeting invalid. It has instead said that any irregularity in the service of notice would not make a resolution of the Council invalid provided that the proceedings were not prejudicially affected by such irregularity. The logic of making such a provision in respect of irregularity in the service of notice becomes strong if the fact that the notice given was short of the required period is considered an irregularity, The existence of this provision in s.36 is a further reason for thinking that the provision as regards any motion or proposition of which notice must be given in s 27(3) is only directory and not mandatory. We are therefore of opinion that the fact that some of the Councillors received less than three clear days ' notice of the, meeting did not by itself make the Proceedings of the meeting or the resolution passed there invalid. These would be invalid only if the proceedings were prejudicially affected by such irregularity. As already stated, nineteen of the twenty Councillors attended the meeting. Of these 19, 15 voted in favour of the resolution of no confidence against the appellant. There is 625 thus absolutely no reason for thinking that the proceedings of the meeting were prejudicially affected by the "irregularity in the service of notice. " We have therefore come to the conclusion that the failure to give three clear days ' notice to some of the Councillors did not affect the validity of the meeting or the resolution of no confidence passed there against the appellant. In the result, we dismiss the appeal with costs. Appeal dismissed.

IN-Abs

The appellant was the elected President of the Municipality. In a special general meeting of the councillors a resolution expressing no confidence in him as President was moved and passed. In the High Court as well as in this Court, the legality of the proceedings of the meeting and the validity of the resolution was challenged by the appellant on the grounds, (i) that the requisite three days notice under the Act was not served on all the members and so the meeting was not validly held, (ii) that the meeting was not properly held as the appellant was not allowed to preside and thus section 24(1) (a) of the Act was contravened and (iii) that the requisition for moving the resolution ,did not comply with the proviso to section 23(a) of the Act as fifteen days notice was not given of the intention to move the resolution. The last two contentions were rejected by the High Court. On the main contention it held that as the notices were sent to the councillors on the 10th October 1963, they must be held to have been given on that date even though they were actually served on the llth, 12th and 13th; but, apart from that it was of opinion that the provisions about three days, notice was only directory and not mandatory and so the omission to give notice would not affect the validity of the resolution. Held: (i) The High Court was wrong holding that "send ing" a notice amounts to "giving" the notice. There is no authority or principle for the proposition that as soon as the person in the legal duty to give the notice despatches the notice to the address of the person to whom it has to be given, the giving is complete. Therefore, it must be held that the notice given to some of the councillors was of less than three clear days. (ii) The provision as regards any motion or proposition of which notice must be given in section 27(3) of the Act is only directory and not mandatory. Therefore the fact that some of the councillors received less than three clear days notice of the meeting did not by itself made the proceedings of the meeting or the resolution passed there invalid. These would be invalid only if the proceedings were prejudicially affected by such irregularity. In the present case, nineteen of the, twenty councillors attended the meet ing and of these 19, 15 voted in favour of the resolution of no confidence against the appellant. There is thus no reason for holding that the proceedings of the meeting were prejudicially affected by the "irregularity in the service of notice". State of U.P. vs Manbodhan Lai Srivastava, [1958] S.C.R. 533, referred to. (iii) On a consideration of the material on the record, it must be held that it was after the appellant left the meeting that the Vice President took the chair and thereafter the no confidence resolution was moved and passed. There could therefore 619 be no question of any contravention of the requirement under s.24(1) (a) of the Act that the President shall preside. (iv) The proviso to s.23(9) of the Act was not contravened. All that is required is that before the resolution is actually moved, the President has got fifteen days notice. In the present case, the meeting was held on October 14 and the appellant received the notice on the 25th September. There was thus more than 15 days notice given to him.

Appeal No. 589 of 1960. Appeal by special leave from the judgment and decree dated April 28, 1953, of the Madras High Court in A.S. No. 695 of 1949. K.N. Rajagopal Sastri, K. Jayram and R. Ganapthy Iyer. for the appellant. A. V. Viswanatha Sastri and T.V.R. Tatachari, for respondent nos. 1, 3, 4 and 6 to 8. B. Kalyana Sundaram, M. Rajagopalan, K. Rajendr Choudhry, M. R. Krishna Pillai for K. R. Chaudhuri, for respondent No. 2. March 26, 1964. The Judgment of the Court was delivered by DAs GUPTA, J. Three brothers, Ramakrishna, Narayanaswamy and Mahadeva. , who are eighty three, seventy nine and sixty nine years of age respectively, are the main figures in this litigation. After their father 's death in 1908 the three brothers continued as members of a joint family. The eldest brother, Ramakrishna became under the law the Karta of the family. When the father died the family was possessed of about 10 acres of land. But he had left some debts and one of the first acts which Ramakrishna had to do as the Manager was the repayment of those debts. Ramakrishna had become the Karnam in Narasingampettai in 1902 and even during his father 's life time started acquiring property. Property to the extent of about 25 acres was acquired for the joint family between the years 1911 to 1931. In 1927 Ramakrishna had been transferred to the bigger village of Vepatthur and continued to be there till 1930. On his retirement in that year his son Venkatarama succeeded him as the Karnam of Vepatthur. Between 1931 to 1946 properties in Vepatthur and other villages were acquired in the name of Ramakrishna 's son Vankatarama, his wife Mangalathammal, his grandson (Ven katarama 's son) Mahalingam. Some property was acquired also in the name of Mangalathammal 's brother Raja Ayyar. Monies were also invested in loans in the names of Ramakrishna 's wife. Mangalathammal, his son Venkatarama and his grandson, Mahalingam. 492 The second brother Narayanaswami became a Vakil 's clerk in Kumbakonam in 1910. The third brother Mahadeva who was a boy a of thirteen at the time of his father 's death was put into the medical school and qualified as a doctor. He was in service as a Sub Assistant Surgeon at the time when the present suit was instituted by Narayanaswamy. Both of them earned well and have admittedly acquired properties for themselves out of their own earnings. As early as the thirties feelings became strained between Ramakrishna, the eldest brother and Narayanaswami the second brother. Mahadeva who had to remain away at different places in connection with his service demanded partition of the joint family properties and in this Narayanaswami also seems to have joined him. The extreme action of going to courts was however not taken so long as mother was alive. She died early in 1945 at the age of 90 years. In December, (12th December) 1946 Narayanaswami sent a lawyer 's notice to Ramakrishna in which he claimed that not only the 25 acres acquired between 1911 and 1931 but also the properties ac quired in the name of Ramakrishna 's wife, his son and brother in law had been acquired with the income of the family and formed part of the joint family properties. He claimed also in this notice that family funds of about Rs. 25.000/ was in the hands of Ramakrishna in the shape of cash and Benami investments. He demanded a partition of all these properties and of the cattle and other movable properties owned by the family. He also called upon Ramakrishana to account for the income derived from the family properties "for the last three years at least". In all these he claimed a one third share. To this Ramakrishna replied on December 1, 1946. He stated that the joint family properties consisted only of 10 acres left by their father and about 25 acres acquired later on and denied that the other properties belonged to the family. Soon after this, on the 1st February 1947. Narayanaswami brought this suit for partition and accounts in the court of the Subordinate Judge, Kumbakonam. The eldest brother Rama krishna was impleaded as the first defendant; Mahadeva the third brother, was the second defendant, Ramakrishna 's son Venkatarama. his wife Mangalathammal and his brother inlaw Raja lyer were in pleaded as the third, fourth and the fifth defendants respectively. Mahalingam was impleaded as the sixth defendant. Two other minor sons of Venkatarama were also impleaded. They are the seventh and the eighth defendants in the case. The plaintiff 's case was short and simple. He claimed that Ramakrishna as the Karta of the joint family managed the family properties and acquired properties with the family funds from 1911 to 1946. He thus claimed that not only the 34 493 acres and 58 cents of land in the village Kumarakshi (men tioned in the A Schedule) which the first defendant Rama krishna 's wife or son or grandson or brother in law were joint ties mentioned in the Schedules B, Bl and B2, and C, C1 and C2 and D for which the sale deeds stood in the name of Ramakrishna 's wife or son or grandson or brother in law were joint family properties. He claimed also that between 1931 and 1946 Ramakrishna. the Karta. had invested family funds in the name of his wife. his son and his grandson and these were also joint family properties. The movable properties claimed to be joint family properties were mentioned in Schedule A2, while the house in Thiagarajapuram. also claimed to be joint family property was mentioned in AI Schedule. The plaintiff prayed for allotment to him of one third share of these properties by division in metes and bounds into three equal shares. He further prayed for a direction on the first defendant to account for the management of the family properties for three years and for payment to the plaintiff of his share in the amount that may be found due. The second defendant Mahadeva generally supported the plaintiff though as regards the years, 1940, 1941, 1942 and 1943 his case in the written statement was that it was the plaintiff Narayanaswamy and not the first defendant who collected the income from the join family properties. For these four years, he pleaded that the plaintiff was liable to render an account while for the remaining period the first defendant was said to be liable. In a Schedule to his written statement he mentioned several other items of properties which he claimed belonged to the joint family though one of the sale deeds stood in the name of the sixth defendant Mahalingam and the other in the name of the fifth defendant Raja Ayyar. The other defendants contested the suit. The first defendant 's case was that though on his father 's death he became in law the Karta of the joint Hindu family the actual management was carried on by the mother till 1940 and from 1940 till the mother 's death in 1945 by the plaintiff Narayanaswami. It was only after the mother 's death that he has taken up the management of the properties. He pleaded that of the properties mentioned in the plaint only 34.58 acres mentioned in the A Schedule formed the joint family property. (In addition to some of the movable properties mentioned in A2 Schedule). He further pleaded that a house in Kumbakonam town which was acquired by the plaintiff in his own name as also some lands in Manalur village in Kumbakonam and Rs. 8,000/ in cash which the plaintiff had obtained on sale of certain lands also formed part of the joint family property. His wife Mangalathammal, the fourth defendant also pleaded that the properties and the investments standing in her 494 name were made by her on her own account with the monies which her husband Ramakrishna gave to her from his own earnings. These therefore were not part of the joint family property and consequently not liable to partition. The third defendant (Venkatarama 's) case was that the purchases of land and investments of money standing in his name were all with his own earnings since he became Qarnam and did not form part of the joint family property. As regards what stood in the name of his son Mahalingam the third defendant pleaded that these were with his own earnings. The fifth defendant also pleaded that whatever stood in his name was acquired by him with his own money and did not form part of the joint family of the plaintiff and his brothers. The learned Subordinate Judge held on a consideration of the evidence that the plaintiff 's case 'that the oldest brother Ramakrishna managed the family property as the Karta from and after their father 's death in 1908 till the date of the suit had been established. He also came to the conclusion that in about 1931 Ramakrishna had with him an accumulated income of about Rs. 14,000/ belonging to the family and but very little money of his own,, From these findings it was an easy step to hold, as the learned Judge did. that the immovable properties mentioned in Schedules A, Al, B, B1., C. Cl, C2 and D as also Item 5 in Schedule B2 were all properties belonging to the joint family. Out of these he found that the properties in Schedule Al, that is, a house in Thiagarajapuram had been, given away to the sister Rukmaniammal and was no longer a joint family property and therefore not liable to division. The rest of the properties, he held, was liable to be divided among the three brothers, the plaintiff and the defendants 1 and 2. The Court also held that the mortgages and promissory notes on which money had been lent in the names of defendants 3 to 5 belonged to the joint family with the exception of a few standing in the name of the third defendant (Venkatarama) which was held to be the third defendant 's personal property. A preliminary decree was made by the Court in accordancewith these findings with a direction that an account be taken with reference to income of the properties in Schedules A, A1, B, B1, C, C1 and D and Item 5 in Sch. B2 and the house at Kumbakonam mentioned in the Schedule to the first defendant 's written statement, for three years prior to the date of the suit and from the date of the suit till the passing of the final decree. As regards the properties in Schedule A it was, directed that the accounting will cease from the date on which the parties took possession of their share in accordance with the interim decree. Against this decision the first defendant appealed to the High Court of Judicature at Madras. The plaintiff also filed 495 an appeal challenging the decision of the Subordinate Judge that the house in Kumbakonam was a joint family property. 'The High Court allowed the plaintiff 's appeal holding that the Kumbakonam house was a separate self Acquisition of the plaintiff. Against this decision of the High Court no appeal has been preferred and we are no longer concerned with the question whether this house was plaintiff 's property or not. In the appeal preferred by the first defendant the High Court came to the conclusion, disagreeing with the Trial court, that the first defendant Ramakrishna had saved enough from his separate earnings from which it was quite possible for him to make all the acquisitions and investments in the name of his son, wife and grandson subsequent to 1930. In the opinion of the High Court the view of the Subordinate Judge that by 1930 the first defendant had in his hands a sum of Rs. 14,000/ accumulated from the income of the joint family lands was "surprising and untenable". It did not disturb the Trial Court 's findings that Schedule D land acquired in the name of the 3rd defendant was joint family property, apparently because no appeal had been filed as regards this property. Taking these 14 acres to be acquisitions for the family the High Court recorded its conclusion thus: "When we consider that the joint family nucleus has been more than quadrupled, it is difficult to see what grievance the younger coparceners really have, particularly the second defendant, who after keeping for himself his earnings as a Doctor in Government Service finds himself entitled to a share in a greatly increased ancestral patrimony. " Finally the High Court concluded "that the plaintiff has not shown that any of the acquisitions or investments in the names of defendants 3, 4 and 6 were made from joint family funds. " Accordingly, it allowed also the appeal preferred by the first defendant, holding that the only items liable for partition as joint property assets were those in Schedules A and D. It also ordered that the first defendant would account for the income from 12th December 1946, the date on which notice demanding partition was sent to him by the plaintiff. The present appeal has been preferred by the plaintiff against this decision of the High Court. Two main arguments were advanced before us by Mr. Rajagopala Sastri in support of the appeal. The first is as regards the properties purchased in the name of the first defen dant 's wife, his son, and his grandson. Learned Counsel submitted that the High Court did not record any clear conclusion that at the date of the acquisition of these properties the joint family had not a sufficient nucleus for acquiring these. He argued that the acquisitions in the name of the first defendant 's wife was admittedly with funds advanced by the first defendant himself; and if at the date of the acquisition in her name the joint family had sufficient nucleus for acquiring them, the presumption would be that they were acquired with joint family funds notwithstanding the fact that the first defendant may have sufficient funds of his own for the same purpose. It was rightly argued that in such a case the property should be held to be joint family property unless the presurmption of the acquired property also being joint family property was rebutted by the first defendant. It was also argued that acquisitions in the name of the third defendant and the sixth defendant should also be held to have been made with funds advanced by the first defendant himself and so these also should be presumed to have been acquired with joint family funds if it is shown that the joint family had sufficient nucleus for acquiring these at the date of the acquisitions and the first defendant does not show positively that the funds with which they were acquired did not belong to the joint family. The legal position is well settled that if in fact at the date of acquisition of a particular property the joint family had sufficient nucleus for acquiring it, the property In the name of any member of the joint family should be presumed to be acquired from out of family funds and so to form part of the joint family property, unless the contrary is shown. (Vide Amritlal Sen & ors., vs Surath Lal Sen & others(1) Appalaswami vs Suryanarayanamurthy & others(2). In the case before us, it is not disputed that the acquisi tions in the name of the first defendant 's wife were made with funds advanced by him. As regards the acquisitions in the name of the third defendant and his minor son the sixth defendant also we find it reasonable to hold from the evidence, as regards the earnings of the third defendant and other circumstances, that for these acquisitions also money was paid by the first defendant. The question whether the joint family had at the time of each of these acquisitions sufficient nucleus from which the acquisitions could have been made is therefore of great importance. On a consideration of the evidence, as discussed below, we have come to the conclusion that it does not appear that the joint family had at the date of the acquisitions made in the names of the first defendant 's wife. his son, and his grandson sufficient nucleus from which these properties could be acquired. In coming to this conclusion we have taken into consideration the fact that family funds were spent in purchasing 14 acres of land mentioned in the name of the 5th defendant. (1) A.I.R. 1942 Cal. (2) I.L.R. [1948] Mad. (P.C.) 440. 497 The period during which acquisitions admittedly for the joint family were made came to an end in about 1931. At that time the first defendant had, according to his own evidence, about Rs. 15,0001 in his hand. His case is that this entire K. amount was what he had accumulated out of his own earnings. The Subordinate Judge held that a little more than Rs. 14,000 / out of this amount was the savings from the family funds. We agree with the High Court that this conclusion is not justified by the evidence on the record. As rightly pointed out by the High Court properties worth about Rs. 20,000/had been purchased out of the family income during this period. During part of this period at least monies had to be spent for other requirements of the family including the expenses on the education of the third brother Mahadeva. The several documents produced in the case show that at the time of more than one purchase the first defendant had to borrow money on promissory notes to pay the consideration mentioned in the documents. It is worth mentioning that even the plaintiff was not prepared to say that the family income was sufficient to pay for these purchases. In cross examination a question was put to him in these words: "Q. From 1911 out of the family income Rs. 20,000/worth of lands had been purchased? Can there have been more income from the family lands?" The answer is significant. It was in these words: "A. From the family income, the joint income of myself and Defendant 1 certainly exceeded Rs. 20,000/ . The income of myself and Defen dant 1 which went in the purchase of lands may have come to Rs. 10,000/ ". In other words, the plaintiff himself seem to concede that only Rs. 10,000/ of the family income was available during this period for purchase of lands. The claim made here that he also contributed to the purchase is clearly inconsistent with his own written statement and with other parts of his evidence and cannot be accepted. The learned Subordinate Judge, appears to have been con vinced that Ramakrishna 's personal earnings were very little. He thought also that what little Ramakrishna earned was required for the expenses of his own branch of the family. The learned Judge concluded that he could not have saved out of these earnings. This view appears to have been mainly responsible for this conclusion that almost the whole of Rs. 15,0001which the defendant No. 1 admitted to have with him in about 1931 came out of the family funds. In our opinion, the materials on the record do not justify the Trial Court 's view that Ramakrishna could not have accumulated a sum of 498 Rs. 15,000/ out of his own income. The mamools which he received as Karnam of Narasingampettai and later on of the bigger village Vepatthur amounted to a considerable quan tity of paddy and must have fetched him a goodly income. There was apart from this, his income from the banana plan tations which he had at Narasingampettai. One of the lease deeds shows a receipt of Rs. 450/ for one season. Taking good years with bad, it would not be unreasonable to think that this also brought him a few thousands of rupees. We are convinced also on a consideration of his evidence, taken with the entries in the account book of Appaswamy Iyer (exhibit B IO 1) that he received a sum of Rs. 2,500/ as reward for successfully maintaining the litigation on Appalaswamy 's behalf. There can be little doubt that he received good sum also as fees for writing documents. One of his witnesses, Narayanaswami Reddiar, DW 7, has given evidence that he paid the defendant Rs. 1,000/ as fees for the documents written for him. Even if this be considered an exaggeration, it s quite clear from, the evidence of this witness that Ramakrishha who, it may be noted, was a man of some education, did a flourishing side business as a writer of documents, saved two or three thousand rupees, earned by him by this work during the entire period he served as a Karnam. It is more than probable that he had other sources of income which he did not think it prudent to mention in the witness box. On a consideration of the circumstances we are convinced that this story that he had Rs. 15,O0O/ in his hands in about 1931 as accumulated out of his own earnings is sub stantially true. Mr. Rajagopala Sastri has however rightly pointed out that a finding that in 1931 very little remained out of the family income would not be sufficient to show that there was no sufficient nucleus for the acquisition of the different pro perties in the name of the defendant 's wife, his son and his grandson after 1931 For a proper decision of this question it is necessary to consider roughly the income and expenditure out of the admittedly family properties during this period. We shall first consider the period, 1931 to 1939, as it is clear from the evidence that during this period the defendant No. 1 carried on the actual management of the joint family properties. It is common case of both the parties that the paddy yield in 1931 was 856 kalams; during 1932 1,000 kalams and during 1933 1,118 kalams. For the next five years paddy yield was, according to the respondent 's counsel, 1,058, 1,058, 958, 958, and 958 kalams. The appellant 's counsel puts his estimates and 1,160 kalams respectively. These differences in the estimates for these years at the higher figures of 1,360, 1,360, 1,160, 1,160 seem to be mainly due to the fact that while, 499 according to the respondent, the family was in possession of only six acres of mortgaged land in addition to the 35 acres, the appellant 's case was that an additional area of six acres of mortgaged land was also in the family 's possession during these years. Mr. Rajagopala Sastri was not however able to point out anything on the record in support of this claim. We think it reasonable therefore to accept as substantially correct the estimate of paddy yield as mentioned before us on behalf of the respondent for these years. For the year 1939 the yield may be taken as 1,153 kalams roughly as in that year the D Schedule lands now found to be the property of the joint family had also been acquired. On an examination of the evidence on the record we accept the the price for each kalam of paddy to be Rs. 2.50 nP for each of the years 1931 and 1932 and 1.19, 1.25, 1.37, 1.40, 1.50, 1.56 and 1.62 for the years 1933 to 1939 respectively, as contended before us on behalf of the respondent. The total income received from paddy in these nine years thus appears to be about Rs. 14,976/ . To this has to be added the receipts from the dry crops like black grams and green rams grown on some of the lands. We accept the evidence given by the defendant that dry crops were not grown in every year and also not on all the lands. The sale proceeds of black grams and green grams amounted to Rs. 72/ for the year 1935 according to the account book exhibit A 98. Taking this to be the average receipt per year from the dry crops the receipts from these crops during the nine years under consideration amounted to about Rs. 648/ . The total income from the crops grown on the joint family lands during the years 1931 to 1939 thus works out approximately to be about Rs. 15,624/ . Adding to this the sum of Rs. 1,100/ received on repayment of the mortgage loan on exhibit 187 the joint family earnings during these nine years appears to have amounted to about Rs. 16,724/ . It is now necessary to have some idea of the expenditure incurred during these years. The claim of expenditure of Rs. 5,172/ during these years made before us on behalf of the respondent is not disputed by the appellant. We think also that the respondent 's claim that Rs. 1,100/ advanced on the mortgage bond (exhibit 187) was paid from family funds should be accepted. We have next to add the sum of Rs. 6,500/ that was paid for the purchase of the D Schedule lands, Rs. 4,030/ paid as kists and Rs. 2.000 / as cultivation expenses including Kariasthan 's pay. The total expenditure during the nine years 1931 to 1939 amounted thus to more than Rs. 18,000 / . Proceeding therefore on the basis on which there is no longer any dispute, that the D Schedule lands were acquired out of the family funds, it appears clear that the joint family did not possess sufficient nucleus for making any of the other purchases. made during this period, viz., the properties mentioned in Schedules B and BI purchased by the document exhibit 125, the properties mentioned in Schedule Cl purchased by the document exhibit B 124, the properties mentioned in Schedule C purchased by exhibit 129, the properties mentioned in the Schedule to the written statement of the second defendant purchased by documents Exhibits B 134 and B 135. The High Court 's conclusion as regards these properties that they did not form part of the joint family properties and are not liable to partition in the present suit is therefore clearly correct. The properties mentioned in Schedule C2 were purchased on the 24th April 1941 by exhibit 136 in the name of the 4 th defendant while properties mentioned in Item 1 of B2 Schedule were purchased on the 19th August 1942 by exhibit 126 in the name of the sixth defendant. Though it was the first defendant 's case that he had nothing to do with these purchases we are convinced on a consideration of the evidence that the monies for these purchases were also advanced by him. To decide whether these properties or the properties mentioned in Item 5 of Schedule B2, a house in Vepatthur, of which mortgage was taken in the name of the first defendant himself by exhibit B 1929 on the 10th May 1942, formed part of the joint family property, it is necessary to examine what funds, if any, belonging to the joint family were with the first defendant during these years. The first defendant 's case, as already indicated, is that from 1940 till the mother 's death in 1945 the plaintiff and not he managed the joint family properties so that he did not receive any portion of the joint family earnings during the period. The plaintiff has strenuously denied the truth of this statement. There are several circumstances however which make us think that the first defendant 's version is true. The most imoprtant of these is the fact that the youngest brother Mahadeva, who is clearly siding with the plaintiff in this family quarrel, made a definite assertion in his written statement in these words: "Similarly the plaintiff has been collecting the income from the joint family properties during the years 1940, 1941, 1942 and 1943. " He also stated there that the plaintiff had assured him that he would maintain proper accounts for the collection and expenditure of the income joint family for his period of management and made the definite claim that the plaintiff was liable to render an account for the period of his management. It is true that at the trial Mahadeva tried to explain away this assertion in the written statement by saying that this was based on information given to him by the defendant No. 1. In the very next sentence, however, he again said that this view that the plaintiff was exclusively managing for certain years was his coiiclusion. It is important to notice in this connection that at the bottom of exhibit B 190 dated the 13th March 1941 which Mahadeva 501 received from Ramakrishna, Mahadeva made in his own hand an entry in red ink to the following effect: "1939 Kuruvai (paddy) sold by Nana 1939 Semba Mudal (harvest) by Nana, sold in 1940. " It is true that there are some letters which indicate that even during 1941 and thereafter Ramakrishna was issuing some instructions to the Kariasthan. But, considering the facts mentioned above along with the letters Exibits B 177 and B 72 in which detailed instructions about the cultivation were being given by the plaintiff to the Kariasthan, we have come to the conclusion that from about 1940 till the mother 's death early in 1945 the plaintiff displaced the first defendant from the management of the family lands and took away all the family lands in Kumarakshi and took away all the income from them. The only income from joint family properties that appears to have come into the hands of the first defendant during this period was that from D Schedule lands. The yield from these lands may roughly be estimated at about 300 kalams for each year. The price per kalam in 1941 appears from exhibit 100 to have been Rs. 2/6/ . The net income, after payment of the kist and debiting the expenses of cultivation etc., may be placed there fore at about Rs. 500 It is undoubtedly a very rough estimate. But in the absence of anything more specific on the record we think it proper to accept this as a reasonable basis for ascertaining the nucleus available in the first defendant 's hands from the D Schedule property. On this calculation the first defendant appears to have had in his hands about Rs. 1,5001 during the years 1940 to 1942. There was already however a deficit of more than this amount on his management of the properties during the previous period 1931 to 1939. It is reasonable therefore to think that there was no nucleus from the joint family properties which the first defendant could have possibly used in making the acquisitions during 1941 and 1942. The conclusion of the High Court that these properties did not belong to the joint family and are therefore not liable to partition cannot therefore be disturbed. Some of the properties mentioned in Schedule B2 to the plaint were purchased in 1945 and 1946 by exhibit B 127 aid B. 128 in the name of the third defendant, Venkatarama. At the time of these acquisitions the third defendant had been karnam of Vepatthur for over 15 years. It is not unlikely he would have saved some portion of his own earnings during this period so as to be able to pay for these purchases out of his own earnings. It cannot therefore be said reasonably that these purchases were made from funds advanced by the first defendant. Apart from this, it appears that the plaintiff has not been able to show that at the time of these acquisitions the first defendant had 502 with him sufficient income out of the joint family properties for purchasing all these lands. We have already found that the first defendant resumed management of the joint family properties on his mother 's death in 1945. On the question about the income and expenses during this period there is hardly any evidence worth the name on the record. On a consideration of all these circumstances, we are of opinion that the High Court 's conclusion as regards these properties also that they did not form part of the joint family property is correct. The brings us to Mr. Rajagopala Sastri 's second argument. While admitting the legal position that in the absence of any evidence of fraud or misappropriation the Karta cannot be called upon to account for the past transactions, learned Counsel stresses the responsibility of the Karta to establish what are the assets available for partition. In support of this, the learned Counsel drew our attention to the decision in Parmeshwar Dube vs Gobind Dube(1). That case laid down the rule that in the absence of fraud or other improper conduct the only account the Karta of a joint family is liable for is to the existing state of the property divisible; but that this did not mean that the parties were bound to accept the statement of the Karta as to what the property consisted of and an enquiry should be directed by the court in a manner usually adopted to discover what in fact the property consisted of at the date of the partition. About the correctness of this proposition there is no dispute. In what manner this principle can be applied depends however on the facts and circumstances of each case. Where, as in the present case, the evidence already adduced before the court shows prima facie that the Karta could not reasonably be expected to have in his hands at the date of the suit any accumulation worth the name in addition to the immovable properties found on evidence to have been acquired for the family, there can be no justification for calling the Karta to account for his past dealings with the joint family property and its income. In the circumstances of this case therefore the order of the High Court that there was no liability on the first defendant as managing member to render any account of any kind prior to the 12th December 1946, on which notice demanding partition was issued, does not call for any modification. In the result, the appeal is dismissed with costs. Appeal dismissed.

IN-Abs

There were three brothers who continued as members of a joint family with the eldest of them, the first respondent as the karta. Certain properties were acquired thereafter for the joint family. Certain properties were also acquired in the name of the first respondent 's son his wife and grandson. The two other brothers of respondent No. 1 acquired properties for themselves out of their own earnings. Relations became strained between the brothers and the second brother the present appellant filed suit for partition claiming not only the original properties of the joint family and the properties acquired for the joint family by the Karta, the present respondent but also the properties acquired by the respondent No. 1 in the name of his wife, son and grandson as joint family properties. He also called on the first respondent to account for the past years. The third brother was impleaded as second defendant. Respondent No. 1 's contention was that the last mentioned properties were bought by him from his own savings and therefore were not part of the join, family property and consequently not liable to partition. The learned trial Judge held that those properties were joint family property and were liable to be partitioned. Respondent No. 1 thereupon appealed to the High Court and the High Court allowed the appeal regarding substantial part of the schedule properties. Thereupon the appellant filed the present appeal. Held: (i) Where properties were acquired in the name of a joint family member, if at the date of such acquisition the joint family had sufficient nucleus for acquiring it, the property should be presumed to have been acquired from out of family funds and so to form part of the joint family property, unless the contrary is shown. In the present case on a consideration of the evidence it is found that the joint family had at the date of the acquisition Of the properties in question sufficient nucleus from which these properties could be acquired. Amritlal Sen & Ors. vs Surath Lal Sen, A.I.R. 1942 Cal. 553 and Appalaswami vs Suryanarayanamurthy, I.L.R. [1948] Mad. (P.C.) 440, referred to. (ii) In the absence of any evidence of fraud or misrepresentation the Karta of a joint family cannot be called upon to account for the past transactions, but this does net mean that the parties were bound to accept the statement of the Karta as to what the property consisted of and an enquiry should be directed by the court in a manner usually adopted to discover that in fact the property consisted of at the date of the partition. In what manner this principle can be applied depends on the facts and circumstances of each case. Where as in the present case the evidence ,on record shows prima facie that the Karta could not reasonably 491 be expected to have in his hands at the date of the suit any accumulaties found on evidence to have been acquired by the family, there can be no justification for calling the Karta to account for his past dealing with the joint family property and its income. Parameshwar Dube vs Govind Dube, I.L.R., , explained.

Appeal No. 677 of 1963. Appeal from the judgment and order dated March 31, 1961 of the Mysore High Court in Writ Petition No. 283 of 1959. B. R. L. Iyengar and B. R. G. K. Achar, for the appellant. section V. Venkataranga Iyengar, M. Rama Jois and A. G. Ratnaparkhi, for the respondent. March 25, 1964. The judgment of the Court was delivered by AYYANGAR, J. A very short question regarding the proper construction of Rule 50(b) of the Bombay Civil Services Rules is involved in this appeal which comes before us by a certificate of fitness granted by the High Court of Mysore under article 133 of the Constitution. The facts giving rise to this appeal which are necessary to be narrated to appreciate the only point urged before us were these: The respondent was recruited as an Upper Division Clerk by the Government of Bombay in 1931 and was later appointed substantively as a Junior Assistant in the Political Department. While so, on September 17, 1943 his services were transferred on deputation to the office of the Controller of Rationing, Bombay to work as a Senior Assistant in the newly started Rationing department which was a temporary department. He obtained successive promo tions in this department and by March, 1954 he was drawing a pay of Rs. 460/ p.m. in the grade Rs. 350 30 650 as Rationing Officer. That department was abolished in March, 1954 and thereafter he was reverted to his parent depart ment. Though his parent department was the Political De partment, the respondent was, after he ceased to be a Rationing Officer, posted first to the Labour Department and then to the Public Works Department. When this reversion took place his pay was fixed at Rs. 120/ p.m. The petitioner protested against this reversion and this loss of his emoluments on the ground that this fixation of pay was contrary to the Rules framed by Government in regard to the service conditions of a Government servant who was appointed on deputation in another department. He also pointed out that the officer next below him in his parent department had been appointed as an Assistant Secretary by virtue of normal and regular promotion. therefore, however, final orders were passed on his representation by the Government of Bombay, the came into force and the respondent was allotted to the State of Mysore. On November 27, 1958 the Government of Mysore informed the respondent through an official memorandum that in view of 473 certain communications received by that Government from the Government of Bombay in answer to his representations he should be considered to have held the post of Senior Assistant on June 1, 1954 on a salary of Rs. 225/ in the grade Rs. 210 15 300.The petitioner 's complaint,however, was that even this order was in violation of the conditions of his service and he claimed that when he was reverted to the parent department he was entitled to be posted as an Assistant Secretary a post which according to him, he would have held on that date had he not been deputed to the department of Civil Supplies on September 17, 1943. There was no dispute that subject to an argument to which we shall refer presently, the respondent would have held the post of Assistant Secretary because the person next below him one Nadkarni actually held that post on that day. The respondent claimed that on the basis of the Service Rules to which we shall immediately make reference he should, on his return to the parent department, have been posted as an Assistant Secretary and been allowed the scale of emoluments applicable to that post. As the Government of Mysore refused to accede to his demand the respondent filed a petition under article 226 for inter alia a writ of mandamus directing the appellant State to include the petitioner in the grade pay of an Assistant Secretary I and fix him above Nadkarni. The appellant raised a preliminary objection to the writ petition, the objection being that the complaint of the petitioner was not justiciable. This was primarily based upon the fact that the respondent relied upon a circular of the Government of Bombay dated October 31, 1950 in support of his plea that he was entitled to the benefit that he claimed on reversion to the parent department from his service on deputation. The material part of that circular ran: "It has come to the notice of Government that Government servants when deputed to other Departments or offices often draw pay in time scales which are identical with the timescales in their parent Departments. The question therefore, arises on their reversion to their parent Department whether the service rendered in an identical time scale in the Department to which their service had been lent, should be allowed to count for increments in the parent Department under Note 4 below Bombay Civil Service Rule 41. Government is pleased to direct that all such cases should be regulated under Bombay Civil Service Rule 51 and that only that portion of service in the foreign Department or office should be allowed to count for increments in the parent Department during which the person concerned would have drawn pay in the time scale applicable to the post he holds on reversion, but for his deputation to another Department or office, i.e., the case should be so regulated as to restore the position the person concerned would have occupied in his parent Department had he not been deputed. " The question as to whether this circular which was treated as an administrative instruction could confer rights en forceable in a court on a Government servant was referred to a Full Bench for its opinion. Before the learned Judges of the Full Bench the learned Advocate General, however, brought to the notice of the Court that this circular merely gave effect to a statutory rule framed by the Government of Bombay. The relevant rule in this respect was rule 50(b) of the Bombay Civil Services Rules which ran: "50(b) Service in another post, other than a post carrying less pay referred to in clause (a) of rule 22 whether in a substantive or officiating capacity, service on deputation and leave other than extraordinary leave counts for increments in the time scale applicable to the post on which the Government servant holds a lien as well as in time scale applicable to the post or posts, if any, on which he would hold a lien had his lien not been suspended: Provided that Government may, in any case in which they are satisfied that the leave was taken on account of illness or for any other cause beyond the Government servant 's control, direct that extraordinary leave shall be counted for increment under this clause. " The position, therefore, that emerged after this was whether an infraction of a statutory rule could give rise to a cause of action to an aggrieved Government servant. The learned Judges answered this question in the affirmative and there after the Division Bench which heard the petition allowed the writ and granted the respondent the relief that he sought. It might be mentioned that even by the date of the pendency of these proceedings in the High Court the respondent had retired on account of superannuation and the only question, therefore, was whether he would be entitled to the remuneration to which he, would have been entitled uader the rule in question. The appellant State applied to the High Court 475 for a certificate to enable an appeal to be filed to this Court and on this having been granted the appeal is now before us. in view of the decisions of this Court of which it is sufficient to refer to State of U.P. vs Babu Ram Upadhya(1) it was not disputed that if there was a breach of a statutory rule framed under article 309 or which was continued under article 313 in relation to the conditions of service the aggrieved Government servant could have recourse to the Court for redress. Learned Counsel for the Appellant, however urged two contentions in support of the stand that the respondent was not entitled to be appointed to any higher post than as a Senior Assistant or to receive a salary higher than Rs. 225/in the scale Rs. 210 15 300 which had been granted to him by the impugned order of November, 1958. The first was that on a proper construction of Rule 50(b), an officer who after serving on deputation in another department is revert ed to his parent department is entitled to nothing more than the increments allowable in the time scale applicable to the substantive appointment which he held at the time of the transfer. In this connection stress was laid on the words "increments in the time scale applicable to the post on which the Government servant holds a lien" occurring in the subrule. We are unable to accept this contention. In the first place, it is not clear whether the case of the respondent was one where he held a lien or one where the lien was suspended, and no material was placed before the Court in this regard, the point in this form not being urged in the High court. But even assuming that it was a case where the respondent had a lien and his lien had not been suspended it is difficult to see what logic there could be in interpreting the rule as providing different criteria in the two cases. 'Where the lien is suspended the rule speaks of the "post or posts, if any he would have held if his lien had not been suspended". By the use of the plural, it is clear that the rule ,contemplated the suspended lien being transferred from one post to another in other words, to a promotion from one post to another during the period of the service in another ,department. If there was any ambiguity in what the rule meant it is wholly dispelled by reference to the circular which ensures to the officer on deputation in another department that he shall be restored to the position he "would have occupied in his parent department had he not been deputed". It was not suggested that there was any ambiguity in the wording of this circular which, in our opinion, gives proper effect to the provisions of Rule 50(b). (1) ; 476 The other submission of learned Counsel was that a Government servant though he had a right to increments in a time scale applicable to the post that he held on the date of his transfer on deputation and on which he had a lien, had no legal right to be promoted to a higher post and that the construction adopted by the High Court virtually con ceded or guaranteed to officers on deputation a right to an automatic promotion which they would not have had if they had not been posted on deputation. We see no force in this contention either. Learned Counsel is right only in so far as the promotion involved relates to a selection post. But where it is based on seniority cum merit, those considerations are not relevant. The service of an officer on deputation in another department is treated by the rule as equivalent to service in the parent department and it is this equation between the services in the two departments that forms the basis of Rule 50(b). So long therefore as the service of the employee in the new department is satisfactory and he is obtaining the increments and promotions in that department, it stands to reason that that satisfactory service and the manner of its discharge in the post he actually fills, should be deemed to be rendered in the parent department also so as to entitle him to promotions, which are often on seniority cummerit basis. What is indicated here is precisely what is termed in official language the "next below rule" under which an officer on deputation is given a paper promotion and shown as holding a higher post in the parent department if the officer next below him there is being promoted. If there are adverse remarks against him in the new department or punishments inflicted on him there, different considerations would arise and these adverse remarks etc. would and could certainly be taken into account in the parent department also, but that is not the position here. In view of the facts of the case it is not necessary to discuss this aspect in any detail or any further. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent was a Government servant in one of the departments of the Bombay Government. He was sent on deputation to another department and after serving there for a long period and getting a number of promotions he was re verted back to his parent department and ordered to be posted at a considerably lower grade, while another Government servant who was below his rank was promoted as Assistant Secretary. Thereupon the respondent filed a petition under article 226 of the Constitution challenging the order of his posting. A preliminary objection was raised by the appellant that the petition was not maintainable. But the High Court held that the respondent was entitled to invoke the jurisdiction of the Court when there is a violation of a statutory rule and on merits it held that the respondent was entitled to the relief claimed. The present appeal was filed on a certificate granted by the High Court under article 133 of the Constitution. Before this Court in view of the decision State of U.P. vs Babu Ram Upadhya. ; it was not disputed that if there was a breach of a statutory rule framed under article 309 or continued under article 313 in relation to the condition of service the aggrieved Government servant could have recourse to the Court. The main contention on behalf of the appellant was that the respondent was not entitled to be appointed to any higher post than as a Senior Assistant or to receive a salary higher than that which had been granted to him by the im pugned order. Held: (i) Assuming that this was a case where the respon ,dent had a lien and his lien had not been suspended it was not possible to interpret Rule 50(b) of the Bombay Civil Service Rules as providing different criteria to cases where a Government servant had a lien and where his lien has been suspended. The Rule and the circular make it abundantly clear that an officer on deputation in another department shall be re stored to the position he would have occupied in his parent department had he not been deputed. (ii) Where promotions are based on seniority cum merit basis an officer on deputation has a legal right to claim pro motion to a higher post in his parent department provided his service in the department to which he is lent is satisfactory. This may not be the case in regard to selection posts.

Appeals Nos. 47 to 50 of 1952. Appeals from the Judgment and Decree dated the 11th May,1950, of the High Court of Judicature at Allahabad (Malik C. J. and Bhargava J.) in Miscellaneous Case No. 134 of 1949 connected with Miscellaneous Case No. 197 of 1948. G.S. Pathak (G. C. Mathur, with him) for the appellant. M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondent. September 23. The Judgment of the Court was delivered by PATANJALI SASTRI C. J. This batch of appeals arises out of a reference made to the High Court at Allahabad by the Income tax Appellate Tribunal, Allahabad Bench, under section 26 of the Excess Profits Tax Act, hereinafter referred to as " the Act. " The assessments challenged in these appeals relate to different chargeable accounting periods but the questions raised are the same in all the cases. The appellants constitute a Hindu undivided family consisting of four branches representing the four sons of one Sohan Pathak deceased. The family carried on business at Banaras in money lending and Banaras brocade under the name and style of Sohan Pathak & Sons. In the assessment relating to the chargeable accounting period ending on October 8, 1943, the appellants alleged that there was a partial partition among the members of the family on July 16, 1943, whereby the Banaras brocade business was divided in equal shares among the four branches and that, on the next day, the adult members of the family formed two partnerships admitting the minors to the benefits thereof, and thereafter carried on business in Banaras 160 brocade under the respective firm names of Sohan Pathak Girdhar Pathak and G. M. Pathak & Co. The appellants claimed that the family as such ceased to carry on business in Banaras brocade after July 16, 1943, though they continued to remain joint in status and that the profits derived by the two partnerships aforesaid after July 17, 1943, could not be assessed as profits of the original joint family business, as the businesses carried on by the two partnerships were distinct and newly started businesses and could neither in law nor in fact be regarded as continuation of the old brocade business. In support of this claim the appellants strongly relied on the circumstance that the Income tax Officer treated the old business as discontinued by the family after the partial partition and granted relief on that footing under section 25(3) of the Indian Income tax Act in the assessment to income tax of the appellants as a Hindu undivided family. The Excess Profits Tax Officer, however, rejected the claim as he was of opinion that the main purpose of the partial partition and the creation of the two partnerships was to avoid or reduce the liability of the appellants to excess profits tax, and he made adjustments under section 10 A of the Act by adding to the profits made by the appellants as a joint Hindu family till the date of the partition the profits made by the two firms during the chargeable accounting periods. The Appellate Assistant Commissioner and the Appellate Tribunal confirmed the finding and order of the Excess Profits Tax Officer, but, at the instance of the appellants, the Tribunal referred the following questions to the High Court for its decision: 1.Whether in view of the fact that the partial partition bad been accepted by the Income tax Officer and the business was treated as having been discontinued for the purpose of assessment under the Income tax Act, the same business could legally be treated as having continued unbroken in respect of the same chargeable accounting period for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act ? 161 2.Whether in the circumstances of the case the effect of the partial partition of the Hindu undivided family on July 16, 1943, and the formation of two different firms was a transaction within the meaning of section 10 A of the Excess Profits Tax Act ? 3.Whether on the facts found by the Tribunal as stated in para. 7 of the statement of the case, it was justified to draw the inference that the main purpose behind the partial partition was the avoidance or reduction of liability to excess profits tax ? The court answered these questions against the appellants but granted leave to appeal to this court. At a previous hearing of these appeals this court was of opinion that the material facts relating to the partial partition and the formation of the partnership and the findings of the Tribunal in regard thereto had not been clearly stated by the Tribunal in the original statement of the case. The court said: " While it is true that in one place in the statement of case the Tribunal speaks of the old family brocade business as continuing without a break after the partial partition, reference is made in another place to the assets of that business having been equally divided among the four branches forming the family. There is thus no clear finding as to how the partition of the brocade business was actually effected whether by a division in shares, each branch holding its share in severalty and the business being carried on as before on a partnership basis, or whether by an actual distribution and allotment of specific assets and liabilities among the branches resulting in the disruption of that business." The court accordingly by its order of January 12, 1953, called for a further and clearer statement of the facts on the points indicated. The Tribunal has since submitted a supplementary statement of the case fully setting out the details of the partition arrangement and the constitution of the two firms by the members of the family after the partition. The statement reveals that the bulk of the 162 capital as well as all " the stock in trade, the cash in hand, the cash in banks, all outstandings as on that date as also the sundry liabilities up to that day " were divided amongst each of the 14 coparceners each branch being allotted a four anna share as stated in the schedule filed by the assessees and annexed to the statement, showing that the partition was by specific distribution of the assets and liabilities and not by a division of shares merely. With the assets and liabilities thus distributed, the two partnerships separately carried on brocade businesses similar to the one carried on by the joint family before the partial partition. The names of the partners of the two firms are mentioned and it appears that each firm consisted of members representing all the four branches, some of them being adults and some minors, the minors in each case being only admitted to the benefits of the partnerships. On these facts it was contended by Mr. Pathak on behalf of the appellants that the finding of the Excess Profits Tax Officer that the main purpose of the partial partition and the formation of the new partnerships was to avoid or reduce the liability of the appellants to excess profits tax was not supported by any material on record. Secondly, assuming that there was material on which the officer could have come to such a finding, the old family business in Banaras brocade having been actually closed down, the officer had no power in assessing the profits of that business to make adjustments under section 10 A of the Act by adding the profits made by the two firms after July 17, 1943. And lastly, and alternatively, there was undoubtedly a change in the persons carrying on the old business after July 16, 1943, even if it were regarded as still continuing, the Hindu undivided family being a "person" [section 2(17)] distinct from the individuals Composing it, and such business ' must, under section 8(1), be deemed for all the purposes of the Act (except for one not material here) to have been discontinued and a new business to have been commenced, and the same consequences followed. Mr. Patbak did not argue 163 that the partial partition and the constitution of the two partnerships were not "transactions" within the meaning of section 10 A. Nor did he insist that the acceptance of the partition and allowance of relief by the Income tax Officer under section 25(4) of the Income tax Act concluded the matter for purposes of section 10 A of the Act, as appears to have been contended in the earlier stages of these proceedings. The first contention can be disposed of in a few words. It appears from the facts found by the tax authorities as well as by the Appellate Tribunal that the partial partition and the formation of the partnerships were brought about at a time when the profits of the Banaras brocade business showed a definitely upward trend. If the main purpose of these transactions was not to evade liability to excess profits tax, the appellants were asked to explain what the purpose was, and they said that they wanted to protect the interests of the minor members whose shares in the partnership assets would not be liable for the losses, if any, of the firms, while the entire family properties would be liable for any loss incurred in the family business. This explanation was not acceptable because such protection was not thought of when the family business was earning smaller profits and also because, according to the constitution of the partnerships, while each branch was given the same 4as. interest, the responsibility for losses falling on the branch which had no minor members would be heavier than what would be borne by the branch which had no adult members, a disparity which the purpose put forward by the appellants failed to explain. In these circumstances we agree with the High Court in holding that there was sufficient material to support the inference drawn by the Appellate Tribunal that the main purpose behind the partial partition and the formation of the partnerships was the avoidance or reduction of liability of the family business to excess profits tax. The real and substantial question in the appeals is whether in view of the finding of fact that the old family business was wound up, its assets and liabilities 164 having been actually distributed among the coparceners, and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, ' section 10 A has any application to the case. Question No. 1, which is supposed to have raised this point, was not happily framed. As already stated, Mr. Pathak did not argue that the Income tax Officer 's finding as to the discontinuance of the old family business precluded the Excess Profits Tax Officer from considering the issue. It is now well settled that, for the purposes of the Act, a business is a unit of assess ment, and the charging section 4 provides for the tax being levied in respect of the profits of " any business to which this Act applies. " Section 5 specifies the businesses to which the Act applies, and they are businesses " of which any part of the profits made during the chargeable accounting period is chargeable to income tax " by virtue of certain specified provisions of the Indian Income tax Act, 1922. There are some provisos to this section, one of which excludes the application of the Act to " any business the whole of the profits of which accrue or arise in a Part B State. " It is thus manifest that the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period. In other words, if a business, having been discontinued, earned no profit during the chargeable accounting period in question, no excess profits tax can be charged in respect of such business, and that being the position here as respects the old joint family business in Banaras brocade, the appellants are not liable to be taxed as a Hindu undivided family in respect of that business. But, argues the learned Attorney General, that result cannot follow by reason of section 10 A of the Act which runs as follows: 10 A. Transactions designed to avoid or reduce liability to exces profits tax. (1) Where the Excess Profits Tax Officer is of the opinion that the main purpose for which any transaction or transactions was or were effected (whether before or after the passing of the 165 Excess Profits Tax (Second Amendment) Act, 1941) was the avoidance or reduction of liability to excess profits tax, he may, with the previous approval of the Inspecting Assistant Commissioner, make such adjustments as respects liability to excess profits tax as he considers appropriate so as to counteract the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction or transactions. This provision, it is claimed, empowers the Excess Profits Tax Officer to ignore any transaction (s) the main purpose of which was the avoidance or reduction of liability to excess profits tax and to proceed on the footing that such transactions) had not been effected, and, in the present case, the partial partition as well as the subsequent formation of the partnerships having been found to be transactions the main purpose of which was the avoidance or reduction of liability to excess profits tax, the officer had authority to assess the appellants ' old family business in Banaras brocade on the basis of its continued existence during the relevant chargeable accounting periods. We are unable to accept this contention. If, under section 4 of the Act read with section 5, the old joint family business cannot be regarded as one " to which this Act applies," section 10 A, one of the provisions of the Act, can have no application to such business. The learned Attorney General 's argument that sections 4 and 5 must be read along with section 10 A in determining whether the Act applies to any particular business or not involves the fallacy that, in determining the initial issue whether the Act does or does not apply to a given business, you have to look not merely at the provision which defines the scope and application of the Act but other provisions also which presuppose its application. We are of opinion that the issue whether the Act applies or not to a particular business must be determined solely with reference to section 5, and section 10 A must be construed as 23 166 applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected. The learned Attorney General conceded that, if a person who had been paying excess profits tax transferred the business to a Part B State, it would not be competent for the Excess Profits Tax Officer to take action under section 10 A to make adjustments on the footing that the assessee continued to carry on his business in the same place as before such transfer, even if it was found that the transfer was effected for the main purpose of avoiding or reducing his liability to excess profits tax. In that case, the Attorney General admitted, the Officer would be running counter to the express prohibition contained in the proviso to section 5 to which reference has been made and he did not challenge the correctness of a decision to that effect by the Bombay High Court, (Commissioner of Excess Profits Tax, Bombay City vs Moholal Maganlal) (1). But we fail to appreciate the distinction in principle between that case and the present, for, to both alike the Act is made inapplicable by section 5. The reasoning of the learned Judges in the Bombay case, namely, that if the Act is inapplicable to a particular business and there would thus be no liability to excess profits tax in respect of that business, no question could arise of avoiding or reducing any liability to excess profits tax under section 10 A, would equally apply to the present case and must lead to the same result. Reference was made by the Attorney General in the course of his argument to the proviso to section 2(5) which says that " all businesses to which this Act applies carried on by the same person shall be treated as one business for the purposes of this Act. " We find it difficult to appreciate the bearing of this section on the point at issue. It is clear that the proviso can operate in respect of businessess to which the Act applies and not otherwise, and it carries the, matter no further. (1) [1953] 23 167 In the view we have expressed above, it is unnecessary to deal with the alternative contention based on section 8(1) of the Act. We allow the appeals, set aside the answer made by the High Court to question No. 1 and answer it as follows: In view of the finding of fact that the old joint family business in Banaras brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not legally be treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act. The judgment of the High Court will stand in other respects. The appellants will have their costs of the appeals. Advocates ' fee one set. Appeals allowed.

IN-Abs

A Hindu undivided family carried on business in money lend ing and brocade. On the 16th July, 1943, there was a partial partition amongst the members by which the brocade business was divided and its assets and liabilities were partitioned in equal shares between the members of the family. On the next day the adult members of the family formed two partnerships admitting minors to the benefit thereof, and carried on the brocade business under two separate firm names though they continued to remain joint in status. The Income tax Officer accepted the partial parti tion and treated the brocade business of the family as having been discontinued, but the Excess Profits Tax Officer held that as the main purpose of the partial partition was avoidance of tax, it was an artificial transaction, and, treating the business as unbroken, made adjustments under section 10 A of the Excess Profits Tax Act, by adding to the profits made by the assessees as a joint family till the date of the partition, the profits made by the two firms after partition during the chargeable accounting period : Held, (i) under sections 4 and 5 of the Excess Profits Tax Act, the Act can have no application to a business which did not make any profits during the relevant chargeable accounting period, and, as the old joint family business in brocade was discontinued and earned no profit during the chargeable accounting period in question, the appellants were not liable to be taxed as a Hindu undivided family in respect of that business; (ii)that the issue whether the Excess Profits Tax Act applies to a particular business must be determined solely with reference to section 5 of the Act, and section 10 A must be construed as applicable only to cases where, the business being found to be one to which the Act applies, a transaction of the kind referred to in the section has been effected; and in view of the finding that the old joint family business in brocade was wound up and was no longer carried on by the joint family as such during the relevant chargeable accounting periods, the same business could not be 159 legally treated as having continued unbroken in respect of such periods for the purpose of section 10 A of the Excess Profits Tax Act read with sections 4 and 5 of the same Act.

minal Appeal No. 202 of 1962. Appeal by special leave from the Judgment and Order dated August 1, 1962, of the Mysore High Court in Criminal Appeal No. 213 of 1961. W. section Barlingay and A. G. Ratnaparkhi, for the appellant. R. Gopalakrishnan and B. R. G. K. Achar, for the res pondent. April 1, 1964. The Judgment of SUBBA RAO and DAS GUPTA JJ. was delivered by DAs GUPTA J. RAGHUBAR DAYAL J delivered a dissenting opinion. DAS GUPTA, J. The appellant, who was a registration clerk in the Haveri Post Office in the Mysore State, was tried by the Sessions Judge, Dharwar, on charges under section 52, section 53 and section 55 of the Indian Post Office Act. The prosecution case is that on the 18th October 1955 a registered letter containin half portion of a ten rupee note and petition on behalf of one Muppayyagonda asking for the said note to be exchanged for a fresh note was received at the Haveri Post Office at 4.30 p.m. from the Branch Post Office at Kabbur. The appellant who was a, registration clerk at Haveri at the time, however, detained the registered envelope instead of 608 despatching it that very day as he should have done. He despatched it the next day. It was the prosecution case that the appellant removed the half portion of the ten rupee currency note from inside the envelope and to cover up his misconduct made alterations in the petition contained in the envelope and in the list of registered articles. All this was discovered, it is said, when the Reserve Bank of India, to which this envelope was addressed made enquiries in the matter on finding that no note had been enclosed with the petition. The appellant admitted that the envelope was received at the Haveri Post Office on October 18, 1955 and also, that he did not despatch it on that date. His case was that it was received at about 5.30 p.m. on the 18th and so it was too late for despatch on that date but that he despatched it duly on the 19th, On a consideration of the evidence the Sessions Judge held that the charge under section 52 of the Indian Post Office Act for the theft of currency note and for secreting the registered articles had not been established and acquitted him of that charge. He, however, found it proved that the appellant bad fraudulently altered the lists of registered articles and thereby committed an offence under section 55 of the Indian Post Office Act. He also held that the appellant had wilfully detained the envelope and thus committed an offence under section 53 of the Indian Post Office Act. He accordingly convicted the appellant of the charges under Ss. 53 and 55 of the Indian Post Office Act and sentenced him to undergo two months ' imprisonment on each charge. The sentences were directed to run concurrently. On appeal. the High Court of Mysore set aside the ap pellant 's conviction under section 55 of the Indian Post Office Act but maintained his conviction under section 53, being of opinion that while the wilful detention of the envelope by the appellant had been proved, the alleged alterations by him in the list of registered articles had not been established. Against the High Court 's decision the present appeal has been preferred by the appellant, Ramchandra Narasimha Kulkarni. In support of the appeal it is contended by Dr. Barlingey that as the allegations of theft of the note or of alterations in the list of registered articles by the appellant have not been established, the appellant must be held not to have committed any offence under section 53 of the Indian Post Office Act. It is argued that assuming that the envelope was detained by the appellant as alleged, he cannot be said to have detained it `wilfully" unless it is shown that he bad some purpose in doing it. But, the purpose alleged by the prosecution was that he wanted to commit theft of the currency note, and to cover this up, to make alterations in the list of registered articles, these purposes have not been established. So, argues the learned Counsel, the detention of the envelope should be held 609 to have been made without any purpose but only through inadvertence or mere carelessness. That would not constitute, according to the learned Counsel, a, wilful detention. The words "wilful" and "wilfully" are frequently used in many statutes and have come up for judicial consideration in the courts of this country as also elsewhere. The meaning given to these words have differed in different contexts. Sometimes, any intentional act has been held to be a wilful act. (Re Young and Harston)(1). Often, it has been said that the word wilful suggests bad conduct or action though it does not necessarily connote blame. (Wheeler vs New Merton Board Mills)(2) Not infrequently the word has been used to mean that the act had been done with a bad purpose or without justifiable excuse or stubbornly, obstinately or perversely. (United States of America vs Harry Murdock)(3). Some decisions stress the requirement of deliberation or reckless disregard of the fact whether the act was or was not in breach of duty in deciding whether it has been wilful. (Hudson vs Official Liquidator(4); and In re T.N.K. Govindarajulu Chetty)(5). In the last mentioned case, viz., In re T.N.K. Govindarajulu Chetty 's case, the Madras High Court held that a submission of a false return cannot be a wilful submission unless the dealer has deliberately made the return with the knowledge that he was excluding a taxable item, though in almost similar circumstances another Bench of the same High Court took a different view and held that even though when an assessee, under the impression that a particular item is not taxable and, therefore, need be excluded in the return, omits lo make a mention, of it in the return which he furnished with the full knowledge of his having committed the same, he has "wilfully" omitted it. (In re Jayarama Chettiar) (6). A review of these various decisions brings out clearly the guiding principle that the meaning to be attached to the words " wilful" or "wilfully" has to be ascertained on a close examination of the scheme and nature of the legislation in which the words appear and the context in which they are used. Turning now, for this purpose, to the Indian Post Office Act, we notice that s.53 which makes punishable the wilful detention or delay of a postal article by an officer of the post office in one of the several sections which create offences under this Act. There are 21 such sections, being sections 49 (1)31 Ch. D. 174. (2) 1933(2) K.B. 669. (3)78 Law E. 389. (4) A.I.R. 1929 All. 826. (5)1951 2 S.T.C. 27. (6) I.L.R. 1949 Madras, 121. L/P(D)ISCI 20 610 to 56 and 58 to 70, all in Chapter X of the Act. Some of these offences, viz., those under Ss. 49, 58, 59, 63, 64, 65, 66 and 67 are punishable only with fine. The offences under Ss. 50, 51, 52, 53, 54, 55, 56, 60, 61, 62, 68 and 69 are made punishable also with imprisonment. Of these again, the offences under section 53, are punishable with imprisonment which, may extend to seven years; offences under Ss. 53, 54, 55, 56, 60, and 68 are punishable with imprisonment which may extend to two years; offences under Ss. 61 and 62 are punishable with imprisonment which may extend to one year while offences under Ss. 51 and 69 are punishable with imprisonment which may extend to six months only. An offence under s, 50 is punishable with imprisonment extending to one month or with fine extending to Rs. 50/ . This comparison clearly shows that the legislature took a more serious view of the offence of wilful detention of a postal articles (section 52) than of many other offences in this Chapter. Delay in the conveyance or delivery of a mail bag or other postal articles in the course of transmission by a person employed to carry the same is made punishable with only a fine of Rs. 501 (section 49). Withdrawal from duties of office without permission or without having given a month 's previous, notice in writing by a person employed to carry or deliver a mail bag or postal article is also made punishable only with imprisonment extending to one month or with fine extending to Rs. 501 . Making of a false entry in the register with intention to induce the belief that an article has been delivered is made punishable with imprisonment extending to only six months or with fine extending to Rs. 100/ . But Wilful, detention of a postal article is made punishable with imprisonment extending to two years. Is it reasonable to thin that the legislature would prescribe this heavy punishment for detention of a postal article which was not deliberate and on purpose, while prescribing lighter punishment as mentioned above for the offences under Ss. 49, 50 and 5 1. We do not think so. The very fact that this comparatively heavy punishment of two years ' imprisonment has been prescribed for wilful detention while lighter punishment has been prescribed under Ss. 49, 50 and 51, justifies, in our opinion, the concclusion that the word "wilful" was used by the legislature to mean only such detention which was deliberate and for some purpose. It is interesting to notice in this connection that in the, preceding section 52 the legislature after making punishable the offence of theft of a postal article or of dishonest misappropriation of the same, also made punishable the secretion, destruction or throwing away any postal article if done "for any purpose whatsoever". It is, in our opinion, reasonable to think that in section 53 when the word "wilfully" was used, the 611 legislature also intended that the detention would be punishable only if made for some purpose. Coining now to the facts of the present case, we find that the prosecution alleged a definite purpose, viz., the purpose of theft of the contents of the envelope as the purpose with which the postal article was detained. The existence of that purpose has not, however, been established. Nothing was suggested before us as to, what other purpose the appellant could 'have had in detaining the article. There is, therefore, no escape from the conclusion that the detention was not deliberate and on purpose, but as a result of either inadvertence or carelessness or negligence. So, the appellant cannot be said to have detained or delayed the article 'wilfully '. Accordingly, we allow the appeal, set aside the order of conviction and sentence passed by the High Court and order that the appellant be acquitted of the charge against him. RAGHUBAR DAYAL, J. The main question to determine, in this case, is what the expression 'wilfully detains or delays ' in section 53 of the Indian Post Office Act, 1898 (Act VI of 1898), hereinafter called the Act, means. I do not agree that it means such detention which was deliberate and for some purpose. I am of opinion that the detention or delay would be 'wilful ' if it was intentional and deliberate on the part of the officer of the post office, as opposed to detention or delay on account of negligence or inadvertence. The word 'wilful ' or 'wilfully ' used in other enactments have been construed by Court in this manner. I may refer 'to some of these cases. In Taylor vs Vergette(1) 'wilful delay ' has been construed ,to mean 'intional delay '. 'Wilfully ' means that the act is done deliberately and intentionally, not by accident or inadvertence, but so that the mind of the person who does the act goes with it". In Tamboli vs Great Indian Peninsular Railway Company(3) the Privy Council had to construe the expression 'wilful neglect ' in determining the responsibility of the railway administration or its servants and approved of what was said by Lord Russel in Reg. vs Senior(2). (1) (2) , 290. (3) L.R. 55 I.A. 67=I.L.R. L.P(D)LSCI 20(a) 612 In Wheeler vs New Merton Board Mills, Ltd.(1) it was said: " 'Wilful act ' is plain English, and I can entertain no doubt that the installing of this machine without guard or fence for use in the factory was a wilful act by some one. It was an act, and it was intentional. It is true that though 'wilful ' and 'intentional ' are synonymous. . wilful ' is more commonly used in modern speech of bad conduct or actions than of good, though it does not necessarily connote blame; but that is far from supporting the strange contention that wilful act in section 29, sub section 1, must be confined to something done with intent to injure". In Hudson vs Official Liquidator(2) 'wilful default ' was construed and it was said at p. 930: "The adjective 'wilful ' in 'wilful acts or defaults ' has evidently been used as a description and not as a definition. The idea intended to be conveyed is that the default is occasioned by the exercise of volition or as the result of the non exercise of will due to supine indifference, although the defaulter knew or was in a position to know that loss or harm was likely to result. The word does not necessarily suggest the idea of moral turpitude. We have also to eliminate the elements of accident or inadvertence or honest error of judgement. The default must be the result of deliberation or intent or be the consequence of a reckless omission. 'Wilful default ', therefore, is indicative of some misconduct in the transaction of business or in the discharge of duty by omitting to do something either deliberately or by a reckless disregard of the fact whether the act or omission was or was not a breach of duty". This view was accepted by the Madras High Court in T.N.K. Govindarajulu Chetty, In re(3). The words 'wilful ' and 'wilfully ' have been used in the various provisions of the Act do not lead to any different interpretation of these words. Section 6 of the Act provides, inter alia, that no officer of the Post Office shall incur any liability by reason of any loss, mis delivery, delay or damage, unless he has caused the same fraudulently or by his wilful act or default. (1)[1933] 2 K.B. 669. (2) A.I.R. 1929 All. 826 (3) 1951 2. S.T.C. 27. 613 Section 48(c) provides that no suit or other legal proceed ing shall be instituted against the Government or any officer of the post office in respect of the payment of any money order being refused or delayed by, or on account of, any accidental neglect, omission or mistake by, or on the part of an Officer of the post office, or for any other cause whatsoever, other than the fraud or wilful act or default such officer; and brings out effectively the contradistinction between wilful act or default of an officer and an act done on account of accidental neglect, omission or mistake. Section 49 to 70 provide for offences. Sections 49, 50 and 51 deal with offences which are committed by persons who are employed to carry or deliver any mail bag or any postal article, in course of transmission by post. They are thus offences by carriers of postal articles. They can be committed both by the officers of the postal department and by others as well. Such of the acts contemplated by those sections which can also fall under the other sections exclusively applicable to officers of the post office, will naturally be dealt with under those sections. The persons who will be dealt with under Ss. 49 to 51 or other sections providing for lighter punishments will be those who are not officers of the postal department but are concerned in any manner with the transmission of the post. Clause (c) of section 49 makes punishable the loitering or making delay in the conveyance or delivery of any mail bag or postal article, and thus emphasizes the necessity of prompt transport of postal articles. Sections 52 to 66 provide for offences by officers of a post office. Section 52 provides punishment for committing theft or dishonestly misappropriating in respect of or, for any purpose whatsoever, secreting, destroying or throwing away any postal article in the course of transmission by post or anything contained therein. The offence is punishable with imprisonment upto seven years and also with fine. This is the most serious offence. It is to be noted for our purpose that the secreting, des troying or throwing away of the postal article for any pur pose whatsoever is an offence. An act done with a purpose must be a deliberate act and a, deliberate act must also be one done with some purpose. The legislature, where it intended to make the purpose behind an act an ingredient of the offence, expressly stated so. If the word 'wilful ' or 'wilfully ' is used in the Act as a synonym for an act done deliberately and for some purpose, the expression 'wilfully ' could have been used in the place of 'for any purpose whatsoever '. This, however, the legislature did not do, though it used that word in the very next section, viz., section 53 which reads: 614 .lm15 "Whoever, being an officer of the Post Office, contrary to his duty, opens, or causes or suffers to be opened, any postal article in course of transmission by post, or wilfully detains or delayed or causes or suffers to be detained or delayed, any such postal article, shall be punishable with imprisonment for a term which may extend to two years, or with fine or with both: Provided that nothing in this section shall extend to the opening, detaining or delaying of any postal article under the authority of this Act or in obedience to the order in writing of the Central Government or the direction of a competent Court". Sections 54, 55 and 56 make certain acts done fraudulently, knowingly or with intent, punishable with imprisonment upto two years or fine. Section 55 makes the fraudulent altering or secreting or destroying of a document which an officer of the post office is entrusted with keeping, punishable with imprisonment upto two years and with fine. This act is con sidered less heinous than that of secreting, destroying or throwing away of any postal article in the course of transmission by post, for any purpose whatsoever. Section 66(1) makes the master of a ship who, in certian circumstances, knowingly has in his baggage or in his possession or custody, any postal article within the exclusive privilege conferred on the Central Government by section 4, punishable with fine which may extend to Rs. 50/ for every such postal article. Here a certain act committed knowingly is made an offence. Sub section (2) of section 66 makes the detention of any postal article, after a demand for it has been made by an officer of the post office, punishable. Here, the mere detention after a demand is made penal irrespective of the intention or purpose behind such detention. Section 67 makes the detention of mails or any postal article in the course of transmission by post by anyone except under the various circumstances mentioned in the section, in offence. Here again, mere detention is made an offence irrespective of the circumstances in which it is made, excepting for reasons mentioned in the section iteself. Section 68 reads: "Whoever, fraudulently retains, or wilfully secretes or makes away with, or keeps or detains, or when required by an officer of the post office, neglects or refuses to deliver up, any postal article in 615 course of transmission by post which ought to have been delivered to any other person, or a mail bag containing a postal, article, shall be punishable with imprisonment for a term which may extend to two years, and shall also be punishable with fine". It is to be noticed that 'wilfully ' secreting any postal article in the course of transmission by post is an offence under this section. A comparison with the provisions of section 52 of the Act indicates that the legislature must have used the expresssions 'wilfully ' and 'for any purpose whatsoever ' in different senses. maliciously with intent to injure any person, offences. 'Wilfully" here is used as something distinct from 'maliciously ' and is, further used in addition to the expression 'with intent to injure any person ', that is to say, the particular purpose or intent is in ingredient of the offence in addition to 'wilfully '. Sections 6 and 48(c) provide that an officer of a post office would be liable for the loss, misdelivery, delay or of damage to any postal article in the course of transmission or for the delay in the payment of a money order, only when this happens as a result of his wilful act or default. The person suffering from such misdelivery etc., has no claim against the officer of the post office if that thing has been the result of something which could not be said to be the wilful act or default of a postal officer. It is no concern of the addressee or recipient of an article in transit by post that the wilful act or default of the postal officer was with a certain purpose or not and whether that officer succeeded in that purpose or not. :Vie should be successful in his claim if the postal officer has deliberately not acted in the manner he is required to act tinder the Act or the rules framed thereunder or if he has deliberately acted in violation of the duties entrusted to him. In either case, the act of the officer concerned would be wilful inasmuch as he would act intentionally in violation of his duty or in a manner in which he is not to act and not accidently or inadvertently. The provision of s.53 of the Act require that the office wilfully detains ' the postal article and that the act of detention be contrary to his duty prescribed by or under the Act. Section 21(2)(c) empowers the Central Government to make rules providing for the detention and disposal of articles in course of transmission by post in certain circumstances. Sections 22(1), 23, 26. 27B and 37(2) provide for the circumstances in which postal articles can be detained or delayed. It is not necessary to detail those circumstances. The clause 'contrary to his duty ' governs both the act of opening 616 of the Postal article and to the act of detaining it. The first necessary ingredient of the offence under section 53 is that the postal officer should act contrary to his duty. Such an act, however, can take place by accident or negligence also, without the officer 's knowing it or even giving any thou ]it to it and therefore without his exercising his will in that matter. The legislature, therefore, felt that accidental or negligent acts be not made offences and that detention of the postal article, even if it be contrary to duty, be protected and that only such detention of the articles be made punishable which be committed wilfully, i.e., when the officer applied his mind towards the act and has committed it deliberately with the intention of committing it. The mere act of detaining mails or postal articles by any person other than a postal officer is made punishable only with fine under section 67 of the Act. This indicates that the punishment under section 53 is severe because the culprit is an officer of the post office who has opportunities to detain the postal article and who acts contrary to his duty. The proviso to section 53 refers to cases which would have come within the main provisions, and provides that the main provisions do not extend to the opening, detaining or delay ing of any postal article under the authority of the Act or in obedience to the order in writing of the Central Government or the direction of a competent Court. Such acts would be undoubtedly deliberate and without any criminal purpose. The use of the expression 'for any purpose whatsoever ' in section 52 is no guide to construe the word 'wilfully ' in section 53. It appears to have been used in section 52 in contradistinction to the mens rea necessary for the commission of the offence of theft or of dishonest misappropriation. Its use makes it clear that the act of secreting, destroying or throwing away of the postal article will be punishable if with a purpose, whatever that may have been. I, therefore, construe 'wilfully ' in section 53 to mean 'inten tionally and deliberately ' and not accidently or negligently and hold that the appellant has been rightly convicted of the offence under that section. I am further of opinion that even if the expression 'wil fully detains ' in section 53 of the Act means a detention delibe rate and for some purpose, the appellant is not entitled to an acquittal on the findings the Courts have arrived at. The appellant, in ordinary course of business, would have forwarded the registered letter by the mail on October 18, 1955 when it had been received at the usual hour and the ap pellant 's contention that it was received after the despatch 617 of the mail has not been accepted. It follows that the appellant deliberately detained the registered letter. The intention and deliberation was directed towards the detaining of the registered letter and to the non forwarding of it in due course With the mail that day. Every intentional and deliberate act must be with some purpose or object. It may be that in some cases the object be achieved by the mere doing of the act intended, that is to say, the object was just the doing of that act. In other cases, an act may be done with some further object also. The appellant 's purpose behind his intentional act of detaining the registered letter must have been to remove what he might have suspected the letter to contain. If he did not have any such object, he could not have any reason to depart from his duty and detain the letter instead of sending it by the next mail in the ordinary course of his duties. His act, therefore, in detaining the letter, amounted to his detain ing it wilfully. that he himself opened the letter, tempered with its contents, and removed the half currency note, facts which have been proved to have been committed by someone, does not mean that his detaining the letter was not on purpose. A person may do an act with a certain purpose and yet may not succeed in his purpose. Even if he succeeds it may not be possible for any other person to establish that he did that act for that purpose and did succeed in achieving that purpose. I would, therefore, dismiss the appeal. ORDER BY COURT In accordance with the majority opinion, the appeal is, allowed, the order of conviction and sentence set aside and the appellant ordered to be acquitted of the charge against him. Appeal allowed.

IN-Abs

The appellant was a registration clerk in a post office. He was prosecuted on the allegation that he committed theft of a half of a ten rupee note contained in a registered letter along with a petition for exchanging it, for altering the petition and for detaining the registered letter for a day with the purpose of committing the theft and making the alteration. He was charged under Ss. 52, 53 and 54 respectively of the Post Offices Act, 1898. The Sessions Judges who tried the case found him not guilty of the offence under section 52 but guilty under Ss. 53 and 55. On appeal to the High Court he was found not to be guilty of the offence under section 55; the conviction under section 53 was maintained. Thereupon he appealed to this Court. It was contended by the appellant before this Court that as suming that he detained the envelope he cannot be said to have detained it "wilfully", unless it is shown that he had some purpose in doing it and since the purpose alleged by the prosecution has not been proved the appellant cannot be said to have committed the offence under section 53. Held: per K. Subba Rao and K. C. Das Gupta, JJ. A review of the case law brings out clearly the guiding principle that the meaning to be attached to the words "wilful ' or ',wilfully" has to be ascertained on a close examination of the scheme and nature of the legislation in which the words appear and the context in which they are used. Re Young and Harston, Wheeler vs New Merton Board Mills, United States of America vs Harry Murdock, , Hudson vs Official Liquidator, A.I.R. 1929 All. 826, In re T. M. K. Govindarajulu Chetty, 1951 2 S.T.C. 27 and In re Jayarama Chettiar, I.L.R. referred to. (ii) A comparison of the various sections of the Act shows that the legislature took a more serious view of the offence of wilful detention of postal articles than any of the offences in Ch. X and has, therefore, prescribed a comparatively heavy punishment. Hence it is reasonable to think that in section 53 when the word "wilfully" was used the legislature also intended that the detention would be punishable only if made for some purpose. (iii) The prosecution alleged in the present case that the purpose was theft of the note but the existence of that purpose has not been established and detention was not deliberate and hence the appellant cannot be said to have detained the article wilfully. Per Raghubar Dayal, J. (dissenting) The legislature where it intended to make the purpose behind an act an ingredient expressly stated so, as for example in section 52. If the word "wilful" or "wilfully" is used in the Act as 607 a synonym for an act done deliberately and for some purpose, the expression wilful could have been used in the place of "for any purpose whatsoever". This the legislature did not do though it used that in section 53. (ii) The mere act of detaining a postal article by any person other than a postal officer is made punishable with only fine under s, 67 and a higher punishment is provided under section 53 because the culprit is an officer of the post office who has opportunities to detain the, postal articles and who acts contrary to his duties. (iii) The expression "wilfully" in section 53 means "intentionally and deliberately" and not "accidently" or "negligently". (iv) From the facts of the case it is proved that the appel lant deliberately detained the registered letter. His intention and deliberation were directed towards the detaining of the registered letter and to the non forwarding of it in due course with the mail that day. Every intentional and relevant act must be with some purpose or object. He, therefore obtained the letter wilfully and is guilty of the offence under section 53. Taylor vs Vergette (861) , Reg. vs Senior , Tamboli vs Great India Peninsular Railway Company, L.R. 55 I.A. 67, Wheeler vs New Merton Board Mills Ltd. , Hudson vs Official Liquidator, A.I.R., 1929 All. 826 and T. N. K. Govindarajulu Chetty, 1951 S.T.C. Vol. 2, 26, referred to.

Appeal No. 505 of 1963. Appeal from the judgment and order dated March 6, 1961 of the Punjab High Court (Circuit Bench) at Delhi in I.T.R. No. 16 of 1959. section K. Kapur and B. P. Maheshwari, for the appellant. C. K. Daphtary, Attorney General, K. N. Rajagopal ' Sastri and R. N. Sachthey, for the respondent. April 1, 1964. SHAH, J. The appellant which is a Hindu undivided family was the registered holder of 1,500 shares of M/s Govan Bros. (Rampur) Ltd. in the year of account October 1, 1950 to September 30, 1951. Pursuant to a resolution passed by the board of directors of M/s Govan Bros. (Rampur) Ltd. hereinafter called 'Govan Bros. ' at a meeting held on August 30, 1950, the appellant received a dividend warrant dated December 28, 1950 for Rs. 4,12,500/being interim dividend in respect of its shareholding in Govan Bros. This amount was brought to tax with the other income of the appellant in the assessment year 1952 53 by the Revenue authorities. after rejecting the objection of the appellant that it represented income for the assessment year 1951 52. At the instance of the appellant the Appellate Tribunal drew up a statement of the case and referred the question set out hereinbelow to the High Court of Punjab under section 66(1) of the Indian Income tax Act: "Whether on a true interpretation of Article 95 of the First Schedule to the Indian Companies Act, 1913, the dividend of Rs. 4,12,500/ was liable to be included in the assessment year 1952 53. " The High Court recorded an answer to the question in the affirmative. Against the order of the High Court, this appeal is preferred by the appellant with certificate granted by the High Court. Even though the question was framed a; , if article 95 of the First Schedule to the Indian Companies Act, 1913, ap plies to Govan Bros, it is common ground that the company 581 was registered under the Companies Act of the former Rampur State, and it had adopted special Articles of Association in supersession of Table A of the Companies Act. The relevant articles of Govan Bros. dealing with declaration or payment of final and interim dividends were articles 73 and 74. The High Court therefore proceeded to deal with the question on the footing that it was, by the question referred, called upon to interpret article 74 of the Articles of Association of Govan Bros. It is common ground between the appellant and the Revenue that the provisions of the Companies Act of the former Rampur State were in terms identical with the provisions of the Indian Companies Act, 1913. The appellant contend that the directors of Govan Bros. had in exercise of authority expressly conferred upon them by article 74 declared dividend in their meeting dated August 30, 1950 and on such declaration the dividend became a debt due to the appellant and under the Indian Income tax Act it became taxable in the year of assessment 1951 52, for the previous year of the appellant had ended on September 30, 1951. The Commissioner of Income tax says that the directors of Govan Bros. had paid by warrant issued on December 28, 1950 pursuant to a resolution dated August 30, 1950, interim dividend and it was only on payment the dividend became taxable under section 16(2) of the Indian Income tax Act. It is said by the Commissioner that dividend final or interim is taxable not in the year in which it is declared but only in the year in which it is paid, credited or distributed, or deemed to be paid, credited or distributed, and that in any event a resolution by the Board of Directors to pay interim dividend does not create an enforceable obligation, for it is always open to the directors to rescind the resolution for payment of dividend even if it is one in form declaring dividend. The Indian Companies Act, 1913 contains no provision for declaration of dividend either interim or final: it does not say as to who shall declare the dividend, nor does it say that dividend may be declared in a general meeting of the company. But section 17(2) provides that the company may adopt all or any of the regulations contained in Table A in the First Schedule to the Companies Act as its articles of association, and shall in any event be deemed to contain regulations identical with or to the same effect, amongst others, as regulation 95 and regulation 97 contained in that Table. Regulation 95 of Table A provides that the company in general meeting may declare dividends, but no dividends shall exeed the amount recommended by the directors, and regulation 97 states that no dividends shall be paid otherwise than out of profits of the year or any other undistributed profits. Regulation 96, which is not an obligatory article, provides that the 582 directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company. Govan Bros. had in their Articles of Association made the following provision with regard to dividends: "article 73. The Company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits. article 74. When in their opinion the profits of the company permit, the directors may declare an interim dividend. article 77. No dividend shall be payable, except out of the net profits arising from the business of the company, and no larger dividends shall be declared than is recommended by the directors. " By article 80 it was provided that unless otherwise directed by the company in general meeting any dividends may be paid by cheque or warrant sent through the post to the registered address of the member entitled to the same. In article 74 relating to payment of interim dividend. there was a slight departure from the regulation under Table A of the First Schedule to the Companies Act. Whereas under regulation 96 Table A the directors are authorised to pay to the members interim dividends, by article 74 of the Articles of Association of Govan Bros. the directors are authorised to declare interim dividend. It may be noticed that under section 17, adop tion of an article in form identical with, or to the same effect as regulation 96 of Table A, is not made obligatory. The material part of section 16(2) of the Income tax Act as it stood before it was deleted by section 7 of the Finance Act, 1959 with effect from April 1, 1960, read as follows: "For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been paid, credited or distributed to him The clause in terms made dividend the income of the year in which it was paid, credited or distributed or was deemed to have been paid, credited or distributed. In the present case dividend was paid to the appellant on December 28, 1950. It is not the case of the appellant that the amount was either credited in the books of account of Govan Bros. to the appellant or was distributed or deemed to have been paid, credited or distributed to the appellant before the close of the appellant 's year of account ending September 30, 1950. But Mr. Kapur contends that under the law governing companies 583 on declaration, dividend interim or final becomes due, and it must be regarded for the purpose of the Income tax Act as paid to the member on the date on which it is declared. There is no doubt that a declaration of dividend by a company in general meeting gives rise to a debt. "When a company declares a dividend on its shares, a debt imme diately becomes payable to each shareholder in respect of his dividend for which he can sue at law, and the Statute of limitation immediately begins to run": In re Severn and Wye and Severn Bridge Railway Company(1). But this rule applies only in case of dividend declared by the company in general meeting. A final dividend in general may be sanctioned at an annual meeting when the accounts are presented to the members. But power to pay interim dividend is usually vested, by the articles of association, in the directors. For paying interim dividend a resolution of the company is not required: if the directors are authorised by the articles of association they may pay such amount as they think proper, having regard to their estimate of the profits made by the company. Interim dividend is therefore paid pursuant to the resolution of the directors on some day between the ordinary general meetings of the company. On payment, undoubtedly interim dividend becomes the property of the shareholder. But a mere resolution of the directors resolving to pay a certain amount as interim dividend does not create a debt enforceable against the company, for it is always open to the directors to rescind the resolution before payment of the dividend. In The Lagunas Nitrate Company (Limited) vs J. Henry Schroeder and Company (2) the directors of a company passed a resolution declaring interim dividend payable on a future date, and requested the company 's bankers to set apart, out of the money of the company in their hand, into a special account entitled "interim Dividend Account", a sum sufficient to cover the dividend, pending the company 's instructions. But before the date fixed for payment, the directors resolved that pending certain litigation to which the company was a party, payment of dividend be postponed. it was held by the Court that the directors had the right even after resolving to pay interim dividend to rescind the resolution and no enforceable right arose in favour of the members of the company by the declaration of interim dividend. In Halsbury 's Laws of England, III Edn., Vol. 6 p. 402, article 778, it has been stated: "A directors ' declaration of an interim dividend may be rescinded before payment has been made." (1) (1)17 Times Law Reports 625. 584 Therefore a declaration by a company in general meeting gives rise to an enforceable obligation, but a resolution of the Board of Directors resolving to pay interim dividend or even resolving to declare interim dividend pursuant to the authority conferred upon them by the articles of association gives rise to no enforceable obligation against the company, because the resolution is always capable of being rescinded. Therefore departure in the text of article 74 of the Articles of Association of Govan Bros. from the statutory version under Table A of the power in respect of interim dividend which may be entrusted to the directors, makes no real difference in the true character of the right arising in favour of the members of the company on execution of the power. The directors by the Articles of Association are entrusted with the administration of the affairs of a company; it is open to them if so authorised to declare interim dividend. They may, but are not bound to, pay interim dividend, even if the finances of the company justify such payment, even if the directors have resolved to pay interim dividend, they may before payment rescind the resolution. Counsel for the appellant does not rely upon any evidence of actual payment or upon any credit given to the appellant in the books of account of the company nor upon any distribution. Even the resolution of the directors of August 30, 1950 is not on the record, and there is no evidence that it was resolved to pay the dividend on any date before it was actually paid, and the company had taken any step to implement the resolution within the year of account corresponding to the assessment year 1951 52. There is no statutory provision which gives rise to a fiction that on declaration of interim dividend, it should be deemend to be paid, credited or distributed. In support of the plea that interim dividend was taxable in the year of assessment 1951 52, the appellant relies upon two facts only the power vested in the directors to declare interim dividend, and the passing of a resolution by the directors relating to interim dividend on August 30, 1950 followed by the drawing of dividend warrants dated December 28, 1950. But for reasons already stated a resolution of the board of directors declaring interim dividend, until it is implemented by some step taken by the company, creates no enforceable right in the shareholders. The judgment of the Bombay High Court in Commissioner of Income tax, Bombay vs Laxmidas Mulraj Khatau(1) on which counsel for the appellant relies, does not assist him either. In that case the company declared a dividend out of its profits, and made it payable a few days later. The dividend was paid on the (1) 585 date on which it was made payable by the resolution of the company. The Income tax Officer treated the amount received by the member as dividend income for the assessment year in which it was actually received. The High Court of Bombay in a reference under section 66 observed that a; , soon as the divi dend was declared it became the income of the assessee which income the assessee could deal with or dispose of in any manner he liked. Chagla C. J., speaking for the Court enun ciated the law as follows: "It is impossible to give a literal construction to the expression "paid" used in this sub section (sub section (2) of section 16). If a literal construction were to be given, then it would amount to this that "until the dividend warrant was actually cashed and the dividend amount was actually realised it cannot be stated that the dividend was paid to the share holder. * * * * * I think the proper construction to give to that word is when the dividend is declared then a liability arises on the part of the company to make that payment to the shareholder and with regard to the shareholder when the income represented by that dividend accrues or arises to him. The mere fact that the actual payment of the income is deferred is immaterial and irrelevant." But whether dividend interim or fixed is income taxable in a particular year of assessment must be determined in the light of section 16(2) of the Indian Income tax Act. The Legislature had not made dividend income taxable in the year in which it becomes due: by express words of the statute, it is taxable only in the year in which it is paid, credited or distributed or is deemed to be paid, credited or distributed. The Legislature has made distinct provisions relating to the year in which different heads of income become taxable. Salary becomes taxable by section 7 when it is allowed to the employee or becomes due to him, whether it is actually paid to him or not. Interest on securities under section 8 is taxable when it is received by the assessee. Under section 9 tax on property becomes payable not on any actual receipt of income from the property but on a purely national computation in the year of account of a bona fide annual value of the property, subject to the adjustments provided in that section. Profits and gains of business, profession or vocation carried on by an assessee are computed in accordance with the method of accounting regularly employed by the assessee, unless the Income tax Officer being of the opinion that profits or gains cannot properly be deduced therefrom, directs otherwise. Other sources of income and dividends are included in this residuary class become taxable in the year in which they 586 are received or accrue or arise or are deemed to be received, accrued or arise, according to the nature of the particular income. The year in which a particular class of income be comes taxable must therefore be determined, in the light of its true character, and subject to the special provision, if any, applicable thereto. The Legislature has enacted an express provision making dividend income taxable in the year in which it is paid, credited or distributed or is to be deemed, so paid, credited or distributed. The test applied by Chagla C. J., that because the dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable in the year in which it is declared, cannot be regarded as correct. The expression "paid" in section 16(2) it is true does not contemplate actual receipt of the dividend by the member. In general, dividend may be said to be paid within the meaning of section 16(2) when the company discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto. Chagla C. J., has himself in Purshotamdas Thakurdas vs Commissioner of Income tax, Bombay City '(2) expressed a different view. The learned Chief Justice in delivering the judgment of the court referred to Laxmidas Mulraj Khatau 's case (3) and observed that the principle of that case applied only to those cases where in facts the dividend was paid to the shareholder and not to cases where a contingent liability was undertaken and no payment was made. He observed: "* * * one thing is clear from the language used by the Legislature that it did not intend to equate "paid" with "declared" in every case. Therefore, it is open to us to consider, notwithstanding the Khatau Mills ' case, whether on the facts of this case, it could be said that dividend has been paid, which although it may have been declared may never be payable and in fact has not been paid. " If the mere declaration of dividend in general meeting of the company is not to be regarded as payment within the meaning of section 16(2), much less can it be said that a resolution declaring interim dividend which is capable of being rescinded by directors operates as payment before the company has actually parted with the amount of dividend or discharged obligation by some other act. The High Court was therefore right in recording an affirmative answer to the question propounded for the consideration of the Court. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant held shares in a company the Board of Directors of which by a resolution dated August 30, 1950 declared interim dividends. The appellant received a dividend warrant dated December 28, 1950 for a certain amount being the interim dividend in respect of its share holdings in the company. The appellant 's year of accounting had ended on September 30, 1950. The revenue authorities brought to tax the amount so received with other income of the appellant in the assessment year 1952 53 after rejecting the objection of the appellant that it represented income for the assessment year 1951 52. In a reference made under section 66(1) of the Indian Income tax Act, 1922, the High Court agreed with the Revenue authority that the dividend was in view of article 95 of the First Schedule to Indian Companies Act, 1913, liable to be included in the assessment year 1952 53. Held: A declaration of dividend by a company in a general meeting gives rise to a debt. In re Severn and Wile and Severn Bridge Railway Co. , referred to. But a mere resolution of the Directors resolving to pay a certain amount as interim dividend does not create a debt enforceable against the company for it is always open to the Directors to rescind the resolution before payment of the dividend. The Lagunas Nitrate Company (Ltd.) vs J. Henry Schroeder and Company, 17 Times Law Reports 625, referred to. Commissioner of Income tax, Bombay vs Laxmidas Mutraj Khatau, , distinguished. (ii) The test applied by Chagla C. J. (in C.I.T., Bombay vs Laxmidas Mulraj Khatau, that because the ,dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable in the year in which it is declared cannot be regarded as correct. (iii) Dividend may he said to be paid within the meaning of section 16(2) of the Indian Income tax Act, 1922 when the company discharges its liability and makes the amount thereof unconditionally available to the member entitled thereto. Purshottamdas Thakurdas vs C.I.T., Bombay, , referred to. I P(1)) 1 S.C.I 17 (a) 580 (iv) The declaration of interim dividend capable of being rescinded by the directors does not operate as a payment under section 16(2) of the Income tax Act before the company has parted 'with the amount of dividend or discharged its obligation by some other act.

Appeal No. 46 of 1961. Appeal from the judgment and decree dated July 17, 1958 of the Patna High Court in Appeal from Original Decree No. 162 of 1952. Sarjoo Prasad and D. N. Mukherjee, for the appellant. R. C. Prasad, for respondents Nos. 565 April 1, 1964. The Judgment of the Court was delivered by MUDHOLKAR, J. This is an appeal by a certificate granted by the High Court of Patna under article 133(1)(a) of the Constitution, and arises out of a suit instituted by the appellant against the respondents for the recovery of a sum of Rs. 57,000/ . The appellant holds permanent lease hold rights over a colliery called the Jealgora Govindpur Colliery and had worked the colliery himself for some time. On January 31, 1949, he granted a sub lease of the colliery to respondent No. 4 for a term of five years. At that time, 2803 tons of slack and rubble coal was lying in the colliery, and under the terms of a separate agreement executed by respondent No. 4, he was liable to pay for this coal at the rate of Rs. 10/ per ton after selling it. According to the appellant, this coal was sold by respondent No. 4, but he was not paid its price amounting to Rs. 28,030/ . Further, according to him, royalty and commission were due to him from the respondents in respect of the coal extracted by them from the colliery, as also Rs. 1,355 / 8 / 3 on account of a loan taken by them from him on February 17, 1949. The total claim was tentatively valued by him at Rs. 57,000/ . He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5 and is now respondent No. 3 before us. The appellant 's case was that respondent No. 4 was a benamidar for the partnership firm and, therefore, all the respondents were liable for the claim. Respondents 4 & 5, who are father and son, admitted the appellant 's contention that the lease was obtained by respondent No. 4 on behalf of the partnership firm, but their contention was that they surrendered their lease hold interest to the appellant on November 1, 1950, which was accepted by him, and that he was, therefore, not entitled to the claim in respect of royalty and commission from them for the period subsequent to November 1, 1950. Further, according to them, the coal which was lying in the colliery was not actually weighed at the time of the agreement and the figure of 2803 tons was put down only as a rough estimate. According to them, on the date of the surrender of the lease by them, there was a stock of more than 2803 tons of slack and rubble, etc., as well as soft coke, including the stock left by the appellant at the time of granting the sub lease, because that could not be sold, and the appellant took possession of the entire stock lying in the colliery in November, 1950, after promising to adjust it towards the dues. They, therefore, 566 disclaimed all liability to pay the price of 2803 tons of coal. They also denied having taken a loan from the appellant as alleged by him. No separate written statement was filed on behalf of respondent No. 3, but respondents 1 & 2, who were defendants 2 & 4 in the trial court, denied the appellant 's claim totally. According to them, respondent No. 4 took the sub lease in his personal capacity and not on behalf of the 'other respondents. They averred that there was no privity of contract between them and the appellant and that, therefore. he was not entitled to a decree against them. The real facts, according to them, are that the respondent No. 4 took a sublease of the property from the appellant and gave a managing agency of the same to the Saurashtra Coal Concern of which the first respondent is the financing partner and the second respondent is the working partner. This concern was, they say, never a sub lessee of the appellant. They also denied having anything to do with the stock of coal which the appellant is alleged to have sold to the 4th respondent. The trial court negatived the claim of the appellant in respect of the loan but decreed the claim for Rs. 28,030/ as the price of coal and commission thereon against all the respondents. It further passed a preliminary decree for ascertaining the precise amount of royalty and commission which would be due to the appellant on account of the sub lease. The trial court further said that the minimum amount under this head would be Rs. 26,000/ . Respondents 1 to 3 preferred an appeal to the High Court and the High Court accepted it. Thus, the position now is that the decree of the trial court stands only against respondents 4 & 5, but has been set aside as against respondents 1 to 3. In view of the fact that both the courts below have found concurrently that the sub lease in question was taken by respondent No. 4 alone, the only point urged by Mr. Sarjoo Prasad in support of the appeal is that respondent No. 4 being a partner in the Saurashtra Coal Concern, all the partners of the firm are liable under the lease inasmuch as the firm admittedly came into possession of the demised colliery. He points out that even according to respondents 1 to 3, they came into possession of the demised colliery immediately after the execution 'of the sub lease, and wants this Court to infer from this that the partnership had already come into existence before the lease was obtained. This, however, has never been the case of the appellant in the courts below. The only case which he put forward was that the lease was taken by respondent No. 4 on behalf of all the respondents. In other words, his case was that respondent No. 4 was a benamidar for the partnership firm. It is only 567 this case which the respondents had to meet, and in our judgment, it would not be proper to permit the appellant to make out an entirely new case at this stage. Apart from that, section 22 of the , clearly provides that in order to bind a firm by an act or an instrument executed by a partner on behalf of the firm, the act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm. The sub lease was not executed in the name of the firm, and it has been found by the courts below that respondent No. 4 in obtaining the lease, did not act 'on behalf of the firm. This in substance means +,hat in obtaining the sub lease, the parties to it did not intend to bind the firm by that transaction. In support of his contention, Mr. Sarjoo Prasad has strongly relied upon the decision in Karmali Abdulla Allarakia vs Vora Karimji Jiwanji and others(1). That was a case in which the question for consideration was whether one of the two partners is liable upon a hundi drawn by one of the partners though the hundi was not drawn in the name of the firm. The Privy Council following the decision in Gouthwaite vs Duckworth(1) held that the other partner would be liable though on the face of it the hundi did not purport to be on behalf of the firm. That decision, however, does not help the appellant, because while the transaction in connection with which the hundi was drawn, was admittedly a partnership transaction, in the case before us, it has been found that the transaction, that is, the taking of the sub lease, was not on behalf of the partnership. The next case relied upon was Mathura Nath Choudhury vs Sreejukta Bageswari Rani and others(2). In that case, the question was whether the firm is liable for the money borrowed by one of its partners. The High Court pointed out that this is a question of fact and depends upon the facts and circumstances of each particular case. In that case also, it was found that the liability arose upon a contract entered into by one of the partners in connection with the partnership business. This case is, therefore, similar to the one just referred to above. The third case relied upon is Pandiri Veeranna vs Grandi Veerabhadraswami(4). In that case, the question was whether the fact that one of the several partners had authority to acknowlede liability to save limitation as against his partners, had to be established only by direct evidence or whether it could be inferred from the surrounding circumstances. The High Court held that it was (1) ILR at 274, etc. (2) (1810) 12 East 421. (3) 46 CLJ 362. (4) ILR Bench). 568 permissible to establish the existence of authority from the surrounding circumstances. The case is thus of no assistance to the appellant. The next case relied upon was Lakshmishankar Devshankar vs Motiram Vishnuram, etc.(1). There, it was held that where money borrowed by one partner in the name of the firm but without the authority of the co partners has been applied to paying off the debts of the firm, the lender is entitled in equity to repayment by the firm of the amount which he can show to have been so applied and the same rule extends to money bona fide borrowed and applied for any legitimate purposes of the firm. It is difficult to appreciate how this case advances the present matter further, because here, the sub lease has not been obtained in the name of the firm. The last case relied upon was Gordhanadas Chliotalal Seth vs Mahant Shri, Raghuvirdasji Gangaramji(2) That again is a case in which the firm was held to be bound by the debts contracted by the managing partner for the purposes of the factory run by the firm. All the partners were held liable, because the transaction was entered into, by the managin partner for the purpose of the partnership business. This case is similar to the one just referred to above and is, therefore, of no assistance to the appellant. Mr. Sarjoo Prasad also referred to two other decisions in Ram Kinkar Banerjee and others vs Satya Chararan Srimani and others(3) and Raja Sri Sri Jyoti Prasad Singh Deo Bahadur vs Samuet Henry Seddon(4). In these cases, the defendants sought to be made liable were assignees of a lease, but that is not the case here. Indeed, Mr. Sarjoo Prasad quite rightly conceded that respondents 1 to 3 cannot be made liable upon the ground that there was a privity of estate between them and the appellant. We, therefore, agree with the High Court that the decree should be limited only against respondents 4 and 5, and dismiss the appeal with costs. Appeal dismissed. (1)6 BLR 1106. (2) 34 BLR 1137. (3)AIR (4) ILR 19 Pat. 433 at 459.

IN-Abs

The plaintiff appellant instituted a suit against the defen dants respondents for the recovery of a sum of Rs. 57,000/ . The appellant was holding permanent lease hold rights over a certain colliery. On January 31, 1949 the appellant granted a sub lease of the colliery to respondent No. 4 for a term of 5 years. He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5. The appellant 's case was that respondent No. 4 was a benamidar for the partnership firm and, therefore, all the respondents were liable for the claim. Respondents 1 and 2 denied the appellant 's claim totally. According to them, respondent No. 4 took the sub lease in his personal capacity and not on behalf of the other respondents. Respondents 4 and 5 who are father and son, admitted the appellant 's case that the lease was obtained by respondent No. 4 on behalf of the partnership firm. The trial court passed the decree against all the respondents. On appeal, the High Court set aside the decree as against respondents 1 to 3 but affirmed the same against respondents 4 and 5. Held: that Section 22 of the , clearly provides that in order to bind a firm by an Act or an ins trument executed by a partner on behalf of the firm, the Act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm. The sub lease was not executed in the name of the firm. On the facts of this case it was held that in obtaining the sub lease, the parties to it did not intend to bind the firm by that transaction, and therefore the decree should be limited only against respondents 4 and 5. Karmali Abdullah Allarakia vs Vora Karimji Jiwanji, I.L.R. , Gouthwaite vs Duckworth, (1810) 12 East 421, Mathura Nath Choudhury vs Sreejukta Bageswari Rani, 46 C.L.J. 362, Pandiri Veeranna vs Grandi Veerabhadi aswami. T.L.R. , Lakshmishankar Devshankar vs Motiram Vishnuram, 6 B.L.R. 1106 and Gordhandas Chhotalal Seth v, Mahant Shri Raghubirdasi Gangaramji, 34 B.L.R. 1137, distinguished.

Appeal No.241 of 1961. Appeal from the judgment and decree dated March 4, 1958, of the Patna High Court in Appeal from Appellate Decree No. 1335 of 1952. 634 R.S. Sinha and R.C. Prasad, for the appellants. Sarjoo Prasad and B. P. Jha, for the respondents nos. 1 and 2. April 3, 1964. The judgment of the Court was delivered by DAS GUPTA, J. This appeal arises out of a suit for re demption of a large number of usufructuary mortgages in favour of the defendants. The plaintiff who owned 1.67 acres. of lands which were recorded in Khata 56 and 10.56 acres in Khata 57 in village Sarifabad gave 1.27 acres out of Khata 56 and 8.24 acres out of Khata 57 lands in mortgage to the several defendants by separate mortgage bonds. Part of the remaining land was sold by him and the rest settled by him with the first defendant on Batai terms. The plaintiff 's case is that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the landlord. The mortgagees however defaulted in the payment of rent for some years. A suit for the arrears of rent was brought by the landlord and a decree obtained. In execution of the decree the lands were sold. The purchasers were one Besolal and Mst. Kirti Kuer, who according to the plaintiff, were only benamidars of defendants 1 and 2 and other mortgagees. It is his case that this purchase enured for the benefit of the mortgagor, that is, the plaintiff, and so the right of redemption of the mortgagees has not been affected. The prayers were for a declarations that the purchase was for the benefit of the plaintiff and for redemption of the mortgagees. The suit was contested by defendants 1 and 2 only. Of these defendants, Chamroo Sao is the purchaser, and Besolal, defendant 2 is the son of the other purchaser Mst. Kirti Kuer. They denied the allegation that Besolal and Mst. Kirti Kuer were their benamidars and contended that the right of redemption has been extinguished by the court sale. The Trial Court held that the plaintiff had failed to show that the auction purchasers were benamidars of the mortga gees and in that view dismissed the suit. On appeal, the Additional District Judge, Patna, came to a contrary conclusion. He held that the put chase, though in the name of Besolal and Mst. Kirti Kuer was really by the, first and the second defendants. He also accepted the plaintiff 's case that under the terms of the mortgage bonds the mortgagees were liable to pay the rent and the rent sale having been brought about due to the default of the mortgagor and the mortgagee they could not be allowed to take advantage of the sale. So, according to the learned Judge, the equity of 635 redemption in favour of the plaintiff still subsisted and that he was entitled to redeem the mortgaged property. Accordingly, he set aside the judgment of the Trial Court and passed a preliminary decree for redemption. Against this decree the two defendants appealed to the High Court of Patna. The appeal came up for hearing in the first instance before a Single Judge (Mr. justice Sahai). On a consideration of the evidence, he was of opinion that the liability of rent of 2.67 acres was upon defendant I and that payment of rent of 87 acres which was purchased and 1.76 acres which was taken in ijra, the total being 2.43 acres, was upon defendant 2, that for payment of rent of 3.83 acres was upon the other defendants, and the plaintiff was liable to pay the rent of only about 3.39 acres out of the entire area of 1.67 acres of Khata No. 56 and 10.65 acres of Khata No. 57. The question which therefore arose was whether section 90 of the Trusts Act would operate to keep the equity of redemption alive in cases where the sale took place due to the default of the mortgagor as well as the mortgagees, the default on the part of the mortgagees, who purchased the properties at the sale being also substantial. The learned Judge referred this point for decision to a Division Bench. The Division Bench of the High Court held that section 90 of the Trusts Act did not apply to these circumstances. In this view the High Court allowed the appeal, set aside the decree of the first appellate court and restored the decree of the Trial Court. The present appeal by Mst. Basmati Devi, who is the legal representative of the original plaintiff who was substituted in his place, is against the High Court 's decision dismissing the suit. In coming to a conclusion that section 90 of the Trusts Act did not apply to cases where the sale took place due to the default of the mortgagor as well as the mortgagee, the High Court appears to have followed a number of previous decisions of the same High Court. In support of the appeal it is urged that the view taken by the High Court in the present case as well as the previous decisions of the Patna High Court is incorrect and defeats the very object of section 90 of the Indian Trusts Act. Section 90 of the Indian Trusts Act is in these words: "Where a tenant for life, co owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in 636 derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit. of all persons so interested, the advantage so gained but subject to repayment by such persons of their due share of the expenses properly incurred, and to, an indemnity by the same persons against liabilities properly contracted, in gaining such advantage. " The question for consideration is whether in circumstances like the present where the decree and the sale in execution of it are brought about by the default of both the mortgagor and the mortgagee, the mortgagee can be said to have taken advantage of his position by purchasing the property at the sale. The High Court appears to think that unless the sale was brought about by the default of the mortgagee alone the mortgagee cannot be said to have taken advantage of his position in making the purchases. What seems to have weighed with the learned Judges is that even if the mortgagee had done his duty by paying the rent he was liable to pay, the sale would still have taken place as the mortgagor did not pay that portion of the rent which he was liable to pay. So, they thought that the mortgagees, though they took advantage of the fact that the property had been brought to sale, could not be said to have taken advantage of their position as mortgagees. With this view we are unable to agree. In our opinion, the fact that the mortgagor had made a default, does not alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay. By his default he has contributed to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit. This contribution to the bringing about of the sale was a. direct result of his position as a mortgagee. When therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee. This, in our opinion, is the position in law even if the mortgagee 's liability was to pay less than the major portion of the rent of the holdings. Whether this would be true even where the portion which the mortgagee is liable to pay is so very small that the property is not ordinarily likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case. In the present case, the finding is that the liability of the defendants 1 and 2 was to pay a substantial portion of the rent. To say in such circumstances that they did not take 637 advantage of their position as mortgagees is entirely unrealistic Such a construction would put a premium on dishonesty on the part of mortgagees whenever the entire burden of payment of rent was not left squarely on the mortgagee as under the provision of s.76 of the Transfer of Property Act. Mr. Sarjoo Prasad, who appeared before us on behalf of the respondents, tried to persuade us that in any case the plaintiff 's suit should fail as regards the lands recorded in Khata No. 57. As, according to him, these mortgagees were not at all liable to pay any portion of the rent of this holding. He drew our attention in this connection to exhibit 2, the mortgage bond executed in favour of Chamroo Sao, and to the statement made therein: "Annual rent payable to the zamindar is the concern of me, the executant". This argument proceeds on the basis that the holding recorded in Khata No. 57 continued to be separate and distinct from the Khata No. 56. It is thus in direct conflict with the plea of these very defendants in their written statement that the two holdings had been consolidated into one holding with one rental. As the oral and documentary evidence on the Paper Book prepared in the appeal did not clearly show whether or not these two holdings had become one, we called for one of the documents, exhibit B which seemed likely to throw some light on the matter. The document has now been received. It is the copy of a judgment of a suit between these parties in which this very question, viz., whether the two holdings had been consolidated into one or not, was raised. It was decided hat such consolidation had taken place. It is clear that it was after such consolidation that the second rent suit was brought in respect of that consolidated holding and it was that consolidated holding which was sold in execution of the decree. It is clear therefore that the mortgage bond Ex.2 in which the mortgagor accepted liability to pay rent to the zamindar in respect of the mortgaged land in Khata No. 57 does not affect the correctness of the High Court 's finding that the liability to pay rent of the holding that was sold was partly of the mortgagor and partly of the mortgagees and, that it was the default of both the mortgagor and the mortgagees that brought about the sale. Accordingly, we allow the appeal, set aside the judgment and decree of the High Court and restore the decree made by the Additional District Judge, Patna. A Pleader Commissioner shall be appointed by the trial court on a deposit of Rs. 50/ as his fees by the present appellant within two months from this date for taking accounts as to the amount due to the defendants on the date of the decree. A preliminary decree for redemption shall be passed in the usual terms. As the suit as also the appeal before the District Judge had been brought in forma pauperis the High Court made an order 638 directing the plaintiff to pay the court fee on the plaint as well as on the memorandum of appeal. That order is set aside. Instead, we order the first and the second defendants in the suit to pay the court fee payable on the plaint as also on the memorandum of appeal. The present appeal to this Court has also been brought by the appellant as a pauper. As she has succeeded in the appeal, we order the contesting respondents, i.e., the first and the second defendants, to pay the court fee payable on the memorandum of appeal to this court. The appellant will get her costs from the first and the second defendants through out. Appeal allowed.

IN-Abs

The plaintiff brought a suit for redemption of a large num ber of usufructuary mortgages in favour of the defendants. The case of the plaintiff was that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the land lord. The mortgagees, however, defaulted in the payment of rent for some years. A suit for arrears of rent was brought by the land lord and a decree obtained. In execution of the decree the lands were sold. According to the plaintiff, the purchasers of the mortgaged lands were only benamidars of defendants 1 and 2 and other mortgagees. The plaintiff claimed that the right of redemption was not affected by the Court sale because the purchase was for the benefit of the plaintiff. The suit was contested by defendants 1 and 2 only. Their case was that the right of redemption had been extinguished by the court sale; that the purchasers were not the benamidars of the defendants. The Trial Court dismissed the suit. On appeal, the Additional District Judge set aside the judgment of the Trial Court and passed a preliminary decree for redemption. Against this decree the two defendants appealed to the High Court. The appeal was heard by the Division Bench. The High Court held that in the present case section 90 of the Trusts Act did not apply because the court sale took place due to the default of the mortgagor as well as the mortgagees. In this view the High Court set aside the decree of the first Appellate Court and restored the decree of the trial court. Held: The fact that the mortgagor had made a default, does not alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay. By his default he has contributed, to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit. This contribution to the bringing about of the sale was a direct result of his position as a mortgagee. When therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee. This is the position of law even if the mortgagee 's liability was to pay less than the major portion of the rent of the holdings. In this view section 90 of the Trusts Act applies to the facts of this case.

Appeal No. 742 of 1963. Appeal from the judgment and order dated July 4, 5, 1961 of the Bombay High Court (Nagpur Bench) at Nagpur in Special Civil Application No. 150 of 1961. section V. Gupte, Additional Solicitor General, G. B. Pai, and R. H. Dhebar, for the appellants. The respondent did not appear. April 3, 1964. The Judgment of the Court was delivered by DAS GUPTA, J. A short point arises for consideration in this appeal. But to understand how the point arises it is neces sary to embark on a somewhat lengthy statement of facts. Three Road Transport Corporations established under the Road Transport Corporation Act, 1950 were operating in the States of Bombay, Madhya Pradesh and Hyderabad in 1956 when the was enacted. These three corporations were known as the Bombay State Road Transport Corporation, the Provincial Transport Service and the State Transport Marathewada respectively. As a result of the reorganisation of the States under the the former State of Bombay lost certain of its territories to the newly formed State of Mysore and some areas to the State of Rajasthan. On the other hand, the State of Bombay gained the Marathewada from the State of Hyderabad and the Vidharbha area from the State of Madhva Pradesh and certain other areas from the then existing State of Saurashtra and the State of Kutch. To meet the situation arising from these territorial changes, Parliament passed the Road Transport Corporation Amendment Act, 1956, thus amending the Road Transport Corporation Act, 1950. Section 47 A which was introduced by the amending Act provides for the reconstitution, reorganisation and dissolution of the Corporations established under section 3 of the Act. On December 31, 1956 an order was made by the Central Government under the provisions of this section approving a scheme for reorganisation submitted by the Government of Bombay. By this scheme those areas in which the Bombay State Road Transport Corporation had been operating but were transferred under the State Reorganisation Act to the States of Mysore and Rajasthan were excluded from the area of the operation of the Bombay State Road Transport Corporation. This came into force from the 1st January, 1957. Another consequence of the was that the two commercial undertakings which were known as 641 the Provincial Transport Services, and the State Transport, Marathewada, became the commercial undertakings of the State of Bombay. Further, territorial changes occurred in the State of Bombay in the year 1960. By the Bombay Reorgani sation Act, No. II of 1960, the State of Bombay was again divided; part of what was in the former State, was formed into a new State by the name of the State of Gujarat, while the remaining area was named, the State of Maharashtra. In consequence of this some other areas were excluded by an order under section 47 A of the Act from the area of operation of the Bombay State Road Transport Corporation. The situation then was the State Transport, Marathewada, was operating in the Maharashtra area, the Provincial Transport Service was operating in the Vidharbha area while in the rest of the Maharashtra State the Bombay State Transport Corporation was operating. It was when things stood like this that the Central Government made an order on the 27th May, 1961 under section 47 A of the Amending Act. By this order it approved a scheme for the reorganisation of the Bombay State Road Transport Corporation and amalgamation with it of the two other transport undertakings of the State Government, viz., the Provincial Transport Services, and the State Transport, Marathewada. After the reorganisation the Corporation was to be known as the Maharashtra State Road Transport Corporation. Clause 9(1) of this Order provided for the abolition of all the posts in the two undertakings, the Provincial Transport Services, and the State Transport Marathewada, and for discharge of all persons holding such posts from service. There was a provision, however, giving such people option either of taking terminal benefits such as compensation, pension, or gratuity to which they may be entitled under the rules applicable to them or of continuing as from the 1st July 1961 in the service of the Maharashtra State Road Transport Corporation. Sub clause 2 of cl. 9 provided that every person who as a result of the exercise of such option is continued in the service of the Maharashtra State Transport Corporation shall be entitled to be employed by that Corporation on the same terms and conditions, including pay as were applicable to him immediately before the appointed day and to count his service under the previous corporations for all purposes. Subclause 3 of cl. 9 was in these words: "Nothing in sub paragraph )2) shall be deemed to affect the right of the Maharashtra State Road Transport Corporation, subject to the provisions of section 77 of the Bombay Reorganisation Act, 1960 (11 of 1960) to determine or vary after the appointed day, the conditions of service of any person who is continued in the service of the Corporation". L/P D)ISCI 21 642 "Provided that the conditions of service ap plicable immediately before the appointed day, to any such person shall not be varied to his disadvantage. except with the previous approval of the Central Government". Notices terminating the services of the employees employed by the Provincial Transport Services (operating in Vidharbha) were issued. On 12th June 1961 an application was made under article 226 and article 227 of the Constitution by two former,, employees of the Provincial Transport Services and the Union of the workmen of that concern challenging the validity of the order of reorganisation made on the 27th May. 1961 and the notices of termination of service served on the employees. The following reliefs were prayed for: (a) that the notices of termination be quashed; (b) that the amalgamation of the Provincial Transport Services with the Bombay State Road Transport Corporation as directed under section 47 A be not carried out, and (c) that "a writ of mandamus be also issued to respondents 1 to 3 directing them to carry out the obligations under s.25 F and other provisions of retrenchment of the , and other provisions of law before taking any action as required by law and also by paragraph 9 of the order even assuming that the amalgamation order is legal and proper. " Three contentions were raised in support of these prayers. It was first urged that the order made on the 27th May violated the provisions of s.47 A of the Act and was therefore bad in law, The second contention was that the proviso to sub cl.3 of cl.9 of the order contravenes the provisions of s.77 of the Bombay Reorganisation Act. Lastly, it was contended that the action taken by the Government in abolishing the posts and issuing notices of termination of services of the employees was bad firstly because it contravened s.25F (b) and (c) of the and secondly, because it contravened the provisions of s.31 of the C.P. and Berar Industrial Disputes Settlement Act, 1947. The High Court rejected the first contention that the Government Order violated s.47 A of the Act. It also rejected the petitioner 's contention that the action taken by the Government was bad because of contravention of s.25F (b) and (c) of the . The High Court was however of opinion that the proviso to sub cl. 3 of cl. 9 of the order was bad in law, being in conflict with s.77 of the Bombay Reorganisation Act, but it held that the proviso was severable and its illegality did not affect the working of the scheme. The High Court also accepted the petitioner 's contention that the action taken by the Government in issuing notices of termination of services on abolition of posts did not comply with the provisions of s.31 of the C.P. and Berar Industrial Disputes 643 Settlement Act and was accordingly invalid. In the result, the High Court quashed the Government resolution for abolition of posts and the notices of termination that were issued in consequence thereof. It also ordered the issue of a direction, directing the Maharashtra State Road Transport Corporation "not to take any action under the proviso to sub paragraph (3) of paragraph 9 of the Order relating to varying the conditions of services to the disadvantage of any of the employees who were employees of the first respondent immediately before the appointed day, i.e., 1st July 1961. " Against these orders of the High Court, the State of Mahrashtra, the Maharashtra State Road Transport Corporation and the Motor Transport Controller, Maharashtra, have appealed. At the hearing of the appeal nobody appeared before us on behalf of the petitioners in the High Court. The correctness of the High Court 's decision that the order of the 27th May, 1961 did not violate section 47 A of the Act was not challenged before us. Nor was the High Court 's decision that the Government 's action in abolishing posts and terminating services of employees was not bad because of contravention of section 25F(b) and (c) of the . questioned before us. We have, therefore, not examined the correctness or otherwise of these conclusions and shall dispose of the appeal on the basis that the decision on these points are correct. The first contention urged in support of the appeal is that the High Court was wrong in thinking that in ordering the abolition of posts and terminating the services of employees in those posts the Government had contravened the provisions of section 31 of the C. P. and Berar Industrial Disputes Set tlement Act. That section is in these words: "31. (1) If an employer intends to effect a change in any standing orders settled under section 30 or in respect of any industrial matter mentioned in Schedule 11, he shall give fourteen days ' notice of such intention in the prescribed form to the representative of employees. (2) The employer shall send a copy of the notice to the Labour Commissioner, Labour Officer and to such other person as may be prescribed and shall also affix a copy of the notice at a conspicuous place on the premises where the employees affected by the proposed change are employed and at such other places as may be specially directed by the Labour Commissioner in any case. (3) On receipt of such notice the representative of employees concerned shall negotiate with the employers". L/P(1))ISCI 21(a). 644 Schedule II of this Act mentions a number of matters, +he first of which is "Reduction intended to be of permanent or semi permanent character in the number of persons employed or to be employed not due to force majeure". The argument that prevailed in the High Court was that abolition of all posts amounted to permanent reduction within the meaning of this Item in Schedule 11. If that be correct it would necessarily follow that the Government had to observe the procedure prescribed in section 31. Admittedly, that was not done. The short question, therefore, is whether the abolition of all posts of an establishment amount to reduction of posts. In our opinion, the word reduction can only be used when something is left after reduction. To speak of abolition as a reduction of the whole thing does not sound sensible or reasonable. We ,ire unable to agree with the High Court that the term reduction in the number of persons employed or to be employed" as mentioned in Item 1 of Schedule 11 covers abolition of all posts. In our opinion, the Government Order in abolishing the posts and terminating the services of the employees did not amount to a change within the meaning of section 31 of the C. P. and Berar Industrial Disputes Settlement Act. The Government was, therefore, not required to follow the procedure mentioned in section 31. This brings us to the question about the validity of the proviso to sub cl. 3 of cl. 9 of the Order. As already indicated the workmen 's contention was that the proviso contravened the provisions of section 77 of the Bombay Reorganisation Act. That section contained a provision that on transfer or reemployment of any workman in consequence of reconstitution. reorganisation, amalgamation or dissolution by any body corporate, cooperative society or any commercial undertaking or industrial undertaking the terms and conditions of service applicable to the workman after such transfer or reemployment shall not be less favourable to the workman than those applicable to him immediately before the transfer of reemployment. It was apparently apprehended by the workmen that though sub cl. 3 of cl. 9 of the Order did state definitely that the right of the Maharashtra State Road Transport Corporation to determine or vary the conditions of service of any person who is continued in the service of the corporation was subject to the provisions of s.77 of the Bombay Reorganisation Act, advantage might be taken of the proviso to the sub clause, which seems at least at first sight to suggest that with the approval of the Central Government the conditions of service of a work man might be varied to his disadvantage notwithstanding the provisions of section 77 of the Bombay Reorganisation Act. We are informed, however, that there has been no such variation. The petition itself did not contain any specific assertion that there had been any 645 variation to the disadvantage of any workman. Only an ap prehension that there might be a change in future was expressed. In the counter affidavit the Government stated that the Order passed in the notices issued clearly gave a guarantee that the conditions of service will not be changed. If there was any reason to think that there had been any change in any conditions of service or that in the immediate future there was any likelihood of any such change being made on the strength of the impugned proviso it would have been necessary for us to examine the question about the validity of this proviso. As however no change appears to have been made and it does not appear that there was any apprehension of any change being made in the immediate future, we have thought it desirable to leave this question open particularly in view of the fact that the workmen were not represented before us in this appeal. We have, therefore, not heard full arguments on this question from the learned Counsel for the appellant. The decision of the High Court that the proviso is bad is therefore, set aside and the question is left open for decision if and when it becomes really necessary to do so. In view of our decision that the High Court erred in thinking that section 31 of the C. P. and Berar Industrial Disputes Settlement Act had to be applied the High Court 's order quashing the abolition of posts and the notices of termination cannot be sustained. We accordingly allow the appeal, set aside the order of the High Court quashing the Government resolution of the 29th May, 1961 directing the abolition of posts and also its order quashing the notices of termination. As we have set aside the High Court 's decision as regards the validity of the proviso to sub cl. 3 of cl. 9 of the Order and left the matter open, the High Court 's direction that no action should be taken under the proviso is also set aside. There will be no order as to costs. Appeal allowed.

IN-Abs

As a result of the passing of the , Vidharbha area which was in the State of Madhya Pradesh became part of the State of Bombay and when the State of Bombay was divided under the Bombay Reorganisation Act, 1950, the said area remained in the State of Maharashtra. Before 1956. the Bombay State Road Transport Corporation and Provincial Services established under the , were operating in the States of Bombay and Madhya Pradesh respectively. To meet the situation arising from these territorial changes, Parliament made amendments to the , by which, inter alia section 47 A was introduced providing for the reconstitution, reorganisation and dissolution of the corporations established under the Act. On May, 27, 1961, the Central Government made an Order under section 47 A of the Act, inter alia, approving a scheme for the reorganisation of the Bombay State Road Transport Corp oration and amalgamating with it the Provincial Transport Services which had, under the Reorganisation Act, 1956, become a commercial undertaking of the State of Bombay and which had been operating in the Vidharba area. Clause 9(1) of this provided for the abolition of all the posts in the Provincial Transport Services and for discharge of all persons holding such posts for service but giving such people an option of continuing in the service of the Maharashtra State Road Transport Corporation. Notice ter minating the services of the persons employed by the Provincial Transport Services (operating in Vidharba) were issued. Thereupon, two former employees of the Provincial Transport Services and the Union of the workmen of that concern made an application before the High Court of Bombay under articles 226 and 227 of the Constitution of India, challenging the validity, inter alia, of the notices of termination of service served on the employees on the ground that the action taken by the Government in abolishing the posts and issuing notices of termination of services of the employees was bad as it contravened, inter alia, the pro visions of section 31 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. Held: Abolition of all posts of an establishment did not amount to reduction of posts within the meaning of Item 1 of the Schedule II of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947; and the Government order abolishing the posts and terminating the services of the employees. 640 did not amount to a change within the meaning of section 31 of the Act. The Government was, therefore, not required to follow the procedure mentioned in section 31.

Appeal No. 51.7 of 1963. Appeal by special leave from the Award dated September 28, 1960 of the Industrial Tribunal, Ernakulam, in Industrial Dispute No. 81 of 1958. G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. P. Govinda Menon, M. section K. Iyengar and M. R. K. Pillai, for respondent No. 1. March 31, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. This appeal by special leave raises a short question about the validity of the order passed by the Industrial Tribunal, Ernakulam, directing the appellant, the Tata Oil Mills Co. Ltd., to reinstate its workman K. K. Raghavan whom it had dismissed with effect from the 14th of November, 1955. The appellant is a public limited concern engaged in the industry of soaps and toilet articles. It owns three factories in addition to 12 sales offices. One of these factories is located at Tatapuram, Ernakulam, in the State of Kerala. Mr. Raghavan was working with the appellant at its factory at Tatapuram. It was reported to the appellant that on the 12th November, 1955, Mr. Raghavan and another employee of the appellant, Mr. Mathews by name, waylaid Mr. C. A. Augustine, the Chargeman of the 557 Soap Plant of the company 's factory at Tatapuram while he was returning home after his duty in the second shift and assaulted him. That is why charge sheets were issued against both Messrs Raghavan and Mathews on the 14th November, 1955. Pursuant to the service of the charge sheets, two officers were appointed by the appellant to hold an enquiry, but the respondent Union represented to the appellant that justice would not be done to Raghavan and Mathews unless somebody outside Tatapuram was invited to hold the enquiry. Thereupon, the General Manager of the appellant appointed Mr. Y. D. Joshi, who is a Law Officer of the appellant in the Head Office, to hold the enquiry. Mr. Joshi held the enquiry from the 27th to 30th December, 1955, and subsequently, he made his report to the General Manager of the appellant on the 7th January, 1956. At that time, an industrial dispute was pending between the appellant and its employees, and so, the appellant applied to the Industrial Tribunal for approval of the dismissal of Messrs Raghavan and Mathews. The Tribunal approved of the dismissal of Raghavan, but did not accord its approval of the dismissal of Mathews. Acting in pursuance of the approval accorded by the Tribunal, the appellant dismissed Raghavan with effect from the 14th November, 1955. Not satisfied with the order of dismissal, the respondent raised an industrial dispute in regard to the propriety and validity of the said dismissal of Raghavan and that has become the subject matter of the present reference which was ordered on the 3rd of December, 1958. It is on this reference that the Industrial tribunal has held that the appellant was not justified in dismissing Raghavan, and so, has ordered his reinstatement. This is the order which has given rise to the present appeal by special leave. The first point which calls for our decision in this appeal is whether the Tribunal was right in holding that the facts proved against Raghavan did not attract the provisions of Standing Order 22(viii) of the Certified Standing Orders of the appellant. The said standing order provides that without prejudice to the general meaning of the term "misconduct", it shall be deemed to mean and include, inter alia, drunkenness, fighting, riotous or disorderly or indecent behaviour within or without the factory. It is common ground that the alleged assault took place outside the factory, and, in fact, at a considerable distance from it. The Tribunal has held that the assault in question can be treated as a purely private matter between Raghavan and Augustine with which the appellant was not concerned and as a result of which standing order 22(viii) cannot be invoked against Raghavan. Mr. Menon who has appeared for the respondent before us, has 558 contended that in construing standing orders of this charac ter, we must take care to see that disputes of a purely private or individual type are not brought within their scope. He argues that on many occasions, individual employees may have to deal with private disputes and sometimes, as a result of these private disputes, assault may be committed. Such an assault may attract the relevant provisions of the Indian Penal Code, but it does not fall under standing order 22(viii). In our opinion, this contention is well founded. It would, we think, be unreasonable to include within standing order 22(viii) any riotous behaviour without the factory which was the result of purely private and individual dispute and in course of which tempers of both the contestants became hot. In order that standing order 22(viii) may be attracted, the appellant should be able to show that the disorderly or riotous behaviour had some rational connection with the employment of the assailant and the victim. In the present case, however, it is quite clear that the assault committed by Raghavan on Augustine was not a purely private or individual matter. What the occasion for this assault was and what motive actuated it, have been consider ed by the domestic Tribunal and the findings of the domestic Tribunal 'on these points must be accepted in the present proceedings, unless they are shown to be based on no evi dence or are otherwise perverse. Now, when we look at the report of the Enquiry Officer, it is clear that on the evidence given by Mr. M. M. Augustine and K. T. Joseph it appeared that the assault was committed by Raghavan on C. A. Augustine, because he was in favour of the introduction of the Incentive Bonus Scheme. It appears that the introduction of this incentive bonus scheme was approved by one set of workmen and was 'opposed by another, with the result that the two rival unions belonging to these two sets respectively were arrayed against each other on that question. The evidence of the two witnesses to whom we have just referred clearly shows that when Raghavan assaulted C. A. Augustine, he expressly stated that Augustine was a black leg (Karinkali) who was interested in increased production in the company with a view to obtain bonus , and the report further shows that the Enquiry Officer believed this evidence and came to the conclusion that the assault was motivated by this hostility between Raghavan and C. A. Augustine. In fact, the charge framed clearly suggested that the assault was made, for that motive. It was alleged in the charge that Augustine was assaulted to terrorise the workmen who had been responsible for giving increased production under the incentives bonus scheme. According to the charge, such acts were highly subversive of discipline. The Enquiry Officer has held that in the light of the evidence given by M. M. Augustine and 559 K. T. Joseph, the charge as framed had been proved. This finding clearly means that the assault was not the result of a purely individual 'or private quarrel between the assailant and his victim, but it was referable to the difference of opinion between the two in regard to the introduction of the incentive bonus scheme on which the two unions were sharply divided. Therefore, if Raghavan assaulted Augustine solely for the reason that Augustine was supporting the plea for more production, that cannot be said to be outside the purview of standing order 22(viii). The next point which needs to be considered arises out of a plea which has been strenuously urged before us by Mr. Menon that the Tribunal was justified in holding that the Enquiry Officer did not conduct the enquiry in accordance with the principles of natural justice, and so, the Tribunal was entitled to go into the evidence itself and decide whether, Raghavan 's dismissal was justified or not. The legal position in this matter is not in doubt. If it appears that the domestic enquiry was not conducted in accordance with the principles of the natural justice and a reasonable opportunity was not, for instance, given to Raghavan to lead evidence in support of his defence, that would be a valid ground on which the Tribunal can discard the finding of the domestic enquiry and consider the matter on the merits uninfluenced by the said finding. Unfortunately for the respondent, however, on the material on record it is very difficult to sustain the finding of the Tribunal that the Enquiry Officer did not conduct the enquiry in accordance with the principles of natural justice. The whole of this contention is based on the fact that Raghavan wanted to examine two witnesses, Messrs M. P. Menon and Chalakudi. It appears that Raghavan told the Enquiry Officer that he wanted to examine these two wit nesses and he requested him to invite the said two witnesses to give evidence. The Enquiry Officer told Raghavan that it was really not a part of his duty to call the said two witnesses and that Raghavan should in fact have kept them ready himself. Even so, in order to assist Raghavan, the Enquiry Officer wrote letters to the two witnesses. Mr. Menon replied expressing his inability to be present before the Enquiry Officer, and the Enquiry Officer communicated this reply to Raghavan, so that for Raghavan 's failure to examine Menon no blame can be attributed to the enquiry officer at all. In regard to Chalakudi, it appears that he sent one letter addressed to the Enquiry Officer and it reached him on the 31st December, 1955, the day on which he was leaving for Bombay. This letter was not signed, and so, the Enquiry Officer took no action on it and gave no time to Chalakudi to appear three or four days later as had been 560 suggested in that unsigned letter. The Tribunal thought that this attitude on the part of the Enquiry Officer was unsympathetic and that introduced an element of Unfairness in the enquiry itself. We are unable to appreciate how such a conclusion can follow on facts which are admitted. We do not think the Enquiry Officer was called upon to accept an unsigned letter and act upon it. Besides, the Enquiry Officer had gone to Ernakulam from Bombay for holding this enquiry, because the respondent Union itself wanted that the enquiry should be held by some other officer outside the local station and it was known that the Bombay Officer would go back as soon as the enquiry was over. In such a case, if Raghavan did not take steps to produce his witnesses before the Enquiry Officer, how can it be said that the Enquiry Officer did not conduct the enquiry in accordance with the principles 'of natural justice? Mr. Menon has suggested that the Enquiry Officer should have taken steps to get the witnesses M. P. Menon and Chalakudi brought before him for giving evidence. This suggestion is clearly untenable. In a domestic enquiry, the officer holding the enquiry can take no valid or effective steps to compel the attendance of any witness; just as the appellant produced its witnesses before the officer, Raghavan should have taken steps to produce his witnesses. His witness Menon probably took the view that it was beneath his dignity to appear in a domestic enquiry, and Chalakudi was content to send an unsigned letter and that too so as to reach the Enquiry Officer on the day when he was leaving Ernakulam for Bombay. It would be unreasonable to suggest that in a domestic enquiry, it is the right 'of the charge sheeted employee to ask for as many adjournments as he likes. It is true that if it appears that by refusing to adjourn the hearing at the instance of the charge sheeted workman, the Enquiry Officer failed to give the said workman a reasonable opportunity to lead evidence, that may, in a proper case, be considered, to introduce an element of infirmity in the enquiry; but in the circumstances of this case, we do not think it would be possible to draw such an inference. The record shows that the Enquiry Officer went out of his way to assist Raghavan; and if the witnesses did not turn up to give evidence in time, it was not his fault. We must accordingly hold that the Tribunal was in error in coming to the conclusion that the enquiry suffered from the infirmity that it was conducted contrary to the principles of natural justice. Let us then consider whether the dismissal of Raghavan is actuated by malafides, or amounts to victimisation. In regard to the plea of victimisation, the Tribunal has definitely found against the respondent. "I do not for a moment believe", says the Tribunal, "that the management foisted a 561 case against the ex worker. Regarding the allegation of victimisation, there is no sufficient evidence in the case that the management 'or its Manager Mr. John was motivated with victimisation or unfair labour practice". This finding is quite clearly in favour of the appellant. The Tribunal, however, thought that because the Enquiry Officer did not give an adjournment to Raghavan to examine his witnesses, that introduced an element of malafides. It has also observed that since the case against Raghavan did not fall within the purview of standing order 22(viii) and yet, the appellant framed a charge against Raghavan under that standing order, that introduced another element of malafides. It is on these grounds that the conclusion as to malafides recorded by the Tribunal seems to rest. In regard to the first ground, we have already held that the Tribunal was not justified in blaming the Enquiry Officer for not adjourning the case beyond 31st December, 1955. In regard to the second ground, we are surprised that the Tri bunal should have taken the view that since in its opinion, standing order 22(viii) did not apply to the facts of this case, the framing of the charge under the said standing 'order and the finding of the domestic Tribunal in favour of the appellant on that ground showed malafides. It seems to us that the Tribunal has completely overlooked an elementary principle of judicial approach that even if a judge or Tribunal may reach an erroneous conclusion either of fact or of law, the mere error of the conclusion does not make the conclusion malafiedes. Besides, as we have just indicated, on the merits we are satisfied that the Tribunal was in error in holding that standing order 22(viii) did not apply. Therefore, the finding of the Tribunal that the dismissal of Raghavan was malafide, cannot possibly be sustained. There is one more point which has been press Id before us by Mr. Menon. In Phulbari Tea Estate vs Its Workmen,(1) this Court has held that even if a domestic enquiry is found to be defective, the employer may seek to justify the dismissal of his employee by leading evidence before the Tribunal to which an industrial dispute arising out of the impugned dismissal has been referred for adjudication. Mr. Menon contends that by parity of reasoning, in cases where the em ployee is unable to lead his evidence before the domestic Tribunal for no fault of his own, a similar opportunity should be given to him to prove his case in proceedings before the Industrial Tribunal. In our opinion, this contention is not well founded. The decision in the case of Phulbari Tea Estate (supra) proceeds on the basis which is of basic importance in industrial adjudication that findings properly recorded in (1) [1960] 1 S.C.R. 32. 562 domestic enquiries which are conducted fairly, cannot be re examined by Industrial adjudication unless the said findings are either perverse, or are not supported by any evidence, or some other valid reason 'of that character. In such a case, the fact that the finding is not accepted by the Industrial Tribunal would not necessarily preclude the employee from justifying the dismissal of his employee on the merits, provided, of course, he leads evidence before the Industrial Tribunal and persuades the Tribunal to accept his case. That, however, is very different from a case like the present. In the case before us, the enquiry has been fair, the Enquiry Officer gave Raghavan ample opportunity to lead his evidence. If at reasonable opportunity had been denied to the employee, that would have made the enquiry itself bad and then, the employer would have been required to prove his case before the Industrial Tribunal, and in dealing with the dispute, the Industrial Tribunal would have been justified in completely ignoring in the findings of the domestic enquiry. But if the enquiry has been fairly conducted, it means that all reasonable opportunity has been given to the employee to prove his case by leading evidence. In such a case, how can the court hold that merely because the witnesses did not appear to give evidence in support of the employee 's case, he should be allowed to lead such evidence before the Industrial Tribunal. If this plea is upheld, no domestic enquiry would be effective and in every case, the matter would have to be tried afresh by the Industrial Tribunal. Therefore, we are not prepared to accede to Mr. Menon 's argument that the Tribunal was justified in considering the merits of the dispute for itself in the present reference proceedings. Since the enquiry has been fairly conducted, and the findings recorded therein are based on evidence which is believed, there would be no justification for the Industrial Tribunal to consider the same facts for itself. Findings properly recorded at such enquiries are binding on the parties, unless, of course, it is known that the said findings are perverse, or are not based on any evidence. There is yet another point which remains to be considered. The Industrial Tribunal appears to have taken the view that since criminal proceedings had been started against Raghavan, the domestic enquiry should have been stayed pending the final disposal of the said criminal proceedings. As this Court has held in the Delhi Cloth and General Mills Ltd. vs Kushal Bhan,(1) it is desirable that if the incident giving rise to a charge framed against a workman in a domes tic enquiry is being tried in a criminal court, the employer, should stay the domestic enquiry pending the final disposal of the criminal case. It would be particularly appropriate to (1) ; 563 adopt such a course where the charge against the workman is of a grave character, because in such a case, it would be unfair to compel the workman to disclose the defence which he may take before the criminal court. But to say that domestic enquiries may be stayed pending criminal trial is very different from saying that if an employer proceeds with the domestic enquiry in spite of the fact that the criminal trial is pending, the enquiry for that reason alone is vitiated and the conclusion reached in such an enquiry is either bad in law or malafide. In fairness, we ought to add that Mr. Menon did not seek to justify this extreme position. Therefore, we must hold that the Industrial Tribunal was in error when it characterised the result of the domestic enquiry as malafide partly because the enquiry was not stayed pending the criminal proceedings against Raghavan. We accordingly hold that the domestic enquiry in this case was properly held and fairly conducted and the conclusions of fact reached by the Enquiry Officer are based on evidence which he accepted as true. That being so, it was not open to the Industrial Tribunal to reconsider the same questions of fact and come to a contrary conclusion. The result is, the appeal is allowed. The order passed by the Industrial Tribunal is set aside and the reference made to it is answered in favour of the appellant. Before we part with this appeal, we ought to add that Mr. Pai for the appellant has fairly offered to pay ex gratia Rs. 1,000/ to Raghavan in addition to the amount which has already been paid to him by the appellant in pursuance of the order of this Court granting stay to the appellant pending the final disposal of the present appeal. There would be no order as to costs. Appeal allowed.

IN-Abs

On a report that R and M, both employees of the appellant waylaid A, another employee and assaulted him outside the factory, the appellant held an enquiry and sought approval for the dismissal of R and M from the Industrial Tribunal, before which an industrial dispute was pending. The Tribunal approved the dismissal of R but not that of M. Thereupon R was dismissed. The respondent raised an industrial dispute in regard to the propriety and validity of the said dismissal. On reference of this dispute, the Industrial Tribunal held that the assault could be treated as a private matter between R and A with which the appellant was not concerned and as a result Standing Order 22(viii) could not be invoked against R, and it ordered the reinstatement of R. On appeal by special leave: Held: (i) that It would be unreasonable to, include within Standing Order 22(viii) any riotous behaviour without the factory which was the result of purely private and individual dispute and in course of which tempers of both the contestants become hot. In order that standing order 22(viii) may be attracted, the appellant should be able to show that the disorderly or riotous behaviour had some rational connection with the employment of the assailant and the victim. (ii) In the present case the assault by R on A was not a purely private or individual matter but was referable to the difference of opinion between the two in regard to the introduction of incentive bonus scheme and that cannot be said to be outside the purview of standing order 22(viii). (iii) The Tribunal was in error in coming, to the conclusion that the enquiry suffered from the infirmity that it was conducted contrary to the principles of natural justice. It is true that if it appears that by refusing to adjourn. the hearing at the instance of charge sheeted workmen, the Enquiry Officer failed to give the said workmen a reasonable opportunity to lead evidence, that may in a proper case, be considered to introduce an element of infirmity in the enquiry; but in the circumstances of this case, it would not be possible to draw such an inference. (iv) The finding of the Tribunal that the dismissal was malafic, cannot possibly be sustained. The Tribunal has completely overlooked an elementary principle of judicial approach that even if a judge or Tribunal may reach an erroneous conclusion either of fact or of law, the mere error of the conclusion does not make the conclusion malafide. 556 (v) Since the domestic enquiry had been fairly conducted, and the findings recorded therein were based on Evidence which was believed, there was no justification for the Industrial Tribunal to consider the same facts for itself. Findings properly recorded at such enquiries are binding on parties, unless, of course, it is shown that such findings are perverse or are not based on any evidence. Phulbari Tea Estate vs Its Workmen, [1960] 1 S.C.R. 32, referred to. (vi) The Industrial Tribunal was in error when it charac terised the result of the domestic enquiry as malafide partly because the enquiry was not stayed pending criminal proceedings against R. It is desirable that if the incident giving rise to a charge framed against a workman in a domestic enquiry is being tried in a criminal court, the employer should stay the domestic enquiry pending the final disposal of the criminal case. It would be particularly appropriate to adopt such a course when the charge is of a grave character because it would be unfair to compel the workman to disclose the, defence which he may take before the criminal court. But to say that domestic enquiries may be stayed pending criminal trial is very different from saying that if an employer proceeds with the domestic enquiry inspite of the fact that the criminal trial is pending, the enquiry for that reason alone is vitiated and the conclusion arrived at in such, an enquiry is either bad in law or malafide. Delhi Cloth & General Mills Ltd. vs Kishan Bhan ; , referred to.

ion No. 200 of 1963. Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights. K. P. Bhandari and R. Gopalakrishnan, for the petitioner. and R. N. achthey, for the respondents. April 1, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. This petition which has been filed by the petitioner section Gurdev Singh Sidhu under Art 32 of the Constitution, challenges the validity of article 9(1) of the Pepsu Services Regulations, Volume 1, as amended by the Governor of Punjab by the notification issued by him on the 19th January, 1960 in exercise of the powers conferred on him by the proviso to article 309 of the Constitution and all other powers enabling him in that behalf. The petitioner 's contention is that the said article contravenes the constitutional right guaranteed to the persons employed in civil capacities either under the Union or the State, by article 311. The petitioner was appointed as Assistant Superintendent of Police in the erstwhile Patiala State by His Highness Maharaja Adhiraj of Patiala on the 4th of February, 1942. The conditions of his service were governed by the Patiala State Service Regulations which had been issued by the Ruler of Patiala State who was at the relevant time the sovereign legislature of the State. Later, the petitioner was confirmed in the rank on the occurrence of a regular vacancy after he had undergone practical district training courses in the Punjab in 1947. On the formation of Patiala and East Punjab States Union on the 20th August, 1948, the petitioner was integrated in Pepsu Police Service. In due course, he was promoted to officiate as Superintendent of Police in February, 1950 by His Highness the Rajpramukh of the erstwhile State of Pepsu. 589 On the 25th March, 1963, respondent No. 2 section Gurdial Singh, Inspector General of Police & Joint Secretary to the Government of Punjab, issued a notice against the petitioner purporting to act under the second proviso to article 9.1 of the Pepsu Services Regulations to show cause why he should not be compulsorily retired. The petitioner alleges that the second proviso to article 9.1 under which the said notice has been issued against him, is invalid, and so, he has moved this Court under article 32 for quashing the said notice on the ground that the article on which it is based is itself ultra vires and inoperative. Respondent No. 1, the State of Punjab, and respondent No. 2 have by their counter affidavit denied the petitioner 's contention that the impugned article 9.1 is constitutionally invalid and they have resisted his claim for quashing the notice issued by respondent No. 2 against the petitioner. That is how the only point which arises for our decision in the present petition is whether the impugned article is shown to be constitutionally invalid. Before dealing with this point, it is necessary to read the said article: "The following shall be added after the first proviso to clause (1) of article 9.1 of the said regulations: (ii) "Provided further that Government retains an absolute right to retire any Government servant after he has completed ten years qualifying service without giving any reason and no claim to special compensation on this account will be entertained. This right will not be exercised except when it is in public interest to dispense with the further services of a Government servant such as on account of inefficiency, dishonesty, corruption or infamous conduct. Thus the rule is intended for use: (a) against a Government servant whose efficiency is impaired but against whom it is not desirable to make formal charges of inefficiency or who has ceased to be fully efficient, (i.e. when a Government servant 's value is clearly incommensurate with the pay which he draws), but not to such a degree as to warrant his retirement on a compassionate allowance. It is not the intention to use the proviso as a financial weapon, that is to say the proviso should be used only in the case of Government servants who are considered unfit for retention on personal as opposed to financial grounds; 590 (b) in cases where reputation for corruption, dishonesty or infamous conduct is clearly established even though no specific instance is likely to be proved under the Punjab Civil Services Punishment and Appeal Rules) Appendix 24 of Volume 1, Part 11 or the Public Servants (Inquiries Act XXXVII of 1850). The word 'Government ' used in this proviso should be given a reasonable opportunity to show causethe power of removing the Government servant concerned from service under the Civil Services (Punishment and Appeal) 'Rules". (iii) Provided further that Government servant should be given a reasonable opportunity to show cause against the proposed action under the rule. No Gazetted Government servants shall, however, be retired without 'the approval of the Council of Ministers. In all cases of compulsory retirement of gazetted Government servants belonging to the State Services, the Public Service Commission shall be consulted. In the case of non gazetted Government servants the Heads of Departments should effect such retirement with the previous approval of the state Government". This article clearly shows that the absolute right retained by respondent No. 1 to deal with public servants can be used against them if it appears to respondent No. 1 that the said public servants suffer from inefficiency, dishonesty, cor ruption, or infamous conduct. It is also clear that one of the reasons for making the amendment in the Pepsu Services Regulations was to use the power thereby conferred on res pondent No. 1 in case where reputation for corruption, dis honesty or infamous conduct may be established to the satis faction of respondent No. 1 even though no specific instance is likely to be proved under the Punjab Civil Services (Punishment and Appeal) Rules. This power was likewise intended for use in cases where the incompetence of the Government servant may not be of such an extent as to warrant his retirement on a compassionate allowance. The only safeguard provided by the amended article is that it was not contemplated to use the power conferred by it on financial grounds. Grounds on which the said power was intended to be used were all grounds personal to the Government servant against whora the said power was exercised. Bhandari for the petitioner contedns that the point raised by the petitoner in this petition is, in substance, concluded by a recent decision of this Court in Moti Ram Deka, 591 etc. vs The General Manager, North East Frontier Railway,(1) etc. His argument is that the trend of the majority, judgment in that case clearly indicates that the impugned Rule is inconsistent with article 311(2) of the Constitution, and as such, must be struck down as being invalid. It is, therefore, necessary to examine briefly the effect of the said judgment. In that case, this, Court was called upon to consider the validity of Rules 148(3) and 149(3) of the Railway Rules. These Rules authorised the termination of services of the railway employees concerned by serving them with a notice for the requisite period or paying them their salary for the said period in lieu of notice. Dealing with the question about the validity of the said Rules, the majority judgment observed that a person who substantively holds a permanent post has right to continue in service subject to two exceptions. The first exception was in relation to the rule of superannuation, and the second was in regard to the rule as to compulsory retirement. The majority judgment accepted the position that a rule fixing the age of superannuation which is applicable to all Government servants falling in a particular category was perfectly constitutional because it applies uniformly to the public servants who fall within its scope and it is based ,on general considerations like life expectation, mental capacity of the civil servants having regard to the climatic condilions under which they work and the nature of the work they do. They are not fixed on any ad hoc basis and do not involve the exercise of any discretion. The second exception was ,affirmed by the majority judgment with the reservation that rules of compulsory retirement would be valid if having fixed a proper age of superannuation, they permit the compulsory retirement of the public servant, provided he has put in a minimum period of service; and while affirming this rule, an express reservation was made that in case a rule of compulsory retirement permitted the authority to retire a permanent servant at a very early stage of his career, the question as to whether such a rule would be valid may have to be considered on a proper occasion. In other words, the acceptance of the ,doctrine that rules for compulsory retirement were valid and constituted an exception to the general rule that the termination of the services of a permanent servant means his removal within the meaning of article 311(2), was not absolute but qualified. At this stage, it is necessary to explain why this, reser vation was made in the majority judgment. The question which fell to be decided in the case of Moti Ram Deka(1) bad no reference to the rule of compulsory retirement; but the argument in support of the validity of the rule proceeded (1) ; 592 on the basis that the previous decisions of this Court in which the validity of the relevant rules of compulsory retirement had been upheld logically supported the contention that the impugned Rules 148(3) and 149(3) were also valid, and this argument made it necessary for this Court to examine the said decisions and to decide whether the observations made in the course of those decisions supported the contention that Rules 148(3) and 149(3) were valid. Let us briefly refer to some of these decisions. In Shyam Lal, vs The State of U.P. and the Union of India(1) the article which was examined was 465 A of the Civil Service Regulations. Note 1 to the said article gave the Government an absolute right to retire any officer after he has completed 25 years of service without giving any reasons, and provided that no claim to special compensation can be entertained from the public servant who has been compulsorily retired under it; this article was held to be valid. In the State of Bombay vs Saubhag Chand M. Deshi,(2) the rule which was considered was 165 A of the Bombay Civil Services Rules as amended by the Saurashtra Government. This rule gave the Government a similar right to retire a Government servant after he has completed 25 years of qualifying service or 50 years of age, and it permitted the Government to ask the Government servant to retire compul sorily without giving any reason and without giving him the right to claim special compensation. The rule further made it clear that the right conferred by it will not be exercised except when it is in the public interest to dispense with the further services of a Government servant such as on account of inefficiency or dishonesty. This rule was also upheld. Reverting then to the argument which was urged in support of the validity of the Railway Rules challenged in the case of Moli Ram Deka(3) the position taken by the learned Additional Solicitor General was that in upholding the impugned rules, the earlier decisions had substantially pro ceeded on the basis that the premature termination of the services of a permanent Government servant would not in every case amount to his removal within the meaning of article 311(2) of the Constitution, and that is how it became necessary to refer to the said decisions which dealt with the question of compulsory retirement, though the problem of compulsory retirement did not fall for the decision of the Court in Moti Ram Deka 's(3) case. The approach adopted by the majority decision in Moti Ram Deka 's(3) case indicates that the Court was not prepared (1) [1955] 1.S.C.R. 26 (2) ; (3) ; 593 to examine the question as to whether the relevant Rules in respect of compulsory retirement which had been upheld were valid or not. The trend of the majority judgment shows that logically, it would be consistent to hold that the premature termination of the services of a permanent Government servant would not amount to hi; , removal under article 311(2) only where such termination is the result of the fixation of a general rule of superannuation. In all other cases where a permanent Government servant is asked to retire compulsorily whether on account of his incompetence, inefficiency, or dishonesty, it may, logically, be open to be suggested that such compulsory retirement is removal within article 311(2). But since 1953, when the case of Satish Chandra Anand vs The Union of India(1) was decided by this Court there appeared to be a consistent course of decisions which had upheld the validity of the rules in regard to compulsory retirement. No doubt, the case of Satish Chandra Anand was one where a person had been employed by the Government of India on a five year contract in the Re ,settlement and Employment Directorate of the Ministry of Labour; but some observations were made in that judgment and similar observations were made in subsequent decisions dealing with the question of compulsory retirement. The majority judgment in Moti Rai Deka 's(2) case took the view that it would be inappropriate and inexpedient to reopen an issue which was covered by several prior reported decisions of the Court. Besides, the point covered by the said decisions did not directly arise in the case of Moti Ram Deka. Even so, the majority judgment took the precaution of adding a note of caution that if a rule of compulsory retirement purported to give authority to the Government to terminate the services of a permanent public servant at a very early stage of his career, the question about the validity of such a rule may have to be examined. That is how in accepting the view that a rule of compulsory retirement can be treated as valid and as constituting an exception to the general rule that the termination of the services of a permanent public servant would amount to his removal under article 311(2), this Court added a rider and made it perfectly clear that if the minimum period of service which was prescribed by the relevant rules upheld by the earlier decisions was 25 years, it could not be unreasonably reduced in that behalf. In other words, the majority judgment indicates that what influenced the decision was the fact that a fairly large number of years had been prescribed by the rule of compulsory retirement as constituting the minimum period of service after which alone the said rule could be invoked. Therefore, it seems to us that Mr. Bhandari is right when he contends that the present (1) ; (2) ; 594 article which reduces the minimum period of service to 10 years, is open to challenge in the light of the majority decision pronounced in the case of Moti Ram Deka(1). In this connection, it is hardly necessary to emphasise that for the efficient administration of the State, it is abso lutely essential that permanent public servants should enjoy a sense of security of tenure. The safeguard which article 311(2) affords to permanent public servants is no more than this that in case it is intended to dismiss, remove or reduce them in rank, a reasonable opportunity should be given to them of ,showing cause against the action proposed to be taken in regard to them. A claim for security to tenure does not mean security of tenure for dishonest, corrupt, or inefficient public servants. The claim merely insists that before they are removed, the permanent public servants should be given an opportunity to meet the charge on which they are sought to be removed. Therefore, it seems that only two exceptions can be treated as valid in dealing with the scope and effect of the protection afforded by article 311(2). If a permanent public servant is asked to retire on the ground that he has reached the age of superannuation which has been reasonably fixed, article 31](2) does not apply, because such retirement is neither dismissal nor removal of the public servant. If a permanent public servant is compulsorily retired under the rules which prescribe the normal age of superannuation and provide for a reasonably long period of qualified service after which alone compulsory retirement can be ordered, that again may not amount to dismissal or removal under article 31](2) mainly because that is the effect of a long series of decisions of this Court. But where while reserving the power to the State to compulsorily retire a permanent public servant, a rule is framed prescribing a proper age of superannuation, and another rule is added giving the power to the State to compulsorily retire a permanent public servant at the end of 10 years of his service, that cannot, we think, be treated as falling outside article 311(2). The termination of the service of a permanent public servant under such a rule, though called compulsory retirement, is, in substance, re moval under article 311(2). It is because it was apprehended that rules of compulsory retirement may purport to reduce the prescribed minimum period of service beyond which compulsory retirement can be forced against a public servant that the majority judgment in the case of Moti Ram Deka(1) clearly indicated that if. such a situation arose, the validity of the rule may have to be examined, and in doing so, the impugned rule may not be permitted to seek the protection of the earlier decisions of this Court in which the minimum (1) ; 595 qualifying period of service was prescribed as high as 25 years, or the age of the public servant at 50 years. We are, therefore, satisfied that Mr. Bhandari is right in contending that the effect of the majority decision in the case of Moti Ram Deka(1) clearly is that the impugned article 9.1 contravenes Article 311(2) of the Constitution and must be struck( down as invalid. The result is, the petition succeeds and article 9.1 as amended by the Governor of Punjab by a notification issued on the 19th January, 1960, is struck down as invalid. In consequence, the notice issued by respondent No. 2 against the petitioner on the 25th March, 1963 must be cancelled. Before we part with this petition we ought to add that the respondents did not urge before us that the writ petition was not competent under article 32 and that the proper remedy available to the petitioner was a petition under article 226 of the Constitution to the Punjab High Court; that is presum ably, because the respondents were anxious to have a decision from this Court on the question about the validity of the impugned article in the Regulations in question. We would, therefore, make it clear that our decision in the present writ petition should not be taken to mean that we have held that a petition like the present is competent under article 32 of the Constitution. In the circumstances of this case, the petitioner is entitl ed to his costs from respondents 1 and 2. Petition allowed.

IN-Abs

The petitioner was appointed as Assistant Superintendent of Police in 1942 in the former Patiala State. In 1948 on the formation of Patiala and East Punjab States he was integrated in Pepsu Police Service. He was promoted to officiate as Superintendent of Police in 1950 by the Rajpramukh of Pepsu. On March 25, 1963, respondent No. 2, the Inspector General of Police and Joint Secretary to the Government of Punjab, issued a notice upon the petitioner under the second proviso to article 9.1 of the Pepsu Services Regulation as amended by the Governor by his notification dated January 19, 1960, to show cause why he should not be compulsorily retired. The petitioner moved this Court under article 32 of the Constitution for quashing the said notice on the ground that the said proviso was ultra vires and inoperative by reason of contravention of article 311(2) of the Constitution and relied on the decision of Frontier Railway; , The said proviso was as follows, " * * * that Government retains an absolute right to retire any Government servant after he has completed ten years qualifying service without giving any reason and to claim to special compensation on this account will be entertained. This right will not be exercised except when it is in public interest to dispense with the further services of a Government servant such as on account of inefficiency, dishonesty, corruption or infamous conduct * * *". Held: Article 9.1 of 'the Pepsu Services Regulation in prescribing a minimum period of ten years of service for the purpose of compulsory retirement contravened article 311(2) of the Constitution and must be struck down. The only two valid exceptions to the protection afforded by article 311(2) were, (1) where a permanent public servant was asked to retire on the ground that he had reached the age of superannuation which was reasonably fixed; (2) that he was compulsorily retired under the Rules which prescribed the normal age of superannuation and provided a reasonably long period of qualified service after which along compulsory retirement could be valid. The first would not amount to dismissal or removal from service within the meaning of article 311(2) and the second would be justified by the view taken by this Court in a long series of decisions. 588 It is not permissible for a State while reserving to itself the power of compulsory retirement by framing a rule pres cribing a proper age of superannuation to frame another giving it the power to compulsorily retire a permanent public servant at the end of ten Years of his service, for that rule cannot fall outside article 311(2) of the Constitution. Moti Ram Deka etc. vs General Manager, North East Frontier Railway etc. ; , applied Shyam Lal vs State of U.P. and Union of India, ; and State of Bombay vs Saubhag Chand M. Doshi, [1958] S.C.R. 571, referred to. This decision should not be taken to mean that a petition like the present one was competent under article 32 of the Con stitution.

Appeals Nos. 721 and 791 of 1963. Appeals by certificate and special leave from the judgment and order dated February 16, 1962 of the Madras High Court in Writ Appeals Nos. 16 and 15 ,of 1959 respectively. V. P. Ran an and R. Ganapathy Iyer, for the appellant in C.A. No. 721 of 1963). G. B. Pai, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant (in C.A. No. 791/63). T. section Venkataraman, for the respondent No. 2 (in both the appeals). April 6, 1964. The Judgment of the Court was delivered by WANCHOO, J. These two appeals by special leave raise a common question and will be decided together. The appel lants are proprietors of two bidi concerns. A reference was made by the Government of Madras of dispute between the appellants and their workmen with respect to three matters. In the present appeals however we are concerned with only one matter, namely, whether reduction of annas two in the wages of workers employed under the agents of the appellants was justified and to what relief the workers were entitled. The contention of the appellants before the tribunal was that the workers in question were not their workmen and therefore there being no relation of employers and employees between them and the workmen, the reference itself was in competent and there could be no industrial dispute between them and the workmen concerned, their case being that the workmen concerned were the workmen of independent con tractors. It was found by the tribunal on the basis of evi dence led before it by both parties that the modus operandi with respect to manufacture of bidis in the appellants ' con cerns was that contractors took leaves and tobacco from the appellants and employed workmen for manufacturing bidis. After bidis were manufactured, the contractors took them back from the workmen and delivered them to the appellants. 648 The workmen took the leaves home and cut them there; however the process of actual rolling by filling the leaves with tobacco took place in what were called contractors ' factories. The contractors kept no attendance register for the workmen. There was also no condition that they should come and go at fixed hours. Nor were the workmen bound to come for work every day; sometimes the workmen informed the contractors if they wanted to be absent and sometimes they did not. The contractors however said that they could take no action if the workmen absented them, selves even without leave. The payment was made to the workmen at piece rates. After the bidis were delivered to the appellants payment was made therefor. The system was that the appellants fixed the price of tobacco and leaves supplied to the contractors who took them to the places where work of rolling was done and gave them to the workmen. Next day, the manufactured bidis were taken by the contractors to the appellants who paid a certain price for the manufactured bidis after deducting therefrom the cost of the tobacco and the leaves already fixed. The balance was paid to the contractors who in their turn paid to the workmen, who rolled bidis, their wages. Whatever remained after paying the workmen would be the contractors ' commission for the work done. It may also be mentioned that there were written agreements on the same pattern between the appellants and the contractors in that behalf, though no ,such agreement has been printed in the paper books. as if there was a sale of leaves and tobacco by the appellants to contractors and after the bidis were rolled there was a resale of the bidis to the appellants by the contractors. The; tribunal however held that it was clear that there was no sale either of the raw materials or of the finished products, for, according to the agreement, if bidis were not rolled, raw materials had to be returned to the appellants and the contractors were forbidden from selling the raw materials to any one else. Further after the bidis were manufactured they could only be delivered to the appellants who supplied raw materials and not to any one else. Further price of raw materials fixed by the appellant, as well as the price of the finished products always remained the same and never fluctuated according to market rates. The tribunal therefore concluded that there was no sale of raw materials followed by resale of the finished products and this system was evolved in order to avoid regulations under the Factories Act. The tribunal also found that the contractors generally got only annas two per thousand bidis for their trouble. The tribunal 649 also referred to a clause in the agreement that the appellants would have no concern with the workers who rolled bidis for whom only the contractors would be responsible. But it was of the view that these provisiors were deliberately put into the agreement by the appellants to escape such statutory duties and obligations, as may lie on them under the Factories Act or under the Madras Shops and Establishments Act. Finally on a review of the entire evidence, the tribunal found that this system of manufacture of bidis through the so called contractors was a mere camouflage devised by the appellants. The tribunal also found that the contractors were indigent persons and served no particular duties and discharged no special functions. Raw materials were supplied by the appellants to be manufactured into finished products by the workmen and the contractors had no other function except to take the raw materials to the workmen and gather the manufactured material. It therefore held that the so called contractors were not independent contractors and were mere employees or were functioning as branch managers of various factories, their remuneration being dependent upon the work turned out. It therefore came to the conclusion that the bidi workers were the employees of the appellants and not of the so called contractors who were themselves nothing more than employees or branch managers of the appellants. It finally held that reduction in the wages by two annas per thousand bidis was not justified and the workmen were entitled to the old rates. It therefore ordered the reduction in wages to be restored. Thereupon the appellants filed two writ petitions in the High Court, their contention being that the tribunal was wrong in holding that the contractors and the workmen em ployed by the contractors were the workmen of the appel lants. It seems that a sample agreement was produced before the High Court, which provided inter alia for the following terms: (1) That the proprietor should supply the tobacco and the bidi leaves; (2) that the intermediary should engage premises of his own and obtain the requisite license to carry on the work of having the bidis rolled there; (3) that at no time should more than nine bidi rollers work in the premises of that intermediary; (4) that the intermediary should meet all the incidental charges for rolling the bidis including the cost of thread and the remuneration paid to the bidi rollers; 650 (5) that for every unit of 1,000 bidis rolled and delivered by the intermediary to the proprietor, the latter should pay the stipulated amount, after deducting the cost of the tobacco and the bidi leaves supplied by the proprietor; (6) that the intermediary should not enter into similar engagement with any other industrial concern;, (7) that the price of the raw materials and price to be paid for every unit of 1,000 bidis rolled and delivered were to be fixed at the discretion of the proprietor. Besides these conditions, the contract also provided that it was liable to termination on breach of any of the conditions, and that the proprietors had no connection with and that they assumed no responsibility for the bidi workers who had to look to the intermediary for what was payable to them for rolling the bidis. The learned Single Judge on a review of the terms of the contract and the evidence on record held that neither the bidi roller nor the intermediary was an employee of the appellants. In consequence there could be no industrial dispute within the meaning of section 2 (k) of the Industrial Disputes Act between the appellants and the bidi rollers. The petitions were therefore allowed and the award of the tribunal was set aside. Thereupon there were two appeals by the workmen. The appeal court on a consideration of the terms of the contract and the findings of the tribunal came to the conclusion that the so called contractors were really the agents of the appel lants and that there was no utter lack of control by the appellants on the bidi workers who actually rolled the bidi. The appeal court also found that the intermediaries were im pecunious and according to the evidence could hardly afford to have factories of their own. It also found that the evi dence revealed that the appellants took the real hand in settling all matters relating to the workers, and the intermediary was a mere cipher and the real control over the workers was that of the appellants. The appeal court therefore held that the appellants were the real employers of the workmen and the so called intermediaries or so called independent contractors who were in some cases ex employees, were no more than agents of the appellants. In this view of the matter the appeal court held that the conclusion reached by the tribunal that the intermediaries were merely branch managers 651 appointed by the management and the relationship of employer and employees subsisted between the appellants and bidi rollers was correct. The appeals were therefore allowed, and the order of the tribunal was restored. The appellants have come before us on certificates granted by the High Court. The question whether relationship of master and servant subsists between an employer and employee has been the subject of consideration by this Court in a number of cases. In Dharangadhara Chemical Works Limited vs State of Saurashtra(1) it was held that the question whether a person was a workman depended on whether he had been employed by the employer and the relationship of employer and employee or master and servant subsisted between them. It was well settled that a prima facie test of such relationship was the existence of the right in the employer not merely to direct what work was to be done but also to control the manner in which it was to be done, the nature or extent of such con trol varying in different industries and being by its very nature incapable of being precisely defined. The correct approach therefore was to consider whether, having regard to the nature of the work there was due control and supervision by the employer. It was further held that the question whether the relation between the parties was one as between an employer and employee or master and servant was a pure question of fact, depending upon the circumstances of each case. In that case, the dispute was whether certain agarias who were a class of professional labourers, were workmen or independent contractors. The facts found in that case were that the agarias worked themselves with members of their families and were free to engage extra labour on their own account. No hours of work were prescribed. No muster rolls were maintained; nor were working hours controlled by the master. There were no rules as regards leave or holidays and the agarias were free to go out of the factory after making arrangements for the manufacture of salt. Even so, though certain features which were usually to be found in a contract of service were absent, the tribunal held that on the whole the status of agarias was that of workmen and not that of independent contractors, particularly as supervision and control was exercised by the master extending to all stages ,of manufacture from beginning to end. This Court upheld the view of the tribunal on a review of the facts found in that case. The next case to which reference has been made is Shri Chintaman Rao vs The State of Madhya Pradesh(2). (1) ; (2) ; 652 That was a case of bidi manufacture, and the question that arose for determination was whether certain persons known as sattedars and those who worked under the sattedars were workmen or not. It was found that the sattedars undertook to supply bidis by manufacturing them in their own factories or by entrusting the work to third parties at a price to be paid by the management after delivery and approval. Refer ence was made to the principles laid down in Dharangadhara Chemical Works Limited 's case(1) to determine whether the persons employed were workmen or not, and it was found that the sattedars were not under the control of the factory management and could manufacture the bidis wherever they pleased. It was therefore held that the coolies were neither employed by the management directly nor by the management through the sattedars. A special feature of that case was that none of the workmen under the sattedars worked in factories. The bidis could be manufactured anywhere and there was no obligation on the sattedars to work in the fac tory of the management. The sattedars were even entitled to distribute tobacco to the workers for making bidis in the workers ' respective homes. It was in these circumstances that this Court held that the sattedars were independent contractors and the workers employed by them were not the workers of the management. Then we come to the case of Shri Birdhichand Sharma vs First Civil Judge Nagpur(2). That was also a case of bidi manufacture. The facts found were that the workmen who rolled the bidis had to work at the factory and were not at liberty to work at their houses; their attendance was noted in the factory and they had to work within the factory hours, though they were not bound to work for the entire period and could come and go away when they liked; but if they came after midday they were not supplied with tobacco and thus not allowed to work even though the factory closed at 7 p.m. Further they could be removed from service if absent for eight days. Payment was made on piece rates according to the amount of work done, and the bidis which did not come upto the proper standard could be rejected. On these facts it was held that the workers were workmen under the Factories Act and were not independent contractors. This Court pointed out that the nature and extent of control varied in different industries and could not by its very nature be precisely defined. When the operation was of a simple nature and did not require supervision all the time, control could be exercised at the end of day by the method of rejecting bidis which did not come upto proper standard, (1)[1957] S.C.R. 152. (2)[1961] 3 S.C.R. 161. 653 such supervision by the employer was sufficient to make the workers, employees of the employer and not independent contractors. The nature of the control required to make a person a servant of the master would depend upon the facts of each case. The next case is Shankar Balaji Waje vs State of Maha rashtra(1). That was also a bidi manufacturing case. On the facts of that case the majority held that decision in Shri Birdhichand Shama 's case(2) was distinguishable and the appellant was not a worker within the meaning of the Fac tories Act. It may be noted however that that case also followed the line of decisions of this Court since the decision in the case Dharangadhara Chemical Works Limited(3) as to the criteria for coming to the conclusion whether a person was an employee or an independent contractor. The last case to which reference has been made is again a bidi manufacturing case, namely, Bhikusa Yamasa Kashtriya (P) Limited vs Union of India(4). In that case the main question raised was about the constitutionality of section 85 of the Factories Act and the notification issued by the State of Maharashtra thereunder. The Constitutionality of section 85 and the notification made thereunder was upheld. The question there involved was about the application of section 79 of the, Factories Act with reference to leave and the difficulty felt in Shankar Balaji Waje 's case(1) as to how leave could be calculated in the circumstances was explained with reference% to the decision in Shri Birdhichand Sharma 's case(2). It is in the light of these decisions that we have to decide whether the workmen who work under the so called independent contractors in these cases are the workmen of the appel lants. It has been found by the tribunal and this view has been confirmed by the appeal court that so called independent contractors were mere agents or branch managers of the appellants. We see no reason to disagree with this view taken by the tribunal and confirmed by the appeal court on the facts of these cases. We are not unmindful in this connection of the view taken by the learned Single Judge when he held that on the agreements and the facts found the so called intermediaries were independent contractors. We are however of opinion that the view taken by the appeal court in this connection is the right one. As the appeal court has rightly pointed out the (1)[1957] S.C.R. 152. (2) ; (3) (1962) Supp 1. I S.C.R. 249. (4) ; 654 so called independent contractors were indigent persons who were in all respects under the control of the appellants. There is in our opinion little doubt that this system has been evolved to avoid regulations under the Factories Act. Further there is also no doubt from whatever terms of agreement are available on the record that the so called independent contractors have really no independence at all. As the appeal court has pointed out they are impecunious persons who could hardly afford to have factories of their own. Some of them are even ex employees of the appellants. The contract is practically one sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so called contractor having no right to insist upon the supply of raw materials to him. The so called independent contractor is even bound not to employ more than nine persons in his so called factory. The sale of raw materials to the so called independent contractor and resale by him of the manufactured bidis is also a mere camouflage, the nature of which is apparent from the fact that the so called contractor never paid for the materials. All that happens is that when the manufactured bidis are delivered by him to the appellants, amounts due for the socalled sale of raw materials is deducted from the so called price fixed for the bidis. In effect all that happened is that the so called independent contractor is supplied with tobacco and leaves and is paid certain amount , for the wages of the workers employed and for his own trouble. We can therefore see no difficulty in holding that the so called contractor is merely an employee or an agent of the appellants as held by the appeal court and as such employee or agent he employs workers to roll bidis on behalf of the appellants. The work is distributed between a number of : so called independent contractors who are told not to employ more than nine persons at one place to avoid regulations under the Factories Act. We are not however concerned with that aspect of the matter in the present appeals. But there can be no doubt that the workers employed by the so called contractors are really the workmen of the appellants who are employed through their agents or servants whom they choose to call independent contractors. It is however urged that there is no control by even the agent over the bidi workers. Now the evidence shows that the bidi workers are permitted to take the leaves homes in order to cut them so that they might be in proper shape and size for next day 's work; but the real work of filling the leaves with tobacco (i.e. rolling the bidis) can only be done in the so called factory of the so called independent contractor. No tobacco is ever given to the workers to be taken home to be rolled into bidis as and when they liked. They have to 655 attend the so called factory of the so called independent contractor to do the real work of rolling bidis. As was pointed out by this Court in Shri Birdhichand Sharma 's case(1) the work is of such a simple nature that supervision all the time is not required. In Birdhichand Sharma 's case(1) supervision was made through a system of rejecting the defective bidis, at the end of day. In the present cases we have not got the full terms of the agreement and it is therefore not possible to say that there was no kind of supervision or control over the workers and that the so called independent contractors had to accept all kinds of bidis whether made upto standard 'or not. It is hardly likely that the so called independent contractor will accept bidis which are not upto the standard; for that is usually the system which prevails; in this trade as wilt be apparent from the facts of the many bidi manufacturing cases to which we have referred. We are therefore not prepared to hold in the absence of any evidence one way or the other that there is no supervision whatsoever of the work done by the workers. In the circumstances we are of opinion that the relationship of master and servant between the appellants and the workmen employed by the ;so called independent contractors is established. As the appeal court has ' pointed out whenever there was a dispute in connection with the manufacture of bidis the workers looked to the appel lants for redress. In one of the cases the manager of one of the appellants sent a letter to the labour officer that the factory was agreeable to increase the wages of the workers from, Rs. 1/14/ to Rs. 2/ per thousand bidis. In the other case also a similar letter was addressed showing that whenever there was increase or decrease in wages of the workers who, work under the so called independent contractors the real decision was taken by the appellants. This conduct on the part of the appellants is clearly inconsistent with their plea that the workers are not their employees and there is no privity between them and the said workers. We are therefore of opinion that on the facts found in these cases the appeal court was right in holding that the conclusion reached by the tribunal that the intermediaries were merely branch managers appointed by the management and the relationship of employers and employees subsisted between the appellants and the bidi rollers is correct. In this view the appeals fail and are hereby dismissed with costs one set of hearing costs. Appeal dismissed (1)[1961] 3 S.C.R. 161.

IN-Abs

On a reference of industrial disputes between the appel lants, the proprietors of bidi concerns, and their workmen, the appellants contended before the Industrial Tribunal that the workers in question were not their workmen, but were the workmen of independent contractors. The Tribunal found on the basis of evidence led, that the modus operandi was that contractors took leaves and tobacco from the appellant and ' employed workmen for manufacturing bidis. After bidis were manufactured, the contractors took them back from the work men and delivered them to the appellants. The workmen took the leaves home and cut them there; however the process of actual rolling by filling the leaves with tobacco took place in what was called contractors ' factories. The contractors kept no attendance register for the workmen, there was no condition for their coming and going at fixed: hours, nor were they bound to come for work every day; sometimes they informed the contractors if they wanted to be absent and some times they did not. The contractors said that they could take no action if the workmen absented themselves even without leave. The payment was made to the workmen at piece rates after the bidis were delivered to the appellants. The system was that the appellant paid a certain sum for the manufactured bidis, after deduct ing therefrom the cost of tobacco and the leaves already fixed, to the contractors who in their turn paid to the workmen, who rolled bidis, their wages. Whatever remained after paying the workmen would be contractors ' commission for the work done, The Tribunal held that there was no sale either of the raw materials or of the finished products, for, according to the agreement, if the bidis were not rolled, raw materials had to, he returned to the appellants and the contractors were forbidden from selling the raw materials to anyone else. Further the manufactured bidis could only be delivered to the appellants who supplied the raw materials. Further price of raw materials and finished products fixed by the appellants always remained the same and never fluctuated according to market rate. The Tribunal concluded that the bidi workers were the employees of the appellants and not of the so called contractors who were themselves nothing more then employees or branch managers of the appellants. Thereupon, the appellants filed writ petitions in the High Court, which held that neither the bidi roller nor the intermediary was an employee of the appellants and allowed the writ petitions. On appeal by the workmen the appeal court allowed the appeal and restored the order and conclusion of the Tribunal. On appeal by certi ficate: Held: On the facts found the appeal court 'was right in holding that the conclusion reached by the Tribunal that the intermediaries were merely branch managers appointed ' by the 647 management and the relationship of employers and employees subsisted between the appellants and the bidi rollers was correct. Dharangadhara Chemical Works Ltd., vs State of Saurashtra, ; , Shri Chintsman Rao vs State of Madhya Pradesh, ; , Shri Birdhichand Sharma vs First Civil Judge Nagpur; , , Shankar Balaji Waje vs State of Maharashtra, [1962] Supp. 1 S.C.R. 249 and Bikusu Yamasa Kashtriya (P) Ltd. vs Union of India, ; , discussed.

Appeal No. 613/ 1963. Appeal by special leave from the judgment dated December 12, 1960, of the Punjab High Court in Income tax Reference No. 2 of 1958. section K. Kapur, K. K. Jain, Bishambar Lal Khanna and section Murthy, for the appellant. C.K. Daphtary, Attorney General, R. Ganapathy Iyer and R.N. Sachthey, for the respondent. 627 April 2, 1964. The Judgment of the Court was delivered by SIKRI, J. The appellant is a Joint Stock Company, here inafter referred to as the assessee, having its registered office in Delhi. It held 11950 'B ' Preference shares in another company, called Rohtas Industries Ltd., in the previous year (calendar year ending December 31, 1953). The latter company paid a sum of Rs. 50,787/ as dividend on the said Preference Shares to the assessee, and for the assessment year 1954 55 this sum was taxed in the hands of the assessee as dividend, within section 2(6A) of the Indian Income Tax Act, 1922, by the Income Tax Officer. The Appellate Assistant Commissioner, on appeal by the assessee, held it not to be taxable. The Income Tax Appellate Tribunal, on an appeal by the Department, however, agreed with the Income Tax Officer and allowed the appeal. On the application of the assessee, the Appellate Tribunal stated a case for the opinion of the Punjab High Court. The High Court upheld the contention of the Department and answered the question referred to it against the assessee. The assessee, after failing to get a certificate under section 66A(2) of the Income Tax Act, obtained special leave from this Court and now the appeal is before us for disposal. The question referred to the High Court is as follows: "Whether on the facts and in the circumstances of the case, the receipt of Rs. 50,787/ was a receipt of dividend and is taxable under the Indian Income Tax Act. " The facts and circumstances referred to in the question are as follows. Rohtas Industries Ltd., hereinafter referred to, as the declaring company, had in the year 1946 issued shares at a premium and the share premiums so received by it were kept separate under the head 'Capital Reserve '. The declaring company declared a dividend in the previous year of the assessee out of the above capital reserve. The learned counsel for the assessee contends before us that the sum received by the assessee is not dividend within the definition of the word in section 2(6A) of the Income Tax Act. He says that the share premiums were not profits capable of being distributed as profits within Regulation 97 of Table A Of Companies Act of 1913 which lays down that "no dividend shall be paid otherwise than out of the profits of the year or any other undistributed profits. " He argues further that it was a capital gain in the hands of the declaring company and capital gains are expressly excluded from the definition of 'dividend ' by the explanation to section 2(6A) which provides that 'the 628 expression "accumulated profits" wherever it occurs in this clause shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948 '. Lastly, he urges that in any event, section 78 of the , has placed this sum beyond the reach of the Revenue. Before adverting to the arguments addressed to us, it is necessary to reproduce the relevant statutory provisions. Section 2(6A) of the Income Tax Act defines 'dividend ' as follows: (6A) 'dividend ' includes (a) any distribution by a company of accumulated profits, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company; (b). . . (c). . . Provided that (d). . . Provided that Provided further that the expression "accumulated profits", wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948. " Section 78, of the , reads: "78. (1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called "the share premium account"; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company. (2) The share premium account may, notwithstanding anything in sub section (1), be applied by the company (a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares; (b) in writing off the preliminary expenses of the company; 629 (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company (3) Where a company has, before the commencement of this Act, issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act: Provided that any part of the premiums which has been so applied that it does not at the commencement of this Act from an identifiable part of the company 's reserves within the meaning of Schedule VI, shall be disregarded in determining the sum to be included in the share premium account. " It is evident from the definition of the word 'dividend ' that if a distribution of accumulated profits, whether capitalised or not, entails the release by the company to its shareholder of all or any part of its assets, it is dividend. It is not disputed that the distribution of Rs. 50,787/ entails the release of the assets of the declaring company. But it is contended that there was no distribution of accumulated profits, because by virtue of Regulation 97, Table A of the Companies Act, 1913, no dividend could be paid otherwise than out of the profits of the year or any other undistributed profits. It is said that the premiums received by the declaring company were not profits within Regulation 97. We are unable to accede to this contention. Previous to the enactment of section 78 of the Companies Act of 1956, and the corresponding section in the English Companies Act, it was recognised that a company ,could distribute premiums received on the issue of shares as dividends (vide Palmer 's Company Law, Twentieth Edition). At page 637, it is stated: legally permissible for the company to distribute dividend out of assets which do not represent profits made as the result of its trading or business. The connotation of divisible profits, or profits in the legal sense, is much wider than that of profits in the business sense: the former term includes, e.g., reserves accumulated from past profits, from realised capital profits indeed, before the requirement of a share premium account by the 1947 48 legislation, from premiums obtained on issue of 630 new shares, whereas none of these items is regarded and rightly so by the businessman or accountant as trading profits." Palmer relies on two cases: Re Hoare & Co. Ltd.,(1) and Drown vs Caumin British Picture Corporation(2). In Re Hoare 's (1) case the company had created a reserve fund con sisting partly of premiums received on the issue of preference: shares. It having incurred a loss arising from the depreciation in the value of the public houses below the amount stated in the company 's balance sheet, applied for sanction of the Court to a scheme for reduction of capital whereby the company, while retaining a small portion of the reserve, attributed to, the reserve more than its rateable proportion and to capital account less than that of its rateable proportion Buckley J. apparently held that these premiums were not 'profits ' in the strict sense; and, on appeal, the counsel for the company contended before the Court of Appeal that this was wrong. Romer, L.J., disposed of this contention in the following words"; "The surplus which was carried to the reserve fund represented that which might have been properly applied at the time, if the company had so thought fit, in paying further dividends to shareholders and no person could have complained if they had done so" Thus, Romer, L.J., thought that there was nothing objec tionable in utilising premiums received on the issue of shares for the purpose of declaring dividend. in Drown 's case(2), a company proposed to pay a dividend on its preference shares and utilise in part premiums received by the company on the issue of shares, which had in fact been invested in the assets of the company. The plaintiff asked for an injunction to restrain the company from paying the dividend. Clauson, J., held that part of a reserve fund consisting of moneys paid by way of premiums on shares, unless set aside in some particular fund which has been wholly spent, is available for dividend purposes. We are not concerned with other points that arose in the case and we have only set out the facts and findings relevant to the question before us. We may here set out Article 129 of the Gauniont British Picture Corporation Ltd. Article 129 reads thus: "The Directors may, with the sanction of a general meeting, from time to time declare dividends or bonuses, but no such dividend shall (except as by (2)[1937] Ch. 631 the statutes expressly authorised) be payable otherwise than out of the profits of the company. . . " . Mr. Kapur, learned counsel for the appellant, had contended that the English Law was different inasmuch as what was prohibited in English Law was payment of dividends out of capital and that it did not enjoin directors to pay dividends out of profits. This case refutes Mr. Kapur 's contention. In re Duff 's Settlements, National Provincial Bank Ltd., vs Gregson,(1) which is strongly relied on behalf of the appellant, and which we will advert to in detail later, Jenkins, L.J., says at p. 926: "The share premiums would have been profits available for distribution (see Drown vs Gamnont British Picture Corporation) " (2). It was thus well established before the Act of 1956 and the corresponding English Act that premiums received on the issue of shares were profits available for distribution. We are of the opinion that the same connotation should be attached to the word 'Profits ' in Regulation 97 of Table A. In this view of the matter, it is not necessary to pronounce on the question whether even if these premiums were not profits within Regulation 97, would this necessarily exclude them from coming with the words 'accumulated profits ' within section 2(6A)(a). This takes up to the next point raised before us: Are the premiums received on the issue of shares capital gains within the explanation to section 2(6A)? This point was not urged before the High Court or the Appellate Tribunal and we did not allow it to be developed. The last point may now be dealt with. In this connection it is necessary to appreciate the scheme of section 78 of the Com panies Act, 1956. Sub section (1) enjoins a company, when it issues shares at a premium, to transfer the premiums to an account called 'the Share Premium Account ' and it then applies the provisions of the Act relating to the reduction of the share capital of a company as if the share premium account were paid up capital of the company. Sub section (2) then provides how the share premium account may be applied. It is said that it impliedly provides that it cannot be used for the purpose of paying dividends. Sub section (3) then deals with the issue of shares at a premium before the commencement of this Act. It deems them to have been issued after the commencement of the Act and applies the provisions of section 78. The effect of this would be that company which has issued shares at a premium before the commencement of the Act would by (1) (2) 632 virtue of section 78, have to open a share premium account and transfer to it the premium so received. What is to happen if before the commencement of the Act the company has already dealt with the premiums in such a way that they had ceased to remain as an identifiable part of the company 's reserves? The sub section says that in that event the premiums so dealt with shall be disregarded in determining the sum to be included in the share premium account. If such premiums are to be disregarded for the creation of the share premium account, it means that they fall outside the purview of section 78. It has no application to them. If this is so, it is difficult to appreciate bow the appellant can utilise this section for the purpose of showing that the premiums which have already been distributed became invested with the character of capital in the bands of the distributing company. We do not say that for the purpose of income tax any future application of the share premium ac count in one of the ways mentioned in sub section (2) will be treated as distribution of capital. No such question arises for our determination in this case. But we do hold that section 78 of the Companies Act does not in any way change the taxability of dividends declared out of premiums on shares received by a Company before the Act of 1956 came into force. If it was taxable, apart from section 78; it remains so taxable. The case of Duff 's Settlements(1) referred to above, on which the learned counsel strongly relied, might or might not help him if the declaration of dividend had taken place after the Act of 1956. We are of the opinion that what was decided in this case has no relevance to the facts of this appeal. Before concluding, we may refer to the decision of the House of Lords in Land Revenue Commissioners vs Reids Trustees(2), relied on by the learned counsel for the respondents. This case would be relevant if we were considering generally whether the receipt of Rs. 50,787/ was income or capital in the hands of the assessee. The question, however, referred to the High Court is limited, and that is whether the receipt of Rs. 50,787/ was a receipt of dividend and taxable. It is, therefore, unnecessary to say more about this case. In the result, we agree with the High Court that the answer to question referred to it is in the affirmative. The appeal fails and is dismissed with cost. Appeal dismissed. (1)[1951] 1 Ch.

IN-Abs

The Rohtas Industries Ltd. issued in 1945 shares at a pre mium and the share premiums so received were, kept separate under the head Capital Reserve. In the calendar year ending December 31, 1953, the company paid a sum of Rs. 50,787/ as dividend to the appellant company. For the year 1954 55, this sum was taxed in the hands of appellant as dividend by the Income tax Officer. The Appellate Assistant Commissioner set aside the order of the Income tax Officer, but the same was restored by the Income tax Appellate Tribunal. The Tribunal referred to the Punjab High Court the question whether on "he facts and in the circumstances of the case, the receipt of Rs. 50,787/ was a receipt of dividend and was taxable under the Indian Income tax Act. The High Court answered the question against the appellant and the latter appealed this Court with special leave. Dismissing the appeal. Held: The receipt of Rs. 50,787/ was a receipt of dividend :and was taxable under the Indian Income tax Act, 1922. It was well established before the , that premiums received on the issue of shares were profits available for distribution and the word "profits" in Regulation 97 of Table A of Companies Act 1913 should be understood to include share premiums also. section 78 of the Companies Act does not in any way change the taxability of dividends declared out of premiums on shares received by a Company before the Act of 1956 came into force. If it was taxable, apart from section 78, it remains so taxable. Re Hoare & Co. Ltd., ; Drown vs Gaumint British Picture Corporation, ; re Duff 's Settlements. National Provincial Bank Ltd., vs Gregson, ; Land Revenue Commissioners vs Reids Trustees, , referred to.

iminal Appeal No. 5 of 1963. Appeal by special leave from the judgment and order dated June 21, 1962 of the Gujarat High Court in Criminal Appeal No. 383 of 1961. D. R. Prem and B. R. G. K. Achar, for the appellant. M. V. Goswami, for the respondent. April 7, 1962. The Judgment of the Court was delivered by HIDAYATULLAH, J. On June 21, 1960 at 5 50 A.M. the Hi Inspector of Factories, Bhavnagar, visited Saurashtra Metal and Mechanical Works, Wadhwan City, which is a factory within the meaning of section 2(m)(1) of the . He found even workmen working on a machine and on examining the notice of period of work for adult workers and the register of workers he found that three of the workmen belonged to a group which was expected to begin work from 7 A.M. He commenced proceedings under section 63 of the against the respondent Mr. Kansara Manilal Bhikhalal as the occupier/manager of the factory, after issuing notice to him to show cause. He asked for enhanced penalty under section 94 of the because the said Mr. Manilal Bhikhalal was convicted on a previous occasion in three cases. As three workmen were concerned three separate complaints were filed in the Court of the Judicial Magistrate, First Class, Wadhwan City. The defence of the respondent was that he was not the occupier and manager of the factory. It may be pointed out that one Mr. Dangi and the respondent are partners. They have another factory at Dharangadhra and the defence was that Mr. Bhikhalal was manager at the Dharangadhra factory 658 and Mr. Dangi was manager at Wadhwan. Another defence. was that a machine had gone out of order the previous day and after it was repaired work was started a little earlier the: next day, because production had suffered and goods were required. The Inspector, it was stated, was informed by a letter (Ext.11) written on the 20th about the change of timing though the letter, unfortunately, did not reach the Inspector till the 22nd. It was admitted that this change in the hours of work was not notified and displayed as required by section 61(1). It was urged that section 61(10) permitted a change to be made in the system of work in a factory and as this provision was fully complied with, there was no offence. The Judicial Magistrate did not accept these defences. According to him, Mr. Dangi 's letter (Ext. 15) showed that the respondent was the occupier and the manager of the factory at Wadhwan. On the second defence the Magistrate was of the opinion that the hours of work could not be changed without the permission of the Inspector of Factories under sub section (10) of section 61. The contention on behalf of the respondent that this being the first change it was not necessary to wait for one week before making another change, was not accepted because it was held that the factory manager must always wait for one week before introducing a change. The respondent was, therefore, convicted under section 63 of the in respect of three offences and under section 94, enhanced punishment was imposed upon him by ordering him to pay a fine of Rs. 100 in respect of each offence. On appeal the Sessions Judge of Surendranagar ordered the acquittal of the respondent. The learned Sessions Judge held that the second part of section 61(10) applied to a case of second or subsequent change and this being the first change it did not fall within the second part. According to the Sessions Judge, it fell in the first part of the sub section and the change could not be said to have been effected in breach of that part since the Inspector of Factories was informed about the change. The learned Sessions Judge was also of the opinion that section 117 of the protected the action because it was bonafide. The conviction and sentence were accordingly set aside. The State of Gujarat appealed against the acquittal but was unsuccessful. A Division Bench of the High Court which heard the appeal agreed with the Sessions Judge in his interpretation of section 61 (10) and did not express any opinion on section 117 of the Act. In this appeal filed by special leave of this Court these two points have again arisen for our consideration. The scheme of the bearing upon the present matter may now be examined. It is convenient to do so 659 in the reverse order. Section 92 is a section providing generally for penalties and section 94 provides for enhanced penalty after previous conviction. These sections prescribe penalties for contravention of any of the provisions of the Act or of any rule made or of any order in writing given thereunder. The breach here is stated to be of section 63 of the Act which lays down that the hours of work must correspond with notice required to be displayed under section 61 and the register directed to be maintained under section 62. It provides: "section 63. Hours of work to correspond with notice under section 61 and register under section 62 No adult worker shall be required or allowed to work in any factory otherwise than in accordance with the notice of periods of work for adults displayed in the factory and the entries made beforehand against his name in the register of adult workers of the factory. " Section 61 deals with the notice of periods of work for adults. It is divided into 10 sub sections of which sub sections (1), (2) and (10) alone are relevant here. They are as fol lows: "61. Notice of periods of work for adults. (1) There shall be displayed and correctly maintained in every factory in accordance with the provisions of sub section (2) of section 108, a notice of periods of work for adults showing clearly for every day the periods during which adult workers may be required to work. (2) The periods shown in the notice required by subsection (1) shall be fixed beforehand in accordance with the following provisions of this section, and shall be such that workers working for those periods would not be working in contravention of any of the provisions of sections 51, 52, 54, 55, 56 and 58. (10) Any proposed change in the system of work in any factory which will necessitate a change in the notice referred to in sub section (1) shall be notified to the Inspector in duplicate before the change is made, and except with the previous sanction of the Inspector, no such change shall be made until one week has elapsed since the last change." 660 Section 62 next provides that a register of adult workers shall be maintained in which will be shown (a) name of each adult workers in the factory; (b) the nature of his work; (c) the group, if any, in which he is included; (d) where his group works on shifts, the relay to which he is allotted and (e) such be prescribed. Section 51 to which second sub section of section 61, already hours week; section 52 refers to weekly fixes a maximum of 9 hours a day interval for rest and prescribes that exceed 5 hours at one stretch; section 56 fixes generally that the period of work and rest should be spread over 10 1/2 hours and section 58 prohibits the overlapping of shifts. The Sessions Judge and the High Court concurred in holding that the provisions of sub section (10) were complied with and there was thus no offence under section 63. They treated this as a change in the system of work in the factory necessitating a change in the notice referred to in sub G. (1) and held that as the change was notified to the Inspector before it was made there was nothing illegal in employing the three workers before their shift commenced. They also held that as this was the first change there was no need to wait for a week or to obtain the previous sanction of the Inspector as required by the latter part of the tenth sub section. With due respect to the High Court, we do not agree that this sort of case is contemplated by the tenth :sub section. That sub section speaks of "change in the system of work in any factory which will necessitate a change in the notice" and these words refer not to a departure from the notice but to a change in the system, a change which would require the notice to be recast. The notice shows "the periods during which adult workers may be required to work" and these words are descriptive of the scheme of the employment of labour in the factory but are not apt to contemplate the time of employment for each individual worker. That can only be found by referring to the register which goes with the notice. Sub section (1) makes no mention of the change in the register but of the change in the notice and thereby indicates that the change which is contemplated is an overall change affecting a whole group and not an individual worker. The latter part of the sub section also points in the same direction because it implies that such changes should not be frequent and if the change is for the second time it should not be made until one week has elapsed since the last change. This cannot possibly refer to a casual change in the hours of work of an individual worker. 661 The learned counsel sought to justify the action by referring to section 59 which provides that extra wages for over time shall be paid. No such claim was made earlier in this case and justification was sought only from the provisions of sub section (10) of section 61 and section 117 of the Act. Section 59 cannot be considered in isolation: It has to be read with section 64, where the State Government has been given the power to make exempting rules '. Under those rules a departure from the provisions of sections 51, 52, 55 and 56 can be made but only in accordance with the rules so framed; as for example, overtime work may be taken from workers engaged on urgent repairs in spite of the provisions of sections 51, 54, 55 and 56, but must be in accordance with rule 91 and the urgency which is referred to in this section and the rule is 'an urgency relating to the factory and not an urgency felt by the constituents of the factory '. A departure from the hours of work as laid down in section 61(2) can only be made in those cases in which the exempting provisions of the rules cover the case and not otherwise. It would, therefore, appear that the offence which was committed in the case was the employment of workers contrary to the notice displayed under section 61(1) without any justi fication by reason of any exempting provision. The respon dent was not saved from the operation of section 63, which is peremptory, by reason of anything contained in sub section (10) and the sending of the letter to the Inspector of Factories was therefore mis conceived. It was contended before us that the respondent was not the occupier/manager of the factory and, in any event, section 117 of the Act protected him because he was not present there and his action was bonafide. A: , to the first part of this argument it is sufficient to say that the Magistrate found that he was the occupier and manager. The letter of Mr. Dangi (Ext. 15) quite clearly establishes this. The argument under, section 117 of the Act requires a more detailed consideration. That section reads as follows: "17. Protection to persons acting under this Act. No suit, prosecution or other legal proceeding. shall lie against any person for anything which is in good faith done or intended to be done under this Act. " It is argued by Mr. M. V. Goswami on the authority of cases about to be mentioned that this section gives protection against prosecution in respect of anything which is done in good faith under the Act. He referred us to two decisions of 662 Thomas, C. J. in Ranjit Singh vs Emperor(1) and Ranjit Singh vs Emperor,(2) in which the learned Chief Justice observes that the language of section 117 is not limited to the inspecting staff but is wide enough to include occupiers, managers, foremen, workers etc. Mr. Goswami also refers to two decisions of the Andhra Pradesh High Court in Public Prosecutor vs Mangaldas Thakker(3) and In re. P. Lakshmaiah Naidu(1) in which the same view has been expressed. Mr. D. R. Prem on behalf of the State of Gujarat relies on The Public Prosecutor vs Vattem Venkatramayya(5) and Provincial Government, C.P. and Berar vs Seth Chapsi Dhanji Oswal Bhate and Anr(6). Reference was also made to Superinte dent and Remembrancer of Legal Affairs, Bengal vs H. E. Watson(7). It is not necessary to refer to the lines of reasoning adopted in these cases. The language of this protecting clause is not limited to officers but is made wide to include "any person". It thus gives protection not only to an officer doing or intending to do something in pursuance or execution of this Act but also to "any person". But the critical words are "any thing * * * done or intended to be done" under the Act. The protection conferred can only be claimed by a person who can plead that he was required to do or omit to do something under the Act or that he intended to comply with any of its provisions. It cannot confer immunity in respect of actions which are not done under the Act but are done contrary to it. Even assuming that an act includes an omission as stated in the General Clauses Act, the omission also must be one which is enjoined by the Act. It is not sufficient to ,say that the act was honest. That would bring it only within the words "good faith". It is necessary further to establish that what is complained of is something which the Act requires should be done or should be omitted to be done. There must be a compliance or an intended compliance with a provision of the Act, before the protection can be claimed. The section cannot cover a case of a breach or an intended breach of the Act however honest the conduct otherwise. In this connection it is necessary to point out, as was done in the Nagpur case above referred to, that the occupier and manager are exempted from liability in certain cases men tioned in section 101. Where an occupier or a manager is charged (1) A.I.R. (1943) Oudh 308. (2) A.I.R. (1943) Oudh 311. (3) A.I.R. (1958) Andh. Pra. 79. (4) I.L.R. (5) A.I.R. (1963) Andh. Pra. 106). (6) I.L.R. (1938) Nag. 408. (7) 663 with an offence he is entitled to make a complaint in his own turn against any person who was the actual offender and on proof of the commission of the offence by such person the occupier or the manager is absolved from liability. This shows that compliance with the peremptory provisions of the Act is essential and unless the occupier or the manager brings the real offender to book he must bear the responsibility. Such a provision largely excludes the operation of section 117 in respect of persons guilty of a breach of the provisions of the Act. It is not necessary that means rea must always be established as has been said in some of the cases above referred to. The responsibility exists without a guilty mind. An adequate safeguard, however, exists in section 101 analysed above and the occupier and manager can save themselves if they prove that they are not the real offenders but who, in fact, No such defence was offered here. For these reasons we are of the opinion that the respondent is not saved by section 117. We, accordingly, set aside his, acquittal and convict him under section 63 read with section 94 of the . He is ,sentenced to pay a fine of Rs. 501/ in respect of each of the offences, or in default to undergo 15 days ' simple imprisonment.

IN-Abs

On inspection three of the workmen were found working in a factory before their shift commenced. It was stated that the Inspector of Factories was informed by a letter written a day prior to this inspection about the change of the timing though the letter did not reach the Inspector till the day after the inspection. This change in the hours of work was not notified and displayed as required by section 61(1) of the . The respondent as the occupied/manager of the factory was convicted under section 63 of the Act. On appeal, the Sessions Judge acquitted the respondent holding that the second part of section 61(10) of the Act applied to a case of second or subsequent change in the system of work in a factory and this being the first change there was no need to wait for a week or to obtain the previous sanction of the Inspector as required by the later part of section 61(101), and further section 117 of the Act protected the action because it was bonafide. The State appealed to the High Court which agreed with the Sessions Judge in his interpretation of section 61(10) but expressed no opinion on section 117 of the Act and it dismissed the appeal. On appeal by special leave: Held: (i) The respondent was not saved from the opera tion of section 63 which is peremptory, by reason of anything contained in section 61(10) and the sending of the letter to the Inspector of Factories was therefore misconceived. The words "change in the system of work in any factory which will necessitate a change in the notice" in section 61(10) refer not to departure from the notice but to a change in the system, a change which would require the notice to be recast. The notice shows "the period during which adult workers may be required to work" and these words are descriptive of the scheme of employment of labour in the factory but are not apt to contemplate the time of employment for each individual worker. That can only be found by referring to the register which goes with the notice. Sub section (1) makes no mention of the change in the register but of the change in the notice and thereby indicates that the change which is contemplated is an over all change affective to a whole group and not an individual worker. The latter part of the sub section also points in the same direction because it implies that such changes should not be frequent and if the change is for the second time it should not be made until one week has. elapsed since the last change. (ii) The language of section 117 of the Act is not limited to officers but is made wide to include "any person". The protection conferred can only be claimed by a person who can plead that he was required to do or omit to do something under the Act or that he intended to comply with any of its provisions. It cannot confer immunity in respect of actions which are not done under the Act but are done contrary to it. 657 (iii) The occupier and manager, are exempted from liabi lity in certain cases mentioned in section 101. Where an occupier or a manager is charged with an offence he is entitled to make a complaint in his own turn against any person who was the actual offender and on such proof the occupier or the manager is a solved from liability. This shows that compliance with the peremptory provisions of the Act is essential and unless the occupier or the manager brings the real offender to book he must bear the responsibility. It is not necessary that means rea must always be established. The responsibility exists without a guilty mind. Ranjit Singh vs Emperor, A.I.R. (1943) Oudh 308, Ranjit Singh vs Emperor, A.I.R. (1943) Oudh 311, Public Prosecutor vs Mangaldas Thakkar, A.I.R. , In re P. Lakshmaiah Naidu, I.L.R. , Public Prosecutor vs Vattem Venkatramayya, A.I.R. 1963. Pra. 106, Provincial Government C.P. and Berar vs Seth Chapsi Dhanji Oswal Bhate and Anr. I.L.R. and Superintendent and Remembrancer of Legal Affairs, Bengal vs H. E. Watson, , referred to.

eal No. XXXIV of 1950. Appeal by special leave from an Award of the All India Industrial Tribunal (Bank Disputes) Bombay, dated 1st Janu ary, 1950. The facts of the case are set out in the judg ment. Dr. Bakshi Tek Chand (Veda Vyas and S.K. Kapur, with him) for the appellant. B. Sen for the respondents. Alladi Krishnaswami Aiyar (Jindra Lal, with him) for the Union of India. 1950. May 26. The Court delivered judgment as follows : KANIA C.J I have read the judgments prepared by Messrs. Fazl Ali, Mahajan and Mukherjea JJ. 461 in this case. As the views in those judgments in respect of the nature of the duties and functions of the Industrial Tribunal do not show agreement I consider it necessary to add a few words of my own. In my opinion, the functions and duties of the Indus trial Tribunal are very much like those of a body discharg ing judicial functions, although it is not a Court. The rules framed by the Tribunal require evidence to be taken and witnesses to be examined, cross examined and re exam ined. The Act constituting the Tribunal imposes penalties for incorrect statements made before the Tribunal. While the powers of the Industrial Tribunal in some respects are different from those of an ordinary civil Court and it has jurisdiction and powers to give reliefs which a civil Court administering the law of the land (for instance, 'ordering the reinstatement of a workman) does not possess in the discharge of its duties it is essentially working as a judicial body. The fact that its determination has to be followed by an order of the Government which makes the award binding, or that in cases where Government is a party the legislature is permitted to revise the decision, or that the Government is empowered to fix the period. of the opera tion of the award do not, to my mind, alter the nature and character of the functions of the Tribunal. Having consid ered all the provisions of the Act it seems to me clear that the Tribunal is discharging functions very near those of a Court, although it is not a Court in the technical sense of the word. The next question is whether under article 136 the Court has jurisdiction to entertain an application for leave to appeal against the decision of such a body. It is not dis puted that the Court has power to issue writs of certiorari and prohibition in respect of the work of the Tribunal. The only question is whether there is a right of appeal also. In my opinion the wording of article 136 is wide enough to give jurisdiction to the Court to entertain an application for leave to appeal, although it is obvious that having regard to the nature of the functions of the Tribu nal, this Court will be very reluctant to entertain such an application. 462 As regards the merits, I do not think this is a case in which I would admit the appeal. The aggrieved parties may apply for redress by adopting other appropriate proceedings. The appeal therefore should be dismissed with costs. FAZL ALl J. The important question to be decided in this case is whether the present appeal lies at all to this Court. The question is not free from difficulty, but on the whole I am inclined to think that 'the appeal does lie. It is fully recognized that the scope article 136 of the Constitution is very wide, but the significance of the language used in the section can be appreciated only by comparing it with the articles which precede it. Article 132 deals with the appellate jurisdiction of the Supreme Court in cases involving a substantial question of law as to the interpretation of the Constitution, and the words used in that article are: "appeal. from any judgment, decree or finalorder." Article 133 deals with appeals in civil matters and the same words are used here also. Arti cle 134 deals with appeals in criminal matters, and the words used in it are: "appeal. from any judgment, final order or sentence." In article 136, the words "judg ment" and "decree," which are used in articles 132 and 133 are retained. Similarly, the words "judgment" and "sen tence" occurring in article 134 are also retained. But the expression "final order" becomes "order," and, instead of the High Court, reference is made to "any court. " Cer tain other words are also used in the article which seem to me to have a special significance, these being "determina tion," "cause or matter" and "tribunal. " It is obvious that these words greatly widen the scope of article 136. They show that an appeal will lie also from a determination or order of "any tribunal" in any cause or matter. Can we then say that an Industrial Tribunal does not fall within the scope of article 136 ? If we go by a mere label, the answer must be in the affirmative. But we have to look further and see what are the main functions of the Tribunal and how it proceeds to discharge those functions. This is necessary because 463 I take it to be implied that before an appeal can. lie to this Court from a tribunal it must perform some kind of judicial function and partake to some extent of the charac ter of a Court. Now there can be no doubt that the Industrial Tribunal has, to use a well known expression, "all the trappings of a Court" and performs functions which cannot but be regarded as judicial. This is evident from the rules by which the proceedings before the Tribunal are regulated. It appears that the proceeding before it commences on an application which in many respects is in the nature of a plaint. It has the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of discovery, inspection, granting adjournment, reception of evidence taken on affidavit, enforcing the attendance witnesses, compelling the production of documents, issuing commissions, etc. It is to be deemed to be a civil Court within the meaning of sections 480 and 482 of the Criminal Procedure Code, 1898. It may admit and call for evidence at any stage of the proceeding and has the power to administer oaths. The parties appearing before it have the right of examination, cross examination and re examination and of addressing it after all evidence has been called. A party may also be represented by a. legal practitioner with its permission. The matter does not rest there. The main function of this Tribunal is to adjudicate on industrial disputes which implies that there must be two or more parties before it with conflicting cases, and that it has also to arrive at a conclusion as to how the dispute is to be ended. Prima facie, therefore, a Tribunal like this cannot be excluded from the scope of article 136, but before any final conclu sion can be expressed on the subject certain contentions which have been put forward on behalf of the respondents have to be disposed of. The first contention is that the Industrial Tribunal cannot be said to perform a judicial or quasi judicial function. since it is not required to be guided by any recognized substantive law in deciding disputes 464 which come before it. On the other hand, in deciding industrial disputes, it has to override contracts and create rights which are opposed to contractual rights. In these circumstances, it is said that the very questions which arose before the Privy Council in Moses vs Parker Ex parte Mose (1) arise in this case, these questions being : (1) How can the propriety of the Tribunal 's decision be tested on appeal, and (2) What are the canons by which the appellate Court is to be guided in deciding the appeal ? Their Lordships of the Privy Council undoubtedly felt that these were serious questions, but they had no hesitation in saying that "if it were clear that appeals ought to be allowed. such difficulties would doubtless be met somehow. " This, in my opinion, is a sufficient answer to the difficul ty raised. The Tribunal has to adjudicate in accordance with the provisions of the . It may sometimes override contracts, but so can a Court which has to administer law according to the Bengal or Bihar Money lenders Act, Encumbered Estates Act and other similar Acts. The Tribunal has to observe the provisions of the special law which it has to administer though that law may be dif ferent from the law which an ordinary Court of justice administers. The appellate Court, therefore, can at least see that the rules according to which it has to act and the provisions which are binding upon it are observed, and its powers are not.exercised in an arbitrary or capricious manner. The second contention, which is a more serious one, is that the adjudication of the Tribunal has not all the at tributes of a judicial decision, because the adjudication cannot bind the parties until it is declared to be binding by the Government under section 15 of the Industrial Dis putes Act. It is said that the adjudication is really in the nature of an advice or report which is not effective until made so by the Government. It appears that a similar objection was raised in Rex vs Electricity Commissioner 's, London Electricily ' (1) Joint Committee Co. (1920) Ex Parte (1) for the purpose of deciding whether a writ of certiorari should be Issued in the circumstances of the case but was dis. posed of in these words : "It is necessary, however, to deal with what i think was the main objection of the Attorney General. In this case he said the Commissioners come to no decision at all. They act merely as advisers. They recommend an order embodying a scheme to the Minister of Transport, who may confirm it with or without nodifications. Similarly the Minister of Trans port comes to no decision. He submits the order to the Houses of Parliament, who may approve it with or without modifications. The Houses of Parliament may put anything into the order they please, whether consistent with the Act of 1919, or not. Until they have approved, nothing is decided, and in truth the whole procedure, draft scheme, inquiry, order, confirmation, approval, is only part of a process by which Parliament is expressing its will, and at no stage is subject to any control by the Courts. It is unnecessary to emphasize the constitutional importance of this contention. . In the provision that the final decision of the Commissioners is not to be operative until it has been approved by the two Houses of Parliament I find nothing inconsistent with the view that in arriving at that decision the Commissioners themselves are to act judicially and within the limits prescribed by Act of Parliament, and that the Courts have power to keep them within those limits. It is to be noted that it is the order of the Commissioners that eventually takes effect; neither the Minister of Trans port who confirms, nor the Houses of Parliament who approve, can under the statute make an order which in respect. of the matters in question has any operation. I know of no author ity which compels me to hold that a proceeding cannot be a judicial proceeding subject to prohibition or certiorari because it is subject to confirmation or approval, even where the approval has to be that of the Houses of Parlia ment. The authorities are to the contrary. ' ' (1) 466 It is well known that a writ of certiorari can issue only against an order of a judicial or quasi judicial tribu nal and if it is permissible for the High Court to. issue a writ of certiorari against an Industrial Tribunal, which fact was not seriously disputed before us, I find it diffi cult to hold that the tribunal does not come with in the purview of article 136. If a subordinate Court acts in excess of its jurisdiction or assumes a jurisdiction which it does not possess, the appellate Court can always interfere and do what is contemplated to be done by a writ of certiorari. It is to be noted that under section 15 of the , in cases where the appropriate Govern ment is not a party to the dispute, all that the Government has to do on receiving the award of the Tribunal is to declare it to be binding and to state from what date and for what period it will be binding. Section 15.(2) is mandatory and it provides: "On receipt of such award, the appropriate Government shall by order in writing declare the award to be binding. . " Thus the Government cannot alter, or cancel, or add to the award, but the award must be declared to be binding as it is. In substance, therefore, the adjudication of the Tribunal amounts to a final determination of the dispute which binds the parties as well as the Government. Our attention was however drawn to the proviso to section 15 (2), which runs as follows: "Provided that where the appropriate Government is a. party to the dispute and in its opinion it would be inexpe dient on public grounds to give effect to the whole or any part of the award, it shall on the first available opportu nity lay the award together with the statement of its rea sons for not making a declaration as aforesaid before the Legislative Assembly of the Province, or where the appropri ate Government is the Central Government, before the Central Legislative Assembly, and shall, as soon as may be, cause to be moved therein a resolution for the consideration of the 467 award, and the Legislative Assembly may, by its resolution, confirm, modify, or reject the award. " This proviso was relied upon by the respondents to show that the right to appeal from the award could not have been contemplated in any case. But the Act itself makes a dis tinction between cases in which the Government is a party and those in which the Government is not a party. The proviso relates to a very special type of case and as at present advised I do not wish to express any opinion as to whether an appeal lies to this Court or not in such a case, but, in my judgment, where the Government has only to de clare the award to be binding, an appeal shall lie. It is necessary here to say a few words as to the scope of the appeal. As was pointed out by this Court in Pritam Singh vs The State(1), the power under article 136 of the Constitution being a special power is to be exercised only in special cases. The rule so laid down is bound to re strict the scope of the appeal in practice in almost all the cases which fall under article 136. But in some cases a limitation will be imposed on the scope of the appeal by the very nature of the case and of the tribunal from which an appeal is sought to be brought, and a case under the Indus trial Disputes Act seems to be an example of such a case. Dealing now with the merits of the appeal, I am not prepared to hold that this is a proper case for interference with the adjudication of the Tribunal. The power of this Court was invoked by the appellants on four grounds. These grounds have been elaborately examined by Mahajan J. and two of them have been pronounced to be wholly inadequate for justifying our interference. My view with regard to these two grounds is identical with that of Mahajan J. and I do not wish to add to what he has already said on the subject. The remaining two grounds also are, in my opinion, wholly insufficient to justify the exercise of our special power under article 136. One of these grounds is that the award of the Tribunal is based on no evidence whatsoever. I do not, however, find that this ground (1) ; 60 468 was urged in this form in the application for special leave to appeal to this Court. All that was intended to be urged was that the appellants wanted to adduce evidence but were not allowed to do so. From the decision of the Tribunal however, it appears that the evidence that was shut out related to one isolated point only and the Tribunal might well have been justified in not allowing evidence to be admitted on a point which in its opinion had no direct bearing on the issue before them. After hearing the re spondents on this particular point, I am not disposed to hold that the Tribunal has committed such an error as would justify the interference of this Court. The last ground urged is that the award has been signed by only two members of the Tribunal though it originally consisted of three persons and though the entire hearing of the dispute had taken place before all the three persons. This objection does not appear to me to be fatal to the jurisdiction of the Tribunal, because under section 8 of the Act it is not obligatory on the Government to appoint a new member to fill a vacancy if one of the members ceases to be available at any time during the proceedings. Under that section, if the Chairman ceases to be available, the Govern ment must appoint his successor, whereas if a member ceases to be available the Government may or may not appoint any one to fill his place. In the present case, our attention was drawn to some correspondence which shows that one of the members was called upon to act as a member of another Tribu nal and the award in question was pronounced after informing the Government of the procedure which the Chairman and the remaining members intended to adopt. In the view I have taken, this appeal must fail, and I would accordingly dismiss it with costs. MAHAJAN J. This is an appeal by special leave from the determination of an industrial dispute by the Industrial Tribunal appointed under Ordinance VI of 1949. Bharat Bank Limited, Delhi, the appellant, is a company registered under the Indian Companies Act. 469 Its employees made certain demands and as a result of an unfavourable response from the bank it appears that they struck work on the 9th March, 1949. The bank in its turn served notices on them to resume work and proceeded to discharge a number of them between the 19th March and 24th March as they failed to do so. The Central Government constitued a Tribunal consisting of three persons for the adjudication of industrial disputes in banking companies under section 7 of the (XIV of 1947), The disputes mentioned in schedule II of the notifi cation were referred under section 10 of the Act to this Tribunal. Item 18 of this schedule reads as follows : "Retrenchment and victimization (Specific cases to be cited by employees). " The dispute under this item between the Bharat Bank and its employees was heard by the Tribunal at Delhi and its award was made on the 19th January, 1950. It was published in the Government of India Gazette dated 4th February, 1950, and was declared to be binding for a period of one year. The award of the Tribunal was signed by two out of its three members. A preliminary objection was raised on behalf of the Central Government as well as on behalf of the respondents that this Court had no jurisdiction to grant special leave to appeal against the determination of an Industrial Tribu nal inasmuch as it did not exercise the judicial powers of the State and that its determination was not in the nature of a judgment, decree or order of a Court so as to be ap pealable. This being the first case in which special leave was granted from the determination of an Industrial Tribu nal, it is necessary to examine the provisions of the Con stitution dealing with this matter and if possible, to define the limits of the jurisdiction of this Court under article 136. This article is in these terms : "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order m any cause or matter passed 470 or made by any court or tribunal in the territory of India. (2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces. " The article occurs in Chapter IV of Part V of the Consti tution: "The Union Judiciary. " Article deals with the establishment and constitution of the Supreme Court. Article 131 confers original jurisdiction on this Court in certain disputes arising between the Government of India and the States etc. Articles and 133 deal with the appellate juris diction of the Court in appeals from High Courts within the territory of India in civil matters. By article 134 limited right of appeal in criminal cases has been allowed. The Judicial Committee of the Privy Council which was the high est Court of appeal for India prior to 10th October, 1949, was not a Court of criminal appeal in the sense in which this Court has been made a Court of criminal appeal under article 134. It could only entertain appeals on the crimi nal side in exercise of the prerogative of the King. Article 135 empowers this Court to hear all appeals which under existing laws could be heard by the Federal Court of India. By the Abolition of Privy Council Jurisdiction Act, 1949,which came into force on the 10th October, 1949, all the powers that were possessed by the Judicial Committee of the Privy Council in regard to cases or matters arising in India became exercisable by the Federal Court of India whether those powers were exercisable by reason of statutory authority or under the prerogative of the King. The powers of the Judicial Committee were conferred upon it by the Judicial Committee Act, 1844 (7 & 8 Vict., C. 69). Appeals lay to His Majesty in Council from judgments, sentences, decreesor orders of any Court of justice within any British colony or possession abroad. Closely following article 135 which confers all the powers of the Judicial Committee on the Supreme Court comes article 136. The language employed in this article is very wide and is of a comprehensive character. Powers given 471 are of an overriding nature. The article commences with the words "Notwithstanding anything in this Chapter. " These words indicate that the intention of the Constitution was to disregard in extraordinary cases the limitations contained in the previous articles on this Court 's power to entertain appeals. These articles dealt with the right of appeal against final decisions of High Courts within the territory of India. Article 136, however, overrides that qualification and empowers this Court to grant special leave even in cases where the judgment has not been given by a High Court but has been given by any Court in the territory of India; in other words, it contemplates grant of special leave in cases where a Court subordinate to a High Court has passed or made any order and the situation demands that the order should be quashed or reversed even without having recourse to the usual procedure provided by law in the nature of an appeal, etc. The word "order" in article 136 has not been qualified by the word "final. " It is clear, therefore, that the power to grant special leave under this article against an order of a Court could be exercised with respect to interlocutory orders also. Another new feature introduced in article 136 is the power given to grant special leave against orders, and determinations etc. of any tribunal in the territory of India. This word did not find place in the Judicial Committee Act, where the phrase used was "a Court of jus tice. " It is the introduction of this new expression in article 136 that has led to considerable argument as to its scope. Another expression that did not find place in the Judicial Committee Act but has been introduced in article 136 is the word "determination." A question has been raised as to the meaning to be given to these words in the article. On the one hand, it was contended that the words "determina tion" and "tribunal" were introduced in the article in order to bring within the scope of the applellate jurisdiction of this Court all orders of tribunals of different varieties and descriptions. On the other hand, it was said that the words "determination" and "tribunal" were added in the article by way of abundant caution and 472 the intention was that if a tribunal exercised the judicial powers of the State and the decision was passed in the exercise of that power, this Court as the highest judicial Court in the Republic would have power, if it considered, necessary in the ends of justice, to grant special leave. Clause (2) of article 136 excludes the jurisdiction of this Court in respect of military Courts. or Tribunal. It is interesting to observe that in articles 138, 139 and 140 the Constitution has conferred powers on Parliament for further enlargement of the powers of this Court. Two points arise for determination in this case: (1) whether the word "tribunal" in this article has been used in the same sense as "Court," or whether it has been used in a wider sense, and (2) whether the word "determination" in the article includes within its scope the determinations made by Industrial Tribunals or other similarly constituted bodies or whether it has reference only to determinations of a Court or a tribunal of a purely judicial character. It was conceded by the learned counsel appearing for the Cen tral Government, Mr. Alladi Krishnaswami Aiyar, that if any tribunal, whether administrative, domestic or quasi judi cial, acts in excess of its jurisdiction, then it can be controlled by the High Courts under the powers conferred on them by article 226 by the issue of a writ of certiorari. It was said that if the Industrial Tribunal in this case could be proved to have trespassed beyond the limits 0 its statutory jurisdiction, then the remedy lies elsewhere and not by a petition of special leave under article 136. Mr. Alladi 's contentions may be briefly summarized as follows: (1) The expression "tribunal " means seat of a judge, or a court of justice. Its necessary attribute is that it can give a final judgment between two parties which carries legal sanction by its own force. That the word "tribunal" in juxtaposition to the word "court" could only mean a tribunal 'which exercised judicial functions of the State and did not include within its ambit a tribunal which had quasi judicial or administrative powers. (2) The kinds of orders against which special leave to appeal could be given under article 136 473 have to be of the same nature as passed by a Court , ' in other words, it was said that unless there was a judicial determination of a controversy between two parties, the order would not be appealable. That in the case of an Industrial Tribunal what gives binding force to the award is the declaration of the government, that the spark of life to it is given by that declaration and without that, the award of the Tribunal is lifeless and has no enforceability and hence cannot be held to be of an appealable nature. It was further said that in cases between the Government and its employees, by the procedure prescribed in the Act the award could also be rejected, and that being so, by its own deter mination a tribunal could not impose a liability or affect rights. Dr. Bakshi Tek Chand, appearing for the bank, on the other hand argued that whenever a tribunal, whether exercis ing judicial or quasi judicial functions, determined a matter in a judicial manner, then such a determination is within article 136. It was said that an Industrial Tribunal has no administrative or executive functions, that its duty is to adjudicate on an industrial dispute, i.e., to act as a Judge, on certain kinds of disputes between employers and employees and that its functions are of a judicial nature, though the ambit of the powers conferred is larger than that of an ordinary Court of law inasmuch as it can grant reliefs which no Court of law could give, but that is because of the powers conferred on it by law. It was argued that the plain words of the article should not be given a narrow meaning when the intention of the Constitution was to confer the widest power on this Court. It was further contended that as between private employers and employees and even in certain cases between Government and its employees the decision of the Tribunal was binding on the Government and Government had no power either to affirm, modify or reject it. All that it was authorised to do was to announce it and by its declaration give it enforceability; that fact, howev er, could not affect the question of appealability of the determination under article 136. It was finally argued that powers should be exercised by this Court wherever there is a miscarriage 474 of justice by a determination of any tribunal and that if the intention of the Constitution by use of the word "tribunal"was in the same sense as "court," then it was not necessary to import it in article 136, because all tribunals that exercise judicial functions fall within the definition of the word "court" though they may not have been so de scribed. After considerable thought I have reached the conclusion that the preliminary objection should be overruled. I see no cogent reasons to limit the plain words of the statute and to place a narrow interpretation on words of widest ampli tude used therein. In construing the articles of the Con stitution it has always to be remembered that India has been constituted into a sovereign democratic republic in order to ensure justice to all its citizens. In other words, the foundations of this republic have been laid on the bedrock of justice. To safeguard these foundations so that they may not be undermined by injustice occurring anywhere this Court has been constituted. By article S2 of the Constitu tion the Court is empowered to see that the fundamental rights conferred on the citizens by the Constitution are not in any way affected. By article 136 it has been given overriding power to grant special leave to appeal against orders of courts and tribunals which go against the princi ple of natural justice and lead to grave miscarriage of justice. The exercise of these, powers could only have been contemplated in cases which affect the rights of people living within the territory of India in respect of their person, property or status. The question, therefore, for consideration is whether the jurisdiction conferred by use of unambiguous phraseology and by words which have a plain grammatical meaning and are of the widest amplitudeshould be limited and restricted on considerations suggested by Mr. Alladi. The construction suggested by the learned counsel, if accepted, would in the first instance make the use of certain words in the article unnecessary and redundant and would run counter to the spirit of the Constitution. It must be presumed that the draftsmen of the Constitution knew well the fact that there were a number of tribunals consti tuted in this country 475 previous to the coming into force of the Constitution which were performing certain administrative, quasi judicial or domestic functions, that some of them had even the trap pings of a Court but in spite of those trappings could not be given that description. It must also be presumed that the Constitution makers were aware of the fact that the highest Courts in this country had held that all tribunals that discharged judicial functions fell within the definition of the expression "Court. " If by the use of the word "tribu nal" in article 136 the intention was to give it the same meaning as "Court," then it was redundant and unnecessary to import it in the article because, by whatever name de scribed, such a tribunal would fall within the definition of the word "Court. " The word "Court" has a well known meaning in legislative history and practice. As pointed out in Halsbury 's Laws of England, the word "Court" originally meant the King 's Palace but subsequently acquired the meaning of (1) a place where justice was admin istered, and (2) the person or persons who administer it. In the Indian Evidence Act it is defined as including all judges and magistrates and all persons except arbitrators legally authorized to take evidence. This definition is by no means exhaustive and has been framed only for the pur poses of the Act. There can be no doubt that to be a Court, the person or persons who constitute it must be entrusted with judicial functions, that is, of deciding litigated questions according to law. However, by agreement between parties arbitrators may be called upon to exercise judicial powers and to decide a dispute according to law but that would not make the arbitrators a Court. It appears to me that before a person or persons can be said to constitute a Court it must be held that they derive their powers from the State and are exercising the judicial powers of the State. In R.v. London County Council (1), Saville L.J. gave the following meaning to the word "Court" or "judicial authori ty" : (1) [1931]2K.B. 215. 61 476 "It is not necessary that it should be a Court in the sense that this Court is a Court, it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a Court if it is a tribuna which has to decide rightly after hearing evidence and opposition. " As pointed out in picturesque language by Lord Sankey L.C. in Shell Co. of Australia vs Federal Commissioner of Taxation(1), there are tribunals with many of the trappings of a Court which, nevertheless, are not Courts in the strict sense of exercising judicial power. It seems to me that such tribunals though they are not full fledged Courts, yet exercise quasi judicial functions and are within the ambit of the word "tribunal" in article 136 of the Constitution. It was pointed out in the above case that a tribunal is not necessarily a Court in this strict sense because it gives a final decision, nor because it hears witnesses oath nor because two or more contending parties appear before it between whom it has to decide, nor because it gives deci sions which affect the rights of subjects nor because there is an appeal to a Court, nor because it is a body to which a matter is referred by another body. The intention of the Constitution by use of the word "tribunal" in the article seems to have been to include within the scope of article 136 tribunals adorned with similar trappings as Court but strictly not coming within that definition. Various defi nitions of the phrase "judicial power" have been given from time to time. The best definition of it on high authority is the one given by Griffith C.J. in Huddart, Parker & Co. vs Moorehead(2), wherein it is defined as follows : "The words 'judicial power ' as used in section 71 the Constitution mean the power which every sovereign author ity must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exer cise of this power does not begin [19311 A. C. 275. (2) ; , 357. 477 until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " It was conceded that a tribunal constituted under the , exercises quasi judicial powers. That phrase implies that a certain content of the judicial power of the State is vestedit and it is called upon to exercise it. An attempt was made to define the words "judicial" and "quasi judicial" in the case of Cooper vs Wilson (1). The relevant quotation reads thus : "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi judicial decision equally presup poses an existing ' dispute between two or more parties and involves (1) and (2), but does not necessarily involve (3) and never involves (4). The place of (4)is in fact taken by administrative action, the character of which is determined by the Minister 's free choice. " The extent of judicial power exercised by an ]industrial Tribunal will be considered hereinafter in the light of the observations cited above. Reference was made to certain passages from Professor Allen 's book on Law and Order, Chapter IV, page 69, where mention is made of the kinds of administrative tribunals functioning in various countries today. Porter on Adminis trative Law, 1929 Edn., (1) , at p. 340. 478 page 194, was also relied upon. There can be no doubt that varieties of administrative tribunals and domestic tribunals are known to exist in this country as well as in other countries of the world but the real question to decide in each case is as to the extent of judicial power of the State exercised by them. Tribunals which do not derive authority from the sovereign power cannot fall within the ambit of article 136. The condition precedent for bringing a tribu nal within the ambit of article 136 is that it should be constituted by the State. Again a tribunal would be outside the ambit of article 136 if it is not invested with any part of the judicial functions of the State but discharges purely administrative or executive duties. Tribunals, however, which are found invested with certain functions of a Court of justice and have some of its trappings also would fall within the ambit of article 136 and would be subject to the appellate control of this Court whenever it is found neces sary to exercise that control in the interests of justice. It is now convenient to consider whether a tribunal constituted under the , exer cises all or any one of the functions of a Court of justice and whether it discharges them according to law or whether it can act as it likes in its deliberations and is guided by its own notions of right and wrong. The phrase "industrial dispute" has been defined in section 2 clause (k) of the Act as follows : "any dispute or difference between employers and em ployees, or between employers and workmen, or between work men and workmen, which is connected with the employment or non employment or the terms of employment or with the condi tions of labour, of any person. " Such a dispute concerns the rights of employers and employees. Its decision affects the terms of a contract of service or the conditions of employment. Not only may the pecuniary liability of an employer be considerably affect ed by the adjudication of such dispute but it may even result in the imposition of punishments on him. It may adversely 479 affect the employees as well. Adjudication of such a dis pute affects valuable rights. The dispute and its result can always be translated in terms of money. The point for decision in the dispute usually is how much money has to pass out of the pocket of the employer to the pocket of the employee in one form or another and to what extent the right of freedom of contract stands modified to bring about indus trial peace. Power to adjudicate on such a dispute is given by section 7 of the statute to an Industrial Tribunal and a duty is cast on it to adjudicate it in accordance with the provisions o Act. The words underlined clearly imply that the dispute has to be adjudicated according to law and not in any other manner. When the dispute has to be adjudicated in accordance with the provisions of the Act, it follows that the tribunal has to adhere to law, though that law may be different from the law that an ordinary Court of justice administers. It is noteworthy that the tribunal is to consist of experienced judicial officers and its award is defined as a determination of the dispute. The expression "adjudication" implies that the tribunal is to act as a judge of the dispute; in other words, it sits as a Court of justice and does not occupy the chair of an administrator. It is pertinent to point out that the tribunal is not given any executive or administrative powers. In section 38 of the Act power is given to make rules for the purpose of giving effect to the provisions of the Act. Such rules can provide in respect of matters which concern the powers and procedure of tribunals including rules as to the summoning of witness es, the production of documents relevant to the subject matter and as to appearance of legal practitioners in pro ceedings under this Act. Rule 3 of these rules provides that any application for the reference of an industrial dispute to a tribunal shall be made in form (A) and shall be accompanied by a statement setting forth, inter alia, the names of the parties to the dispute and the specific matters of dispute. It is in a sense in the nature of a plaint in a suit. In rule 13 power is given to administer oaths. Rule 14 provides as follows : "A tribunal may accept, admit or call for 480 evidence at any stage of the proceedings before it and in such manner as it may think fit. " Rule 17 provides that at its first sitting the tribunal is. to call upon the parties to state their case. In rule 19 provision has been made for proceedings ex parte. Rule 21 provides that in addition to the powers conferred by sub section (3) of section 11 of the Act, a tribunal shall have the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of the following matters, namely, (a) discovery and inspection; (b) granting of adjournment; (c) reception of evidence taken on affidavit; and that the tribunal may summon and examine suo motu any person whose evidence appears to it to be material. It further says that the tribunal shall be deemed to be a civil Court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 189S. Rule 21 says that the representatives of the parties, appearing before a tribunal, shall have the right of examination, cross exami nation and re examination and. of addressing the Court or Tribunal when all evidence has been called. In rule 30 it is provided that a, party to a reference may be represented by a legal practitioner with the permission of the tribunal and subject to such conditions as the tribunal may impose. In section 11 (3) it is laid down that a tribunal shall have the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of the following matters, namely, (a) enforcing the attendance of any person and examining him on oath; (b) compelling the production of documents and material objects; (c) issuing commissions for the examination of witnesses; (d) in respect of such other matters as may be prescribed; and every in quiry or investigation by a tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code. It is difficult to conceive in view of these provisions that the Industrial Tribunal per forms any funCtions other than that of a judicial nature. The tribunal has certainly the first three requisites and characteristics of a Court as defined above. It has cer tainly a considerable element of the fourth also inasmuch as. 481 the tribunal cannot take any administrative action, the character of which is determined by its own choice. It has to make the adjudication in accordance with the provisions of the Act as laid down in section 7. It consists of persons who are qualified to be or have been judges. It is its duty to adjudicate on a serious dispute between employers and employees as affecting their right of freedom of contract and it can impose liabilities of a pecuniary nature and disobedience of its award is made punishable. The powers exercisable by a tribunal of this nature were considered in a judgment ' of the Federal Court of India in Western India Automobile Association vs Industrial Tribunal, Bombay (x), and it was observed that such a tribunal can do what no Court can, namely, add to or alter the terms or condi tions of the contract of service. The tribunal having been entrusted with the duty of adjudicating a dispute of a peculiar character, it is for this reason that it is armed with extraordinary powers. These powers, however, are derived from the statute. These are the rules of the game and it has to decide according to these rules. The powers conferred have the sanction of law behind it and are not exercisable by reason of any discretion vested in the members of the tribunal. The adjudication of the dispute has to be in accordance with evidence legally adduced and the parties have a right to be heard and being represented by a legal practitioner. Right to examine and cross examine witnesses has been given to the parties and finally they can address the tribunal when evidence is closed. The whole procedure adopted by the Act and the rules is modelled on the Code of Civil Procedure. In my opinion, therefore, the Industrial Tribunal has all the necessary attributes of a Court of justice. It has no other function except that of adjudicating on a dispute. It is no doubt true that by reason of the nature of the dispute that they have to adju dicate the law gives them wider powers than are possessed by ordinary Courts of law, but powers of such a nature do not affect (1) [1949]] F.C.R. 321. 482 the question that they are exercising judicial power. Stat utes like the Relief of Indebtedness Act, or the Encumbered Estates Act have conferred powers on Courts which are not ordinarily known to law and which affect contractual rights. That circumstance does not make them anything else but tribunals exercising judicial power of the State, though in a degree. different from the ordinary Courts and. to an extent which is also different from that enjoyed by an ordinary Court of law. They may rightly be described as quasi judicial bodies because they are out of the hierarchy of the ordinary judicial system but that circumstance cannot affect the question of their being within the ambit of article 136. It may also be observed that the tribunal is deemed to be a civil Court for certain purposes as laid down in rule 21 of the rules above cited and in section 11(3) of the Act. As a civil Court if it exercises any of the powers contem plated by this section its decisions would become subject to appeal to a District Judge and a fortiori this Court 's power under article 136. would at once be attracted in any case in respect of these matters. Again, in Chapter VI of the Act breach of the terms of an award has been made punishable by section 29 of the Act. The result therefore, is that disobedience of the terms of an award is punishable under the Act. That being so, a determination of the tribu nal not only affects the freedom of contract and imposes pecuniary liability on the employer or confers pecuniary benefits on the employees, but it also involves serious consequences as failure to observe those terms makes a person liable to the penalties laid down in Chapter VI. An award which has these serious consequences can hardly be said to have been given by a tribunal which does not exer cise some of the most important judicial functions of the State. Considerable stress was laid by Mr. Alladi on the provi sions of sections 15 and 19 of the Act. Section 15 enacts as follows : "(1) Where an industrial dispute has been referred to a Tribunal for adjudication, it shall hold its 483 proceedings expeditiously and shall, as soon as practicable on the conclusion thereof, submit its award to the appropri ate Government. (2) On receipt of such award, the appropriate Govern ment shall by order in writing declare the award to be binding. Provided that where the appropriate Government is a party to the dispute and in its opinion it would be inexpe dient on public grounds to give effect to the whole or any part of the award, it shall on the first available opportu nity lay the award together with the statement of its rea sons for not making a declaration as aforesaid before the Legislative Assembly of the province, or where the appropri ate Government, is the Central Government, before the Cen tral Legislature, an d shall, as soon as may be, cause to be moved therein a resolution for the consideration of the award; and the Legislative Assembly or as the case may be, the Central Legislature, may by its resolution confirm, modify or reject the award. (3) On the passing of a resolution under the proviso to sub section (2), unless the award is rejected thereby, the appropriate Government shall11 by order in writing declare the award as confirmed or modified by the resolution, as the case may be, to be binding. (4) Save as provided in the proviso to subsection (3) of section 19, an award declared to be binding under this section shall not be called in question in any manner. " As regards clause (4), it was conceded rightly that a law dealing with industrial disputes and enacted in the year 1947 could not in any way,affect the provisions of the Constitution laid down in article 136. It was however, strenuously urged that the award of the tribunal had no binding force by itself and unless the appropriate Govern ment made a declaration in writing under clause (2) of section 15, this award was a lifeless document and had no sanction behind it and therefore it could not have been contemplated that if would be appealable even by special leave. In my opinion, this contention is unsound. The provisions of clause (2) of 484 section 15 leave no discretion in the Government either to affirm, modify or reject the award. It is bound to declare it binding. It has no option in the matter. In such a situation it is the determination by the tribunal that matters. Without that determination Government cannot function. It does not possess the power either to adjudi cate the dispute or to alter it in any manner whatsoever. That power vests in the tribunal alone. The rights of the parties are really affected by the adjudication contained in the award, not by the Government 's declaration which is automatic. It is no doubt true that announcement of the award by the Government gives it binding force but that does not affect the question of the appealability of the determination under article 136 of the Constitution. The apposite answer to this contention may be given in the language of the decision in Rex vs Electricity Commissioners (1). The relevant passage runs thus : "It is necessary, however, to deal with what I think was the main objection of the Attorney General. In this case he said the Commissioners come to no decision at all. They act merely as advisers. They recommend an order embodying a scheme to the Minister of Transport, who may confirm it with or without modifications. Similarly the Minister of Trans port comes to no decision. He submits the order to the Houses of parliament, who may approve it with or without modifications. The Houses of Parliament may put anything into the order they please, whether consistent with the Act of 1919, or not. Until they have approved, nothing is decided, and in truth the whole procedure, draft scheme, inquiry, order, confirmation, approval, is only part of a process by which Parliament is expressing its will, and at no stage is subject to, any control by the Courts. It is unnecessary to emphasize the constitutional importance of this contention. Given its full effect, it means that the checks and safeguards which have been imposed by Act of Parliament, including the freedom from compulsory taking, can be removed, and new and onerous and (1) , at 207. 485 inconsistent obligations imposed without an Act of Parlia ment, and by simple resolution of both Houses of Parliament. I do not find it necessary to determine whether, on the proper construction of the statute, resolutions of the two Houses of Parliament could have the effect claimed. In the provision that the final decision of the Commissioners is not to be operative until it has been approved by the two Houses of Parliament I find nothing inconsistent with the view that they act judicially and within the limits pre scribed by Act of Parliament, and that the Courts have power to keep them within those limits. It is to be noted that it is the order of the Commissioners that eventually takes effect, neither the Minister of Transport who confirms, nor the Houses of Parliament who approve. can under the statute make an order which in respect of the matters in question has any operation. I know of no authority which compels me to hold that a proceeding cannot be a judicial proceeding subject to confirmation or approval, even where the approval has to be that of the Houses of Parliament. The authorities are to the contrary The observations, though they relate to a case which concerns the issue of a writ of prohibition and certiorari, have application to the present case. Here no discretion whatsoever has been left in the Government in ordinary cases to either modify or t0 reject the determination of the tribunal. The fact that the Government has to make a decla ration after the final decision of the tribunal is not in any way inconsistent with the view that the tribunal acts judicially. It may also be pointed out that within the statute itself a clue has been provided which shows that the circumstance that the award has to be declared by an order of Government to be binding does not affect the question of its appealability. In article 136 clause (2) express provi sion has been made for excepting from the ambit of article 136 the decisions of military courts and tribunals. It follows that but for the exception it was considered that these would be within article 136 clause (1). It is quite clear from the various provisions of the Army Act that the decisions of military tribunals or courts are subject to confirmation either by 486 the Commander in Chief or various other military authori ties. It is only after such confirmation that 'that can operate. It has never been considered that fact in any way affects the question of their appealability. Rex vs Minister of Health (1) also supports this view. There by the Housing Act, 1925, by section 40, a local authority which had prepared an improvement scheme was required to present a petition to the Minister praying that an order should be made confirming such scheme. Sub section (3) provided that the Minister after considering the peti tion may cause a local inquiry to be made and may by order confirm the scheme with or without conditions or modifica tions. In sub section (5) it was stated that the order of the Minister when made shall have effect as if enacted in this Act. It was held be the Court of Appeal that as the order made by the Minister was made without the statutory conditions having been complied with it was ultra vires and therefore a writ of certiorari should issue for the purpose of quashing it. Reliance was placed by Scrutton L.J. on Rex vs Electricity Commissioners (2). The same.view was ex pressed in Minister of Health vs The King (3). It was observed that judicial review by prohibition or a writ of certiorari was permissible if the Minister of Health in confirming the order exceeded his statutory powers. It is clear therefore that simply because an order has to be confirmed by a Minister or by the Government it in any way affects the power of judicial review. Reference may also be made to the observations in Smith vs The Queen (4). At page 623 it was observed that it is a common principle in every case which has in itself the character of a judicial pro ceeding that the party against whom a judgment is to operate shall have an opportunity of being heard. In this sense it can hardly be disputed that the proceeding before an indus trial Tribunal is a judicial proceeding. In my judgment, therefore, the contention raised by Mr. Alladi that this (1) (3) [1931] A.C. 494; (2) (4) 3 A.C. 245. 487 Court cannot exercise its powers under article because the decision of the tribunal has no force till a declaration is made by the Government cannot be sustained. As regards section 19, it was contended that an award declared by the appropriate Government under section 15 to be binding can only come into operation on such date as may be specified by the appropriate Government and can only remain in operation for such period not exceeding one year, as may be fixed by that Government and it was said that herein the Government had the power to state the period from which the award was to commence and the time for which it was to remain in force. This section does not, in my opin ion, affect the question of the appealability of the deter mination of the tribunal. Government has certain functions to perform in its own sphere after the award is made. In certain cases it is bound to declare that award binding. In other cases, when it is itself a party to the dispute, it has certain overriding powers and these overriding powers are that if it considers that the award is not in public interests it may refer it to the legislature. The legisla ture, however, has the power to modify, accept or reject the award. These overriding powers presuppose the existence of a valid determination by a tribunal. If that determina tion is in excess of jurisdiction or otherwise proceeds in a manner that offends against the rules of natural justice and is set aside by exercise of power under article 136, then no occasion arises for exercise of governmental power under the Act. Given a valid award, it could not be denied that the Government could exercise its powers in any manner it con sidered best and the exercise of that power is outside the constitution of this Court. In this connection reference was made to Moses vs Parker (1). The passage on which emphasis was laid reads as follows : "The Court has been substituted for the commissioners to report to the governor. The difference is that their report is to be binding on him. Probably it was (1) [1896] A.C. 488 thought that the status and training of the judges made them the most proper depositaries of that power. But that does not make their action a judicial action in the sense that it can be tested and altered by appeal. It is no more judicial than was the action of the commissioners and the governor. The Court is to be guided by equity and good conscience and the best evidence. So were the commissioners. So every public officer ought to be. But they are expressly exoner ated from all rules of law and equity, and all legal forms. How then can the propriety of their decision be tested on appeal ? What are the canons by 'which this Board is to be guided in advising Her Majesty whether the Supreme Court is right or wrong ? It seems almost impossible that decisions can be varied except by reference to some rule, whereas the Court making them is free from rules. If appeals were allowed, the certain result would be to establish some system of rules, and that is the very thing from which the Tasmanian Legislature has desired to leave the Supreme Court free and unfettered in each case. If it were clear that appeals ought to be allowed such difficulties would doubt less be met somehow. But there are strong arguments to show that the matter is not of an appreciable nature. " One would have expected that after this opinion the decision would have been that the Judicial Committee had no jurisdiction to entertain the appeal but their Lordships proceeded to base their decision not on this ground but on the ground that this was not a fit case for the exercise of the prerogative of the King. In my opinion, the observations made in that case have no apposite application to the provi sions of the statute with which we are concerned. I do not see any difficulty in this case in testing the propriety of the determination of the tribunal. This Court is not to substitute its decision for the determination of the tribu nal when granting relief under article 136. When it chooses to interfere in the exercise of these extraordinary powers, it does so because the tribunal has either exceeded its jurisdiction or has approached the questions referred to it in a manner which is likely to 489 result in injustice or has adopted a procedure which runs counter to the well established rules of natural justice. In other words, if it ,has denied a hearing to a party or has refused to record his evidence or has acted in any other manner, in an arbitrary or despotic fashion. In such cir cumstances no question arises of this Court constituting itself into a tribunal and assuming powers of settling a dispute. All that the Court when it entertains an appeal would do is to quash the award and direct the tribunal to proceed within the powers conferred on it and approach the adjudication of the dispute according to principles of natural justice. This Court under article 136 would not constitute itself into a mere court of error. Extraordinary powers have to be exercised in rare and exceptional cases and on well known principles. Considered in the light of these principles, there is no insuperable difficulty in the present case of the nature pointed out in the passage cited above. It was conceded that the High Court could exercise powers under section 226 and could quash an award but it was said that under article 136 this power should not be exer cised in an appeal. I do not see why ? Particularly when after the High Court has passed any decision on an applica tion made to it in exercise of the powers under section 226, that decision could be brought to this Court in appeal. In the matter of an industrial dispute where expedition is the crux of the matter, it is essential that any abuse of powers by such tribunals is corrected as soon as possible and with expedition. It may be mentioned that it is no novel practice for a court empowered to grant special leave to exercise its powers even though there may be intermediate rights of appeal or other remedies available, if it is considered essential to do so in extraordinary situations. Vide Bent wick 's Privy Council Practice, 3rd Edn., page 125. Therein it is stated as follows : "In several cases from Jamaica, the Privy Council grant ed leave to appeal to the Queen in Council directly from the Supreme Court, without an intermediate appeal (which would have been attended with much 490 expense and delay) to the Court of Error in the island, there being in each of those cases manifestly some point of law raised which deserved discussion. " The cases were In Re Barnett(1), Harrison vs Scott (2), and Attorney General of Jamacia vs Manderson (s). The phraseology employed in article 136 itself justifies this course. The article empowers this Court to grant special leave against sentences or orders made by any court. In all other articles of the Constitution right of appeal is con ferred against final decisions of the highest court of appeal in the country but under this article power is given to this Court to circumvent that procedure if it is considered necessary to do so. I am, therefore, of the opinion that the mere circumstance that a remedy in the nature of a writ of certiorari is open to the petitioners does not necessarily lead to the conclusion that the power of this Court under article 136 is circumscribed by that circumstance. Whenever judicial review is permissible in one form or another, this Court as the highest Court in the land can exercise its special powers and circumvent ordinary procedure by granting special leave. What it has to ulti mately decide it can decide earlier. I now proceed to examine some of the cases to which reference was made by Mr. Alladi. Three Australian cases were cited which concern the construction of sections 51, 71 and 72 of the Australian Constitution (63 and 64 Vict., c. 12). Section 72 requires that every Justice of the High Court and every Justice of any other Court created by the Parliament of the Common wealth shall subject to the power of removal contained in the section be appointed for life. Section 71 confers the whole judicial power of the Commonwealth upon the Courts therein mentioned and no other tribunal or body can exercise that power. Every Court referred to in section 71 has to be constituted in the manner provided by section 72. The ques tion in these cases was as to the meaning of the phrase "judicial power of the Commonwealth. " Similar (1) 4 Moo. 453. (2) 5 Moo. 357. (3) 6 Moo. 239. 491 phraseology has not been used in any part of the Constitu tion of India and in these circumstances it is difficult to derive any assistance from these decisions in solving the problem before us. The Constitution of India is not mo delled on the Constitution of Australia and that being so, any observations made in decisions given under that Consti tution cannot be held to be a safe guide in the interpreta tion of language employed in a Constitution differently drafted. The first of these cases is Waterside Workers ' Federa tion of Australia vs J.W. Alexander Ltd. (1). Therein it was held that the power conferred by the Commonwealth Concilia tion and Arbitration Act 1904 1915 upon the Commonwealth Court of Conciliation and Arbitration to enforce awards made by it is part of "the judicial power of the Commonwealth "within the meaning of section 71 of the Constitution, and can only be vested in the courts mentioned in that section. Mr. Alladi placed reliance on a passage at page 467 in the judgment of Isaacs and Rich JJ., which reads as follows : "The arbitral part of the Act, therefore, is quite within the power of pl. xxxv, and is not intended by the Act to be exercised by an ordinary Court of Justice, which, it is suggested, Parliament by some strange perversity proceed ed to destroy at birth. It is true that enforcement provi sions are found. . But all this was in imitation of the State Acts of Arbitration, and not in reliance on the Judi cature Chapter of the Federal Constitution. The arbitral portion of the Act is, in our opinion, perfectly good, subject to its severability from any other portion which may be bad. " It was argued that the Industrial Tribunal here was an arbitration tribunal of the same kind as in Australia and exercises similar functions. It is however pertinent to observe that the phraseology employed in section 15 of the Indian Act is different from that used in the Australian statute. The Indian statute has constituted different bodies for different purposes. An Industrial Tribunal has been constituted (1) 25 C.L.R. 63 492 only to discharge one function of adjudication. It is not described as an arbitral tribunal. The Act has avoided the use of the word "arbitration" either in preamble or in any of its relevant provisions though the determination has been named as an award. In these circumstances it is unsafe to seek any guidance from observations made in this case. The next case to which reference was made is Rola Co. (Australia) Proprietary Ltd. vs The Commonwealth (1). The question here was whether the Women 's Employment Board constituted under the Women 's Employment Act, 1942, did not exercise the judicial power of the Commonwealth. It was held that the Board exercised functions which were arbitral in character. Emphasis was laid on a passage occurring in page 198 of the report which reads as follows : "An industrial award lays down rules of conduct for the future. It does not purport to ascertain and enforce exist ing rights; it is directed to the creation of new rights. It is urged on behalf of the plaintiff that a determination of the Committee does not create a rule of conduct binding the parties for the future, but that it authoritatively deter mines a possibly controverted question of fact and that the making of such an authoritative determination is necessarily an exercise of judicial power. Reference is made to the frequently quoted statement of Griffith C.J. in Huddart Parker & Co. Pty. Ltd. vs Moorehead (2), approved by the Privy Council in Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation (8):__ "I am of opinion that the words 'judicial power ' as used in section 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controverises between its subjects or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authori tative decision (whether subject to appeal or not) is called upon to take action." (1) ; (2) a C.L.R. 330 at 357. (3) 493 Reg. 5C gives Committees power. to decide controversies between subjects relating to their rights and the regulation purports to make those decisions binding and authoritative. I am not satisfied that the words of Griffith C.J. are properly interpreted when it is said that they mean that a power to make binding and authoritative decisions as to facts is necessarily judicial power. I direct attention to the concluding words " is called upon to take action. " In my opinion these words are directed to action to be taken by a tribunal which has power to give a binding and authorita tive decision. The mere giving of the decision is not the action to which the learned Chief Justice referred. If a body which has power to give a binding and authoritative decision is able to take action so as to enforce that deci sion, then, but only then, according to the definition quoted, all the attributes of judicial power are plainly present. I refer to what I say more in detail hereafter, that the Privy Council, in the Shell case (1), in which approval was given to the definition quoted, expressly held that a tribunal was not necessarily a Court because it gave decisions (even final decisions) between contending parties which affected their rights. In Huddart Parker 's case (2), Isaacs 1. referred to the statement of Palles C.B. in R.v. Local Government Board for Ireland (3) "to erect a tribunal into a 'Court ' or 'juris diction ', so as to make its determinations judicial, the essential element is that it should have power, by its determination within jurisdiction, to impose liability or affect rights." "By this," said the learned Chief Baron, "I mean that the liability is imposed, or the right affected by the determination only, and not by the fact determined, and so that the liability will exist, or the right will be affected, although the determination be wrong in law or in fact. It is otherwise of a ministerial power. If the existence of such a power depends upon a contingency, al though it may be necessary for the officer to determine whether (1) (2) ; at 383. (3) at p. 373. 494 the contingency has happened, in order to know whether he shall exercise the power, his determination does not bind. The happening of the contingency may be questioned in an action brought to try the the act done under the alleged exercise of the power. But where the determination binds, although it is based on an erroneous view of facts or law, then the power authorizing it is judicial. There we get a modern use of the term 'judicial power '. " This state ment of the characteristics of judicial power looks to what, in Waterside Workers ' Federation of Australia vs Gilchrist, Watt & Sanderson Ltd.(1), Isaacs and Rich JJ. referred to as the creation of instant liability in specified persons as distinct from laying down a rule or standard of conduct for the future. The decision of an ordinary Court that B is bound to pay money to A applies a pre existing standard of rights and duties not created by the Court itself, with the result that there is an immediately enforceable liability of B to pay to A the sum of money in question. The decision of the Wom en 's Employment Board does not create any such liability, nor does the determination of a Committee of Reference create any such liability. In order to impose an immediale ly enforceable liability upon any employer, for example, to pay wages to a particular female, it would be necessary for the female or some person on her behalf (see reg. 9A) to sue in a court of competent jurisdiction. If such a proceeding succeeded there would then be a liability created by the determination of the court. such a proceeding the determina tion of the Committee of Reference would be evidence of the facts to which it related, but that determination would not in itself create "liability. " The concluding words of the passage quoted above at once distinguish the present case from the Australian case. The award given by an Industrial Tribunal in respect either of bonus or higher wages, etc. is enforceable by its own force and by the coercive machienary of the Act and it is not merely a declaration of a character that furnishes a cause of action to the employee to bring a suit on its foot to recover the C.L.R. 482, 512. 495 wages. An arbitral tribunal 's decision cannot be enforced unless it has the sanction of a Court of justice behind it but the award of the Tribunal is enforceable under the Act itself by the coercive machinery provided therein. It is the terms of the award that are enforceable and not the terms of the order made by the Government. It is the breach of the terms of the award that is punishable and not any breach of Government 's order. The Government itself is bound to declare the award binding and it has no option whatsoever in the matter. It is no doubt true that the tribunal has not only to decide the existing rights and liabilities of the parties and it can lay down rules of conduct for the future but it does so because by law it is authorised to do so. Its decision carries the sanction with it. The Government is bound to give effect to it and the statute enforces it by coercive machinery. In my view, therefore, this decision again has no relevancy to the present case. The third case to which reference was made is Shell Co. of Australia vs Federal Commissioner of Taxation (1). That was an income tax matter and the decision has been consid ered in an earlier part of this judgment. Reference was also made to Mohammad Ahmad vs Governor General in Council ("), in which it was held that an improvement trust was not a civil Court subordinate to the High Court under section 115 of the Code of Civil Procedure. That has no bearing to the matter in issue here. Similar point was discussed in Hari vs Secretary of State for India (3). Labour Relations Board vs John East Iron Works Ltd. (4) is a Canadian case and the decision proceeded on the same lines as in the Australian cases. Mr. Sen appearing for the respondents placed reliance on O 'Connor vs Waldron (5). The relevant passage occurs at page 81 which runs thus : The law as to judicial privilege has in process of time developed. Originally it was intended for the protection of judges sitting in recognised Courts of (1) (3) I.L.R. (2) I.L.R. (4) A.I.R. 1949 P.C. 129. (5) , 496 Justice established as such. The object no doubt was that judges might exercise their functions free from any danger that they might be called to account for any words spoken as judges. The doctrine has been extended to tribunals exer cising functions equivalent to those of an established Court of Justice. In their Lordships ' opinion the law on the subject was accurately stated by Lord Esher in Royal Aquari um etc. Ltd. vs Parkinson (1), where he says that the privi lege applies wherever there is an authorized inquiry which, though not before a Court of Justice, is before a tribunal which has similar attributes. This doctrine has never been extended further than to Courts of Justice and tribunals acting in a manner similar to that in which such Courts act '" The learned counsel contended that the. word "tribunal" in article 136 could only have reference to those tribunals which exercise functions equivalent to that of a Court of Justice. I have no hesitation in holding that the Industrial Tribunal has similar attributes as that of a Court of Jus tice in view of the various provisions to which I have made reference. Reference was also made to certain passages occuring in pages 422 and 428 of Toronto Corporation vs York Corporation (2). That was a case of the Municipal Board of Ontario. It was held there that the Board was merely an administrative tribunal. Next reliance was placed on R.v. National Arbitration Tribunal, Ex parte Horatio Crowther & Co. Ltd.(3). That dealt with the powers of tile National Arbitration Tribunal. In my opinion this citation also is not of much assistance. It was again urged by Mr. Alladi that the word "tribu nal" was introduced in the article to provide for cases of tribunals like the Board of Revenue. The suggestion does not appear to be sound, because a Revenue Board has all the attributes of a Court of justice and falls within the defi nition of the word "Court" in matters where it adjudicates on rights of parties. (6) (7) [1938] A.C. &15. (8) 497 The word "tribunal" has been used in previous legisla tion in a number of statutes and it is difficult to think that the Constitution when it introduced this word in arti cle 136 intended to limit its meaning to only those tribu nals which though not described as Courts strictly speaking, were discharging the same or analogous functions as were being discharged by Courts. For the reasons given above I am of the opinion that the word "tribunal" in article 136 has to be construed liberally and not in any narrow sense and an Industrial Tribunal inasmuch as it discharges functions of a judicial nature in accordance with law comes within the ambit of the article and from its determination an application for spe cial leave is competent. The question now to determine is whether the exercise of overriding powers of this Court can be justified on any ground whatsoever in the present case. As I have already said, exceptional and extraordinary powers of this character can only be justifiably used where there has been a grave miscarriage of justice or where the procedure adopted by the Tribunal is such that it offends against all notions of legal procedure. Dr. Bakshi Tek Chand for the petitioner bank urged four grounds justifying exercise of the special jurisdiction of this Court. Firstly, he contended that the word "victimiza tion" used in clause 18 of the reference had been interpret ed in such a manner by the Tribunal that it had usurped jurisdiction to decide disputes which were never referred to it. In my view this is not a matter which can justify the exercise of the powers under article 136. This Court is not a mere Court of error. The word "victimization" has not been defined in the statute and is not in any sense a term of law or a term of article It is an ordinary English word which means that a certain person has become a victim, in other words, that he has been unjustly dealt with. It was argued that the word has acquired a special meaning in regard to industrial disputes and connotes a person who becomes a victim of the employer 's wrath by reason of his trade union activities and that the word cannot relate to a person who has been merely unjustly dismissed. Be that as it may. 498 The determination of the Tribunal has not been materially affected by this interpretation of the word to any large extent and that being so, it does not call for the exercise of the special power. The second ground urged was that the Tribunal has erred in ordering reinstatement of persons who were guilty of an illegal strike. It was contended that section 23 (b) of the Act has been wrongly construed by it and as a result of this misconstruction persons who were guilty of a wrong and who could not have been reinstated have been reinstated. In brief, the argument was that under section 23(b) when a matter has been referred to a tribunal in respect of an earlier strike, any strike during the pendency of that dispute is an illegal strike and that was the situation here. The employees of the bank had struck work in December, 1948. That dispute had been referred to an Industrial Tribunal. It was during the pendency of that dispute that another strike took place which led to the dismissal of the employees who have now been reinstated by the present award. The Calcutta High Court has held that a strike during the pendency of the period of truce and during the pendency of an earlier dispute before a tribunal is illegal even if it is brought about as a result of fresh and new demands which are not covered by the earlier dispute. One of the members of the Tribunal thought that the decision laid down the law correctly on the point, but the other member thought that the decision was erroneous. Both of them, however, agreed that whether the strike was legal or illegal that point did not in any way affect the question that they had to decide under issue 18. The consequences of an illegal strike are laid down in the Act and certain penalties are provided therein. The Act nowhere states that persons guilty of illegal strike cannot be reinstated. Be that as it may. The reference to the Tribunal was made by the Government in respect of an illegal. strike and the Tribunal was bound to give its decision on the reference. Item 18 of schedule II clearly empowers the tribunal to deal with cases of victimi zation as a result of the third strike which the petitioner described as illegal. The Tribunal may be 499 wrong in the view they have taken but it seems to me this is again not a question of that vital character which would justify the grant of special leave under article 136. The next question raised by the learned counsel that the award of the Tribunal is based on no evidence whatsoever. This contention requires serious consideration. I have examined the proceedings of the Tribunal and it appears that all ' it did was that as required by rule 17 at the first sitting it called upon the parties to state their cases. Mr. Parwana on behalf of the employees stated their respec tive cases and Mr. Ved Vyas who represented the bank stated the bank 's case and after the cases had been stated the proceedings terminated and both parties addressed arguments and the Tribunal proceeded to give its award. Whether the charge of victimization in individual cases was proved or not depended on proof of certain facts which had to be established by evidence. The onus of proving victimization clearly rested on the employees. No evidence whatsoever was led on their behalf. The statement of the case by Mr. Parwana was not on oath. There was no examination or cross examination of Mr. Parwana. No affidavit supporting the facts stated by Mr. Parwana was filed by him or by any employee. Mr. Parwana produced an abstract of the corre spondence but the original correspondence was not produced. The bank disputed the facts stated by Mr. Parwana by means of a lengthy affidavit. It seems no reference was made even to this affidavit by the Tribunal. No counter affidavit was filed in reply to the facts stated in this 'affidavit. The bank wanted to call some evidence. Particular reference was made in respect of a scurrilous letter issued by one Bhatta charya on behalf of the employees and distributed by them, which it is alleged considerably shook the credit of the bank. This opportunity was denied to it. It was contended before us that the bank wanted to lead evidence on certain matters and that the opportunity to lead it was denied. There is nothing on the record to support this contention. The result therefore is that the facts on the basis of which allegations of victimization have been 64 500 made are neither supported by an affidavit nor by any evi dence and the award is based on no evidence whatsoever. The Act as well as the rules framed under it contemplate a proper hearing, discovery and inspection of documents and production of evidence, etc. None of this procedure was followed by the Tribunal. It is difficult to see on what material the Tribunal has given its award as there is none existing on the present record and the respondents ' counsel could not point out to any such material. At one time during the argument I was inclined to think that possibly both parties by agreement consented to treat the statement of case as evidence in the case and did not wish to produce any other evidence, but the affidavit filed on behalf of the bank disputes all the facts stated by Mr. Parwana. The only evidence on the record is the bank 's affidavit and if the facts contained in the affidavit are accepted, then the determination made by the Tribunal cannot stand. It seems to me therefore that the procedure adopted by the Tribunal was against all principles of natural justice and the award is thereby vitiated and should be set aside. It happens that when the safeguard of an appeal is not provided by law the tendency sometimes is to act in an arbitrary manner like a benevolent despot. Benevolent despotism, however, is foreign to a democratic Constitution. The members of the Tribunal seem to have thought that having heard the state ment of the cases of the parties they could proceed to a judgment on their own view of its right or wrong unaided by any material. That kind of procedure to my mind is unwar ranted by the statute and is foreign to a democratic Consti tution. In these circumstances it is the compelling duty of this Court to exercise its extraordinary powers and to quash such an award. The last contention raised by Bakshi Tek Chand was that though a Tribunal consisting of three persons was appointed to adjudicate on the dispute, the award has only been signed by two of them. Reference in this connection was made to section 16 of the Act which says that the award of a Tribu nal shall be in writing and shall be signed by all the members of the 501 Tribunal and that nothing in the section shall be deemed to prevent any member of the Tribunal from recording a minute of dissent. The provisions of the section are mandatory and have not been complied with. It is common ground that the case was stated by the parties at a sitting when all the members of the Tribunal were present and the arguments were heard by all of them. No sitting took place subsequent to this which would have necessitated the carrying on of pro ceedings by two members of the Tribunal by a quorum. When the matter has been heard by all the three members, the award should have been given by all of them. Therefore the award given by two of them is not the award of the Tribunal constituted by the Government. It is therefore vitiated and has to be quashed. Reference in this connection was made to section 8 of the Act which reads as follows : "If the services of the chairman of a Board or of the chairman or other member of a Court or Tribunal cease to be available at any time the appropriate Government shall, in the case of a chairman, and may in the case of any other member, appoint another independent person to fill the vacancy, and the proceedings shall be continued before the Board, Court or Tribunal so reconstituted. " The Tribunal was never reconstituted by the Government by any notification. Under section 7 a Tribunal has to be constituted in accordance with the provisions of the Act by the Government. The Government having constituted a Tribunal of three persons it had power under section 8 to reconsti tute it but did not exercise that power. The result there fore is that the Tribunal as originally constituted was not the Tribunal which gave the award in this reference. Only two members have given the award. It was said that one of the members ceased to be available and the Government was not bound to fill up that vacancy. There is no material on the record to prove whether any member became unavailable and if so, when. But even if a member becomes unavailable and the Government does not choose to fill up the vacancy, still the Government has to reconstitute the Tribunal by saying that 502 two members will now constitute the Tribunal. An affidavit with two telegrams annexed was filed before "us on behalf of the respondents which disclosed that Mr. Chandrasekhara Aiyar who was one of the members of the Tribunal, in Novem ber, 1949, was appointed a member of the Boundary Commission in Bengal and that the other two members sent a telegram to the Labour Ministry asking it to fill up the vacancy or to reconstitute the Tribunal. The advice given by the Ministry was that they could proceed as they were and that the Gov ernment would later on, if necessary, fill up the vacancy. We are not concerned whether the advice given was right or wrong. But the fact remains that the Tribunal was never reconstituted and it was not denied that Mr. Chandrasekhara Aiyar is now sitting in the same Tribunal without being again nominated to it and the Tribunal is hearing the same reference under the other issues referred to it. Moreover, I do not see why after having heard the reference he could not give the award even if he was in Calcutta or sign the award given by the other two members. The idea of three persons hearing a case and two of them deciding it is repug nant to all notions of fairness. It may well have been that the opinion of the third may have influenced the other two or the decision arrived at may have been quite different. It so happened in this case that two members of the Tribunal differed on an important question of law but somehow adjust ed their differences and gave a unanimous award. The presence of the third in such a situation may have very vitally affected the result. After a good deal of thought I feel that it would be most dangerous for this Court to condone proceedings of this character. If exceptional powers are not exercised even when a body legally constitut ed under the statute does not function according to the statute, then they defeat the very purpose of the Constitu tion. Reference in this connection may be made to the deci sion of their Lordships of the Privy Council in Fakira vs King Emperor (1). In that case section 377 (1) A.I.R. 1937 P.O. 119. 503 of the Code of Criminal Procedure as modified and as ap plicable to Hyderabad stood as follows : "In every case so submitted, the confirmation of the sentence or order passed by the Court of the Resident at Hyderabad shall, when such Court consists of two or more Judges, be made, passed and signed by at least two of them." In Fakira 's case the order of confirmation was only made, passed and signed by one of them, though the Court of the Resident consisted of two Judges. Their Lordships held that the peremptory provisions of section 377 had not been complied with and that the sentence passed had not been validly confirmed. The appeal was allowed and the case was remitted to the Court of the Resident. The provisions of section 18 of the are also of a peremptory nature. Reference may also be made to a case arising under the Bar Councils Act reported in In re An Advocate, Madras(1), where one member of the tribunal under that Act had died and had not signed the report. It was held that the tribunal ceased to be properly constituted and that the report could not be considered. For the reasons given above I would quash this award and direct that the Tribunal which is still functioning should readjudge item 18 of the reference and then submit its award on this point to Government. The employees cannot be held responsible for the method of procedure adopted by two members of the Tribunal. Each party will have to bear their own costs in this Court. The appeal is allowed to the extent indicated above. MUKHERJEA J. This appeal, which has come up before us on special leave, is directed against an award made by the All India Industrial Tribunal, dated the 19th of January, 1950. The Tribunal was constituted by the Central Govern ment under section 7 of the and a large number of disputes (1) A.I.R. 1942 Mad. 504 between several Banking companies and their emiployees were referred to it for adjudication. Amongst these Banking companies were the Bharat Bank Limited, the appellants before us, and the disputes between them and their employ ees, who are respondents in this appeal, related inter alia to a number of cases of retrenchment and victimization which the latter alleged against the former. The Tribunal held its enquiry in Delhi in respect to the cases which were connected with the Delhi Branch of the appellants and as a result of the same, made their award on 19th January, 1950, holding that 26 persons, who were employees under the appel lants, were improperly dismissed by the latter and should be reinstated. Further directions were given in the award regarding the salaries and allowances that were to be paid to the dismissed employees. This award was declared to be binding in terms of the provisions of sections 15 and 19 of the by the Central Government on 30th of January, 1950, and it was directed to remain in operation for a period of one year. It is against this award that the present appeal has been preferred. On behalf of the Indian Union which appeared as an intervener in this appeal, as also on behalf of the respond ents, a preliminary objection was taken challenging the competency of the appeal. The contention put forward by Sir Alladi Krishnaswami Aiyar, who appeared for the inter vener, in substance, is that article 136 of the Indian Constitution, under which special leave was prayed for and obtained by the appellants in this case, does not contem plate or include within its scope an appeal against an award of an Industrial Tribunal which is not vested with, and cannot exercise, judicial powers, and the decision of which cannot, therefore, rank as a judicial determination. The Industrial Tribunal, it is said, is an administrative body exercising quasi judicial functions and this Court cannot be called upon to exercise the powers of an appellate Court in respect to the decision of a tribunal which is really a part of the administrative machinery of the Govern ment. 505 In reply to this objection, it has been urged by Sir Tek Chand that the Tribunal constitutedunder the is really and in substance, a Court or judicial tribunal which is invested with the power and authority to exercise judicial functions; and in any event, the language of article 136 of the Constitution is wide enough to include an appeal from the award or determination of any tribunal, be it judicial or not. There are two questions which require consideration on this preliminary point. The first is, whether the award or decision of an Industrial Tribunal constituted under the is a judicial decision in the proper sense of the expression or is it the pronouncement of an administrative or quasi judicial body which may exercise some of the functions of a Court of law but is really not so ? The other question turns upon the construction to be put upon article 136 of the Constitution particularly on the meaning to be given to the words 'tribunal ' and 'determina tion ' occurring therein; and the question is whether the language is wide enough to include an adjudication or award of an Industrial Tribunal. As regards the first question, it is to be noticed that owing to the intricate and complex system of Government that exists in a modern State and the vast expansion of social legislation of all sorts that have taken place in England and in other countries including our own, within the last few decades, the so called administrative and quasi judicial tribunals have come to be a permanent feature of our social and political system. They function as adjudicating bodies in disputes concerning a large number of economic and. social affairs. In a sense they are governmental bodies appertaining to the executive and not to the judicial branch of the State, though in various matters they are armed with judicial powers analogous to those normally carried out by Courts of law. The question is, what are the tests or distinguishing features, if any, which distinguish an admin istrative tribunal from a Court of law. Once we are able to formulate these tests, we would be 506 in a position to determine whether a Tribunal functioning under the is or is not a judicial tribunal properly so called. Whether a particular function or activity is judicial or not is often a difficult question to decide. The point was elaborately dealt with by Lord Sankey who delivered the judgment of the Privy Council in Shell Co. of Australia vs Federal Commissioner of Taxation (1). The question raised in that case was whether the Board of Review, which was set up in 1925 under the Commonwealth Income Tax legislation, was a Court exercising judicial powers of the Commonwealth ? The High Court of Australia decided by a majority that it was an administrative and not a judicial tribunal and this majority judgment was affirmed in appeal by the Privy Council. Lord Sankey remarked in course of his judgment that "the decided cases show that there are Tribunals which possess many of the trappings of a Court but which, nevertheless, are not Courts in the strict sense of exercising judicial power. Mere externals do not make a direction by an ad hoc tribunal to an administrative officer, an exercise by a Court of judicial power. " The actual decision in the case rested on the ground that the Board of Review could not be a judicial tribunal, as its orders were not conclusive for any purpose whatsoev er. The decision, it seems, has only a negative value. The Lord Chancellor enumerated a series of negative propositions which stated inter alia that a tribunal is not necessarily a Court because two or more contending parties appear before it, nor because it hears witnesses, or gives a final deci sion which affects the right of the parties. What the real or positive test is, the Privy Council did not care to formulate, though the judgment quoted, with approval, cer tain observations of Griffith C.J. given in another Austra lian case, namely, Huddart Parker & Co. vs Moorehead(" '), which to some extent neutralised the effect of the negative tests enumerated in the judgment. The observations of Grif fith C.J. are as follows : (1) (2) ; , at p. 357. 507 "I am of opinion that the words 'judicial power '. mean the power which every sovereign authority must have of necessity to decide controversies between its subjects, or between itself and its subjcets, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " It may be stated that the authority to hear and decide on evidence between a proposal and an opposition though it is one of the most essential of judicial powers, may be present is an administrative tribunal also. In the majority of cases, administrative bodies are also armed with the powers of a Court of Justice in summoning witnesses, admin istering oaths and punishing disobedience to its order made for the purpose of effecting its enquiries (1). As a matter of fact, it is usual to find that those features which were at one time attached exclusively to activities carried on in a Court of law are being extended to committees, commissions or boards conducting enquiries under directions or supervi sion of the Government. The presence or absence of these features, therefore, does not furnish any conclusive test to determine whether a particular body is a judicial body or not. In the observations of Griffith C.J. quoted above, the learned Chief Justice laid stress on the power to make a binding and authoritative decision as the essential element in the exercise of judicial power. The exact meaning and implication of these expressions were the subject matter of discussion in later Australian cases and it was held by the majority of the Judges in Rola Co. (Australia) Pty. Limited vs The Commonwealth (2), that t. hey do not simply mean that if an authority is given power to decide controverted ques tions of fact and its determination is made binding on the parties to the controversy, it would be sufficient to show that judicial power was entrusted to such authority. A determination, it was pointed out, may be binding on the parties (1) Vide W F. O 'Connor vs Waldron at p, 82. ; 508 in the same sense as a contract is binding on them. What is necessary is that the determination by its own force and without the aid or instrumentality of any other authority or power must affect the rights and obligations of the parties; or in other words, the decision itself irrespective of the facts decided, must create rights and impose obligations; and it should be enforceable as such under the ordinary law of the land. This undoubtedly is one of the fundamental tests which distinguishes a judicial body from one which exercises administrative or quasi judicial functions. Some times the decision or report of the administrative tribunal becomes operative after it is accepted by the head of the department under which the tribunal conducted its enquiries and it is then enforced by some sort of administrative process; or it might create rights between the parties which have to be sued upon in the ordinary way in a Court of law and it is only on the basis of a judgment or decree that is obtained in such action that relief could be had by the party. The essence of judicial determination is that nothing further remains to be done except the enforcement of the judgment, a step which is compelled automatically by the law of the land. The other fundamental test which distinguishes a judicial from a quasi judicial or administrative body is that the former decides controversies according to law, while the latter is not bound strictly to follow the law for its decision. The investigation of facts on evidence adduced by the parties may be a common feature in both judicial and quasi judicial tribunals, but the difference between the two lies in the fact that in a judicial proceeding the Judge has got to apply to the facts found, the law of the land which is fixed and uniform. The quasi judicial tribunal on the other hand gives its decision on the differences between the parties not in accordance with fixed rules of law but on principles of administrative policy or convenience or what appears to be just and proper in the circumstances of a particular case. In other words, the process employed by an administrative tribunal in coming to its decision is not what is known as 'judicial 509 process ' (x). Sir Maurice Gwyer in his deposition before the Committee on Minister 's Powers appointed by the English Parliament in 1929 stated that "a clear distinction is to be drawn between judicial and quasijudicial powers. " The 'judicial power ' was defined by the witness as a power to decide a question of legal right in a dispute between par ties involving either a finding of fact or the application of a fixed rule or principle of law or involving both. "The quasi judicial power," he defined as meaning "the power of giving decisions on questions of differences of an adminis trative and not justiciable character which cannot be deter mined by reference to any fixed law or principle of law but are matters of administrative discretion and judgment "(2). In Cooper vs Wilson (3), Scott L.J. quoted with approval and adopted as the basis of his judgment the following passage from the report of the above committee: "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertain ment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2) but does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister 's free choice. " (1) See Robson 's Justice and Administrative Law, p. 74. (2) Vide Committee of Minister 's Powers, Minutes of Evd., Vol. II, pages 15 16 and also Robson 's Justice and Adminis trative Law, p. 319. (3) 510 In our opinion these statements correctly bring out the distinction between a judicial tribunal and an administra tive body which exercises quasi judicial functions. These being the essential features which distinguish the two classes of tribunals, we would have to ascertain with refer ence to the provisions of the , which class or category of tribunals an Industrial Tribunal comes under. The object of the , as set out in the preamble, is "to make provisions for investigation and settlement of industrial disputes and for certain other purposes hereinafter appearing. " The word "settlement" suggests the idea of establishing compromise between the interests of disputing parties. There are three classes 'of authorities provided for by the Act who are entrusted with the powers and duties of investigation and settlement of industrial disputes. First of all, there are conciliation officers or Boards of Concil iation, whose duties mainly are to induce parties to come to a fair and amicable settlement amongst themselves. Second ly, there are Courts of Enquiry and though they are ' de scribed as Courts, their duties end with investigation into the matters referred to them and submitting reports there upon to the appropriate Government. Lastly, there are Industrial Tribunals composed of independent persons who either are or had been Judges of a High Court or District Judges or are qualified for appointment as High Court Judges. It will be seen from the descriptions given above that the Board of Conciliation or Court of Enquiry constituted under the could, on no account, be regarded as judicial tribunals. To enable them to investi gate facts they are however armed with certain powers of compelling attendance of witnesses and production of docu ments etc. These provisions are to be found in section 11 of the Act. The significant thing to note is, that there is no distinction made in this respect between Conciliation Boards and Courts of Enquiry on the One hand and Industrial Tribunals on the other. The same powers are conferred 511 the three classes of authorities without any distinction whatsoever and sub section (3) of section 11 further lays down that any enquiry or investigation by a Board, Court of Enquiry or Tribunal shall be deemed to be a judicial pro ceeding within the meaning of sections 193 and 228 of the Indian Penal Code. This means that proceedings before an Industrial Tribunal or for the matter of that before the other two bodies also could be deemed to 'be judicial pro ceedings only for certain specified purposes. The express provision making the proceedings judicial proceedings for those purposes only emphasises that they are not judicial proceedings otherwise. Under section 15 (1), the Industrial Tribunal has got to submit its award to the appropriate Government and sub section (2) lays down that on receipt of such an award, the appropriate Government shall by order in writing declare the award to be binding. A different provision has been made in regard to cases where the Government itself figures as a party to the dispute. In such cases, if the Government considers it inexpedient on public grounds to give effect to the award either in whole or in part, it may, at the earli est opportunity, lay the award for consideration before the Provincial or Central Legislative Assembly as the case may be and the Legislative Assembly may. by its resolution confirm, modify or reject the award. After the resolution is passed, the Government is to declare the award so con firmed or modified to be binding [see sub section (3)]. Sub section (4) of section 15 expressly lays down that an award declared to be binding under any two of the previous sub sections shall not be called into question in any manner whatsoever. The Government is not merely to declare the award binding but under section 19 (3), it has got to speci fy the date when the award would come into force and also to fix the period during which it would remain binding, and this period shall not exceed one year. It will be seen, therefore, that there is nothing in the from which it could be inferred that the Industrial Tribunal really functions as a Court exercis ing judicial functions. Regarding 512 the trappings or the external indicia of a Court, its i position is almost the same as that of the Board of Con ciliation or Court of Enquiry and Bakshi Sir Tek Chand concedes that the latter are not judicial tribunals at all. The powers of an Industrial Tribunal are certainly wider than those of the other bodies, but it has no power to make a final pronouncement which would proprio vigore be binding on, and create rights and obligations between the parties. It is for the appropriate Government to declare the award to be binding and the part which the Government plays in such matters is not a mechanical part merely, for the award can really become operative only when the date of its commence ment and the period of its duration are fixed, and it is for the Government and Government alone to. fix the same. With regard to the other class of cases, where the Government itself is one of the parties to the dispute, the position is still worse. An award in such cases is always subject to the contingency of being rejected or modified by the legis lature before whom it could be placed for consideration at the option of the Government. Where a contingency like this is attached to an award, it can never be regarded as a final or binding decision which is of the essence of a judicial proceeding. The fact that in cases of disputes between private employers and their workmen, the Government has to accept the award as it is, makes no difference in principle. Possibly, this rule was made in consideration of the status and training of the people who constitute the Tribunal, but nevertheless the determination cannot acquire any authority or force, so long as the appropriate Government does not make the declaration and fix the time of its operation as mentioned above. In regard to the other class of awards, where the Government is one of the disput ing parties, the award on the face of it is neither the final nor the authoritative pronouncement on the matter in dispute, and it is always in the powers. of one of the disputing parties to subject it to further scrutiny at the hands of the legislature who can reject the whole award or effect such changes in it as it considers proper. This shows the real nature of the Tribunal and it is not and 513 could not be suggested that the Industrial Tribunal is a Tribunal which exercises judicial functions when the dispute is only between private employers and their workmen, and it ceases to be such when the employer is the Government it self. We would now examine the process by which an Industrial Tribunal comes to its decisions and I have no hesitation in holding that the process employed is not judicial process at all. In settling the disputes between the employers and the workmen, the function of the Tribunal is not confined to administration of justice in accordance with law. It can confer rights and privileges on either party which it con siders reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or give effect to the contractual rights and obligations of the parties. It can create new rights and obligations between them which it considers essential for keeping industrial peace. An industrial dispate as has been said on many occasions is nothing but a trial of strength between the employers on the one hand and the workmen 's organization on the other and the Industrial Tribunal has got to arrive at some equitable arrangement for averting strikes and lock outs which impede production of goods and the industrial development of the country. The Tribunal is not bound by the rigid rules of law. The process it employs is rather an extended form of the process of collective bargaining and is more akin to administrative than to judi cial function. In describing the true position of an Industrial Tribu nal in dealing with labour disputes, this Court in Western India Automobile Association vs Industrial Tribunal, Bom bay, and others(1) quoted with approval a passage from Ludwig Teller 's well known work on the subject, where the learned author observes that "industrial arbitration may involve the extension of ,existing agreement or the making of a new one or in general the creation of new obligations or modification of old ones, while commercial arbitration generally (1) at p. 345. 514 concerns itself with interpretation of existing obligations and disputes relating to existing agreements. " The views expressed in these observations were adopted in its entire ty by this Court. Our conclusion, therefore, is that an Industrial Tribunal formed under the is not a judicial tribunal and its determination is not a judicial determination in the proper sense of these expres sions. We now come to the other question as to whether an appeal could be taken to this Court against an award of an Industrial Tribunal by special leave under article 136 of the Constitution. Article 136 is a part of Chapter IV of the Constitution which deals with the Union Judiciary. The different jurisdictions of the Supreme Court have been prescribed in a series of articles commencing from article 131. Article 131 defines the original jurisdiction of the Supreme Court. Article 132 deals with its appellate powers in cases where substantial questions of law as to the inter pretation of the Constitution are involved. Article 133 contains the provision relating to appeals in civil cases from judgments, decrees and orders of the High Courts;and article 134 makes provisions relating to criminal appeals. Article 135 lays down that the Supreme Court shall have jurisdiction and powers with respect to any matter not covered by articles 133 and 134, if such jurisdiction and power could have been exercised by the Federal Court prior to the coming into force of the present Constitution. Then comes article 136 which runs as follows: "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. " The article is worded in the widest terms possible. It vests in the Supreme Court a plenary jurisdiction in the matter of entertaining and hearing appeals by granting of special leave against any kind of judgment, decree or order made by any Court or tribunal in any 515 cause or matter and the powers could be exercised in spite of and overriding the specific provisions for appeal con tained in the previous articles. The controversy so far as the present case is concerned mainly centers round the interpretation to be put upon two words, namely, "determi nation" and "tribunal" used in the article. Does the word "tribunal" mean a judicial tribunal only and is the expres sion "determination" restricted to what is known as "judi cial determination"? Sir Alladi 's contention is that in interpreting these words we should follow the principle of ejusdent generis. "Determination," he says, must be taken to be judicial determination which is of the same nature as decree, judg ment, order or sentence; and "tribunal" associated with the word" Court" could not but mean "judicial tribunal. " Bakshi Sir Tek Chand on the other hand lays stress on the fact that the word "determination" was not in the origi nal draft Constitution, and it was subsequently added, presumably with a view to widen the scope of article 136 and include within it, the decisions of administrative and quasi judicial tribunals also. He points out that according to the definition given in section 2 (b) of the , "award" means a determination either interim or final of an industrial dispute by an Industrial Tribunal. There is undoubtedly something to be said in favour of both these views. The difficulty, in our opinion, arises from the fact that neither of these terms "determination" or "tribunal" has a fixed or definite connotation in ordinary language. The word "determination" means and signifies the ending of a controversy or litigation by the decision of a Judge or Arbitrator. It cannot be said that it is restrict ed exclusively to proceedings in court. Likewise, the dictionary meaning of the word "tribunal" is 'court of justice ' or 'seat of a Judge. ' By 'Judge ' we mean some authority by which contested matters are decided between rival parties. Here again, it is not possible to say that the expression is applicable only to a 66 516 regular court of law. If the tribunal is a full fledged judicial tribunal, it is not disputed that its decisions would be proper subject matter of appeal under article ,136 of the Constitution. The question is whether this article includes within its scope the determinations of quasi judicial tribunals as well. Our view is that ordinarily we should not put any re stricted interpretation upon the plain words of an article in the Constitution and thereby limit our powers of granting special leave for appeals, which the Constitution for best of reasons did not choose to fetter or circumscribe in any way. At the same time, we must admit that some sort of restricted interpretation may be unavoidable in view of the context in which particular words appear; and certain re strictions may be implicit in the very purpose for which article 136 has been framed. Article 136 empowers us in our discretion to hear appeals from pronouncements of all infe rior courts and tribunals. With regard to law courts, no difficulty arises. As regards tribunals which are not courts in the proper sense of the expression, it may not be proper, in our opinion, to lay down a hard and fast rule that no appeals could, on any account, be allowed against determina tions of such tribunals. There are numerous varieties of these adjudicating bodies, whose structures vary greatly in character and composition and so do the powers and functions which they exercise. The best thing to do would be to examine each type of cases as it arises and if we find that with regard to determinations emanating from certain tribu nals it is not possible for us to exercise fully and effec tively the powers of an appellate Court, such determinations must be held to lie outside the purview of article 136 of the Constitution. This disability in the matter of exercising our powers as an appellate Court might arise from the fact that the rules and principles by which we ordinarily judge the sound ness or otherwise of judicial decisions are not capable of being applied to the determinations of certain administra tive tribunals. It might also arise from the fact that the law under which the 517 tribunal functions prevents us from making any effective order which would be binding and operative of its own force without the intervention of some other power or authority; or there may be some kind of contingency attached to it. In our opinion, these difficulties do confront us in the entertaining or hearing of an appeal against the decision of an Industrial Tribunal. In the first place, as we have said above, the determination of an Industrial Tribunal does not become complete and binding unless and until it is declared to be so by the appropriate Government. Till the Government makes such declaration, neither of the parties to the dis pute can have any real reason for filing an appeal. An appeal, if it lies, could be filed after the determination has been declared binding. But in such cases, is it the determination of the Tribunal merely which is challenged by way of appeal or is it ' the determination by the Tribunal to which has been super added a declaration by the Government ? The decision in the appeal would undoubtedly affect not merely the decision of the Tribunal but that of the Govern ment as well which is certainly not a tribunal within the meaning of article 136. Assuming again that the award is set aside and we substitute our own determination in place of the award given by the Tribunal, will our award be enforce able by itself or will it require a declaration by the Government to make it binding ? If Government is itself a party to the dispute, will it be open to Government to place our decision for consideration by the Legislative Assembly? And will the Legislative Assembly be competent to reject or modify our award ? These problems arise because under sec tion 15 the award under the Act becomes binding only when the Government declares it to be so and if our judgment takes the place of the award of the Tribunal, all the in firmities that attach to the award must necessarily attach to our judgment also. The other difficulty is no less formidable. As said above, the Tribunal is not bound to decide the disputes by application of the ordinary law of the land. A good deal depends upon questions of policy 518 and public convenience. It is not possible for us to.judge the propriety of the decision by a reference to some stand ard or fixed rules and we think that the very policy of the law prevents us from interfering with the discretion exer cised by the Tribunal. Where the direction is committed to any body or a tribunal exercising quasi judicial functions which are not lettered by ordinary rules of law, the tribunal should in the absense of any provision to the contrary be deemed to have the final authority in the exercise of that discretion. We cannot sit in appeal over their decision and substitute our own discre tion for theirs. ,Questions, however, may and do arise where such quasi judicial body attempts to usurp jurisdiction which it does not possess. It may assume jurisdiction under a mistaken view of law or refuse to exercise jurisdiction properly by adoption of extraneous or irrelevant considera tions;or there may be cases where in its proceedings the tribunal violates the principles of natural justice. In all such cases the most proper and adequate remedy would be by writs of certiorari or prohibition and the Court having authority may direct that the decision of the body or tribu nal might be brought up to be quashed for lack of jurisdic tion or for mistake apparent on the face of it; and if the proceedings had not terminated at that time, a writ of prohibition may also be issued for preventing the tribunal from exceeding its jurisdiction. The issuing of such writs would not be an exercise of appellate powers which means the rehearing of the case and passing of such judgment which in the opinion of the appellate Court the original tribunal should have made. The object of these writs is simply to keep the exercise of powers by these quasi judicial tribu nals within the limits of jurisdiction assigned to them by law and torestrain them from acting in excess of their authority. These principles are well settled and require no elucidation(1). Our conclusion, therefore, is that article 136 of the Constitution does not contemplate a determination given by the Industrial Tribunal. (1) Rex vs Electricity Commissioners ; Board of Education vs Rice 519 Even assuming for argument 's sake that we have got jurisdiction under article 136, the exercise of which would depend upon the circumstances of each case, in view of the reasons which we have set out above, this is not an appeal which, in our opinion, should be admitted even if we have the power to do so. The result is that the preliminary objection succeeds and the appeal fails and is dismissed with costs. PATANJALI SASTRI ' J. I entirely agree with the judgment just now delivered by Mukherjea J. and I have nothing to add. Appeal dismissed. Agent for the Union of India: P.A. Mehta.

IN-Abs

Held per KANIA (C.J. FAZL ALl, and MAHAJAN JJ. (MUKH ERJEA and PATANJALI SASTRI JJ. dissenting). The functions and duties of the Industrial Tribunal constituted under , are very much like those of a body discharging judicial functions although it is not a Court, and under article 136 of the Constitution of India the Supreme Court jurisdiction to entertain an application for leave to appeal from decision of the Tribunal, even though it will be very to entertain such an application. Per MUKERJEA J. (PATANJALI SASTRI J. concurring). An Industrial Tribunal functioning under the is not a judicial tribunal. The nature of the determinations made and the materials and considerations on which it has to decide a dispute are also such that the powers of an appellate court cannot be exer cised fully and effectively in respect of them and such determinations are therefore outside the purview of article 136 of the Constitution. Even assuming that the Court had jurisdiction appeal, the present case was not a fit one for entertaining an appeal from the determination of the Tribunal. [On the merits KANlA C. J., FAZL ALl, PATANJALI SASTRI and MUKHERJEA, JJ. were of opinion that there was no ground for admitting the appeal. MAHAJAN J. was of opinion that the award was bad and must be set aside.]

69 of 1953. Petition under article 32 of the, Constitution for enforcement of fundamental rights. 1185 section C. Isaacs (Jai Prasad Agarwal, with him) for, the appellant. K. B. Asthana for respondent No. 1. section P. Sinha (R. Patnaik, with him) for respondent No. 4. 1953. May 22. The Judgment of the Court was delivered by PATANJALI SASTRI C. J. This is an application under article 32 of the Constitution seeking protection of the petitioners ' fundamental right under article 15 (1) against alleged violation thereof by the respondents. The petitioners are three residents of Etah in Uttar Pradesh. They complain that at the by election to the Municipal Board of Etah held on November 2, 1951, December 8, 1951, and March 17, 1952, at which respondents 4, 11 and 12 were respectively elected, the Petitioners were deprived of their rights to exercise their votes and to seek their election as candidates, as those by elections were held on communal lines on the basis of separate electorates contrary to the provisions of the Constitution. They also allege that the nomination of respondent 3 as a member of the Board by the Government was an illegal exercise of its powers, as the interest which that respondent was nominated to represent in the Board was already sufficiently represented. The petition ners accordingly pray for the issue of writs of quo warranto, mandamus and other appropriate writs or directions to respondents 3, 4, 11 and 12 to show under what authority they are acting as members of the Board and to prevent them from acting assuchmembers. Tbe petitioners also ask for wkits on the District Magistrate and the Civil Judge of Etah, respondents 2 and 13 respectively, directing them not to hold or permit the holding of any meeting of the Board which is said to be illegally constituted. Now, it cannot be seriously disputed that any law providing for elections on the basis of separate electo rates for members of different religious communities offends against article 15 (1) of the Constitution which runs thus 1186 "15 (1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. " This constitutional mandate to the State not to diis criminate against any citizen on the ground, inter alia, of religion clearly extends to political as.well as to other rights, and any election held after the Constitution in ,pursuance of such a law subject to clause (4) must be held void as being repugnant to the Constitution. But the question is whether the petitioners are now entitled to the relief they seek in this application under article 32. It is true, as pointed out in the Cross Roads case(1), that article 32 provides, in some respects, for a more effective remedy through this court than article 226 does through the High Courts. But the scope of the remedy is clearly narrower in that it is restricted solely to enforcement of fundamental rights conferred by Part III of the Constitution. Any right, for instance, which the petitioners may have as rate payers in the Municipality to insist that the Board should be legally constituted and that respondents 3, 4, 11 and 12, who are not properly elected or nominated members, should not be permitted to take part in the proceedings of the Board, is outside the purview of article 32, as such right, even if it exists, is not a fundamental right conferred by Part 111. Petitioners ' learned counsel, however, contended that the fundamental right conferred by article 15 (1) on the petitioners as citizens of India was violated by the elections in question having been held on a basis which discriminated against the petitioners on the ground of their religion in that it precluded them from exercising their franchise in relation to all the candidates and from contesting the elections without regard to the reservation of seats on communal basis. Learned counsel,also submitted that the delimitation of the constituencies on communal lines was a denial of equality to the petitioners in the matter of their political rights and in that respect also infringed their (1) ; 1187 fundamental right under article 14. We are unable to accede to these contentions. It is plain that the fundamental right conferred by article 15(1) is conferred on a citizen as an individual and is a guarantee against his being subjected to discrimination in the matter of the rights, privileges and immunities pertaining to him as a citizen generally. It is not the petitioners ' case that any discrimination is now being practised or threatened against them. Their grievance is that the mode of election by separate electorates formed on communal lines involved discrimination against them in relation to seats other than those reserved for their respective communities as to which they could not exercise their right to vote or their right to stand as candidates. There is no suggestion that the petitioners actually sought to assert those rights by taking appropriate proceedings to have the bar removed and the election conducted in accordance with the Constitution. In fact, the petitioners acquiesced in the elections being conducted under the old system of separate electorates and felt no discrimination having been practised against them until a no confidence motion was tabled recently against the former Chairman who has since lost his seat as a result of that motion having been carried. Thus, the infringement of their fundamental rights under article 15(1) and art 61 14, that is, the discrimination practised against them, of which they now complain, related to rights which they in fact never sought to exercise and took no steps to assert, while there was still room for doing so, and for the exercise of which the opportunity is now lost. But, argues Mr. Isaacs, the election of the respondents 4 11 and 12 being void, they are no better than usurpers, and the petitioners are entitled to prevent them from functioning as members of the Municipal Board. It may be, as we have already remarked, that the petitioners could claim such relief as ratepayers of the Municipality in appropriately framed proceedings, but there is no question of enforcing petitioners ' funda mental right under article 15(1) or article 14 in such claim, There is still less ground for seeking relief on 1188 that basis aoainst respondent 3 who is only a nominated member. The petitioners appear to have misconceived their remedy and their application under article 32 must fail. The petition is dismissed with costs, one sot. Petition dismissed. Agent for the petitioners: K. L. Mehta. Agent for respondent No. I : C. P. Lal. Agent for respondent No. 4: section P. Varma.

IN-Abs

The petitioners, who were residents of a municipality, alleging that they had been deprived of their rights to exercise their votes and to seek their election as candidates in certain by elections to the Municipal Board, as those by elections were held on communal lines on the basis of separate electorates contrary to the provisions of the Constitution, applied for writs tinder article 32 of the Constitution for preventing the elected candidates from acting as members of the Board, and the District Magistrate and Civil Judge from holding any meetings of the Board: Held, that, though a law which provides for elections on the basis of separate electorates for members of different religious communities offends against article 15(1) of the Constitution and an election held after the Constitution in pursuance of such a law subject to el. 4 would be void, the right which the petitioners claimed as rate payers in the municipality to insist that the Board should be legally constituted and that persons who have not been properly elected should not be allowed to take part in the proceedings of the Board was outside the purview of article 32 of the Constitution inasmuch as such a right, even if it existed, was not a fundamental right conferred by Part III of the Constitution. Held further, that the alleged infringement of the fundamental rights of the petitioners under article 15(1) and article 14, that is, the discrimination practised against them related to rights which they in fact never sought to exercise and took no steps to assert while there was occasion for doing so and the petitioners were therefore entitled to no relief under article 32 of the Constitution.

Appeal No. 220/ 1963. Appeal by special leave from the judgment and order dated January 9, 1961 of the Kerala High Court in I.T.R. Case No. 17 of 1959. K. N. Rajagopal Sastri and R. N. Sachthey, for the ap pellant. The respondent did not appear. April 1, 1964. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave preferred against the judgment of the High Court of Kerala at Ernakulam raises the question of the interpretation of section 7(1) of the Indian Income tax Act, 1922 (Act No. XI of 1922), hereinafter called the Act. The respondent, L. W. Russel, is an employee of the English and Scottish Joint Co operative Wholesale Society Ltd., Kozhikode, hereinafter called the Society, which was incorporated in England. The Society established a superan nuation scheme for the benefit of the male European members of the Society 's staff employed in India, Ceylon and Africa by means of deferred annuities. The terms of such benefits were incorporated in a trust deed dated July 27, 1934. Every European employee of the Society shall become a member of that scheme as a condition of employment. Under the term of the scheme the trustee has to effect a policy of insurance for the purpose of ensuring an annuity to every member of the Society on his attaining the age of superannuation or on the happening of a specified contin gency. The Society contributes 1/3 of the premium payable by such employee. During the year 1956 57 the Society con tributed Rs. 3,333/ towards the premium payable by the respondent. The Income tax Officer, Kozhikode Circle, in cluded the said amount in the taxable income of the respon dent for the year 1956 57 under section 7(1), Explanation 1 Sub cl. (v) of the Act. The appeal preferred by the respondent against 571 the said inclusion to the Appellate Assistant Commissioner of Income tax, Kozhikode, was dismissed. The further appeal preferred to the Income tax Appellate Tribunal received the same fate. The assessee thereupon filed an application under section 66(1) of the Act to the Income tax Appellate Tribunal for stating a case to the High Court. By its order dated December 1, 1958, the Tribunal submitted a statement of case referring the following three questions of law to the High Court of Kerala at Ernakulam: (1) Whether the contributions paid by the employer to the assessee under the terms of a trust deed in respect of a contract for a deferred annuity on the life of the assessee is a 'perquisite ' as contemplated by section 7(1) of the Indian Income tax Act? (2) Whether the said contributions were allowed to or due to the applicant by or from the employer in the accounting year? (3) Whether the deferred annuity aforesaid is an annuity hit by section 7(1) and para. (v) of Explanation 1 thereto? On the first question the High Court held that the employer 's contribution under the terms of the trust deed was not a perquisite as contemplated by section 7(1) of the Act. On the second question it came to the conclusion that the employer 's contributions were not allowed to or due to the employee in the accounting year. On the third question it expressed the opinion that the Legislature not having used the word 'deferred" with annuity in section 7(1) and the statute being a taxing one, the deferred annuity would not be hit by para. (v) of Explanation 1 to section 7(1) of the Act. The Commissioner of Income tax has preferred the present appeal to this Court questioning the correctness of the said answers. The three questions formulated for the High Court 's opinion are interdependent and the answers to them turn upon the true interpretation of the relevant part of section 7(1) of the Act. Mr. Rajagopala Sastri, learned counsel for the appellant, contends that the amount contributed by the Society under the scheme towards the insurance premium payable by the trustees for arranging a deferred annuity on the respondent 's superannuation is a perquisite within the meaning of section 7(1) of the Act and that the fact that the respondent may not have the benefit of the contributions on the happening of certain contingencies will not make the said contributions any the less a perquisite. The employer 's share of the contributions to the fund earmarked for paying premiums of the insurance policy, the argument proceeds, vests in the respondent as soon as 572 it is paid to the trustee and the happening of a contingency only 'operates as a defeasance of the vested right. The respondent is ex parte and, therefore, the Court has not the benefit of the exposition of the contrary view. Before we attempt to construe the scope of section 7(1) of the Act it will be convenient at the outset to notice the pro visions of the scheme, for the scope of the respondent 's right in the amounts representing the employer 's contributions thereunder depends upon it. The trust deed and the rules dated July 27, 1934, embody the superannuation scheme. The scheme is described as the English and Scottish Joint Co operative Wholesale Society Limited Overseas European Employees ' Superannuation Scheme, hereinafter called the Scheme. It is established for the benefit of the male European members 'of the Society 's staff employed in India, Ceylon and Africa by means of deferred annuities. The Society itself is appointed thereunder as the first trustee. The trustees shall act as agents for and on behalf of the Society and the members respectively; they shall effect or cause to be effected such policy or policies as may be necessary to carry out the scheme and shall collect and arrange for the payment of the moneys payable under such policy or policies and shall hold such moneys as trustees for and on behalf of the person or persons entitled thereto under the rules of the Scheme. The object of the Scheme is to provide for pensions by means of deferred annuities for the members upon retirement from employment on attaining certain age under the conditions mentioned therein, namely, every European employee of the Society shall be required as a condition of employment to apply to become a member of the Scheme from the date of his engagement by the Society and no member shall be entitled to relinquish his membership except on the termination of his employment with Society; the pension payable to a member shall be provided by means of a policy securing a deferred annuity upon the life of such member to be effected by the Trustees as agents for and on behalf of the Society and the members respectively with the Co operative Insurance Society Limited securing the payment to the Trustees of an annuity equivalent to the pension to which such member shall be entitled under the Scheme and the Rules; the insurers shall agree that the Trustees shall be entitled to surrender such deferred annuity and that, on such deferred annuity being so surrendered, the insurers will pay to the Trustees the total amount of the premiums paid in respect thereof together with compound interest thereon; all moneys received by the Trustees from the insurers shall be held by them as Trustees for and 'on behalf of the person or persons entitled thereto under the Rules of the Scheme; any policy or policies issued by the insurers in connection with the 573 Scheme shall be deposited with the Trustees; the Society shall contribute one third of the premium from time to time payable in respect of the policy securing the deferred annuity in respect of each member as thereinbefore provided and the member shall contribute the remaining two thirds , the age at which a member shall normally retire from the service of the Society shall be the age of 55 years and on retirement at such age a member shall be entitled to receive a pension of the amount specified in Rule 6; a member may also, after following the prescribed procedure, commute the pension to which he is entitled for a payment in cash in accordance with the fourth column of the Table in the Appendix annexed to the Rules; if a member shall leave or be dismissed from the service of the Society for any reason whatsoever or shall die while in the service of the Society there shall be paid to him or his legal personal representatives the total amount of the portions of the premiums paid by such member and if he shall die whilst in the service of the Society there shall be paid to him or his legal personal representatives the total amount of the portions of the premiums paid by such member and if he shall die whilst in the service of the Society or shall leave or be dismissed from the service of the Society on account of permanent breakdown in health (as to the bona fides of which the Trustees shall be satisfied,) such further proportion (if any) of the total amount of the portions of the premiums paid by the Society in respect of that member shall be payable in accordance with Table C in the Appendix to the Rules; if the total amount of the portions of the premiums in respect of such member paid by the Society together with interest thereon as aforesaid shall not be paid by the Trustees to him or his legal personal representatives under sub section (1) of r. 15 then such proportion or the whole, as the case may be, of the Society 's portion of such premiums and interest thereon as aforesaid as shall not be paid by the Trustees to such member or his legal personal representatives as aforesaid shall be paid by the Trustees to the Society; the rules may be altered, amended or rescinded and new rules may be made in accordance with the provisions of the Trust Deed but not otherwise. We have given the relevant part of the Scheme and the Rules. The gist of the Scheme may be stated thus: The object of the Scheme is to provide for pensions to its employees. It is achieved by creating a trust. The Trustees appointed thereunder are the agents of the employer as well as of the employees and hold the moneys received from the employer, the employee and the insurer in trust for and on behalf of the person or persons entitled thereto under the rules of the Scheme. The Trustees are enjoined to take out policies of insurance securing a deferred annuity upon the 574 life of each member, and funds are provided by contributions from the employer as well as from the employees. The Trus tees realise the annuities and pay the pensions to the employees. Under certain contingencies mentioned above, an employee would be entitled to the pension only after super annuation. If the employee leave the service of the Society or is dismissed from service or dies in the service of the Society, he will be entitled only to get back the total amount of the portion of the premium paid by him, though the trustees in their discretion under certain circumstances may give him a proportion of the premiums paid by the Society. The entire amount representing the contributions made by the Society or part thereof, as the case may be, will then have to be paid by the Trustees to the Society. Under the scheme the employee has not acquired any vested right in the con tributions made by the Society. Such a right vests in him only when he attains the age of superannuation. Till that date that amount vests in the Trustees to be administered in accordance with the rules , that is to say, in case the employee ceases to be a member of the Society by death or otherwise, the amount contributed by the employer with interest thereon, subject to the discretionary power exercisable by the trustees, become payable to the Society. If he reaches the age of superannuation, the said contributions irrevocably become fixed as part of the funds yielding the pension. To put it in other words, till a member attains the age of superannuation the employer 's share of the contributions towards the premiums does not vest in the employee. At best he has a contingent right therein. In 'one contingency the said amount becomes payable to the employer and in another contingency, to the employee. Now let us look at the provisions of section 7(1) of the Act in order to ascertain whether such a contingent right is hit by the said provisions. The material part of the section reads: Section 7(1) The tax shall be payable by an assessee under the head "salaries" in respect of any salary or wages, any annuity, pension or gratuity, and any fees, commissions, perquisites or profits in lieu of, 'or in addition to, any salary or wages, which are allowed to him by or are due to him, whether paid or not, from, or are paid by or on behalf of. . . a company. . . . Explanation I For the purpose of this section perquisite includes (v) any sum payable by the employer, whether directly or through a fund to which the pro. visions of Chapters IX A and IX B do not 575 apply, to effect an assurance on the life of the assessee or in respect 'of a contract of annuity on the life of the assessees. This section imposes a tax on the remuneration of an employee. It presupposes the existence of the relationship if employer and employee. The present case is sought to be brought under the head "perquisites in lieu of, or in addition to, any salary or wages, which are allowed to him by or are due to him, whether paid or not, from, or are paid by or on behalf of a company". The expression "perquisites" is defined in the Oxford Dictionary as "casual emoluments. fee or profit attached to an office or position in addition to salary or wages". Explanation 1 to section 7(1) of the Act gives an inclusive definition. Clause (v) thereof includes within the meaning of "perquisites" any sum payable by the employer, whether directly or through a fund to which the provisions of Chs. IX A and IX B do not apply, to effect an assurance on the life of the assessee or in respect of a contract for an annuity on the life of the assessee. A combined reading of the substantive part of section 7(1) and cl. (v) of Expl. 1 thereto makes it clear that if a sum of money is allowed to the employee by or is due to him from or is paid to enable the latter to effect an insurance on his life, the said sum would be a perquisite within the meaning of section 7(1) of the Act and, therefore, would be eligible to tax. But before such sum becomes so exigible, it shall either be paid to the employee or allowed to him by or due to him from the employer. So far as the expression "paid" is concerned, there is no difficulty, for it takes in every receipt by the employee from the employer whether it was due to him or not. The expression "due" followed by the qualifying clause "whether paid or not" shows that there shall be an obligation on the part of the employer to pay that amount and a right on the employee to claim the same. The expression "allowed", it is said, is of a wider connota tion and any credit made in the employer 's account is cover ed thereby. The word "allowed" was introduced in the sec tion by the Finance Act of 1955. The said expression in the legal terminology is equivalent to "fixed, taken into account, set apart, granted". It takes in perquisites given in cash or in kind or in money or money 's worth and also amenities which are not convertible into money. It implies that a eight is conferred on the employee in respect of those perquisites. One cannot be said to allow a perquisite to an employee if the employee has no right to the same. It cannot apply to contingent payments to which the employee has no right till the contingency occurs. In short, the employee must have a vested right therein. If that be the interpretation of section 7(1) of the Act, it is. not possible to hold that the amounts paid by the Society 576 to the Trustees to be administered by them in accordance with the rules framed under the Scheme are perquisites allowed to the respondent or due to him. Till he reaches the age of superannuation, the amounts vest in the Trustees and the beneficiary under the trust can be ascertained only on the happening of one or other of the contingencies provided for under the trust deed. On the happening of one contingency, the employer becomes the beneficiary, and on the happening of another contingency, the employee becomes the beneficiary. Learned counsel for the appellant strongly relied upon the decision of the King 's Bench Division in Smyth vs Stretton(1). There, one Stretton, one of the Assistant Masters of Dulwich College, was assessed to income tax in the sum of pouns 385 in respect of his emoluments as Assistant Master received from the Governors of Dulwich College for the year ended the 5th day of April, 1901. He objected to the assessment on the ground that it included pound 35 not liable to taxation, being amount placed to his credit by the Governors under the Provident Fund Scheme for the year 1900. Channell, J., with some hesitation, came to the conclusion that the said sum was taxable. That case was dealing with a scheme for the establishment of provident fund for the benefit of the Assistant Masters on the permanent staff of the Dulwich College. Under para. 1 of the scheme the salaries of Assistant Masters were increased. Clause (a) of para. 1 of the scheme provided that Assistant Masters having not less than five years, but less than fifteen years ' service, would be allowed an increase of 5 per cent, in their salaries; under cl. (b) thereof, Assistant Masters having not less than 15 years ' of service and over, would get an increase of 7 1/2 per cent. in their salaries; under cl. (c) thereof, a further addition in their salaries, equal in amount to the above sums, should be granted from the same date to the Assistant Masters alluded to in (a) and (b), such addition being, however, subject to the conditions provided by para. Paragraph 5 read: "That Assistant Masters having less than ten years ' service who may resign their appointments, or from any other cause than ill health cease to belong to the College, shall be entitled to receive the total increase sanctioned by (a) and the accu mulations thereof, but shall not receive the additional increase sanctioned by (c), or the accumulations thereof. In the event of any such Assistant Master retiring from ill health the Governors, in addition to the increase sanctioned by (a), may grant him the further 5 per cent. sanctioned by (c), and the accumulations thereof. In the event of death of any such Assistant Master whilst in (1) , 46. 577 the service of the College, the 5 percent. due by (c) as well as under (a), with the accumulations thereof, shall be paid to his legal representatives". It was contended that the amount payable under cl. (c) of para. I was a contingent one without any vested character and, therefore, could not be described as income in any way. The learned Judge construed the provisions of the scheme and rejected the contention. The main reason for his conclusion is stated thus: "The result seems to me to be that I must take that sum as a sum which really has been added to the salary and is taxable, and it is not the less added to the salary because there has been a binding obligation created between the Assistant Masters and Governors of the Schools that they should apply it in a particular way". No doubt it is possible for another court to come to a different conclusion on the construction of the provisions of the scheme; but the learned Judge came to the conclusion that cl. (c) of para. 1 of the scheme provided for an additional salary to the Assistant Masters. Indeed, the Court of Appeal in Edwards (H. M. Inspector of Taxes) vs Roberts(1) construed a similar scheme and came to the contrary conclusion and explained the earlier decision on the basis we have indicated. There, the respondent was employed by a company under a service agreement dated 'August 21, 1921, which provided inter alia, that, in addition to an annual salary, he should have an interest in a "conditional fund", which was to be created by the company by the payment after the end of each financial year of a sum out of its profits to the trustees of the fund to be invested by them in the purchase of the company 's shares or debenture stock. Subject to possible forfeiture of his interest in certain events, the respondent was entitled to receive the income produced by the fund at the expiration of each financial year, and to receive part of the capital of the fund, (or, at the trustees ' option, the investments representing the same) at the expiration of five financial years and of each succeeding year, and, on death whilst in the company 's service or on the termination of his employ ment by the company, to receive the whole amount then standing to the credit of the capital amount of the fund (or the actual investments). The respondent resigned from the service of the company in September, 1927, and at that date the trustees of the fund transferred to him the shares which they had purchased out of the payments made to them by the company in the years 1922 to 1927. He was assessed to income tax on the amount of the current market value of the (1) , 638, 640. LP(D)ISCI 17 578 shares at the date of transfer. The assessee contended that immediately a sum was paid by the company to the trustee& of the fund he became invested with a beneficial interest in the payment which formed part 'of his emoluments for the year in which it was made, and for no other year, and that, accordingly, the amount of the assessment for the year 1927 28 ought not, in any event, to exceed the aggregate of the sums paid by the company to the trustees, the difference between the amount and the value of the investments at the date of transfer representing a capital appreciation not liable to tax for any year. The Court of Appeal rejected the contention. Lord Hanworth, M. R., in rejecting the contention. observed be said to have accrued to this employee a vested interest in these successive sums placed to his credit, but only that he had a chance of being paid a sum at the end of six years if all went well. That chance has now supervened, and he has got it by reason of the fact of his employment, or by reason of his exercising an employment of profit within Schedule E.". Maugham. L. J., said much to the same effect thus: "The true nature of the agreement was that lie was to be entitled in the events, and only in the events mentioned in Clause 8 of the agreement, to the investments made by the Company out of the net profits of the Company as provided in Clause 6.". The decision of Channel], J., in Smyth vs Stretton(1) was strongly relied upon before the appellate court. But the, learned Judges distinguished that case on the round that under the scheme which was the subject matter Of that deci sion the sums taxed were really additions to the salary of the Assistant Master and that. in any view, that decision should be confined to the facts of that case. The principle laid down by the Court of Appeal, namely, that unless a vested interest in the sum accrues to an employee it is not taxable. equally applies to the present case. As we have pointed out earlier, no interest in the sum contributed by the employer under the scheme vested in the employee. as it was only a contingent interest depending upon his reaching the age of superannuation. It is not a perquisite allowed to him by the employer or an amount due to him from the employer within the meaning of section 7(1) of the Act. We, therefore, hold that the High Court has given correct answers to the questions of law submitted to it by the Income tax Appellate Tribunal. In the result, the appeal fails and is dismissed. Appeal dismissed. (1)(1904) 46.

IN-Abs

The respondent is an employee of the English and Scottish Joint Co operative Wholesale Society Ltd. incorporated in England. The Society established a superannuation scheme for the benefit of the male European members of its staff employed in India by means of deferred annuities. Under the terms of the scheme, the trustee has to effect a policy of insurance for the purpose of ensuring an annuity to every member of the ,Society on his attaining the age of superannuation or on the happening of a specific contingency. The Society contributed ,one third of the premium payable by each employee. During the year 1956 57, the Society contributed Rs. 3333/ towards the premium payable by the respondent, an employee of the Society. The Income tax Officer included the said amount in the taxable income of the respondent for the year 1956 57 under section 7(1), Explanation 1, sub cl. (v) of the Act. The appeals of the respondent were dismissed both by the Appellate Assistant Commissioner of Income tax and the Income tax Appellate 'Tribunal. The Tribunal referred to the High Court the following three questions of law: (1) Whether the contribution paid by the employer to the assessee under the terms of a trust deed in respect of a contract for a deferred annuity on the life of the assessee is a perquisite as contemplated by section 7(1) of the Income tax Act? (2) Whether the said contributions were allowed to, or due to the applicant by or from the employer in the accounting year? (3) Whether the deferred annuity aforesaid is annuity hit by section 7(1) and para (v) of Explanation 1 thereto. The High Court held that the employer 's contribution under the terms of the trust deed was not a perquisite as con templated by section 7(1). The employer 's contributions were not allowed to or due to the employee in the accounting year. The legislature not having used the word "deferred" with annuity in section 7(1) and the statute being a taxing one, the deferred annuity would not hit para (v) of Explanation 1 to section 7 (1) of the Act. Against the decision of High Court, the appellant came to this Court by special leave. Dismissing the appeal, 570 Held: The answers to the questions of law as given by the High Court were correct. Unless a vested interest in the sum accrues to an employee, it is not taxable. In the present case. no interest in the sum contributed by the employer under the scheme vested in the employee, as it was only a contingent interest depending upon his reaching the age of superannuation. it is not a perquisite allowed to him by the employer or an amount, due to him from the employer within the meaning of section 7(1) of the Act. A perquisite is only that amount of money which is allowed to the employee by or is due to him from the employer or is paid to him to effect an insurance on his life. Smyth vs Stretton, , and Edwards (H. M., Inspector of Taxes) vs Roberts, , referred to.

Appeal No. 473 of 1963. Appeal by special leave from the judgment and order March 22, 1960, of the Andhra Pradesh High Court in Tax Revision Case No. 88 of 1960. A. Ranganadham Chetty, B. R. G. K. Achar and R. N. Sachthey, for the appellant. The respondent did not appear. 665 April 8, 1964. The Judgment of the Court was delivered by SHAH, J. The respondents who are registered as dealers under the Hyderabad General Sales Tax Act, 1950 carry on the business of tanning hides and skins and of selling the tanned skins in the town of Hyderabad. For the purposes 'of their business the respondents purchase undressed hides and skins and also tanning bark and other materials required in their tannery. For the assessment year 1954 55 the Sales tax Officer, Circle IV, Hyderabad, found that the total turnover of the respondents was Rs. 5,70,417 12 4 (O.S.) in respect of the hides, skins, wool and tanning bark. The respondents disputed their liability to pay tax on Rs. 61,431 14 9 (O.S.) included in the turnover contending that this amount represented the price paid for buying tanning bark required in their tannery. They submitted that tanning bark was bought for consumption in the tannery and not for sale, and they were accordingly not dealers in tanning bark and therefore the price paid for buying tanning bark was not liable to duty under the Hyderabad General Sales Tax Act. The Sales tax Officer rejected the contention of the respondents, and his order was confirmed in appeal by the Deputy Commissioner, C. T., Hyderabad Division and also by the Sales Tax Appellate Tribunal, Hyderabad. But the High Court of Andhra Pradesh in a petition under section 22(1) read with rule 40 framed under the Andhra Pradesh General Sales Tax Act VII of 1957 modified the order passed by the taxing authorities and excluded from the computation of the taxable turnover the price paid by the respondents for the tanning bark used in the tannery. With special leave, the State of Andhra Pradesh has appealed to this Court. Section 2(e) of the Hyderabad General Sales Tax Act defines "dealer" as meaning any person. local authority, company, firm, Hindu undivided family or any association or associations of persons engaged in the business of buying, selling or supplying goods in the Hyderabad State whether for a commission, remuneration or otherwise and includes a State Government which carries on such business and any society, club or association which buys or sells or supplies goods to its members. Section 2(m) defines "turnover" as, meaning an aggregate amount for which goods are either bought by or sold by a dealer, whether for a cash or for de ferred payment or other valuable consideration. section 4 a tax at the rate of three pies in the rupee in I. G. currency on so much of the turnover for the year is is attributable to transactions in goods other than exempted goods is imposed. Rule 5(1) provides that save as provided in sub rule (2) the turnover of a dealer for the purpose of the rules shall be the amount for which goods are sold by the dealer. Rule 5(2) provides that in the case of certain commodities the turnover 666 of a dealer for the purpose of the rules shall be the amount for which the goods are bought by the dealer. Those commo dities are: (a) Groundnut (shelled or unshelled); (b) Bidi leaves; (c) Tarwar and other tanning barks; (d) Til, karad and castor seed; (e) Cotton including kappas; (f) Linseed, turmeric, dhania and other agricultural produce including all kinds of dhals and paddy (husked or unhusked) not otherwise exempted under the said Act, but excluding cotton seed, sugarcane, tea and coffee seeds; (g) Hides and skins; (h) Wool, bones and horns. The High Court of Andhra Pradesh rejected the claim of the taxing authories to tax the tanning bark bought by the respondents on the ground that a purchaser is liable to pay tax under Rule 5(2) only when he is carrying on business of buying and selling a commodity specified in the sub rule (2) and not when he buys it for consumption in a process for manufacturing an article to be sold by him. Therefore, in the view of the High Court if a dealer buys any commodity included in Rule 5(2) for consumption in his business but not for sale, he is not to be regarded as engaged in the business of buying, selling 'or supplying that commodity and the price paid for buying the commodity is not liable to tax. We are unable to agree with this view of the High Court. A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression "busi ness" though extensively used a word of indefinite import, in taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying selling and supplying the same commodity. Mere buying for personal consumption i.e. without a profit motive will not make a person, dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, 'or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer: the definition merely requires that the buying of the commodity mentioned in Rule 5(2) must be in the course of business, i.e. must be for sale 667 or use with a view to make profit out of the integrated activity of buying and disposal. The commodity may itself be converted into another saleable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable commodity. It cannot be said in the present case that the tanning bark was bought by the respondent for any purpose unconnected with the business carried on by them, viz., manufacture and sale of dressed hides and skins. Consumption in the business and not sale of the commodity bought therefore does not exclude the respondents from the definition of dealer aua the tanning bark. This is the view which has, in our judgment, been rightly taken by the Madras Hight Court in the interpretation of a similar statute in operation in the State of Madras in L.M.S. Sadak Thamby and Company vs The State of Madras(1). The appeal is therefore allowed and the order passed by the High Court is set aside and order passed by the Sales tax Appellate Tribunal restored. No order as to costs. Appeal dismissed.

IN-Abs

The respondents are registered dealers carrying on the business of tanning hides and skins and selling the tanned skins. The authorities under the Hyderabad General Sales Tax Act, 1950 assessed the respondent for the total turnover which included the price paid by the respondent for purchasing tanning bark used in the tanning process. The respondent contended that the price paid for the purchase of tanning bark should be excluded from the taxable turnover because the tanning bark was bought by the respondent for consumption and not for sale and hence the respondent was not "dealer" qua the tanning bark. His contention was not accepted by the Tax authorities. In a petition to the High Court under section 22(1) of, the Hyderabad General Sales Tax Act the contention of the respondent was accepted and the assessment was modified. In appeal filed with special leave, Held: The High Court was in error in holding that a purchaser is liable to pay tax under r. 5(2) of the Sales Tax Rules only when he is carrying on a business of buying and selling a commodity specified in sub r. (2) and not when he buys it for consumption in a process for manufacturing a commodity to be sold by him. (ii) To regard an activity as a business there must be a course of dealing either actually continued or contemplated. to be continued with a profit motive and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. The Act requires merely that buying of the commodity mentioned in r. 5(2) must be in the course of business; that is it must be for sale or use with a view to take profit out of the integrated, activity of buying and disposal. The commodity may itself be converted into another saleable commodity or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable commodity. (iii) In the present case the tanning bark was not bought by the respondent for any purpose unconnected with the business. Consumption of the tanning bark in the manufacturing process did not therefore exclude the respondents from the definition of dealer qua the tanning bark. Sadak Thamby and Company vs State of Madras, 14 S.T.C. 753, approved.

Appeal No. 299 of 1964. Appeal from the judgment and order dated September 26, 1961 of the Allahabad High Court in Second Appeal No. 620 of 1957. J. P. Goyal, for the appellants. B. C. Misra, for the respondent No. 1. April 15, 1964. The judgment of the Court was delivered by HIDAYATULLAH, J. In this appeal by certificate from the High Court of Judicature at Allahabad the appellants are the four original defendants in a suit for pre emption filed by the first respondent. Kaiseri Begam (respondent No. 2) sold a plot and two houses in mohalla Gher Abdul Rahman Khan, 757 Qasba Milak, Tehsil Milak, District Rampur, to the appel lants on December 4, 1953. The first respondent Labh Singh owned the adjacent house and he claimed pre emption on the ground of vicinage after making the usual demands. The suit was filed by Labh Singh in the court of Munsif, Rampur who by his judgment dated September 25, 1955 held that there was a general custom of pre emption in the town of Milak. He also held that Labh Singh was entitled to preempt and had performed the Talabs. He, however, dismissed the suit because the sale did not include a strip of land 3 feet 6 inches wide between Labh Singh 's house and the property sold. He made no order about costs. There was an appeal by Labh Singh and the present appellants objected. The District Judge, Rampur allowed the appeal and dismissed the cross objections. The appellants then filed a second appeal in the High Court of Allahabad. Mr. Justice V. D. Bhargava, who heard the appeal, referred the following question to a Division Bench: "Whether after coming into operation of the right of pre emption is contrary to the provisions of article 19(1)(f) read with article 13 of the Constitution, or is it saved by clause (5) of article 19? " The Divisional Bench held that the law relation to pre emp tion on the ground of vicinage was saved by clause (5) of article 19 and was not void under article 13 of the Constitution. In view of this answer, the second appeal was dismissed. The High Court, however, certified the case and the present appeal has been filed. The question which was posed by Mr. Justice V. D. Bhargava was considered by this Court in connection with s.10 of the Rewa State Pre emption Act, 1946 in Bhau Ram vs B. Baijnath Singh (1). This Court held by majority that the law of pre emption on the ground of vicinage imposed unreasonable restrictions on the right to acquire, hold and to dispose of property guaranteed by article 19(1)(f) of the Constitution and was void. It was pointed out that it placed restrictions both on the vendor and on the vendee and there was no advantage to the general public and. that the only reason given in support of it, that it prevented persons belonging to different religions, races or castes from acquiring property in any area peopled by persons of other religious, races or castes, could not be considered reasonable in view of article 15 of the Constitution. If this ruling applies the present appeal must succeed. Mr. B. C. Misra, who appears for Labh Singh attempts to distinguish Bhau Ram 's case(1). He contends that the earlier case was concerned with a legislative measure whereas the. (1) [1962] Supp. 3 S.C.R. 724. 758 present case of pre emption arises from custom. He refers to the decision in Digambar Singh vs Ahmad Said Khan(1) where the Judicial Committee of the Privy Council has given the early history of the law of pre emption in village com munities in India and points out that the law of pre emption had its origin in the Mohammedan Law and was the result, some times, of a contract between the sharers in a village. Mr. Misra contends that articles 14 and 15 are addressed to the State as defined in article 12 and are not applicable to custom or contract as neither, according to him, amounts to law within the definition given in article 13(3)(b) 'of the Consti tution. He submits that the ruling of this Court does not cover the present case and that it is necessary to consider the question of the validity of the customary law of pre emption based on vicinage. It is hardly necessary to go into ancient law to discover the sources of the law of pre emption whether customary or the result of contract or statute. In so far as statute law is concerned Bhau Ram 's case(2 ) decides that a law of pre emption based on vicinage is void. The reasons given by this Court to hold statute law void apply equally to a custom. The only question thus is whether custom as such is affected by Part III dealing with fundamental rights and particularly article 19(1)(f). Mr. Misra ingeniously points out in this connection that article 13(1) deals with "all laws in force" and custom is not included in the definition of the phrase "laws in force" in clause (3)(b) of article 13. It is convenient to read article 13 at this stage: "13.(1) 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. (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 the contravention, be void. (3) In this article, unless the context otherwise re 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; (b) "law in force" includes laws passed or made by a Legislative or other competent authority in the territory of India before the commencement of this Constitution and not previously (2) [1962] Supp. 3 S.C.R. 724. (1) L.R. 42 I.A. 10, 18. 759 repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas. " The argument of Mr. Misra is that the definition of "law" in article 13(3)(a) cannot be used for purposes of the first clause, because it is intended to define the word "law" in the second clause. According to him, the phrase "laws in force" which is used in clause (1) is defined in (3)(b) and that definition alone governs the first clause, and as that definition takes no account of customs or usage, the law of pre emption based on custom is unaffected by article 19(1)(f). In our judgment, the definition of the term "law" must be read with the first clause. If the definition of the phrase "laws in force" had not been given, it is quite clear that the definition of the word "law" would have been read with the first clause. The question is whether by defining the composite phrase "laws in force" the intention is to exclude the first definition. The definition of the phrase "laws in force" is an inclusive definition and is intended to include laws passed or made by a Legislature or other competent authority before the commencement of the Constitution irrespective of the fact that the law or any part thereof was not in operation in particular areas or at all. in other words, laws, which were not in operation, though on the statute book, were included in the phrase "laws in force". But the second definition does not in any way restrict the ambit of the word "law" in the first clause as extended by the definition of that word. It merely seeks to amplify it by including something which, but for the second definition, would not be included by the first definition. There are two compelling reasons why custom and usage having in the territory of India the force of the law must be held to be contemplated by the expression "all laws in force". Firstly, to hold otherwise, would restrict the operation of the first clause in such ways that none of the things mentioned in the, first definition would be affected by the fundamental rights. Secondly, it is to be seen that the second clause speaks of "laws" made by the State and custom or usage is not made by the State. If the first definition governs only cl. (2) then the words "custom or usage", would apply neither to cl. (1) nor to cl. (2) and this could hardly have been intended. It is obvious that both the definitions control the meaning of the first clause of the Article. The argument cannot, therefore, be accepted. It follows that respondent No. 1 cannot now sustain the decree in view of the prescriptions of the Constitution and the determination of this Court in Bhau Ram 's case(1). The appeal will be allowed but in the circumstances of the case parties will bear their costs throughout. Appeal allowed.

IN-Abs

In a suit filed by the respondent, the Munsif though holding that there was a general custom of pre emption in the locality and that the respondent had a right to pre empt, under that custom, dismissed the suit because the sale did not include a strip of land 3 feet 6 inches wide between the respondent 's house and the property sold. The respondent 's appeal was allowed by the District Judge. The appellants appealed to the High Court which was unsuccessful because of the answer of the Division Bench to which the question was referred. The Division Bench held that the law relating to pre emption on the ground of vicinage was saved by article 19(5) and was not void under article 13 of the Constitution. The appellant relied on the decision of this Court in Bhau Ram vs Baijnath and claimed that pre emption on the ground of vicinage could not be claimed. The respondents in reply contended (a) that Bhau Ram 's case was concerned with a legislative measure whereas the present case arose from custom and was thus distinguishable and (b) that article 13(1) dealt with "all laws in force" and custom was not included in the definition of the phrase "laws in force" in cl. (3)(b) of article 13. Held: (i) In so far as statute law is concerned Bhau Ram 's case decides that a law of pre emption based on vicinage is void. The reasons given by this Court to hold statute law void apply equally to a custom. Bhau Ram vs B. Baijnath Singh, [1962] Supp. 3 S.C.R. 724, followed. Digambar Singh vs Ahmad Said Khan, L.R. 42 I.A. 10, referred to. (ii) Custom and usage having in the territory of India the force of law are included in the expression "all laws in force".

Appeal No. 172 of 1964. Appeal from the judgment and decree dated July 6, 1962 of the Calcutta High Court in Appeal from Original Decree No. 213 of 1959. section T. Desai, B. Sen and B.P. Maheshwari, for the appllant. H. N. Sanyal, Solicitor General, Ajit Kumar Sen and S.N. Mukherjee, for the respondent No. 1. April 15, 1964. The judgment of the Court was delivered by DAs GUPTA, J. The subject matter of this litigation is a piece of land in the heart of the business centre of the city of Calcutta. This was part of a block of 52 cottahs of land taken on lease on January 21, 1950 from the Official Trustee, West Bengal, by a private limited company, Raghuvanshi Private Ltd. The lease was a building lease for a period of 75 years commencing from January 21, 1950. The lessee was required to complete the construction of a three or four storeyed building on the land within 1O years. In September 1960, Raghuvanshi Private Limited in its turn leased 10 1/2 cottahs out of the 52 cottahs to a public limited company, Land and Bricks Ltd. This lease by Raghuvanshi Private Ltd., (hereinafter referred to as "Raghuvanshi") in favour of Land & Bricks Ltd., (hereinafter referred to as "Land & Bricks") created a monthly tenancy commencing from the 1st October 1950. Land and Bricks in its turn sub let the entire 10 1/2 cottahs to the present appellant, Rupchand Gupta in his business name of Hind Airways. The lease was on the terms as settled by two letters dated August 19, 1950 and September 5, 1950 between Hind Airways and Land and Bricks. By the terms of the sub lease, the sub lessee undertook not to sub let the land to anybody, to vacate the land as soon as it was required by Land and Bricks for any purpose and not to construct anything on the land but only to use the open land for "garage purpose for motor vehicles". Inspite of this undertaking however the appellant constructed a pacca structure on the land. Land and Bricks protested un successfully and then started proceedings under the Calcutta 762 Municipality Act for demolition of the structures. Those proceedings were also unsuccessful. Land and Bricks, it appears, also served on the appellant in February 1953 a notice to quit. This was not followed up by any suit in court. But a suit for arrears of rent was instituted by Land and Bricks against the appellant in September 1955 and another in 1957. Consent decrees were passed in both of these suits. It appears ,that in about May or June 1954, Raghuvanshi was desirous of getting possession of the land it has leased to Land and Bricks. The difficulty was that Land and Bricks having sublet to the appellant was not in a position to deliver possession to its lessor Raghuvanshi until and unless possession was obtained from the appellant. It was in these circumstances that Raghuvanshi determined its lease in favour of Land and Bricks by a notice to quit dated the 11th April 1955. Raghuvanshi then instituted a suit No. 3283 of 1955 in the High Court of Calcutta against Land and Bricks for possession of the land. The appellant was not impleaded in the suit and Land and Bricks did not contest it. An ex parte decree was made by the Court in favour of Raghuvanshi on the 11th May 1956. The necessary legal consequences of that decree is that the plaintiff as the sub lessee of Land and Bricks has no right to stay on the land and has become a trespasser. It is to avoid the consequence of that decree, that the present suit was brought by Rupchand Gupta. His case is that the decree had been obtained "by fraud and collusion between the de fendants in order to injure the plaintiff and to evict the plaintiff from the said premises without any decree being passed against the plaintiffs" Both Land and Bricks and Raghuvanshi have been impleaded in the suit Land and Bricks as the first defendant, and Raghuvanshi as the second defendant. Both of them denied the allegations of fraud and collusion. The case that the decree was obtained by fraud was given up at the hearing and only the allegation that it was a collusive suit was pressed. The Trial Judge held that there was collusion between defendant No. 1 and defendant No. 2 in the matter of obtain ing an ex parte decree in suit No. 3283 of 1955 and that the plaintiff was not bound by that decree. He gave a declaration that the plaintiff was still a tenant under defendant No. 1 and was not liable to be ejected under the ex parte decree. He also ordered the issue of an injunction restraining the defendants from taking any steps in execution of the ex parte decree. On appeal by the defendant No. 2, Raghuvanshi, the decree made by the Trial Judge was set aside. The learned Judges, who heard the appeal, came to the conclusion that 763 the plaintiff had failed to prove that the decree in suit No. 3283 of 1955 had been procured collusively. So, they held that the plaintiff was bound by the decree in that suit. It is against this decree of the appellate Bench of the High Court that the present appeal has been filed by the plaintiff Rupchand Gupta. The only question for decision in the appeal is whether the plaintiff had established his allegation that the ex parte decree had been obtained as a result of collusion between Raghuvanshi and Land and Bricks. The main circumstances on which the plaintiff relied to prove collusion and which according to the learned Judge established his case were these: Raghuvanshi and Land and Bricks though distinct entities had the same persons as directors. The construction of building in terms of indenture of lease with Official Trustee was necessarily in the interests of shareholders of Raghuvanshi and so this was in the interest of Land and Bricks also as the main shareholders were the same. The Calcutta Thika Tenancy Act, 1949 was a serious impediment in the way of the plaintiff 's eviction in any suit by Land and Bricks. So, Land and Bricks attempted to get possession of the land by obtaining an order of demolition of structures by proceedings under the Calcutta Municipality Act. When these failed and it was apprehended that a suit for ejectment by Land and Bricks might not succeed against the plaintiff that this device of having a suit by Raghuvanshi against Land and Bricks was decided upon by agreement between Raghuvanshi and Land and Bricks. By arrangement between the two, Land and Bricks did not contest the suit and to avoid any risk of any defence being raised by the plaintiff he was not impleaded in the suit at all. All the circumstances taken together justify, it was urged by the appellant, the conclusion that the defendant No. 2 colluded with defendant No. 1 to procure the exports decree for the purpose of executing that decree against the plaintiff. One of the simplest definitions of collusion was given by Mr. Justice Bucknill in Scott vs Scott(1). "Collusion may be defined", said the learned Judge, "as an improper act done or an improper refraining from doing an act, for a dishonest purpose". Substantially the same idea is expressed in the definition given by Whatron 's Law Lexicon, 14th Edition, p. 212. viz., "Collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision (1) [1913] Law Rerports (Probate Division) 52. 764 of a judicial tribunal for some sinister purpose". This definition of collusion was approved by the Court in Nagubai Ammal & ors., vs B. Shamma Rao and ors.(1). Thus the mere fact that the defendant agrees with the plaintiff that if a suit is brought he would not defend it, would not necessarily prove collusion. It is only if this agreement is done improperly in the sense that It dishonest purpose is intended to be achieved that they can be said to have colluded. There is little doubt that in the present case Land and Bricks agreed with Raghuvanshi that the suit for ejectment would not be contested. When the suit was instituted Land and Bricks did not contest and the ex parte decree was passed. Raghuvanshi did not implead this appellant in that suit. Can any of these acts, viz., Land and Bricks agreeing with Raghuvanshi that it would not contest the suit, the actual refraining by Land and Bricks from contesting the suit or the act of Raghuvanshi in not impleading the appellant, be an improper act or improper refraining from an act? We do not see how any of these things can be said +to be improper. Taking the last action first, viz., Raghuvanshi 's omission to implead the appellant, it is quite clear that the law does not require that the sub lessee need be made a party. It has been rightly pointed out by the High Court that in all cases possession of the laid on the basis of a valid notice to quit served on the lessee and does not implead the sub lessee as a party to the suit, the object, of the landlord is to eject the sub lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub lessee. This may act harshly on the sub lessee; but this is a position well understood by him when he took the subleases The law allows this and so the omission cannot be said to be an improper act. Nor is it possible, in our opinion, to say that the omission of Land and Bricks to contest the ejectment suit was an improper act. It has not been suggested that Land and Bricks had a good defence against the claim for ejectment but did not take it for the mere purpose of helping Raghu vanshi to get possession of the land. Even if it had a good defence, we do not think it was bound to take it. It may be that if Land and Bricks had a defence and the defence was such which if brought to the notice of the court would have stood in the way of any decree being passed in favour of Raghuvanshi there would be reason to say that the omission to implead the sub lessee was actuated by a dishonest pur pose and consequently was improper. It is not necessary for (1) ; 765 us however to consider the matter further as neither in the courts below nor before us was any suggestion made on behalf of the appellant sub lessee that Land and Bricks had even a plausible defence against Raghuvanshi 's claim for ejectment. We have already mentioned the fact that one of the circumstances which the plaintiff claimed showed collusion was that the Calcutta Thika Tenancy Act stood in the way of the plaintiff 's eviction of Land and Bricks. It is unneces sary for us to decide whether or not the appellant was a Thika tenant within the meaning of the Calcutta Thika Tenancy Act, 1949. If he was, that Act would undoubtedly have protected him against eviction by Land and Bricks. That Act could however have no operation in a suit brought by Raghuvanshi against Land and Bricks. It has been held by the High Court of Calcutta that the Thika Tenancy Act was designed to protect the Thika tenant from eviction by his landlord only and not against eviction from any source. Shamsuddin Ahmed vs Dinanath Mullick & ors. , Appeal from Original Decree No. 123 of 1957, decided on August 13, 1959). The correctness of this view has not been challenged before us. Nor is it the appellant 's case that Land and Bricks was a Thika tenant of Raghuvanshi. Obviously, this could not be suggested, because Land and Bricks never erected any structure at all. (See the definition of a Thika tenant in section 2, cl. 5 of the Calcutta Thika Tenancy Act, 1949). On the materials on the record we are satisfied that there was no defence that Land and Bricks could have raised for resisting Raghuvanshi 's claim for ejectment. The crux of the matter is: Was this attempt by Raghuvanshi to get possession of the land a dishonest or sinister purpose? We are asked by Mr. Desai to spell dishonesty out 'of the fact that the directors of Raghuvanshi and Land and Bricks were common and so the persons who were interested in Land. and Bricks were also interested in seeing that Raghu vanshi had not to suffer for forfeiture of his lease for failure to comply with the covenant to construct a building by 1960. All this may be taken to be true. But, we are unable to see how this would make Raghuvanshi 's attempt to get possession of the land dishonest or sinister. It is not as if Raghuvanshi did not actually want to get possession of the land but wanted to help Land and Bricks to get possession. It has also to be remembered that the identity of the directors and the identity of the main shareholders do not in any way affect the position that in law and in fact Raghuvanshi and Land and Bricks were distinct and separate entities. It is not even remotely suggested that Raghuvanshi and Land and Bricks were really one and the same person with two names. 766 If that had been so, there might have been good reason for thinking that it was in an attempt to surmount the obstacle represented by the Calcutta Thika Tenancy Act, 1949, that this mode of Raghuvanshi suing Land and Bricks for ejectment was resorted to. Indeed, if Raghuvanshi and Land and Bricks were one and the same person possession of Land and Bricks would be possession of Raghuvanshi and a suit by Raghuvanshi to eject Land and Bricks would be meaningless. But, that is not the appellant 's case. It appears from the High Court 's judgment that the plaintiff 's counsel made it plain before the court that it was not his client 's case that the plain tiff 's real lessor was Raghuvanshi Private Ltd., and not Land and Bricks Ltd. In the present appeal before us also Mr. Desai argued on the basis that Land and Bricks and Raghuvanshi were distinct entities and that the lease of Land and Bricks under Raghuvanshi was a real subsisting lease at the time of Suit No. 3283 of 1955. In our judgment, the appellate Bench of the High Court has rightly come to the conclusion that the plaintiff has failed to establish that the decree in Suit No. 3283 of 1955 was procured collusively. The suit was therefore rightly dis missed. The appeal is accordingly dismissed with costs. Appeal dismissed.

IN-Abs

Respondent No. 2 is the lessee of Respondent No. 1 and the appellant is the sub lessee. Both the respondents Nos. 1 and 2 had the same directors. Respondent No. 1 brought a suit against respondent No. 2 for eviction in which the appellant was not impleaded as a party. By agreement between the present respondent Nos. 1 and 2 that suit was not defended and ex parte decree was obtained in favour of respondent No. 1. By virtue of this decree the appellant as a sub lessee of respondent No. 2 became a tresspasser and had no right to remain on the land. To avoid this situation the appellant filed a suit to set aside the decree on the ground that it was obtained by collusion. The Trial Judge accepted his contention and gave a direction that the appellant still remained a tenant and directing the defendants in that suit from taking any steps in execution of the ex parte decree. On appeal the trial Court 's decree was set aside on the ground that the present appellant had failed to prove that the ex parte decree was obtained collusively. Before this Court the same contentions as in the courts below were raised. Held: (i) The mere fact that the defendant agreed with the plaintiff that if a suit is brought he would not defend it would not necessarily prove collusion. It is only if this agreement is done improperly in the sense that a dishonest purpose was intended to be achieved that they can be said to have colluded. Scott vs Scott. 1913 Law Reports (Probate Division) 52 and Nagubai Ammal & Ors. vs B. Shamma Rao, ; , referred to. (ii) The law allows a landlord to institute a suit against a lessee for the possession of the land on the basis of a valid notification without impleading the sub lessee and the decree in such suit would bind the sub lessee and hence the suit instituted by respondent No. 1 in the present case cannot be said to have constituted an improper act. (iii) The omission of the respondent No. 2 to defend the earlier suit was not also an improper act because even if it had a good defence it was not bound to take it. (iv) Even if the appellant was a Thika tenant within the meaning of the Calcutta Thika Tenants Act, 1949, it would have protected him against eviction by respondent No. 2 but It would not have given protection against the eviction by respondent No. 1 because the Act was designed to protect the Thika Tenant from eviction by the landlord only and not against eviction from any other source. 761 Shamsuddin Ahmad vs Dinanath Mullick, Appeal from original decree No. 123 of 1957, decided on 13 8 59. (v) The respondents Nos. 1 and 2 are two distinct legal entitles and therefore simply because both had the same directors it cannot be said that the purpose of the suit was dishonest or sinister. (vi) The appellate Bench of the High Court has correctly decided that the present appellant has failed to establish that the impugned decree was procured collusively.

iminal Appeal No. 83 of 1961. Appeal from the judgment and order dated June 20, 1960, of the Calcutta High Court in Criminal Revision No. 1525 of 1959. H. R. Khanna, K. L. Hathi and R. N. Sachthey, for the appellant. G. section Pathak, B. Datta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent. April 14, 1964. The judgment of the Court was delivered by RAGHUBAR DAYAL, J. This appeal, on certificate granted by the Calcutta High Court, is directed against an order of the High Court dated June 20, 1960 reversing the Order of the Chief Presidency Magistrate directing return of certain documents to the respondent, and has arisen in the following circumstances: On April 6, 1959, the Chief Presidency Magistrate, Calcutta, ordered the issue of search warrants on the application of the Enforcement Officer, Enforcement Directorate, Ministry of Finance, under sub section (3) of section 19 of the Foreign Ex change Regulation Act, 1947 (Act VII of 1947). The search warrant was issued on May 6, 1959. It required the produc tion of documents seized, before the Magistrate. In execution of the search warrant, a number of documents were seized from the possession of the respondent on May 14, 1959. The 726 Enforcement Officer reported that day that a certain room could not be searched and therefore further action on the search warrant was to be taken. He also noted in his appli cation, for the Chief Presidency Magistrate 's information: "that the seized documents as per enclosed Seizure Memo have been kept with us for scrutiny and those will be retained till the completion of the enquiry or the adjudication proceedings as the case may be and a report will be submitted to Your Honour thereafter." on May 28. 1959, the Enforcement Officer applied to the Chief Presidency Magistrate for permission for the retention of the seized documents for a period of two months for the submission of further report in the matter. The Chief Presidency Magistrate granted the necessary permission. Similar permission was again granted on applications, by the Chief Presidency Magistrate, on July 28 and September 28, 1959. On October 5, 1959, the respondent applied to the Chief Presidency Magistrate for an order of return of the said documents as the statutory period of 4 months during which the Director of Enforcement could keep the documents had expired, and no proceedings had been commenced against him under section 23 of the Act. The claim for the return of the documents was based on the provisions of section 19 A. On Octo ber 20, 1959 the Chief Presidency Magistrate ordered the return of the seized files to the respondent. He, however, modified this order the same day, when his attention was drawn to his earlier order dated September 28, 1959 permit ting the Enforcement Officer to retain the documents till November 28, 1959. He directed the matter to be heard 'on October 26, 1959 and on that day, in view of the Investigat ing Officer being on leave, adjourned the matter for decision to November 10, 1959. in his application presented on November 10, 1959 the Enforcement Officer stated that the Director of Enforcement had started adjudication proceedings against the respondent for alleged violation of section 4(1) of the Act and had issued notice to him to show cause and that in connection with the adjudication proceedings seized files items Nos. 2 and 7 of the Seizure Memo would be required and that he had no objection to the return of the remaining seized files though they might have some distant bearings on those proceedings. The Chief Presidency Magistrate ordered, on November 10, 1959, the return of all the documents except those mentioned at items 2 and 7 of the search list. The respondent went up in revision against this order for the continued retention 727 of the two documents, and the High Court allowed the revision and ordered the return of these documents also to the s respondent. It is against this order that this appeal has been filed. We may first refer to the relevant provisions of sections 19 and 19 A of the Act, and later to certain provisions of the Code of Criminal Procedure, hereinafter called the Code, to appreciate the contention for the parties. "19(1). The Central Government may, at any time by notification in the Official Gazette, direct owners, subject to such exceptions, if any, as nay be specified in the notification, of such foreign exchange or foreign securities as may be so specified, to make a return thereof to the Reserve Batik within such period, and giving such particulars, as may be so specified. Government or the Reserve Bank considers it necessary or expedient to obtain and examine any information, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank it is possible for such person to 'obtain and furnish, the Central Government or, as the case may be, the Reserve Bank may, by order in writing, require any such person (whose name shall be specified in the order) to furnish, or to obtain and furnish, to the Central Government or the Reserve Bank or any person specified in the 'order with such information, book or other document. (3) If on a representation in writing, made by a person authorised in this behalf by the Central Government or the Reserve Bank, a District Magistrate, Sub Divisional Magistrate, Presidency Magistrate or Magistrate of the first class, has reason to believe that a contravention of any of the provisions of this Act has been, or is being or is about to be, committed in any place, (2) of this section has been or might be addressed, will not or would not produce the information, book or other document, or where such information, book or other document is not known to the Magistrate to be in the possession of any person, or where the Magistrate considers that the purposes of any investigation or proceeding under this Act will be served by a general search or inspection, 728 he may issue a search warrant and the person to whom such warrant is directed may search or inspect in accordance therewith and seize any book or other document, and the provisions of the Code of Criminal Procedure, 1898 relating to searches under that Code shall, so far as the same are applicable, apply to searches under this sub section: Provided that such warrant shall not be issued to any police officer below the rank of sub inspector. Explanation. In this subsection, 'place ' includes a house, building, tent, vehicle, vessel or aircraft. Where in pursuance of an order made tinder sub section (2) of section 19 or of a search warrant issued under sub section (3) of the said section, any book or other document is furnished or seized, and the Director of Enforcement has reasons to believe that the said document would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be necessary to retain the document in his custody, he may so retain the said document for a period not exceeding four months or if. before the expiry of the said period of four months, any pro ceedings under section 23: (a) have been commenced before him, until the disposal of those proceedings, including, the proceedings before the Appellate Board, if any, or (b) have been commenced before a Court, until the document has been filed in that Court. " Chapter VII of the Code provides for processes to compel the production of documents etc. Section 94 empowers the Court to issue a summons to a person in possession of the document or whose production is considered necessary or desirable for the purpose of any investigation, inquiry, trial or other proceeding under the Code to produce the same before it. In certain circumstances mentioned in section 96 it may issue a search warrant, for conducting the search for such documents or articles as are mentioned in section 94. The combined effect of the two sections is that the articles seized in execution of the search warrant have to be produced before the Magistrate and the Magistrate thereafter passes suitable orders about the custody or return of those documents. Form 8, Schedule V, of the Code gives the form of the search warrant and contains a direction that the articles seized be produced forthwith before the Court. Sections 98 and 99 A deal with search 729 warrants in special circumstances and sections 101 to 103 come under the general provisions relating to searches. The appellant 's main contentions are: 1.The provisions of section 19 A limit the period for retaining the documents seized in execution of a search warrant issued under section 19 to 4 months by the Director of Enforcement but does not limit the power of the Court issuing the search warrant to pass any orders for the retention of the seized documents or with respect to the disposal 'of those documents. In the absence of any prescribed procedure for the issue of a search warrant under section 19, the provisions of sections 96, 98 and Form 8 of Schedule V of the Code would be applicable to the search warrants issued under section 19. 3.The Court has inherent power to pass proper orders with respect to the retention of the documents seized for the purposes of investigation and proceedings following it. 1.Section 19 and, 19 A are special provisions which provide for special procedure for investigation of the several offences created by the statute and were enacted in order to remove certain difficulties in investigation which led to the keeping of documents of citizens unduly long and thus causing them inconvenience and harassment, and to relieve the Magistrate of his repeatedly dealing with police reports for permission to retain the documents and that therefore when section 19 A fixes the maximum duration for the retention of the documents by the Director of Enforcement at 4 months and thus prohibits further detention except in certain circum stances by the officer concerned, the Magistrate cannot allow the Director of Enforcement to keep the documents beyond four months. 2.There is no provision in the Act empowering the Court to extend the period for the detention of documents and any such power in the Magistrate will defeat the very object of the Act. The provisions of the Code relating to searches under the Code apply so far as the same be applicable to searches under sub section (3) of section 19 of the Act and therefore the provision of the Code giving jurisdiction to the Magistrate over the property seized in execution of a search warrant issued by him will not fully apply to property seized in execution of the search warrant issued under sub section (3) of section 19. The first question to determine is whether Magistrate issuing the search warrant has control over the disposal of the articles seized in execution of the warrant. The provisions of the Code relating to searches apply to search warrants issued under sub section (3) of section 19 but only in so far as they be 730 applicable. The provisions dealing with the circumstances in which, and the authorities by which, search warrants can be issued cannot apply, in view of the specific provision for the issue of a search warrant under the Act in sub section (3) of section 19. Sections 96, 98 and Form 8 of Schedule V, do not therefore operate in connection with searches under sub section 19. It is therefore the provisions which deal with what is done after the issue of a search warrant which have been made applicable to searches under the Act and such provisions therefore would be the provisions relating to the mode of conducting searches. The object of the aforesaid provision in sub section (3) of section 19 is to provide how the searches are to be conducted as it deals with the issue of search warrant in sub section (3) of s.19. It is only with respect to the intervening stage, that is the stage of actual search that no specific Provision is made in the Act. We are therefore of opinion that, the provisions under sub section (3) of section 19 are the provisions relating to the conduct of searches and that these provisions are sections 101, 02 and 103 of the Code. What is to be done with the articles seized does not strictly come within the expression 'searches '. It is dealt with in section 19 A. It is therefore not correct for the appellant to say that the Magistrate can exercise his powers under the Code in connection with property seized tinder sub section (3) of section 19 of the Act. It follows that any further reference to the Magistrate, as made by the Enforcement Officer in this case, for permission to retain the documents seized was not necessary. The Enforcement Officer has a right under section 19 A to retain the articles seized in accordance with its provision. What course is to be adopted by the person aggrieved when the Enforcement Officer contravenes the provisions of section 19 A, is a different matter. The fact that such a contingency may arise does not mean that it is the Magistrate issuing the search warrant who is to be approached and who is competent to deal with the grievance. Any way, such a contingency is insufficient to warrant the finding that the Magistrate issuing the warrant has control and possession over the documents seized and that therefore he can pass any orders with respect to their disposal. He has no such power, in any case, till the period mentioned in section 19 A has expired. There is no provision in the Act which gives him any power to deal with the situation arising after the expiry of that period. One should, however, presume that the Director 'of Enforcement will not by his order act against the provisions of section 19. Section 19 A deals with the custody of documents which come into the possession of the Director 'of Enforcement in two ways. Documents are furnished to the Director of En forcement in pursuance of an order made under sub section (2) of section 19 under the directions of the Central Government or the Reserve Bank. No Magistrate as such has jurisdiction over the disposal of such documents which come into the possession of the Director of Enforcement in pursuance 'of orders under sub section (2) of section 19. The Director of Enforcement also gets possession of documents in execution of search warrants under sub section (3) of section 19. The provisions with respect to his retaining in his posses. ion the documents which come in his possession are the same, whether they conic so one way or the other. It follows that, in the latter case too, the Magistrate issuing the search warrant has nothing to do with the retention or disposal of the documents seized in execution of the search warrant. It was also urged for the apelllant that the provisions of section 5(2) of the Code apply to the present case in matters which are not provided by the Act. This contention too has no basis. Section 5 provides that all offences under any law other than the Indian Penal Code shall be investigated, in quired into, tried and otherwise dealt with according to the provisions contained in the Code of Criminal Procedure, but subject to any enactment for the time being in force regu lating the manner or place of investigating, inquiring into, trvina or otherwise dealing with such offences. The Act is a special Act and it provides under section 19 A for the necessary investigation into the alleged suspected commission of an offence under the Act. by the Director of Enforcement. The provisions of the Code of Criminal Procedure therefore will not apply to such investigation by him, assuming that the expression investigation ' includes the retaining of the documents for the purposes of the investigation. Reliance has also been placed for the appellant on the case reported as Moliammad Serajuddin vs R. C. Mishra(1) in support of the contention that the Magistrate retains con trol over the disposal of the articles seized in connection with the search warrant issued by him. In that case the Court was considering the question of the disposal of the documents seized in execution of a search warrant under section 172 of the Sea Customs Act. The provisions of that section are different from those of sub section (3) of section 19 of the Act. A search warrant issued by a Magistrate under section 172 of the Sea Customs Act has the same effect as a search warrant issued under the Code of Criminal Procedure and thus assumes the character of a search warrant issued under the Code of Criminal Procedure. The same is not the case with respect to the search warrant issued under sub section (3) of section 19. further, there is no section corresponding to section 19 A of the Act in the Sea Customs Act. This case, therefore, is not of help to the appellant. 732 In this view of the matter, the order of the Magistrate with respect to the disposal of the documents was beyond his jurisdiction and the High Court was right in setting aside his order directing the retaining of certain documents by the Director of Enforcement. The question however remains whether the order of the High Court directing the return of the two documents to the respondent is a correct order. It has been urged for the appellant that there is no pro vision under section 19 A or any other section of the Act that the documents be returned to the party from whose custody they were seized, without an order from the Magistrate and that therefore no order for their return can be made by any authority. No such express provision is necessary. Documents seized have to be returned if the law provides that they are not to be retained after a certain period of time. Such a direction under the statute is sufficient Justification and authority for the person in possession of the documents to return them to the person from whose possession they had been seized. Provisions are necessary for retaining documents of others and not for returning them to the persons entitled. Section 19 A authorises the Director of Enforcement to retain a document for a period of not exceeding 4 months, or, if before the expiry of the said period of 4 months, any proceedings under section 23(1) have been commenced before him, until the disposal of those proceedings, including the proceedings before the Appellate Board, if any, or (ii) if such proceedings have been commenced before a Court, until the document has been filed in that Court. This means that the Director of Enforcement can justifiably retain with himself the document seized till the final disposal of the proceedings taken under section 23 of the Act if the proceedings had commenced before the period of 4 months, during which he could keep the documents. In the present case such proceedings had not been commenced within the period of 4 months of the Director of Enforcement getting possession of the documents. He could not have therefore, on his own, retained those documents after the expiry of the fourth month. He ,could have taken legal steps for the retention of those documents. He did not keep those documents with himself on his own. He had been obtaining the permission of the Chief Presidency Magistrate for retaining the documents from the time of their seizure under the impression that the Magistrate could legally order the retention of the documents, presumably as the warrant had directed the production of documents seized, before him. Proceedings under section 23 did start prior to the order for the return of the documents. Considering the real intention 733 of section 19 A to be that the Director of Enforcement can retain the documents seized till the final disposal of proceedings under section 23 of the Act. the Magistrate 's order, even if he had not the authority to pass orders for the retention of the documents by the Director of Enforcement, till the final disposal of the proceedings under section 23, was an order giving effect to the spirit behind the provisions of section 19 A. The order of the High Court directing the return of the documents to the respondent therefore appears to us to be unjustified in the special circumstances of the case. It is not necessary for us to consider in this case what legal steps the Director of Enforcement could take for re taining possession of the documents seized on the expiry of the 4 months ' period in case his investigation in connection with those documents is not complete within that period. One of the methods possibly can be his applying to the Cen tral Government to make an order under sub section (2) 'of section 19 directing the owner of those documents to furnish them to the Director of Enforcement. Such an order will be legal justification for the Director of Enforcement to retain in possession any of the documents which nationally be would be deemed to have returned to the owner on the expiry. of the four months and to have got fresh possession over those documents not by virtue of a search warrant but by virtue ,of an order of the Central Government under sub section (2) of section 19. We therefore hold that the Magistrate has no jurisdiction over the articles seized in execution of the search warrant issued under section 19(3) of the Act and that he cannot permit the retention of such documents by the Director of Enforce ment after the expiry of the period he is entitled to keep them in accordance with the provisions of section 19 A. In the special circumstances of the case, we allow the appeal, set aside the order of the High Court and order that the documents mentioned at items Nos. 2 and , 7 of the Seizure Memo can be retained by the Director of Enforcement till the final conclusion of the proceedings commenced under section 23 of the Act. Appeal allowed.

IN-Abs

On May 14,1959 ,a number of documents were seized from the possession of the respondent by the Enforcement Officer in execution of a search warrant. The search warrant was issued by the Chief Presidency Magistrate under sub section (3) of section 19 of the Foreign Exchange Regulation Act, 1947. The Director of Enforcement with the permission of the Chief Presidency Magistrate retained those seized documents for a period exceeding four months. On October 5, 1959, the respondent filed an application before the Chief Presidency Magistrate in which he claimed the return of the seized documents on the basis, of the provision of section 19 A of the Foreign Exchange Regulation Act. On this application the Chief Presidency Magistrate directed the return of all the documents to the respondent except those mentioned at items 2 and 7 of the search list. The respondent went up in revision against this order for the continued retention of the two documents, and the High Court allowed the revision and ordered the return of these documents also to the respondent. Against this order appeal was filed in this Court. Held:(i) The Magistrate has no jurisdiction over the articles seized in execution of the search warrant issued under section 19(3) of the Foreign Exchange Regulation Act and that he cannot permit the retention of such documents by the Director of Enforcement after the expiry of the period he is entitled to keep them in accordance with the provisions of section 19 A of the Act. The Enforcement Officer has a right under section 19 A to retain the articles seized for a period not exceeding four months and it is not necessary for him to obtain permission from the Magistrate for retaining the seized documents within the statutory period. Therefore, the Magistrate issuing the search warrant has nothing to do with the retention or disposal of the documents seized in execution of the search warrant either during the statutory period of four months or after the expiry of that period. Mohammad Serajuddin vs R. C. Mishra, [1962] 1 Supp. S.C.R. 545, distinguished. (ii) In view of the specific provision for the issue of a search warrant under sub section (3) of section 19 of the Foreign Exchange Regulation Act, the provisions of sections 96, 98 and Form No. 8 of Schedule V of the Code would not be applicable to the search warrants issued under sub section (3) of section 19. The provisions of SS. 101, 102, 103 of the Code will apply to searches under sub section (3) of section 19 of the Act as there is no specific provision in the Act with respect to the conduct of the search. 725 (iii) The provisions of section 5(2) of the Code will not apply to an investigation conducted under the Act because the Act is a special Act and it provides under s.19 A for the necessary investigation into the alleged suspected commission of an offence" under the Act, by the Director of Enforcement. (iv) No express provision is necessary in the statute for the return of documents after the expiry of the statutory period. Provisions are necessary for retaining documents of others and not for returning them to persons entitled. Therefore the documents seized have to be returned to the person from whose possession they had been seized after the expiry of the statutory period. (v) Under s.19 A of the Act the Director of Enforcement can justifiably retain with himself the documents seized till the final disposal of the proceedings taken under s.23 of the Act if the proceedings had commenced before the period of four months, during which he could keep the documents. In the present case he could not have retained those documents beyond four months because no such proceeding had been commenced within 4 months. In the present case proceedings under s.23 did start prior to the order for the return of documents. On the facts of this case it was held that the direction of the Magistrate in regard to the retention of documents was an order giving effect to the spirit behind the provision of section 19 A.

Appeals Nos. 384 and 385 of 1963. Appeals by special leave from the judgment and Decree dated January 19, 1961, of the Kerala High Court in Income tax Referred case No. 20 of 1959. K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant. Bishan Narain, G. B. Pai, T. A. Ramachandran, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the res pondents. April 10, 1964. The judgment of the Court was delivered by SUBBA RAO, J. These two appeals by special leave raise the question whether the estate duty paid by the resident Company, hereinafter called the assesses, incorporated outside India, on behalf of members not domiciled in India is deductible from its profits in computing its assessable income under section 10(2)(xv) of the Indian Income tax Act, 1922, hereinafter called the Act. The material facts are not in dispute and they may be briefly stated. The assesses is a resident Company incorpo rated outside India. Most of its shareholders are in the United Kingdom. During the accounting period ending March 31, 1955, it paid pound 1,302 9 4 and pound 1,303 towards estate duty which was payable on the death of certain share holders who were not domiciled in India. The assessee debited the said amounts to revenue in its accounts in ascertain 695 ing the profits and gains of its business for the said year. Similarly, for the accounting year ending March 31, 1956, it paid a sum of pound 3,809 1 5 towards estate duty payable on the death of certain shareholders and debited the said amount to revenue in its accounts in ascertaining the profits and gains of its business for that year. The Income tax Officer included the said amounts so paid towards estate duty in the profits and gains of the company for the said two accounting periods and assessed the company to income tax for 1955 56 and 1956 57 on that basis. The appeals preferred by the assessee to the Appellate Assistant Commissioner were dismissed. On further appeal to the Appellate Tribunal it held that the assessee was entitled to deduct the said amount in computing its profits; and on that finding it set aside the orders of the Appellate Assistant Commissioner. On an application made by the Commissioner of Income tax, the Appellate Tribunal stated a case under section 66(1) of the Act to the Kerala High Court, and referred the following question of law for its opinion: "Whether on the facts and in the circumstances of the case, the estate duty paid by the Company under Section 84 of the , is a revenue expenditure deductible in computing the assessee 's business income for the assessment years in question?" The High Court agreed with the view expressed by the Appellate Tribunal and answered the question referred to it in the affirmative. The present appeals by special leave have been filed against the said order of the High Court. Mr. Rajagopala Sastri, learned counsel for the Commissioner of Income tax, raised before us the following two points; (1) The sums paid by the assessee under section 84 of the , are not expenditure of the assesseeCompany and, therefore, they cannot be deducted from its profits in computing its assessable income under section 10(2)(xv) of the Act; and (2) even if it is revenue expenditure, it is not laid out or expended wholly or exclusively for the purpose of the assessee 's business within the meaning of the said sub clause. Mr. Bishan Narain, learned counsel for the respondent, supported the judgment of the High Court and contended that the said estate duty was revenue expenditure incurred by the assessee as it was put out of pocket to that extent and that it had not been proved that the assessee could legally recover the said amounts from the legal representatives of the deceased shareholders. He further argued that 696 he said expenditure was wholly and exclusively for the pur pose of the assessee 's business within the meaning of s.10(2)(xv) of the Act inasmuch as it discharged its statu tory obligation in order to preserve the assets of the com pany. The question raised turns upon the provisions of section 10(2) (xv) of the The act. It reads : Section 10. Business The tax shall be payable by an assessee under the head "Profits and gains of business, profession or vocation" in respect of the profits and gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely: (xv) any expenditure (not being an allowance of the nature described in any of the clauses (1) to (xiv) inclusively, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly or exclusively for the purpose of such business, profession or vocation. " The first facet of the argument turns upon the question whether the estate duty paid by the assessee is an expendi ture incurred by it within the meaning of the said provision. Under section 5 of the the property of every person dying after the commencement of the said Act shall be liable to a duty called "estate duty" at the rates fixed in accordance with section 35 thereof. Under section 21 of the said Act there shall not be included in the property passing on the death of the deceased, inter alia, movable property situated outside the territories to which the said Act extends at the time of the death of the person. Under section 53 of the said Act, where any property passes on the death of the deceased, every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested and others mentioned in the section shall be accountable for the whole of the estate duty on the property passing on the death. Section 84 thereof is aimed to reach the property of a member of a company dying outside India: the section before amendment read: Section 84. Company to furnish particulars of deceased inemberrs to the Controller Where a company incorporated outside India carried on business in the territories to which this Act extends and has been, treated for the 697 purposes of the Indian income tax Act, 1922 (Xi of 1922),as resident for two out of three completed assessments immediately preceding, such company shall, within three months of the receipt of intimation of the death of a member dying after the commencement of this Act, fur nish to the Controller such particulars as may be prescribed in respect of the shares of the deceased member in the company, and shall be liable to pay estate duty at the rates mentioned in Part III of the Second Schedule, on the principal value of the shares held by the deceased in the company except in cases where the deceased member was a person domiciled in India and the person accountable has obtained a certificate from the Controller showing that either the estate duty in respect thereof has been paid or will be paid or that none is due, as the case may be." Under this section in the circumstances mentioned therein a company is liable to pay estate duty in respect of the shares of the deceased member of the company on the princi pal value of the share held by the deceased in the company: under this section a statutory obligation is imposed on the company to pay the estate duty on the shares of a deceased non resident member. If such a member of the company had died in India, subject to the conditions mentioned in the section, the company would not be liable to pay the estate duty payable on the shares held by the deceased. In substance the company is made a statutory agent to pay the said duty payable in respect of property belonging to another. Section 77 of the enables a person authorised or required to pay estate duty in respect of any property to transfer the said property for the purpose of paying the duty. This section cannot have extra territorial operation. Prima facie the company cannot transfer the shares or the property of a person domiciled in a country outside India. Nor sub section (2) of section 77, which says that a person having an interest in any property, who pays the estate duty in respect of that property, shall be entitled to the like charge, as the estate duty in respect of that property had been raised by means of a mortgage to him, has application, for it cannot be said that the company has any legal interest in the shares owned by a third party. That apart, the said sub section also cannot have extra territorial operation. Nothing has been placed before us to enable us to ,.come to the conclusion whether in England, where the concerned shareholders died, the resident company could recover the amount representing the estate duty paid by it in 698 India from the legal representatives of the deceased share holders. We, therefore, assume that the assessee who, as a statutory agent pays to the State the estate duty, cannot recover the same from the legal representatives of the deceased non resident shareholders. In that situation the company would be out of pocket to the extent it paid the estate duty of the said persons. We cannot, therefore, accede to the contention of the learned counsel for the appellant that the amounts paid by the assessee towards estate duty were not expenditure incurred by it, but only amounts paid by it on account with a right to recover the same from the persons on whose behalf it paid. The next question is whether the said expenditure was expended wholly and exclusively for the purpose of the business of the assessee within the meaning of section 10(2)(xv) of the Act. The crucial words of the section relevant to the present enquiry are "for the purpose of such business. " Subsection (2) cl. (xv) is a residuary clause which provides for allowing the items of business expenditure not covered by the other clauses of sub section (2) of section 10 of the Act. Beforethe Amending Act of 1939, the language of the predecessor of this clause read thus: " not being in the nature of capital gains incurred solely, for the purpose of earning such profits or gains. " The Amending Act of 1939 substituted the present clause and made it more comprehensive by using the expression "for the purpose of such business". Some of the decisions cited at the Bar, both English and Indian, throw some light on the construction of the said expression and we would, therefore, briefly notice them. The House of Lords in Strong and Company of Romsey, Limited vs Woodifield(1) construed a corresponding provision in the Income tax Act of the United Kingdom, the, relevant part whereof read: "money wholly and exclusively laid out or expended for the purposes of such concern." ' There, a brewing company, which also owned licensed houses in which it carried on the business of innkeepers, incurred damages and costs to the amount of pound 1,490 on account of injuries caused to a visitor staying at one of its houses by falling in of a chimney. The House of Lords held that the damages and costs were not allowable as a deduction in computing the company 's profits for income tax purposes. The learned Lord Chancellor said: "They cannot be deducted if they are mainly incidental to some other vocation, or fall on the , (1) ; , 219, 220. 699 trader in some character other than that of a trader." Lord Davey, whose dictum was the basis for some of the subsequent decisions in that country, referring to the expression "for the purpose of trade" observed as follows: It is not enough that the disbursement is made in the course of, or arises out of , or is connected with, the trade or is made out of the profits of the trade. It must be made for the purpose of earning the profits." Lord Davey 's definition appears to be much narrower than that of the Lord Chancellor, for the former restricts the expression to mean that the expenditure should have been made only for the purpose of earning profits. Finlay, J., in Allen vs Farquharson Brothers Limited(1), noticed that the qualifictaion "for the purpose of earning profits" was a slight expansion of the words of the statute, though he ex pressed the view that it brought out the real import of the relevant section. In Rowntree and Company, Ltd. vs Curtis (H.M. Inspector of Taxes)(2), in disallowing the deduction claimed by a company of a sum set aside for the relief of ,the invalid employees, Rowlatt, J., applied the test whether the said expenditure incurred by the company was for the purpose of earning profits. In Cooke vs Quick Shoe Repair Service(3), the court allowed a deduction in respect of sums paid by the respondent firm in discharging the liabilities of the business outstanding at the date of the said respondent purchased the business from a third party on the ground that the said expenditure, having been incurred for the purpose of preserving the goodwill and for ensuring the continuity of supply of raw material and labour, was wholly and exclusively laid out for the purpose of its business. After referring to earlier decisions, Croom Johnson, J., made the following observation: Here is a payment made in the circumstances of this case in order to ensure a supply of leather for the business, a payment made in order to ensure a continuance of labour willing to be employed in this business, and payment for rent in order to ensure that the landlord 's consent to assignment of the premises, of the premises in which the business was carried on, should not be re fused. I find it quite impossible to say that there is no evidence to justify those findings." (1) 65. (2) (3) ; 466. 700 Here it will be noticed that the learned Judge went beyond the limited scope given by Lord Davey to the expression in the statute and did not confine it to the amounts spent only for earning profits, but to expenditure incurred in connec tion with the business. Where a company incurred an ex penditure in defending its title to property, it was held in Southern (H.M. Inspector of Taxes) vs Borax Consolidated, Ltd.(1) that the said amount was spent wholly and exclu sively for the purpose of the company 's trade and was, therefore, an allowable deduction for the purpose of com puting the profits of the company for income tax purposes. This decision gives a more liberal meaning to the expression "for the purpose of the trade" than that given by Lord Davey. "Purpose" of the trade includes the purpose to pro tect the assets of the company carrying on the trade. The House of Lords resurveyed the legal position in Morgan (Inspector of Taxes) vs Tate and Lyle Ltd.(2) in the context of the questions whether the expenditure incurred by a com pany engaged in sugar refining in a propaganda campaign to oppose the threatened nationalization of the industry was, an admissible deduction. Lord Morton, after referring to the relevant case law and to Lord Davey 's formula, made the following observations: ". . this seeems to me to be an assumption wholly unwarranted by the evidence. There is no evidence that a transfer of the assets to a national body or authority would not destroy or adversely affect the company 's business. . . . It is clear on the authorities that Lord Davey 's formula includes expenditure for the purpose of ' preventing a person from being disabled from carrying on and earning profits in the trade." Lord Reid laid down the relevant test thus: "A general test is whether the money was spent by the person assessed in his capacity of trader or in some other capacity whether on the one hand the expenditure was really incidental to the trade itself or on the other hand it was mainly incidental to some other vocation or was made by the trader in some other capacity than that of trader. " This decision also restated the two tests namely (i) that the expenditure should be for carrying on the business to earn profits in the trade, and (ii) that the expenditure shall ' be incurred by the assessee in his capacity of a person (1) (1942) 10 T.T.R. (Suppl.) 1, section (2 ) , 205, 206, 219. 701 carrying on the business. Lord Greene, M.R., in Rushden Heel Co., Ltd. vs Keene(1) reaffirmed the second test in the following words: "I find, however, in Strong and Company 's case(2) what appears to me to be a clear answer to the present appeal. It is, I think, a matter not of dictum but of decision in that case that an expense is not deductible if it falls on a trader in some character other than that of a trader. This was the ground of the opinion of Lord Loreburn, L.C., with which Lords Macnaghten and Atkinson agreed. Their Lordships held that the expense there in question fell upon the appellants in their character not of traders but of householders. " In Smith vs Lion Brewery Co., Ltd.(3), the question was whether a brewery company, which was owner and lessee of a number of licensed premises where business was carried on on the tide house basis, was entitled to deduct for the purposes of income tax its liability in respect of compensation fund charges under the, Licensing Act, 1904. It was contended by the Crown that the liability to which the Company became subject was in its capacity as landlord of the property and not as trader carrying on the trade of brewer. When the case ultimately came up before the House of Lords, the House was equally divided. The view of two of the members who agreed with the view of the Court of Appeal prevailed. The basis of the judgment was that the liability was wholly and exclusively related to the carrying on of the company 's business, because on the facts of that case the company had assumed the position of landlord for the purpose of its trade. If the finding was that the company paid the tax in its capacity as landlord as opined by the learned Lords who dissented, the result would have been the other way. In Harrods (Buenos Aires) Ltd. vs TaylorGooby (H.M. Inspector of Taxes)(4), Buckley, J., covered the entire ground over again in the context of a question whether the appellant company therein which was incorporated and resident in the United Kingdom and carrying on the business of a large general stores in Buenos Aires, having paid in Argentina a tax known as the "substitute tax" to which it was liable, could claim deduction under the Income tax Act, 1952 (15 and 16 Geo. VI and 1 Eliz. 1, c. 10, s.137 (a)). The learned judge held on the facts of that case (1) , 316. (2) ; (3) (4) Appeal No. 2048 (Ch. D.) decided on 25th March, 1963 (unreported). 702 that incurring liability for that tax was a pre condition of the Company 's earning profits in the Argentina, for without incurring liability for that tax the Company could not carry on business in the Argentina at all. On that finding the learned Judge came to conclusion that it was a liability which the Company had undertaken for the purpose of its trade, and was, therefore, a payment made wholly and ex clusively for the purpose of the company 's trade. It will be seen that in that case the tax was paid by the Company in its capacity as company doing business and unless that tax was paid the company could not carry on its business. The two tests laid down are satisfied. Pausing here, we shall briefly recapitulate the legal posi tion in England. The relevant wordings of section with which the English Judges were concerned are, in effect, similar to the terms of section 10(2)(xv) of the Indian Income tax Act, 1922. The test laid down by Lord Davey in Strong and Company of Ramsey, Ltd. vs Woodifield(1), namely, the disbursement must be made for the purpose of earning profits, has been accepted and followed throughout, though the content of that test has been expanded to meet diverse situations. Broadly, the English courts applied two tests to ascertain whether a deduction was permissible or not, namely. (i) whether the expenditure was incurred for the purpose of carrying on of the business and for removing obstacles and impediments in the conduct of the business, and (ii) whether the assessee paid the amount in his capacity as businessman or in his personal capacity. Now coming to the Indian decisions, a Devision Bench of the Bombay High Court in Tata Sons Ltd. vs Commissioner of Income tax, Bombay (2 ) held that the share of bonus voluntarily paid by a company, which held the managing agency of another company, to some of the officers of the managed company was a permissible deduction under s.10(2)(xv) of the Act. The reason for the conclusion is stated thus: "But having considered the whole case and the question submitted to us I am satisfied that looking purely at it from the point of view of commercial principles what the assessee company has done is something which had as its object increasing the profits of the Tata Iron and Steel Co. nd thereby increasing its own share of the commission." (1) ; (2) , 472. 703 In Badridas Daga vs Commissioner of Income tax(1), where the agent of the assessee misappropriated his money and the assessee claimed the part of the amount misappropriated and not recovered from the agent as a deduction under section 10(2)(xv) of the Act for the purpose of income tax, this Court held that it was not allowable under section 10(2)(xi) or s.10(2)(xv) of the Act. Venkatarama Ayyar ,j., observed : "The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend, on whether having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it." This decision, though not direct in point, lays down the principle that an expenditure can be deducted only if it arises out of the carrying on of the business and is incidental to it. In Indian Molasses Co. (Pvt.) Ltd. vs Commissioner of Income tax, W.B. (2), this Court held that section 10(2) (xv) of the Act enacted affirmatively what was stated in the negative form in the English statute and was substantially in pari materia with the English enactment and the courts might consider the English authorities as aids to the interpretation thereof. The decision of this Court in Commissioner of Income tax, Bombay vs Abdullabhai Abdulkadar(3), though, turns upon the provisions of section 10(1) of the Act, gives some assistance in deciding the question raised. One of the questions raised was whether the tax paid by the assessee firm as an agent of the non resident principle could be claimed as a bad debt or a trading loss. In the words of Kapur, J., "the loss which the appellant has incurred is not in its own business but the liability arose because of the business of another person and that is not permissible deduction within section 10(1) of the Act". It is true that this decision did not arise under section 10(2)(xv) of the Act, but the principle that the expenditure incurred by the assessee in his capacity as agent of another is not a deductible item equally applies to the present case. This Court in The Commissioner of Income tax, W.B. vs Royal Calcutta Turf Club(1) had to consider the question whether an expenditure incurred by a race club for the purpose of training jockeys of the club was an allowable deduction within the meaning of section 10(2)(xv) of the Act. (1) ; (2) (3) ; (4) ; , 735 736. 704 Kapur,j., speaking for the Court , after considering the relevant decisions, concluded thus: "Applying the law, as laid down in those cases, to the present case the conclusion is that the amountn dispute was laid out wholly and exclusively for the purpose of the respondent 's business because if the supply of jockeys of efficiency and skill failed the business of the respondent would no longer be possible. Thus the money was spent for the preservation of the respondent 's business. " This decision gives a liberal interpretation to the relevant expression. In M/s. Haji Aziz and Abdul Shakoor Bros. vs The Commissioner of Income tax, Bombay City II(1), this Court disallowed deduction of the amount paid by a firm as penalty to release the consignment confiscated by the Customs authorities. In coming to the conclusion, Kapur, J., speaking for the Court, observed: "The words "for the purpose of such business" have been construed in Inland Revenue vs Anglo Brewing Co., Ltd.(2) to mean "for the purpose of keeping the trade" going and of making it pay.,, After considering the relevant decisions, the learned Judge proceeded to state thus: "They cannot be deducted it they fall on the assessee in some character other than that of a trader. Therefore, where a penalty is incurred for the contravention of any specific statutory provision, it cannot be said to be a commercial loss falling on the assessee as a trader the test being that the expenses which are for the purpose of enabling a person to carry on trade for making profits in the business are permitted but not if they are merely connected with the business." No doubt this judgment is really based upon the fact that an expense which is paid by way of penalty for breach of law cannot be said to be an amount wholly and exclusively laid out for the purpose of the business; but the observations in the decision go further and indicate that the expenditure, if incurred by the trader in some character other than that of a ,trader, is not an allowable deduction. (1) ; , 657, 663. (2) [(1925] 813. 705 The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide: it may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measure for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile titles; it may also comprehend payment of statutory dues and taxes imposed as a pre condition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. It cannot include sums spent by the assessee as agent of a third party, whether the origin of the agency is voluntary or statutory; in that event, he pays the amount on behalf of another and for a purpose unconnected with the business. In the present case, the company, as a statutory agent of the deceased owners of the shares, paid the sums payable by the legal representatives of the deceased shareholders. The payments have nothing to do with the conduct of the business. The fact that on his default, if any, in the payment of the dues the Revenue may realise the amounts from the business assets is a conse quence of the default of the assessee in not discharging his statutory obligation, but it does not make the expenditure any the more expenditure incurred in the conduct of the business. It is manifest that the amounts in question were paid by the assessee as a statutory agent to discharge a statutory duty unconnected with the business, though the occasion for the imposition arose because of the territorial nexus afforded by the accident of its doing business in India. We, therefore, hold that the estate duty paid by the respondent was not an allowable deduction under section 10(2)(xv) of the Act. We answer the question in the negative. The order of the High Court is wrong and is set aside. In the result, the appeals are allowed with costs. One set of hearing fees.

IN-Abs

For the two accounting periods the assessee, a resident company, incorporated outside India paid estate duty payable on the death of its certain share holders not domiciled in India and debited the said amounts to revenue in its accounts in ascertaining the profits and gains of its business for the said years. The Income tax Officer included the said amounts so paid towards estate duty in the profits and gains of the company for the said two accounting periods and assessed the company to income tax for 1955 56 and 1956 57 on that basis. The appeals by the assessee to the Appellate Assistant Commissioner were dismissed but on further appeal, the Appellate Tribunal set aside the said orders and held that the assessee was entitled to deduct the said amount in computing its profits. On an application by the Commissioner of Income tax, the Tribunal stated a case under section 66(1) of the Act to the High Court and referred the following question of law for its opinion: "Whether on the facts and in the circumstances ,of the case, the estate duty paid by the company under s, 84 ,of the , is a revenue expenditure deductible in computing the assessee 's business income for the ,assessment years in question." The High Court agreed with the view of the Tribunal and answered the question in the affirmative. On appeal by special leave it was urged on behalf of the appellants, (1) that the sum paid by the assessee under section 84 of the were not expenditure of the assessee company and therefore, they could not be deducted from its profits in computing its assessable income under section 10(2)(xv) of the Act; and (2) that even if it was revenue expenditure, it was not laid out or expended wholly or exclusively for the purpose of the assessee 's business within the meaning of the said sub clause. Held: (i) There was nothing on the record to show whether in England, where the concerned share holders died, the resident company could recover the amount representing the estate duty paid by it in India from the legal representative of the deceased share holders. Therefore, the assessee who, as a statutory agent paid to the State the estate duty, could not recover the same from the legal representative of the deceased non resident share holders. In that situation the company would be out of pocket to the extent it paid the estate duty of the said persons. Therefore, it cannot be held that the amounts paid by the assessee towards estate duty were not expenditure incurred by it, but only amounts paid by it on account with a right to recover the same from the persons on whose behalf it paid. (ii)The expression" for the purpose of the business"in s.10(2) (xv) of the Act is wider in scope than the expression "for the purpose of earning profits". Its range is wide: it may 694 take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a pre condition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for carrying on the business and the assessee shall incur it in his capacity as a person carrying on the business. It cannot include sums spent by the assessee as agent of a third party, whether the origin of the agency is voluntary or statutory; in that event, he pays the amount on behalf of another and for a purpose unconnected with the business. In the present case, the amounts in question were paid by the assessee as a statutory agent to discharge a statutory duty unconnected with the business, though the occasion for the imposition arose because of the territorial nexus afforded by the accident of its doing business in India. Therefore, it must be held that the estate duty paid by the respondent was not an allowable deduction under section 10(2)(xv) of the Act. Case law reviewed.

iminal Appeal No. 71 of 1963. Appeal by special leave from the judgment and order dated November 23, 1962 of the Allahabad High Court (Lucknow Bench at Lucknow) in Criminal Revision No. 251 of 1962. S T. Desai, O. P. Rana, Atiqur Rahman and C. P. Lal, for the appellant. C. B. Agarwala, Ravinder Narain, O. C. Mathur and J. B. Dadachanji, for respondents nos. 1 and 2. April 15, 1964. The Judgment of SUBBA RAO and DA, '; GUPTA JJ. was delivered by SUBBA RAO J. RAGHUBAR DAYAL J. delivered a dissenting Opinion. 736 SUBBA RAO, J. This appeal by special leave raises the question of the privilege raised by the Government of India in respect of certain documents called for from its Home De partment in a criminal proceeding pending the court of the Special Judge, Anti Corruption (East), U.P., Lucknow. The respondents were prosecuted in the said Court, after obtaining the sanction of the Central Government under section 197 of the Code of Criminal Procedure, for an offence under section 6(1)(a) of the Prevention of Corruption Act, 1947 (Act 11 of 1947). An objection was taken before the said court on behalf of the respondents that the sanctioning authority did not apply his mind properly when sanction for the prosecution was granted. It was stated on behalf of the respondents that on a representation made by one of the accused, Col. Sujan Singh, for reconsideration of the order of his prosecution, the Deputy Secretary in the Home Department reconsidered the matter and made notings on his application to the effect that the sanction accorded earlier for his prosecution was given on insufficient data. He filed a petition before the Special Judge to summon the con cerned record of the Home Department on the ground that the said record would substantiate his assertion that the con cerned officer did not apply his mind earlier in according, sanction for his prosecution. The Secretary, Ministry of Home Affairs, claimed privilege on the ground that the production of the record containing the said notings of the Deputy Secretary would not be in the interests of the State. The Special Judge in the first instance and the High Court in revision re jected the claim of privilege raised by the Union Govern ment. The State of U.P. has preferred the present appeal by special leave against the order of the High Court. The respondents filed criminal petition No. 149 of 1964 for condonation of delay in filing appearance and the statement of case. The facts relevant to this application are briefly as follows. Respondents 1 and 2 received the notice granting special leave by this Court on January 16, 1964. After the receipt of the notice they contacted their local advocate at Lucknow and, on his advice, the 1st respondent, along with his local advocate, came to Delhi on January 28, 1964, and made necessary arrangements with Messrs. J. B. Dadachanji & Co., Advocates. On January 16, 1964, respondents 1 and 2 received a notice from the High Court intimating them that the records of the case had been despatched to the Supreme Court. On February 11, 1964, they filed their appearance and on February 18, 1964, their statement of case. If January 16, 1964, was the date of service on them, there would not be any delay in making their appearance or filing their statement of case. But the notice of the dispatch of the records was served on the learned counsel for respondents 1 and 2 on November 4, 1963. Under Ch. V, r. 4(1)(c), read with r. 2, of the Rules of the High Court, Allahabad, where a party is represented by an advocate, a service of notice of dispatch of record on such advocate is deemed to be sufficient service. As the present appeal arises out of an interlocutory order it may be said that the advocate representing the respondents in the High Court still continues to represent them. We assume for the purpose of this case that the rule is valid and the notice was duly served on the advocate. If that be so, the respondents should have filed their appearance and lodged their statement of case within a month from the said date. But they filed their appearance on February 11, 1964, which is clearly beyond time. It will be seen from the said facts that the respondents had filed their appearance within one month from the date of service of notice on them, but beyond time from the date the notice was served on their advocate. The said delay is not in the presentation of any appeal but only in following the procedural steps for making the case ready for disposal. We are satisfied by perusing the record that the delay was not due to negligence on the part of the respondents. It is not suggested that the appellant is in any way prejudiced by this delay. In the circumstances we think that this is a fit case for excusing the delay. We excuse the delay in filing respondents ' appearance and also in lodging the statement of case. Whether the daily of the respondents in entering appearance is excused or not. we are at the outset confronted with the situation that this Court gave special leave when the appeal was prima facie barred by limitation without the appellant filing an application for excusing the delay and the Court excusing the same. A few facts would make the position clear. The Judgment of the High Court in the criminal revision is dated November 23, 1962. A certified copy of the Judgment was delivered to the appellant on December 5, 1962. On December 19, 1962, the appellant filed a petition in the High Court of Judicature at Allahabad for a certificate that the case was a fit one, for appeal to the Supreme Court. On February 18, 1963, the High Court held that the order sought to be appealed against was an interlocutory one and, therefore, the petition was not maintainable under article 134 (1)(c) of the Constitution of India. On April 16, 1963 the appellant filed a petition in this Court for special leave to appeal against the order of the High Court in the criminal revision. In para. 19 of that petition it was stated that the appellant applied to the High Court for a certificate for leave to appeal to the Supreme Court but the High Court by order dated February 18, 1963, refused to grant the certificate applied for. The appeal L/P(D)ISCI 24 738 would be in time if that application was maintainable in the High Court, but would be out of time if that application was not maintainable there, for in the latter event the time would have expired on March 5, 1963, and the appeal would have been out of time by 42 days. Learned counsel for the appellant contends that special leave was ranted on May 10, 1963, and that, as the respon dents have not taken objection on the ground that it was barred by limitation till they filed their petition in this Court on February 26, 1964, we shall not permit them to raise this plea at this very late stage. We are not impressed by this argument. This is not a case where the Supreme Court excused the delay in filing the petition for special leave and the respondents with the knowledge of that fact permitted the appellant to incur heavy expenditure and after a long delay raised the objection at the time of hearing of the appeal that the delay should not have been excused. But this is a case where the appellant did not bring to the notice of the Court that the petition for special leave was out of time. The Registry could not point out the defect as in the petition it was stated that the application under article 134(1)(c) of the Constitution of India was dismissed by the High Court without indicating on what ground it did and this Court assumed that the petition for special leave was in time and gave special leave. Order XXI, r. 2, of the Supreme Court Rules reads: "Where the period of limitation is claimed from the date of refusal of a certificate, it shall not be necessary to file the order refusing a certificate, but the petition for special leave shall be accompanied by an affidavit stating the date of the judgment sought to be appealed from, the date on which the application for a certificate was made to the High Court, the date of the order refusing the certificate and the ground or grounds on which the certificate was refused and in particular whether the application for a certificate was dismissed as being out of time." Under the said rule it is incumbent upon the petitioner to state in the affidavit filed in support of the petition the date of the order of the High Court refusing the certificate and the ground or grounds on which the certificate was refused. If the appellant had complied with this rule, the Registry of this Court would have noticed the delay in filing the special leave petition and brought that to the notice of the Court. In the circumstances there are two courses open to us: one is to dismiss the appeal on the ground that it was barred by limitation, and the other is to permit the appellant to file 739 a petition at this very late stage for excusing the delay in filing the special leave petition and consider that petition on merits. Ordinarily no indulgence should be given to a party when the said party with open eyes filed a petition for special leave without disclosing a material circumstance in the affidavit on the basis of a wrong view of law that the appeal was in time. With some hesitation we gave liberty to the appellant to file a petition for excusing the delay and they have done so. We shall now consider the petition for excusing the delay on merits, as this Court would have done if that application had been filed along with the special leave petition. Two reasons are given in the application for excusing the delay, namely, (1) the Law Officer, who was at the relevant time in charge of the matter in the High Court, advised the Government that the order under appeal was a final order and that an application should be filed under article 134(1)(c) of the Constitution in the first instance so that the other side might not contend that the appellant did not approach the High Court for a certificate, and that the said advice was accepted by the Government; and (2) the appellant acted bona fide, as it believed on legal advice that the period of limitation would be counted from February 18, 1963, i.e., the date of the order of the High Court refusing to give certificate and that the order was also filed along with the petition in this Court. The respondents filed a counter affidavit denying that the order was a final order and stating that there was not sufficient reason for excusing the delay. The learned counsel for the appellant contended that the order of the High Court dated November 23, 1962, in the criminal revision was a final order within the meaning of article 134(1) of the Constitution. The material part of the said article reads: "An appeal shall lie to the Supreme Court from any judgment, final order or sentence in a criminal proceeding of a High Court in the territory of India. . . . We find it difficult to hold that the order under appeal is a final order within the meaning of the said article. In Seth Premchand Satramdas vs The State of Bihar(1) it was held that an order of the Patna High Court dismissing an application under section 21(3) of the Bihar Sales Tax Act, 1944, to direct the Board of Revenue, Bihar, to state a case and to refer it to the ; ,, 804. L/P(D)ISCI 24(a) 740 High Court was not a "final order". This Court, speaking through Fazl Ali, J., defined the expression 'final order" thus: "It seems to us that the order appealed against in this case. cannot be regarded as a final order, because it does not of its own force bind or affect the rights of the parties". Though this definition is given in a different context, it will equally apply to that expression in article 134 of the Constitution. Can it be said that the Special Judge in allowing the petition of the respondents to call for the production of a document from the Union Government is a final order in the criminal proceeding '? The criminal proceedings were taken against the respondents for an offence under section 6(1)(a) of the Prevention of Corruption Act, 1947. The proceedings are now pending in the court of the Special Judge. In the course of those proceedings the respondents filed an application for the production of a document by the Union Government and that was allowed by the court. The said order is only an interlocutory order pending the proceedings. It does not purport to decide the rights of the parties, namely, the State of U.P. and the accused. It enables the accused to have the said document duly proved and exhibited in the case. It relates only to a procedural step for adducing evidence. The High Court confirmed that order in revision. But the learned counsel contents that it negatives the claim of privilege made by the Union Government and, therefore, it decides against the right of the Union Government to withhold the production of the document. Assuming that the order decides some right of the Union Government, on which we do not express any opinion, the Union Government is neither a party to the cri minal proceedings nor is it a party either before the High Court or before us. The indirect effect of that order on a third party to the proceedings, who does not seek to question that order, does not deprive the order of its interlocutory character. We, therefore, bold that the order made by the High Court is not a final order within the meaning of article 134(1) of the Constitution. That apart the order of the High Court holding that the order sought to be appealed from was not a final order within the meaning of article 134(1) of the Constitution has become final. The appellant has not filed any appeal against that order. It cannot ignore that order for the purpose of special leave and contend that the application before the High Court was maintainable and the order made by the High Court must be deemed to have been made on merits, though in express terms it rejected the petition for the reason that it was not maintainable. In either view the period of limitation for filing the special leave petition could not be computed from 741 the date of the order of the High Court refusing to give a certificate to appeal to the Supreme Court. It is then contended that the rule does not say in express terms that the said order of refusal to give a certificate must be on an application which is maintainable and, therefore, if in fact the High Court refused to give a certificate, whether on merits or on the round that it was not maintainable, the party can take advantage of the said rule. We cannot accede to this argument. The rule presupposes that the application for the certificate is maintainable, and the court refuse to give it on the round that the conditions laid down in article 134(1) of the Constitution have not been complied with. If the construction put forth by the appellant be accepted, it will give room for fraud and ,evasion of the rule. A party whose appeal has become barred can file a petition with the knowledge that it is not maintainable, get an order of dismissal and then seek to take advantage of the additional period of limitation provided by the rule. The rule, therefore, must be interpreted reasonably and if so interpreted. it could only mean that the refusal of the ,certificate must be in an application maintainable under the said Article. Now we shall proceed to consider the application for excusing delay on its merits. The reason for the delay given in the affidavit is that the Law Officer was of the opinion that the application for a certificate was maintainable under article 134(1) of the Constitution. We do not see any justification for this opinion. There is no conflict of judicial opinion on this question. The only question that was before the Law Officer was whether the order sought to be appealed from was a final order. The order ex facie was an interlocutory order and so far as the Government of U.P. was concerned it could not possibly be held that any of its rights bad been affected by that order. In the circumstances we cannot hold that a wrong legal advice is a sufficient ground for excusing the delay. What is more, on February 18, 1963, the High Court in a considered order held that the order sought to be appealed from was not a final order and, therefore, an application under article 134(1) of the Constitution was not maintainable. The time for preferring an appeal from the main order of the High Court would expire only on March 5. 1963, that is to say, the appellant had 15 days time more for taking steps for preferring the appeal. Even so no steps were taken to file the appeal and instead an appeal was filed on the basis of the original opinion of the Law officer that the time can be computed from the date of the order refusing to issue the certificate. From the information supplied by the counsel for the appellant it appears that the Government decided to file the appeal only on March 8, 1963, i.e., after the time for filing the appeal bad 742 expired. After further correspondence between the Govern ment of U.P. and the counsel representing it in the Supreme, Court the special leave petition was filed only on April 16,. 1963, completely ignoring the reasons given by the High Court in dismissing the application for certificate of fitness. On the ,said facts we do not see any justification for excusing the long delay of 42 days. the appeal is clearly barred by limitation and should be dismissed. Accordingly the appeal is dismissed. RAGHUBAR DYAL, J. I respondents ' appearance and also in lodging the statement of case be excused. I am however, of opinion that the appellant 's application for excusing the delay in the presentation of the petition for special leave to appeal be allowed. It has to be assumed, for the purposes of disposing of this application, that the order under appeal was not a final order within the meaning of that expression in article 134(1) of the Constitution. The High Court held so and refused the certificate. The appellant has neither preferred an appeal against that order nor questioned its correctness in its petition for special leave. The reason urged for condoning the delay is that the legal advisers of the appellant were of opinion that limitation for the presentation of the petition for special leave would be governed by the provisions of r. (1) of O.XXI, Supreme Court Rules, hereinafter called the rules, and that in accordance with those provisions the period of limitation would be 60 days from the date of refusal of the certificate by the High Court. If that rule applied, the petition for ,special leave would be in time. The certificate was refused on February 18, 1963, and the special leave petition was filed ' on April 16. The question then is whether the appellant can take advantage of the opinion of its legal advisers, assuming that this opinion was erroneous. I am of opinion that it should be given that advantage, as the error. if any, cannot be said to be of such a character which a legal adviser could not have possibly given. The rule does not expressly state that limitation would be counted from the date of refusal of the certificate only when an application for a certificate under article 134 would be maintainable as an application against an order which is held by the High Court to be a 'judgment, final order or sentence in a criminal proceeding '. It is true that an application under article 134 is contemplated to be an application against the judgment. final order or sentence in a criminal proceeding, and that refusal of a certificate under article 134. for purposes, of rule 1 (1) of O.XXI. refers to the refusal of an application 743 for certificate against the judgment, final order or sentence in a criminal proceeding. But this does not necessarily mean that the rule will not be applicable in cases of refusal of a certificate when one applied for it on the ground that the order sought to be appealed against amounted to a judgment, final order or sentence while the High Court came to a different opinion. The rule does not specifically ,state that the date of the refusal of the certificate would be taken to be the starting point of limitation only when the High Court refuses certificate on the round that it was not a fit case for appeal to the Supreme Court. If it were so, the rule would have been limited to those cases. Further, there is indication in sub r. (2) itself that such was not contemplated by sub r. (1) of r. 1. Sub rule (2) of r. 1 requires the petitioner, in case he desires limitation to be counted from the date of refusal of the certificate, to mention the rounds for the refusal of the certificate and, in particular, Whether the application for certificate was rejected as being out of time. An application presented after the expiry of limitation is not maintainable till the Court allows the application for the condonation of delay. There must be a reason for providing, in sub r. (2), that the fact of the refusal of the certificate on round of limitation must be expressed. The reason is that proviso (iii) to sub r. (1) of r. 1 provides that when an application for a certificate is dismissed on the round of its being out of time, limitation for the petition for special leave to appeal will not be counted from the date of the dismissal of the application. There is no corresponding provision with respect to the limitation being not counted from the date of refusal. if the refusal be on the ground that the order sought to be appealed against did not amount to a 'judgment, final order or sentence ' in a criminal proceedings. In view of these considerations, the advice of the appel lant 's counsel, even if it be erroneous, should not go against the appellant to the extent that the delay in filing of the special leave petition be not condoned. I do not think that the omission to state the ground of refusal in the petition for special leave was deliberate in order to keep back from the Court that the application had been presented after the expiry of the period of limitation. it would not be irrelevant to consider the nature of the point sought to be urged in the appeal. The question is whether the High Court was right in considering the order of the trial Court rejecting the claim of privilege raised by the Union Government in accordance with section 123 of the Evidence Act with respect to the production of certain documents summoned. on the ,round that the disclosure would not be in public 744 interest. If the view of the Courts below is wrong, the result of refusing to condone the delay would be that public interest will suffer and that consideration should, in my opinion, outweigh the lapse on the part of the appellant in not filing the petition for special leave to appeal within time and that too,, in view of the wrong advice or opinion given by its legal advisers. I would therefore allow the application and condone the appellant 's delay in presentation of the petition for special leave. ORDER In accordance with the opinion of the majority, the delay in filing the special leave petition is not condoned. The appeal is barred by limitation and is dismissed. Appeal dismissed.

IN-Abs

The respondents were prosecuted in the court of the special Judge after obtaining the sanction of the Central Government, for an offence under section 6(1)(a) of the Prevention of Corruption Act, They put an objection that the sanctioning authority did not apply his mind properly when sanction was granted. One of the respondents asked the Court to summon the concerned record of the Home Department for, it would substantiate his assertion that the concerned officer did not apply his mind earlier in according sanction for his prosecution. The Secretary Ministry of Home Affairs, claimed privilege. The Special Judge and the High Court in revision rejected the claim of privilege of the Union Government. The appellant than filed a petition in the High Court for grant of a certificate. The High Court held that the order sought to be appealed against was an interlocutory one and, therefore, the petition was not maintainable under article 134(1)(c) of the Constitution. Against the order of the High Court in revision the appellant filed a petition for special leave to appeal stating that he applied for a certificate to the High Court but it was refused. The appellant did not bring to the notice of this Court that the petition for special leave ",as out of time. The Registry could not point out the defect as in the petition it was stated that the application under article 134(1)(c) was dismissed by the High Court without indicating on what ground it did and this Court assumed that it was in time and granted special leave. However after obtaining the permission of this Court the appellant filed a petition for excusing the delay on the ground that the Law Officer, who was at the relevant time in charge of the matter in the High Court, advised the Government that the order under appeal was a final order and that an application should be filed under article 134(1)(c) of the Constitution and that the appellant acted bonafide. The appellant contended (1) that the order of the High Court in the criminal revision was a final order within the meaning of article 134 (1)(c) of the Constitution and (2) that the rule 1(1) of 0. XXI of the Supreme Court Rules does not say in express terms that the order of refusal to give a certificate must be on an application which is maintainable and, therefore, if in fact the High Court refused to give a certificate, whether on merit,, or on the ground that it was not maintainable, the party could take advantage of the said rule. Held (per K. Subba Rao and K. C. Das Gupta, JJ): (i) The order under appeal was not a final order within the, meaning of article 134(1) of the Constitution. It did not purport to decide 735 the rights of the parties, namely, the State U.P. and the accused. Assuming that it decided some right of the Union Government, the Union Government was neither a party to the criminal proceedings nor was it a party either before the High Court or before this Court. The indirect effect of the order of a third party to the proceedings, who did not seek to question that order, did not deprive the order of its interlocutory character. Seth Premchand Satramdas vs State of Bihar [1950] S.C.R. 799, relied on. (ii) Rule 1(1) of 0. XXI presupposes that the application for the certificate is maintainable and the Court refuses to give it on the ground that the condition laid down in article 134(1) of the Constitution have not been complied with. On a reasonable Interpretation of the rule, it could only mean that the refusal ,of the certificate must be in an application maintainable under the said Article. (iii)The order ex facie was an interlocutory order and so far as the Government of U.P. was concerned it could not possibly be held that any of its rights had been affected by that order. In the circumstances, it must be held that a wrong legal advice is not a sufficient ground for excusing the delay, and the appeal therefore must be dismissed as barred by limitation. Per Raghubar Dayal, J. (dissenting),: The appellant should be given the advantage of the opinion of its legal advisers as the error, if any. could not be said to be of such a character which a legal adviser could not have possibly given. The rule does not expressly state that limitation would be counted from the date of refusal of the certificate only when an application for a certificate under article 134 would be maintainable. It is true that an application under article 134 is contemplated to be an application against the judgment, final order or sentence in a criminal proceeding and that refusal of a certificate under article 134, for purposes of rule 1(1) of 0. XXI, refers to the refusal of an application for certificate against the judgment, final order or sentence in a criminal proceeding. But this does not necessarily mean that the rule will not be applicable in cases of refusal of a certificate when one applied for it on the ground that the order sought to be appealed against amounted to a judgment, final order or sentence while the High Court came to a different opnion, The rule does not specifically state that the date of the refusal of the certificate would be taken to be the starting point of limitation only when the High Court refuses certificate on the ground that it was not a fit case for appeal to the Supreme Court. If it were so, the rule would have been limited to those cases,.

Appeals Nos. 396 413 of 1963. Appeals by special leave from the judgment and order dated October 26, 1961 of the Kerala High Court in Writ Appeals Nos. 104 106, 107, 109, 112, 108, 113, 114, 111, 115, 116, 119, 120, 123, 124 and 122 of 1964. M. C. Setalvad, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellants (in all the appeals). V. P. Gopalan Nambiar, Advocate General, Kerala and V. A. Seyid Muhammed, for the respondent (in all the appeals). April 10, 1964. The judgment Of GAJENDRAGADKAR, C.J., SHAH AND SIKRI JJ. was delivered by SHAH J. The dissenting Opinion Of WANCHOO and AYYANGAR JJ. was delivered by AYYANGAR J. SHAH, J. The Sales tax Officer, Special Circle Ernakulam assessed the appellants under the Travancore Cochin General Sales Tax Act XI of 1125 M.E., to pay sales tax on transactions of sale of tea chests at the auctions held at Fort Cochin in the years 1956 57 to 1958 59, rejecting their contention that the sales were exempted from tax by virtue of article 286(1)(b) of the Constitution. The appellants then petitioned the High Court of Kerala for writs of certiorari quashing the orders of assessment and for writs of prohibition restraining the Sales tax Officer from proceed ing with the collection of tax in pursuance of the orders of assessment. Vaidialingam J., rejected the petitions and his order was confirmed in appeal by a Division Bench of the High Court of Kerala. With special leave, the appellants have appealed to this Court. The transactions of sale sought to be taxed by the Revenue authorities are in tea, which is a controlled commodity. The Parliament enacted the Tea Act (19 of 1953) to provide for the control by the Union of the tea industry, including the control of cultivation of tea in, and of export of tea from, India and for that purpose to establish a Tea Board and to levy customs duty on tea exported from India. By section 3(f) "export" is defined as taking out of India by land, sea or air to any place outside India other than a country Or territory notified in that behalf by the Central Government by notification in the Official Gazette. "Export allotment" is defined by section 3(g) as the total quantity of tea which may be exported during any one financial year. Section 17(1) places an embargo upon exportation of tea unless covered by a licence issued by or on behalf of the Board. Section 18 provides that no consignment of tea shall be shipped or water borne to be shipped for export or shall be exported until the owner has delivered to the Customs Collector a valid export licence or special export licence or a 709 valid permit issued by or on behalf of the Board or the Central Government as the case may be, coverning the quantity to be shipped. Section 19 authorises the Central Government to declare export allotments of tea for each financial year, and by section 20 it is provided that any tea estate shall, subject to conditions as may be prescribed, have the right to receive under the Act an export quota for each financial year. Section 21 provides that the owner of a tea estate to which an export quota has been allotted for any financial year shall have the right to obtain at any time ,export licences during that year to cover the export of tea upto the amount of the unexhausted balance of the quota. The export quota right is, by cl. (2) of section 21, transferable, subject to such conditions as may be prescribed and the transferee of such right may again transfer the whole or any part of his right provided that nothing in the sub section shall operate to restrict the issue of licences for the export of tea expressed to be sold with export rights. The other provisions are not material in deciding this group of appeals. Trade in tea in the State of Kerala internal as well as export is carried on through certain defined channels. A manufacturer of tea applies for and obtains from the Tea Board allotment of export quota rights on payment of the necessary licence fee. The manufactured tea in chests is then sent to M/s. T. Stanes & Company Ltd. who warehouse the chests at Willingdon Island. Chests of tea are then sold by public auction through brokers at Fort Cochin. With the chests of tea for which export quota rights are obtained, export quota rights are sold by the auctioneer. At the auction sale, bids for tea chests with export quota rights are given by the agents or intermediaries in Cochin of foreign buyers. Tea chests are delivered at the warehouses by M/s. T. Stanes & Company Ltd. to the purchasers whose bids are accepted. The agents or intermediaries of the foreign buyers then obtain licences from the Central Government for export of tea chests under the export quota rights vested in them under the purchases made at the auction sales. Tea cannot therefore be exported otherwise than under a licence: such a licence may be issued to a manufacturer or to the purchaser of the quota granted by the Central Gov ernment to the manufacturer when tea is sold with export rights. When auctions of tea with the export rights are held at Fort Cochin, it is in this group of appeals common ground, sellers on whose behalf the auctioneer acts as the agent know that bids are offered by the buyers of tea for the purpose of export. It is also known that the bidder is an agent or an intermediary of a foreign buyer. 710 Is the sale by auction to the agent of intermediary of the foreign buyer, in the course of export within the meaning of article 286(1) of the Constitution '? If the sale is in the course of export out of the territory of India. any State law which imposes or authorises the imposition of a tax on such sale is, because of article 286(1)(b), invalid. Before the Constitution was amended by the Constitution (Sixth Amendment) Act, 1956, there was no legislative guidance as to what were transactions of sale in the course of export out of the territory of India. But by the Constitution (Sixth Amendment) Act, cl. (2) of article 286 was substituted for the original clauses, and thereby the Parliament was authorised to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in cl (1). The Parliament has under the Central Sales Tax Act (74 of 1956) enacted by section 5 that "a sale or purchase of goods. shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. " This was legislative recognition of what was said by this Court in the State of Travancore Cochin and others vs The Bombay Company Ltd(1) and State of Travancore Cochin and others vs Shanmugha Vilas Cashew Nut Factory and others(2) about the port of the goods out of the territory of India" in article 286(1) (b).A transaction of sale which occasions export, or which is effected by a transfer of documents of title after the goods have crossed the customs frontiers, is therefore exempt from sales tax levied under any State legislation. The appellants set out in their respective petitions the manner in which sales tax of tea chests were conducted at Fort Cochin and in certain petitions affidavits in reply even were not filed by the State of Kerala. In the remaining petitions in which affidavits in reply were filed it was contended that the export of goods was made by the purchasers who had taken delivery of the goods from the manufacturers in Travancore Cochin and in pursuance of the export licences obtained by the purchasers goods were exported, but such subsequent export by the purchasers did not affect the character of the sales by the manufacturers to the purchasers. It is true that there is no finding by the Sales tax authorities that the respective purchasers at the auction were agents of foreign buyers, but the Advocate appearing. on behalf of the State argued the case before the High Court on the footing that the bids were offered at the auctions by (1) ; (2 ) ; 711 the agents or intermediaries or foreign buyers, and the Court proceeded to dispose of the case before it on that footing. Vaidialingam J., held that transactions of sale were complete when bids for purchase of tea together with the export quota rights were accepted, and the sellers had no concern with the actual export which was effected by the auction purchasers to their foreign principals. It could not, therefore, in the view of the learned Judge, be held that the sales in question had as an integral part thereof occasioned export, that is, the sales preceded the export and were not in the course of export. The High Court in appeal held that the ban imposd by article 286(1)(b) predicated a casual connection between the sale and the export a con nection which is intimate and real. The sale, it was said, must inextricably be bound up with the export and form an 'integral part thereof, so that without export the sale is not ,effectuated; but as the sale imposed or involved no obligation to export, there was no movement under the contract of sale and exemption claimed was not admissible. Correctness of this view is challenged in this appeal. To constitute a sale in the course of export of goods out of the territory of India, common intention of the parties to the transaction to export the goods followed by actual export of the goods, to a foreign destination is necessary. But intention to export and actual exportation are not sufficient to Constitute a sale in the course of export, for a sale by export "involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier or transport out of the country by land or sea. Such .a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction": State of Travancore Cochin and others vs The Bombay Company Ltd.(1). A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to ,constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be obligation to export, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for (1) ; 712 export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions export. And to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India. There are a variety of transactions in which the sale of a commodity is followed by export thereof. At one end are transactions in which there is a sale of goods in India and the purchaser immediate or remote exports the goods out of India for foreign consumption. For instance, the foreign purchaser either by himself or through his agent purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the good, , are intended by the purchasers to be exported, such a transaction is not in the course of export, for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the goods. Such a transaction without more cannot be regarded as one in the course of export because etymologically, "in the course of export", contemplates an integral relation or bond between the sale and the export. At the other end is a transaction under a contract of sale with a foreign buyer under which the goods may under the contract be delivered by the seller to a common carrier for transporting them to the purchaser. Such a sale would indisputably be one for export, whether the contract and delivery to the common carrier are effected directly or through agents. But in between lie a variety of transactions in which the question whether the sale is one for export or is one in the course of export i.e., it is a transaction which has occasioned the export, may have to be determined on a correct appraisal of all the facts. No single test can be laid as decisive for determining that question. Each case must depend upon its facts. But that is not to say that the distinction between transactions which may be called sales for export and sales in the course of export is not real. In general where the sale is effected by the seller, and he is not connected with the export which actually takes place, it is a sale for export. Where the export is the result of sale, the export being inextricably linked up with the sale so that the bond cannot be dissociated without a breach of the obligation arising by statute, contract or mutual understanding between the parties arising from the nature of the transaction, the sale is in the course of export. It may be conceded that when chests of tea out of the export quota are sold together with the export rights, the goods are earmarked for export, and knowledge that the goods were purchased by the bidders for exporting them to. 713 the foreign principals of the bidders must clearly be attri butable to them. Does the co existence of these circumstances, impress upon the transactions of sale with the character of a transaction in the course of export out of the territory of India '? We are unable to hold that it does. That the tea chests are sold together with export rights imputes knowledge to the seller that the goods are purchased with the intention of exporting. But there is nothing in the transaction from which springs a bond between the sale and the intended export linking them up as part of the same transaction. Knowledge that the goods purchased are intended to be exported does not make the sale and export parts of the same transaction, nor does the sale of the quota with the sale of the goods lead to that result. There is no statutory obligation upon the purchaser to export the chests of tea purchased by him with the export rights. The export quota merely enables the purchaser to obtain export licence, which he may or may not obtain. There is nothing in law or in the contract between the parties, or even in the nature of the transaction which prohibits diversion of the goods for internal consumption. The sellers have no concern with the actual export of the goods, once the goods are sold. They have no control over the goods. There is therefore no direct connection between the sale and export of the goods which would make them parts of an integrated transaction of sale in the course of export. Decided cases on which reliance was placed at the Bar have mainly been of cases in which the benefit of the exemption of article 286(1)(b) was claimed in respect of sales preceding the export sale. Such a sale preceding the export could not, it was held, without doing violence to the language of article 286(1)(b), be given the benefit of the exemption from tax imposed by State legislation merely because of its historical connection with the export sale. In a majority of the cases to be presently referred there were at least two salessale under which goods were procured followed by a sale under which the goods so procured were exported, and the claim of the Revenue to tax the first transaction was upheld. It may be regarded as therefore settled law that where there are two sales leading to export the first under which goods are procured for sale and the property in the goods passes within the territory of India, and the second by the buyer to a foreign party resulting in export the first cannot be regarded as a sale in the course of export, for a sale in the course of export must be directly and integrally connected with the export. It cannot also be predicted that every sale which results in export is to be regarded as sale in the course of ex. We may briefly refer to the cases which have come before this Court. Justification for citation of the cases is 714 not to evolve a pinciple from the actual decisions, but to highlight the grounds on which the decisions were rendercd. The first case which came before this Court in which article 286(1)(b) fell to be construed was the State of Travancore Cochin and others vs The Bombay Company Ltd.(1). The assessee who had exported coir products to foreign purcha sers claimed exemption from sales tax relying upon article 286(1)(b). The Revenue authorities held that property in the goods having passed within the State, the transactions, were liable to tax. The High Court disagreed with that view, holding that a sale in the course of export was not merely a sale when the goods had crossed the customs frontiers, but included a transaction which precede export. This Court agreed with the High Court. In appeal Patanjali Sastri C.J., speaking for the Court observed that sales which occasioned export were within the scope of the exemption under article 286(1)(b). But that was a case in which on the facts found there could be no dispute that the sale by the assessee occasioned export, for in pursuance of the contract the assessee had exported the goods sold. The next case which came before this Court was the State of Travancore Cochin and others vs Shanmugha Vilas Cashew Nut Factory and others(2). It was held by this Court that purchases in the State made by the exporters for the purpose of export are not within the exemption granted by article 286(1)(b) of the Constitution. Patanjali Sastri C.J., speaking for the majority of the Court observed: "The word 'course ' etymologically denotes movement from one point to another, and the expression 'in the course of ' not only implies a period of time during which the movement is in progress but postulates also aconnected relation. * * * * A sale in the course of export out of the country should similarly be understood in the context of clause (1)(b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country but also as part of or connected with such activities. " He further observed that the phrase "integrated activities ' cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction. It is in that sense that the two activities the sale and the export were said to be integrated. But a purchase for the purpose of export like production or manufacture for export, being only an act (1) ; (2) ; 715 preparatory to export could not be regarded as an act done "in the course of the export of the goods out of the territory of India". In the State of Madras vs Gurviah Naidu and Company Ltd.(1), section R. Das, Actg. C.J., observed that an assessee who goes about purchasing goods after securing orders from foreign purchasers is not exempt from liability to pay tax by virtue of article 286(1)(b) of the Constitution in respect of the purchases made by him because, those purchases do not themselves occasion the export. Goods were undoubtedly bought for the purpose of export, but the purchase did not occasion the export within the meaning of article 286(1)(b) of the Constitution. In State of Mysore and another vs Mysore Shipping and Manufacturing Co. Ltd. and others(2), it was held that where goods were sold to a licenced exporter by the assessee and the licenced exporter sold the goods to a foreign purchaser it could not be said that the first was in the course of ex port. The licenced exporter was not an agent of the assessee and the two sales could not have both occasioned the export: it was only the second sale which did that, and the assessee not being a party to it either directly or through the exporter or through his agents, the first sale with which alone the assessee was associated did not occasion the export. If it did not, then it hardly matters whether the goods were exported through the instrumentality of the exporter or not, because all sales that precede the one that occasioned the export were taxable. In this case the Court expressed the opinion that for the sale to be one which occasions the export it must directly concern the assessee as an exporter. In East India Tobacco Company vs The State of Andhra Pradesh and another (3) this Court held that only the sale under which the export is made that is protected by article 286(1)(b) of the Constitution and a purchase made locally by a firm doing business of exporting tobacco, which preceded the export sale did not fall within its purview though it is made for the purpose of or with a view to export. One more judgment of this Court may be noticed: B. K. Wadeyar vs M/s. Daulatram Rameshwarlal(4). The assessees in that case sold goods to an Indian purchaser, who had agreed to sell them to a foreign buyer. The sales by the assessees "were on F.O.B. contracts under which they (1) A.I.R. (1956) S.C. 158. (2) A.I.R. (1958) S.C. 1002. (3) ; (4) ; 716 continued to be the owners" till the goods crossed the cus toms barrier, and entered the export stream. It was held by this Court that since the goods remained the property of the assessees till they reached the export stream, the sales were exempt from tax imposed by a State under article 286(1)(a). This was undoubtedly a case of two sales resulting in export, and the first sale was held immune from State taxation: but that was so because the property in the goods had passed to the Indian purchaser when the goods were in the export stream. The first sale itself was so inextricably connected with the export that it was regarded as a sale in the course of export. Mr. Setalvad on behalf of the appellants placed strong reliance upon the judgment of the Madras High Court in of Madras(1). That was a case in which a dealer in the Stater of Madras in hides and skins after purchasing raw hides tanned them and sent them to Kovai Tanned Leather Co. Madras who acted as the dealer 's agent for sale. Kovai Tanned Leather Company sold the goods to Dharamsee Parpia who acted as an agent of Srivan Brothers (Eastern) Ltd., London. There was another transaction between Kovai Tanned Leather Co. and Gordon Woodroffe and Company Ltd. who acted as agents for a foreign principal. The Salestax Tribunal refused to accept the transaction to Dharamsi Parpia as an export sale on the ground that Kovai Tanned Leather Company delivered the goods to the exporter Dharamsi Parpia and thereafter the exporter obtained the bills of lading, and that the sale became complete in the Madras State before shipment, and it was on that account not a sale in the course of export. The High Court disagreed with that view. Jagadisan J., speaking for the Court observed: Where there is privity of contract between the foreign buyer and the seller in the taxing territory and the concluded sale between them occasions the export even if the property in the goods sold passes within the territory the transaction is nevertheless one in respect of which Article 286 imposes a ban on the State to levy tax. " We are not concerned to decide whether there was evidence in that case on which the High Court could come to the conclusion that the sale occasioned the export. But Mr. Setalvad relied upon the observation in support of the pro position that in all cases where there is a contract for purchase of goods in the taxing territory, between a local merchant and a foreign buyer acting through his agent, and the (7)13 S.T.C. 629. 717 goods are after purchasing the same exported by the agent, the transaction must be deemed to be one in the course of export. We are unable to accept that contention. We do not read the judgment as laying down any such proposition, and none such is legitimately deducible. The second transaction in favour of Gordon Woodroffe & Co. was found to be one in which property in the goods passed beyond the customs frontier. Such a transaction would indisputably be a sale in the course of export. In our view the transactions of sale in the present case did not occasion the export of the goods, even though the appellants knew that the buyers in offering the bids for chests of tea and the export quotas were acting on behalf of foreign principals, and that the buyers intended to export the goods. There was between the sale and the export no such bond as would justify the inference that the sale and the export formed parts of a single transaction or that the sale and export were integrally connected. The appellants were not concerned with the actual exportation of the goods, and the sales were intended to be complete without the ex port, and as such it cannot be said that the said sales occasioned export. The sales were therefore for export, and not in the course of export. The appeals therefore fail and are dismissed with costs. One hearing fee. AYYANGAR, J. We regret our inability to concur in the order that these appeals should be dismissed. We are clearly of the opinion that the appeals should be allowed. This batch of 18 appeals which have been heard together are directed against a common judgment of the High Court of Kerala and are before this Court by virtue of special leave granted to the appellants. The appellants filed writ petitions in the High Court which were dismissed by the learned Single Judge whose judgment was affirmed on appeal by a Bench of the High Court. It is from this judgment that these appeals have been brought. The appellants are 18 tea estates which tire carrying on the business of growing and manufacturing tea in their estates. Their claim is that the teas grown by them have been sold by them "in the course of the export of goods out of the territory of India" within article 286(1)(b) of the Consti tution and they, therefore, claim that the State of Travan core Cochin in which these sales took place was not entitled to impose sales tax upon these sales. The question for consideration is whether these sales effected by the appellants are, as they claim, sales "in the course of export". It is common ground that the tea sold 718 under the transactions involved in these appeals was actual ly exported out of the territory of India. Doubtless, this circumstance would not per se render the sales which preceded the export "sales in the course of export" but the argument submitted to us is that these exports are so directly and immediately linked up with the sales effected by the appellants and so integrated with them that the two form part of the same transaction as to render the sales "sales in the course of export". It was presented in this form, relying on the decision of this Court in State of Travancore Cochin vs Shanmugha Vilas Nut Factory(1) where the learned Chief Justice observed: "The word 'course ' etymologically denotes movement from one point to another and the expression 'in the course of ' not only implies a period of time during which the movement is in progress but postulates also a connected relation. . A sale in the course of export out of the country should be understood in the context of article 286(1)(b) as meaning a sale taking place ,not only during the activities directed to the end of exportation of the goods out of the country, but also as part of or connected with. . emphasised the integral relation between the two where the contract of sale itself occasioned the export as the ground for holding that such a sale was one taking place in the course of export. " It is this integrality that is involved in the concept which is expressed by the words that "the sale that occasions the export" is "a sale in the course of export". The details of the sales on which tax is sought to be levied by the respondent, together with the facts relating thereto, as well as the several contentions urged before us and the decisions on which reliance is placed on either side have all been narrated in the judgment just now pronounced and we do not think it necessary to restate them. Similarly, the provisions of the and the rules framed thereunder so far they are relevant for the decision of the question involved in these appeals have also been set out and so we are not repeating them either. We shall confine ourselves to the very restricted area of our disagreement with our learned brethren which has occasioned this separate judgment. (1) [1954] S.C.R.53 719 As preliminary to the discussion of the question involved, we shall put aside certain types of transactions as regards which there is no dispute that they clearly fall on one side of the line of the other. On the one side of the line would be the case where a seller in pursuance of a contract of sale with a foreign buyer puts the goods sold on board a ship bound for a foreign destination. Such a sale would be an "export sale" which would undoubtedly be within the con stitutional protection of article 286(1)(b). In regard to this type, however, we would make this observation. In such a case we consider that it would be immaterial whether or not with reference to the provisions of the Sale of Goods Act, read in conjunction with the terms and stipulations of any particular contract, the property in the goods passes to the buyer on the Indian side of the customs frontier or beyond it. In either event the sale would have occasioned the export, for the sale and the export form one continuous series of transactions, the one leading to the other not merely in point of time but integrated by reason of a common intention which is given effect to. In such a case it would be seen that there is but one sale to the foreign buyer "which occasions the export", and which is implemented in accordance with the terms of the contract by an actual export which is the sine qua non of "a sale in the course of export". A case on the other side of the line would be one where the sale is effected to a resident purchaser who effects the export by sale of the goods purchased to a foreign buyer. Here the first sale to the buyer who enters into the export sale would not be a "sale in the course of export" for it would not be the particular sale which occasions the export, notwithstanding that the purchase might have been made with a view to effect the export sale, or to implement a contract of sale already entered into with a foreign buyer. That such a sale is not one "in the course of export" has been repeatedly held by this Court (See State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory(1), State of Madras vs Gurviah Naidu and Co. Ltd.(2), State of Mysore vs Mysore Spinning and Manufacturing Co. Ltd.(3) and East India Tobacco Co. vs The State of Andhra Pradesh(4). This second type of case involves two sales one to a resident purchaser who purchases it with a view to effect an export and the second, the export sale or sale in the course of export by the purchaser to a foreign buyer. The existence of the two sales and the consequent dissociation between the (1) ; (2) A.I.R. 1956 S.C. 158 = 6 S.T.C. 717. (3)A.I.R. (4) ; 720 first sale and the export causes a hiatus between that sale and the export and destroys the integrality of the two events or transactions viz., the sale and the factual export. The sales involved in the present appeals are not of the 2nd type for here there is a single sale direct to a foreign buyer, the contract being concluded with and the goods sold delivered to his agent. It is hardly necessary to add that for purposes relevant to the decision of the question before us there could be no difference in legal effect between a sale to a foreign buyer present in India to take delivery of the goods for transport to his country and a sale to his resident agent for that purpose. Pausing here we should mention that there is no dispute (1) that the persons who bid at the auction at Fort Cochin and purchased the teas of the assessees were agents of foreign buyers or (2) regarding their having made these purchases under the directions of their foreign principals in order to despatch the goods to the latter a contractual obligation that they admittedly fulfilled. Under the sales here involved, though to foreign buyers and intended for export, the goods were not under the terms of the contract of sale placed by the seller on board the ship in the course of its outward voyage and that is the only reason why they do not conform strictly to the first type of an export sale which we have described earlier. But the question is, do not these sales also "occasion the export" and in that sense sales "in the course of export" The test which has been laid down by this Court for deter mining the proximity of the connection between the sale and the export so as to bring the sale within the constitutional exemption in article 286(1)(b) is the integrality of the two events the sale and the export. The question to be answered is therefore whether the sales now under consideration do not form part and parcel of a single integrated transaction with the export or are they distinct, distant and mediate, the sale and the export being related to each other only in sense of one leading to the other or the one succeeding the other merely in point of time. If the former, the sales are within article 286(1)(b), but if the connection between the two is as described later, they are outside the exemption. What then are the facts of the present case. Before re stating them for their being examined in the light of the criteria we have just specified, it is necessary to emphasise certain matters. When the assessees sought an opportunity to adduce evidence as to the facts which they offered to prove to establish their claim to the constitutional protection, the assessing authorities accepted their statements as correct and did not desire them to adduce evidence and so 721 no detailed evidence was led. If therefore on an examination of the legal position it is now found that there is any lacunae in the statement of facts or in the evidence whose existence would have brought the sales within the exemption, it appears to us that the appellant assessees should in fairness be afforded an opportunity to adduce evidence to establish their case. We say so particularly because it could by no, means be said that the law was clear as to the facts necessary to be proved to claim exemption in the case of sales of the type now before us. To proceed with the facts, the assessees had applied for and obtained export quotas with a view to effect exports of a quantity of tea grown and processed by them. The sales at Fort Cochin were effected along with the export rights , ranted to the Appellant estates. the contract being that the purchaser at the auction would obtain a transfer of the ex port quota right of that estate whose tea he purchased to the extent needed to effect export of the tea purchased. The purchases were thus made only on the basis that the export rights of the seller would be transferred to the buyer and on the basis of these transfers the purchasers obtained export licences from Government for exporting the tea and effected the exports. The purchases were made by agents of foreign principals and it was part of the contractual duty Of these agents vis a vis the principals to consign the goods purchased to them without avoidable delay. There was proof by the certificates produced that these agents had fulfilled their obligations to their principals and had shipped the goods bought as early as practicable to foreign destinations. The principal contention urged by the learned Advocate General of Kerala to persuade us to hold that the sales did not "occasion the export" was based on two circumstances: (1) that it was not part of the contract between the assessees and their buyers that the goods shall only be ex ported and not sold in the local market. In other words, it was urged that in the absence of such a specific term of contract it would have been open to the buyers to have diverted the goods from being exported and to have sold them locally. This was so far as the contractual relationship between the assessee sellers and the buyers from them under the sale was concerned, (2) dealing next with the effect of the provisions of the and the rules framed thereunder on the sales effected by the assessees, the submission was that section 21 and other provisions of the merely enabled an export to be effected and did not require the goods in regard to which they were issued to be exported. In other words, it was stressed that the did not impose any obligation on the quota holder or his transferee 722 to export the goods covered by the quota and that conse quently the buyer even after taking a transfer of the export quota rights alongwith his purchase was not compelled by law to export and was not precluded from failing to export and selling the goods locally. On this reasoning the argument was that here was a purchase under which the purchaser was free to export or not to export and the mere fact that he chose to export would not render the sale to him one which occasioned the export or one "in the course of export". We consider that these arguments do not sufficiently take into account the actualities of the situation, but proceed on investing on formal requirements a significance which is not warranted. When learned counsel says that there was no term in the contract between the seller and the buyer that the goods purchased were not to be sold locally but have to be export ed, he is right only in the sense that it is not any express term of the contract. But could it be said that that was not the implicit common understanding on which the entire transaction was concluded. The buyer was not interested in the purchase except on terms of the export quota rights being transferred to him and that was why the transfer of the export right was effected or contracted to be effected as part and parcel of the sale of the goods. Again, the buyer was an agent, who as we have stated earlier was not free to deal with the tea purchased by effecting a local sale, but was under an obligation to his foreign principal to export the goods purchased to a foreign destination. It was with such a buyer that the assessee entered into the transaction of sale. On these facts we are satisfied that it was part of the understanding between the seller and the buyer, inferable from all the circumstances attendant on the transaction that the buyer was bound to export. Pausing here, we would add that, we understand that importance is attached in this context to the need of a term in the sate contract laying an obligation on the part of the buyer to export only for the purpose of demonstrating the intimate connection between the sale and the export for establishing that it was the sale that occasioned the export. If we are right, then what is of significance is the real and common intention of the two parties to the transaction whether they contemplated the goods purchased being sold locally, or whether they intended the goods sold being only exported and not whether there is such a term in the contract between the parties. Coming next to the contention that the does not compel export of goods covered by the quotas granted, we might mention that no evidence was led as to the prices prevailing in the local market as compared to that in the foreign countries where the principals of the resident buyers rested, which would have disclosed whether a local sale of the tea bought ostensibly for export was in a commercial sense within the bounds of possibility, though if one went by the rationale underlying the provisions of the and in particular sections 17, 21 and 22, one gets the impression that export quota rights were considered to have a considerable value in the market which would be some indication that a buyer with an export quota would never sell in the local market. Thus it might be that even though the statute does not in terms prohibit internal sale of tea purchased alongwith export quota rights, this could be explained by the circumstance that the right to export tea is considered a privilege which secures economic advantages to the exporter and hence there was no need for any statutory compulsion to do so. We are making this observation because Parliament and the Central Government are keen on promoting exports and in the case of some commodities like sugar where the external price is lower than the local price, the regulations framed in that behalf require exports to be effected under compulsion. We consider therefore that the absence of a compulsive provision in the requiring export of the quantity allotted to the estates, is not very material and that Parliament might well have left it optional with the estate owners to export seeing that economic factors provided the requisite compulsion. If there was a contract or understanding between the buyer and seller by which the latter was to export the goods bought, it is conceded the sale of the assessee did occasion the export and in our view on the facts established, we con sider this condition satisfied. We would therefore allow the appeals and set aside the assessment in so far as they included the sales involved in these appeals. ORDER In accordance with the opinion of the majority, the appeals are dismissed with costs. One hearing fee. Appeal dismissed.

IN-Abs

The appellants were carrying on the business of growing and manufacturing tea in their estates. The sellers of tea were the appellants; the purchasers were local agents of Foreign buyers. The sales were by public auction at Fort Cochin. They were conducted by brokers of tea. The sales were in conformity with the provisions of Tea Act of 1953. The Sales tax Officer assessed the appellants to pay sales tax on transactions of sale of tea chests at the auctions held at Fort Cochin in the years 1956 57 to 1958 59. Against the orders of assessment the appellants filed petitions before the High Court for writs of certiorari and for writs of prohibition re straining the Sales tax Officer from proceeding with the collection of sales tax. The petitions were dismissed by the High Court. With special leave the appellants appealed to this Court. It was the common case of all the appellants that the pur chases by the local agent of foreign buyers were with a view to export the goods to their principals abroad and that the goods were in fact exported out of India. It was contended on behalf of the appellants that the sales of tea were "in the course of export out of the territory of India", and thus exempt from taxation under article 286(1)(b) ,of the Constitution. Held: (per Gajendragadkar, C. J., Shah and Sikri, JJ.) (i) A transaction of sale which occasions export, or which is effected by a transfer of documents of title after the goods have crossed the customs frontiers, is exempt under article 286(1)(b) of the Constitution from sales tax levied under any State legislation. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions export. Etymological the expression "in the course of export", contemplates an integral relation or bond between the sale and the export. In general where a sale is effected by the seller, and the seller is not connected with the export which actually takes place, it is a sale for export. Where the export is the result of sale, the export being inextricably linked up with sale so that the bond cannot be dissociated without a breach of the obligations arising by statute. contract of mutual understanding between the parties arising from the nature of the transaction the sale is in the course of export. 707 (ii) A sale in the course of export predicates a connection between the sale and export, the two activities being so in tegrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In the present case there was between the sale and the export no such bond as would justify the inference that the sale and the export formed parts of a single transaction or that the sale and export were integrally connected. The appellants were not concerned with the actual exportation of the goods, and the sales were intended to be complete without the export, and as such it cannot be said that the said sales occasioned export. The sales were therefore for export and not in the course of export. Therefore the sales by the appellant to the agents of foreign buyers do not come with the purview of article 286(1)(b) of the Constitution. State of Travancore Cochin vs Bombay Company Ltd. ; , distinguished. State of Travancore Cochin V.Shanmugha Vilas Cashew Nut Factory; , , State of Madras vs Gurviah Naidu and Company Ltd. A.I.R. 1956 S.C. 158, State of Mysore vs Mysore Shipping and Manufacturing Co. Ltd. 13 S.T.C. 529 and B.K. Wadear vs M/s. Daulatram Rameshwarlal , relied on. M. R. K. Abdul Salem and Company vs Government of Madras, 13 S.T.C. 629, explained. Per Ayyangar, J. In the present case the sale and the export being related to each other in the sense of one lead . in. to the other are therefore within article 286(1)(b) of the Constitution. There could be no difference in legal effect between a sale to a Foreign buyer present in India to take delivery of the goods for transport to his country and a sale to his resident agent for that purpose. The buyer was an agent, who was not free to deal with the tea purchased by effecting a local sale, but was under an obligation to his Foreign principal to export the goods purchased to a Foreign destination. The goods purchased were in fact exported from this country. It was with such a buyer that the appellants entered into the transaction of sale. In other words it was a part of understanding between the seller and the buyer, inferrable from all the circumstances attendant on these transactions that the buyer was bound to export. State of Travancore Cochin vs Shanmugha Vilas Cashew ; , State of Madras vs Gurviah Naidu and Co. Ltd. A.I.R. 1956 S.C. 158, State of Mysore vs Mysore Spinning and Manufacturing Co. Ltd. A.I.R. 1958 S.C. 1002 and East India Tobacco Co. vs The State of Andhra Pradesh, [1963]1 S.C.R. 404, referred to. (ii) Even though the Tea Act does not in terms prohibit in ternal sale of tea 'Purchased alongwith export quota rights, this could be explained by the circumstance that the rights to export tea is considered a privilege which secures an economic advantage to the exporter and hence there was no need for any statutory compulsion to do so. L/P(D) ISCI 23(a). .

Appeal No. 250 of 1963. Appeal by special leave from the judgment and ,order dated February 2, 1960 of the Madras High Court in Case Referred No. 1 of 1955. R. Ganapathy Iyer and R. N. Sachthey, for the appellant. section Narayanaswamy and R. Gopalakrishnan, for respondent nos. I and 3 6. April 16, 1964. SHAH, J. Respondents to this appeal are a firm constituted under a deed dated December 12, 1947. The firm originally consisted of three partners: K. N. Damodara Mudaliar, A. Krishnaswami Mudaliar and vs Thangaraja Mudaliar. K.N. Damodara Mudaliar acquired for the firm for Rs. 1,00,000/ the exploitation rights which were to ensure for four years in a cinematograph film "Apoorva Chinthamani" for the North Arcot, the South Arcot and the Chingleput districts and for Pondicherry. For the period, December 25, 1.947 to August 2, 1948 which was "the previous year" corresponding to the assessment year 1949 50the firm filed a voluntary return declaring that Rs. 28,643/were earned by the exploitation of the film. In the statement submitted by the firm the total receipts credited in the firm 's books were Rs. 1,46,849/ , and against that amount were debited Rs. 13,206/ as expenses and Rs. 1,00,000/ as the amount disbursed for acquiring the exploitation rights. Thereby in the computation of the profits of the business, the firm debited the amount paid for acquiring the rights of exploitation of the film, but did not take credit for the value of the unexpired exploitation rights at the end of the "previous year". On August 15, 1948, a deed of dissolution of the partnership was executed, and Damodara Mudaliar sold with effect from August 6, 1948, his half interest in the assets of the partnership to Krishnaswami Mudaliar for Rs. 2,000/ and retired from the partnership. On August 27, 1948 a trial balance sheet of the firm 's books of account was prepared showing a cash balance of Rs. 190/12/4, a debit against Krishnaswami Mudatiar for Rs. 2.641/8/8 and credits in favour of Damodara Mudaliar and Thangaraja Mudaliar respectively for Rs. 1,888/2/11 and Rs. 944/2/1. Thereafter Krishnaswami Mudaliar, Thangaraja Muidaliar and V. section Lakshmanan (an outsider) formed themselves into another partnership to exploit the film for the unexpired period. From this partnership Krishnaswami Mudaliar retired on February 22. 1949 agreeing to receive Rs. 12000/ for his 778 six sixteenth share in the assets of the firm on the date of retirement. In the assessment of the respondent firm for the year 1949 50 the Second Additional ' income tax Officer, Vellore declined to accept the statement of account that the firm had earned till August 2, 1948, a net profit of only Rs. 28,643/ as truly representing the profits of the firm. Fie observed that "no stock valuation of the picture has been taken but only the excess collection over purchase value has been returned", indicating thereby that in his view from the statement of account which omitted to include at the close of the year the value of the rights in the film for the unexpired period the profits of the firm could not properly be deduced. The Income tax Officer estimated the value of the rights for the unexpired period of exploitation to which the firm was entitled on August 2, 1948 at Rs. 65,000, and computed net profits of the firm as an unregistered firm at Rs. 93,642/and assessed income tax and super tax payable by the firm on that footing. In appeal by the firm to the Appellate Assistant Com missioner, the correctness of the estimated value of the ex ploitation rights of the film at Rs. 65,000/ was alone chal lenged and it was submitted that the sum of Rs. 4,000/ was the true value of the assets at the end of the previous year. Damodara Mudaliar the retiring partner having relinquished his rights representing half share for Rs. 2.000/ only. The Appellate Assistant Commissioner rejected the contention, holding that the valuation of the exploitation rights for the unexpired period in the deed of dissolution dated August 15, 1948 was "dictated by extra commercial considerations". and confirmed the valuation of Rs. 65,000/ made by the Incometax Officer. Even in appeal to the Income tax Appellate Tribunal, Madras, the respondent firm merely contended that the valuation of the exploitation rights for the unexpired period was excessive. The Tribunal partially upheld the plea, and reduced the valuation to Rs. 40.000/ as on August 2, 1948, and directed modification of the assessment on that footing. Pursuant to an order issued by the High Court of Madras in a petition under section 66(2) the Tribunal stated the case and referred the following question: "Whether on the facts and circumstances of this case the Tribunal was justified in applying the proviso to section 13 of the Income tax Act and in confirming the assessment on a mercantile basis of accounting. " 779 The High Court held that it was open to the assessee to maintain accounts according to a recognised system of ac counting and the assessee having adopted the cash system of ,accounting, and the Tribunal having assigned no reasons for discarding that system in the computation of the profits the Tribunal was in error in making the assessment on the basis of the mercantile system of accounting. The High Court observed: "When we reach the position that it was the cash system that the assessee had adopted in this case, and that valuation of the closing stock was not an incident of that system for ascertaining the profits, it should be obvious that the Income tax Officer had no power under the proviso to section 13 to force a different system 'on the assessee either the mercantile system or a hybrid system of cash plus valuation of closing stock. " The High Court accordingly answered the question referred in the negative. Against the order, with special, leave, this appeal is preferred. The question to be determined in this appeal is whether in the computation of the income of the firm under the head "Profits and gains of business" the Income tax Officer was bound by the method of accounting in which the cost of acquisition of the film of which the exploitation rights were held was debited at the commencement of the year, but the value of the film at the end of the year was ignored. Section 10 of the Indian Income tax Act, 1922, provides that tax shall be payable by an assessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. Such profits or gains have to be computed after making the allowances set out in sub section Section 13 provides that the income, profits and gains shall be computed, for the purposes of sections 10 and 12, in accordance with the method 'of accounting regularly employed by the assessee, provided that, if no method of accounting has been regularly employed or if the method employed is such that, in the opinion of the Income tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Income tax Officer may determine. It may be recalled that the Income tax Officer had in the order of assessment observed that the firm had not made a stock valuation of the film and had merely taken the excess collection over the purchase value and had submitted its 780 return of income 'on that basis. No express order was re. corded by the Income tax Officer that in his opinion the in come, profits or gains of the business could not properly be deduced from the method of accounting employed by the firm, but it is implicit in what is stated by him that without valuation of the unexpired exploitation rights the profits of the year of account could not be computed. With this view. it appears, the Appellate Assistant Commissioner agreed. In appeal to the Appellate Tribunal the only plea raised was that the Income tax Officer had erred in estimating the value of the unexpired exploitation rights at Rs. 65,000/ . That was partially accepted, and the value was reduced to Rs. 40,000/ . It is difficult to appreciate how any question about the regularity of the proceedings of the Income tax Officer by the adoption of the mercantile system of accounting and by the application of the proviso to section 13 of the Incometax Act arose from the order of the Tribunal. The High Court has under the Income tax Act power to call upon the Appellate Tribunal to state a case ' only if the High Court is not satisfied about the correctness of the decision of the Tribunal that no question of law arises from the order of them Tribunal. The grounds of appeal filed before the Tribunal and before the Appellate Assistant Commissioner make it abundantly clear that the question as to the applicability of the proviso to section 13 to the profits disclosed by the respondent firm was never challenged. Nor can it be said that the Tribunal "forced the x x x firm to adopt for the purpose of computation of its profits" a .system of accounting other than the one adopted by the firm. In the title of the order by the Income tax Officer it was recited that the, method of accounting adopted by the firm was "mercantile", but that does not amount to saying that he proposed to compute the income on the basis that the accounts should be re written on the mercantile system. The question referred to the High Court asks for advice on the justification for applying the proviso to section 13, and computation of the income on the basis of the mercantile, system of accounting. On neither of these two branches there was any argument raised by the firm before the Tribu nal. But we do not propose to dispose of this appeal on the limited ground that the question as framed did not arise out of the order of the Tribunal and need not be answered. The grounds given by the High Court in support of their answer, to the question referred raise a matter of principle of some importance in the computation of income of an assessee carrying on a trading venture with the aid of a wasting asset, and we have heard elaborate arguments advanced by counsel at the Bar and we deem it necessary, to express our opinion on the questions debated. 781 It is true that the Revenue authorities and the Tribunal did take into consideration the stock valuation at the end of the year of account, but that was not because in their view the system of accounting adopted was or should be mercan tile: the truth of the matter is that in their view, profits of the firm for the year could not, having regard to the nature of the business, properly be deduced from the accounts, "unless the opening and closing stocks were brought into the picture". This is made clear by the observations of the Tribunal in paragraph 15 of the statement of the case: "x x x in all trading cases the true profits cannot be deduced from any system of maintaining accounts whether cash or mercantile, unless the opening and closing stocks are brought into the picture at cost or market price whichever is lower; it will not avail an assessee to say that in his cash system, he had not made any profit on his cash sales till all his stock is disposed of. Income tax is an annual levy and the profits of each year require to be ascertained for that purpose as accurately as circumstances permit. It therefore, in any system of accounting maintained by the assessee, otherwise acceptable, the stocks are left out of account, the aforesaid proviso, it is humbly submitted, necessarily has to be invoked, even if it were for the sole purpose of adjusting the book figures for the stock figures. " Correctness of this view especially in the context of a trading venture by the exploitation of a wasting asset, but which is the assessee 's stock in trade, falls to be considered. Section 13 of the Indian Income tax Act was incorporated for the first time in the Income tax legislation in India by the Income tax Act II of 1922, because in a case decide ' under the Income tax Act, 1918, Wallis, C. J.,, delivering the principal judgment of the Full Bench in Secretary, Board of Revenue, Madras vs Arunachalam Chettiar(1) expressed the view that whatever may be the system of accounting adopted by an assessee, income assessable to tax means the income actually or constructively received and that the words of the charging section placed limits upon the succeeding sections specifying the different classes of income liable to tax. To supersede this exposition of the law the Legislature while enacting Act 11 of 1922 found it necessary to enact section 13. The section leaves it to the assessee to adopt any compute of accounting and obliges the Income tax Officer to compute the income, profits and gains for the purposes of sections 10 and 782 12 in accordance with such method of accounting regularly employed, if profits of the business can properly be deduced therefrom. The Judicial Committee of the privy Council ob served in Commissioner of Income tax, Bombay vs Sarangpur Cotton Manufacturing Company Ltd, Ahmedabad(2): " x x x the section relates to a method of ac counting regularly employed by the assessee for his own purposes x x x and does not relate to a method of making up the statutory return for assessment to income tax. Secondly, the section clearly makes such a method of ac counting a compulsory basis of computation, unless, in the opinion of the Income tax Officer, the income, profits and gains cannot properly be deduced therefrom. It may well be that, although the profit brought out in the accounts is not the true figure for income tax purposes, the true figure can be accurately deduced therefrom. The Board also observed: "It is the duty of the Income tax Officer, where there is such a method of accounting to consider whether the income, profits and gains can properly be deduced therefrom, and to proceed according to his judgment on this question. " Again as observed by this Court in Commissioner of Income tax vs Mcmillan & Co.(2) the expression "in the opinion of the Income tax Officer" in the proviso to section 13 of the Indian Income tax Act, 1922, does not confer a mere discretionary power; in the context it imposes a statutory duty on the Income tax Officer to examine in every case the method of accounting employed by the assessee and to see whether or not it has been regularly employed and to determine whether the income, profits and gains of the assesses could properly be deduced therefrom. But the section only deals with the computation of income, profits and gains for the purposes of sections 10 and 12 and does not purport to enlarge or restrict the content of taxable income, profit and gains under the Act. Section 2(15) of the Act defines "total income" as meaning total amount of in. come, profits and gains referred to in sub section (1) of section 4 computed in the manner laid down in the Act. Section 4(1) lays down what income shall be included in the total income, and sections 10(2), 12(2), 12B(2), 14, 15A, 15B, 15C and 16 prescribe the manner of computation of income, profits and gains in (1) L.R. 65 I.A. 1. (2) ; 783 different circumstances, and also prescribe special excep tions. Section 13 does not directly impinge upon the application of these provisions: it merely prescribes that the computation of taxable profits shall be made according to the method of accounting regularly employed. Where in the opinion of the Income tax Officer the income, profits and gains cannot properly be deduced from the method of ac counting, it is open to the Income tax Officer to compute the income upon such basis in such manner as he may determine. The section does not compel the Income tax Officer to accept a balance sheet of cash receipts and outgoings prepared from the books of account; he has to compute the income in accordance with the method of accounting regularly employed by the assessee. The only departure made by section 13 of the Indian Incometax Act from the tax legislation in England is that whereas under the English legislation the Commissioner is not obliged to determine the profits of a business venture, according to the method of accounting adopted by the assessee, under the Indian Income tax Act, prima facie, the Income tax Officer has for the purpose of sections 10 and 12 to compute the income, profits and gains in accordance with the method of account ing regularly employed by the assessee. If, therefore, there is a system of accounting regularly employed and by appropriate adjustments from the accounts maintained taxable profits may properly be deduced, the Income tax Officer is bound to compute the profits in accordance with the method of accounting. But where in the opinion of the Income tax Officer the profits cannot properly be deduced from the system accounting adopted by the assessee it is open to him to adopt a more suitable basis for computation of the true profits. Among Indian businessmen, as elsewhere, there are current two principal systems of book keeping There is, firstly, the cash system in which a record is maintained of actual receipts and actual disbursements, entries being posted when money or money 's worth as actually received, collected or disbursed. There is secondly the mercantile system, in which entries are posted in the books of account on the date of the transaction i.e. on the date on which rights accrue or liabilities are incurred, irrespective of the date of payment. For example, when goods are sold on credit, a receipt entry is posted as of the date of sale, although no cash is received immediately in payment of such goods; and a debit entry is similarly posted when a liability is incurred although payment on account of such liability is not made at the time. There may have to be appropriate variations when this system is adopted by an assessee who carries on a profession. Whereas 784 under the cash system no account of what are called the outstandings of the business either at the commencement or at the close of the year is taken; according to the mercan tile method actual cash receipts during the year and the actual outlays during the year are treated in the same way as under the cash system, but to the balance thus arising, there is added the amount of the outstandings not collected at the end of the year and from this is deducted the liabilities incurred or accrued but not discharged at the end of the year. Both the methods are somewhat rough. In some cases these methods may not give a clear picture of the true profits earned and certainly not of taxable profits. The quantum of allowances permitted to be deducted under diverse heads under section 10(2) from the income, profits and gains of a business would differ according to the system adopted. This is made clear by defining in sub section (5) the word "paid" which is used in several clauses of sub s (2) as meaning actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under section 10. Again where the cash system as adopted, there is no question of bad debts or outstandings at all: in the case of mercantile system against the book profits some of the bad debts may have to be set off when they are found to be mercantile system, there are in numerable other systems of accounting which may be called hybrid or heterogeneous in which certain elements and inci dents of the cash and mercantile systems are combined. But whatever method of book keeping is adopted, in the case of a trading venture, for computing the true profits of the year the stock in trade must be taken into account. If the value of stock in trade is not taken into account, in the ultimate result the profit or loss resulting from trading is bound to get absorbed or reflected in the stock in trade unless the value of the stock in trade remains unchanged at the commencement of the year and at the end of the year. It must be remembered that under the Income tax Act, tax is levied on income, profits and gains, and not on receipts: taxable profits therefore cannot ordinarily be deduced from cash receipts alone. If in the computation of profits of a trading venture, only the cash receipts and outgoings are taken into account, in substance emergence of profits would be deferred, till the firm 's capital outlay is completely recouped, thereby transforming what in truth are profits of the business into capital, by book keeping entries. In this case it is unnecessary to consider whether the method of accounting adopted of ignoring the value of the stock in trade may be regarded as regularly employed by the respondent firm, when it is the first year of account. It is com 785 mon ground that the method of accounting was not mercantile. but was wholly or primarily cash. The Income tax Officer was of the view that in the absence of stock valuation of the film which was a wasting asset of the partnership and which was exploited for earning profits, the income of the firm could not properly be deduced and with that view the Appellate Assistant Commissioner and the Tribunal have agreed. The High Court, however, held that the maintenance of account on cash basis being a recognised method of accounting, the Income tax Officer was bound by the choice of the assessee who had adopted that system of accounting, and to compute the income in accordance with that method, unless the Income tax Officer was satisfied that the assessee had not regularly adopted that system. The High Court also observed that what the Department had done was to make the assessment on the basis that the system of accounting adopted by the assessee was mercantile a system which the assessee had never adopted, and thereby computed the profits of the assessee, by taking into consideration valuation of the closing stock which was not an incident of the cash system. The Income tax Officer had in the view of the High Court no power under the proviso to section 13 "to force a different system on the assessee either the mercantile system or a hybrid system of cash plus valuation of closing stock". In coming to that conclusion, in our judgment, the High Court erred. Note the facts: an amount of Rs. 1,00,000/ was paid by the firm for acquiring a wasting asset, which was to be exploited for the benefit of the partnership. The price paid for acquiring the asset was debited as an outgoing. At the end of the year there was a total, collection of Rs. 1,46,849/ by the exploitation of the asset. The expenses for carrying on the business amounted to Rs. 18,206 / . The result according to the respondent firm was a net profit of Rs. 28,647/ . This was arrived at by posting the outgoing for acquiring its stock in trade as a proper debit, and ignoring the value of that asset at the end of the year altogether. Under the Income tax Act for the purpose of the assessment each year is a self contained unit, and if out of the receipts the cost of the film was to be deducted in the absence of an entry crediting the value of the asset at the end of the year, for arriving at the income of the profit of the firm would either wholly or substantially be absorbed in the amortization of the capital value of the asset. The result of the accounting would therefore give a false picture of the partnership, however lucrative the business may in reality be. The methods of computation of taxable incomes prescribed by the Act of different kinds of income are undoubtedly highly artificial, but the Act does not compel the Income tax Officer to accept a statement of account which is not prepared according to any recognised accounting practice. 786 In Commissioner of Inland Revenue vs Cock Bussell and Co. Ltd.(1). Croom Johnson J., in dealing with valuation of ' stock in trade for purposes of taxation observed: there is no word in the statutes or rules which deals. with this question of valuing stock in trade. There is nothing in the relevant legislation which indicates that in computing the profits and gains of a commercial concern the stock in trade at the start of the accounting period should be taken in and that the amount of the stock in trade at the end of the period should also be taken in. It would be fantastic not to do it: it would be utterly impossible accurately to assess profits and gains merely on a statement of receipts and payments or on the basis of turnover. It has long been recognised that the right method of assessing profits and gains is to, take into account the value of the stock in trade at the beginning and the value of the stock in trade at the end as two of the items in the computation. I need not cite authority for the general proposition, which is admitted at the Bar, that for the purposes of ascertaining profits and gains the ordinary principles of commercial accounting should be applied, so long as they do not conflict with any express provision of the relevant statutes . " We have already said that in England there is no provision which compels the tax officer to adopt in the computation of income the system of accounting regularly employed by the assessee. But whatever may be the system whether it is cash or mercantile as observed by Croom Johnson J. in a trading venture it would be impossible accurately to assess the true profits without taking into account the value of the stock in trade at the beginning and at the end of the year. Reference may also be made to Whimster & Co. vs The Commissioner of Inland Revenue(2) in which Lord President Clyde observed at p. 823: "In computing the balance of profits and gains for the purposes of Income Tax, x x x two general and fundamental commonplaces have always to be kept in mind. In the first place, the profits of any particular year or accounting period must be taken to consist of the difference between the receipts from the trade or business during such year or accounting period and the expenditure laid out to earn those receipts. In the second place, the (1) (2) T.C. 813. 787 account of profit and loss to be made up for the purpose of ascertaining that difference must be framed consistently with the ordinary principles of commercial accounting, so far as applicable, and in conformity with the rules of the Income tax Act, or of that Act as modified by the provisions ' and schedules of the Acts regulating Excess Profits Duty as the case may be. For example the ordinary principles of commercial accounting require that in the profit and loss account a merchant 's or manufacturer 's business the values of the stock intrade at the beginning and at the end of the period covered by the account should be entered at cost or market price, whichever is the lower. although there is nothing about this in the taxing statutes." Similarly in Commissioner of Income tax and Excess Profits Tax, Madras vs Messrs. Chari and Ram, Madura(1) Rajamannar C.J., observed that stock in trade in hand is an essential item in the computation of the profits for a period. "Profits" as observed by Fletcher Moulton, L.J., in the Spanish Prospecting Company Ltd. in re.(2). "implies a comparison between the state of a business at two specific dates usually separated by an interval of a year. The fundamental meaning is the amount of gains made by the business during the year. This can only be ascertained by a comparison of the assets of the business at the two dates. "We start therefore with this fundamental definition of profits, namely, if the total assets of the business at the two dates be compared, the increase which they show at the later date as compared with the earlier date x x x x represents in strictness the profits of the business during the period in question. " It is true that in that case Fletcher Moulton, L.J., made the observations not in dealing with a profit and loss account in a case relating to taxation, but with a, balance sheet of a company intended to show the actual financial condition of a business at the end of a year. The observations however do show that in ascertaining profits what may be regarded as normal book keeping practice has to be observed. Whether in the case of trading in special classes of assets appropriate adjustments may have to be made it beside the point. The Income tax Act makes no provision with regard to the valuation of stock. It charges for payment of tax the income, (1) (2) 788 profits and gains which have to be computed in the manner provided by the Income tax Act. In the case of a trading venture these profits have to be adjusted in the light of the provisions of the Income tax Act permitting allowances prescribed thereby. For that purpose it is the duty of the Income tax Officer to find out what profits the business has made according to true Accountancy practise , in the system adopted, and thereafter to make requiste adjustments, and even appropriate modifications on the rule suggested by Fletcher Moulton, L.J. to ascertain the taxable profits. it is true as observed by Lord Buckmaster in The Naval Colliery Co. Ltd. vs The Commissioner of Inland Revenue(1) that the principle of determining the profits of the trade by valuing everything at the beginning and the end of the accounting period and by finding the difference may not be universally applicable in all cases, and needs material modification. The formula suggested in the Spanish Prospecting Company 's case(") was sought to be applied to a case in which Excess Profits duty was assessed. The assessee a mining company was unable to work its colliery on account of a strike. The assessee sought to introduce into its account which normally ended on June 30, 1921, the estimated expenses for repairing the damage (which though arising in the account period was restored later) on the plea that the expenses were in the nature of liability of business and properly debitable before they were actually incurred. The House of Lords rejected that contention. It was in this context that Lord Buckmaster observed that the accountancy rules, applicable to wise and prudent trading could not be used in connection with the working of a mining lease. These observations do not affect the true character of the profits of a business. Adjustments may have to be made in the principle having regard to the special character of the assets, the nature of the business and the appropriate allowances permitted, in order to arrive at the taxable profits. They do not support the proposition that in the case of a trading venture. you can arrive at the true profits of a year by ignoring altogether the valuation of the stock in trade at the end of the year, while debiting its value at the commencement of the year as an outgoing, for determination of the profits by ignoring the valuation of the stock at the end of the year and debiting the value of the assets at the commencement of the year would not give a true picture of the profit for the year of account. There is no, warrant in this case for assuming that the Re venue authorities and the Tribunal had sought to displace the method of accountancy adopted by the assessee. By applying the proviso to section 13, they made the computation upon the basis (1) (2) 789 and in the manner in which in their opinion profits would be properly deduced. That they were entitled to do. We are therefore of the view that the High Court was in error in holding that because the assessee had maintained his accounts in the cash system it was not open to the Income tax Officer to add to the receipts from the business the value of the stock in trade at the end of the year for the purpose of properly deducing the profits of the business for the year in question. The appeal therefore must be allowed and the answer to the question referred to the High Court will be in the affirma tive. The Commissioner will be entitled to his costs in this Court as well as in the High Court. Appeal allowed.

IN-Abs

The assessee firm acquired for Rs. 1,00,000/ the exploitation rights of a cinematograph film which were to enure for four years. For the period, December 25, 1947 to August 2, 1948, which was the previous year corresponding to the assessment year 1949 50 the firm filed a voluntary return declaring that Rs. 28,643/ were earned by the exploitation of the film. In the statement submitted by the firm the total receipts credited in the firm 's books were Rs. 1,46,849/ and against that amount were debited Rs. 18,206/ as expenditure and Rs. 1,00,000/ as the amount disbursed for acquiring the exploitation rights. The Income tax Officer was of the view that from the statement of account which omitted to include at the close of the account year the value of the right in the film for the unexpired period, the profits of the firm could not properly be deduced. Accordingly, he estimated the value of the rights for the unexpired period of exploitation to which the firm was entitled on August 2, 1948, at Rs. 65,000/ and computed the net profits of the firm as an unregistered firm at Rs. 93,642/ and assessed income tax and super tax payable by the firm on that footing. In the appeals filed against the order or assessment, only the correctness of the estimated value of the rights of the film at Rs. 65,000/ was challenged, and the Appellate Tribunal reduced the valuation to Rs. 40,000/ . On reference, the High Court of Madras took the view that it was the cash system that the assessee had adopted. that valuation of the closing stock was not an incident of that system for ascertaining the profits and that the Incometax Officer had no power under the proviso to section 13 of the Indian Income tax Act, 1922, to force a different system on the assessee either the mercantile system or a hybrid system of cash plus valuation of closing stock. Held: In a trading venture, for computing the true profits of the year, the stock in trade must be taken into account, whatever method of book keeping was adopted; and the High Court was in error in holding that because the assessee had maintained his accounts in the cash system it was not open to the Incometax Officer to add to the receipts from the business the value of the stock in trade at the end of the year for the purpose of properly deducing the profits of the business for the year in question. There was not warrant in the case of assuming that the income tax Officer sought to displace the method of accountancy adopted by the assessee it " as only by applying the proviso to section 13 of the Indian Income tax Act, 1922, that the Income tax Officer made the computation upon the basis and in the manner in which in his opinion profits could be properly deduced. 777

Appeal No. 617 of 1963. Appeal from the judgment and order, dated March 15, 1960, of the Madras High Court in Case referred No. 87 of 1955. Gopal Singh and R.N. Sachthey, for the appellant. K. Rajinder Chaudhuri and K.R. Chaudhri, for the res pondent. April 16. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by certificate is preferred against the order of the High Court of Judicature at Madras holding that a sum of Rs. 12,447/ received by the respondent from the Government during the accounting year 1950 51 was not assessable to tax for the assessment year 1951 52. Gajapathy Naidu, the respondent, was supplying provisions to the Government Stanley Hospital. Royapuram, Madras. During the financial year April 1, 1948 to March 31, 1949, he entered into a contract with the Government for the supply of bread to the said hospital at the rate of Rs. 0 4 6 per lb. As the respondent was maintaining his accounts on mer cantile basis, it is common case that the amount due from the Government under the terms of the said contract was credited in the accounts of the respondent for that year. For the assessment year 1949 50 the Income tax Officer assessed the respondent to income tax on the basis of the accounts so made. It appears that some time after March 31, 1949, representations were made to the Government for relieving the respondent from the loss sustained in the supply of bread to the hospital. The Government by its order dated November 24, 1950, directed payment of compensation for the loss sustained by the respondent in respect of the supply of bread to the hospital during the year 1948 49 under the said contract. The respondent re 769 ceived on that account payment of Rs. 12,447/ during the year of account 1950 51. In the assessment year 1951 52 the, income tax Officer included the said amount in the assessment of that year. The assessee, inter alia, contended that he received the said sum in respect of the contract that was entered into by him with the Government during the accounting year 1948 49 and, therefore, it could not be included in the assessment year 1951 52. This contention was rejected by the Income tax Officer and, on appeal, by the Appellate Assistant Commissioner and also, on further appeal, by the Income tax Appellate Tribunal. But the contention received favour with the High Court on a reference made to it under section 66(1) of the Indian Income tax Act, 1922, hereinafter called the Act. The following two questions were referred to the High Court: "1. Whether the sum of Rs. 12,447/ is assessable to income tax? " "2. If so, whether it has been rightly assessed in the as sessment year 1951 52. " On the first question the High Court held that the said amount was directly related to the business of the assessee and, therefore, was taxable as a trade receipt. It answered the first question in the affirmative. No argument was raised before us on the question of the correctness of this finding. Therefore, nothing further need be said about it. The High Court answered the second question in the negative. Its conclusion is based upon the following three steps: 1. "The only right of the assessee, on the date, when he supplied the bread, was to debit the Government the contract rate. He was entitled to nothing further. The Government Order which raised the rates, came into existence long after payment thereunder was ex gratia, and not on the basis of a right. Therefore, the amount of Rs. 12,447 was not, and indeed could not have been debited in the books of the assessee for the year, when the supply of bread was made to the hospital, namely, 1948 49. Those accounts have been closed. But where a receipt is correlated to and arises out of a commercial transaction between the parties, the right or liability should be deemed to have been established in the past accounting period. That principle is based not only on any theory of accrual, because there was no legal right existing then; but being correlated to the transaction, it L/P(D)ISCI 25 770 should properly belong to it, and the account should be re opened when the payment came in. "Being a receipt of an earlier year, the amount could not be included in the assessment for the year 1951 52. " On the said reasoning the High Court held that though in fact the right to receive the amount did not accrue during the accounting year 1948 49, it should be deemed to have related to the year of contract in respect whereof the amount was paid. The Commissioner of Income tax has preferred the present appeal against the said order of the High Court. Learned counsel for the Revenue contended that the High Court misdirected itself on the basis of English decisions and that on its finding that the amount accrued to the assessee only during the accounting year 1949 50 it should have held that the Income tax Officer had correctly included it in the assessee 's income for the year 1950 51. Learned counsel for the respondent argued that the said amount was paid in respect of the contract entered into between the assessee and the Government and, therefore, the said amount should properly belong to the accounting year 1948 49, and should not have been included in the assessment of the year 1951 52. To sustain his argument he relied upon certain English decisions referred to by the High Court which held that in such circumstances the relevant account of the year when the amount was due under the contract could be reopened and the additional amount, though an ex gratia payment, could be included therein. With great respect to the learned Judges of the High Court we must point out that the decision of the High Court is deflected by its reliance on English decisions delivered under circumstances peculiar to that country and on the con struction of provisions which are not in pari materia with the provisions obtaining in India. The observations made by this Court in Commissioner of Income tax vs Vazir Sultan & Sons(1) may usefully be restated "While considering the case law it is necessary to bear in mind that the Indian Income tax Act is not in pari materia with the British income tax statutes, it is less elaborate in many ways, subject to fewer re finements and in arrangement and language it differs greatly from the provisions with which the courts in England have had to deal. Little help can therefore be gained by attempting to construe (1) [1959] Supp. 2 S.C.R. 375. 771 the Indian Income tax Act in the light of decisions bearing upon the meaning of the income tax legislation in England. But on analogous provisions, fundamental concepts and general principle unaffected by the specialities of the English incometax statutes, English authorities may be useful guides. " The caution administered by this Court shall always be borne in mind in construing the provisions of the Indian statute. The provisions of the Indian Income tax Act shall be construed on their own terms without drawing any analogy from English statutes whose terms may superficially appear to be similar but on a deeper scrutiny may reveal differences not only in the wording but also in the meaning a particular expression has acquired in the context of the development of law in that country. The problem raised before us can only be answered on the true meaning of the express words used in section 4 (1)(b)(i) of the Act. It reads: "Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which if such person is resident in the taxable territories during such year, accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year. " We are not concerned in this case with the expression "deemed to accrue or arise to him", as that expression refers to cases set out in the statute itself introducing a fiction in respect of certain incomes. In regard to the question when and whether an income accrues or arises within the meaning of the first part of the said clause, we have a decision of this Court which has clearly enunciated the principles underlying the said expression: that is the decision in E. D. Sassoon and Company, Ltd., vs The Commissioner of Income tax, Bombay City(1). In that decision this Court accepted the definition given to the words "accrue" and "arise" by Mukerji, J., in Rogers Pyatt Shellack & Co. vs Secretary of State for India(2), which is as follows: ". . both the words are used in contradistinction to the word "receive" and indicate a right to (1) ; , 342:(1954) , 50. (2) , 371:(1925) I.L.R. L/IP(D) ISCI 25(a) 772 receive. They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income which is more or less inchoate. " Under this definition accepted by this Court, an income accrues or arises when the assessee acquires a right to receive the same. It is common place that there are two principal methods of accounting for the income, profits and gains of a business , one is the cash basis and the other, the mercantile basis. The latter system of accountancy "brings into credit what is due immediately it becomes legally due and before it is actually received; and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. " The book profits are taken for the purpose of assessment of tax, though the credit amount is not realized or the debit amount is not actually disbursed. If an income accrues within a particular year, it is liable to be ,assessed in the succeeding year. When does the right to receive an amount under a contract accrue or arise to the assessee i.e., come into existence? That depends upon the terms of a particular contract. No other relevant provision of the Act has been brought to our notice for there is none which provides an exception that though an assessee does not acquire a right to receive an income under a contract in a particular accounting year, by some fiction the amount received by him in a subsequent year in connection with the contract, though not arising out of a right accrued to him in the earlier year, could be related back to the earlier year and made taxable along with the income of that year. But that legal position is sought to be reached by a process of reasoning found favour with English courts. It is said that on the basis of proper commercial accounting practice, if a transaction takes place in a particular year, all that has accrued in respect of it, irrespective of the year when it accrues, should belong to the year of transaction and for the purpose of reaching that result closed accounts could be reopened. Whether this principle is justified in the English law, it has no place under the Indian Incometax Act. When an Income tax Officer proceeds to include a particular income in the assessment, he should ask himself inter alia, two questions, namely, (i) what is the system of accountancy adopted by the assessee? and (ii) if it is mercantile system of accountancy, subject to the deemed provisions, when has the right to receive that amount accrued? If he comes to the conclusion that such a right accrued or arose to the assessee in a particular accounting year, he shall include the said income in the assessment of the succeeding assessment year. No power is conferred on the Income tax Officer under the Act, to relate back an income that accrued or arose in a 773 subsequent year to another earlier year on the ground that the said income arose out of an earlier transaction. Nor is the question of reopening of accounts relevant in the matter of as certaining when a particular income accrued or arose. Section 34 of the Act empowers the Income tax Officer to assess the income which escaped assessment or was under assessed in the relevant assessment year. Subject to the provisions of the section and following the procedure prescribed thereunder, he can include the escaped income and re assess the assessee on the basis of which the earlier assessment was made. So too, under section 35 of the Act the officers mentioned therein can rectify mistakes either of their own motion or when such mistakes are brought to their notice by a party to the proceedings. For that purpose the correct item may be taken into consideration in the matter of assessment. But strictly speaking even in those cases there is no reopening of the accounts of the assessee, but a re assessment is made or the mistake is corrected on the basis of the actual income accrued or received by the assessee. We do not see any relevancy of the question of reopening of accounts in considering the question when an assessee acquired a right to receive an amount. We shall now proceed to notice some of the decisions cited at the Bar. J.P. Hall & Co. vs Commissioner of Inland Revenue(1) is a decision of the Court of Appeal under section 38 of the Finance (No. (5 & 6 Geo. V, c. 89) dealing with excess profits duty. There it was held that for the purpose of Excess Profits Duty, the profits from the contracts for the purchase and sale of the control ear arose to the appellant company in the accounting years in which the gear was actually delivered and not in the pre war period ending the 30th June, 1914, in which the contracts were made. The price of the control gear in that case was increased later without there being any contractual obligation but purely by a voluntary act of the purchaser. Though the additional amounts accrued to the assessee in a later year, it was regarded as analogous to a trade debt due in respect of the trading operation of the earlier year. On that principle the accounts were reopened in order to bring the increase into profits of the assessee in the year of transaction. This decision was accepted and extended in Severns (H.M. Inspector of Taxes) vs Dadswell(2). As this decision is the basis for the High Court 's view we shall give its facts in some detail. The respondent therein was granted a licence to mill flour in October, 1941, and carried on the trade of flour milling until September, 1945. As he had not been a (1) (1921)1 (2) 774 miller at the outbreak of war, he was not entitled to the benefit of a remuneration agreement whereby millers were compensated by the Ministry of Food for losses incurred under wartime arrangements for the purchase of wheat and sale of flour. Having, however, been informed by the Ministry in 1943 and twice later that the remuneration of millers who had begun milling during the period of control was under consideration, he made a claim in 1949 on the same basis as that laid down in the remuneration agreement and received payments in settlement. The respondent contended that the sums received in 1949 were not trading receipts but ex gratia payments, and alternatively, that they were received after the cessation of his trade and that if there was a debt arising to the trade at the date of cessation its value at that date was nil. The Court held that the said payments were ex gratia; and it further held that, if on the discontinuance of a trade payment for work already done in a year had not been finally settled. accounts for that year could be reopened so as to bring in a gratuitous payment for such work made in a subsequent year. This judgment cer tainly supports the respondent. Though it could be distinguished on the ground in that case it was found that the payment for the work already done had not been finally settled whereas in the present case there is nothing on the record to disclose that it was not finally settled. We would prefer to base our conclusion on the ground that we cannot extend the meaning of the word "accrue" or "arise" in section 4(1)(b)(i) of the Act so as to take in amounts received by the assessee in a later year, though the receipt was not on the basis of the right accrued in the earlier year. Such amounts are in law received by the assessee only in the year when they are paid. We cannot apply the English decisions in the matter of construction of the provisions of the Indian Act, particularly when they have received an authoritative interpretation from this Court, in this view, it is not necessary to consider further English decisions cited by learned counsel for the respondent in support of his contention. Before a Division Bench of the Allahabad High Court in Commissioner of Income tax, U.P. vs Kalicharan Jagannath(1), when a similar question arose, learned counsel appearing for the Revenue relied upon the said English deci sions, but the High Court, rightly, refused to act on them on the ground that they were not relevant in interpreting section 4 of the Indian Income tax Act. It further made an attempt to distinguish those decisions on grounds based upon the alleged difference in the scope of the provisions 'of the respective countries. It was said that under the relevant English Act the excess profits duty was payable on computation of profits arising from a trade or business in different chargeable accounting periods and, therefore. the emphasis there was more (1) 775 upon the carrying on 'of the trade within the chargeable period than on the income accruing during that period. But we do not propose to express our view on this aspect of the question, as the relevant sections of the English Acts have not been placed before us. The learned Judges, after having rightly refused to rely upon the English decisions, construed the provisions of the Indian statute. There. during the accounting period April 1, 1945 to March 31, 1946, the assessee entered into a contract with and supplied fruits and bullock carts to, the military authorities at two different places at rates fixed by the agreement. The assessee incurred a loss and he submitted a petition for review under the terms of the agreement. On November 6, 1947, the military authorities sanctioned the payment of an additional sum which was paid to the assessee on February 17 and 24, 1948. The Incorne tax Department sought to include this additional sum in the assessment for the accounting year 1945 46. The High Court held that until the order of review the only right that the assessee had was to claim the money payable at the rates laid down in the agreement itself and that the additional amount became payable to the assessee not by virtue of any right conferred by the agreement, but because of the order passed in review directing the payment of the amount and thus creating a right to this amount in favour of the assessee. As the right to receive the payment of the additional sum arose after the closing of the accounting year 1945 46, the High Court proceeded to hold that the income did not accrue or arise to the assessee in the accounting year. It may be pointed out that in that case the original agreement gave a right to apply for review and notwithstanding that fact the court held that the additional payment could not be held to have accrued during the accounting year. For the reasons already stated by us, we are entirely in agreement with the view expressed by the Allahabad High Court. In the result, we hold that the High Court in the present case should have answered the second question referred to it in the affirmative. The order of the High Court is set aside ,and the appeal is allowed with costs. Appeal allowed.

IN-Abs

A certain sum of money was received by the assessee as payment of compensation for the loss sustained by him in respect of a supply during the previous accounting year. The .Income tax Officer included the amount in the assessment year it was received. Appeals to the Appellate Assistant ComMissioner and to the Income tax Tribunal were unsuccessful. But on a reference, the High Court held that though in fact the right to receive the amount did not accrue during the accounting year of the contract, it should be deemed to have related to the year of contract in respect whereof the amount was paid. On appeal by certificate, Held: (i) The decision of the High Court was deflected by its reliance on English decisions delivered under circumstances peculiar to that country and on the construction of provisions which were not in pari materia with the provisions obtaining in India. The provisions of the Indian Income tax Act shall be construed on their own terms without drawing any analogy from English statutes whose terms may superficially appear to be similar but on a deeper scrutiny may reveal differences not only in the wording but also in the meaning a particular expression has acquired in the context of the development of law in that country. Commissioner of Income tax vs Vazir Sultan & Sons, [1959] Supp. 2 S.C.R., 375, followed;. (ii) under the definition accepted by this Court of the word "accrue" or "arise" in section 4(1)(b)(i) of the Indian Incometax Act, an income accrues or arises when the assessee acquires ,a right to receive the same. section D. Sassoon and Co. Ltd. vs Commissioner of Income tax, Bombay City, ; , followed. Rogers Pyatt Shellack & Co. vs Secretary of State for India Cal. 1, approved. When an Income tax Officer proceeds to include a particular income in the assessment, he should ask himself, inter alia, two questions, namely (i) what is the system of accountancy adopted by the assessee? and (ii) if it is mercantile system of accountancy, subject to the deemed provisions when has the right to receive that amount accrued? If he comes to the conclusion that such a right accrued or arose to the assessee in a particular accounting year, he shall include the said income in the assessment of the succeeding assessment year. No power is conferred on the Income tax Officer under the Act, to relate 768 back an income that accrued or arose in a later year to an earlier year on the ground that the said income arose out of an earlier transaction. (iii) The meaning of the word "accrue" or "arise" in section 4(1)(b)(i) of the Indian Income tax Act cannot be extended so as to take in amounts received by the assessee in a later year, though the receipt was not an the basis of the right accrued in the earlier year. Such amounts are in law received by the assessee only in the year when they are paid. J. P. Hall & Co. v Commissioner of Inland Revenue, and Severns (H. M. Inspector of Taxes) vs Dadawall, (1954). , referred to. Commissioner of Income tax, U.P. vs P. V. Kalicharan Jagannath, , approved.

iminal Appeals Nos. 84 and 85 of 1952. Appeals by Special Leave granted by the Supreme Court of India on the 17th September, 1951, from the Judgment and Order dated the 6th June, 1951, of the High Court of Judicature at Calcutta in Criminal Appeals No. 175 and 176 of 1950, respectively arising 33 out of the Judgment and Order dated the 29th August, 1950, of the Special Court of Alipur, Calcutta, in Case No. 2 of 1949. N.C. Chatterjee (section N. Mukherjee and P. N. Mehta, with him) for the appellant in Cr. Appeall No. 84 of 1952. Ajit Kumar Dutt and Arun Kumar Dutt for the appellant in Cr. Appeal No. 85 of 1952. C. K. Daphtary, Solicitor General for India (B. Sen, with him) for the respondent in both the appeals. May 22. The Judgment of the Court was delivered by PATANJALI SASTRI C. J. These are connected appeals by special leave from the order of the High Court of Judicature at Calcutta dated January 6, 1951, confirming the conviction of the appellants and the sentences imposed on them by the Special Court, Alipur, Calcutta, constituted under the West Bengal Criminal Law Amendment (Special Courts) Act, 1949. The first appellant was at all material times the proprietor of the firm of Kedar Nath Mohanlal, Managing Agents of Shiva Jute Press Ltd., an incorporated company having a number of godowns at Cossipore in West Bengal, and the second appellant was the Area Land Hiring and Disposals Officer in the service of the Government of India. Some of the godowns belonging to the company were requisitioned by the Govern ment for military purposes in 1943 and were released in December, 1945. The appellants, along with two others who were given the benefit of doubt and acquitted, were charged, with having conspired to cheat, and having cheated, the Government by inducing their officers to pay Rs. 47,550 to the first appellant on behalf of the company as compensation for alleged damage to the godowns on the basis of an assessment made by the second appellant which was false to the knowledge of both the appellants. It was also alleged that the second appellant recommended 34 the payment of Rs. 1,28,125 to the company for damage caused to the jute stored in the godowns by leakage of rain water through cracks in the roof which the military authorities neglected to repair. This claim, however, had not been paid as the second appellant 's recommendation was not accepted by the higher authorities who referred it to the Claims Commission for investigation. The appellants were accordingly charged with having committed offences under sections 120B and 420 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act (Act No. 11 of 1947). The West Bengal Criminal Law Amendment Act (hereinafter referred to as " the Act ") came into force on June 23, 1949, and, by notification No. 5141 J dated September 16, 1949, the West Bengal Government allotted the case against the appellants and two others to the Special Court constituted by the Government under section 3 of the Act. The trial commenced on January 3, 1950, and nine prosecution witnesses were examined in chief before January 26, 1950, when the Constitution came into force. , After some more witnesses were examined, the charges were framed on February 27, 1950. On June 9, 1950, prosecution evidence was closed and the appellants were examined under section 342 of the Criminal Procedure Code. On August 29, 1950, the Special Judge delivered judgment convicting the appellants on all the counts and sentenced them to varying terms of rigorous imprisonment and fine. In addition to the sentences imposed under the ordinary law the first appellant was fined Rs. 50,000 including the sum of Rs. 47,550 received by him, as required by section 9(1) of the Act. Though the constitutionality of the Act was not challenged in the High Court, Mr. Chatterjee on behalf of the appellants made it the principal issue in these appeals. He contended that the Special Court had no jurisdiction to try and convict the appellants inasmuch as section 4 of the Act, under which the case was allotted by the State Government to the Special Court offended against article 14 of the Constitution in that 35 it enabled the Government to single out a particular case for reference to the Special Court for trial by the special procedure which denied to persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure. Learned counsel placed strong reliance on the majority decision of this court in Anwar Ali Sarkar 's case(1) and, indeed, claimed that that decision ruled the present case. He further urged that the offence under section 5(2) of the Prevention of Corruption Act was triable exclusively by the court of session under item (1) of the last heading of Schedule 11 to the Criminal Procedure Code as the offence is made punishable under that section with imprisonment for seven years, with the result that the trial which was held in Calcutta would have been by jury in the High Court had the ordinary procedure been followed. Though the trial by the Special Court began before the commencement of the Constitution, its continuance without a jury after the Constitution came into force vitiated the whole trial, as it would riot be possible to introduce the jury at any subsequent stage. In support of this view he relied on certain observations in the majority judgment of this court in Qasim Razvi 's case(2). These observations were made by way of explaining the majority decision in Lachmandas Kewalram Ahuja 's case(3) where it was held that proceedings taken prior to the commencement of the Constitution before a Special Court constituted under section 12 of the Bombay Public Safety Act, which was in the same terms as section 5(1) of the West Bengal Act, remained unaffected by the Constitution, though the special procedure provided by the Act was held to be discriminatory following Anwar Ali Sarkar 's case(1). On the other hand, the Solicitor General on behalf of the Government maintained that the decision was clearly distinguishable and had no application to this case which is governed by the principles enunciated in the Saurashtra case(4). Before considering the constitutional validity of the Act in the light of the rulings referred to above, (1) ; (2) (3) ; (4) ; 36 it is necessary to have a look at the provisions of the Act in order to ascertain the underlying policy and purpose of the legislation, what evil it seeks to remedy and what means it employs to that end. The Act is entitled " an Act to provide for the more speedy trial and more effective punishment of certain offences" and the preamble declares that " it is expedient to provide for the more speedy trial and more effective punishment of certain offences " which are set out in the schedule annexed to the Act. The Provincial Government is empowered to constitute Special Courts of criminal jurisdiction for specified areas and to appoint persons with prescribed qualifications as Special Judges to preside over such courts (sections 2 and 3). Section 4 defines the jurisdiction of Special Judges and reads as follows: "4. (1) The Provincial Government may, from time to time by notification in the Official Gazette, allot cases for trial to a Special Judge, and may also from time to time by like notification transfer any case from one Special Judge to another and withdraw any case from the jurisdiction of a Special Judge or make such modifications in the description of a case (whether in the name of the accused or in the charges preferred or in any other manner) as may be considered necessary. (2)The Special Judge shall have jurisdiction to try the cases for the time being allotted to him under subsection (1) in respect of such of the charges for the offences specified in the schedule as may be preferred against the several accused, and any such case which is at the commencement of this Act or at the time of such allotment pending before any Court or another Special Judge shall be deemed to be transferred to the Special Judge to whom it is allotted. (3)When trying any such case as aforesaid, a Special Judge may also try any offence whether or not specified in the schedule which is an offence with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial." 37 Section 5 provides for the procedure and powers of Special Judges. They are empowered to take cognisance of offences without the accused being committed to their court for trial and are required to follow the procedure prescribed by the Criminal Procedure Code for the trial of warrant cases. The Special Judges may, for reasons to be recorded, refuse to summon any witness, if satisfied after examination of the accused, that the evidence of such witness will not be material and shall not be bound to adjourn any trial for any purpose unless such adjournment is, in their opinion, necessary in the interests of justice. Except as aforesaid the provisions of the Code are made applicable so far as they are not inconsistent with the Act, and for the purposes of the said provisions the Special Court is to be deemed to be a court of session trying cases without a jury and without the aid of assessors. By section 6 the High Court is given all the powers conferred on a High Court by Chapters XXXI and XXXII of the Code as if the court of the Special Judge were a court of session. Section 7 bars the transfer of any case from a Special Judge, and section 8 lays down certain special rules of evidence to be applied in the trial of offences specified in the schedule. Section 9 enacts certain special provisions regarding punishment. Sub section (1) provides that a Special Judge shall impose in addition to any sentence authorised by law a further fine which shall be equivalent to the amount of money or value of other property found to have been procured by the offender by means of the offence, and sub section (4) requires the amount of such fine when recovered to be paid to the Government to which the offence caused loss or if there is more than one such Government to distribute the amount among them in proportion to the loss sustained by each. Section 10 makes the provisions of the Prevention of Corruption Act, 1947, applicable to trials under the Act. The schedule sets out eight categories of offences triable by the Special Judges. Paragraphs 1, 2, 3 and 4 relate to offences in which public servants are concerned or loss of Government property or money is involved. Paragraph 5 relates 38 to offences of forgery,falsification of accounts and such like. Paragraph 6 includes offences punishable under the Essential Supplies Act, 1946, and paragraph 7 includes those punishable under section 5 of the Prevention of Corruption Act, 1947, while paragraph 8 relates to conspiracies and attempts to commit, and abetments of, any of the offences specified in the earlier paragraphs. Before examining whether the present case is governed by the ruling in Anwar Ali Sarkar 's case(1) as urged by Mr. Chatterjee or by the principles laid down in the Saurashtra case(2) as the Solicitor General maintained, it will be convenient to dispose of the contention of Mr. Chatterjee about his clients having been denied the advantage of a jury trial after January 26, 1950. The contention, supported as it is by the observations in Qasim Razvi 's case (3) to which reference has been made, does not, however, carry the appellant 's case far enough, for, the question still remains whether the legislation impugned in the present case was obnoxious to article 14 as section 5(1) of the West Bengal Act was held to be in Anwar Ali Sarkar 's case (1). This brings us to the main question referred to above which we now proceed to examine. Now, it is well settled that the equal protection of the laws guaranteed by article 14 of the Constitution does not mean that all laws must be general in character and universal in application and that the State is no longer to have the power of distinguishing and classifying persons or things for the purposes of legislation. To put it simply, all that is required in class or special legislation is that the legislative classification must not be arbitrary but should be based on an intelligible principle having a reasonable relation to the object which the legislature seeks to attain. If the classification on which the legislation is founded fulfils this requirement, then the differentiation which the legislation makes between the class of persons or things to which it applies and other persons or things left (1)[1932] S.C.R. 284. (3)[1953] S.C.R. 589. (2)[1952] S.C.R. 435. 39 outside the purview of the legislation cannot be regarded as a denial of the equal protection of the law, for, if the legislation were all embracing in its scope, no question could arise of classification being based on intelligible differentia having a reasonable relation to the legislative purpose. The real issue, therefore, is whether having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions as summarised above, the classification of the offences, for the trial of which the Special Court is set up and a special procedure is laid down, can be said to be unreasonable or arbitrary and, therefore, violative of the equal protection clause. In considering this question it is hardly necessary to invoke the accepted principle that " If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed " [see per Fazl Ali J. in Chiranjit Lal 's case (1), quoting from Constitutional Law by Willis]. In the present case, it is well known that during the post war period various organisations and establishments set up during the continuance of the war had to be wound up, and the distribution and control of essential supplies, compulsory procurement of food grains, disposal of accumulated stores, adjustment of war accounts and liquidation of war time industries had to be undertaken. These undertakings gave special opportunities to unscrupulous persons in public services placed in charge of such undertakings to enrich themselves by corrupt practices and antisocial acts thereby causing considerable loss to the Government. Viewed against this background, it will be seen that by and large the types of offences mentioned in the schedule to the Act are those that were common and widely prevalent during this period, and it was evidently to prevent, or to place an effective check upon, the commission of such offences that the impugned legislation was considered necessary. It is manifestly the policy of the Act to impose, in addition to the penalties prescribed under the ordinary law, deterrent punishment that would make the offender disgorge the (1) ; , 877. 40 ill gotten gains procured by him by means of the offence, and where such gains were obtained at the expense of Governments, to distribute the amount recovered among them in proportion to the loss caused to them by the offence. This legislative purpose :is indicated clearly not only in the preamble to the Act but also in section 9 which provides for special compensatory fines equal in value to the amount procured by the offender by means of the offence and, as cases involving such offences were known to be numerous at the time, a speedier trial of such cases than was possible under the normal procedure was presumably considered neces sary. Hence the system of Special Courts to deal with the special types of offences under a shortened and simplified procedure was devised, and it seems to us that the legislation in question is based on a perfectly intelligible principle of classification having a clear and reasonable relation to the object sought to be attained. Mr. Chatterjee argues that the offences listed in the schedule do not necessarily involve the accrual of any pecuniary gain to the offender or the acquisition of other property by him or any loss to any Government, and that the classification cannot, therefore, be said to be based on that consideration. Counsel referred in particular to the offences included in the fifth paragraph, namely, forgery, making and possessing counterfeit seals, falsification of accounts, etc., as instances in point. It may, however, be observed that section 9(1), which makes it obligatory on the Special Court to impose on persons tried and convicted by it an additional compensatory fine of the kind mentioned above, indicates that only those offences, which, either by themselves or in combination with others mentioned in the schedule, are suspected to have resulted in such pecuniary gain or other advantage and, therefore, to merit the compensatory fine, are to be allotted to a Special Court for trial. It is well known that acts which constitute the offences mentioned in paragraph 5 are often done to facilitate the perpetration of the other offences specified in the schedule, and they may well have been included as ancillary offences. Article 14 doer, not insist that legislative classification should be 41 scientifically perfect or logically complete and we cannot accept the suggestion that the classification made in the Act is basedon no intelligible principle and is, therefore, arbitrary. It has been further contended that even assuming that the scheduled offences and the persons charged with the commission thereof could properly form a class in respect of which special legislation could be enacted, section 4 of the Act is discriminatory and void, vesting, as it does, an unfettered discretion in the Provincial Government to choose any particular "case " of a person alleged to have committed an offence falling under any of the specified categories for allotment to the Special Court to be tried under the special procedure, while other offenders of the same category may be left to be tried by ordinary courts. In other words, section 4 permits the Provincial Government to make a discriminatory choice among persons charged with the same offence or offences for trial by a Special Court, and such absolute and unguided power of selection, though it has to be exercised within the class or classes of offences mentioned in the schedule, is no less discriminatory than the wider power of selection from the whole range of criminal law conferred on the State Government by the legislation impugned in Anwar Ali Sarkar 's case (1). The vice of discrimination, it is said, consists in the unguided and unrestricted power of singling out for different treatment one among a class of persons all of whom are similarly situated and circumstanced, be that class large or small. The argument overlooks the distinction between those cases where the legislature itself makes a complete classi fication of persons or things and applies to them the law which it enacts, and others where the legislature merely lays down the law to be applied to persons or things answering to a given description or exhibiting certain common characteristics, but being unable to make a precise and complete classification, leaves it to an administrative authority to make a selective application of the law to persons or things within the, (1) ; 6 42 defined group, while laying down the standards or at least indicating in clear terms the underlying policy and purpose, in accordance with, and in fulfilment of, which the administrative authority is expected to select the persons or things to be brought under the operation of the law. A familiar example of this type of legislation is the , which, having indicated in what classes of cases and for what purposes preventive detention can be ordered, vests in the executive authority a discretionary power to select particular persons to be brought under the law. Another instance in point is furnished by those provisions of the Criminal Procedure Code which provide immunity from prosecution without sanction of the Government for offences by public servants in relation to their official acts, the policy of the law being that public officials should not be unduly harrassed by private prosecution unless in the opinion of the Government, there were reasonable grounds for prosecuting the public servant which accordingly should condition the grant of sanction. It is not, therefore, correct to say that section 4 of the Act offends against article 14 of the Constitution merely because the Government is not compellable to allot all cases of offences set out in the schedule to Special Judges but is vested with a discretion in the matter. Whether an enactment providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 must be determined in each case as, it arises, for, no general rule applicable to all cases can safely be laid down. A practical assessment of the operation of the law in the particular circumstances is necessary. There are to be found cases on each side of the line: Anwar Ali Sarkar 's case(1) is an authority on one side; the Saurashtra case (2) is on the other. Apart from dicta here and there in the course of the judgments deliver ed in these cases and the decisions based on them, there is no real Conflict of principle involved in them. The majority decision in Anwar Ali Sarkar 's case(1) proceeded on the view that no standard was laid down (1) ; (2) ; 43 and no principle or policy was disclosed in the legislation challenged in that case, to guide the exercise of discretion by the Government in selecting a " case" for reference to the Special Court for trial under the special procedure provided in the Act. All that was relied on as indicative of a guiding principle for selection was the object, as disclosed in the preamble of the West Bengal Act, of providing for the " speedier trial of certain offences ", but the majority of the learned judges brushed that aside as too indefinite and vague to constitute a reasonable basis for classification. "Speedier trial of offences", observed Mahajan J., " may be the reason and motive for the legislation but it does not amount either to a classification of offences or of cases. . In my opinion it is no classification at all in the real sense of the term as it is not based on any characteristics which are peculiar to persons or to cases which are to be subject to the special procedure prescribed by the Act" (page 314). Mukherjea J. said, " I am definitely of opinion that the necessity of a speedier trial is too vague, uncertain and elusive a criterion to form a rational basis for the discrimination made. The necessity for speedier trial may be the object which the legislature had in view or it may be the occasion for making the enactment. In a sense quick disposal is a thing which is desirable in all legal proceedings. This is not a reasonable classification at all but an arbitrary selection" (page 328). Similar observations are to be found in the judgments of Das and Chandrasekhara Aiyar JJ. at pages 328 and 352 respectively. It will be seen that the main reasoning of the majority judges in Anwar Ali Sarkar 's case (1) as disclosed in the passages extracted above is hardly applicable to the statute here in question which is based on a classification which, in the context of the abnormal post war economic and social conditions is readily intelligible and obviously calculated to subserve the legislative purpose. The case, in our opinion, falls on the same side of the line as the Saurashtra ruling(1) where Anwar Ali Sarkar 's case (1) was distinguished (1) ; (2) ; 44 by three of the learned Judges who were parties to the majority decision in the earlier case. Fazl Ali J. observed: " There is however one very important difference between the West Bengal Act and the present Ordinance which, in my opinion, does afford such justification (for upholding the Ordinance), and I shall try to refer to it as briefly as possible. I think that a distinction should be drawn between discrimination without reason and discrimination with reason. The main objection to the West Bengal Act was that it permitted discrimination without reason or without any rational basis The mere mention of speedier trial ' as the object of the Act did not 'cure the defect ', as the expression afforded no help in determining what cases required speedier trial The clear recital (in the Saurashtra Ordinance) of a definite objective furnishes a tangible and rational basis of classification to the State Government for the purpose of applying the provisions of the Ordinance and for choosing only such offences or cases as affect public safety, maintenance of public order and the preservation of peace and tranquillity. Thus under section 11, the State Government is expected only to select such offences or class of offences or class of cases for being tried in a Special Court in accordance with the special procedure, as are calculated to affect the public safety, maintenance of public order etc. " (pages 448 449). Almost the whole of this reasoning would apply mutatis mutandis to the legislation impugned in the present case. Mukherjea J., after distinguishing Anwar Ali Sarkar 's case(1) on similar grounds, said: "The object of passing this new Ordinance is identically the same for which the earlier Ordinance was passed, and the preamble to the latter, taken along with the surrounding circumstances, discloses a definite legislative policy which has been sought to be effectuated by the different provisions contained in the enactment. If special courts were considered necessary to cope with an abnormal situation, it cannot be said that the vesting of authority in the State Government to select offences for trial 45 by such courts is in anyway unreasonable." (Page 463. Italics mine). The last sentence aptly applies to the present case. It will be recalled that section 11 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Special Courts Act. Answering the objection that it committed to the absolute and unrestricted discretion of the executive government the duty of making the selection or classification of cases to be 'placed before the Special Court, the learned Judge observed: "A statute will not necessarily be condemned as discriminatory, because it does not make the classification itself but, as an effective way of carrying out its policy, vests the authority to do it in certain officers or administrative bodies." (Page 459). . . In my opinion, if the legislative policy is clear and definite and, as an effective method of carrying out that policy, a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation. . . In such cases the power given to the executive body would import a duty on it to classify the subject matter of legislation in accordance with the objective indicated in the statute. The discretion that is conferred on official agencies in such circumstances is not an unguided discretion; it has to be exercised in conformity with the policy to effectuate which the discretion is given, and it is in relation to that objective that the propriety of the classification would have to be tested." (Page 460). Das J. no doubt laid stress on the fact that although section 1 1 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Act, the court had to consider the discriminatory character of the latter enactment in so far as it empowered the West Bengal Government to refer an individual case to the special court for trial, whereas the Saurashtra Government, having by the notification issued under the Ordinance referred only certain offences, the court was called upon to consider the constitutionality of 46 that part of section 1 1 which enabled the executive government to refer "offences, classes of offences and classes of cases". As regards these three categories, however, the learned Judge held that in the preamble of the old Ordinance, in which the impugned provisions were inserted by way of amendment, there was sufficient indication of policy to guide the executive government in selecting offences or classes of offences or classes of cases for reference to a special court, and concluded thus: "In my judgment this part of the section, properly construed and understood, does not confer an uncontrolled and unguided power on the State Government. On the contrary, this power is controlled by the necessity for making a proper classifi cation which is to be guided by the preamble in the sense that the classification must have a rational relation to the object of the Act as recited in the preamble. It is therefore not an arbitrary power. The legislature has left it to the State Government to classify offences or classes of offences or classes of cases for the purpose of the Ordinance, for the State Government is in a better position to judge the needs and exigencies of the State, and the court will not lightly interfere with the decision of the State Government." (Page 474). Among the minority Judges both Mahajan and Chandrasekhara Aiyar JJ. took the view that the preamble which merely referred to the need to provide for public safety, maintenance of public order and the preservation of peace and tranquillity in the State of Saurashtra indicated no principle of classification, as the object was a general one which had to be kept in view by every enlightened Government or system of administration and that every law dealing with commission and punishment of offences was based on this need. Accordingly, in their view, the decision of the majority in the Saurashtra case(1) marked a retreat from the position taken up by the majority in the earlier case of Anwar Ali Sarkar(2). However that may be, the majority decision in the Saurashtra case(1) would seem to lay down the principle that if the (1) ; (2) (1952] S.C.R. 284. 47 impugned legislation 'indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed is not a sufficient ground for condemning it as arbitrary and, therefore, obnoxious to article 14. In the case of such a statute it could make no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases. For, in either case, the discretion to make the selection is a guided and controlled discretion and not an absolute or unfettered one and is equally liable to be abused, but as has been pointed out, if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts. Mr. Chatterjee brought to our notice in the course of his argument a decision of the Calcutta High Court in J. K. Gupta vs The. State (1) where a Special Bench (Harries C. J., Das and Das Gupta JJ.) inclined to the view that the Act now under challenge did not create a valid class or classes of offences, and held that even if the classification were held to be proper, section 4(1) was ultra vires article 14 of the Constitution in that a discretionary power was given to the State to allot cases to the Special Court or not as the State Government felt inclined, and thus to discriminate between persons charged with an offence falling within the same class. We are unable to share this view. There may be endless variations from case to case in the facts and circumstances attending the commission of the same type of offence, and in many of those cases there may be nothing that justifies or calls (1) 48 for the application of the provisions of the special Act. For example, sections 414 and 417 of the Indian Penal Code are among the offences included in the Schedule to the Act, but they are triable in a summary way under section 260 of the Criminal Procedure Code where the value of the property concerned does not exceed fifty rupees. It would indeed be odd if the Government were to be compelled to allot such trivial cases to a Special Court to be tried as a warrant case with an appeal to the High Court in case of conviction. The gravity of the particular crime, the advantage to be derived by the State by recoupment of its loss, and other like considerations may have to be weighed before allotting a case to the Special Court which is required to impose a compensatory sentence of fine on every offender tried and convicted by it. It seems reasonable, if misuse of the special machinery provided for the more effective punishment of certain classes of offenders is to be avoided, that some competent authority should be invested with the power to make a selection of the cases which should be dealt with under the special Act. For all these reasons we hold that section 4 of the Act, under which the appellants ' case was allotted by the State Government to the Special Court at Alipur is constitutionally valid, and the Special Court had jurisdiction to try and convict the appellants. As regards the fine of Rs. 50,000, inflicted on the first appellant, Mr. Chatterjee objected that it could not stand to the extent of Rs. 47,550 found to have been received by the first appellant by the commission of the offence, as it is in contravention of article 20 of the Constitution which provides, inter alia, that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. The offences for which the first appellant has been convicted were all committed in 1947, whereas the Act which authorised the imposition of the additional punishment by way of fine equivalent to the amount of money or value of other property found to 49 have been procured by the offender by means of the offence came into force in June, 1949. Mr. Chatterjee urged that article 20 on its true construction prohibits the imposition of such fine even in cases where the prosecution was pending at the commencement of the Constitution. This question, which turns on the proper construction of the article, was recently considered and decided in Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh(1), and according to that decision the sentence of fine to the extent of Rs. 47,550 will be set aside in any event. The appeal will be heard in due course on the merits, and it would be open to the court, in case the conviction is upheld, to, impose such appropriate fine as it should think fit in addition to the sentence of imprisonment. BOSE J. It is with the deepest regret that I again find myself compelled to dissent. While this was still virgin land there was wide scope for many different points of view, but as decision has followed decision the room for divergencies of view has narrowed down to a small field. I respectfully and loyally accept the decisions of this court which have gone before and I have no desire to reopen matters which must now be taken to be settled. But these fundamental provisions of the Constitution are, in my opinion, of such deep and far reaching importance and my views about them are so strong that I cannot in all conscience yield a single inch of ground except where compelled to do so. So far as I am concerned, the only point in this case is where and how far the matters which arise for decision here have been settled by previous authority. The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, was enacted and came into force before the Constitution. At that date, the fundamental provisions were not in force and no question of the equal protection clauses arose. By reason of the ratio decidendi in the previous decisions of this court I respectfully agree that article 14 has no retrospective (1) ; 7 50 operation. I concede therefore that up to the 26th of January, 1950, the impugned Act was good law, that the Special Court which was constituted to try this case was validly constituted and that the singling out of the appellants by the Provincial Government for trial by the Special Judge in the Special Court under its special procedure was lawful and proper however much this might have savoured of discrimination after the Constitution. AR that I accept. Then, as regards the continuation of the trial after the Constitution, I accept on the basis of Habeeb Mahamed 's case(1) and Qasim Razvi 's case(2), where the previous decisions of this court have been examined and explained, that the continuation of the trial after the Constitution can only be impugned if the procedure followed after that date was substantially discriminatory. In my opinion it was in this case in at least one vital particular. Had the normal procedure been followed the appellants would have had a jury trial in the High Court at Calcutta. In Qasim Razvi 's case(2), the majority dealt with the matter thus: "We may mention here that the impossibility of giving the accused the substance of a trial according to normal procedure at the subsequent stage may arise not only from the fact that the discriminatory provisions were not severable from the rest of the Act and the court consequently had no option to continue any other than the discriminatory procedure; or it may arise from something done at the previous stage which though not invalid at that time precludes the adoption of a different procedure subsequently. Thus, if the normal procedure is trial by jury or with the aid of assessors, and as a matter of fact there was no jury or assessor trial at the beginning, it would not be possible to introduce it at any subsequent stage. Similarly having once adopted the summary procedure, it is not possible to pass on to a different procedure on a later date. In such cases the whole trial would have to be condemned as bad. " That, in my view, covers this case, (1) (2) , 51 On the question of punishment also there is discrimination but that is severable and would in any event be covered by article 20. I am also compelled to dissent from the view that the impugned Act does not fall foul of the Constitution. I am aware that this Act has been repealed and so cannot be used again. But we are now laying down a pattern for the future and I am apprehensive of other Acts being framed along the same lines at some future date because of our decision in this case. The ratio decidendi of the majority proceeds on the assumption that this Act would have been good even if it had been enacted after the Constitution. I must with the very greatest respect record a strong and emphatic dissent. I bow with respect to the wisdom of my colleagues who have laid down the classification test, and indeed I have myself agreed that that is one of the matters to be borne in mind in any given case. In so far therefore as the Act makes provision for the setting up of Special Courts and of Special Judges, and in so far as it selects classes of offences which can be tried by them, it is, I think, on the basis of our previous decisions, good. Where, in my opinion, it is bad is in section 4(1) where it empowers the Provincial Government to pick out cases from among the specified classes and to send them to Special Courts and thus discriminate between man and man in the same class. I am not concerned here with reasonableness in any abstract sense, nor with the convenience of administration nor even with the fact, which may well be the case here, that this will facilitate the administration of justice. The solemn duty with which I am charged is to see whether this infringes the fundamental provisions of the Constitution; and though I recognise that there is room for divergencies of view, as indeed there must be in the case of these loosely worded provisions, and deeply though I respect the views of my colleagues, I am nevertheless bound in the conscientious discharge of my duty to set out my own strong views so long as there is, in my opinion, scope still left for a divergence of view. 52 In my opinion, the West Bengal legislature could not, and indeed Parliament itself could not, have selected case A and case B and case C and accused X and Y and Z and sent them to the Special Courts for trial leaving others, similarly placed in the same class, for trial by the ordinary courts of the land; and what the legislature itself could not do cannot be done by a delegated authority. Having made a classification, having given reasons for it, the legislature could not, in my judgment, without assigning reasons for a subclassification, arbitrarily select A, B and C and set them as a class apart in the classification already made. It is, in my view, as objectionable to make an arbitrary sub classification out of a good classification as it is to make an arbitrary classification in the first instance; and to pick out A, B and C from an already classified class and set them apart for special treatment is nothing more nor less than a fresh classification. If it is not arbitrary; if it falls within the rules laid down in our previous decisions: good. If it does not: then bad. I am clear on the strength of previous authority that if the legislature had done this the Act would have been bad, at any rate to that extent. It is in my judgment equally bad when the discrimination is left to a lesser power. I do not think the preventive detention laws afford a proper guide to interpretation here. They are a class apart and have been engrafted as an exception to the fundamental rights in the very chapter on those rights. I feel all this is fraught with the gravest danger. We cannot have Star Chambers or their prototypes in this land; not that these tribunals have any resemblance to Star Chambers as yet. But we are opening a dangerous door and paving a doubtful road. If we wish to retain the fundamental liberties which we have so eloquently proclaimed in our Constitution and remain a free and independent people walking in the democratic way of life, we must be swift to scotch at the outset tendencies which may easily widen, as precedent is added to precedent, into that which in the end will be the negation of freedom and equality. To 53 this extent and with the deepest regret I express my respectful dissent. In my view, the convictions cannot be upheld and there should be a retrial in the normal way. Appeals dismissed. Agent for the appellant in C.A. No. 84: Sukumar Ghose. Agent for the appellant in C.A. 'No,. 85: R. R. Biswas.

IN-Abs

Whether an enactment Providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 of the Constitution must be determined in each case as it arises, for no general rule applicable to all cases can safely be laid down. The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, which was entitled an Act to provide for the more speedy trial and more effective punishment of certain offences, and the preamble of which declared that it was expedient to provide for the more speedy trial and the more effective punishment of certain offences which were set out in the Schedule to the Act, empowered the Provincial Government (by sections 2 and 3) to constitute Special Courts of criminal jurisdiction for specified areas and to appoint Special Judges to preside over such courts. Section 4 31 of the Act provided that the Provincial Government may, from to time, allot cases for trial to a Special Judge, that the Special Judge shall have jurisdiction to try the cases for the time being allotted to him in respect of such of the charges for offences specified in the Schedule as may be preferred against the accused. The procedure laid down for trial by the Special Judges varied in several particulars from the ordinary trials. It was contended on behalf of the appellants who were convicted and sentenced by a Special Judge under the Act that section 4 of the Act was void as it contravened article 14 of the Constitution in that it enabled the Government to single out a particular case for reference to the Special Court for trial by a special procedure which denied to the persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure : Held, per PATANJALI SASTRI C.J., MUKHERJEA, GHULAM HASAN and JAGANNADHA DAS JJ. (VIVIAN BOSE J. dissenting): (i) that when a law like the present one is impugned on the ground that it contravenes article 14 of the Constitution, the real issue to be decided is whether, having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions, the classification of the offences for the trial of which the Special Court is set up and a special procedure is laid down can be said to be unreasonable or arbitrary and therefore violative of the equal protection clause; (ii) having regard to the fact that the types of offences specified in the Schedule to the Act were very common and widely prevalent during the post war period and had to be chocked effectively and speedily tried, the legislation in question must be regarded as having been based on a perfectly intelligent principle of classification, having a clear and reasonable relation to the object sought to be achieved, and it did not in any way contravene article 14 of the Constitution ; (iii)the impugned section cannot be said to contravene article 14 merely because the Government was vested with a discre tion to allot any particular case to the Special Judge and is not required to allot all cases of offences set out in the Schedule, to the Special Court, for if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed, is not a sufficient ground for condemning it as arbitrary and therefore obnoxious to article 14. In the case of such a statute it makes no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases. For, in either case, the discretion to make the selection is a guided 32 and controlled discretion and not an absolute or unfettered one and is equally liable to be abused but if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts. VIVIAN BOSE J. (i) Up to the 26th of January, 1950, the impugned law was a good law and the Special Court which was constituted to try the present case was therefore validly constituted and the allotment of this case to a Special Judge for trial was also lawful. But the continuation of the trial after the 26th January, 1950, when the new Constitution came into force was illegal as the procedure followed after that date was discriminatory at least in one vital particular, namely, the accused did not have the benefit of a trial by jury which they would have had if the normal procedure had been followed. (ii)The impugned Act in so far as it makes provision for the setting up of Special Courts and of Special Judges and in so far as it selects classes of offences which can be tried by them is, on the basis of the previous decisions of this court, valid, but section 4(1) of the Act is bad in so far as it empowers the Provincial Government to pick out cases from among the specified classes and to send them to the Special Courts and thus discriminate between man and man in the same class. Held also, by the Court, that under article 20 of the Constitution the accused could not be subjected to any fine greater than that which might have been imposed on them under the law in force when the offence was committed, even though the Act of 1949 empowered the Court to inflict a greater fine. Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh ([1953] S.C.R. 1188) followed. Anwar Ali Sarkar 's case ([1952] S.C.R. 284), Quasim Ravi 's case , Lakshmandas Kewalram Ahuja 's case ([1952] S.C.R. 710) explained. Saurashtra case ([1952] S.C.R. 435) applied.

Appeals Nos. 507 508 of 1963. Appeal by special leave from the judgment and order dated November 4, 1950, of the Orissa High Court in Special Jurisdiction Cases Nos. 38 and 39 of 1958. R.Ganapathy Iyer and R. N. Sachthey, for the appellant (in both the appeals). 817 B.Sen and section N. Mukherjee, for the respondents (in both the appeals). April 21, 1964. The Judgment of the Court was delivered by SIKRI, J. The respondent, hereinafter referred to as the the dealer, filed a return for the quarter ending June 30, 1951, under the Orirsa Sales Tax Act (Orissa Act XIV of 1947) (hereinafter referred to as the Act). He claimed a deduction of Rs. 2,40,000/ under section 5(2)(a)(ii) in respect of the goods sold to a registered dealer, named M/s. Lal & Co. Ltd., BA 1335. Similarly, for the quarter ending September 30. 1951, he claimed a deduction of Rs. 15,677/1/3. By two assessment orders passed under section 12(2) of the Act, the Sales Tax Officer, Cuttack III circle, Jaipur, Orissa, determined the tax payable allowing the deduction of Rs. 2,40,000/ and Rs. 15,677/l/3, under section 5(2)(a)(ii). The dealer filed appeals to the Assistant Collector, Sales Tax, challenging the assesment on grounds which are not relevant. The dealer later filed revisions against the decision of the Assistant Collector. While the revisions were pending, the legislature amended the Orissa Sales Tax Act, in 1957, by Orissa Sales Tax (Amendment) Act (Orissa Act XX of 1957). The effect of this amendment was that revisions were treated as appeals to Sales Tax Tribunal, and it enabled the Government to file cross objec tions. The State of Orissa, in pursuance of this amendment, filed memorandum of cross objections challenging the deduc tion of Rs. 2,40,000/ and Rs. 15,677/l/3, on the ground that the dealer had not produced any declaration, as required under r. 27(2) of the Orissa Sales Tax Rules, 1947, as evidenced from the Check Sheet kept on record. The Tribunal upheld this objection and directed that fresh assessments be made. Certain other questions were raised before the Tribunal by the dealer, but as nothing turns on them as far as these appeals are concerned, they are not being mentioned. The Tribunal stated a case to the High Court and one of the questions referred to was "whether the assessing officer was not wrong in allowing deduction of Rs. 2,40,000/ for the quarter ending on 30 6 51 and Rs. 15,677/1/3 for the quarter ending on 30 9 51 from the respective gross turnover of the applicant. " The High Court, following its earlier decision in Member, Sales tax Tribunal, Orissa vs Messrs section Lal & Co. Limited (1) answered the question in the affirmative. The State of Orissa having obtained special leave from this Court, these appeals are now before us for disposal. Mr. Ganapathy lyer, on behalf of the State of Orissa, has contended before us that it is clear that r. 27(2) was not complied with, and, therefore, the Sales Tax Officer was wrong (1) (1961) 12 S.T.C. 25. 818 in allowing the said deduction. The answer to the question referred depends on the correct interpretation of section 5(2)(a)(ii), Co. and r. 27(2). They read thus: "section 5(2)(a)(ii) sales to a registered dealer of goods specified in the purchasing dealer 's certificate of registration as being intended for resale by him in Orissa and on sales to a registered dealer of containers or other materials for the packing of such goods. Provided that when such goods are used by the registered dealer for purposes other than those specified in his certificate of registration, the price of goods so utilised shall be included in his taxable turnover." "Rule 27(2). Claims for deduction of turnover under sub clause (ii) of clause (a) of sub section (2) of section 5 A dealer who wishes to deduct from his gross turnover on sales which have taken place in Orissa the amount of a sale on the ground that he is entitled to make such deduction under sub clause (ii) of clause (a) of sub section (2) of section 5 of the Act, shall produce a copy of the relevant cash receipt ,or bill according as the sale is a cash sale or a sale .on credit in respect of such sale and a true declaration in writing by the purchasing dealer or by such responsible person as may be authorised in writing in this behalf by such dealer that the goods in question are specified in the purchasing dealer 's certificate of registration as being required for resale by him or in the execution of any contract: Provided that no dealer whose certificate of registration has not been renewed for the year during which the purchase is made shall make such a declaration and that the selling dealer shall not be entitled to claim any deduction of sales to such a dealer. " It is, plain from the terms of section 5(2)(a)(ii) that a selling ,dealer is entitled to a deduction in respect of sales to a registered dealer of goods, if the goods are specified in the purchasing dealer 's certificate of registration as being intended for re sale by him in Orissa. No other condition is imposed by the above section. The proviso deals with consequences that follow if the purchasing dealer uses them for purposes other than those specified in his certificate of registration, and ,directs that, in that event, the price of goods so utilised shall 819 be included in his turnover. Therefore, there is nothing in the section itself that disentitles a selling dealer to a deduction, but if the contingency provided in the proviso occurs, them the price of goods is included in the taxable turnover of the buying dealer. But Mr. Ganapathy lyer says, be it so, but the rule making authority is entitled to make ruler, for carrying out the purposes of the Act, and r. 27(2) is designed to ensure that a buying dealer 's certificate of registration does, in fact, mention that the goods are intended for resale by him, and for that purpose it has chosen one exclusive method of proving the fact before a Sales Tax Officer. He further urges that no other method of proving that fact is permissible. Rule 27(2) is mandatory and if there is breach of it the selling dealer is not entitled to deduction. The learned counsel for the res pondent, on the other hand, contends that r. 27(2) is directory. He points out that the word 'shall ' should be read as 'may ', in the context. He further says that supposing the selling dealer brought the original certificate of registration of a buying dealer and produced it before the Sales Tax Officer, according to the appellant, this would not be enough, but this could never have been intended. In our opinion, r. 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales Tax Officer to be satisfied that, in fact, the certificate of registration of the buying dealer contains the requisite Statement, and if he has any doubts about it, the selling dealer must satisfy his doubts. But if he is satisfied from other facts on the record, it is not necessary that the selling dealer should produce a declaration in the form required in r. 27(2), before being entitled to a deduction. We are, therefore, of the opinion that the High Court came to a correct conclusion. The High Court is correct in holding that the production of a declaration under r. 27(2) is not always obligatory on the part of a selling dealer when claiming the exemption. It is open to him to claim exemption by adducing other evidence so as to bring the transaction within the scope of section 5(2)(a)(ii) of the Act. In this case, the Sales Tax Officer was satisfied by a mere statement of the dealer and it has not been shown that in fact the registration certificate of the buying dealer, M / s section Lal & Co., did not contain the statement that the goods were intended for resale by him in Orissa. The appeals accordingly fail and are dismissed with costs. One set of hearing fee. Appeals dismissed.

IN-Abs

Assessment orders were passed by the Sales Tax Officer allowing the deductions of two amounts claimed by the respondent dealer under section 5(2)(a)(ii) of the Orissa Sales Tax Act in respect of goods sold to a registered dealer. The respondent dealer filed appeals to the Assistant Collector Sales Tax, challenging the assessment on grounds which were not relevant and against those decisions revisions were filed by the dealer. While the revisions were pending the Orissa Sales Tax Act was amended by Orissa Sales Tax (Amendment) Act (Orissa Act, 10 of 1957) with the result that revisions were treated as appeals to the Sales Tax Tribunal, and it enabled the Government to file cross objections. In pursuance, the State filed cross objections challenging the deductions on the ground that the dealer had not produced any declaration as required under r. 27(2) of the Orissa Sales Tax Rules, 1947. The Tribunal upheld this objection and directed that fresh assessments be made. On statement of the case, the High Court answered that the assessing officer was not wrong in allowing the deductions. On appeal by special leave). Held:(i) There is nothing in section 5 (2) (a) (ii) itself that disentitles a selling dealer to a deduction, but if the contingency provided in the proviso occurs, then the price of goods is included in the taxable turnover of the buying dealer. (ii)The production of a declaration under r. 7(2) is not always obligatory on the part of a selling dealer when claiming the exemption. It is open to him to claim exemption by adducing other evidence so as to bring the transaction within the scope of section 5(2)(a)(ii). Rule 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales tax Officer to be satisfied that, in fact. the certificate of registration of the buying dealer contains the requisite statement, and if he has any doubts about it, the selling dealer must satisfy his doubts. But if he is satisfied from other facts on the record, it is not necessary that the selling dealer should produce a declaration in the form required in r. 27(2). before being entitled to a deduction. Member Sales tax Tribunal, Orissa vs Mls. section Lai & Co. (1961) 12 S.T.C. 25, referred to.

Appeal No. 587 ,of 1963. Appeal by special leave from the judgment and order dated November 30, 1960 of the Madhya Pradesh High Court, in Miscellaneous Civil Case No. 73 of 1960. K.N. Rajagopal Sastri and R. N. sachthev, for the appellant. S.K. Kapoor, section Murty and K. K. fain, for the respondent, 811 April 17, 1964. The judgment of the Court was delivered by SIKRI, J. The respondent, Swadeshi Cotton & Flour Mills, hereinafter referred to as the assessee, is a limited company which owns and runs a textile mill at Indore. For, the assessment year 1950 51 (accounting year calendar year 1949), which was its first year of assessment under the Indian Income tax Act, 1922 (hereinafter referred to as the Act) it claimed that under section 10(2)(x) of the Act it was entitled to an allowance in respect of the sum of Rs. 1,08,325/ which it had paid as bonus for the year 1947 in the calendar year 1949, as a result of the award of the Industrial Tribunal, dated January 13, 1949. The claim of the assessee was not accepted by the Income Tax authorities. The Appellate Tribunal held that it was a liability relating to an earlier year and not the year 1949. However, on an application by the assessee it stated a case and referred two questions. We are concerned only with one which reads thus: "Whether on the facts and in the circumstances of the case the assessee is entitled to claim a deduction of bonus of Rs. 1,08,325/ relating to the calendar year 1947 in the assessment year 1950 51? The High Court of Madhya Pradesh answered the question in the affirmative. The appellant, having failed to get a certificate under section 66A(2) of the Act, obtained special leave from this Court, and that is how the appeal is before us. The facts and circumstances referred to in the question have been set out in the statement of the case. Unfortunately, the facts are meagre, but since the appellant is content to base his case on a few facts, which will be referred to shortly, it is not necessary to call for a further statement of the case. The facts, in brief, are as follows. The assessee paid as bonus to its employees the sum of Rs. 1,08,325/9/3 for the calendar year 1947 in terms of an award made on January 13, 1949 under the Industrial Disputes Act. This amount was debited by the assessee in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus payable account. The books for 1948 had not been closed till the date of order of the Industrial Tribunal, January 13, 1949. This bonus was in fact paid to the employees in the calendar year 1949, the relevant assessment year being 1950 51. The Appellate Assistant Commissioner had further found that upto 1946 when the order for payment of bonus used to be received before the company 's accounts for the year were finalised, the amount of bonus used to be in fact 812 debited to the profit and loss account of the respective year. this finding is repeated by the Appellate Tribunal in its appellate order. On these facts the learned counsel for the appellant, ,Mr. Sastri, contends that according to the mercantile system of accounting, which is followed by the assessee, and on which its profits have been computed for the accounting calendar year 1949, the year to which the liability is properly attributable is the calendar year 1947 and not 1949. He says that it was a legal liability of the assessee which arose in 1947 and should have been estimated and put into the accounts for 1947. In the alternative he has invited us to reopen the accounts for the year 1947, following the practice which,according to him, obtains in England. Inour opinion, the answer to the question must depend on theproper interpretation of section 10(2)(x), read with section 10(5), of theAct. These provisions read as follows: "section 10(2)(x) Any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission; Provided that the amount of the bonus or commission is of a reasonable amount with reference to (a)the pay of the employee and the conditions of his service , (b)the profits of the business, profession or vocation for the year in question; and (c)the general practice in similar businesses, professions or vocations. " section 10(5) In sub section (2), "paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section;. " If we insert the definition of the word 'paid ' in sub cl. (x), it would read as follows: any sum actually paid or incurred according to the method 'of accounting upon the basis of which the profits or gains are computed under this section, to an employee as bonus. " As the assessee 's profits and gains have been computed according to the mercantile system, the question, using for .he time being the terms of the clauses, comes to this: "Has this sum of Rs. 1,08,325/ been incurred by the assessee according to the mercantile system in the calendar year 1947 or 1949?" 813 At first sight the sentence does not read well, but the meaning of the word 'incur ' includes 'to become liable to ' Therefore, the question boils down to: "In what year did the liability of this sum of Rs. 1,08,325/ arise, according to the mercantile system ? " The mercantile system of accounting was explained in a judgment of this Court in Keshav Mills Ltd. vs Commis sioner of Income Tax, Bombay(1) thus: "That system brings into credit what is duc, immediately it becomes legally due and before it is actually received, and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. " These observations were quoted with approval in Calcutta ,Co. Ltd. vs Commissioner of Income Tax, West Bengal(2). On the facts of this case, when did the legal liability arise in respect of the bonus? This depends on the facts of the case and the nature of the bonus awarded in this case. This Court has examined the nature of profit bonus it is common round, that the bonus with which we are concerned with was a profit bonus in various cases. It is explained in Muir Mills vs Suti Mills Mazdoor Union(3) that "there .are two conditions which have to be satisfied before a demand for bonus can be justified and they are (1) when 'wages fall short of the living standard, and (2) the industry makes huge profits part of which are due to the contribution 'Which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. " This matter was again considered in the case of Associated Cement Co. vs Their Workmen(4). This Court observed: "It is relevant to add that in dealing with the concept of bonus this Court ruled that bonus is neither a gratuitous payment made by the employer to his workmen nor can it be regarded as a deferred wage. According to this decision, where wages fall short of the living standard and the industry makes profit part of which is due to the contribution of labour, a claim for bonus can be legitimately made." ; (2) ; ; (4) 814 In 1961, this Court was able to say that "the right to claim bonus which has been universally recognised by indus trial adjudication in cases of employment falling under the said Act has now attained the status of a legal right. Bonus can be claimed as a matter of right provided of course by 'the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand." (Vide Gajendragadkar, J., as lie then was, in Workmen vs Hercules Insurance Co.(1). The Indian Tea Association vs Workmen(2) this Court held that "the profit bonus can be awarded only by reference to a relevant year and a claim for such bonus has therefore to be made from year to year and has to be settled either amicably between the parties or if a reference is made, it has to be determined by Industrial adjudication. A general claim for the introduction of profit bonus cannot be made or entertained in the form in which it has been done in the present proceedings. " It follows from the above decisions of this Court that: (a) workmen are entitled to make a claim to profit bonus if certain conditions are satisfied; (b) the workmen have to make a claim from year to year; (c) this claim has either to be settled amicably or by industrial adjudication; and (d) if there is a loss or if no claim is made, no bonus will be permissible. In our opinion it is only when the claim to profit bonus, if made, is settled amicably or by industrial adjudication that a liability is incurred by the employer, who follows the mercantile system of accounting, within section 10(2)(x), read with section 10(5) of the Act. On the facts of this case, it is clear that it was only in 1940 that the claim to profit bonus was settled by an award of the Industrial Tribunal. Therefore, the only year the liabiiity can be properly attributed to is 1949, and hence we are of the opinion that the High Court was right in answering the question in favour of the assessee. The second contention of the learned counsel does not appeal to us. We are of the opinion that this system of reopening accounts does not fit in with the scheme of the Indian Income Tax Act. We have already held in Commissioner of Income Tax, Madras vs A. Gajapathy Naidu, Madras(,) that as far as receipts are concerned, there ,an be no reopening ; (2) [1962] Supp. (1) S.C.R. 557. (3)A.I.R. 815 of accounts. The same would be the position in respect of expenses. But even in En land accounts are not opened in every case. Halsbury gives various instances in footnote (m) at p. 148. Vol.20. Mr. Sastri has relied on various English cases but it is unnecessary to refer to them as Lord Radcliffe explains the position in England, in Southern Railway of Peru Ltd. vs Owen(1) thus: "The courts have not found it impossible hitherto to make considerable adjustments in the actual fall of receipts or payments in order to arrive at a truer statement of the profits of successive years. After all, that is why income and expenditure accounting is preferred to cash accounting for this purpose. As I understand the matter, the principle that justified the attribution of something that was in fact, received in one year to the profits of an earlier year, as in such cases as Isaac Holden and Sons vs Inland Revenue Comrs. and Newcastle Breweries Ltd. vs Inland Revenue Comrs. was just this, that the payment had been earned by services given in earlier year and, therefore, a true statement of profit required that the year which had borne the burden of the cost should have appropriated to it the benefit of the receipt. " The principle mentioned by Lord Radcliffe would not apply to a profit bonus. As stated above, a profit bonus is strictly not wages, at least not for the purpose of computing liability to income tax; it is not an expense, in the ordinary sense of the term, incurred for the purpose of earning profits. A fortiori profits have already been made. It is more like sharing of profits on the basis of a certain formula. One other point raised by Mr. Sastri remains. He urged that the word "for the year in question" in the proviso to sub section 10(2)(x) mean "for the year in which allowance is claimed. " We are unable to agree with him. The words 'for the year in question ' mean the year in respect which bonus is paid. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent company paid to its employees Rs. 1,08,325/ as bonus for the year 1947 in the calendar year 1949, as a result of the award of the Industrial Tribunal dated January 13, 1949. This amount was debited by the company in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus payable account. The books for 1948 were not closed till the date of the award of the Industrial Tribunal. For the relevant assessment year, 1950 51, the company claimed that under section 10(2)(x) of the Indian Income tax Act, 1922, it was entitled to an allowance in respect of the amount paid as bonus, but the claim was rejected by the Income tax authorities on the ground that according to the mercantile system of accounting which was followed by the assessee the year to which the liability was properly attributable was the calendar year 1947 and not 1949. It was the case of the Income tax authorities that it was a legal liability of the assessee which arose in 1947 and should have been estimated and Put into the accounts for 1947, and that, if necessary, the amounts for the year 1947 should be reopened. It was admitted that the bonus in the instant case was a profit bonus. Held:(i) It was only when the claim to profit bonus, if made, was settled amicably or by industrial adjudication that a liability was incurred by the employer, who followed the mercantile system, within section 10(2)(x), read with section 10(5), of the Indian Income tax Act, 1922; and as it was only in 1949 that the claim to profit bonus was settled by an award of the Industrial Tribunal, the only year the liability could be properly attributed to was 1949. (ii) The system of reopening accounts was not applicable under thescheme of the Indian Income tax Act. (iii) The words "Year in question." in proviso (b) to s.10 (2)(x) of the Act meant "year in respect of which bonus was paid".

Appeals Nos. 680 to 682 of 1963. Appeals by special leave from the judgment and decree dated February 8, 1960 of the Board of Revenue, U. P. in petitions Nos. 203 to 205 of 1958 59. J. P. Goyal, for the appellant (in all the appeals). Brijbans Kishore and Ramesh B. Saxena, for respon,dents Nos. I to 3 (in all the appeals). April 17, 1964. The judgment of the Court was delivered ,by HIDAYATULLAH, J. This judgment shall also govern the disposal of C. A. 681 of 1963. These are appeals by special leave of this Court against a common order of the Board of Revenue, U.P. dated February 8, 1960 disposing of three .appeals. Civil Appeal No. 682 of 1963 (since compromised) was also against the same decision. The appellant in each 'of these appeals is one Amba Prasad who was the Zamindar of village Rhonda, Pargana and Tehsil Khurja, District Bulandshahr, before the coming into operation of the U. P. Zamindari Abolition and Land Reforms Act, 1950. The opposite parties (who will be referred to as the answering respondents in this judgment) are persons whose names were recorded in column 23 (miscellaneous) in the Khasra for the year 1356 Fasli, as persons in possession and who claim, by reason of the entry, to be the recorded, occupants of the fields in dispute, and to have 'obtained adhivasi rights in the fields under section 20 of the Abolition Act. Though the point in dispute appears to lie within a very narrow compass the history of litigation in respect of these plots is as tedious as it is long. It must unfortunately be told to get a true measure of the ,arguments in the appeals. Amba Prasad brought two suits under section 180 of the U.P. Tenancy Act, 1939 for ejectment from the fields now in dis pute and for damages, against Mohammad Ali and Mst. Sharifan respectively because their names A ere recorded in the Khasra as tenants 'bila tasfia lagan '. These suits were dismissed by the trial Judge and Aniba Prasad 's appeal to the Commissioner failed on November 30, 1943. Amba Pra.sad then appealed to the Board of Revenue, U.P. and succeeded. The order of the Board of Revenue, U. P. is dated March 19, 1949 (item No. 25). Mohammad Ali had died by L/P(D)ISCI 26 802 then and was represented by one Faivazali and six others. Sarifan had also died and was represened by one Abdul Sattar alias Chunna Khan and two others. As a result of the decision of the Board of Revenue possession of the fields was delivered to Amba Prasad on July 1, 1949 the day of the commencement of the year 1357 Fasli. The dakhalnamas are items Nos. 44 and 45 in this record and they mention fields Nos. 427/2, 428/2, 429, 430 and 380 (item No. 44) and fields Nos. 416, 418/1 and 418/2 (item No. 45) of village Rhonda, Pargana and Tehsil Khurja, District Bulandshahr. Immediately after obtaining possession of the fields Amba Prasad was required to commence proceedings under section 145, Criminal Procedure Code before the Sub Divisional Magis trate, Anupshahr against Faiyazali and Abdul Sattar and others and on January 13, 1951 these proceedings terminated in favour of Amba Prasad (item No. 28). The Sessions Judge Bulandshahr made a reference to the High Court of Allahabad recommending that the order be vacated but the High Court declined to interfere. The order of the High Court is dated October 20, 1951 (item No. 29). Meanwhile Amba Prasad started a prosecution under section 218, Indian Penal Code against the Lekhpal alleging that he had made false entries in the Revenue papers but the Magistrate, 1st Class, Buland shahr discharged him by his order dated July 24, 1950 (item No. 26). An application for revision of the order filed by Amba Prasad was dismissed by the Sessions Judge, Bulandshahr on October 10, 1950 (item No. 27). During the pendency of the proceedings under section 145,. Criminal Procedure Code these fields remained under atta chment from August 23, 1949 (1358 F.) to November 6, 1951 (1359 F.). Two suits were then commenced in the court of the Munsif, Khurja for declaration that crops of the fields under attachment belonged to the plaintiffs. One suit (97 of 1951) was filed by Abdul Noor Khan and others (answering respondents) and the other (67 of 1952) was filed by Sarfraz Ali Beg and 8 others (respondents in C. A. 682 of 1963since compromised). These suits were directed against Amba Prasad and the plaintiffs claimed to be in possession of the fields by virtue of entries to this effect in the remarks column of the Khasras of the relevant years. These suits failed on August 9, 1952 and August 8, 1953 respectively (vide items Nos. 30 and 32). It appears that proceedings under section 107,, Criminal Procedure Code were also started against A. Noor khan and others before Magistrate, 1st Class, Bulandshahrand they were bound over to keep the peace. There is on the file of this case an order of the Sessions Judge, Buland shahr dismissing their application in revision on February 24, 1953 (item No. 31). 803 Meanwhile, the answering respondents and Sarfraz Ali and others commenced on November 6, 1951 three suits under section 61 read with section 183 of the U. P. Tenancy Act, 1939 .for declaration of Sirdar rights and to claim hereditary rights under section 180/2 ibid. These suits were decreed against Amba Prasad by the Judicial Officer, Anupshahr on July 14, 1953. He held that the Dakhaldehi of July 1, 1949 did not affect the plaintiffs and since they were shown to be in possession they were entitled to succeed (item No. 33). Amba Prasad filed an appeal and the Commissioner, Meerut Division re versed the decision by his order dated April 1, 1954 (item No. 35). The Board of Revenue, U. P. also dismissed the appeal of the plaintiffs on September 17, 1955 (item No. 38). On October 10, 1953 two suits were filed by the answering respondents in these two appeals and a third by the res pondents in C. A. No. 682 of 1963 which has been compro mised. These suits were under section 232/2O of the U. P. Zamin dari Abolition and Land Reforms Act. It is with these suits that we are concerned in the appeals. Two suits also under section 232/20 of the Abolition Act were filed by Ayub Ali Khan and Abdul Sattar Khan and others against Amba Prasad. The answering respondents and Sarfraz Ali and others were joined as defendants in those suits. The plaints in these two suits are dated December 28, 1954 and December 20, 1954 (items Nos. 36 and 38). They were dismissed by the Sub Divisional Magistrate, Khurja on % lay 16, 1955. The Addi tional Commissioner, Meerut, dismissed the appeals on Janu ary 30, 1950 in default of appearance (item No. 39). On September 4, 1958 the Sub Divisional Officer, Khurja dismissed the three suits filed by the answering respondents ,and the respondents in the companion appeal. In these suits the answering respondents relied on extracts from the Khasras of 1355F, 1356F, 1357F, 1358F and 1359F as showing their possession. These lands, however, were under attachment from August 23, 1949 (1358F) to November 6, 1959 (1359F) and could not be in the possession of the answering respondents in the years 1358F and 1359F. This fact was noticed by the Commissioner, Meerut Division, in his order dated April 1, 1954 and he cast doubts on the entries in 1355F ,and 1356F. The Sub Divisional Officer took up the same line of reasoning and pointed 'out that in years subsequent to 1355F the entry would have found place in column 6 of the Khasra and not the remarks column. He accordingly held that the entries of 1355 F and 1356 F were unreliable and .the answering respondents had not acquired adhivasi rights. On Appeal, the Additional Commissioner, Meerut, reversed ,the decision on April 19, 1959 and decreed the suits. Before the Commissioner the answering respondents claimed that as L /P(D)ISCI 26(a) 804 they were recorded occupants in 1356F they were not required to prove actual possession. This proposition, it appears, was conceded by the counsel for Amba Prasad. He only argued that the entries were not in accordance with paragraph 87 of the Land Records Manual and they were considered spurious in earlier litigation. He also claimed that the answering respondents were barred by the principle of res judicata because though they were parties to the suits of Ayub Ali Khan and Abdul Sattar they did not claim adhivasi rights in those suits. The learned Commissioner pointed out that the entries were no doubt suspected to be spurious by the Commissioner on April 1, 1954, but this was after July 1. 1952 which was the date of vesting and the case therefore was outside Expla nations 11 and III of section 20(b) of the Abolition Act. The learned Commissioner, therefore, was of the opinion that them entries could not be discarded as they must have been completed under the rules before April 30, 1949, that is to say, even before the Dakhaldehi. He held that the answering respondents (appellants before him) had acquired adhivasi rights. Amba Prasad appealed to the Board of Revenue. The Board dismissed his appeal on February 8, 1960 by the order now impugned. This time the learned counsel for Amba Prasad conceded that the entry was made but contended that it was fraudulently made after July 1, 1949 and referred to the prosecution of the Lekhpal. The Board 'of Revenue pointed out that there was no order for the correction of the entry before the date of vesting and the Lekhpal was acquitted of ' the charge under section 218, Indian Penal Code. Since the entries were not corrected as required by Explanation 11 to section 20 the conditions of section 20(b) of the Abolition Act were held to be satisfied and the appeal was dismissed. Mr. Goyal on behalf of Amba Prasad contends that these suits were barred by res judicata. He submits that in the previous suits filed by Ayub Ali Khan and Abdul Sattar and others, the answering respondents were made defendants and could have raised the plea that they had acquired adhivasi rights and as they did not raise such a plea they cannot now raise it. We do not accept this Contention. The answering respondents had filed these suits even before Ayub Ali Khan and Abdul Sattar had filed their suits. Further, the suits filed by Ayub Ali Khan and Abdul Sattar did not decide anything because they were dismissed owing to a technical flaw in the plaint. Even the appeal was dismissed in default of appearance. Lastly, the answering respondents and Amba Prasad were co defendants and no issue between them was tried or decided even if one was necessary to be tried. 805 Mr. Goyal next contends that the answer in respondents must show that they were in possession and that under Explanation I to section 20 they were evicted after June 30, 1948. He submits that these conditions are not fulfilled by them. Mr. Goyal also wishes to withdraw the concession made on behalf of Amba Prasad before the Tribunals below that the answering respondents need not prove their possession. He says that the concession was made because there were rulings of the Allahabad High Court which bound the Revenue Tri bunals. He submits that these rulings should be considered and urge that possession in 1356 Fasli must be proved. He further submits that even entries in the Khasra and Khatauni to be of value must be made in accordance with sections 28 and 33 of the U. P. Land Revenue Act and he relies on paragraph 87 of the Land Record Manual to contend that the entries in favour of the answering respondents were irregular. These contentions though they appear to be many are really two. The first questions the entry and the other the right of the answering respondents even if the record be correct to claim adhivasi rights under section 20 of the Abolition Act. We shall consider them separately. The first question is whether these entries were regularly made. It is pointed out that they were doubted by the Revenue Tribunals in some other proceedings and that the Lekhpal was also prosecuted under section 218, Indian Penal Code. That, however, does not prove in these proceedings that the entries are spurious. The Lekhpal was discharged and the Additional Commissioner has held here: "By making the entry in the remarks column it is also not possible to attribute any dishonest or collusive entry. It appears that Shri Amba Prasad had filed a criminal case against the patwari but this was after the entries in the remarks column in favour of appellants had been made. The entry in 1356 fasli cannot be discarded on the remarks in the judgments referred by the learned counsel for the respondent. It appears that Sri Mohammad Ali and Srimati Sharifan were the proprietors and they mortgaged their share with present respondents and Sri Amba Prasad purchased the equity of redemption and got the share partitioned. There was litigation between Sri Amba Prasad and Sri Mohammad Ali and Srimati Sharifan upto High Court. Sri Amba Prasad and others filed suits against Srimati Sharifan and Sri Mohammad Ali under section 180 and it was decreed in the 2nd appeal on 19 3 49. The possession was delivered on 1 7 1949, in execution of the decree. The Khasra for 1356 fasli under 806 the rules may have been deposited some time before 31st July 1950 but the entries in the Khasras had to be completed upto 30th April 1949" Mr. Goyal relies upon paragraph 87 of the Land Records Manual and argues that the names of persons occupying land without the consent of persons whose names are recorded in column 5 of the khasra should have been entered in column 6 but column 6 is crossed out. It is, however, to be seen that when a tenant leaves the neighbourhood without leaving in charge of his holding, a person responsible for the pay ment of his rent as it falls due and without giving a written notice to the land holder of such arrangement, the Lekhpal is required to show the name of the actual cultivator in the column of remarks preceded by the word 'qabiz ' (see Para. 85(c)). That is how the entry stands and there is nothing on the record of this case on the strength of which it can be said that the entry in 1356F was not regularly made. If it was wrong Amba Prasad ought to have got it corrected but the doubts cast on the entry cannot be said to have corrected it .as required by Explanation III to section 20 of the Abolition Act. There is thus no doubt that the answering respondents were recorded as 'qabiz ' in 1356F. There is also no doubt that if they were 'qabiz ' they were dispossessed after June 30, 1948. The possession of Amba Prasad did not begin ,earlier than July 1, 1949. There is nothing to show that the possession of the answering respondents was disturbed bet ween these two dates, because the attachment came much later. Mr. Goyal, however, contends that the burden is on ,the answering respondents to prove their possession and eviction after June 30, 1948 before they can regain possession as adhivasis under section 20. Mr. Brij Bans Kishore, however, joins issue and claims that the answering respondents have done enough when they show that they are recorded as 'occupants ' in the year 1356F. He contends that it is not necessary to show possession though he does not admit that the Ian were not in his clients ' possession. We have pointed out above that the eviction could not have taken place before July 1, 1949. The Dakhalnamas show that possession was given to Amba Prasad on July 1, 1949. In so far as the appellant is concerned he was not in possession before that date and the khasra for 1356F shows that the answering respondents were 'qabiz ' (in possession). It is ,contended that the suit is for possession and the date of dispossession has not been given as required by rule 183. No such objection appears to have been made at any time. In any event, that date is useful only to calculate limitation and it is not Amba Prasad 's cases that there is any such bar. 807 The real dispute thus is whether a person who is recorded as 'qabiz ' but not as a tenant or a sub tenant can get the advantage of section 20 of the Abolition Act and claim rights as an adhivasi. It is convenient at this stage to set out the material portions of section 20: "20. Every person who (a) * (b) was recored as occupant (i)of any land (other than grove land or land to which section 16 applies) in the khasra or khatauni of 1356F prepared under sections 28 and 33 respectively of the U.P. Land Revenue Act, 1901, or who was on the date immediately preceding the date of vesting entitled to regain possession thereof under clause (c) of subsection (1) of section 27 of the United Provinces Tenancy (Amendment) Act, 1947, or (ii) * * * * be called adhivasi of the land and shall, subject to the provisions of this Act, be entitled to take or retain possession thereof. Explanation I Where a person referred to in clause (b) was evicted, from the land after June 30, 1948, he shall notwithstanding anything in any order or decree, be deemed to be a person entitled to regain possession of the land. Explanation II Where any entry in the records referred to in clause (b) has been corrected before the date of vesting under or in accordance with the provisions of the U. P. Land Revenue Act, 1901, the entry so corrected shall for the purposes of the said clause, prevail. Explanation III For the purposes of explanation 11 an entry shall be deemed to have been corrected before the date of vesting if an order or decree of a competent court requiring any correction in records has been made before the said date and had become final even though the correction may not have been incorporated in the records. Explanation IV For the purposes of this section " occupant" as respects any land does not include a person who was entitled as an intermediary to the land or any share therein in the year l356 Fasli. " The scheme of the section may now be noticed. The section, speaking generally says that certain persons "recorded" a,, "occupants" of lands (other than grove lands or lands to which section 16 applies) shall be known as adhivasis and. 808 shall be entitled to retain or to regain possession of them, after the date of vesting which was July 1, 1952. Such persons do not include an intermediary (Explanation IV). Such persons must be recorded as occupants in the khasra or khatauni for 1356F (1 7 48 to 30 6 49). If such a person is in possession be continues in possession. If he is evicted after June 30, 1948 he is to be put back in possession notwithstanding anything in any order or decree. By fiction such persons are deemed to be entitled to regain possession (Explanation 1). The emphasis has been laid on the record of khasra or khatauni of 1356F and June 30, 1948 is the datuni line. The importance of an entry in these two documents is further apparent from explanations 11 and 111. Under the former, if the entry is corrected before the date of vesting (1 7 52), the corrected entry is to prevail and under the latter the entry is deemed to be corrected (even though not actually corrected) if an order or decree of a competent court ordering the correction had been made before the date of vesting and the order or decree had become final. There are thus two date lines. They are June 30, 1948 and July 1, 1952, and the title to possession as adhivasi depends on the entries in the khasra or khatauni for the year 1356F. Before we proceed to decide whether the answering respondents satisfy the above tests we must consider what is meant by the terms 'occupant ' and 'recorded '. The word 'occupant ' is not defined in the Act. Since khasra records possession and enjoyment the word 'occupant ' must mean a person holding the land in possession or actual enjoyment. The khasra, however, may mention the proprietor, the tenant, the sub tenant and other person in actual possession, as the case may be. If by occupant is meant the person in actual possession it is clear that between a proprietor and a tenant the tenant, and between a tenant and the sub tenant the latter and between him and a person recorded in the remarks column as "Dawedar qabiz" the dawedar qabiz are the occupants. This is the only logical way to interpret the section which does away with all intermediaries. If rights are not to be determined except in the manner laid down by the section, the entries must be construed as explained by the four explanations. Once we find out the right person in the light of the explanations, that person continues as an adhivasi after July 1, 1952, provided he is in possession or was evicted after June 30, 1948. If he was evicted after June 30, 1948 he is entitled to regain possession in spite of any order or decree to the contrary. The word 'occupant ' thus signifies occupancy and enjoyment. Mediate possession, (except where the immediate possessor holds on behalf of the mediate possessor) is ,of no consequence. In this way even persons who got into Occupation when lands were abandoned get recognition. The 809 section eliminates inquiries into disputed possession by ac cepting the records in the khasra or khatauni of 1356F, or its correction before July 1, 1952. It was perhaps thought that all such disputes would have solved themselves in the four years between June 30, 1948 and June 30, 1952. There was, however, for some time a difference of opinion, on the point whether possession in 1356F should be proved, between the High Court of Allahabad and the Board of Revenue. Section 20 came before this Court in The Upper Ganges Sugar Mills Ltd. vs Khalil ul Rehman and others(1) where the correctness of Lala Nanak Chand vs The Board of Revenue, U.P.(2) was challenged oil the ground that it had held that a mere entry in 1356F without possession in that year was sufficient. This Court did not decide the question and left it open. Subsequently, the Allahabad High Court in several decisions including the Full Bench decision in Ram Dular Singh and another vs Babu Sukh Ram and others(3) has endorsed the earlier view in Nanakchand vs Board of Revenue, U.P.(2) In L. Bhal Singh vs Bhop and another(4) the following passage from Nanak Chand 's case was expressly approved: "It seems to us that clauses (b)(i) and (b)(ii) of Sec. 20 do not require the proof of actual possession in the year 1356F. What they require merely is the entry of a person 's name as an occupant in the Khasra or Khatauni of 1356F. The words of the section are clear. (Every person who was recorded as occupant in the Khasra or Khatauni in 1356F. etc.). The words are not "every person who was an occupant in 1356F": nor are the words "every person who was recorded as an occupant in the year 1356F and who was also in possession in that year". There is no warrant for introducing words in the section which are not there. This conclusion is reinforced by what is stated in Explanation 11". The Board of Revenue in Sugriva vs Mukhi etc.(5) has also adopted the same view. In view of the long established line 'of cases we see no justification for reopening of this question. The decision of the Board of Revenue was therefore right. The appeal fails and is dismissed with costs. One set of hearing fees. Appeal dismissed. (1) ; (2) (3) (4) at p. 291.

IN-Abs

On October 10, 1953, the respondents filed suits under section 232 read with section 20 of the U. P. Zamindari Abolition, and Land Reforms Act, 1950 against the appellant before the Sub Divisional Officer. Before the coming into operation of the Abolition Act the appellant (Amba Prasad) was Zamindar of the disputed land. The names of the respondents were recorded in column 23 (miscellaneous) in the Khasra for the year 1356 Fasli as persons in possession of the disputed land. The respondents claimed adhivasi rights under section 20 of the Abolition Act because they were recorded as occupants of the fields in dispute in the Khasra for 1356 Fasli. The common case of the respondents was: (i) that they were in possession of the suit land (ii) that they were dispossessed after June 30, 1948 by the appellant, (iii) that as they were recorded occupants in 1356F they were not required to prove actual possession. The case of the appellant was that the entry was fraudulently made after July 1, 1949. These suits were dismissed by the Sub Divisional officer. On appeal, the Additional Commissioner held that the respondents had acquired the adhivasi fights. Against this order Amba Prasad (the appellant) appealed to the Board of Revenue. The Board of Revenue dismissed the appeals. The appellant then filed appeals in this Court. Held:(i) Under section 20 of the Abolition Act (U. P. Zamindari Abolition and Land Reforms Act) a person continues as an adhivasi after July 1, 1952. provided he is in possession or was evicted after June 30, 1948. If he was evicted after June 30, 1948 he is entitled to regain possession in spite of any order or decree to the contrary. (ii)The words "recorded as occupants" in section 20 of the Abo lition Act mean persons recorded as occupants in the Khasra or Khatauni for 1356 Fasli (1 7 48 to 30 6 49). Such persons do not include an intermediary. The word "occupant" must mean a person holding the land in possession or actual enjoyment. Mediate possession (except where he immediate possessor holds on behalf of the mediate possessor) is of no consequence. (iii)The appellant was not entitled to raise the plea of the correctness of the entry in Khasra because the entry was not corrected before the date of vesting (1 7 52) as required by Explanation (ii) to section 20 of the Abolition Act. (iv)The title to possession as adhiwasi depends on the entries in the Khasra or Khatauni for the year 1356 Fasli. Section 20 of the Abolition Act does not require the proof of actual possession. Therefore, section 20 eliminates inquiries into disputed possession by accepting the record in the Khasra or Khatauni of 1356F. or its correction before July 1, 1952. 801 The Upper Ganges Sugar Mills Ltd. vs Khalil ul Rehman, ; , referred to. Lala Nanak Chand vs Board of Revenue, U. P., 1955 A.L.J. 408, Ram Dular Singh vs Babu Sukh Ram, , Bhal Singh vs Bhop and Anr., and Sugriva vs Mukhi etc., , approved.

Appeal No. 298 of 1964. Appeal from the judgment and order dated May 31, 1963, of the Punjab High Court in F.A.0. No. 5 E of 1962. M.C. Setalvad, and B. P. Maheshwari, for the appellant. Bawa Shiv Charan Singh, Hardev Singh and Y. Kumar, for the respondent. April 17, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C. J. The short question of law which arises in this appeal by special leave is whether by publishing and distributing a poster (Ext. p. 10) in furtherance of his election, the appellant, Kultar Singh has committed a corrupt practice under section 123(3) of the Representation of the People Act, 1951 (No,. 43 of 1951) (hereinafter called 'the Act '). The Election Tribunal which tried the election petition 792 filed by the respondent Mukhtiar Singh challenging the vali dity of the appellant 's election, as well as the High Court of Punjab which heard the appellant 's appeal against the decision of the Election Tribunal have answered this question .against the appellant. Accordingly, the election of the appellant has been declared to be void. Mr. Setalvad for the appellant contends that the view taken by the Election Tribunal and the High Court is based on a misconstruction of the impugned pamphlet. The appellant was elected to the Punjab Legislative Assembly from the Dharamkot Constituency and he defeated his nearest rival, the respondent, by a margin of nearly 8,000 votes. The appellant had stood for election on the Akali Dal ticket, while the respondent had been officially adopted by the Congress Party. After the election of the appellant was declared, the respondent filed an election petition alleging that the appellant 's election was void inasmuch as for the purpose of .securing votes, he had appealed to his religion and had thereby committed a corrupt practice. It appears that the election petition had also alleged that the appellant had appealed to his language and community, but with that part of the case we are no longer concerned in the present appeal, because the petition has not succeeded in that behalf. According to the respondent, the appellant had addressed seven election meetings held in different places and on different dates and at those meetings, he and his supporters had made speeches asking the voters to vote for the appellant as he was the proper representative of the Sikh Panth, whereas the respondent represented the Hindu ridden Party, and so, the appellant would be able to protect the Sikh religion and the Sikh language. The petition further alleged that at five of the seven election meetings organised by the appellant, the printed posters (Ext. I to p. 10) bad been distributed by the appellant and these posters contained an appeal to the voters to vote for the appellant on the ground of his religion. The appellant denied both these allegations. He admitted that election meetings were held on his behalf and were ad dressed by him and his supporters, but he disputed the res pondent 's case that at these meetings any appeal to religion was made. In regard to the posters, the appellant denied that he had anything to do with the said posters, except one Ext. p. 9 and he pleaded that the said poster was innocent and its ,publication and distribution would not attract the provisions of section 123(3) of the Act. On these pleadings, two broad questions arose for decision. The first question was whether the speeches alleged to have been made by the appellant and his supporters at the election meetings included appeals to the voters to vote for the appellant on the ground of his religion; and the second 793 was whether the impugned posters Exts. p. I to p. 10 were published or distributed by the appellant at the election meetings, and if yes, whether any one or more of them contained an appeal to the voters on the ground of the appellant 's religion. Both these questions were answered by the Tribunal in favour of the respondent. The High Court, however, has reversed the conclusion of the Tribunal on the first question: it has held that the evidence led by the respondent in support of his case that at the election meetings an appeal was made to the voters to support the candidature of the appellant or the ground of his religion, did not establish the respondent 's case. In regard to the posters, the High Court has held that all the ten posters bad been distributed by the appellant, but in its opinion, except Ext. p. 10, none of the others offended. the provisions of section 123(3). An argument was urged before the High Court by reference to the two posters in particular Exts. p. 9 and p. IO. The High Court rejected the respondents case with regard to poster Ext. 9, because it held that it was not clear that the poster contained an appeal to the voters or the ground of the appellant 's religion. In regard to, poster Ext. p. 10, however, the High Court agreed with the conclusion of the Tribunal and held that the said poster contained an appeal to the voters to vote for the appellant on the ground of his religion, and so, by publishing and distributing it at his, election meetings, the appellant had committed a corrupt practice under section 123(3) of the Act. That is how on this narrow ground. the decision of the Tribunal was confirmed by the High Court and that raises the question about the construc tion of the impugned poster Ext. P. 10. Before dealing with this question, it is necessary to refer to the provisions of section 123(3). Section 123 provides for different acts which constitute corrupt practices under the Act. Section 123(3) lays down, inter alia, that the appeal by a candidate or his agent or by any other person with the consent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, would amount to a corrupt practice. It is thus, plain that if it is shown that the impugned poster which the appellant is proved to have published and distributed at his election meetings contained an appeal to the voters of his constituency to vote for him or the ground of his religion that would amount to a corrupt practice under section 123(3) of the Act and in that case, the election of the appellant would be void under section 100(1)(d)(ii). It is true that a corrupt practice under section 123(3) can be committed by a candidate by appealing to the voters to vote for him on the ground of his religion even though his rival candidate may belong to the same religion. If, for instance, Sikh candidate were to appeal to the voters to vote for him because be was a Sikh and add that his rival candidate 794 though a Sikh in name, was not true to the religious tenets of Sikhism or was a heretic and as such, outside the pale of the Sikh religion, that would amount to a corrupt practice under section 123(3), and so, we cannot uphold the contention that section 123(3) is in applicable because both the appellant and the respondent are Sikhs. In fairness, we ought, however, to add that Mr Setalvad did not press this contention before us. The corrupt practice as prescribed by section 123(3) undoubtedly constitutes a, very healthy and salutary provision which is intended to serve the cause of secular democracy in this country. In order that the democratic process should thrive and succeed, it is of utmost importance that cur elections to Parliament and the different legislative bodies must be free from the unhealthy influence of appeals to religion, race, caste, community, or language. If these considerations are allowed any sway in election campaigns, they would vitiate the secular atmosphere of democratic life, and so, section 123(3) wisely provides a check on this undesirable development by providing that an appeal to any of these factors made in furtherance of the candidature of any candidate as therein prescribed would constitute a corrupt practice and would render the election of the said candidate void. In considering the question as to whether the distribution of the impugned poster by the appellant constitutes corrupt practice under section 123(3), there is one point which has to be borne in mind. The appellant had been adopted as its can didate by the Akali Dal Party. This Party is recognised as a political party by the Election Commission notwithstanding the fact that all of its members are only Sikhs. It is well known that there are several parties in this country which subscribe to different political and economic ideologies, but the membership of them is either confined to, or predominantly held by, members of particular communities or religions. So long a,; law does not prohibit the formation of such parties and in fact recognises them for the purpose of election and parliamentary life, it would be necessary to remember that an appeal made by candidates of such parties for votes may, if successful, lead to their election and in an indirect way, may conceivably be influenced by considerations of religion, race, caste, community or language. This infirmity cannot perhaps be avoided so long as parties are allowed to function and are recognised, though their composition may be predominantly based on membership of particular communities or religion. That is why we think, in considering the question as to whether a particular appeal made by a candidate falls within the mischief of section 123(3), courts should not be astute to read into the words used in the appeal anything more than can be attributed to them on its fair and reasonable ,construction. 795 That takes us to the question of construing the impugned poster. The principles which have to be applied in constru ing such a document are well settled. The document must be read as a whole and its purport and effect determined in a fair, objective and reasonable manner. In reading such documents, it would be unrealistic to ignore the fact that when election meetings are held and appeals are made by candidates of opposing political parties, the atmosphere is usualy surcharged with partisan feelings and emotions and the use of hyperboles or exaggerated language, or the adoption of metaphors. and the extravagance of expression in attacking one another, are all a, part of the game, and so, when the question about the effect of speeches delivered or pamphlets distributed at election meetings is argued in the cold atmosphere of a judicial chamber, some allowance must be made and the impugned speeches or pamphlets must be construed in that light. In doing so, however, it would be unreasonable to ignore the question as to what the effect of the said speech or pamphlet would be on the mind of the ordinary voter who attends such meetings and reads the pamphlets or hears the speeches. It is in the light of these well established principles that we must now turn to the impugned pamphlet. p. 10 has been translated by the High Court. The correctness of this translation is not challenged by either party before us. It reads thus: "Dear resident Sikhs, We, who are living in Singapore, Malaya, and South East Asia, place this before you, most respectfully, that at this critical juncture it is your duty to keep high the honour of the Panth. This is not the time to criticise the weaknesses of the, leaders of the Panth; the need is that in the coming General Elections you should defeat the opponents of the Panth the same way as you did in the last Gurdwara Elections. Every Sikh vote should go to the representatives of the Akali Dal. and we hope that this prayer of ours from far off will be accepted by you and you will once again pre serve the bonour of the Panth. Victory of the Panth will maintain the honour of the Panth. By maintaining such honour we will reach our final goal, that is Punjabi Suba". The poster then ends thus: "We remain anxious to, keep the honour and prestige of the Panth ever high Yours, Non resident brothers" 796 The respondent 's contention before the Tribunal and the High Court was that this appeal plainly and unambiguously invites the voters to vote for the appellant in order to preserve the honour and prestige of the Panth and it was urged that in the context, the Panth meant the Sikh religion. Since the pamphlet clearly appeals to the voters to vote for the appellant and proceeds on the assumption that the election of the appellant would uphold the honour and prestige of the Sikh religion, that amounts to a corrupt practice, because the appeal is based on the ground of the appellant 's religion. The courts below have accepted this contention. The word 'Panth ' is one of Sanskrit origin and etymologically it means the path or the way. It must be conceded that by itself it has come to indicate the Sikh religion because it has been used by Sikhs to denote their religion and their denomination as the followers of that Panth. In that context, Panth may mean the Sikh religion and the followers of the Panth would be the persons who follow the path prescribed by the Sikh gurus and as such, would signify the Sikh community. Panthic is an adjective which means, of the Panth or belonging to the Panth, and so, prima facie, the glory or prestige of the Panth may mean the glory or prestige of the Sikh religion. The question which calls for our decision, however, is not what the word 'Panth ' in the abstract may mean in the Punjab. The question which we have to answer is, what does the word "Panth" mean in the context of the pamphlet the distribution of which is alleged to constitute corrupt practice? It would be noticed that the word "Panth" occurs in six places in this pamphlet. First, reference is made to the honour of the Panth, then it is said that it is not the time to criticise the leaders of the Panth. In both these places, the word "Panth" may conceivably mean the Sikh religion. But when we go +to the use of the word "Panth" in the next sentence, it becomes clear that the said word cannot possibly mean the Sikh religion. The relevant portion of the pamphlet says to the electors: you should defeat the opponents of the Panth the same way as you did in the last Gurdwara Elections. It is common ground that the Gurdwara Elections were fought between different parties of the Sikhs and the Akali Dal party triumphed at the said Elections. Therefore, there is no doubt whatever that in this sentence, the Panth cannot possibly mean the Sikh religion. The expression "the opponents of the Panth" obviously means the opponents of the Akali Dal party and what the pamphlet purports to tell the electors is, just as at the last Gurdwara Elections the Akali Dal Party succeeded over its opponents, so should the Akali Dal Party triumph in the election in question. The next sentence makes it still clearer that the Panth and the Akali Dal Party are treated as 797 synonymous in this portion because it says "every Sikh vote should go to the representatives of the Akali Dal", and that can be reconciled with the previous sentence only on the basis that in the minds of those who drafted the impugned poster, the Akali Dal Party and the Panth are the same. Then the poster says that the prayer made in the poster, if accepted, will once again preserve the honour of the Panth; the words "once again" take us back to the triumph which the Akali Dal Party achieved at the last Gurdwara Elections, and so, the Panth in this context must mean the Akali Dal Party; and in the end when the pamphlet refers to the victory of the Panth and the honour of the Panth, it must be taken to refer to the victory and honour of the Akali Dal Party. The last sentence is very significant. It says that by maintaining such honour, meaning the honour of the Panth which is the Akali Dal, we will reach our final goal, that is, the Punjabi Suba. It is not disputed that at these elections, the Akali Dal Party propagated for the creation of the Punjabi Suba and the crux of the appeal made by the impugned poster is that if the voters returned the Akali Dal candidate, the honour and prestige of the Akali Dal would be maintained and the ideal of the Punjabi Suba attained. In the end, the poster also says that those who issued it were anxious to keep the honour and prestige of the Panth ever high. We have carefully considered the view taken by the Punjab High Court and the Tribunal, but we are satisfied that the said view is inconsistent with a fair and reasonable construction of the impugned poster. In fact, the High Court does not appear to have considered the different places in the poster where the word "Panth" has been used and no attempt has been made to co relate these sentences and to enquire whether the meaning attributed by the High Court to the word "Panth" is justified in regard to all the sentences in which that word occurs. It is an elementary rule of construction that the same word cannot have two different meanings in the same document. unless the context compels the adoption of such a course. Afterall, the impugned poster was issued in furtherance of the appellant 's candidature at an election, and the plain object which it has placed before the voters is that the Punjabi Suba can be achieved if the appellant is elected; and that necessarily means that the appellant belongs to the Akali Dal Party and the Akali Dal Party is the strong supporter of the Punjabi Suba. In these proceedings, we are not concerned to consider the propriety, the reasonableness or the desirability of the claim for Punjabi Suba. That is a political issue and it is perfectly competent to political parties to hold bona fide divergent and conflicting views on such a political issue. The significance of the reference to the Punjabi Suba in the impugned 798 poster arises from the fact that it gives a clue to the mean. ing which the poster intended to assign to the word "Panth". Therefore, we are satisfied that the word "Panth" in this poster does not mean Sikh religion, and so, it would not be possible to accept the view that by distributing this poster, the appellant appealed to his voters to vote for him because of his religion. In this connection, it may be relevant to refer to the oral evidence led in this case. Kartar Singh has stated that since the last 30 years the other name of the Akali Party is Panthic Party. This witness had been actively helping the appellant in his election, and he added that at the said election, there was a common front of all the opposition parties against the Congress. These parties were Jan Sangh, Swatantra Party, Akali Party and others. Another witness Ajmer Singh admitted that Shiromani Akali Dal was a political party of the Sikhs. He also stated that excepting 1957 elections, for which there was settlement with the Congress, the Akali Dal had been fighting in all the elections. In 1957, the Akali candidates contested the election on the Congress ticket. In 1958, the Akali Dal started an agitation for getting Punjabi Suba because it thought that the Regional Formula had not been property implemented by the Government. This evidence would show that the Akali Dal Party is also known as the Panthic Party and that one of the major issues on which it fought the Congress party at the election in question was the creation of a separate province which it calls the Punjabi Suba. In construing the impugned poster, the High Court does not appear to have taken into account this oral evidence. It is true that oral evidence would not be of any material assistance in construing the words in pamphlet; but as we have just indicated, the word "Panth" used in six places in the pamphlet can be properly interpreted only to mean the Akali Dal Party and it is in that context that the statements made by the witnesses as to the name by which the Akali Dal Party is known in popular minds, may have some relevance. It appears that a similar question has been considered by the Election Tribunals on two occasions in the past. In Sardul Singh Caveeshar vs Hukam Singh and Ors.(1) the Elec" tion Tribunal had to consider the denotation of the words "Panth" and "Panthic" candidate and it has observed that though the words "Panthic candidate" would literally signify a candidate of the Sikh Community, after the Akali Dal Party came to be known as the Panthic Party in the popular minds. the word "Panthic" candidate came to signify a candidate of the Akali Dal Party. It appears from this judgment that the Akali Dal Party called itself the Panthic Party even at the time when there were separate Sikh electorates, and that has (1) (1953) VI E.L.R., 316 at 326. 799 a significance of its own. When there were separate Sikh electorates, the candidates who fought against each other would all be Sikh and yet, the Akali Dal Party which set up its own ,candidates, described itself as a Panthic Party and its candidates as Panthic candidates, (vide Baba Gurdit vs Sardar Partap Singh Kairon)(1). These decisions tend to show that the Akali Dal Party is known as Panthic Party and its candidates as Panthic candidates, and that incidentally may be of some help to determine the true denotation of the word "Panth" used in the impugned poster in the present case. Unfortunately, these decisions also do not appear to have been placed before the High Court. Before we part with this appeal, we may refer to a recent decision of this Court in Jagdev Singh Sidhanti vs Pratap Singh Daulta and Ors. In that case, the election of the successful candidate was challenged on the ground that he had committed a corrupt practice under s.123(3) of the Act in that he had appealed to the voters to vote for him on the ground of his language, and the High Court had upheld that contention. In reversing the conclusion of the High Court, this Court pointed out that the reference to the language on which the challenge to the successful candidate 's election was based, had to be considered in the context of the main controversy between the parties and that controversy was that the Hariana Lok Samiti which had sponsored the candidature of the successful candidate wanted to resist the imposition of Punjabi in the Hariana region and that was clearly a political issue. If in propagating its views on such a political issue, a candidate introduces an argument based on language, the context of the speech in which the consideration of language has been introduced must not be ignored, and that is how this Court held that the corrupt practice alleged against the successful candidate had not been established. Political issues which form the subject matter of controversi,es at election meetings may indirectly and incidentally introduce considerations of language or religion, but in deciding the question as to whether corrupt practice has been committed under s.123(3), care must be taken to consider the impugned speech or appeal carefully and always in the light of the relevant political controversy. We are, therefore, satisfied that the High Court was in error in coming to the conclusion that the impugned poster Ext. P 10 attracted the provisions of s.123(3) of the Act. The result is, the appeal is allowed, the decision of the High Court is set aside and the election petition filed by the respondent is dismissed with costs throughout. Appeal allowed . (1)Indian Election Cases by Doabia Vol. 1, p. 92. (2) A.I.R. 1963 S.C. 183.

IN-Abs

The respondent challenged the appellant 's election before the Tribunal alleging that it was void inasmuch as for the purpose of securing votes the appellant had appealed to his religion and had thereby committed a corrupt practice. He had addressed seven election meetings and in those meetings he and his supporters had asked the voters to vote for him as he was the proper representative of the Sikh Panth, and so, he would be able to protect the Sikh religion and the Sikh language. It was further alleged that at five of the seven election meetings organised by him, the printed posters (Exts. p. 1 to p. 10) had been distributed by him and they contained an appeal to the voter , to vote for him on the ground of his religion. The appellant denied both these allegations. He disputed the respondent 's case that at these meetings any appeal to religion was made. In regard to the posters, he denied that he had anything to do with the said posters, except one Ext. p. 9 and pleaded that the said poster was innocent and its publication and distribution would not attract the provisions of section 123(3) of the Act. Both these questions were answered by the Tribunal in favour of the respondent. On appeal, the High Court reversed the conclusion of the Tribunal on the first question. lit regard to the posters, it held that all the ten posters had been distributed by him, but, in its opinion, except Ext. p. 10, none of the others offended the provisions of section 123(3) of the Act. In regard to poster Ext. p. 10, however, it agreed with the conclusion of the Tribunal and held that the said poster contained an appeal to the votes to vote for the appellant on the ground of his religion, and so, by publishing and distributing it at his election meetings, he had committed a corrupt practice under section 123(3) of the Act. In this Court the appellant contended that the view taken by the Election Tribunal and the High Court was based on a misconstruction of the impugned pamphlet. Held:In considering the question as to whether a parti cular appeal made by a candidate falls within the mischief of section 123(3) of the Act, courts should not be astute to read into the words used in the appeal anything more than can be attributed to them on its fair and reasonable construction. The view taken by the High Court and the Tribunal was inconsistent with a fair and reasonable construction of the impugned poster. In fact, the High Court did not consider the different places in the poster where the word "Panth" had been used and no attempt was made to co relate these sentences and to enquire whether the meaning attributed by the High Court 791 to the word "Panth" was justified in regard to all the sentences in which that word occurred. The significance of the reference to the Punjabi Suba in the impugned poster arises from the fact that it gives clue to the meaning which the Poster intended to assign to the word "Panth". Therefore, the word "Panth" in this poster did not mean Sikh religion and so, it would not be possible to accept the view that by distributing this poster, the appellant had appealed to voters to vote for him because of his religion. In construing the impugned poster, the High Court did not take into account the oral evidence. It is true that oral evidence would not be of any material assistance in construing the words in the pamphlet; but, the word "Panth" used in six places in the pamphlet could be properly interpreted only to mean the Akali Dal party and it was in that context that the statements made by the witnesses as to the name by which the Akali Dal Party was known in popular minds, might have some relevance. Sardul Singh Caveeshar vs Hukam Singh, (1953) VI, E.L.R. 316 and Baba Gurdit Singh vs Sardar Partap Singh Kairon, Indian Election Cases by Doabia, Vol. 1, p. 92, referred to. Political issues which form the subject matter of contro versies at election meetings may indirectly and incidentally introduce consideration of language or religion, but in deciding the question as to whether corrupt practice had been committed under section 123(3), care must be taken to consider the impugned speech or appeal carefully and always in the light of the relevant political controversy. Therefore, the High Court was in error in coming to the conclusion that the impugned poster Ext. P. 10 attracted the provision of section 123(3) of the Act. Jagdev Singh Sidhanti vs Partap Singh Daulte, ;

Appeal No. 221 of 1964. Appeal from the judgment and order dated September 5, 1963 of the Madhya Pradesh High Court in Misc. Petition No. 334 of 1962. M. C. Setalvad, B. V. Shukla, Rameshwat Nath, section N. Andley,and P. L. Vohra, for the appellant. B. Sen and I. N. Shroff, for the respondents. April 21, 1964. The Judgment of the Court was delivered by DAS GUPTA, J. This appeal raises the question of the validity of the Madhya Pradesh Minimum Wages Fixation Act, 1962 (Act No. 16 of 1962). The appellant is the Manager of a Bidi counting and labelling factory of M/s. Mohanlal Har govindas, Jabalpur, who are engaged in the trade of purchase and sale of Bidi in the State of Madhya Pradesh and other States of India. In 1951 the State of Madhya Pradesh fixed rates of minimum wages payable to workmen engaged in Bidi making manufactories. This was done in accordance with the provisions of the (Central Act 11 of 1948). These rates of minimum wages were revised in the year 1956 by a notification of the Madhya Pradesh Government dated the 23rd February 1956. New rates of minimum 822 wages for workmen engaged in the Bidi making manufactories were notified by the Madhya Pradesh Government by a notification dated the 30th December 1958. The notification directed that these rates would come into force from January 1, 1959. The validity of this notification was however successfully challenged by the present appellant before the Madhya Pradesh High Court. To meet the situation the Madhya Pradesh Legislature enacted the Minimum Wages (Madhya Pradesh Amendment and Validation) Act, 1961 (Madhya Pradesh Act No. 23 of 1961). Section 31A which was introduced by this Act into the Central Act (No. 11 of 1948) provided that the rates of minimum wages fixed or revised under the notification of the 30th December 1958 "shall be and shall always be deemed to have been validly fixed and revised and shall be deemed to have come into force on the date men tioned in the said notification, notwithstanding any judicial decision to the contrary or any defect or irregularity in the constitution of the Advisory Board under section 7 of the principal Act read with section 9 thereof or publication of the notification in the Gazette or non compliance with any other requirement of law and shall not be called in question in any court merely on the ground that there was failure to comply with the provisions of the principal Act. " The appellant and some other Bidi manufactories of Madhya Pradesh challenged the validity of this Act before the High Court by petitions under article 226 of the Constitution. The High Court allowed the applications, struck down section 31A as invalid and restrained the Government from enforcing the section and from giving effect to the impugned notification dated the 30th December, 1958. The High Court gave its decision on the 2nd May 1962. On the 21st June 1962 the Madhya Pradesh Ordinance No. 4 of 1962 was passed fixing rates of minimum wages retrospec tively. The Ordinance was later replaced by an Act, the Madhya Pradesh Minimum Wages Fixation Act, 1962. On the 5th October 1962, the appellant made an application to the High Court of Madhya Pradesh under article 226 and article 227 of the Constitution challenging the validity of this Act and praying for a declaration that the Act is ultra vires, void and inoperative and a writ in the nature of mandamus re straining the State of Madhya Pradesh and the other respon dents from giving effect to or enforcing the provisions of the Act. The High Court has held that the Act is valid and has disallowed his application. Against that decision the present appeal has been preferred. The challenge to the validity of the Act is based on three principal grounds. The first is that in enacting Act No. 16 823 of 1962 the Madhya Pradesh Legislature was really not exer cising its independent legislative power but only validating the notification dated the 30th December 1958 which it was not competent to do. The second ground is that by giving retrospective effect to the rates of wages fixed by this Act the State has put unreasonable restrictions on the appellant 's fundamental rights under article 19(l)(f) & (g) of the Constitution. The last ground on which the Act was challenged as invalid is thatby making provisions of section 20 and section 22 of the Central Act No. 11 of 1948 applicable to the wages now fixed the Act has contravened article 20(1) of the Constitution. The impugned Act is a short Act of five sections only. The first section giver, the title of the Act and the fifth section repeals the Ordinance to replace which this Act was passed. Three remaining sections are in the following words: "2. The expression used in this Act and defined in the minimum Wages Act, 1948 (XI of 1948), in its application to the State of Madhya Praderh shall have the meanings assigned to them in the said Act. Notwithstanding anything contained in section 5 of the (XI of 1948), in its application to the State of Madhya Pradesh (hereinafter referred to as the said Act) or any other provisions contained therein relating to the fixation or revision of minimum rates of wages in scheduled employments and any judgment, decree or order of any court to the contrary, the minimum rates of wages in respect of employments in items 2, 3, 5, 6, 7, 8 and I 1 in Part I and in respect of employment in Part 11 of the Schedule to the said Act shall be and shall always, in respect of each employment, be deemed to be as specified in Table appended hereto and it is hereby enacted that the said minimum rates of wager, shall be payable by the employer in the said scheduled employments and be enforceable against him with effect from the 1st January 1959, as if the provi sions herein contained have been in force at all material times. The provisions of section 4 A, section 5A, in so far as they relate to revision of minimum rates of wages, and of sections 12 to 30 A of the said Act, and the rules made thereunder shall apply to minimum rates of wages specified in section 3 as they apply to minimum wages in respect of scheduled employments fixed in accordance with the said Act; 824 Provided that with respect to claims arising out of payment of minimum rates of wages specified in section 3 pertaining to a period prior to the publication of the Madhya Pradesh Minimum Wages Fixation Ordinance, 1962 (4 of 1962) in the Gazette, the period of one year referred to in the first proviso to sub section (2) of section 20 of the said Act shall be counted with effect from the 21st June, 1962, the date of the publication of the said Ordinance in the Gazette. " It is not disputed that the Madhya Pradesh legislature had the legislative competence to make a law as regards minimum wages under Entry 24 of List III (Sch. Seventh). Mr. Setalvad contends that this power of independent legislation was not really exercised by the legislature and that in the guise of independent legislation it has in substance passed a validating Act, after an attempt to validate the notification of the 30th December, 1958, had failed. In support of his argument that it is not independent legislation Mr. Setalvad laid stress on the language of section 2. That section merely says that the expressions used in this Act shalt have the same meaning for the purpose of this Act as defined in the of 1948. According to the learned counsel, this shows that this was really a dependent and not independent legislation. We can find no substance in this argument. The definition of expressions used in an Act with reference to other Act is a well known device in legislative practice generally adopted for the sake of brevity. The definition would remain effective even after the other Act with reference to which the definition was given ceases to exist. This fact of defining expressions in an Act with reference to some other Act cannot therefore have the effect of making this Act de pendent on such other Act. Mr. Setalved next urged that quite clearly the object of section 3 was to validate the minimum rates of wages as fixed by the notification dated the 30th December 1958 and nothing more. As we read the section we find that it merely fixed wages in respect of certain employments at the rates mentioned in the Table appended to the Act. We are informed that the rates mentioned in the Table are identical with the rates men tioned in the notification dated the 30th December, 1958. The effect of enactment of section 3 would therefore be the same as if the notification of 1958 had been validated. To say that, however, is not to say that this Act has validated or that even it seeks to validate the 30th December 1958 notification. On the face of it the legislature was fixing for itself the minimum rates of wages in certain scheduled employments. That is stated in the preamble and is plain from section 3 itself. The fact 825 ,that rates mentioned in the Table appended to the Act hap pened to be the same as rate; , fixed elsewhere cannot reason,ably justify a conclusion that the validation of the old rates was being affected. Independent legislation does not cease to be so, merely because its effect is the same as it would have been if a validating Act had been passed. The contention that this Act was not independent legislation cannot therefore be accepted. Nor is it possible to accept the argument that the Act is an unreasonable restriction on the appellant 's fundamental rights under article 19(1)(f) and (g) of the Constitution. Restriction there undoubtedly is, but we are not satisfied that the restriction is unreasonable. Section 3 of the Act makes the new rater, of wages effective from January 1 , 1959. Section 4 makes the various provisions of the Central Act No. 11 of 1948 available for revision and enforcement of the rates as specified in section 3. The consequence is that if an employer does not pay the rates as specified, an application may be made under section 20 of Act 11 of 1948 to enforce such payment. He will be liable also to prosecution and penalties under section 22 of the Act. What according to the learned counsel makes the Act unreasonable is that such application can be made and such prosecution and penalties can be imposed even in respect of the past period from 1st January 1959 upto the date of the Act. How is it possible for the employer, it is urged, to pay such arrears which might amount in many cases to considerable sums of money when the accounts for the past years had been closed, profits had been distributed and the available surplus had either been spent or invested in other ways? We have no hesitation in agreeing to the proposition that the retrospective operation of legislation is a relevant circumstance in deciding its reasonableness. It is, however, clearly established by a long series of decisions of this Court that this is not necessarily a decisive test. We may mention in this connection the decision of this Court in Rai Ramkrishna vs State of Bihar(1). There the Court had to consider the question whether the retrospective operation of the Bihar Taxation of Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 put such an unreasonable restriction on the fundamental rights guaranteed under article 19(1)(f) and (g) of the Constitution as to make the Act invalid to the extent of its retrospective operation. The Bihar Finance Act, 1950 (Bihar Act XVII of 1950) had imposed a tax on passengers and goods carried by public service motor vehicles in Bihar. In an appeal arising out of a suit filed by the passengers and owners of goods, this Court struck down Part 111. of the ,aid Act as unconstitutional. This judgment was pronounced on the 12th (1) ; 826 December 1960. Then an Ordinance, viz., Bihar Ordinance No. 11 of 1961 was issued on August 1, 1961. By this Ordinance the material provisions of the earlier Act of 1950 were validated and brought into force retrospectively from the date when the earlier Act had purported to come into force. Subsequently, the provisions of this Ordinance were incorporated in the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961. Section 23 of the Act provided that any amount paid, collected or recovered or purported to have been paid, collected or recovered as tax or penalty under the provisions of Part III of the Bihar Finance Act, 1950 or rules made thereunder during the period beginning with the first day of April 1950 and ending on the thirty first day of July 1961, shall be deemed to have been validly levied, paid, collected or recovered under the provisions of this Act. It was urged that this retrospective operation for such a long period like 10 years itself made the provisions unconstitutional. In repelling this contention, Gajendra gadkar, J. (as he then was) speaking for the Court observed thus: "If a statute passed by the legislature is challenged in proceedings before a court and the challenge is, ultimately sustained and the statute is struck down, it is not unlikely that the judicial proceedings, may occupy a fairly long period and the Legislature may well decide to await the final decision in said proceedings before it uses its legislative powerto cure the alleged infirmity in the earlier Act. In such a case, if after the final judicial verdict is pronounced in the matter the legislature passes a validating Act, it may well cover a long period taken by the judicial proceedings in court and yet it would be inappropriate to hold that because the retrospective operation covers a long period, therefore, the restriction imposed by it is unreasonable." These observations which were made in respect of a validating Act apply fully to a legislation as in the Act now under consideration. It is not also possible to accept the picture presented by Mr. Setalvad of the employers ' financial difficulties in making payment for the past period as a fair representation of the true facts. For practically the entire period from the 1st April 1959 to the date of the present Act the employers had before, them the provisions of what purported to be a good law requiring them to pay at these very rates. As good businessmen they are expected to have made provisions 827 for payments on these very rates, even though they intended to challenge the validity of the previous Act and ultimately succeeded in that attempt. We are not prepared to believe that such provisions are not generally made. The hardship which according to Mr. Setalvad the employers would have to face in making the payments for the past periods is, in our judgment, more imaginary than real. But, urges the learned counsel, section 3 of the Act while giving to the rates of wages fixed by the Act retrospective effect from the 1st January 1959 has also made wages at these new rates payable on January 1, 1959 for the past period. The result of this, according to the learned counsel, is that as soon as an application is made under section 20 of Act 11 of 1948 the employer would be liable not only to pay the arrears of wages but also compensation as provided in sub section 3 of section 20. Sub section 3 of section 20 of Act 11 of 1948 provides, inter alia, that the minimum wage authority may direct: "In the case of a claim arising out of payment of less than 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 payment of such compensation as the Authority may think fit, not exceeding ten times the amount of such excess. " It has further provided that the authority may direct pay ment 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. If the legal position were as urged by the learned counsel, that section 3 made the new rates of wages for the past period payable on January 1, 1959 or the apprehension that the em ployer might be made to pay heavy compensation may well be true. Another consequence of that legal position would be that the employer would also be liable to prosecution under section 22 of the Act for his omission to pay on January 1, 1959 the rates which were fixed first by the Ordinance and then by the impugned Act. We are satisfied however that section 3 of the impugned Act does not make the new rates of wages payable on the 1st January 1959. The words used are. . and it is hereby enacted that the said minimum rates of wages shall be payable by the employer in the said scheduled employments and be enforceable against him with effect from the 1st January 1959, as if the provisions herein contained have been in force at all material times. " By these words, it is urged on behalf of the appellant, the legislature not only made the minimum wages effective from the 1st January 1959 but also made them payable on that date for the past period. In other words, the sentence is sought to be read as saying: 828 "the said minimum rates of wages shall be payable by the employer in the said scheduled employments with effect from, 1st January 1959 and shall be enforceable against him with effect from 1st January 1959. " If that had been the intention of the legislature the appropriate words to use would have been "the said minimum rates of wages shall be payable by the employer in the said scheduled employments and enforceable against him with effect from 1st January 1959. " No purpose would be served by the word "be" before the word "enforceable" if the phrase "with effect from the 1st January 1959" was intended to apply both to "payable" and to " enforceable". The very fact that the legislature took care to say "be enforceable" in the latter part of the sentence shows clearly that while it was intended that the new rates would be enforceable against the employer with effect from the 1st January 1959 no date was being prescribed by section 3 as regards the date on which it became payable. An examination of section 4 of the Act further makes it clear beyond any reasonable doubt that it was the intention of the legislature that new rates became payable only on the 21st June 1962, the date of the publication of the Ordinance which was later replaced by the Act. Section 4 makes applicable to the minimum rates of wages as fixed by section 3, the provisions of section 4A and section 5 of the (Act 11 of 1948), that is, the provisions as regards the revision in future of the rates fixed by the impugned Act, and of sections 12 to 30A. Among the sections thus included is therefore section 20 which prescribes the procedure for claims arising out of payment of less than the minimum rates of wages. The first proviso to sub section 2 of section 20 prescribes a period of limitation within which an application on such claims has to be made. The period prescribed is one year from the date on which the minimum wages became payable. It was thus necessary for the legislature when giving retrospective effect to the rates fixed by section 3 of the impugned Act to indicate the date on which the new rates would become payable. This indication is clearly given by the proviso to section 4. The proviso (which has already been set out) is in these words: "Provided that with respect to claims arising out of payment of minimum rates of wages specified in section 3 pertaining to a period prior to the publication of the Madhya Pradesh Minimum Wages Fixation Ordinance 1962 (4 of 1962) in the Gazette, the period of one year referred to in the first proviso to sub section (2) of section 20 of the said Act shall be counted with effect from the 21st June 1962, the date of publication of the said Ordinance in the Gazette. " 829 The above provision that "the period of one year referred to in the first proviso to sub section (2) of section 20 of the said Act shall be counted with effect from the 21st June 1962" is a clear statement of the legislature 's intention that it is on the 21st June 1962 that the rates which had become enforceable under section 3 with effect from 1st January 1959 became payable. That is how the High Court has construed the section and in our judgment that construction is correct. The appellant 's apprehension that he might be made liable for payment of compensation under section 20(3) or to prosecution under section 22 of the (Act 11 of 1948) as a result of the mere passing of the Act is therefore groundless. It is clear that the duty to pay at these rates arose only on and from the 21st June 1962 and no liability to pay compensation under section 20(3) or to prosecution under section 22 of the would arise if payment was made on the 21st June 1962. It was then urged that it would be unreasonable to expect the employer to be able to make such payment on the 21st June 1962, the date of publication of the Ordinance. Some time would elapse, it is pointed out, before the employer could acquaint himself with the detailed provisions of the Act and some further time in making arrangements for payment; there was thus the risk of an application being made against him under section 20 of the , and an order directing him to pay compensation. While there is no doubt a theoretical possibility of such a thing happening, the risk appears to us practically non existent. It is to be noticed that it is discretionary with the minimum wage authority to make an order for payment of compensation. It is very unlikely that the authority will in the use of his discretion make an order for payment of compensation when he finds that the employer has made the payment within a few days after the 21st June 1962. The risk of prosecution under section 22 because of failure to pay exactly on the 21st June 1962 is even less. But such prosecution, it may be pointed out, will be entertained by courts only after an application under section 20 as regards the facts had been made and partly succeeded and the appropriate Government or an officer authorised by it has sanctioned the making of a complaint. It does not appear to us likely that prosecution will be launched because of failure to pay exactly on the 21st June 1962. The contention that section 3 and section 4 of the impugned Act impose unreasonable restrictions on the appellant 's fundamental rights must therefore be rejected. The last ground urged in support of the appeal. viz., that the impugned Act contravenes article 20(t) of the Constitution, is based on the assumption that the new rates of wages be came payable on the 1st January 1959 even as regards the 830 past period. If that assumption were correct it would no doubt be also correct to say that the combined effect of sections 3 and 4 of the impugned Act was to make the employer liable to conviction for offences for violation of a law which was not in force at the time of the commission of the act charged. We have already held however that on a proper construction of sections 3 and 4, the new rates of wages for the past period became payable not on the 1st January 1959 but on the 21st June 1962. The attack on the validity of the sections on the ground of article 20(l) of the Constitution therefore fails. All the points raised in the appeal fail. The appeal is accordingly dismissed with costs. Appeal dismissed.

IN-Abs

The appellant was the manager of a Bidi counting and labelling factory. In 1951, the State of Madhya Pradesh fixed rates of minimum wages payable to workmen in accordance with the provisions of the . These rates were revised in the year 1956 and new rates were notified by the Government by a notification dated December 30, 1958 directing that these rates would come into force from January 1, 1959. The validity of this notification was successfully challenged by the appellant before the High Court. To meet the situation the Legislature enacted the Minimum Wages Act, 1961 giving effect to the impugned notification. On challenge ,of this Act by the appellant and other Bidi manufactories, the High Court allowed the applications and restrained the Government from giving effect to the impugned notification. There after, the Madhya Pradesh Ordinance No. 4 of 1962 was passed fixing rates of minimum wages retrospectively. The ordinance was later replaced by an Act, the Madhya Pradesh Minimum Wages Fixation Act, 1962. On challenge of the validity of this Act by the appellant, the High Court held the Act to be valid ,and disallowed the application. In this Court the validity of the Act was challenged on the ground (1) that in enacting the Act of 1962 the Legislature was not exercising its independent legislative power but only validating the notification dated December 30, 1958 which it was not competent to do, (2) that by giving retrospective effect to the: rates of wages fixed by this Act the State had put unreasonable restrictions on the appellant 's fundamental rights under article 19(l)(f) & (g) and (3) that by making the provisions of sections 20 and 22 of the Central Act of 1948 applicable to the wages now fixed the Act had contravened article 2b(1) of the Constitution. Held:(i) The contention that the Act was not independent legislation cannot be accepted. Section 2 of the Act merely says that the expressions used in this Act shall have the same meaning for the purpose of this Act as defined in the Minimum Wages Act of 1948. The definition of expressions used in an Act with reference to another Act is a well known device in legislative practice generally adopted for the sake of brevity. The definition would remain effective even after the other Act with reference to which the definition was given ceases to exist. This fact of defining expressions in an Act with reference to some other Act cannot therefore have the effect of making this Act dependent on such other Act. 821 It is clear from section 3 of the impugned Act that the legislature was fixing for itself the minimum rates of wages in certain ,scheduled employments. The fact that the rates mentioned in the Table appended to the Act happened to Le the same as the rates fixed elsewhere cannot reasonably justify a conclusion that the validation of the old rates was being affected. Independent legislation does not cease to be so, merely because its effect is the same as it would have been if a validating Act had been passed. (ii)The retrospective operation of legislation is a relevant circumstance in deciding its reasonableness. It is, however, not necessarily a decisive test. Section 3 of the Act does not make the new rates of wages payable on the 1st January 1959. The proviso to section 4 is a clear statement of the legislature 's intention that it is on the 21st June 1962 that the rates which had become enforceable under section 3 with effect from 1st January 1959 became payable. The appellant 's apprehension that he might be made liable for payment of compensation under section 20(3) or to prosecution under section 22 of the as a result of mere passing of the Act must therefore be held to be ground less. The contention therefore that sections 3 and 4 of the impugned Act impose unreasonable restrictions on the appellant 's fundamental rights must be rejected. Rai Ramkrishna vs State of Bihar, ; , applied. (iii)On a proper construction of sections 3 and 4 of the impugned Act, the attack on the validity of the section on the ground of a contravention of article 20(l) of the Constitution must also fail.

Appeals Nos. 51 and 52 of 1962. Appeals from the judgment and order dated June 12, 1959 of the Kerala High Court in A.S. Nos. 538 and 539 of 1954. V. A. Seyid Muhammad, for the appellants ,. section T. Desai and A. G. Pudissery, for the respondent No. 1 April 15, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J. These two appeals arise from two suits Nos. 5 of 1947 and 32 of 1951; and the main point which they raise for our decision is whether the two document& executed by the appellants and two of the respondents are unenforceable as being opposed to public policy under sec tion 23 of the Indian Contract Act (hereinafter called the Act). The trial Court has answered this question in the affirmative. while the High Court of Kerala has taken a contrary view. Poulo Varghese and Poulo Thommi who are the sons of Ouseph Poulo were carrying on trade in hill produce at Always and in the course of their business, they had borrowed from the branch of the Catholic Union Bank Ltd. at Always large amounts. In that connection, they had pledged goods with the Bank as security for the loan and the same had been deposited in a godown the key of which remained with the Bank. It appears that on the 10th February, 1947, 747 the Officers of the Head Office of the Bank inspected the godown and it was discovered that there was considerable shortage of the goods pledged. Thereupon, the Secretary of the Bank lodged a complaint with the Police that Ouseph Poulo and his two sons who had dealings with the Bank as well as Poulo Joseph, another son of Ouseph Poulo, had col luded with the local Agent of the Bank and had fraudulently( removed a substantial part of the pledged articles form the godown. The complaint also alleged alternatively that if the goods had not been fraudulently removed, then the security offered by Poulo Varghese and Poulo Thommi was grossly inadequate to cover the large amounts advanced to them, and that was the result of cheating. The Police registered this case and investigations began. At that time the parties settled their differences and the two documents in question were ,executed. The criminal complaint was filed on the 13th February.and the First Information Report was made on the 16th February, 1947. On the 22nd February, a hypothecation bond (Ext. 26) was executed by Ouseph Poulo, his wife, his three sons and the wife of another son in favour of the Bank for Rs. 30,000/ . This bound covered immovable properties belonging to the executants. On the 27th February, 1947, another document was executed by the same parties in favour of the Bank for Rs. 35,000/ ; this document was called Kollappirivu Karar (Ext. On the came day a receipt was executed by Poulo Varghese and Poulo Thommi which showed that the goods in the godown were valued at Rs. 10,000/ and were surrendered to the Bank in partial satisfaction of the debts due from them to the Bank. This was followed by a hire purchase agreement by which the car owned by Poulo Thommi was transferred to the Bank and the same was conveyed back to him on a hire purchase agreement , the value of this car was taken to be Rs. 5,0001 . The total amount due from Poulo Varghese and Poulo Thommi to the Bank was Rs. 80,024 5 9. As a result of the transactions in which the parties entered, Rs. 10,000/ were made good by surrendering to the Bank the goods in the godown; Rs. 5,0001 by transferring the car; Rs. 30,000/ and Rs. 35,000/ by the hypothecation deed and the Karar respectively; that left a balance of Rs. 24 5 9 which was paid in cash. After this transaction had thus been concluded, on the 28th February the Secretary of the Bank made a statement before the police that the Bank 's claim had been settled and that he and the Managing Director of the Bank was satisfied that no goods had been removed from the godown as alleged in the complaint and that in collusion with the Agent of the Bank, the debtors Poulo Varghese and Poulo Thommi had 748 cheated the Bank by over valuing the goods pledged, but that no further action was necessary to be taken in that behalf. In consequence, the criminal proceedings were dropped. That, in substance, is the nature of the transactions, the character of which falls to be determined in the present appeals. On the 15th December, 1947, Ouseph Poulo, the father, his son Joseph, Poulo 's wife Aelia and Joseph 's wife Thressia filed a suit in forma paliperis seeking cancellation of the two documents in question on the ground that they had been executed to stifle criminal prosecution and that they were also vitiated by undue influence, coercion and threat. The first defendant to this suit was the Bank and defendants 2 and 3 were the two debtors Poulo Varghese and Poulo Thommi, the sons of Ouseph Poulo. This was suit No. 5/1947. While this suit was pending, the Bank instituted suit No. 32 of 1951 on the 26th February, 1951 and claimed to recover the amount due on the Karar from all its executants. The persons who had filed suit No. 5/1947 were defendants 1, 2, 5 & 6 in this suit and defendants 3 & 4 were the debtors Poulo Varghere and Poulo Thommi. These two sets of defen dants filed two separate written statements '. but the common plea raised by them was that the document on which the Bank 's suit was based was unenforceable under section 23 of the Act. The trial Court substantially upheld this defence with the result that suit No. 5 / 1947 was decreed and suit No. 32/1951 was dismissed. The Bank took this matter before the High Court by preferring two appeals Nos. 538 & 539 of 1954. The High Court has reversed the conclusion of the trial Court in regard to the character of the impugned transaction and in consequence, suit No. 5/1947 has been dismissed and suit No. 32/1951 has been decreed. That is how the plain tiffs in suit No. 5 / 1947 have come to this Court with a certificate issued by the High Court. During the course of this judgment. we will refer to the Bank as the Bank. the persons who brought suit No. 5/1947 as the plaintiffs and the two debtors as defendants 2 & 3. Before dealing with the merits of the controversy between the parties, it is necessary to state briefly the true legal position in regard to the agreements which are held to be unenforceable on the ground that the consideration for which they are made is opposed to public policy. It is well settled that agreements which are made for stifling prosecution are opposed to public policy and as such, they cannot be enforced. The basis for this position is that the consideration which sup ports such agreements is itself opposed to public policy. In India. this doctrine is not applicable to compoundable offences, nor to offences which are compoundable with the leave of the 749 court where the agreement in respect of such offences is entered into by the parties with the leave of the Court. With regard to non compoundable offences, however, the position is clear that no court of law can allow a private party to take the administration of law in its own hands and settle the question as to whether a particular offence has been committed or not, for itself. It is obvious that if such a course is allowed to be adopted and agreements made between the parties based ' solely on the consideration of stifling criminal prosecutions are sustained, the basic purpose of criminal law would be defeated; such agreements may enable the guilty persons to escape punishment and in some others they may conceivably impose an unconscionable burden on an innocent party under the coercive process of a threat of the criminal prosecution. In substance, where an agreement of this kind is made, it really means that the complainant chooses to decide the fate of the complaint which he has filed in a criminal court and that is clearly opposed to public policy. In dealing with such agreements, it is, however, necessary to bear in mind the distinction between the motive which may operate in the mind of the complainant and the accused and which may indirectly be responsible for the agreement and the consideration for such an agreement. It is only where the agreement is supported by the prohibited consideration that it falls within the mischief of the principle that agreements which intend to stifle criminal prosecutions are invalid. The sequence of events, no doubt, has relevance in dealing with this question; but from mere sequence it would not be safe to infer the existence of the prohibited consideration. If in order to put an end to criminal proceedings, an agreement is made in the execution of which persons other than those who are charged in a criminal court join, that may afford a piece of evidence that the agreement is supported by the consideration that the criminal proceedings should be terminated. If the nature of the liability imposed upon a debtor by a previous dealing is substantially altered with a view to terminate the criminal proceedings, that itself may be another factor which the Court may take into account in deciding whether the agree ment is supported by the prohibited consideration. But in weighing the different relevant considerations in such a case, courts must inevitably enquire: did one party to the transaction make his promise in exchange or part exchange of promise of the other "not to prosecute or continue prosecuting"? As Lord Atkin observed in Bhowanipur Banking Corporation, Ltd. vs Durgesh Nandini Desi(1), "In all criminal cases reparation where possible is the duty of the offender, and is to be encouraged. It would be a public mischief if on reparation (1) (1942)I.L.R. I Cal. 1. 750 being made or promised by the offender or his friends or relatives mercy shown by the injured party should be used as a pretext for avoiding the reparation promised". That, however, is not to say that if reparation is made as a consideration for a promise to give up criminal proceedings, it would not amount to an abuse of the right of private prosecution and would not attract the provisions of section 23 of the Act. The main point to remember is that the party challenging the validity of the impugned transaction must show that it was based upon an agreement to stifle prosecution. If it is shown that there was an agreement between the parties that a certain consideration should proceed from the accused person to the complainant in return for the promise of the complainant to discontinue the criminal proceedings, that clearly is a transaction which is opposed to public policy (vide V. Narasimha Raju vs V. Gurumurthy Raju(1), Maharaja Srish Chandra Nandy vs Supravat Chandra(2), Sudhindra Kumar Ray Chaudhuri vs Ganesh Chandra Ganguli(3); and Kamini Kumar Basu, vs Birendra Nath Basu(4). What then are the facts in this case on which the plaintiffs seek to challenge the correctness of the conclusion of the High Court that the impugned transactions are not invalid? Dr. Seyid Muhammed for the plaintiffs has urged that in dealing with the present dispute between the parties, it is essential to remember that the complaint filed by the Bank against defendants 2 & 3 is found to be not a bonafide complaint and that, according to him, shows the true complexion of the impugned transactions. It is true that the trial Court has found that the complaint made by the Bank was not bonafide and the High Court has not in terms reversed that finding because the High Court disbelieved the direct evidence led by the plaintiffs and held that the agreement alleged by them was not proved. Dr. Seyid Muhammed, therefore, contends that there is a finding recorded by the trial Court which has not been reversed in appeal, and so, we should deal with the main point in the light of this finding. If we had been satisfied that the complaint filed by the Bank was deliberately and dishonestly filed, that no doubt would have assisted the plaintiffs to a very large extent; but after carefully considering the material evidence on this point, we are satisfied that the trial Court was in error in coming to the conclusion that the Bank had filed the complaint malafide. The complaint in terms made three material allegations. It alleged that though the goods pledged by defendants 2 and 3 were of a very low value, they were (1) ; (3) 1939 I.L.R. I Cal. (2) A.I.R. 1940 Cal. (4) A.I.R. 1930 P.C. 100. 751 entered in the godown and in the relevant books as being worth a much larger amount. It also alleged that the goods, though of a cheap quality, were described as a very superior quality; and it also said that substantial part of the goods pledged had been removed from the godowns for the purpose of causing loss to the Bank and for making unlawful profit. This complaint was filed against defendants 2 and 3 and plaintiffs 1 and 2, and another son Ouseph Poulo who is not a party to the present litigation. In regard to this last allegation of theft, the complaint also averred that the key of the godown used to be with the agent of the Bank at Alwaye and the said agent had absconded. The complaint mentioned that the lorry in which the goods were removed bore the registration No. 2923 and it belonged to the Qunani Motor Service. When the Secretary of the Bank gave evidence he stated that on an enquiry being made on the spot, it was learnt that the goods had been removed in the particular lorry; but, later, no evidence was forthcoming to support that report. He, however, adhered to the case of the Bank that the goods which were found in the godown were hopelessly inadequate to serve as a security for the advance made to defendants 2 and 3. The argument is that the allegation as to theft was dishonesty made by the Bank in its complaint in order to apply coercive pressure against defendants 2 and 3 and the members of their family. Prima facie, this argument does appear to be attractive, and if it had been sustained, it might have helped the plaintiffs a good deal. There is, however, clear evidence on the record which negatives this contention. As we have already seen, a receipt was passed in favour of the Bank surrendering the goods which were found in the godown to the Bank and these goods have been priced at Rs. 10,000/ . It is common ground that the goods which were pledged with the Bank were intended to serve as a security for as much as Rs. 80,000 and odd; and so, there can be no doubt whatever that the goods found did not satisfy that requirement. The number of bags which were mentioned in the receipt its 534; that again does not represent the total bags of goods pledged with the Bank. So, it is absolutely clear that the Bank realised on inspection of the godown that the security offered was wholly in adequate and it may well be that on the spot some people reported that the pledged goods had been removed. That is why the Bank stated all the material facts and alleged that either the substantial part of the goods which had been pledged had been removed, or the goods which had been pledged were not at all enough to cover the amount advanced. In any case, the agent of the Bank may have colluded with the debtors. Now, in the view of the receipt passed by the debtors and the members of their family in favour of the Bank in which the value 752 of the goods found in the godown has been determined at Rs. 10,000/ , it would be unreasonable to suggest that the complaint made by the Bank was not bonafide. Besides, in dealing with this dispute, it is essential to remember that defendants 2 and 3 have not entered the wit ness box at all. They have left it to their father, mother, brothers and sister in law to fight this litigation. At every stage of the proceedings in both the suits, we come across points of dispute on which defendants 2 and 3 alone could have given evidence. Did they pledge goods worth the amount advanced to them? If yes, did the Agent remove them, or were the goods which were originally pledged not of enough value and by collusion with the Agent, representation was made and accepted that they were valuable? On all these matters, it was necessary that defendants 2 and 3 should have taken the oath to support the case made by the plaintiffs when they challenged the validity of the transaction in question. The High Court has seriously commented on the fact that defendants 2 and 3 have deliberately avoided to face the witness box. In our opinion, in the circumstances of this case, this comment is fully justified. There is another piece of evidence which is equally material and which is in favour of the Bank and that evidence relater, to the subsequent conduct of defendants 2 and 3. We have already noticed that a motor car belonging to one of the debtors was sold to the Bank for Rs. 5,0001 and taken back on hire purchase agreement. Indeed, this hire purchase agreement is a part of the transaction which settled the dispute between the parties. It appears that the debtors failed to pay the instalments under the hire purchase agreement and that led to a suit by the Bank. In this suit, the debtors filed an elaborate written statement containing 21 paragraphs; but we do not see, any allegation that the hire purchase agreement was a part of a transaction which was invalid and as such, the claim made by the Bank was not sustainable. In fact, this suit was decreed in favour of the Bank. The conduct of defendants 2 and 3 in not raising a plea against the validity of the hire purchase agreement is not without significance. Similarly, it appears that after the impugned transaction took place between the parties, defendants 2 and 3 applied to the Bank for further advance on the 11th April, 1947 and Mr. Ramakrishna Nair who is the principal witness for the plaintiffs in the present litigation and who was the Legal Adviser of the Bank, Supported the debtor 's request for advance. This request was, however, turned down and it is obvious that the failure of the Bank to accommodate the debtors ultimately led to the present plea that the transactions in question are 753 invalid. Therefore, we are satisfied that the subsequent conduct of defendants 2 and 3 clearly shows that they are not prepared to take the risk of facing cross examination and that is the reason that they have left it to their relatives to fight the present litigation. It is in the light of this background that we have to consi der the oral evidence in the case. The main witnesses on whose testimony Dr. Seyid Muhammed has relied are Mr. Nair P.W. I and Mr. Pillai P.W. 3. Mr. Nair is a practising lawyer and was at the relevant time the Municipal Chairman of Alwaye, whereas Mr. Pillai was a Municipal Councillor at that time. According to Mr. Nair, he took part in the execution of the relevant documents and advised the Bank. He stated that the documents were so executed for settling the criminal case. He also added that he told defendants 2 and 3 that if the mortgage deed and the agreement were got executed, the criminal case could be dropped and his explanation was that he made that statement because the Managing Director and the Bank 's Secretary Joseph had told him to that effect. It appears that for assisting the Bank in filing the criminal complaint, this lawyer had claimed Rs. 5001 , but the Bank, paid him only Rs. 200/ . That was one reason why he was dissatisfied. It also appears that he recommended to the Bank to give a loan to some persons including defendants 2 and 3 and his recommendation letters were ignored by the Bank. That war, another reason why he was not feeling happy with the Bank. The High Court has taken the view that the statements made by this witness cannot be regarded as reliable or trustworthy; and we are not prepared to hold that the view taken by the High Court is so erroneous that we should reverse it. In any case, reading the evidence of this witness as a whole, we would be reluctant to come to the conclusion that there was an agreement between the Bank and. defendants 2 and 3 at the relevant time which would attract the provisions of section 23 of the Act. Our reluctance is based on the somewhat unsatisfactory character of the evidence given by this witness as well as on the fact that defendants 2 and 3 who could have given evidence on this point have not stepped. into the witness box. The onus to prove the illegal character of the transactions was obviously on the plaintiffs and their failure to examine defendants 2 and 3 must largely contributed to the final decision on the issue. Mr. Pillai who is the other witness on whose evidence the, plaintiffs rely has been characterised by the High Court as untrustworthy; but the infirmity in the evidence of this witness, is that his evidence does not clearly or expressly lead to the conclusion that there was an agreement between the parties 754 that the document should be executed by the debtors in con sideration for the Bank withdrawing the criminal proceedings. The answers which he gave are somewhat vague and indefinite, and it would be unsafe to make the said answers the basis of a definite finding against the Bank. The last witness on whose evidence Dr. Seyid Muhammed has relied is plaintiff No. 1, the father, P.W. 7. His evidence is obviously interested and the fact that he has taken upon himself to speak to a transaction when defendants 2 and 3 who were directly concerned in the transaction did not come to give evidence, considerably detracts from the value of his statements. Therefore, having carefully considered the evidence in the light of criticism made by the High Court, we are not prepared to accept Dr. Seyid Muhammad 's argument that he has made out a case for reversing the conclusion of the High Court. In this connection, we ought to mention another point which is not irrelevant. The evidence given by the Secretary of the Bank, Joseph, shows that soon after the godown was inspected and before the complaint was filed, defendants 2 and 3 offered to the Bank to make up for the deficiency in the value of the pledged goods. They appealed to the Bank that the discovery made by the bank on inspection of the godown should not be disclosed to anybody and that they would immediately furnish sufficient additional security. In order to carry out this promise, they in fact delivered to the Bank certain documents of title in respect of the property which was ultimately mortgaged to the Bank; but all the documents of title were not handed over and that is where the matter stood when the complaint war, filed. Later, the two impugned documents were executed and the complaint was withdrawn. The point on which Mr. Desai for the Bank has relied is that the evidence of the Secretary shows that an agreement to furnish additional security had been reached between defendants 2 and 3 on the one hand and the Bank on the other even before the complaint was filed, and so, it would be unreasonable to suggest merely from the sequence of subsequent events that the impugned documents were executed with the object, and for the consideration, of stifling the criminal prosecution. Mr. Desai argues, and we think rightly, that where the validity of an agreement is impeached on the ground that it is opposed to public policy under section 23 of the Act, the party setting up the plea must be called upon to prove that plea by clear and satisfactory evidence. Reliance on a mere sequence of events may tend to obliterate the real difference between the motive for the agreement and the consideration for it. Did the parties offer to give security and execute the documents in consideration for the withdrawal of the criminal complaint by the Bank? that is the question which has to be decided in the present appeals, 755 and in proving their case, the plaintiffs are expected to lead satisfactory evidence; and in our opinion, the High Court is,, on the whole, right when it came to the conclusion, that the evidence led by the plaintiffs is, far from satisfactory. Therefore, we are satisfied that the view taken by the High Court is right and cannot be reversed. The result is, the appeals fail and are dismissed with costs( one set of hearing fees. The appellants have been allowed to file their appeals in forma pauperis, and so, we direct that they should pay court fees which they would have had to pay if they had not been allowed to appeal as paupers. Appeals dismissed.

IN-Abs

Two of the defendants in the two suits out of which the present appeals arose borrowed a sum of Rs. 80,024 4 9 from the respondent Bank in course of their business by pledging their goods. The Bank discovered that there was shortage in the goods deposited and through its Secretary lodged a com plaint with the police that the said defendants, their father and brother had in collusion with the local agent of the Bank fraudulently removed part of the goods or, in the alternative, had made a grossly inadequate deposit to cheat the Bank. The Police registered the case and started investigation. The parties, thereafter settled their differences by a transaction which consisted, among others, of a hypothecation bond for Rs. 30,000/covering immovable property and a Karar for Rs. 35,000/ , which were executed in favour of the Bank by the parent of the said defendants, by the said defendants themselves and their brother and his wife. On the Secretary of the Bank stating to the Police that the Bank 's claim had been settled and any further action would be unnecessary the criminal proceeding was dropped. Thereafter the said relatives of ;the two defendants who had executed the hypothecation bond and the Karar brought a suit for the cancellation of the said documents on the ground that they had been executed to stifle the criminal prosecution and were as such unenforceable under section 23 of the Indian Contract Act. The Bank sued for recovery of the amount due on the Karar which was resisted on the same ground that the document was unenforceable under section 23 of the Contract Act. The said defendant debtors did not examine themselves. They did not raise the plea of unenforceability in respect of a hire purchase agreement which formed a part of the transaction in question and on which the Bank brought a suit against them and got a decree. After the said settlement these defendants applied for further loan from the Bank. There was evidence to show that an agreement to furnish additional security had been reached between the said defendants and the Bank even before the complaint was filed. The trial Court held that both ;the documents fell within the mischief of section 23 of the Contract Act and decreed the first suit and dismissed the second. The High Court on appeal took the contrary view and reversed the decision of the trial Court accordingly. The plaintiffs in the first suit appealed to this Court. Held: It was well settled that agreements made with the sole purpose of stifling prosecution were opposed to public policy since the consideration which supported such agreements was itself against public policy and could not, therefore, be 746 enforced. In India however this doctrine was not applicable either to compoundable offences or to offences which could be compounded with the leave of the Court. The onus was strictly on the party that impugned the trans action to prove that it was based on an agreement to stifle the prosecution. It must be able to show that on a certain consideration proceeding from it the complainant in return promised to discontinue the criminal proceeding and then alone the transaction would be one against public policy. V. Narasimha Raju vs V. Gurumurthy Raju, [1963] 3 S.C.R. 687, Maharaja Srish Chandra Nandy vs Sapravat Chandra A.I.R. , Sudhindra Kumar Ray Chaudhuri vs Ganesh Chandra Ganguli, 1939 I.L. R. I Cal. 241 and Kamini Kumar Basu vs Birendra Nath Basu, A.I.R. 1930 P.C. 100, referred to. Bhowanipur Banking Corporation Ltd. vs Duresh Nandini. Dasi, Cal. 1, considered. But in judging a particular agreement distinction must be made between the motive for the agreement and the considera tion for it and subsequent events should not be allowed to confuse the issue. It was clear in the present case that the plaintiffs had failed to discharge the onus that lay on them and the decision of the High Court was, therefore, correct.

Appeals Nos. 1043 1044 of 1963. Appeals by special leave from the judgment and decree dated April 8, 1963 of the Bombay High Court in Appeals Nos. 10 and 11 of 1962. S.T. Desai, V. N. Thakar, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant (in both the appeals). G.S. Pathak, 0. P. Malhotra and 1. N. Shroff, for respon dent No. 1 (in both the appeals). V.J. Merchant, for respondents Nos. 2 and 4 to 7 (in C.A. No. 1043/1963). April 24, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. These appeals, by special leave, arise in the following circumstances: section N. Asnani owned Chevrolet Car bearing registered No. AA 4431. He insured it with the New Asiatic Insurance Co. Ltd., hereinafter referred to as the company, under a policy dated November 26, 1957. Asnani permitted Pessumal Dhanamal Aswani, hereinafter called Pessumal, to drive that car. When Pessumal was driving the car with Daooji Radhamohan Meherotra and Murli Dholandas in the car, the car met with an accident as a result of which Meherotra died and Murli received injuries. Pessumal himself owned a Pontiac car which had been insured with the Indian Trade & General Insurance Co. Ltd., under policy No. Bombay P.C. 42733 2, dated November 18, 1957. The heirs of Meherotra instituted suit no.70 of 1959 against Pessumal for the recovery of Rs. 2,50,000/ by way of damages with interest. Murli instituted suit No. 71 of 1959 against Pessumal to recover Rs. 1,50,000/ by way of damages. Notices under section 96(2) of the (Act IV of 1939), hereinafter called the Act, were issued to the New Asiatic Insurance Co, Ltd. The notice was given to the company as the defendant 's liability to third parties had been. insured with it under its policy No. MV/4564. The company then took out Chamber Summons and it was contended that notice under section 96(2) of the Act was bad in law and should be set aside and that the company was not liable to satisfy any 869 judgment which might be passed in the suit against the defendant. Alternatively, it was prayed that the company be added as a party defendant to the suit and/or be authorised to defend the suit in the name of the defendant. Tarkunde J., held the notice issued to the company in the suits under section 96(2) of , the Act, to be bad in law and, accordingly, set them aside. The plaintiffs then filed Letters Patent Appeals which were allowed and the Chamber Summonses were dismissed. It was directed that the trial Judge would hear the alternative prayers in the Chamber Summonses and make the necessary orders, It is against this order in each of the appeals that the company has preferred these appeals, after obtaining special leave. To appreciate the contentions of the parties in these ap peals, reference may be made to certain provisions in the two policies. The various provisions in the two policies are identical in matters affecting the question for determination before us. We, therefore, set out the relevant provisions from the policy issued by the company and would refer to differences, if any, at the proper place. The policy is described as 'Private Car (Comprehensive Policy) '. The policy issued by the other company does not so describe it, but it is also a Comprehensive Policy as the premium charged is on that basis. The policy insures, under Section I against loss or damage, under Section II against liability to third parties and under Section III against liability for medical expenses. Thereafter, follow the general exceptions and conditions. Para 1 of Section II indemnifies the insured, i.e. Asnani who effected the policy, in the event of accident caused by or arising out of the use of the motor car, against all sums which he may become legally liable to pay in respect of death or of bodily injury to any person. Paras 3 and 4, generally known as 'Other drivers ' 'Extension Clause ' and 'Other Vehicles Extension Clause ' respectively, are material and are set out in full: "3. In terms of and subject to the limitations of the indemnity which is granted by this section to the Insured the Company will indemnify any driver who is driving the Motor Car on the Insured 's order or with his permission provided that such Driver: (a)is not entitled to indemnity under any other policy. (b)shall as though he were the Insured observe, fulfil and be subject to the terms, exceptions and conditions of the policy in so far as they can apply. 870 4. In terms of and subject to the limitations of the indemnity which is granted by this Section in connection with the Motor Car the Company will indemnity which is granted by this Section in conPrivate Motor Car (but not a Motor Cycle) not belonging to him and not hired to him under a Hire Purchase Agreement". Under the heading 'Avoidance of certain terms and right of recovery ', the policy states: "Nothing in this Policy or any endorsement hereon shall affect the right of any person indemnified by this Policy or any other person to recover an amount under or by virtue of the provisions of the , section 96. But the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the said provisions. " Condition 6 reads: "6. If at the time any claim arises under this Policy there is any other existing insurance covering the same loss damage or liability the Company shall not be liable to pay or contribute more than its rateable proportion of any loss damage compensation costs or expense. Provided always that nothing in this Condition shall impose on the Company any liability from which but for this Condition it would have been relieved under proviso (a) of Section II 3 of this Policy". The Schedule to the policy mentions the limitations as to use and under heading 'Driver ' notes (a)Any person: (b)The insured may also drive a motor car not belonging to him and not hired to him under a Hire Purchase Agreement. Provided that the person driving holds a licence to drive the Motor Car or has held and is not disqualified for holding or obtaining such a licence". At the end of the Schedule is an important notice which reads: "The insured is not indemnified if the Vehicle is used or driven otherwise than in accordance with this Schedule. Any payment made by the Company by reason of wider terms appearing in the Certificate in order to comply with is recoverable from the Insured. See the clause headed 'Avoidance of certain terms and right of recovery '." 871 The contention for the appellant is that in view of para 4 of Pessumal 's policy issued by the other company, Pessumal was indemnified against any liability incurred by him whilst personally driving a private motor car not belonging to him and not hired to him under a Hire Purchase Agreement, and that, therefore, lie was not included among the persons indemnified in para 3 of the policy it had issued to Asnani on account of proviso (a) to para 3 which reads: "provided that such driver is not entitled to indemnity under any other policy". This contention is met by the respondent on the ground that this proviso is not a limitation on the class of persons indemnified under para 3, that class being the drivers driving the Chevrolet car insured under the policy, but merely amounted to a condition affecting the liability of the company vis a vis the driver who was entitled to indemnity under any other policy. The question thus reduces itself to the determination of whether Pessumal comes within the persons indemnified in para 3 of the policy issued by the company. We may now set out the relevant provisions of the Act which have a bearing on the contention between the parties. Chapter VIII of the Act provides for insurance of motor vehicles against third party risks. Section 93 defines the expressions 'authorised insured ', 'certificate of insurance ' and reciprocating country '. The relevant portions of the various sections are: "94. No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter. Explanation A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy as is required by this subsection, shall not be deemed to act in contravention of the sub section unless he knows or has reason to believe that there is no such policy in force. (2) Sub section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise. (3) The appropriate Government may. by order, exempt from the operation of sub section (1) any 872 vehicle owned by any of the following authorities. namely: Provided that no such order shall be made in relation to any such authority unless a fund has been established and is maintained by that authority in accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties. (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which (a) is issued by a person who is an authorised insurer or by a co operative society allowed under section 108 to transact the business of an insurer, and (b) insures the person or classes of person specified in the policy to the extent specified in sub section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place: (4) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases, (5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person. If, after a certificate of insurance has been issued under subsection (4) of section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability 873 as is required to be covered by a policy under clause (b) of sub section (1) of section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be" entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) No sum shall be payable by an insurer under sub section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely (3)Where a certificate of insurance has been issued under sub section (4) of section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of subsection (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub section (1) of section 95, be of no effect : Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub section shall be recoverable by the insurer from that person. (4) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under 874 the policy in respect of that liability, the insure shall be entitled to recover the excess from that person (6)No insurer to whom the notice referred to in subsection (2) or sub section (2A) has been given shall be entitled to avoid his liability to any person en titled to the benefit of any such judgment as is referred to in sub section (1) or sub section (2A) otherwise than in the manner provided for in sub section (2), or in the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, as the case may be". Chapter VIII of the Act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parties who suffer on account of the user of the motor vehicle would be also to get damages for injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment. Section 94 prohibits, as a matter of necessity, for insu rance against third party risk, the use of a motor vehicle by any person unless there exists a policy of insurance in relation to the use of the vehicle by that particular person and the policy of insurance complies with the requirements of Chapter VIII. The policy must therefore provide insurance against any liability to third party incurred by that person when using that vehicle. The policy should therefore be with respect to that particular vehicle. It may, however, mention the person specifically or generally by specifying the class to which that person may belong, as it may not be possible to name specifically all the persons who may have to use the vehicle with the permission of the person owning the vehicle and effecting the policy of insurance. The policy of insurance contemplated by section 94 therefore must be a policy by which a particular car is insured. Section 95 lays down the requirements which are to be complied with by the policy of insurance issued in relation to the use of a particular vehicle. They are: (1) the policy must specify the person or classes of person who are insured with respect to their liability to third parties; (2) the policy must specify the extent of liability which must extend to the extent specified in sub section (2); and (3) the liability which be incurred by the specified person or classes of person in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle insured in a public place. 875 Sub section (4) of section 95 requires the issue of a certificate of insurance, in the prescribed form, to the person who effects the, policy. The form of the certificate prescribed by the Motor Vehicles Third Party Insurance Rules, 1946, requires the specification of persons or classes of persons entitled to drive. ' The authorised insurer is also to certify in the certificate that the policy to which the certificate relates, as well as the certificate of insurance, are issued in accordance with the provisions of Chapter VIII of the Act. Sub section (5) of section 95 makes the insurer liable to in demnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person. If the policy covers the insured for his liability to third parties, the insurer is bound to indemnify the person or classes of person specified in the policy The same is the effect of sub section (1) of section 96 which provides that the insurer is bound to pay to the person entitled to the benefit of a decree he obtains in respect of any liability covered by the terms of the policy against any person insured by the policy irrespective of the fact whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy. This means that once the insurer has issued a certificate of insurance in accordance with sub section (4) of section 95 he has to satisfy any decree which a person receiving injuries from the use of the vehicle insured obtains against any person insured by the policy. He is however liable to satisfy the decree only when he has been served with a notice under sub section (2) of section 96 about the proceedings in which the judgment was delivered. It is for this reason that a notice under sub section (2) of section 96 was issued to the company and it is on account of the consequential liability in case the plaintiffs ' claim is decreed against Pessumal that the appellant challenged the correctness of the allegation that Pessumal was a person insured under the policy issued by it in respect of the Chevrolet car. It follows from a consideration of these various provisions of the Act and this is not really disputed for the appellant that if under the terms of the policy Pessumal can be said to be the Person insured under para 3, the company would be liable to satisfy the decree if any passed against Pessumal. The whole question then is whether Pesumal comes within the terms of para 3 of Section II of the policy. Under this paragraph, the company indemnifies any person who is driving the motor car on the insured 's order or with his permission. Pessumal was driving the car with the permission of Asnani who had effected the Policy and there fore the company undertook to indemnify Pessum 'al in accor dance with this provision of para 3. The appellant, however. 876 contends that this provision should not be read as defining by itself the class of persons insured under it, in view of the further classification of this class of drivers by proviso (a). It is contended that only such drivers were indemnified as were not entitled to indemnity under any other policy and thus drivers who were entitled to indemnity under any other policy were taken out of the general class of drivers driving the car on the insured 's order or with his permission. We do not agree with this contention. The proviso is not really a classification of drivers but is a restriction on the right of the driver to recover any dam ages be had to pay, from the company. The driver who can ,get indemnity from any other company under any other policy is, under this contractual term, not to get indemnity from the company. The proviso thus, affects the question of indemnity between a particular driver and the company and has nothing to do with the liability which the driver has incurred to the third party for the injuries caused to it and against which liability was provided by section 94 of the Act and was affected by the policy issued by the company. The company, by agreeing with the person who affects the policy, to insure him against liability to third parties, takes upon itself the entire liability of the person effecting the insurance. It is open to the insurer not to extend this idemnity to the insured to other persons but if it extends it to other persons, it cannot restrict it vis a vis the right of the third party entitled to damages, to recover them from the insured, a right which is not disputed. A proviso meant to exempt certain persons from the general classification Will have to be related to considerations affecting it and is not to be related to such classified persons right to indemnity from any other insurer. In this connection reference may be made to proviso (b) which cannot in any case be a proviso relating to the classification of persons to be indemnified. It provides that tie person indemnified under para 3 will observe, fulfil and be subject to the terms, exceptions and conditions of the policy in so far as they can apply to him. We are further of opinion that clause (4) of Section II of Pessumal 's policy with the other company does not make that policy to be a policy within the meaning of section 94 of the Act in relation to the Chevrolet car by whose user Pessumal incurred liabilities sought to be established in the two suits. The paragraph indemnifies the insured, i.e., Pessumal, whilst personally driving any private motor car. It does not indemnify him against the liability incurred when driving any particular car and therefore, in view of what we have said earlier, Pessumal 's policy cannot be a policy of insurance in relation to the Chevro. let car as required by section 94 of the Act. Such a policy and any indemnity under it cannot be used for sub classifying drivers specified in the policy 'of the company. 877 The Act contemplates the possibility of the policy of in surance undertaking liability to third parties providing such a contract between the insurer and the insured, that is, the person who effected the policy, as would make the company entitled to recover the whole or part of the amount it has paid to the third party from the insured. The insurer thus acts as security for the third party with respect to its realising damages for the ' injuries suffered. but vis a vis the insured, the company does not undertake that liability or undertakes it to a limited extent. It is in view of such a possibility that various conditions are laid down in the policy. Such conditions, however, are effective only between the insured and the company, and have to be ignored when considering the liability of the company to third parties. This is mentioned prominently in the policy itself and is mentioned under the heading 'Avoidance of certain terms and rights of recovery ', as well as in the form of 'An Important Notice ' in the Schedule to the policy. The avoidance clause says that nothing in the policy or any endorsement thereon shall affect the right of any person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Act. It also provides that the insured will repay to the company all sums paid by it which the company would not have been liable to pay but for the said provisions of the Act. The 'Important Notice ' mentions that any payment made by the company by reason of wider .terms appearing in the certificate in order to comply with the Act is recoverable from the insured, and refers to the avoidance clause. Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis a vis the third parties, in view of the provi sions of the Act. We are of opinion that once the company had undertaken liability to third parties incurred by the per sons specified in the policy, the third parties ' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. Considering this aspect of the terms of the policy, it is reasonable to conclude that proviso (a) of para 3 of Section II is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the way of third parties ' claim against the company on account of its claim against a person specified in para 3 as one to whom cover of the policy was extended. It has been contended for the appellant that it was not incumbent on the owner of a car to take out a policy of in surance indemnifying himself or any person permitted to drive the car and that if he does not insure the car and uses it he runs the risk of prosecution under section 125 of the Act. This is 878 true, but has no relevant effect on the question for decision before us. Asnani did insure his car with respect to liability against third persons. We have to see whether the company, on account of undertaking that liability can be said to have insured Pessumal on account of his driving the car with the permission of Asnani. The same may be said about the other contention for the appellant that there is nothing in the Act which makes it compulsory for an insurer to insist that the owner of the car takes out a policy in the widest terms possible covering any person who drives the car with his permission. The company did agree under the policy to indemnify drivers who drove the car with the insured 's permission. The question is whether that undertaking covers Pessumal. Lastly, we may mention that the question about tie proper stage at which the question raised by the company in the Chamber notice is to be decided, came up for consideration at the hearing. We however do not propose to express any opinion on that point in this case. We are of opinion that the High Court rightly held that the company had insured Pessumal in view of para 3 of Section II of the policy and that it comes within the expression 'insurer ' in section 96 of the Act. We therefore dismiss the appeals with costs of hearing one set. Appeals dismissed.

IN-Abs

A had insured his car with the appellant under a comprehen sive policy. A permitted B, (who had insured his own car with another company) to drive his car and while B was driving the car it met with an accident. As a result of the accident died and D sustained serious injuries. Both C and D were in the car. The heirs of C and D filed suits for damages. Notices under section 96(2) of the were issued to the appellant who thereupon took out a Chamber Summons contending that the notice was bad in law. Alternatively it was contended that the appellant be permitted to defend the suit in the name of the defendant. The Court held that the notices were bad. The plaintiffs filed Letters Patent appeals with success and the Chamber Summons were dismissed and the trial Judge was directed to hear the alternative prayer. Against this Order the present appeal was filed with special leave. The contention of the appellant was that in view of para graph 4 of B 's own policy issued by the other company which indemnified B against any liability incurred by him whilst personally driving a private car not belonging to him or hired by him. under a Hire Purchase agreement, B was not included among persons indemnified in para. 3 of A 's policy which the appellant had issued on account of proviso (a) to the said para. The respondent contended that this proviso is not a limitation on the class of persons indemnified under para. 3 that class being the drivers driving A 's car insured under the policy but merely amounted to a condition affecting the liability of the company vis a vis the driver who was entitled to be indemnified under any other policy. Held: (i) From a consideration of sections 93, 94, 95 and 96 of the it follows that if under the terms of the policy B can be said to be the person insured under Para. 3 ,of the policy, the company would be liable to satisfy the decree if any passed against B. (ii)The appellant by agreeing with the person who effects the policy, to insure him against liability to third parties, takes upon itself the entire liability of the person effecting the insurance. It is open to the insurer not to extend the indemnity to the insured to other persons but if it extends it to other persons, it cannot restrict it vis a, vis the right of the third party ,entitled to damages to recover them from the insured, a right which is not disputed. A proviso meant to exempt certain persons from the general classification will have to be related to considerations affecting it and is not to be related to such ,classified person 's right to indemnity from any other insurer. (iii)The cl. (4) of section II of B 's policy with the other company does not make that policy to be a policy within the meaning of L/P(D))1SCI 28(a) 368 s.94 of the Act in relation to A 's car by whose user B incurred liabilities sought to be established in the two suits. Such a policy and any indemnity under it cannot be used for sub classifying drivers specified in the policy issued to A by the appellant. (iv)The High Court was correct in holding that the ap pellant had insured B in view of para. 3 of section II of that policy and that it comes within the expression insurer in section 96 of the Act.

Appeal No. 145 of 1963. Appeal from the judgment and order dated November 16. 1959, of the Madras High Court in Case Reference No. 82 of 1956. section K. Kapur and R. N. Sachthey, for the appellant. section Swaminathan and R. Gopalakrishnan, for the respondent. 847 section T. Desai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the intervenor. April 24, 1964. The judgment Of SUBBA RAo and SIKRI In, JJ. was delivered by SIKRI J. SHAH J. delivered a dissenting Opinion. SIKRI, J. This is an appeal by the Commissioner of Income Tax, Madras, against the judgment of the High Court, dated November 16, 1959, on a certificate granted by the High Court under section 66A(2) of the Indian Income Tax Act, 1922. The respondent, Mir Mohd. Ali, hereinafter referred to as the assessee, is a bus owner and transport operator at Vel lore, North Arcot District. He had a fleet of buses, and during the year of account ending with March 31, 1950 (relevant to assessment year 1950 51) he replaced the petrol engines in two of his buses (MDJ 583 and MDJ 723) by new Diesel engines, incurring an expenditure of Rs. 18,544/in this connection. Before the Income Tax Officer, apart from claiming normal depreciation under the first Paragraph of cl. (vi) of section 10(2), he also claimed depreciation under the second paragraph of cl. (vi) and cl. (via) of the Indian Income Tax Act, 1922. The Income Tax Officer only allowed 25 per cent depreciation under the first paragraph of cl. The assessee appealed unsuccessfully to the Appellate Assistant Commissioner on this point. There were other points involved in the appeal but as we are not concerned with them in this appeal, they are not being mentioned. On further appeal, the Appellate Tribunal held that "the assessee is not entitled to extra depreciation under section 10(2) (vi) or section 10(2)(via) because however important the engine might be for running of a motor, it is after all part of an equipment and it cannot by itself become "machinery" for the purpose of claiming extra depreciation, as envisaged in these sub sections. We have to hold that the "installation of the new engines is only a capital addition, for the above reasons the assessee was rightly refused the extra depreciation he claims". The Income Tax Appellate Tribunal, on the application of the assessee, referred the following question to the High Court: "Whether extra depreciation is admissible under the provisions of section 10(2)(via) of the Income Tax Act, in respect of a diesel oil engine fitted to a motor vehicle in replacement of the existing engine. " We may mention that another question regarding disallowance of interest had also been referred to the High Court but we are not concerned with that in the present appeal. 848 As the High Court felt that there had been an accidental slip in framing the question, it amended the question as and the amended question reads: "Whether extra depreciation is admissible under the provisions of section 10(2)(vi) and section 10(2)(via) of the Income Tax Act in respect of the diesel oil engines fitted to the motor vehicles in replacement of the existing engines". The High Court answered this question in the affirmative i.e., in favour of the assessee. The Commissioner of Income Tax, on obtaining a certificate under section 66A(2) of the Income Tax Act, has filed this appeal. Before attempting to answer the question, it is necessary to set out the relevant provisions of the Income Tax Act. The relevant provisions, as in force at the relevant time, were: section 10(2) Such profits or gains shall be computed after making the following allowances, namely (iv)in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (v) in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof; (vi)in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of cases be prescribed; and where the buildings have been newly erected, or the machinery or plant being new has been installed, after the 31st day of March, 1945, a further sum (which shall however not be deductible in determining the written down value for the purposes of this clause) in respect of the year of erection or installation equivalent, (a) in the case of buildings the erection of which is begun and completed between the 1st day 849 of April 1946 and the 31st day of March 1952 (both dates inclusive), to fifteen per cent of the cost thereof to the assessee; (b) in the case of other buildings, to ten per cent of the cost thereof to the assessee; (c) in the case of machinery or plant, to twenty per cent of the cost thereof to the assessee: Provided that (via) in respect of depreciation of buildings newly erected, or of machinery or plant being new which has been installed, after the 31st day of March, 1948, a further sum (which shall be deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant) in the assessments for such of the five years commencing on the 1st day of April, 1949, and ending with the 31st day of March, 1954: Provided that where, in respect of such machinery or plant, the assessee establishes that the market value of similar machinery or plant on the 31st day of March, 1953, is lower than the original cost, then, subject to the provisions of clause (vi), there shall be made in the assessment for the year commencing next after that date a further allowance (which shall be deductible in determining the written down value) of an amount by which the written down value of the machinery or plant as on that date (without deduction of the initial depreciation admissible in the first year) would have exceeded the corresponding written down value thereof as on the same date if the market price of the machinery or plant had been taken as the actual cost of the assessee; (vii)in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount 850 for which the building, machinery or plant, as the case may be, is actually sold or its scrap value: Provided that (5) In sub section (2) . . `plant ' includes vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the business, profession or vocation. ." The point at issue before us has been considered by three High Courts. The Bombay and Andhra Pradesh High Courts have held against the assessee while in the judgment under appeal, the Madras High Court has held in favour of the assessee. The High Court of Andhra Pradesh, in the case of B. Srikantiah vs Commissioner of Income Tax Andhra Pradesh(1), followed the Bombay case and expressly dissented from the Madras case. In the judgment under appeal (reported as Mr. Mohd. Ali vs Commissioner of Income Tax, Madras(2), the High Court arrived at the conclusion by the following steps: (a)Machinery must be given the same meaning with reference to each of the statutory provisions, in section 10(2)(vi) and section 10(2)(via); (b) A diesel engine is machinery by the test laid down in the case of Corporation of Calcutta vs Chairman, Cossipore and Chitpore Municipality(3); (c) Machinery does not cease to be machinery merely because it has to be used in conjunction with one or more machines. Nor does it cease to be machinery merely because it is, for instance, installed as part of a manufacturing or industrial plant; (d) The statutory provision for depreciation is in the alternative. Whether it is plant or whether it is machinery without its being itself a plant, the assessee is entitled to claim the statutory allowance for depreciation. The question then is: Which is the correct view? First, the history of para two of cl. (vi) may be noticed. The object of the Income Tax (Amendment) Act, 1946 (VIII of 1946), which first inserted the provisions regarding extra depreciation, was to encourage the modernisation and re habilitation of industry and trade. The Second World War (2) (3) 190. 851 had ended recently and during the long war machinery and plant had not only not been replaced or modernised but had been subjected to excessive wear and tear and needed rehabilitation. During the War, there had also been great,,, advance in technology. It is then pertinent to point out that the word 'machinery ' occurs in cls. (iv), (v), (vi) and (via) of section 10(2). Prima facie the same meaning must be given to the word ,machinery ' in all these clauses. If a machine is machinery for purposes of giving an allowance in respect of insurance or for repairs or in respect of normal depreciation or for the purpose of para one of cl. (vi), it must also be machinery for the purpose of second para of cl. (vi) and cl. (via). But it is said that the scheme of para two of cl. (vi) and cl. (via) is different from that of para one of cl. (vi) inasmuch as before it can qualify for extra depreciation, the machinery must be new and must be installed, and the rate of depreciation is provided in the Act itself. Keeping in view this scheme, it is urged that the word 'machinery ' must be given a restricted meaning in para two of cl. (vi) and cl. (via), and the meaning suggested is that it must be a "self contained unit capable of being put to use in the business, profession or vocation for the benefit of which it was installed". That this is the true meaning, it is further said, is evidenced by the definition of the word 'plant ' in section 10(5). It is argued that this definition indicates that for purposes of para two of cl. (vi) and cl. (via), 'plant ', including a vehicle should be viewed as a unit and component parts thereof are excluded from its purview, and 'machinery ' should also be considered in the same light. Let us now examine these contentions. First, we do not think that there is anything in the scheme of the second para ,of cl. (vi) and cl. (via) that throws any light on the construction of the word 'machinery ' in these clauses. It is true that the machinery must be new and it must be installed and the rate of allowance is prescribed in the Act itself. But the requirement that the machinery must be new does not tell us what is 'machinery '. Assuming for the present that a diesel engine is machinery, if an assessee buys and instals a secondhand diesel engine, he will not be given the extra allowance under the second para of cl. (vi), and the ground would be that the engine is not new and not that because it is second hand, it is not machinery. Similarly, if it is purchased but not installed, the ground of refusal would be that it has not been installed and not that because it has not been installed it has ceased to be machinery. Suppose a new machinery is purchased but not installed, it would not qualify for extra depreciation on the ground that it has not been 852 installed and not because it has ceased to be machinery due to its non installation. The fact that the rate of depreciation is provided for in the Act has also no bearing on the question of the construction of the word 'machinery '. This fact only indicates that the legislature had made up its mind as to the extent of encouragement to be given to industry and, therefore, it did not consider it necessary to delegate this to the rule making authority. The definition of the word 'plant ' in section 10(5) equally does not throw any light on the meaning of the word 'machinery '. The word 'plant ' is of wide import, but even so it may be argued that vehicles, books, scientific apparatus and surgical equipment are not 'plant ' in all businesses, pro fessions and vocations. The legislature settled this possible controversy, but without throwing any light on the true meaning of the word 'machinery '. What then is the test for determining whether a mechanical contrivance is machinery for the purposes of second para of cl. (vi) and cl. (via)? The Privy Council in the case of Corporation of Calcutta vs Chairman, Cossipore and Chitpore Municipality(1) hazarded the following definition of `machinery ': "The word 'machinery ', when used in ordinary language prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances,. by the combined movement and inter dependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. " They had already observed that the word 'machinery ' must mean more than a collection of ordinary tools. The Privy Council case was not a tax case but prima facie the ordinary meaning of the word 'machinery ' and the word machinery ' is an ordinary and not a technical word must, unless there is something in the context, prevail in the Indian Income Tax Act also. According to the above definition, a diesel engine is clearly 'machinery '. Indeed, r. 8 of the Income Tax Rules treats aero engines separately from aircraft. It is true that this rule cannot be used to interpret the clauses in the Act but it does show that components of an aircraft, which are machinery, can be treated separately. (1) Cal. 190 853 Further, when the assessee purchased the diesel engines, they were not 'plant ' or part of a plant, because they had not been installed in any vehicle. They were, according to the definition given by the Privy Council, machinery. They, were not yet part of a plant, and, according to the Act, 20 ' per cent of the cost thereof was allowable to the assessee. All the conditions required by the Act are satisfied. If we look at the point of time of purchase and installation, what was purchased and installed was machinery. The learned counsel next contended that the assessee is not entitled to extra depreciation because a diesel engine cannot be said to be installed. He urges that the word 'installed ' is wholly inappropriate to cover the fixing of a diesel engine in a motor vehicle. We are of the opinion that there is no force in this contention. As observed by the Bombay High Court in the case of Commissioner of Income Tax vs Saraspur Mills Ltd.(1) the expression 'installed ' did not necessarily mean 'fixed in position ' but was also used in the sense of 'inducted or introduced ' , or to use the language of the Madras High Court in the case of Commissioner of Income Tax, Madras vs Sri Ram Vilas Services (Pvt) Ltd.(2), installed would certainly mean 'to place an apparatus in position for service or use '. We are of the opinion that when an engine is fixed in a vehicle it is installed within the meaning of the expression in cls. (vi) and (via). Accordingly, we hold that the High Court was correct in answering the question referred to it in the affirmative. The appeal, therefore fails and is dismissed with costs. SHAH, J. I am unable to hold that the respondent is entitled to the allowance under section 10(2)(vi) paragraph 2, in respect of the diesel engines claimed by him. Section 10 of the Indian Income tax Act provides that tax shall be payable on the profits and gains of an assessee under the head 'profits and gain of business, profession or vocation". By sub section (2) in the computation of taxable pro fits certain allowances prescribed therein are permissible. We are primarily concerned in this appeal with the initial allowance permissible under the second paragraph of cl. (vi) of sub section But cls. (iv), (v), (vi), (vi)(a) and (vii) are inter related and it may be necessary briefly to refer to those provisions By cl. (iv) allowance for premium paid in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation is admissible. Under cl. (v) an amount paid on account of any current repairs to such buildings, machinery, plant or furniture is (1), ( 2 ) 854 an admissible allowance. Clause (vi) recognises by the first paragraph a right to normal depreciation of a percentage on the prescribed valuation of such buildings. machinery, plant or furniture, which are the property of the assessees. The second paragraph at the material time stood as follows: "and where the buildings have been newly erected, or the machinery or plant being new has been installed, after the 31st day of March, 1945, a further sum (which shall however not be deductible in determining the written down value for the purposes of this clause) in respect of the year of erection or installation equivalent, etc. " Clause (vi)(a) which was inserted by Act 67 of 1949 permit ted a further depreciation allowance In respect of buildings newly erected or of machinery or plant being new which had been erected or installed after March 31, 1948, in not more than five successive assessments, for the financial years next following the previous year in which such buildings were erected, or machinery or plant installed. Clause (vii) permitted as an allowance the difference between the written down value and the sale price or scrap value of such buildings, machinery or plant which had been sold, discarded, demolished or destroyed. All these clauses dealt with allowances in respect of assets of the specified description and used for the purpose of business, profession or vocation. The depreciation allow ance permitted under the first paragraph of cl. (vi) which may be called the normal allowance is in respect of all buildings, machinery, plant and furniture of the assessee used for the purpose of his business. By the second paragraph of cl. (vi) an initial allowance in the year in which buildings have been newly erected or the machinery or plant being new has been installed after March 31, 1945, is allowable. Use of the definite article "the" in the second paragraph indicates that the buildings, machinery or plant referred to in that paragraph must also be used for the purpose of the business, profession or vocation of the assessee. However to qualify for the initial allowance under paragraph two, the buildings must be newly erected or the machinery or plant being new must have been installed, after March 31, 1945. Two rival views are pressed upon us in support of the respective cases of the Commissioner and the assessee as to the meaning of the second paragraph. The Commissioner contends that the buildings, machinery or plant for which the initial allowance is admissible must be a self contained unit capable of being put to use in the business, profession or vocation for the benefit of which it is erected or installed. It is submitted that the second paragraph of cl. (vi) was en 855 acted with the object of giving a fillip to industry which had been starved during the war years of new machinery and building activity. But the buildings, machinery, or plant to qualify for the initial allowances were not intended to be in the nature of replacement, addition, or repair to existing units: they had to be buildings newly erected or machinery or plant being new installed. On behalf of the assessee it was contended that the Legislature has not put any restriction of the nature suggested on behalf of the Commissioner and, therefore, any building or a part thereof newly erected or any new machinery or plant or a part thereof installed,. qualified for the benefit of the initial allowance. The question to be decided is one about the intention of the Legislature. Can it be said that when to an existing building a room even a floor is added, that the additional construction is a building newly erected? In my view, that does not appear to be the intention. Such an addition to an existing structure, becomes a part of the structure, and cannot be said to be a building newly erected. If every alteration or addition in an existing building is covered by the second paragraph of cl. (vi) mere repairs falling within the words of cl. (vi) may also qualify for initial allowance. If a mere addition to a building cannot be regarded as such an erection as is contemplated by the second paragraph of cf. (vi), it would be difficult to hold that the machinery or plant would include part of machinery or plant. Counsel for the assessee concedes that replacement of a petrol engine by a diesel engine in a motor transport vehi cle is not installation of plant. The question is whether it is installation of machine. In my view replacement of a petrol engine by a new diesel engine in a motor car cannot be said to be installation of machinery within the meaning of the relevant clause. To be installed the machinery being new must for the purpose of the business be brought into service as a self contained unit. If the argument of the assessee is sound, every bolt, nut, rod or flywheel which constitute a part of machinery would qualify for the initial allowance and the difference between the allowance for repairs and initial allowance may be obliterated. Counsel for the assessee also did not, as I understood him, contend that replacement of a mere part of machinery was installation of machinery within the meaning of the second paragraph of cl. The Legislature has not given any definition for that expression, and the expression "machinery" is otherwise somewhat difficult to define. The Judicial Committee in Corporation of Calcutta vs Cossipore and Chitpore Municipality(1) when it was called upon to consider whether a tank supported on (1) L. R. 48 I.A. 435. 856 columns, and which could be filled by pumping from a re servoir belonging to the Corporation could be regarded as machinery within the meaning of the Bengal Municipal Act, 1884, observed at p. 445: "If their Lordships were obliged to run the hazard of the attempt (to define machinery) they would be inclined to say that the word 'machinery ' when used in ordinary language, prima facie means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivance, by the combined movement and inter dependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. " But we are not called upon in this case to decide whether a diesel engine is in the abstract machinery: the question is whether a diesel engine, which is used for replacing a pet rol engine, in a vehicle used by a transport operator for the purpose of his business is machinery installed within the meaning of section 10(2)(vi) paragraph 2. Whether "machinery" is some contrivance for supplying motive power to another contrivance which directly produces an article or is a mechanical contrivance which produces or assists in the production of an article, it would be difficult to regard introduction of a mere part, which has no independent use in the business conducted by the assessee, as machinery installed for the purpose of the second paragraph of cl. The Legislature has provided for the normal depreciation by paragraph 1 of cl. (vi) and in respect of newly installed machinery it has provided for the initial allowance, the object being to induce industrialists to start new industries or to extend their existing industries by erecting new buildings, or installing new machinery or plant. A diesel engine by itself may undoubtedly be used in a business other than that of a transport operator, for instance, for working a pump to draw underground water and may for that purpose be regarded as a self contained unit. But that is not decisive of the question whether in the business of a transport operator a diesel engine used to replace a petrol engine may be regarded as machinery installed. Machinery installed within the meaning of paragraph 2 of section 10(2)(vi) is qualified by the expression "used for the purposes of the business", and therefore unless as a self contained unit the machinery is used for the purposes of the business, initial depreciation would not be admissible in respect thereof. That it may be capable of being used in another 857 business by the same or another assessee as a self contained unit is irrelevant in considering its admissibility for initial allowance in the business in which it is actually used. It would be fruitless to refer to the schedule under rule 8 of the Income tax Rules for computing the allowance in res pect of the depreciation under section 10(2)(vi). The schedule catalogues different items in respect of which depreciation is admissible at the rates prescribed. But whether a particular item is admissible for initial allowance in the second paragraph must depend upon two factors (i) that it is in respect of the year of erection or installation that the initial allowance is permissible; and (ii) the building or the machinery is used for the purposes of the business. If it is a predicate of admissibility to initial allowance that the machinery must be new and a self contained unit in the particular business in the carrying on of which the initial allowance is claimed, the fact that in certain conditions that machinery may be regarded as self contained for the purpose of another business in which it is used, would furnish no guide in ascertaining whether initial allowance is permissible as a deduction in the assessment of taxable income of the business in which it is actually used. In my view the appeal should be allowed and the question referred for opinion should be answered in the negative. ORDER In accordance with the opinion of the majority the appeal is dismissed with costs. Appeal dismissed.

IN-Abs

The assessee, who was the owner of a fleet of buses, rep laced the petrol engines in two of his buses by new Diesel engines incurring an expenditure of Rs. 18,544/ in this connection, during the year of account ending with March 31, 1950. For the relevant assessment year he claimed deprecia tion allowance under the second para of cl. (vi) and cl. (via) of section 10(2) of the Indian Income tax Act, 1922, apart from the normal depreciation under the first para of cl. (vi) but he was allowed only 25 per cent depreciation under the first para ,of cl. (vi) on the ground that he was not entitled to extra depreciation under section 10(2)(vi). or section 10(2)(via) because the ,engine was only part of an equipment and could not by itself become machinery and that when an engine was fixed in a motor vehicle it could not be said to be installed within the meaning of those sub sections. Held: (per Subba Rao and Sikri, JJ.) (i) The assessee was entitled to extra depreciation under sections 10(2)(vi). and 10(2) (via) of the Indian Income tax Act, 1922, in respect of the diesel oil engine fitted to the motor vehicles in replacement of the existing engines. (ii)The definition of "machinery" given by the Privy Council in the case of Corporation of Calcutta vs Chairman, Cossipore and Chitpore Municipality (1922) L.R. 48 I.A. 435, is applicable, and according to that definition a diesel engine is clearly "machinery". And when an engine is fixed in a vehicle it is installed within the meaning of the expression in cls. (vi) and (via). Per Shah, J. (dissenting) Replacement of a petrol engine by a new diesel engine in a motor car cannot be said to be installation of machinery. To be installed, the machinery must for the purpose of the business be brought into service as a self contained unit, and it would be difficult to regard the introduction of a mere part, which has no independent use in the business conducted by the assesses, as machinery installed for the purpose of the second para of cl. (vi) of section 10 (2).

Appeal No. 510/ 1963. Appeal by special leave from the judgment and order dated January 22, 1960 of the Madhya Pradesh High Court in Misc. Petition No. 35 of 1959. B. Sen and I. N. Shroff, for the appellant. K. N. Rajagopal Sastri and A. G. Ratnaparkhi, for the respondent. April 22, 1964. The judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave raises the question whether the expression "income tax" in cl. (c) of sub r. (2) of r. 2 of Schedule I to the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated Lands) Act, 1950 (M.P. Act No. 1 of 1951), hereinafter cal led the Act, includes super tax. The facts are as follows: The respondent was the zamindar of Bhadra Estate in Balaghat District of Madhya Pradesh. His estate was known as Bahela Zamindari consisting of 78 villages. The Act came into force on January 26, 1951. Under the Act the proprietary rights of the zamindari vested in the State and he became entitled to compensation in respect of the said rights in the said villages under section 8 ,of the Act. The compensation was to be determined in ac cordance with the rules contained in Schedule I to the Act. Under r. 8 of Schedule I the zamindar would be entitled to ,compensation at 10 times the net income. The net income would be calculated by deducting from the gross income, inter alia, the average of the income tax paid in respect of the income from big forest during 30 agricultural years preceding March 31, 1951. On November 30, 1951, the Com pensation Officer determined the compensation payable to the respondent at Rs. 2,21,330 12 6. In arriving at that figure he deducted not only the income tax payable by the respon dent but also the super tax and surcharge payable by him. The average of the income tax paid by him during the mateI 30 years was only Rs. 3,760 2 9, but if the average of ,the super tax and surcharge was included, the average came 840 to Rs. 7,070 8 0. The result was that the net yearly income of the estate was reduced by Rs. 3,310 5 3 and compensation was paid to him on the basis of the amount so reduced. The respondent moved the Settlement Commissioner under section 15 of the Act for enhancement of the compensation, but the Commissioner confirmed the order of the Compensation Officer. Thereafter, the respondent filed an application in the High Court under articles 226 and 227 of the Constitution for quashing the order of the Compensation Officer. The High Court held, on a construction of the relevant provisions. of the Act, that super tax should not be taken into account while calculating the compensation payable to the respondent. The State of Madhya Pradesh has filed the present appeal against the order of the High Court. Mr. Sen, learned counsel for the State, contends that the object of r. 2(2)(c) is to provide a method for ascertaining the net income of an estate, that in that context there cannot be any justifiable distinction between income tax and super tax, for both of them have, inter alia, to be deducted from the gross income to arrive at the net income, and that the Legislature used the word "income tax" in its comprehensive sense so as to take in super tax. He adds that under the Income tax Act super tax is only an additional duty of income tax and, therefore, a part of it. Mr. Rajagopala Sastri, learned counsel for the respondent assessee, argues that in construing a provision of an ex proprietary Act, the Court will have to construe such a pro vision strictly and if so construed, super tax cannot be in cluded in the expression "income tax". He took us through the relevant provisions of the Income tax Act to support his contention that super tax is different in its origin, description, scope, incidents and collection from the income tax. The question turns upon the correct interpretation of r. 2(2)(c) of the rules of Schedule I to the Act. The relevant provisions of the Act and the rule read: Section 8(1) of the Act: "The State Government shall pay to every proprietor, who is divested of proprietary rights, compensation determined in accordance with the rules contained in Schedule 1. " Schedule I to the Act Rule 2. The net income of an estate or mahal in the Central Provinces shall be calculated by deducting from the gross income the sums under the following heads, namely: (c) the average of the income tax paid in respect of the income received from big forest during 841 the period of thirty agricultural years preceding the agricultural year in which the relevant date falls; * * * * * * * Rule 8. (1) The amount of compensation in the Central Provinces and in Berar shall be ten times the net income determined in accordance with the rules herein contained. The combined effect of the said provisions is that for the purpose of ascertaining the net income of an estate one of the deductible items is the average of the income tax paid in respect of the income received from the big forest. That .average is ascertained on the basis of the income tax paid during the 30 agricultural years preceding the agricultural .year in which the relevant date falls. The compensation payable is ten times the net income ascertained under the rules. The relevant date for the purpose of ascertaining the average is the date specified by notification by the State Government under section 3 of the Act: for instance, if the relevant date falls in the year 1951, the income tax paid during the years 1921 to 1951 will afford the basis for arriving at the average. To appreciate the distinction between the concepts of income tax and super tax a brief history of their incidents will not be inappropriate. Under the Income tax Act of 1886 the total income from various sources was not the criterion for assessment but the different sources alone were the basis for it. For the first time the 1918 Act introduced the scheme of total income for the purpose of determining the rate of tax. Under that Act several heads were enumerated, under which the income of an assessee fell to be charged. The 1922 Act went further and enacted that loss under one head of "income" can be set off against the profit under another head. Till the 1922 Act super tax was separately levied. It was first introduced by the Super tax Act of 1917 and then it was replaced by the 1920 Act. Only in 1922, for the first time, it was incorporated in the Income tax Act. Though both the taxes are dealt with by the same Act, their distinctive features are maintained. As regards income tax, in the words of a learned author, "section 3 charges the total income, section 4 define its range, section 6 qualifies it and sections 7 to 12 quantify it. " There are various other sections which provide the machinery for the ascertainment of the total income for assessment and recovery of tax. As regards super tax, a separate chapter viz., Ch. IX, deals with it; it comprises sections 55 to 58. Section 55 is the charging section for the purpose of super tax; under that section, "In addition to the income tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the 842 previous year. . . an additional duty of income tax (in this Act referred to as super tax) at the rate or rates laid down for that year by a Central Act". Section 56 says that for the purpose of super tax, except in specified cases, the total income shall be the total income as assessed for the purpose of income tax. Section 56A exempts from super tax certain dividends. Section 58(1) applies by reference to supertax certain provisions of the Act relating to the charge, assessment, collection and recovery of income tax. It would be seen from this Chapter that though super tax is described as an additional duty of income tax it is not incorporated in the income tax , its identity is maintained. A self contained chapter deals with the charge, assessment, collection and recovery of super tax. There are essential differences between the two taxes emanating not only from the express provisions contained in Ch. IX but also from the omission to apply the specified sections of the Act to the said tax. Successive Finance Acts also made a distinction between the two taxes. This is not the occasion to notice in detail the differences between the two taxes. It is enough to state that there are pronounced differences between the incidents of the twotaxes. But two relevant differences may be noticed, namely,(i) though both the taxes are assessed on the total income ofa person, the total income for the purpose of income tax is computed on the basis of income classified and chargeable under the different heads mentioned in section 6 of the Act, whereas super tax is not concerned with the different heads, but is payable on the total income so ascertained , and (ii) while super tax, except in a few cases, is payable by the assessee direct, the income tax is payable by him direct as well as by deduction. While in the case of income tax by reversing the process the tax attributable to a particular source can be ascertained, in the case of super tax no such process is possible as the said liability springs into legal existence only after the total income is ascertained. The only possible method by which the said tax may be split up is by working out the proportion of the tax payable by the assessee in respect of an income from a particular source on the basis of the ratio the said income bears to the total income. But this method is not sanctioned by the Act. It is not legally possible to predicate what particular part of the super tax is attributable to an income from a particular source, for, unlike in the case of income tax, total income alone is the criterion and the income from different sources is not relevant. To illustrate: super tax is now levied on income over certain level at present Rs. 25,000/ . If "A 's" total income is Rs. 35.000/ made up of Rs. 20,000/ from big forest and Rs. 15,000/ from other sources, what is the super tax attributable to the income from the big forest? The answer is, it is not possible to do so. 843 With this background let us give a close look to the provisions of r. 2(2)(c) of Schedule I to the Act. The legislative intention is manifest from the express language used and also by internal evidence. With the knowledge that under the Income tax Act two separate duties, namely, in come tax and super tax, are imposed, the Legislature has used the expression "income tax". If the intention was to refer to both the taxes, it would have stated "income tax and super tax". The mention of the one and the omission of the other is a sure indication of its intention. The qualification that income tax paid should have been in respect of the income received from the big forest neces sarily excludes super tax, for under the Income tax Act no super tax is payable in respect of the income received from big forest, but only in respect of the total income. As we have pointed out earlier, it is not legally possible to disintegrate and allocate a portion of the super tax to the income attributable to the big forest. It is not paid in respect of the income from the big forest, but is paid only in respect of the total income. If the contention of the appellant prevails, though the income from big forest falls below the taxable income, it will be deducted if, in combination with the income from other sources, the income goes up to the taxable level. In that event super tax not payable in respect of the income from big forest will have to be deducted. That apart, the rules made under the Act do not provide for any machinery for allocating the super tax payable on the total income among the different sources. It is said that the same difficulties are present even in the case of income tax. Though income tax is also a tax on the total income of an assessee, the Act, as we have indicated earlier, provides for computing the income under different heads and, therefore, it is not inappropriate to describe a particular tax as attributable to an income from a particular head, but it would wholly be inappropriate to describe that a part of the super tax is payable in respect of an income from a particular source. The argument of Mr. Rajagopala Sastri, learned counsel for the respondent, that the 30 years mentioned in the rule takes us back to a period when there was no super tax appears to be not sound, for, as we have stated earlier, supertax was payable in one form or other from the year 1917. That apart, if the income tax takes in super tax, the nonexistence of super tax in a particular year does not make any difference in ascertaining the average, for the income tax for that year will be the income tax without the addition of super tax. This circumstance is not, therefore, of much relevance and we exclude it from our consideration. 844 The argument that if the Legislature intended not to exclude super tax from the gross income, it would have expressly stated so in the rule is an attempt to put the shoe on the wrong foot. The proper approach, particularly in the case of an exproprietary statute, is to ask the question why the Legislature did not expressly mention super tax, if it in tended to do so. The use of one of the two well understood expressions is, on the other hand, an indication that the Legislature provided for the deduction of the one used and not of the other omitted. The reason for the rule, if it is, legitimate to speculate, appears to be that as it is concerned with the calculation of the net income from the estate after making certain deductions, only those deductions, which have a direct relation to that income are allowed. If the other construction prevails, speculation would take the place of certainty and super tax not paid factually in respect of the income from big forest would have to be deducted. Such a construction defeats the purpose of the rule. Some of the decisions cited at the Bar may now be noticed. Lord Sumner pithily remarks in Brooks vs The Commissioner of Inland Revenue(1): ". for super tax tax is another and a new tax none the less, though it is an additional duty of Income Tax. " In Bates, In re: Selmes vs Bates(2), a testator gave to his wife by his will "such a sum in every year as after deduction of the income tax for the time being payable in respect thereof will leave a clear sum of pound 2000. " It was held that the wife was entitled to the pound 2000 free of income tax only and was not entitled to payment of any sum in respect of super tax. There the trustees were directed to pay the annuity after deducting the income tax in respect of that annuity. Rejecting the argument advanced on behalf of the wife that the said annuity should be free from super tax also, Russell. J., observed: "Now super tax was not a charge in respect of any particular annuity or sum, but was a charge in respect of the recipient 's whole income and was not a matter with which the trustees would be charged or concerned at all, and, in his opinion, what the testator had done was to give the widow the yearly sum of pound 2500 clear of all deductions, for which the trustees were accountable, but that did not include super tax, which she must pay herself." (1)(19l4) 7 T. C. 2 3 6, 2 5 section 2 , 159 160, 161, 845 The learned Judge proceeded to state: "No super tax is really payable 'in respect of ' this sum. " It is true that the said judgment turned upon the provisions of a particular will, but the reasoning is helpful. There, income tax was deductible in respect of the sum bequeathed, here income tax is deductible in respect of the income re ceived from big forest. As super tax is not a charge in respect of the income from big forest, on the parity of reasoning it shall be held that the word "income tax" used in cl. (c) of r. 2(2) of Schedule I to the Act excludes super tax. In Reckitt, In re: Reckitt vs Reckitt(1), a fund was bequeathed to trustees upon trust for investment and to pay out of the income of the investments "the annual sum of pound 5000 free of income tax" during the life of the annuitant. The Court of Appeal held that the annuitant was entitled to have the sum paid to her without deduction on account of super tax and that the trustees must pay the super tax payable in respect of that sum out of the income of the fund. The conclusion turned upon the provisions of the will. Lord Hanworth, M.R., distinguished the decision in Bates, In re: Selmes vs Bates(2) on the ground that Russell, J., founded his judgment upon the reference to deductions and also upon the direction to, the trustees that specified sum should be paid after deduction of income tax in respect thereof and proceeded to observe that in the case before them no reference was made to, the system, or the power of the trustees to make deductions . and that it was simply that a total sum in each year was to be paid free of income tax. That decision may be right or wrong on the construction of the will before the Court of Appeal, but the features which distinguished Bates case from the decision in Reckitt 's case are also present in the case before us now. Here also the rule empowers the prescribed authority to deduct from the gross income incometax paid in respect of the income received from big forest. The earlier decision is more in point to the present case than the later. Be that as it may, the English decisions on the construction of will are not of much help in construing the express provisions of r. 2(2)(c) of Schedule I to the Act: they shall be construed on their own terms. Having regard to the terms of the rule, we have come to the conclusion that in come tax does not take in super tax. In the result, the appeal fails and is dismised with costs Appeal dismissed.

IN-Abs

The respondent was an owner of an estate in Madhya Pradesh. Under the provisions of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 the respondent 's estate was vested in the State and he became entitled to compensation. The compensation was to be paid at the rate of ten times the net income. The net in come would be calculated by deducting from the gross income, inter alia, the average of the income tax paid in respect of the income from big forest during 30 agricultural years proceeding March 31, 1951. In calculating the net income the Compensation Officer deducted not only income tax but also super tax and the respondent appealed to the Settlement Commissioner against the deduction of super tax. On the rejection of the appeal the respondent filed a writ petition in the High Court and the High Court held that on a construction of the various provisions of the Act it was wrong to deduct the super tax while calculating the compensation payable to the respondent. The appellant filed this appeal on special leave granted by this Court. It was contended on behalf of the appellant that the object of the r. 2(2) (c) of Schedule I to the Act is to provide a method for ascertaining the net income of an estate and therefore there cannot be any distinction between income tax and super tax and the expression "income tax" has been used comprehensively to include super tax also. The contention on behalf of the respondent was that from a historical point as well as from the provisions of the Act it is seen that income tax and super tax were distinct and separate and the former does not include the latter. Held:(i) There are two essential differences between income tax and super tax. They are (1) though both the taxes are assessed on the total income of a person, the total income for the purpose of income tax is computed on the basis of income classified chargeable under the different heads mentioned in section 6 of the Income tax Act whereas super tax is not concerned with the different heads, but is payable on the total income so ascertained and (2) while super tax 1, except in a few cases, is payable by the assessee direct, the income tax is payable by him direct as well as by deduction. (ii)Examining the provisions of r. 2(2)(c) Schedule I of the Act it is evident that with the knowledge that under the In come tax Act two seperate duties namely income tax and super tax are imposed the Legislature has used the expression "income tax". If the intention was to refer to both the taxes it would have stated income tax and super tax. The mention of the one and the omission of the other is a sure indication of its intention. The qualification that income tax paid should have been in respect of the income received from the big 839 forests necessarily excludes super tax for under the Income tax Act no super tax is payable in respect of the income re ceived from big forest but only in respect of the total income. (iii)Having regard to the terms of r. 2(2)(c) of Sche dule I to the Act it is clear that income tax does not take in super tax. Case law reviewed. Brooks vs Commissioner of Inland Revenue, , Bates. In re: Salmea vs Bates, and Reckitt vs Reckitt,