21. In his letter dated April 2, 1951, the Income-tax Officer, City Circle No. III, informed the Income-tax Officer, City Circle No. II, that the Syndicate was carrying on its business within his jurisdiction and had earned an income of Rs. 2,07,926. By that very letter the Income-tax Officer, City Circle No. Ill, requested the Income-tax Officer, City Circle No. II, to take steps to assess the Syndicate and to intimate him the share income earned by his assessee, D. D. Italia. The Incorne-tax Officer, City Circle No. III, also cautioned the Income-tax Officer, City Circle No. II, that if the Syndicate had applied for registration, the question of registration should be carefully considered in the light of the instructions communicated by the Commissioner of Income-tax recently in regard to illegal partnerships. With reference to notice under Section 34 of the Income-tax Act, dated July 27, 1951, D. D. Italia informed the Income-tax Officer, City Circle No. II, that nine persons carried on business in liquor, but that the Syndicate did not exist in 1357 Fasli. Through that letter, D. D. Italia also informed the Income-tax Officer that the account books of the Syndicate were with Bansilal Shivcharan. These letters, in our opinion, amply indicate that the Income-tax Officer, City Circle No. II, who assessed the A.O.P., knew about the existence of a group of persons who carried on liquor business. That the Income-tax Officer was aware of the existence of the Syndicate, i.e., a group of persons carrying on business, is also borne out by what he said in the assessment order itself. This is what he said :


Commissioner Of Income-Tax vs Hyderabad Deccan Liquor ... on 31 July, 1972

"The assessment of the Syndicate, is still pending. The income admitted by the assessee is provisionally accepted and will be revised in respect of information from the Income-tax Officer, ' B ' Ward, who holds jurisdiction to assess the Syndicate."
 22. It was then incumbent on the Income-tax Officer to make a further probe into the matter in order to find out whether that group of persons was an A.O.P. or a firm, or whether it was granted registration, etc., whether he made such investigation or not, it is abundantly clear that he was aware that there was an association of persons which carried on business within his jurisdiction and earned an income which attracted tax. At that time, the Income-tax Officer should nave been careful enough to exercise the option and to elect to assess either the A.O.P. or the members of the association.1 We are, therefore, satisfied that the assessments on the individual members of the A.O.P. may, at best, be considered to have been made by the Income-tax Officer under an erroneous impression of law, rather than under ignorance of necessary facts. After having made assessments on the individual members of the association in such circumstances, it was not open to the Income-tax Officer, under Section 3 of the Act, to once again make an assessment on the A.O.P. in respect of the same income. We have, therefore, no hesitation in holding that the assessment made on the A.O.P. after making assessments on two of the members of the A.O.P. is bad in law.


23. Although the assessment made on the A.O.P. is liable to be set aside on the ground that the assessments made on the individual members would bar a further assessment. on the A.O.P., we would, however, like to consider the question of validity of the service of notices on the members of the association, as it was argued at great length, and also in view of its importance.
 24. At this stage, it is necessary to note that the assessment on the A.O.P. in question is not a regular assessment made under Section 31 of the Hyderabad Act, but an assessment made under Section 46(1) of the Act in respect of the escaped income.
 25. Courts have held that the issue of a notice under Section 148 of the Indian Income-tax Act, 1922, is a condition: precedent to the validity of an assessment under Section 147, and if no notice has been issued, or if the notice issued is invalid, or is not served in accordance with law, the assessment would be bad. Any number of authorities we can find in support of this proposition. A long line of authorities in support of the above proposition is given in the foot-notes at page 786 in the VIth edition of Law and Practice of Income-tax by Kanga and Palkhivala, under items 16, 17 and 18. It is sufficient to notice some of the decided cases. In Y. Narayana Chetty v. Income-tax Officer, Nellore, .


, the Supreme Court has observed that the notice prescribed by Section 34 of the Income-tax Act, for the purpose of initiating reassessment proceedings, is not a mere procedural requirement. The service of the prescribed notice on the assessee is a condition precedent to the validity of any reassessment made under Section 34 of the Indian Income-tax Act, 1922. If no notice is issued, or if the notice issued is shown to be invalid, then the proceedings taken by the Income-tax Officer without a notice, or in pursuance of an invalid notice, would be illegal and void.
 26. Section 34 of the Indian Income-tax Act, 1922, corresponds to Section 46(1) of the Hyderabad Act.
 27. The same view has been taken by the Calcutta High Court in Sewlal Daga v. Commissioner of Income-tax, [1965] 55 I.T.R. 406 (Cal), and by the Mysore High Court in C.N. Nataraj v. Fifth Income-tax Officer, City Circle No. II, Bangalore, [1965] 56 I.T.R. 250 (Mys.)..


28. It was then argued that the service of such a notice cannot be waived as held by the Allahabad High Court in Benarasi Silk Palace v. Commissioner of Income-tax, [1964] 52 I.T R. 220 (All.). Notices under the Income-tax Act have to be served in the same manner as summons under the provisions of the Civil Procedure Code. Section 78 of the Hyderabad Income-tax Act provides that the provisions of the Hyderabad Civil Procedure Code (No. III of 1323-Fasli will apply to the service of such notices, whereas under Section 63 of the Indian Income-tax Act, 1922, the provisions of the Indian Civil Procedure Code (No. V of 1908) will apply to service of notices. Sub-section (1) of Section 63 of the Indian Income-tax Act, 1922, provides that a notice may be served on the person therein named either by registered post or, as if it were a summons issued by a court under the code of Civil Procedure Sub-section (2) of Section 63 provides that, in the case of an A.O.P., notice may be served on the principal officer thereof. The words "service by registered post " and " service on the principal officer" in respect of an A.O.P. which are present in Section 63 of the Indian Income-tax Act, 1922, are absent in Section 78 of the Hyderabad Act. Would that make the procedure prescribed under the Hyderabad Act, for service of notices and summons, different from the procedure prescribed for service of notices under the Indian Income-tax Act, 1922? This aspect of the matter has been considered by this court in the assessee's own case in Commissioner of Income-tax v. Hyderabad Deccan Liquor Syndicate.


29. Considering Section 63 of the Indian Income-tax Act, 1922, and Section 449 of the Hyderabad Civil Procedure Code, which governed the service of notices and summons, this court in Commissioner of Income-tax v. Hyderabad Deccan Liquor Syndicate, [1963] 50 I.T.R. 6, 15 (A.P.) [F.B.]., at page 15, observed thus :   "It  is  manifest  that there is no  material difference  between the
second part of Section 63 of the Indian Income-tax Act and the first part of Section 449 of the Hyderabad Civil Procedure Code  (III of 1323-F.).    The
only difference between them is that, while section  63(2) includes a joint
family or an association of persons, Section 449 relates only to firms.    But


that cannot drive us to the Conclusion that this section is inapplicable to service on association of persons. In this behalf, it cannot be overlooked that the Hyderabad Income-tax Act does not contain any other provision in regard to service of summons. We must, therefore, take it that the intention of the legislature was that this would apply equally to association of persons or joint families. So, we may proceed on the assumption that this section comes into operation even in regard to association of persons, "
 30. Even otherwise, under Section 29 of the Hyderabad Income-tax Act, the principal officer of an A.O.P. is made liable to file a return of income on behalf of an A.O.P. Section 2(15) of the Hyderabad Income-tax Act defines " principal officer " as an agent of the A.O.P. or any person connected with the association who has been served with a notice by the Income-tax Officer of his intention to treat him as the principal officer thereof. Thus, even under the Hyderabad Income-tax Act, notice for making an assessment on an A.O.P. must be served on its principal officer.
 31. The assessment order makes it clear that the Income-tax Officer had considered Bansilal as the principal officer of the association of persons.


The very fact that the Income-tax Officer had considered the service of notice on Bansilal for making the assessment on the A.O.P. shows that he had recognized Bansilal as the principal officer of the association. Neither D.D. Italia was the agent of the A.O.P. nor was he treated by the Income-tax Officer as the principal officer of the association after service of notice.
 32. Valid service of notice under Section 30(2) read with Section 46(1) of the Hyderabad Income-tax Act on Bansilal, who was the principal officer of the A.O.P., was, therefore, a condition precedent for making a valid assessment on the A.O.P.
 33. We will consider the question of the necessity of service of a valid notice on Bansilal for making a valid assessment on the A.O.P. from a different angle.


34. Indian Finance Act (No. 25 of 1950) which came into force on April 1, 1950, extended the application of the Indian Income-tax Act of 1922 to the Part B State of Hyderabad and repealed the Hyderabad Act. Section 13 of that Act preserves the operation of the State income-tax law for the purposes of levy, assessment and collection of tax in respect of the income of the previous years, relevant to the assessment years prior to 1951. Obviously, the State income-tax law applied to the income of the previous year ending September 30, 1948, relevant to the assessment year 1358-F., which was earlier to the previous year relevant to the assessment year 1951. To "levy" a tax means " to impose or assess" or " to impose, assess or collect under the authority of law ". It is a unilateral act of superior legislative power to declare the subjects and rates of taxation and to authorise the collector to proceed to collect the tax. " Assessment " is the official determination of liability of a person to pay a particular tax. " Collection " is the power to gather in money for taxes, by enforced payment if necessary. The levy of taxes is generally a legislative function, assessment is a quasi-judicial function, and collection, an executive function.
 35. In Hazari Mal Kurthiala (A Firm) v. Income-tax Officer, Special Circle, Ambala Cantonment, [1956] 30 I.T.R. 500, 510 (Punj.)., Bhandari C. J. of the Punjab High Court, speaking for the court, observed that:


"These three expressions 'levy', 'assessment' and 'collection' are of the widest significance and embrace in their broad sweep all the proceedings which can possibly be imagined for raising money by the exercise of the power of taxation from the inception to the conclusion of the proceedings."
 36. In A.N. Lakshman Shenoy v. Income-tax Officer, Ernakulam, , the Supreme Court approved the meaning given to the words "levy", "assessment" and "collection of tax" by the Punjab High Court in Hazari Mal's case.
 37. In S. Chattanatha Karayalar v. Income-tax Officer, Nagercoil, [1960] 38 I.T.R. 325 (Mad.)., the Madras High Court, in similar circumstances, held that the Indian law would apply and not the State law to Travancore.
 38. However, we do not find any discussion as to why the learned judges held that the Indian law and not the State law was applicable.
 39. Following the decisions of the Punjab High Court and of the Supreme Court, we hold that the service of notice in this case has to be examined with reference to the provisions of the Hyderabad Income-tax Act. Under the provisions of the Hyderabad Income-tax Act, as we have stated above, a valid notice has to be served on the, principal officer before making a valid assessment on an A.O.P.
 40. The Tribunal, as a matter of fact, found at page 88 of the printed book, that no service of a notice under Section 46(1) has been made on Bansilal. This is a finding of fact arrived at by the Tribunal after discussing at great length the material which has been brought on record by the income-tax authorities.


41. In a reference under the Income-tax Act, the High Court is not a court of appeal and it is not open to it to embark upon a re-appraisal of the evidence and to arrive at a finding of fact contrary to the Tribunal. It is the duty of the High Court to confine itself to the facts as found by the Tribunal and answer the question of law referred to it in the setting and context of those facts.
 42. In Commissioner of Income-tax v. Kamal Singh Rampuria, .


, the Supreme Court observed that:
 "...in a reference the High Court must accept the findings of fact reached by the Appellate Tribunal and it is for the party who applied for a reference to challenge those findings of fact, first, by an application, under Section 66(1). If the party concerned has failed to file an application under Section 66(1) expressly raising the question about the validity of the findings of fact he is not entitled to urge before the High "Court that the finding was vitiated for any reason. "
 43. Since the department has not asked in its application under Section 66(1) or 66(2) to refer to this court a question challenging the correctness of the above finding of fact that no notice under Section 46(1) of the Hyderabad Act was served on Bansilal, it is not open to the department to urge before us that the said finding of fact is either vitiated or defective.
 44. We have, therefore, necessarily to agree with the assessee's counsel that no notice under Section 30(2) read with Section 46(1) of the Hyderabad Act was served on the principal officer of the A.O.P. This is the second reason on the basis of which we agree with the Tribunal that the impugned assessment on the A.O. P. is bad in law.
 45. Since D.D. Italia Was not the principal officer of the association, nothing turns upon the validity or otherwise of the service of notice on him under Section 46.
 46. Although the impugned assessment is invalid for more than one reason, set out in the foregoing paragraphs, we will, however, consider the validity of the service of notices on Bansilal and D.D. Italia.


47. The notice dated August 13, 1951, even assuming for a moment it was a notice under Section 30(2) read with Section 46 of the Hyderabad Act, was affixed on the outer door of Bansilal's house. Earlier notices issued to Bansilal were returned unserved on the ground that he had gone to Benaras on a pilgrimage. Notices issued in the name of D.D. Italia were served on one Manchusha, who was an employee of D.D. Italia.
 48. Order V, Rule 12, of the Civil Procedure Code of 1908 (corresponding to Section 90 of the Hyderabad Civil Procedure Code) provides that, whenever it is practicable, service must be made on the person concerned unless he has an agent empowered to accept the service in which case service on such agent shall be sufficient.
 49. Order V, Rule 17, of the Civil Procedure Code of 1908 (corresponding to Section 94 of the Hyderabad Civil Procedure Code), provides that, where the person concerned refuses to sign the acknowledgment or where the serving officer, after using all due and reasonable diligence, cannot find him, and there is no agent empowered to accept service of the summons on his behalf, the serving officer shall affix it on the outer door of the house of the person concerned.
 50. The validity of the service of notice effected under both the above Sections came to be considered by the Calcutta High Court in Tripura Modern Bank Ltd. v. Bansen and Company, . Sinha J. observed thus :
 " What constitutes ' due and reasonable diligence' depends on the facts and circumstances of each case ; but the mere temporary absence of a defendant from his residence or place of business does not justify service by affixation.


The question as to what was 'a reasonable time' must be decided against the background of a particular case, and no hard and fast rule can be laid down. If the person is absent from his residence, then all possible enquiries are to be made to find out as to when he was likely to return or else when he was likely to be found at his residence. The result of such enquiry must be tested against all the known facts about the defendant, his habits, his station in life, his occupation and so forth. There no doubt exist inveterate process dodgers who are bent upon being obstructive. That, however, is no justification for relaxing the requirements of the law. If determined efforts are made, service can be satisfactorily effected in the majority of cases. , In a really difficult case, the Code has provided an adequate remedy.........
 In the case of a service by affixation, it is not sufficient to state in the affidavit of service that the process-server was satisfied upon enquiry that the defendant could not be found at his residence within a reasonable time. Facts must be stated in the affidavit to show what enquiries were made and whether it was reasonable under the circumstances to assume that the defendant could not be found at his residence within a reasonable time. The court must be satisfied that the process-server was justified in coming to such a conclusion, and in the absence of particulars it cannot do so.


Reading Order 3, Rule 6, with Order 5, Rule 9, there can be no doubt that the empowering of an agent under Order 5, Rule 9, can only be in the manner indicated in Order 3, Rule 6, and verbal authority is not enough, Rules 16 and 17, coming as they do after Rule 9, do not refer to a different kind of agency than what is referred to in Rule 9. But even if a liberal interpretation is put upon the word 'agent' in these rules, it would not be sufficient to say that a particular person was the agent of the defendant and had authority to accept service, without adducing evidence to show how such a person came to be the agent of the defendant and how such authority was conferred upon him."
 51. We will judge the validity of the affixture of the notice on the outer door of Bansilal's house in the light of the above circumstances. Earlier notices issued in the name of Bansilal were returned unserved on the ground that he had gone to Benaras on a pilgrimage. The serving officer did not make any enquiry as to when he would be returning. There is no evidence on record, on the basis of which we can come to the conclusion that Bansilal was evading service. The serving officer, in our opinion, had not used due and reasonable diligence in serving the notice on Bansilal. We, therefore, unhesitatingly hold that there was no justification for the serving officer to serve the notice on Bansilal by affixture.


52. Manchusha was only an employee of D.D. Italia. A mere servant employed to carry out the orders cannot be considered to be an agent appointed for accenting service of summons. D.D. Italia did not, in writing, appoint Manchusha as his agent to accept service of summons issued to him. The fact that on earlier occasions he had received such notices issued in the name of D.D. Italia will not be sufficient to infer that Manchusha was his "agent" within the meaning of Order III, Rule 6, of the Civil Procedure Code, duly constituted to accept service of summons issued in the name of D.D. Italia. We, therefore, hold that there was no valid service of notice on D.D. Italia under Section 30(2) read with Section 46(1) of the Hyderabad Act.
 53. Even assuming that a procedural irregularity in the service of a notice of reassessment can be waived or ignored, if the assessee has admitted to have received the notice, or on facts it could be found so, still it must be established that D.D. Italia had admitted that he had received the notice. There is no evidence on record to show that D.D. Italia had anywhere admitted to have received the notice issued by the Income-tax Officer under Section 30(2) read with Section 46(1) requiring him to file a return on behalf of the A. O. P.


54. Thus, the assessment on the A. O. P. is bad for two reasons : one is that the Income-tax Officer had assessed to tax the individual members of the A. O. P. in respect of their share incomes from the A. O. P. and in doing so, he had elected to assess the individual members of the association. It was not, thereafter, open to him, in law, to make an assessment on the A. O. P. and the second is that no notice was served on Bansilal, who was the principal officer of the A. O. P., before making an assessment on the A. O. P. and that, in any case, service on him by affixture was bad in law.
 55. Service of notice of assessment on D.D. Italia was also bad and, even assuming it was good and valid service, still it would not help the department in getting the assessment upheld by this court, because D.D. Italia was not the principal officer of the association.
 56. Section 81 of the Hyderabad Income-tax Act does not also lend any help to the department, Under that section, no assessment could be quashed as void if merely there was a defect in the form of the notice-issued. However, that section does not say that even if the notice is not duly served on the assessee, the assessment would be valid.
 57. We, therefore, answer question No. 1 in the affirmative, i.e., the assessment on the A.O.P. was invalid.


58. The Tribunal had decided only one contention raised by the assessee, because it went to the very root of the matter. The Tribunal, however, did not consider the other grounds urged by the assessee. The Tribunal accepted the contention of the assessee that the assessment made on the A.O.P. without serving notices on all the members of the association, was bad. On a reference, the High Court answered that question in favour of the department, holding that the assessment was valid. The matter then came up before the Tribunal once again. The Tribunal was competent to decide the other objections raised by the assessee and which were left undecided on the earlier occasion. For that purpose, the Tribunal does not require any direction or authority of the High Court to dispose of the other grounds of appeal. We, therefore, hold that the Tribunal was justified in disposing of the other contentions raised by the assessee in its appeal. The question No. 2, is, therefore, answered in the affirmative.
 59. We will then take up the third contention. In the assessment order, the Income-tax Officer did not consider the question of the validity of service of the notice on D.D. Italia. In the appeal filed before him the Appellate Assistant Commissioner suo motu went into the question and held that there was service of notice on D.D. Italia. The question is whether the Appellate Assistant Commissioner was competent to consider such a ground which was neither raised nor determined by the Income-tax Officer in the assessment order. Considering the powers of the Appellate Assistant Commissioner in disposing of an appeal before him, we are of the opinion that the objection raised by the assessee's counsel is untenable.


60. In Ramgopal Ganpatrai & Sons Ltd. v. Commissioner of Excess Profits Tax, [1953] 24 I.T.R. 362 (Bom.)., the Bombay High Court held that the appellate court may even reverse or modify the order on a point of law taken by itself suo motu without being asked to do so by the appellant. Consequently, under Section 17 of the Excess Profits Tax Act, 1940, the Appellate Assistant Commissioner has jurisdiction to deal with an order of the Excess Profits Tax Officer on any ground of law which applies to the facts on which that order was based.
 61. In Commissioner of Income-tax v. Shapoorji Pallonji Mistry, [1962] 44 I.T.R. 391 (S.C.)., the Supreme Court has pointed out that in an appeal filed by an assessee, the Appellate Assistant Commissioner has no power to enhance the assessment by discovering new sources of income not mentioned in the return of the assessee or considered by the Income-tax Officer in the order appealed against. That does not, however, mean that the Appellate Assistant Commissioner is not competent, or has no power to allow a ground of appeal to be raised by the assessee which was not raised by him before the Income-tax Officer. We, therefore see no substance in this contention. We, therefore, answer question No. (3) also in the affirmative.
 62. The reference is answered accordingly. The department shall pay the costs of this reference to the assessee. Advocate's fee Rs. 250.


Commissioner Of Income-Tax vs Challapalli Sugars Ltd. on 5 September, 1969

JUDGMENT Gopal Rao Ekbote, J.


1. This is a reference made under Section 66(1) of the Income-tax Act, 1922, and the question referred is :
 "Whether the interest payment of Rs. 2,38,614 represents an element of the actual cost of the machinery, plant, etc., to the assessee and as such depreciation and development rebate are admissible with reference to this amount also ?"
 2. The essential facts are: The assessee in this case is a public limited company engaged in the manufacture and sale of sugar. The company went into production from January 22, 1958. Its first accounting period which relates to 1959-60 assessment year ended on June 30, 1958. The company claimed depreciation and development rebate on the sums which they paid by way of interest. The payment of interest was Rs. 2,38,614. It appears that the company borrowed considerable sums of money from the Industrial Finance Corporation of India for the installation of machinery and other assets. It is on this borrowed capital that the interest was paid. The interest related to the period prior to the commencement of the business from the date of the borrowing. The assessee contended that this payment of interest added to the cost of machinery, plant, etc., to the assessee and as such while calculating depreciation admissible to the assessee the interest paid should be treated as a part of the cost of the machinery, plant, etc., to the assessee.
 3. The Income-tax Officer rejected this claim holding that interest paid from year to year is an admissible item of revenue expenditure. No depreciation, however, can be allowed on the capitalised amount of the expenditure incurred under interest. No part of the above amount can, therefore, be taken as expenditure which can be attributed to the erection of the machinery or other assets on which depreciation is allowable, said the Income-tax Officer.


4. Aggrieved by that order of the Income-tax Officer, the assessee preferred an appeal to the Appellate Assistant Commissioner, Vijayawada. The appellate authority by its order dated 30th March, 1963, disagreed with the conclusion of the Income-tax Officer. In a brief disposal of that aspect of the case, the appellate authority stated that during the time of construction when the moneys are borrowed for the purposes of purchasing the machineries and also for installing them, the cost of maintaining this borrowal, namely, the interest payment is necessarily an item which goes to increase the cost of construction, which is included as a part of the capital cost. The appellate authority, therefore, allowed the depreciation claimed.
 5. The matter was carried to the Income-tax Appellate Tribunal. Noting the fact that the interest payments in dispute represented payments on borrowed capital utilised for the purchase of machinery, erection, construction, etc., it held that "the cost to the assessee must necessarily include all expenditure, which it has to incur for acquiring and installing the asset. The interest paid or payable during the period of such acquisition and installation has, therefore, to be considered only as a part of the cost to the assessee. The appeal, therefore, was dismissed.
 6. At the request of the department, the Tribunal has referred the above said question to this court.


7. The question in this case arises on the construction of a few words of Sections 10(2)(vi) and. 10(5) of the Income-tax Act relating to the computation of the income-tax and the deduction which can be made in such computation in respect of business income. It has so far evoked only a single judicial opinion, and, therefore, the soil in this respect seems to be almost virgin and no one therefore would be readily inclined to express his opinion as not admitting a doubt or a difference of opinion. We have, after bestowing our best consideration of which we are capable, come to the conclusion which forces us to answer the reference against the assessee and in favour of the department.
 8. Now, the words "actual cost" are not defined specifically in the Act. From, the Explanation to Sub-section (5), however, it appears that it is meant for the purpose of that sub-section. It states:
 " ... . the expression 'actual cost' means the actual cost of the assets to the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by Government or by any public or local authority, and any allowance in respect of any depreciation carried forward under Clause (b) of the proviso to Clause (vi) of Sub-section (2) shall be deemed to be depreciation ' actually allowed'."
 9. It becomes immediately plain that this is a restricted definition of the term and is not very useful for the present enquiry. Section 43(1) is the new prevision for Explanation 1 to Sub-section (5) of Section 10 of the old Act. It is almost on the same lines and does not render much assistance in reaching the conclusion on the problem before us.


10. We have, therefore, to find out the true meaning of this term and its scope in the context of other provisions of the Act read with Section 10 itself.
 11. Now, the provisions of Section 10 indicate that in the computation of the tax payable by an assessee under the head "Profits and gains of business" the assessee is entitled to certain deductions by way of certain allowances and one such allowance is depreciation allowance in respect of machinery, the property of the assessee. The allowance allowable is at a certain prescribed percentage on the written down value.
 12. There are three purposes for which it becomes necessary to ascertain the original actual cost to the assessee of the asset in respect of which depreciation allowance is claimed: (1) The cost is the basis of allowance in respect of ocean-going ships; (2) the written down value is calculated with reference to the cost in the case of other assets; (3) under Section 34(2)(i) the aggregate of all depreciation allowance must not exceed the original cost to the assessee, and therefore it would be necessary to ascertain the original cost in order to decide whether the assessee is no logger entitled to the benefit of the relevant provision of the Act.


13. The method of computation of the written down value is two-fold as provided In Clauses (a) and (b) of Sub-section (5) of Section 10 of the Act, In determining the written down value, a term which is defined in Section 10(5), of the assets the following has to be kept in view : in the case of assets acquired in the previous year the actual cost to the assessee and in the case of the assets acquired before the previous year the actual cost minus the depreciation actually allowed.
 14. It is evident that the word "actual" by itself would give us very little assistance. It merely lays emphasis on the word it immediately follows. It is to be the cost, the whole cost and nothing but the cost. That can only be the meaning of the word "actual". It removes any question of estimate. The term "actual cost" cannot be read to mean anything more than cost accurately ascertained.
 15. The ordinary dictionary meaning of the word "actual" is "existing In fact or fact as opposed to imaginary or past state of things". Likewise the dictionary meaning of the word "cost" is "what is laid out or suffered to obtain anything". The word "depreciation allowance", as understood in the commercial field, is deduction from profits which a business man ordinarily makes with a view to making good the capital investment,, which, sooner or later, will have to be replaced on account of the wear and tear of the assets during the course of the business. It is thus clear that the said statutory provision, i.e., Section 10(2)(vi), permits an allowance to the assessee carrying on trade or business in respect of diminution in the value of their plant or machinery by reason of wear and tear. The assessee makes a deduction obviously from the profits and the deduction would be based on the value of the machinery and its expected life.


16. The phrase "actual cost", therefore, plainly indicates that the section is intended to confine the relief to an aggregate equal to the sum of money which the person has expended out of his own resources, called cost, of which the burden has ultimately fallen upon him. In other words, what a person expends on machinery seems to us to be the actual cost to him of acquiring and installing that machinery. The term therefore guides one to the conclusion that all expenditure on the machinery by the assessee will be the actual cost to the assessee. The actual cost therefore to the assessee is what he in fact expends or lays out for acquiring and installing the asset, in this case the machinery.


17. It is true that such an expenditure would vary from assets to assets and would depend upon its nature and availability. For example, in a case of cost of a cinema theatre, the said term would include the payment made to a third party for assistance in preparing plans for the construction and for securing permits, priorities, import licences and foreign exchange for the materials. It will include a profit paid by him to a contractor if one has been employed. In other kinds of assets, other sorts of expenditure might be included. No hard and fast rule can be laid down as to what items of expenditure will be included in that term. Nor is it advisable to make any attempt in that direction as there are bound to be innumerable and varying assets which are acquired. Each case depends and has to be decided upon the facts and circumstances of that case. It can, however, be broadly stated that in acquiring an asset of machinery, not only the invoice costs are to be included but the cost which the assessee incurs in transporting the machinery and erecting it for the purpose of his business will also have to be included in the said term. The services of the technicians or engineers necessary for designing and erecting the machinery including its supervisory cost will also have to be included in the said term.
18. Thus all expenditure incurred directly or intimately on the machinery can be said to be included in that term. It would not be correct to treat the words "actual cost" to mean the cost paid to the vendors of the machinery alone. The term being what it is, has to be, in our view, liberally construed.


19. But is it possible even under such a liberal construction of the term to include the interest paid by the assessee on the borrowed capital for the acquisition of machinery. In other words, can it be said that the amount of interest paid on the capital, which is used for the acquisition of the machinery, is a part of its actual cost ? We do not think that the interest paid on the borrowed capital which went into the acquisition of the asset forms a part of its actual cost.
 20. Now, the capital which has gone into the acquisition of the asset, in this case the machinery, may be the assessee's own capital or he may have borrowed it or even got it by way of subsidy or grant from the Government or any other authority. Once the amount conies into his hands, it becomes his own, irrespective as to by what mode and from what source he has received it. The amount in his hands would be his capital and it is that capital which he used in acquiring the assets on which the depreciation is claimed.
 21. In Corporation of Birmingham v. Barnes, [1935] A.C. 292; 19 T.C. 195; 3 I.T.R. (Eng, Cas.) 26, 30, 31 (H.L.) Lord Atkin observed at page 30:
 "What a man pays for construction or for the purchase of the work seems to me to be the cost to him; and that whether some one has given him the money to construct or purchase for himself; or before the event, has promised to give him the money after he has paid for the work.; or after the event, has promised or given the money which recoups him what he has spent."
 22. The learned Lord observed further at page 31:


22. The learned Lord observed further at page 31:
 "Here there are no qualifying words, and I think the phrase guides one to the conclusion that the expenditure on capital improvements by the person, regardless of source, will be the same as actual cost to the person, also regardless of source ".


23. We do not find any valid and compelling reason to hold that where a
plant is constructed  out of borrowed  moneys, interest paid on the loan
up to the date of commencement of the business can be capitalised and
treated as part of the actual cost of the plant.    In our view, it would not
be correct to treat the interest paid on the borrowed capital on par with
the services rendered or supervision made by technicians  to select  and
erect the machinery and expenses incurred in that behalf.    Because  while
interest is paid not on the acquisition of the asset but on borrowed capital
and the fact that the borrowed money has gone into the acquisition of the
plant may be a factor but is  certainly not directly or intimately connected
with the acquisition of the asset itself.    The interest paid, therefore, is on
the capital which he obtained by borrowing and  has little to do with the
actual cost to the assessee of the machinery which is his asset.    It   must be
remembered  that  the source  of   capital   is   hardly   relevant.    What   is
relevant and pertinent is what actual  cost the assessee has incurred in
acquiring and erecting the machinery.    We are, therefore, clear in our view
that when Sections 10(2)(vi) and 10(5) speak of  original and actual cost of
machinery to the assessee, it only means the amount expended  or laid out
by the assessee in acquiring and installing machinery.   The interest paid on
the borrowed capital, which went into the acquisition of an asset, cannot, in
our opinion, form part of the actual cost of the asset.


24. We are strengthened in our view by the following provisions of the Act expressing clearly the intention of the legislature. Section 19 of the 1961 Act relates to deductions from interest on securities. The income chargeable under the head "Interest on securities" is directed to be computed after making the deductions mentioned in that section. Clause (ii) of that section reads as follows:
 "Any interest payable on moneys borrowed for the purpose of investment in the securities by the assessee."
 25. Similarly, Section 24, which relates to deductions from income from house property, categorically allows deduction in Clause (vi) of Sub-section (1):
 "Where the property has been acquired, constructed, repaired, renewed or re-constructed with borrowed capital, the amount of any interest payable on such capital."
 26. Section 10(2)(iii) of the Act of 1922 itself provides a third category of cases where the legislature expressly allowed deduction of interest on borrowed capital. If the legislature wanted that interest paid on the borrowed capital, which went into the acquisition of an asset, should be deducted, nothing could perhaps have prevented the legislature from adding an Explanation as they did in fact to Sub-section (5) of Section 10 in regard to other matter to make this matter also very clear. Wherever the legislature wanted the interest on borrowed capital to be given as deduction, the legislature expressly provided for it. The absence of any provision in this behalf, therefore, is meaningful and supports the view which we have taken.


27. It was then argued that the accounting practice permits the capitalisation of interest and treats it as part of the cost incurred in acquiring the assets. Reliance in this behalf was placed on an extract appearing at page 15 of Members' Handbook Series No. 1 issued by the Institute of Chartered Accountants of India (Statement on Auditing Practices). Paragraph 2, 19 at page 15 reads :
 "Interest on borrowings :


"Interest on borrowings :
 The question often arises as to whether interest on borrowings can be capitalised and added to the cost of fixed assets which have been created as a result of such expenditure. The accepted view seems to be that in the case of a newly started company which is in the process of constructing and erecting its plant, the interest incurred before production commences may be capitalised. 'Interest incurred' means actual interest paid or payable in respect of borrowings which are used to finance capital expenditure. In no circumstances should imputed interest be capitalised, such as, interest on equity or preference capital at a notional rate. Interest on capital during construction paid in accordance with the provisions of Section 208 of the Companies Act, 1956, may, however, be capitalised as permitted by that section. Interest on monies which are specifically borrowed for the purchase of a fixed asset may be capitalised prior to the asset coming into production, i.e., during the erection stage. However, once production starts, no interest on borrowing for the purchase of machinery (whether for replacement or renovation of existing plant) should be capitalised. For an existing business, the only interest which may be capitalised is interest paid for financing a completely new unit or a substantial expansion undertaken by the company. Even here, only the Interest on monies specifically borrowed for the new expansion may be capitalised and that only for the period before production starts. Interest payable on fixed assets purchased on a deferred credit basis should not be capitalised after commencement of production."


28. It need not be doubted that the method of accounting and allowing the interest paid on the borrowed capital to be capitalised for certain purposes is recognised in accounting practice. But merely because the method of accounting is followed in the way in which the above-said extract indicates, it does not necessarily follow that the legislature has adopted this principle when it said that the "actual cost" to the assessee of machinery should alone be deducted. How the assessee writes the accounts or what mode he adopts in treating a particular expenditure is hardly relevant. What is relevant is the actual words employed in the section and what meaning they give. We do not therefore think that merely because such commercial practice exists, we must interpret the term to include the interest after it is capitalised and added to the cost of the machinery as part of the actual cost of the machinery to the assessee within the meaning of Section 10(2)(vi).


29. It is true that if the statute is one passed with reference to a particular trade, business or commerce, and words are used therein which everybody conversant with that trade, business or commerce knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning which may differ from the ordinary or popular meaning. But Section 10 is not legislated for any particular trade, business or commerce. It is a general legislation applicable to all those who get caught in its net. That apart, "actual cost" does not appear to be a technical business, trade or commercial term used as such and is known and understood in the way in which it is now sought to mean. The above-said extract does not make any claim of that sort. Furthermore, in order that an alleged trade, business or commercial use of a term shall prevail, it must appear that such commercial meaning is the result of established usage in business, trade or commerce and that, at the time of the passage of the Act, such usage was definite, uniform and general and not particular, local or personal. No such case, in our view, is made out in this case. Moreover, we feel that the interpretation we have placed on the said term is more agreeble to the object and intention of the legislature.


30. Let us then examine the authorities cited at the Bar. Calico Dyeing and Printing Works v. Commissioner of Income-tax, [1958] 34 I.T.R. 265,273 (Bom.) is a case which pertains to Section 10(2)(iii) and renders us no assistance in this enquiry. In that case, the assessee-firm, which carried on the business of bleaching, dyeing and printing cloth, borrowed money in the year of account in order to extend its business, purchased land and erected additional plant and machinery and paid interest on the borrowed capital. In its assessment to income-tax in the relevant assessment year the claim of the assessee to the deduction of the interest so paid under Section 10(2)(iii) of the Act was rejected on the ground that the plant and machinery were not used for the business in the year of account. On a reference, the High Court of Bombay held that the assessee was entitled to the deduction claimed, even though the plant and machinery were not used in the year of account. That question does not, in our case, arise. Their Lordships dealing with Section 10(1) and (2) observed:
 "Therefore, the scheme of Section 10(1) and (2) is clear. To start with, there must be a business which is being carried on for the purpose of earning profits and those profits are being assessed to tax. It is in respect of that business that the assessee claims various allowances under Section 10(2) and one of the allowances is depreciation, whether normal or initial."
 31. And it is, in the context of the facts of that case, that their Lordships held"
 "An assessee is entitled to claim interest paid on borrowed capital provided it is for the purpose of the business irrespective of what may be the result of using the capital which he has borrowed."


32. We are not concerned with any such question in this enquiry.
 33. The next case cited to us is G.J. Coelho v. State of Madras, [1960] 40 I.T.R. 686 (Mad.). That was a case relating to the agricultural income-tax. The assessee in his assessment to tax on his agricultural income from his plantation for the assessment year 1955-56 under the Madras Agricultural Income-tax Act, 1955, claimed deduction of the entire interest paid by him on monies borrowed for the purpose of purchasing plantation. Rejecting that claim, the Madras High Court held that the interest was not an allowable deduction under Section 5(k) of the Act as it was not an expenditure on the land within the meaning of that section. Their Lordships, however, held that the expenditure by way of payment of interest was not of a capital nature. The decision in that case was exclusively upon the language of the particular enactment, which fell for their Lordships* consideration and cannot be said to render any assistance to us. No observation in the said judgment is also useful for our purpose.


34. Then comes Habib Hussein v. Commissioner of Income-tax, [1963] 48 I.T.R. 859 (Bom.). It is upon this decision that the two tribunals below have mainly relied. In that case, the assessee obtained a licence from the owner of a plot to enter upon the land and erect a cinema theatre, business premises and residential quarters on the land, on payment of a rental of Rs. 4,200 per month. For the purpose of erection of the theatre and starting the business, the assessee entered into an agreement with the owner of the plot, who was an influential businessman, by which the latter agreed to help the assessee in getting prepared suitable plans and designs for the cinema theatre and other buildings, in obtaining permission from the Bombay Municipality for constructing an additional sixth floor, in procuring the required finance to enable the assessee to complete the construction of a modern theatre and other buildings, in procuring various priorities and permits for scarce materials including cement, steel and petrol for transport, in securing import licences for various goods for the purpose of the cinema theatre, in securing foreign exchange facilities to enable the assessee to import from abroad the goods required for the purpose of the theatre and other buildings and to advise the assessee from time to time during the course of construction of the cinema theatre and buildings. In consideration of the aforesaid services and assistance rendered by the owner, the assessee agreed to give the latter for a period of 20 years 2 per cent. of gross annual income earned by him in his cinema business. Subsequently, a new agreement was entered into by which the parties agreed that in full satisfaction of payment of 2 per cent. of the annual gross income for 20 years as provided in the original agreement, the assessee should pay to the owner a sum of Rs. 3,30,000 within a period of five years by twenty quarterly instalments of Rs.


3,30,000 within a period of five years by twenty quarterly instalments of Rs. 16,500. The amount of Rs. 3,30,000 was debited by the assessee at the close of the account year. The assessee claimed in the subsequent accounting year that the said sum should be included in the actual cost of the depreciable assets to the assessee for the purpose of determining the depreciation allowance allowable to him under Section 10(2)(vi) of the Act.


35. The Bombay High Court held that the meaning of the expression "actual cost to the assessee" as used in Section 10(5) of the Act was what the assessee had, in fact, expended or laid out for the purpose of acquiring the depreciable assets; the expenditure incurred in getting prepared suitable plans and designs for the construction of the cinema theatre, for construction of a minuet theatre, for securing various priorities and permits for scarce materials including cement, steel, piping and petrol for transport, in securing import licences for various goods for the purpose of the cinema theatre, and for securing foreign exchange facilities to enable the assessee to import from abroad goods required for the purpose of the said cinema theatre was liable to be included in the cost of the depreciable assets to the assessee and that, therefore, such portion of the remuneration as was attributable to these services should be included in the cost of the depreciable assets.
 36. Their Lordships specifically declined to allow the deduction claimed by the assessee in regard to the commission amount which the assessee had paid for procuring the capital which went into the construction of the property. It was categorically observed :
 "It is clear that the services mentioned in Clauses (b), (c), (e) and (j) cannot be said to be in any manner connected with the acquisition of the depreciable assets."


37. This decision supports the view which we have taken that not every item of expenditure which is indirectly or remotely connected would go as part of the cost of the asset but it is only those items which are directly and intimately connected with the acquisition of an asset that may be included in the term "actual cost" within the meaning of Section 10(2)(vi). That is why their Lordships, while allowing some items, rejected the others. This decision, however, is not authority for the proposition that interest paid on the borrowed capital also comes within the term "actual cost" to the assessee.
 38. The only decision which takes the view which can be said to be contrary to our view is Commissioner of Income-tax v. Standard Vacuum Refining Co. of India Ltd., [1966] 61 I.T.R 799, 802, 808 (Cal.) We have, therefore, very closely and carefully examined this decision. In that case, the assessee-company borrowed moneys on debentures in June, 1953, interest to run from that date, and utilised the amount along with other moneys financed by it for setting up a refinery which started work on September 1, 1954. All expenses incurred during the period of construction including a sum of Rs. 23,53,284 being the interest which had accrued on the aforesaid debentures from the date of the borrowings to the date of commencement of the business were capitalised and depreciation on the full amount was claimed. The Tribunal had held that the assessee-company was entitled to depreciation on the capitalised interest also. On a reference to the High Court by the department, the Calcutta High Court held :


"The interest paid on the debentures issued formed part of the actual cost incurred by the assessee-company in acquiring the capital asset and under Sections 10(2)(vi), 10(2)(via), 10(2)(vib) read with Section 10(5), such interest must be taken into consideration for the purpose of depreciation and development rebate."


39. This conclusion was reached on a set of reasoning. The judgment states;
 " Capital asset may be acquired by the assessee either out of his own savings or with borrowed capital. When capital asset is acquired with borrowed capital the assessee is ordinarily required to pay interest on such amount borrowed while the capital asset is being acquired, that is to say, until it is fit for the commencement of business. Expenses are incurred by the assessee in paying for the other materials including machinery for the construction of the capital asset, in paying wages of labourers engaged for the work of construction and in paying remuneration to erection engineers, architects, designers, etc. It is not disputed that such expenses do form part of the actual cost to the assessee in acquiring the capital asset. If a machine is imported from abroad, amounts paid on account of freight and for transporting it from the harbour to the factory site certainly form part of the actual cost to the assessee in acquiring the capital asset. In the case of a machine, invoice price alone is not the actual cost; certain other expenses incurred in installing the machine also enter into the actual cost. Whatever expenses are essential to the erection of the capital asset are certainly included in the actual cost to the assessee."
40. So far as these reasons go, there can hardly be any quarrel. Their Lordships, however, further observed:


"When a capital asset is acquired by an assessee with his own money he is not required to pay any interest; so it may be argued that payment of interest is not essential to the acquisition of a capital asset but this argument does not bear scrutiny. Employment of an erection engineer may be necessary in one case and may not be necessary in another. From this it cannot be said that in an appropriate case the employment of an erection engineer is not essential to the erection of a factory. Similarly, where an assessee cannot acquire a plant except with the aid of a loan, the loan is essential to him for the acquisition of the plant, and payment of interest being essential to the procurement of loan, payment of interest too must be regarded as essential to the acquisition of the plant."
41. With due respect to the learned judges, we find it very difficult to see the similarity between the instances mentioned. It may be that for the purpose of erection of a factory, consultation of an engineer in a particular case may not be necessary. But then since no cost on account is incurred it will not be computed towards interest. What similarity that example bears with the payment of interest is not quite clear. Merely because a person is hard pressed for money and has necessarily to borrow for the purpose of acquiring an asset, that by itself need not drive one to the conclusion that payment of interest since it became essential to a particular person forms part of acquisition cost of the machine. We have already indicated and we are supported by an English authority of the House of Lords that source of capital is hardly relevant. It was argued before their I ordships on behalf of the revenue that when interest is paid even after the commencement of the business, such interest, must be added to the cost of the plant. It was repelled in the follow no manner :


"The short answer is that such interest is paid other the plant has been established and hence, it cannot form part of the cost of establishing the plant."
 42. It is difficult to appreciate this reasoning. If the interest on borrowed capital forms part of the actual cost of the machinery to the assessee, then till the depreciation is permissible the interest paid on such borrowed capital should necessarily fall within the ambit of that term. How does the commencement or non-commencement of the business alter this situation surpasses our comprehension.
 43. It may be that the interest paid on the borrowed capital after the commencement of the business is sought to be brought within Section 10(2)(iii) and, therefore, the assessee may not be interested as it is not in his interest to claim depreciation on the interest paid on the borrowed capital, which went into the acquisition of the estate. The deduction under Section 10(2)(iii) would definitely be much more than what is deducted by way of depreciation under Section 10(2)(vi). Whether the capital borrowed before the business commenced and which went into the erection of machinery can be said to fall within the meaning of Section 10(2)(iii) or not, does not fall for our consideration in this case. But merely because the assessee claims the interest under Section 10(2)(iii) after the commencement of the business, assuming that it is done validly, even then how the real position which existed, that is to say, that the interest which was paid on the borrowed capital and which formed part of the actual cost, according to the said decision, would alter its position merely because of the commencement of the business ?


44. It cannot be actual cost before the commencement of the business and subsequent thereto become a borrowed capital for the purpose of business within the meaning of Section 10(2)(iii), We do not, therefore, consider that this aspect should have any impact upon the question which falls for our consideration in this case.
 45. Their Lordships further stated :
 "On general principle there is scarcely any distinction between payment made to a supervisor who supervises the erection of a plant and the payment made by way of interest on the amount borrowed for the acquisition of the capital asset. If payment to a supervisor is an element in the actual cost incurred by the assessee in having the plant, there is no reason why payment of interest should not be an element in such cost."
 46. We have already stated that these two instances have very little in common between them, and as we are clearly of the opinion that the source of the capital is not relevant for the purpose of this enquiry, this reasoning also does not impress us much.
 47. Their Lordships then referred to the practice prevailing in the commercial circles to which we have already made reference and expressed our opinion in that behalf.


48. This is all the reasoning which the learned judges have given to reach the conclusion to which they reached that interest paid on borrowed capital forms part of the actual cost of the machinery to the assessee within the meaning of Section 10(2)(vi). With profound respect to the learned judges who expressed that opinion, we find it very difficult to accept that view as correctly interpreting Section 10(2)(vi) read with Section 10(5). We have already narrated the reasons which compel us to take the view which we have taken. We are, therefore, satisfied that the Appellate Assistant Commissioner and the Tribunal have erred in allowing the deduction under Section 10(2)(vi) for the interest paid on the borrowed capital. We would, therefore, answer the reference in the negative, in favour of the department and against the assessee. The assessee will pay the costs to the department.


Harijander Singh vs Selection Committee, Kakatiya ... on 17 April, 1974

JUDGMENT Ekbote, C.J.

 1. This case first came before our learned brother K. Ramachandra Rap J. In view of conflict in certain decisions, he referred the matter to a Bench. When it came before a Bench, it was noticed that "the case raises a very important question as to whether a writ petition under Article 226 lies against Kakatiya Medical College which though privately run is affiliated to the Osmania University and receives grants from the public exchequer from the State of Andhra Pradesh."
The case therefore was referred to a Full Bench by an order dated 24-1-1974 for an authoritative judgment on this 'vexed question' and that is how this case has come to us.

2. Kakatiya Medical College was established in 1959 by some enthusiastic officials and non-officials. The then Chief Minister showed keen interest. A managing committee headed by the Collector. Warangal was formed. The Regional Medical Education Society was registered under the Societies Registration Act, The Medical College so started is affiliated to the Osmania University. The Government Hospital. Warangal is attached to this College. The State Government is giving grants to this Medical College. Sometimes it draws upon the bounty of the Central Government. Apart from receiving capitation fee from each student it receives the fees prescribed from the students. The University and the State Government have their representatives on the managing committee.

3. The Osmania University is governed by Act IX of 1959, the Osmania University Act. Section 2 (a) defines the affiliated College to mean "a college within the University area affiliated to the University in accordance with the conditions prescribed."

4. Section 2 (a) (i) defines the term 'aided college'. "It means a college other than a Government College which receives aid out of the State Government funds."


5. Section 2 (f) then defines the term 'Professional College' which means "a college established and maintained by the University, or affiliated to the University for providing courses of study leading to the professional degrees of the University, in accordance with, the Regulation prescribed."

6. The term 'teacher' includes a teacher working in the affiliated professional college. Section 4 lays down the Powers, functions and objects of the University, one of which is to affiliate or recognise colleges and institutions and to withdraw such affiliation and recognition. The other is to supervise and control the conduct and discipline of the students of the University and its affiliated and recognised colleges and institutions and to make arrangements for promoting their health and general welfare.

7. Yet another is to inspect affiliated and recognised colleges and institutions and to take measures to ensure that proper standards of instruction are maintained in them. It is the function of the University to hold the examinations and to confer degrees on persons who have pursued a course of study in its affiliated or recognised colleges. It can take over and maintain colleges and hostels.

8. Under Section 18 of the Act, the Senate of the University has the power to prescribe general conditions of affiliation and recognition of colleges and institutions and to suspend or to withdraw affiliation or recognition, as the case may be on the recommendation of the Syndicate and after consultation with the Academic Council. It has also power to control in general all colleges and institutions in the University area in the manner prescribed by the statutes. It can enter into any agreement with a private management for ensuring the management of any institution and taking over its properties and liabilities or for any other purpose, not repugnant to the provisions of this Act.


9. The Syndicate under Section 21 of the Act has power to affiliate colleges to the University under conditions prescribed or recommend their suspension or withdrawal of such affiliation. It also has power to direct the inspection of affiliated colleges and to call for reports, returns and other information from affiliated colleges.

10. From these provisions of the Act it would be abundantly plain that not only the courses of studies are prescribed by the University but the appointment of teachers, admission of students, holding examinations and conferring degrees all rest with the University. It can affiliate or withdraw such affiliation. It can inspect and call for reports from the affiliated colleges. There is thus an ample control of the University on the affiliated colleges. The affiliation and other things of the private aided colleges are regulated and controlled not only by the provisions of the Act but also by the statutes, ordinances, or Regulations made by the University in pursuance of the power conferred on it by the Act.

11. Thus the University as well as the affiliated colleges are bound not only by the provisions of the Act but also by the subordinate legislation in the form of statutes, ordinances or regulations made by the University.

12. Section 44 of the Act empowers the Senate to make statutes determining the condition of affiliation or recognition of colleges and institutions. It is in pursuance of this power that the Senate made the Regulations regarding the affiliation or its withdrawal of the private colleges.

13. Rule 1 authorises the Syndicate after consultation with the academic council to affiliate any college.


14. Rule 5 lays down the conditions which must be satisfied. Firstly that it is under the management of a regularly constituted governing body properly appointed by the Society duly registered. Such governing body shall have at least one representative of the University and one of the education department. It fixes the minimum and maximum number of members of such a governing body. It forbids exclusion from admission to the college on the ground of religion, caste, race, or sex place of birth or any of them. It also ensures the qualifications of the teachers and conditions governing their tenure of office.

15. Rule 15 empowers the Syndicate to appoint a commission once in five years to inspect the affiliated colleges.

16. Rule 17 authorises the Syndicate to suspend or withdraw the affiliation.

17. Rule 19 then enjoins that every college shall have a duly constituted Selection Committee for recruitment to the teaching staff. The Government and the University shall be represented on the Selection Committee.

18. Rule 20 then lays down the qualification for the teachers and the principals.

19. Rule 21 lays down the minimum pay scales for the teaching staff of the affiliated colleges.

20. Rule 22 authorises the college to frame rules which must be sent to the University relating to promotion, (sic) or retirement, leave, fixation of pay and provident fund. The University has retained the power to direct amendment of any rules so submitted to the University. It further declares that the teachers appointed permanently in the affiliated colleges shall be entitled to serve till they complete the age of 60 years. It can be extended with the permission of the University unto 65 years. It also enacts that an appeal shall lie with the Syndicate in case there is any dispute between the management and teaching staff.


21. Rule 26 then states that terms, vacations, conditions for admission of students attendance examination promotion and hours of work in the affiliated college shall be the same as those of the constituent colleges of the University.

22. Rule 32 enjoins that every college affiliated to the University shall conform to and be bound by the Rules of the University now in force or framed from time to time.

23. It is in this background of these provisions that we have to examine whether judicial review is available in this case.


24. The question of availability of judicial review is the first question which must be answered by the Court in every case. This task is no more in controversy because of Article 226. The Constitution itself makes it available. That is what is meant by rule of law. It cannot be taken away or limited by any statute. Whether the power to review should be exercised in any given case is altogether a different question. Our administrative law like that of England is squarely founded on the doctrine of ultra vires i. e. jurisdiction. The courts approach a challenged administrative act on the footing that it is either lawful o unlawful, intra vires or ultra vires. In the former case they have no concern with it. In the latter case, they will quash it or declare it void. From this view point, it really becomes irrelevant that there may be parallel jurisdiction in some other body or some alternative administrative remedy. The Courts are concerned only with the question whether there has been a breach of the law in the situation before them, and on those they must focus to the exclusion of everything else. In any case, where a Court has jurisdiction it must of necessity be ready to remedy illegalities of all kinds. It is of course understood that since the writs are discretionary remedies, the Courts may withhold them if there are special circumstances which deprive their application on merit. There have come into existence some self-imposed restrictions on the exercise of this very wide and extraordinary power of the High Court.


25. The question in this regard is often posed: against whom writs and orders can issue? It must however, be realised that the methods by which an administrative action can be removed by the courts include the issue of certiorari, mandamus, prohibition etc. etc. The question as to against whom such a writ can issue must therefore depend upon the nature of the writ asked for. We have in this case to consider the question relating to certiorari and mandamus. These are the reliefs asked for in the two writ petitions with which we are concerned.


26. In regard to certiorari Lord Atkin. L. J. made the following statement in R. v. Electricity Commissioner, (1924) 1 KB 171 at p. 204):
"Both writs are of great antiquity, forming part of the process by which the King's Courts restrained courts of inferior jurisdiction from exceeding their powers. Prohibition restrains the tribunal from proceeding further in excess of jurisdiction; certiorari requires the record or the order of the court to be sent up to the King's Bench Division, to have it legally inquired into, and if necessary to have the order quashed. It is to be noted that both writs deal with questions of excessive jurisdiction, and doubtless in their origin dealt almost exclusively with the jurisdiction of what is described in ordinary parlance as a Court of justice. But the operation of the writs has extended to control the proceedings of bodies which do not claim to be, and would not be recognised as, courts of justice. Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs."
27. From the above statement two questions arise: First, in respect of what acts is certiorari available; second, on what grounds i. e. in respect of what defects, will it issue?


28. If we take up the first question, it will be seen that Atkin. L. J.'s dictum extracted above shows that the availability of certiorari has extended historically from the courts in the strict sense to bodies which would not normally be regarded as courts. In England while it is available to quash the decisions of Courts of summary jurisdiction, of country courts, of Corroners' Courts, the National Insurance Commissioner. Rent and other Tribunals, it is also granted in respect of decisions given by bodies whose functions are normally considered as far removed from those of a court.

29. Although the proposition laid down by Lord Atkin, L. J. is neither uniquely authoritative nor self-explanatory and although in some situations it has offered a court uncertain guidance; in others it has appeared unduly restrictive, nevertheless one has necessarily to analyse the implications of the learned Lord's observation in order to appreciate the present state of law.

30. We have seen that according to the learned Lord "Whenever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially act in excess of their legal authority, certiorari may issue." The words "any body of persona" naturally give rise to question as to against whom a given writ can be issued. While we have noticed that certiorari will issue against the authorities mentioned above, it would be erroneous to confine its operation to only statutory bodies. Even a non-statutory body if it falls within the ambit of the abovesaid dictum a certiorari can go against such non-statutory body. The wording of Article 226 is sufficiently wide and according to it writ can be issued "to any person or authority including any Government."


31. Now the words "any person" in Article 226 only mean any person to whom according to well-established principles a writ would lie. In Janardhan Reddy v. State of Hyderabad. ():
"The power given to this Court under the provision is a large one. But it has to be exercised in accordance with the well-established principles."
The above observations of the Supreme Court are applicable also to the wide powers of the High Court under Article 228 and they have, therefore, to be exercised in accordance with well-established principles.

32. Certiorari was for long dogged by the absurd verbal confusion which the Courts made out of the supposed requirement that it lay only to quash 'judicial' or 'quasi judicial' acts, when in fact it had, even in England, for centuries been, used to quash administrative acts. Fortunately a healthy reaction has new supervened and it is now dear that certiorari lies to control purely administrative decisions such as licensing, slum clearance and making of rating valuation lists. It may, here-after, therefore be capable of reaching beyond the area of legal power strictly so called.

33. The distinction between a Judicial or quasi-judicial action and an administrative act is now practically wiped out. It is now fairly settled that even an administrative act of any person or authority which affects the right or interest of a citizen can be challenged in a proceeding under Article 226.

34. The words "having legal authority" were still recently taken to mean a statutory authority. Recently a strong Divisional Court held that a public body required to make determination affecting individual interests in a judicial manner was subject to review by certiorari despite the fact that it was neither constituted by a statute nor endowed with jurisdiction by statute.


35. In R. v. Criminal Injuries Compensation Board. ((1967) 2 All ER 770), this question has been thrashed out. In 1964, the Criminal Injuries compensation scheme was established by which compensation is payable to persons injured by crimes of violence. The scheme was set up under the executive power and not under a statutory one. The Parliament's approval of the necessary annual expenditure is however given annually. The scheme is administered by the Board. The principles it has to apply when awarding compensation and the procedure it has to follow in determining applications are laid down by the Home Secretary. There is no enforceable legal right to compensation even if the Board makes an award. Lain applied for certiorari for error of law on the face of the record. The Board did not deny that it had a duty to act judicially but argued that it was not amenable to certiorari as, with reference to Atkin L. J.'s dictum, (a) it has no 'legal authority' and (b) it did not "determine questions affecting the rights of the subjects". The Court held (a) that the Board's authority was legal though it was not set up by statute (b) that the word 'rights' was not confined to legally enforceable rights; or more widely, that the words "the rights" might be omitted from Atkin, L. J.'s dictum. Lord Parker. C. J. said at page 778 that certiorari will not issue to private or domestic tribunals which "have always been outside the scope of certiorari since their authority is derived solely from contract, i. e. from the agreement of the parties concerned."


36. The dictum of Lord Atkin L. J. then requires that the authority must have to determine questions affecting the rights of subjects. The word 'right' is used in a very wide sense. It has therefore to be understood in a very broad sense and is not to be confined to the jurisprudential concept of rights to which relative legal duties are annexed. It comprises an extensive range of legally recognised interests, the categories of which have never been closed. In a number of cases the granting or refusal of a licence which analytically is a privilege or liberty has been held to be reviewable by certiorari.


37. Coming then to the last of the observations of Lord Atkin L. J. i. e, "having the duty to act judicially", certiorari will not issue to quash the order of a body that has acted in a purely ministerial capacity. But it is not necessary that in every action there must be a lis between the parties. There are cases in which a duty to act judicially in accordance with the rules of natural justice has been held to arise by implication, from the nature of power and its impact upon the rights of individuals despite the absence of any express duty to follow a procedure analogous to the judicial. There are also cases in which certiorari has been issued to quash decisions made in excess of authority despite the fact that the body concerned was under no express or implied duty to afford a hearing to two contending parties. What follows therefore is that the duty to act judicially may exist in situations other than those in which there is express statutory provision for the determination of an issue analogous to a lis inter partes. Thus the duty might arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. The general approach in recently reported decisions, English and Indian, towards the permissible scope of certiorari has been very liberal. It is now clear that certiorari can issue to bodies exercising discretionary powers and having no duty 'to act judicially' in the sense of a duty to follow a judicial type procedure; some are tempted to assume baldly that certiorari will issue to qua purely administrative as well as judicial acts and decisions. The administrative decision, however, must be such as to affect the right or interest of a person.


38. It will thus be seen that the administrative law relating to certiorari has been in the slow process of evolution. The exact limits of certiorari, however, were never rigidly laid down. They have varied from time to time, with a view to meet the changing conditions. At one time the writ was issued to an inferior court. It was subsequently extended to statutory tribunals determining a lis inter partes. Later again it extended to cases where there was no lis in strict sense of the word but where rights or interests of citizen were affected. The only constant limits throughout have, however, been that it was performing a public duty. Thus certiorari may issue to inferior non-statutory tribunals discharging functions of a public nature. We have thus reached the position when the ambit of certiorari can be said to cover every case in which a body of persons of a public as opposed to a purely private or domestic character has to determine matters affecting the subjects provided always that it has a duty to act judicially. And the term 'judicially' would now include quasi judicially or fairly. It can sometimes even be implied. It is usually implied when the action affects in the broad sense rights or interests of the subjects. It would include administrative acts of such character which affect the rights or interests of citizens and in which they are in any base required to act, openly, fairly and impartially.


39. Halsbury's Laws of England. 4th Edition at page 104 says:--
"In order to establish that certiorari or prohibition will issue, it appears to be enough to show that the body in question was obliged to act in a judicial manner, in the sense that it was under an express duty to adopt a procedure analogous to a judicial procedure, or that it was required to determine questions of law and fact or otherwise to exercise a limited or judicial discretion, or that it was under an implied duty to act judicially in accordance with natural justice, or even under a more loosely formulated duty to act fairly. A duty to act judicially may be inferred from the severity of the impact made by the exercise of a power or duty on individual interests."
40. One of the best features of our administrative law is the range and the effectiveness of the remedies provided in Article 226 of the Constitution. In our modern highly organised society were administrative acts and decisions intimately affect the wall being and happiness of so many citizens, particularly those who are poor, life would be intolerable if there were no means of ensuring that interference by administrative action with the liberty or property of the individual did not exceed that which had been authorised by a representative legislature and also by the Constitution and that the administrative decisions so authorised were fairly made.

41. That it is the proper role of the High Court to ensure needs no urging. But unfortunately the methods of review provided are shrouded in the thicket of technicalities. If we once recognise the need to control administrative acts and decisions, then the courts should not be slow in devising the means but shake off the hesitancy to assume the role of doing so. The situation at present recognises it and the development of remedies justifies such an attitude.


42. Moreover, the important aspect of the writs enumerated in Article 226 is that they belong exclusively to public law with the exception of habeas corpus. Their primary object is to make the machinery of Government and administrative tribunals and bodies work properly rather than to enforce private rights. This introduces a valuable 'public interest' element. An application for certiorari, as the title of the case indicates, is a proceeding by a superior court to call some public body or authority to account for exceeding or abusing its power. Similarly in a proceeding for mandamus the superior court is calling for the proper discharge of some public duty. Although private persons are of course the real applicants, the public character of the proceedings is more than a mere form. In reality, thus, the applicant may be an ordinary citizen but the fiction of a "Crown suit" broadens the basis of the whole proceeding. As Lord Delvin once said :
"Orders of certiorari and prohibition are concerned principally with public order, it being part of the duty of the High Court to see that inferior courts confine themselves to their own limited sphere."
A citizen who comes forward to point out defect of jurisdiction is in a sense public benefactor.

43. This then is the present position of law relating to certiorari.


43. This then is the present position of law relating to certiorari.

44. When we come to the writ of mandamus, it is seen that it is writ which commands a public body to perform a public duty imposed on it by law. A distinction must therefore be made between a duty and a mere power. The distinction between the two is clear and obvious. Mandamus is not limited to judicial acts. It will issue at the instance of a person whose legal right is involved and a corresponding statutory obligation is also involved. The remedy of mandamus is discretionary. It is not issued as a matter of course. Nor it can be claimed as a matter of right. Thus there must be a legal right existing in the petitioner and a corresponding legal duty upon the public officer or authority in order to issue a mandamus.

45. It is in this background of prevalent position of law regarding certiorari and mandamus that we have to consider whether a writ of certiorari or mandamus can issue against a private aided college affiliated to the University.


46. A Bench of this Court consisting of Gopal Rao Ekbote J. (as he then was) and Ramachandra Raju J. held in Kailash Pati v. Governing Council, (1971) 2 An WR 352):


"There is no doubt that a College may not be a statutory body but in view of the fact that it is heavily aided under the Grant-in-aid code by the State Government from the State Exchequer which comes from the tax payers' money and is affiliated to the University in accordance with the statutes made by the University in pursuance of the University Act passed by the State Legislature it is amenable to the jurisdiction of this Court under Article 226 of the Constitution. It is of course true that it must also satisfy the other requirements. Whatever may have been the view held in the past it can safely now be said that the recent factors favourable to the expansion of certiorari have been many including the factor that certiorari will issue to a non-statutory body exercising public functions. The Courts of late have readily held that those orders can He to administrative tribunals deciding issues of law and facts between parties. Although they have usually said that only judicial or quasi-judicial acts could be supervised by them, at the same tune, they have wished and have attempted to control as many forms of administrative action as possible. If this trend is to be taken as the basis, then it would not be difficult to hold that the said writ not only can be directed against the statutory bodies or authorities but also against bodies or authorities although non-statutory in their character, yet discharging public duties, provided of course that they have an authority to decide questions affecting the rights of others and have the duty express or implied to act judicially. If the body is constituted and is registered under the Societies Registration Act and if such body is receiving substantial grant out of public Exchequer and is affiliated to the University, since it discharged public obligation and is performing public duties, such a body surely comes, within the ambit of Article 226 of the Constitution. Such a body is amenable, therefore, to the jurisdiction of this Court under Article 226 of the Constitution."


It was further observed:
"It would be patently clear that the college is a body of persons of a public character which has to determine sometimes matters affecting civil rights of the teachers and also students of the College. The college has to necessarily act judicially while determining the service of a teacher on disciplinary grounds or expelling students on grounds of indiscipline. Even in case where a non-statutory body like the college invades the civil rights of teachers or students and affects them economically or otherwise, the college owes a duty towards the teachers and students to observe the principles of natural justice wherever there are no specific rules made in that regard. Article 226 of the Constitution although qualifies the word 'rights' by the words 'conferred by Part III' the words 'for any other purpose' are of wide amplitude. These words would include rights which are legally enforceable and created not only by the statute but Would also include rights created by common law."
47. That was, however, a case terminating the services of a Principal of private aided and affiliated college. This case was cited before another Bench consisting of Obul Reddi and Ramachandra Raju JJ. in Subhadra Devi v. Andhra Girls College. ((1973) I An WR 94). The learned Judges felt that since the said decision was "not in conformity with the de-clared law of the Supreme Court in Madan Gopal Rungta's case. , they were not called upon to refer the question involved to a Full Bench. The learned Judges also referred to the fact that the earlier Bench decision had relied upon Regina v. Criminal Injuries Compensation Board, Ex parte Lain (1967) 2 QB 864. They also noted what the case has decided. They, however, recalled what Mukherjea, J. had said in T. C. Basappa v. T. Nagappa, . They extracted the following passage:


"In view of the express provisions in our Constitution, the Court need not now look back to the early history of the procedural technicalities of these writs in English Law, nor feel oppressed by the difference or change of opinion expressed in particular cases by English Judges."
48. Although they have not said so expressly but it is clearly that they held that the English Judgments on administrative law cannot be relied upon in Indian Courts.


49. Thus the earlier Bench decision was considered opposed to the decisions of the Supreme Court on two grounds. Firstly that the existence of the legal right said to have been infringed is a condition precedent for an application under Article 226 and secondly English cases ought not to have been relied upon.

50. In so far as the first ground is concerned, the question of the existence of the legal right in early days arose for consideration because of the language of Article 226. The Article says "for the enforcement of any of the rights conferred by Part III and for any other purpose." The High Court thus has wide power to issue directions and writs not only for the enforcement of fundamental rights but also for 'other purposes'. A conflict arose as to the true meaning of the expression 'and for any other purpose,' One view was that the principle of ejusdem generis writ apply in order to understand the meaning of this expression and accordingly it was held that the writ will issue only for the enforcement of fundamental rights and not for the purpose of enforcement of ordinary legal rights. The other view was that the rule of ejusdem generis does not apply and therefore the said expression will include the enforcement of ordinary legal rights which do not amount to Fundamental rights. The second view prevailed. What follows is that moral rights, obligations and matters, which just fall within the region of propriety and decency but all outside the region of law cannot he dealt with under Article 226. In other words, unless the breach of legal right or a provision of law or of the Constitution is alleged and proved or there is a violation of principles of natural justice, the High Court will not interfere. It is only in this context that the Supreme Court decisions in Madan Gopal Rungta's case, and State of Orissa v. Ram Chandra, have always been understood.


51. It must, however, be noted that it is not necessary for invoking the powers of the High Court under Article 226 that the applicant must, in every case, have suffered a 'personal injury' or must seek the enforcement of 'personal right'. Thus an application for habeas corpus may be made by a person other than the person under the detention. So also an application for a writ of quo warranto is maintainable although the applicant does not seek the enforcement of any of his personal rights. Surely it cannot be argued that the result of the Supreme Court decision is contrary to this position. No doubt the Supreme Court has said "the existence of the right is the foundation for the exercise of jurisdiction of the Court under Article 226". But if under the law an application can be made by a person although he has not suffered a personal injury and does not seek redress of a personal grievance or the enforcement of a duty personally in his favour or his benefit, there can be any objection to saying that such a person has a 'right' to make the application. Thus although Article 226 can only be invoked for the enforcement of legal right, such right need not be the personal right of the applicant in cases where the nature of the writ according to well-established principles does not require that the applicant must be personally injured.


52. The development in this branch of law must be borne in mind if one is not to go wrong. The latest view is that the restrictive rules about 'standing' are in general considered inimical to a healthy system of administrative law. The rules about 'standing' are now extremely liberal. Indeed in the case of certiorari and prohibition, the two remedies so largely concern with the jurisdiction, it can almost be said that there are scarcely rules about 'standing' at all. The doctrine is that anyone, even a mere stranger may apply. If the applicant is a person aggrieved, the remedies lie ex debito justitiae. If he is mere stranger, they lie only in the discretion of the courts. See Bernard Schwartaz and H. W. R. Wade on 'Legal Control of Government' page 293. If a person with a good case is turned away merely because he is not sufficiently affected personally, that means that some Government agency is left free to violate the law and that is contrary to the public interest. Litigants are unlikely to expend their time and money unless they have some real interest at stake. In the rare cases where they want to sue merely out of public spirit, why should they be discouraged? The said Supreme Court decision therefore should not be literally taken and mechanically followed. It has to be understood in the backdrop of various remedies and their scope and purpose in the administrative law. If they are literally taken and applied to all remedies and in all situations, then the tax or rate payers' cases challenging various actions of the local bodies or consumers' actions can never be justified. With due respect to the learned Judges, therefore, we do not think that that could have been a ground on which the earlier Bench decision could have been held opposed to Supreme Court decision.


53. In the earlier case the termination of Principal's service was found to be in accordance with the law and as a result no writ was issued. In our judgment, however, the case rightly decides that a private aided and affiliated college is amenable to writ jurisdiction whenever it acts in excess of jurisdiction, commits an error of law or violates principles of natural justice.

54. In the later case under examination, the lecturer was temporarily appointed. She was not qualified to be appointed as Lecturer. She had thus no right to hold the post. In these circumstances the termination of her temporary service was quite valid.


55. Let us then take the second around on the basis of which the earlier decision was considered as bad in law. We have noticed that the earlier case had relied upon the well-known and often cited case (1967) 2 QB 864. It is pertinent to note that this case has been cited with approval by Bernard Schwartz and H. W. R. Wade in their Book "Legal Control of Government" at p. 104. Halsbury's Laws of England 4th Edition, at page 150 also quotes it with approval. It is a case which has opened up a new vista in the administrative law. The learned Judges, however, thought that the said judgment being an English case ought not to have been followed. We are not persuaded to agree with this view. First of all reliance on to support the view which the learned Judges have taken was not quite apposite. The observations of Mukherjea J. merely invite us to take cognizance of Article 226 but do not preclude us from following the English and American cases on administrative law. Long back Banerjee, J. said in Union of India v. Elbridge Watson, "It is necessary to bear in mind the difference between the several writs and I would recommend to persons concerned a careful study of the nature of the writs from the English books".


56. Article 226 accepts the remedies which have been invoked in England. Not only the nomenclature but their content, scope and purpose are also accepted. It therefore becomes necessary not only to know the nature of these writs but their scope and extent of operation also. Their growth and development in England must also be closely followed. The phraseology employed in Article 226 compels us to know the principles which are well established for the use of these remedies effectively. Even in a case which went from Ceylon the Privy Council said:--
"...............There can be no alternative to the view that when Section 42 gives power to issue those mandates 'According to law' it is the relevant rules of the English common law that must be resorted to in order to ascertain in what circumstances and under what conditions the court may be moved for a prerogative writ. These rules then must themselves guide the practice of the Supreme Court of Ceylon."
57. In ; Fazl Ali, J. in reference to Article 32 said:--
"The power given to the Court under this provision is a large one but it has to be exercised in accordance with well-established principles."
58. In fact the case on which reliance has been placed by the learned Judges itself decides that in determining whether a particular writ, direction or order will issue, the High Court will take into consideration the historic background of the writ, direction or order and the general principles applicable to the prerogative writ. See T. G. Basappa v. T. Nagappa, . See also Asiatic Engineering Co. v. Achhru Ram, ; R. C. Naidu & Sons v. I. T. Officer, ; and Narasimha Setty v. Dy. C. T. Officer, .


59. It is true that these principles are not the foundation of the jurisdiction of the High Court. That foundation is provided by Article 226. Nevertheless the principles are the same. Thus the principles of the English law are applicable to the issue of the writs mentioned in Articles 32 and 226 of course in so far as they do not conflict with any provision of the Constitution or Indian law and subject to such conditions as the Court may deem it necessary to attach importance to in the exercise of its discretion in regard to the issue of the writs, in view of the special conditions in India That is why we find not only the Supreme Court but every High Court profusely and quite often relying upon English and American decisions wherever they are applicable. The administrative law is almost similar in these countries. In any case, we fail to see how the earlier decision of the Bench can be disregarded on the ground that it has preferred to rest its conclusions on an English case without holding that the principles laid down in the English case are not good law in India. We carefully considered the earlier Bench decision and we find ourselves in entire agreement with the views expressed therein.

60. The learned Judges then considered whether a private aided and affiliated college is a 'State' within the meaning of Article 12 of the Constitution. They held that it is not a State. Since no arguments were advanced to us in this behalf, we do not propose to express any opinion one way or the other.