Garimell Satyanarayana And ... vs East Godavari Coconut And Tobacco ... on 13 September, 1958

JUDGMENT Satyanarayana Raju, J.
 1. These petitions filed under Article 226 of the Constitution, pray for the issue of writs of Mandamus or other appropriate writs directing the respondents, namely (1) the State of Andhra Pradesi), and (2) the Market Committees, to forbear from enforcing the provisions of the Madras Commercial Crope Markets Act (XX of 1933) or the rules framed thereunder against the several petitioners. A common question of law arises in all these petitions concerning the legality and constitutional validity of Section 11 of the Act.
 2. The Madras Commercial Croos Markets Act (hereinafter referred to as 'the Act') was originally' enacted in 1933 by the Madras Legislature after the-previous sanction of the Governor-General had been obtained to the passing of the Act. It was subsequently amended from time to time. As the Act was-a "law in force" immediately before the formation of the Andhra State, its provisions govern the territories forming part of the Andhra State by virtue of the Andhra State Act of 1953 and the adaptation of the Laws Order made by the Government of Andhra on the First November 1953.
 3. The object of the Act, as stated in the preamble, is to provide for the better regulation of buying and selling of commercial crops and the establishment of Markets for commercial crops and make rules for their proper administration. For an appreciation of the contentions raised in the Writ petitions it is necessary to refer to the material provisions of the Act.
 4. Section 2(i-a) defines 'commercial crop' as meaning cotton, groundnut or tobacco and as including any other crop or product, notified by the State-Government in the Official Gazette as a commercial crop for the proposes of this Act.


Under Section 3 the State Government may, by notification in the Official Gazette, declare their intent iotti of exercising control over the purchase and sale of such commercial crop or crops and in such area as may be specified in the notification and such notification shall state that any objections or suggestions which may be received by the Slate Government, within a period to be specified in the notification, which will be considered by them. Under Section 4 the Government may declare the area specified in the notification under Section 3 or any portion thereof to be notified area for the purposes of the Act in respect of the commercial crop or crops.
Section 4-A empowers the State Government to establish a market committee for every notified area, and it shall be the duty of the market committee to enforce the provisions of the Act and the rules and by laws made thereunder in such notified" area as is entrusted to the Committee. The constitution of Market Committees is provided under Section 6 of the Act. Section 7 enacts that every market Committee shall be a body corporate. Section 9 empowers a market committee to employ such officers and servants as may be necessary for the management of the market and for the payment of their salaries. The form of contracts which may be entered into by a market committee is specified in Section 10. Then comes the material Section 11 which is in the following terms:
 "11(1). The market Committee shall, subject to such rules as may be made in this behalf, levy fees on the notified commercial crop or crops brought and sold in the notified area at such rates as it may determine:
 Provided that until the market committee has determined the rates of such fees it shall levy fees at the rates specified in the Schedule to this Act or in the case of any crop or product notified by the State Government as commercial crop for the purpose of this Act, at the rates specified in this behalf in such notification.


Explanation -- For the purposes of this sub-section, all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area.
 (2) The fees referred to in Sub-section (1) shall be paid by the purchaser of the commercial crop concerned:
 Provided that where the purchaser of a commercial crop cannot be identified, the fee shall be paid by the seller.
 (3) Out of the fees levied under Sub-section (1) on the commercial crop or crops bought and sold in any part of the notified area which constitutes a village as defined in Section 2 of the Madras Village Panchayats Act, 1930, such proportion as may be prescribed shall be paid by the market committee to the panchayat concerned."
 5. Section 11-A empowers the market committee to levy subscription for collecting and disseminating among the subscribers, information as to any matter relating to crop statistics or marketing in respect of the commercial crop or any of the Commercial crops concerned.
 6. Section 12 lays down that all moneys received by a market committee shall be paid into a fund to be called the 'Market Committee Fund', and all expenditure incurred by the market committee under or for the purposes of this Act shall be defrayed out of the said fund and that any surplus remaining after such expenditure has been met shall be invested in such manner as may be prescribed by rules. Section 13 enumerates the purposes for which the market committee fund may be expended.


7. In Kutti Keya v. State of Madras, 1954-1 Mad LJ 117: (MR 1954 Mad 621) it was contended that the Act and the Rules framed thereunder had become void and unenforceable by reason of their being repugnant to the Constitution. After an elaborate consideration of the contentions raised before them, Kajamannar, C.J. and Venkatarama Ayyar, J., held that the provisions of that Act generally must be upheld under Article 19(6) of the Constitution as reasonable and as having been enacted in the interests of the general public. The learned Judges, however, declared that Section 5(4)(a) of the Act, which confers on the Collector an unlimited and uncontrolled discretion to grant or refuse licenses as he might choose, is void. Rule 37 which provides that buyers and sellers, whose names are not registered by the market committee, shall not buy or sell within the notified area, was also held to be void.


8. the provisions of the Act in Sections 11 and 11-A and Rule 28(1) and (3), providing for the levy of fees on notified commercial crops, bought and sold in the notified area at such rates as it might determine, were held to be not repugnant to Article 286(2) of the Constitution. Rut the learned Judges observed that the amounts collected were taxes notwithstanding that they were not brought into the consolidated fund of the State under Article 266(1) but constituted into a separate fund and the levy was only on a section of the public. The learned Judge observed that as actually no levy had been imposed under Section 11 on any of the petitioners, its legality did not arise for determination in those proceedings and that the point was raised only as leading on to the further contention that as the levy, under Section 11 was illegal, the entire Act must fail.
 9. The learned Advocates appearing for the petitioners have raised divergent contentions but they are all agreed- that the levy of fees as contemplated by Section 11 of the Act is unconstitutional. The learned Advocate appearing for the petitioner in W.P. No. 42 of 1955 has contended that the levy in Section 11 is a tax and not a fee and it must be struck down as being ultra vires the powers of the State Legislature. He has argued that even if the imposition is held to be a fee, and not a tax, there being no direct, proximate and immediate service to the petitioners, it cannot be justified.


In these contentions, he is supported by the learned Advocates appearing for the petitioners in W. P. Nos. 718 of 1955 and 739 of 1936, who have argued that, if construed as a fee, it is so excessive that it does not bear a reasonable relation to the services rendered by the market committee. The learned Advocates appearing for the petitioners in W. P. Nos. 1060 of 1956 and 1367 of 1957 have, however, argued that the observations made in the Madras decision with regard to Section 11 are obiter, that the levy under Section 11 is not a tax but a fee, and that as a fee, it is unconstitutional.
 10. The learned Advocate-General, appearing for the respondents, has contended that the Act was passed in 1933 at a time when there was no distinction between a tax and a fee and the only requirement then was that where it was a tax the sanction of the Governor-General was necessary, and that the requirement having been complied with, the Act is valid both under Section 292 of the Government of India Act and Article 372 of the Constitution and that therefore the question of legislative competence does not arise.
 The learned Advocate-General has further argued that even assuming that the validity of Section 11, on the ground of want of legislative competence, is now open for determination, having regard to the general scheme and the purpose of the Act, the imposition must be held to be a fee and not a tax. He went a step further and has argued that even if the provision is regarded as authorising the levy of a tax, it is perfectly valid because it is an ancillary and incidental provision in a legislation relating to a subject enumerated in the State List.


11. We shall deal at the outset with the last contention of the learned Advocate-General for if that contention is sound, it would render unnecessary the consideration of the other questions. He relied upon certain decisions in support of the contention. In United Provinces v. Mst. Atiqa Begum 1941-1 Mad LJ FC (Sup) p. 65 at pp. 77 and 78: (AIR 1941 FC 16 at p. 25) Gwyer, C.J. said.
 "The subjects dealt with in the three Legislative Lists are not always set out with scientific definition. It would be practically impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every other item in that list, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import .....I think however that none of the items in the Lists is to be read in a narrow or restricted sense, and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. I deprecate any attempt to enumerate in advance all the matters which are to be included under any of the more general descriptions; it will be sufficient and much wiser to determine each case as and when it comes before this Court."
 12. In State of Bombay v. F.N. Balasara 1951-2 Mad LJ 141 at p. 147: (AIR 1951 SC 318 at p. 322) the following observations occur:


"It is well-settled that the validity of an Act is not affected if it incidentally trenches on matters outside the authorised field, and therefore it is necessary to inquire in each case what is the pith and substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers expressly conferred upon the Legislature which enacted it, then it cannot be held to be invalid, merely because it incidentally encroaches on matters which have been assigned to another Legislature."
 13. In Prafulla Kumar v. Bank of Commerce, Ltd., Khulna, AIR 1947 PC 60 if has been held that if an enactment according to its true nature, its pith and substance, clearly falls within one of the matters assigned to the provincial Legislature, it is valid notwithstanding its incidental encroachment of a Federal Subject. This decision of the Privy Council was followed by the Federal Court in Miss Kishori Shetty v. The King, AIR 1950 FC
69.


14. As was pointed out by the Supreme Court when the validity of an Act is called in question, the first thing for the Court to do is to examine whether the Act is a law with respect to a topic assigned to the particular Legislature which enacted it. If it is, then the Court is next to consider whether, in the case of an Act passed by a Legislature of a State, its operation extends beyond the boundaries of the State, for under the provisions conferring legislative powers on it, such legislature can only make a law for its territories or any part thereof and its laws cannot, in the absence of a territorial nexus, have any extra-territorial operation. If the impugned law satisfies both these tests, then finally the Court has to ascertain if there is anything in other part of the Constitution which places any fetter on the legislative powers of such Legislature.
 15. There is no generic difference between a tax and a fee but our Constitution has for legislative purposes, made a distinction between them. While there are various entries in the legislative lists as regards various forms of taxes, there is an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of the matters that is included in it. (Vide the Sirur Mutt Case; Commr. of Hindu Religious Endowments v. Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, .
 16. Article 366 Clause (28) gives an inclusive definition of 'taxation.' It reads:
 "Taxation -- includes the imposition of any tax or impost, whether general or local or special, and 'tax' shall be construed accordingly."


17. The Constitution has given an enumeration of the subjects into three categories: List 1 with reference to matters which fall exclusively within the competency of the Union; List 2 with regard to matters which fall exclusively within the competency of the State; and List 3 with regard to matters in respect of which the Union and the Stale have concurrent powers.
 18. The power to enact a law with respect to a tax on a subject must, to be intra vires, be one relating in fact to that subject. Entries 82 to 92-A of List I enumerate various kinds of taxes which the Union is competent to legislate upon. Entry 97 of the said List vests a residuary power in the Union Legislature in respect of any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists. Similarly entries 45 to 63 of List II give an enumeration of the various impositions which are within the legislative competence of the State. Entry 96 of List I, entry 66 of List II and entry 47 of List III (Concurrent List) specifically provide for the imposition of fees in respect of any of the matters enumerated in the three lists. The absence of a similar provision in regard to the levy of taxes in respect of any of the matters enumerated in the Lists gives a strong indication that the levy of tax was not meant to be exercised as an ancillary or incidental power.
 19. The subjects dealt with in Lists I and II are meant to be exclusive, and all residuary power with regard to taxation is vested in the Union under Entry 97. Where the power of taxation is intended to be conferred on the Union or State, the Lists specify the subjects with regard to which that power can be exercised. We find it difficult to extract the power of taxation as ancillary or incidental to the subjects specified in the Lists.


20. We are fortified in this conclusion by a recent decision of their Lordships of the Supreme Court in Sundararamier and Co. v. State of Andhra Pradesh, , where it was observed:
 "The above analysis -- and it is not exhaustive of the entries in the Lists -- leads to the inference that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as a distinct matter for purposes of legislative competence."
 21. It is next contended by the learned Advocate-General that regarded as a tax, it is within the legislative competence of the State by reason of Entry Nos. 52, 54 and 60 in List II. The entries read:
 "52. Taxes on the entry of goods into a local area for consumption, use or sale therein.
 X X            X            X           XX


54. Taxes on the sale or purchase of goods other than newspapers.

 X X              X              X             X

 60. Taxes on professions, trades, callings and employments."


22. Under Section 11 the market committee is empowered to levy fees on the notified commercial crop or crops brought and sold in the notified area at such rates as it may determine, and ordinarily they are to be paid by the purchaser of the commercial crop concerned. It is not, therefore, a tax on the entry of goods into a local area, within the meaning of Entry No. 52. It is not a tax on the sale or purchase of goods nor is it a lax on a profession, trade, calling or employment. It is impassible, therefore, to bring the impost under Section 11 of the Act within any of the subjects enumerated in Entry Nos. 52, 54 and 60.
 22A. Another submission made by the learn--ed Advocate-General is that the Act was passed in 1933, before the Government of India Act of 1935 was passed, at a time when there was no distinction between a tax and a fee and the only requirement was that where it was a tax the sanction of the Governor-General was necessary, and that requirement was satisfied. The impugned section was substituted for the original section by the Madras Commercial Crops Markets (Amendment) Act (XXII of 1945). The original Section ran:
 "The market committee shall, subject to such rules as may be made in this behalf, levy fees on the commercial crop or crops bought and sold in the notified area....."
 It will be seen that the power to levy fees' on the notified commercial crop or crops was introduced in the section in 1945. Section 11 in its present form was placed on the statute book after the Government of India Act of 1935 came into force. The Government of India Act of 1935 made a distinction between a fee and a tax. We arc therefore unable to accede to this contention of the learned Advocate-General.


23. The point for determination is whether the levy is a tax or a fee? As already stated, the Division Bench of the Madras High Court, consisting of Rajamannar, C.J., and Venkatarania Ayyar, J. have held in that the amounts collected under Section II are taxes notwithstanding that they are not brought into the consolidated fund of the State, but constituted a separate fund and the levy is only on a section of the public. It is, no doubt, true that the legality of the levy under Section 11 did not directly arise for determination in the proceedings before the learned Judges and may in that sense be considered to be obiter. Even as an obiter dictum their opinion is entitled to the highest respect.
 24. The question has, however, assumed a new orientation consequent upon two recent decisions of the Supreme Court rendered on 16-3-1954, where this question as to whether a particular levy is a fee or a tax has been elaborately considered. The first of the decisions is the Sirur Mutt Case and the .other is Sri Tagannatli Ramanuj Das v. State of Orissa . In the tost of these cases, their Lordships of the Supreme Court held that the contribution levied under Section 76 of the Madras Hindu Religious and Charitable Endowments Act, is a tax and not a fee and consequently it was beyond the power of the State Legislature to enact that provision. In the latter case their Lordships upheld the constitutionality of Section 49 of the Orissa Hindu Religious Endowments Act.
 25. Now, it will be useful to set out Section 76 of the Madras Act, and Section 49 of the Orissa Act.


Section 76: "(1) In respect of the services rendered by the Government and their officers, every religious institution shall, from the income derived by it, pay to the Government annually such contribution not exceeding five per centum of its income as may be prescribed.
 (2) Every religious institution, the annual income of which, for the fasli year immediately preceding as calculated for the purposes of the levy of contribution under Sub-section (1), is not less than one thousand rupees, shall pay to the Government annually, for meeting the cost of auditing its accounts, such further sum not exceeding one and half per centum of ifs income as the Commissioner may determine.
 (3) The annual payments referred to in subsections (1) and (2) shall be made, notwithstanding anything to the contrary contained in any scheme settled or deemed to he settled under this Act for the religious institution concerned.
 (4) The Government shall pay the salaries, allowances, pensions and other beneficial remuneration of the Commissioner, Deputy Commissioners, Asst. Commissioners and other officers and servants (other than executive officers of religious institutions) employed for the purposes of this Act and the other expenses incurred for such purposes including the expenses of Area Committees and the cost of auditing the accounts at religious institutions."
 Section 49: (1) Every Math or temple and every specific endowment attached to a math or temple the annual income whereof exceeds Rs. 250 shall, for meeting the expenses of the Commissioner and the other officers and servants working under him pay annually a contribution at the following rates:
 Explanation -- A math or temple or a specific endowment attached to a math or temple, the annual income whereof does not exceed Rs. 250/- shall not be liable to pay any contribution for meeting the expenses of the Commissioner:


Provided that the Provincial Government, may, for special reasons, increase or decrease the rates of contribution payable under this sub-section as they deem fit.
 (2) Religious endowments, the administration of which is governed by a scheme settled under Section 92 of the Code of Civil Procedure, 1908, shall notwithstanding anything to the contrary contained in such scheme, he liable to pay the contribution under this Section."
 26. There was no provision in the Madras Act that the money raised by levy of contributions should be earmarked or specified for defraying expenses that the Government has to incur for performing the services. All the collections made under Section 7G went into the consolidated fund of the State and all the expenses had to be met not out of these collections but out of the general revenues. What is more, there was a total absence of any correlation of the expenses incurred by the Government and the amounts raised by contribution.
 In the Orissa Act, on the other hand, the contribution levied by Section 49 is demanded only for the purpose of meeting the expenses of the Commissioner and his office and the collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They are constituted into a fund which is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. On the basis of this distinction, it was held that the levy of contributions under Section 76 of the Madras Act was a tax while the levy under Section 49 of the Orissa Act was a fee. The former was held to be unconstitutional and the latter was upheld.
 27. These two decisions of the Supreme Court read in juxtaposition bring out in bold relief the essential distinction between a tax and a fee. In the words of their Lordships:


"There is no generic difference between a tax and a fee and both are different forms in which the taxing power of a State manifests itself. A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax.... Thus, a tax is a common burden and the only return which the tax-payer gets is the participation in the common benefits of the State.
 Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded. Thus in fees there is always an element of Quid Pro Quo which is absent in a tax. Two elements are thus essential in order that payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State to be spent for general public purposes. Judged by this test, the contribution that is levied by Section 49 of the Orissa Act will have to be regarded as a fee and not a tax.


The payment is demanded only for the purpose of meeting the expenses of the Commissioner and his office which is the machinery set up for the administration of the affairs of the religious institution. The collections made are not merged in the general public revenue and are not approoriation of expenses for other public purposes. They go to constitute the fund which is contemplated by Section 50 of the Act and: this fund, to which also the provincial Government contributes both by way of loan and grant, is specifically set apart for the rendering of services involved in carrying out the provisions of the Act.


We think, therefore, that according to the principles which this Court has enunciated in the Madras appeal mentioned above, the contribution could legitimately be regarded as fees and hence it was within the competence of the Provincial Legislature to enact this provision. The fact that the amount of levy is graded according to the capacity of the payers though it gives it the appearance of an income-tax, is not by any means a decisive test."
 28. The question for consideration then is, whether Section 11 is ultra vires or unconstitutional. It is not contended that the Act is ultra vires in the sense that it is beyond the competence of the State Legislature. Having regard to the object of the Act, as stated in its preamble, and its broad scheme, which is to regulate the buying and selling of commercial crops in specified areas, the Act undoubtedly comes within the purview of the subjects enumerated in Entry No. 14 of List II, viz., "Agriculture, including agricultural education and research, protection against pests and prevention of plant diseases;" Entry 28, which provides for weights and measures except establishment of standards, which is also one of the purposes for which provision is made in the Act, and entry 32 viz., "Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific religious and other societies and associations; co-operative societies." Every one of the provisions of the Act would be within the ambit of the legislative power on the assumption that the vires of the Act is to be judged with reference to the Constitution.
 29. The concept of a welfare State is that the State is entitled to make a levy even against the will of the people sought to be benefited. Therefore, the fact that the person sought to he benefited by the Act, does not consider it to be so, is of no relevance.


30. There are various kinds of fees which it is not possible to enumerate and a scientific or mathematical formulae to distinguish a tax from a fee is not possible. The levy of a fee under Section 11 of the Act is correlated to the purposes mentioned in Section 13. The provision in Section 13 that "the market fund shall be expended for the following purposes only", emphasises the fact that the fund cannot he expended for any other purpose.
 31. Now, the purposes mentioned in Section 13 are:
 "(i) the acquisition of a site or sites for the market;
 (ii) the maintenance and improvement of the market;
 (iii) the construction and repair of buildings which are necessary for the purposes of such market and for the health, convenience and safety of the persons using it;
 (iv) the provision and maintenance of standard weights and measures;
 (v) the pay, pensions, leave allowances, gratuities, compassionate allowances and contributions towards leave allowances, pensions or provident fund of the officers and servants employed by the market committee;
 (vi) the expenses of and incidental to elections;
 (vii) the payment of interest on loans that may he raised for purposes of the market and the provision of a sinking fund in respect of such loans;
 (viii) the collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of the commercial crop or crops concerned;
 (ix) schemes for the extension or cultural improvement f the commercial crop or crops concerned within the notified area, including the grant, subject to the approval of the State Government, of financial aid to schemes for such extension or improvement within such area, undertaking by other bodies, or individuals;
 (x) propaganda in favour of agricultural improvement and thrift;


(x) propaganda in favour of agricultural improvement and thrift;
 (xi) such other purposes as may be authorised by the State Government in this behalf by general or special order."
 32. All of them arc related, and none of them is extraneous to the object and intendment of the Act. If it is postulated that the existence or a market committee is necessary for the purpose of regulating the buying and selling of commercial crops, it follows that that committees must have a habitation. Purposes (i) to (iii) mentioned In Section 13, which provide for the acquisition of a site or sites for the market, the maintenance and improvement of the market and the construction and repair of buildings which are necessary for the purposes of such market and for the health, convenience and safety of the persons using it, are all correlated to the main, purpose.
 The provision and maintenance of standard weights and measures is also in the interests of the buyer and the seller. The market committee must have a staff. Clause (v) provides for the payment of salaries of the officers and servants employed by the Committee. The committee is to be elected. The expenses of and incidental to the election are also comprised within the purposes of the Act. The payment of interest on loans that may be raised for purposes of the market is undoubtedly within the scope of the Act.


The collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect, of the commercial crop or crops concerned, is conceived in the interests of both the seller and the buyer. The schemes for the extension or cultural improvement of the commercial crop or crops concerned are intended to improve the standard of the produce. This is in the interests of both the buyer and the seller. Propaganda in favour of agricultural improvement and thrift is an ancillary provision. Therefore, it is seen that all the purposes mentioned in Section 13, for which the funds of the market committee are to be expended, have an element of quid pro quo or service to the persons from whom the fee is collected fee in the sense that it is a sort of return to the persons from what it is levied and collected.
 33. The complaint of the petitioners is that most of the purposes mentioned in Section 13 are beneficial to growers of commercial crops and that they do not benefit the buyer. It is not necessary that every one of the purposes should be beneficial to both the seller and the buyer. It may benefit one or the other. The quid pro quo which the buyer receives from the market committee may not. be in the same sense in which the expression is used in the Contract Act. The contention that the service rendered should be in the mathematical proportion to this amount paid, is not a correct concept. If it can be justified as a sort of return, which certainly it is, then it is valid. Again, the wishes of the person from whom the fee is collected, are not decisive of the question. The purposes enumerated in Section 13 are beneficial because the Legislature thinks them to be so, not because the concerned individual requires them.


34. Undoubtedly, the Government does some positive work for the benefit of persons and fees are levied as the return for the work done or services rendered. The money thus paid is set apart and appropriated specifically for the purpose' of such work and is not merged in the public revenues for the benefit of the general public. There is no doubt that the market committee fund is earmarked for the particular purposes enumerated in Section 13; and even ii' the amount is to be collected by the Government, it would still be a fee. It is an a fortiori case where the fund is to belong to a corporate body distinct from the Government, to be expended for specified purposes.
 35. It is then contended by the learned counsel appearing for the petitioners that some of the market committees have not been established yet and the fee sought to be collected is unrelated to any present service rendered or contemplated to be rendered by the market committees. In other words, the contention is that there is no direct, proximate Or immediate service. The fees collected by the market committee are paid into a fund, known as the market committee fund. From out of the moneys in this fund the market committee has to purchase a site and the acquisition of a site is a pre-requisite for the construction of a building for the habitation of the market committee and its officers and servants and also for facilitating the transactions of buying and selling. If so much is conceded, it follows that the fund is utilised for the purpose mentione3 in Section 13. The contention that the benefit must be proximate, contemporaneous or immediate has no valid basis. Without the constitution of the fund, the purposes mentioned in Section 13 cannot be achieved.


36. It is then suggested that the committee can profitably raise loans from the Government in the First instance and redeem those loans at a later date from the moneys collected under the Act. This may be a useful suggestion to make but it has no relevancy in the matter of deciding the validity of the levy and collection of fees under Section 11 of the Act.
 37. It is finally argued that if the levy under Section 11 is to be construed as a fee, it is so excessive that it does, not bear a reasonable relation to the services rendered or intended to be rendered. The proviso to Section 11 provides that until the market committee has determined the rates of such fees to be levied thereunder, it shall levy fees at the rates specified in the Schedule to the Act. The schedule gives the following rates:
 "I. Cotton kapas per candy of 784 lb.


or part thereof.....                                                                 3 annas.
Cotton lint -- Loose or pressed in
bales per candy of 784 lb.  or
part thereof.....                                                                    5 annas.
II. Groundnut pods (unshelled nuts)
per bag of 80 lb. or part thereof....                                                2 pies.
Groundnut kernels per bag of 177
lb. or part thereof.....                                                             6 pies.
III. Tobacco.
Suncurcd leaf per candy of 500 lb.
or part thereof.....                                                                 2 annas.
Flue cured leaf per candy of 500
lb. or part thereof.....                                                             4 annas.
Dust and primings per candy of
500 lb. or part thereof  .....                                                       1 anna.
Jutty  flue cured gulla scrap per
candy of 500 lb. or part thereof....                                                 1 anna.
Suncured-Strips per candy of 500
lb. of part thereof.....                                                             3 annas.
Fluecured-Strips  per  candy  of
500 lb. or part thereof.....                                                         5 annas."

 38. The rale of Fees provided in this schedule can by no means be termed excessive or unreasonable. We are, therefore, unable to accede to this contention.

 39. It is argued that there are a plethora of fees under various names provided under the Act, viz., licenses fee under Section 5(1), the fee contemplated by Section 5(3), the registration fee provided under Section 18(2),


weighrnent and licence fee and eventually the fee under Section 11. We are here concerned only with the question as to whether the fee levied under Section 11 is valid and it is no part of our present purpose to pronounce upon the wisdom of the Legislature. In fact, that other fees are collected does not render the levy of fee under Section 11 unconstitutional.
 40. Before concluding, it is necessary to refer to another contention raised by the petitioners, which was not ultimately persisted in and that is that the levy amounts to a double taxation and is therefore prohibited under Article 265 of the Constitution. A similar contention was raised in Cantonment Board, Poona v. Western India Theatres Ltd., where it has been held that there is nothing in the Constitution which prevents double taxation being levied and that instances are not wanting in this country in which taxes are levied twice upon the same thing, once for the benefit of the State Government and in the second instance for the benefit of the Local Self-Government bodies, for example, the Dist. Local Board or the Municipality, Indeed Article 276 of the Constitution preserves that right, in the following words:
 "(1) Notwithstanding anything in Article 246, no law of the Legislature of a State relating to taxes for the benefit of the State or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings, or employments shall be invalid on the ground that it relates to a tax on income."
 41. This disposes of all the common contentions of law raised in the Writ petitions and they will be posted for consideration on the merits.


42. The learned counsel for the petitioners in W. P. Nos. 42, 62. 63, 64, 65 and 718 of 1955 and 739 of 1956 state that they are not raising any further contentions. They are therefore dismissed with costs.


N. Krishna Prasad vs Assistant Controller Of Estate ... on 24 June, 1971

JUDGMENT Sriramulu, J.
1. Nagavarapu Cheuchaiah and his son, Krishna Prasad, constituted members of a Hindu undivided family, governed by Mitakshara school of Hindu law. Chenchaiah, as the karta of the Hindu undivided family, died on 21st Aagust, 1966, Under Section 53(3) of the Estate Duty Act (hereinafter called "the Act"), Krishna Prasad, the accountable person, filed before the Assistant Controller of Estate Duty, an account of the estate of the deceased. The value of the estate was determined by the Assistant Controller of Estate Duty at Rs. 3,32,814 and the half share of the deceased at Rs. 1,66,407. A sum of Rs. 1,000 was allotted for funeral expenses under Section 44 of the Act, and the value of the chargeable estate was determined at Rs. 1,65,407. For the purpose of determining the rate of estate duty, the Assistant Controller of Estate Duty aggregated the same with the value of the interest o! the lineal descendant, Krishna Prasad, so as to form one estate and on the value of the estate so determined at (Rs. 1,65,407 plus Rs. 1,66,407), i.e., Rs. 3,31,814. levied estate duty after allowing rebate on the lineal descendant's share under Section 34(2) of the Act. The estate duty that was payable was determined at Rs. 8,442"59 after deduction of the provisional duty already paid.


2. Krishna Prasad, the accountable person, challenged the legality and the validity of the assessment so made by the Assistant Controller of Estate Duty, on the following; two grounds : (1) Section 34(I)(c) is beyond the competence of the legislative power of the Central Legislature, and (2) Section 34(1)(c) prescribing a different and unique procedure for imposing tax on the share of the deceased in the coparcenary of the Mitakshara joint family is discriminatory and repugnant to Article 14 of the Constitution of India.
3. In support of the above contentions, the learned counsel appearing for the petitioner invited our attention to entry No. 87 in List I, and the definition of estate duty found in Article 366(9) of the Constitution of India and submitted that estate duty is payable, on the property passing on the death of the deceased. Instead of levying estate duty on the value of the half interest of the deceased in the estate that passed on his death, Section 34(1)(c) brought in the principle of aggregation of the estate of the lineal descendant, over which no estate duty is payable. Parliament is not competent to levy estate duty on the property of the lineal descendant, which did not pass on the death of the coparcener of the Mitakshara Hindu undivided family.
4. Section 34(1)(c) makes an infoad into the property of another, i.e., the lineal descendant of the deceased, although such property did not pass on the death of the deceased.
5. The origin and source of the principle of aggregation is the English law. But the. principle of aggregation stated in Section 34(1 )(c) of the Act is something different from the one found in the English law.


6. In applying the principle of aggregation to the case of the death of a coparcener in a Hindu undivided family of Mitakshara law, Marumafc-kattayam law and Aliyasantana low and not to the member of a Hindu undivided family in Dayabhaga school of law, amounts to an invidious discrimination. There is no reasonable classification and the application of the principle of aggregation to a member of one undivided family in one school of Hindu law and not to such a member belonging to another school of Hindu law, has absolutely no nexus or relation to the object sought to be achieved. The classification is arbitrary and not reasonable. There is no basis for making such an invidious discrimination. Section 34(1)(c) of the Act is, therefore, repugnant to Article 14 of the Constitution and is void.


7. The learned counsel, Sri Srinivasa Murthy, appearing for the revenue contended to the contra. According to him the word "assessment" is used in taxing statutes as meaning sometimes computation of income, some-times determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing the liability upon the taxpayer. In this connection the learned counsel relied upon the decision in Commissioner of Income-tax v. Khemchand Ramdas, [1938] 6 I.T.R. 414(P.C.).. Under entry 87 in the Union List, Parliament has got power to legislate on estate duty. For the imposition of estate duty, rates have to be prescribed and for that purpose there must be a provision of law in the Act. That is provided in the instant case under Section 34(1)(c) of the Act. The aggregation is only for the purpose of fixing the rate and it does not levy estate duty on the pro-perty of a person, other than the person whose property passed on the death. The section does not make an inroad into the property of another. The power to make law with regard to estate duty carried with It the power to legislate the manner in which the rates of estate duty are fixed for the purpose of computation of such estate duty imposable on a taxpayer. Section 34(1)(c) of the Act is not discriminatory aad violative of Article 14 of the Constitution. In support of this argument, the learned counsel relied upon the decision of the Madras. High Court in Ramanathan Chettiar v. Assistant Controller of Estate Duty, . A Hindu undivided family governed by Mitakshara Law, Marumakkattayarn or Aliyasantana law is distinct and a different class from the Hindu undivided family governed by Dayabhaga school of law. The impugned section cannot foe struck down merely because varying rates of tax


school of law. The impugned section cannot foe struck down merely because varying rates of tax are imposed on different classes of people. In this connection the learned counsel relied upon the decision of the Supreme Court in Venugopala Ravi Varma Rajah v. Union of India, .


8. Parliament has got exclusive power to make law with regard to any of the matters named in List I, in the 7th Schedule of the Constitution of India, i.e., Union List. Entry No. 87 in the Union List reads as follows :
 "Estate duty in respect of property other than agricultural land."
9. The expressisn "estate duty" has been given the following meaning under Article 366(9) of the Cpnstitution :
 'Estate duty means a duty to be assessed on or by reference to the principal value, ascertained in accordance with such rules as may be prescribed by or under laws made by Parliament or the Legislature of a State relating to the duty, of all property passing upon death or deemed, under the provisions of the said laws, so to pass."


10. From entry No. 87 in the Union List, it is obvious that Parliament is competent to legislate any law imposing estate duty in respect of properties other than agricultural land. In enacting a law for imposition of estate duty, the legislative authority must make provisions for ascertaining the value of the estate or the property, which passed on the death of the deceased, and also a provision relating to the rate at which the said value of the property has to be subjected to tax. Unless the law deals with those two matters, it cannot be said that a complete law on estate duty has been enacted. In the Income-tax Act, "assessment" sometimes means computation of income, sometimes determination of the amount of tax payable and sometimes the procedure laid down in the Act for imposing the liability on the taxpayer. (See Commissioner of Income-tax v. Khemchand Ramdas). Similar meaning should be given to an estate duty assessment. Assessment of estate duty must necessarily mean, (1) determination of the property passing on the death or deemed to pass on the death, (2) determination of the amount of tax payable, and (3) the whole procedure laid down for imposing tax liability on the taxpayer. Thus, a power given to Parliament to make law with regard to estate duty necessarily, in our opinion, includes power to fix the rates of estate duty. Section 34(1)(c) of the Act is a section which fixes the rates of estate duty payable in a given case where the property passing on death consists of a coparcenary interest in the joint family property of a Hindu family governed by Mitakshara, Marumakkattayam or Aliyasantana law.


11. There is no force in the argument of the learned counsel appearing for the petitioner that the power to make law in regard to estate duty did not include the power to fix the rate. When Parliament is competent to make law on estate duty, it can and should make the law regarding the rate of tax and the manner in which such tax is to be computed. Section 34(1)(c) of the Act does not make an inroad into the property of the lineal descendant, but only takes it into consideration for the purpose of fixing the rate of estate duty, on the value of the property passing on the death of the coparcener by aggregating it with the value of the property of the share of the lineal descendant. There is also equally no force in the argument of the learned counsel that by enacting Section 34(1)(c), the legislature has reduced the property which has been inherited by the lineal descendant. Estate duty is payable on the property of the deceased as at the death of the deceased. The lineal descendant takes the property of the deceased, minus the tax that is leviable on it. That would in fact be the property inherited by the lineal descendant. Tax is paid out of the property of the deceased and not out of the property of the lineal descendant after he has inherited the same.


12. There is no doubt that the Estate Duty Act owes its origin to the English law. When our Parliament has got the power or competency to enact a law on estate duty it has also competence to depart from the principles found in English law. The mere fact that the principle of aggregation enunciated by Parliament in Section 34(1)(c) is a slight departure from the principle of aggregation as found in the English law, is no reason why Section 34(1)(c) should be struck down, or be thought of that the legislature did not intend to or cannot make such departure. We, therefore, find no force in the first ground of attack on the validity of Section 34(1)(c) of the Act and and accordingly reject it.
13. We will then proceed to consider whether Section 34(1)(c) of the Act is discriminatory and violative of Article 14 of the Constitution of India. Article 14 of the Constitution of India provides that the "State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India". Equality before the law means that among equals the law should be equal and should be equally administered, that like should be treated alike, i.e., equal protection of all alike in the same situation and under like circumstances. A tangible distinction between the two doctrines, i.e., "equality before the law", and "equal protection of the laws" for the first time was pointed out by Subba Rao J. in State of U. P. v. Deoman, A.I.R. 1960 S.C. 1124, 1134.


:
 "All persons are equal before the law is fundamental of every civilised constitution. Equality before law is a negative concept ; equal protection of laws is a positive one. The former declares that every one is equal before law, that no one can claim special privileges and thai all classes are equally subjected to the ordinary law of the land ; the latter postulates an equal protection of all alike in the same situation and undey like circumstances."
14. According to the learned counsel appearing for the petitioner Section 34(1)(c) prescribes a unique procedure for imposing tax on the share of the deceased in the coparcenary of the joint family governed by Mitakshara law, Marumakkattayam law or Aliyasantana law, different from the procedure prescribed for one governed by Dayabhaga school of law. This different treatment accorded to the members of a Hindu undivided family of different schools of Hindu law is, according to him, discriminatory and offends Article 14 of the Constitution. According to him, this discrimination is not based upon reasonable classification and that such discrimination has no nexus or relation to the object sought tp be achieved.


15. There is no doubt that "equal protection of laws" means right to equal treatment in similar circumstances both in the privileges conferred and liabilities imposed by the law. No one can be subjected to any burden or charge than such as are imposed upon all others under the like circumstances. In other words, there should be no discrimination between one person and another if, as regards the subject-matter of the legislation, their position is the same. A person or class of persons cannot be singled out as a special subject for discriminatory and hostile legislation. The principle of equality does not mean that every law must have universal application for all persons, who are not by nature, attainment or circumstances in the same position, as the varying needs of different classes of persons often require separate treatment. The State has thus the; power to classify persons for legislative purposes.
16. When a particular provision of law is attacked or challenged as violative of Article 14, it is necessary for the court to ascertain the policy underlying the statute and the object intended to be achieved by it. The object behind the enactment of the Estate Duty Act has been stated to be :
 "To impose an estate duty on property passing or deemed to pass on the death of a person. Though the levy and collection of income-tax at high rates since the war and the investigations undertaken by the Income-tax Investigation Commission in a number of important cases of tax evasion have, no doubt, prevented to some extent the further concentration of wealth in the hands of those who are already wealthy, yet these do not amount to positive steps in the direction of reducing the existing inequalities ia the distribution of wealth. It is hoped that by the imposition of an estate duty such unequal distributions may be rectified to a large extent."


17. The entire problem under the equal protection clause under Article 14 is one of classification or of drawing lines. A classification is reasonable when it is not an arbitrary selection, but rests on differences, pertinent to the subject in respect of which classification is made. Permissible classification must be based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. Classification must be rational. It must not only be based on some qualities or characteristics which are to be found in all persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation, that is to say, the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and that the differentia must have a rational relation to the object sought to be achieved by the Act.


18. The doctrine of equal protection of laws in the field of taxation has been considered by the Supreme Court in Venugopala Ravi Varma Rajah v. Union of India. That case arose under the Expenditure-tax Act. The contention raised in that case was that the law which enables the Expenditure-tax Officer to assess tax on the expenditure of all members of a Hindu undivided family governed by the Marumakkattayam law discriminates on the ground of religion between the Hindu undivided family and a Mappilla undivided family governed by Marumakkattayam law, resident in North Malabar. Under the Expenditure-tax Act, the charging section imposes tax on individuals as well as Hindu undivided families. An undivided family, which consisted of Hindus, was treated as a unit of assessment, whereas an undivided family, whose members are not Hindus, was assessed to tax as an individual. In a Hindu family governed by Marumakkattayam law, the total expenditure incurred by all the members of the undivided family was clubbed together for the levy of expenditure-tax, because the unit of tax under Section 3 was a Hindu undivided family. A Mappilla, on the other hand, is an undivided family governed by the same Marumakkattayam law and was liable to be assessed to tax as an individual and on that account at a lower rate.
19. Dealing with the contention raised, Shah J., speaking for the Supreme Court, explained thus :


"Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws being the expression of legislative will intended to solve specific problems or to achieve definite objectives by specific remedies, absolute equality or uniformity of treatment is impossible of achievement. Again tax laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. The courts accordingly admit, subject to adherence to the fundamental principles of the doctrine of equality, a larger play to legislative discretion in the matter of classification. The power to classify may be exercised so as to adjust the system of taxation in all proper and reasonable ways ; the legislature may select persons, properties, transactions and objects, and apply different methods and even rates for tax, if the legislature does so reasonably. Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification : it is not a condition of the guarantee of equal protection that all transactions, properties, objects or persons of the same genus must be affected by it or none at all. If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation, subject different classes of property to tax in different ways and adopt different modes of assessment. A taxing statute may contravene Article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions, or occupations similarly situate, incidence of taxation, which leads to obvious inequality. A taxing statute is not, therefore, exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations or objects.


It is for the legislature to determine the objects on which tax shall be levied, and the rates thereof. The courts will not strike down an Act as denying the equal protection of laws merely because other objects could have been, but are not, taxed by the legislature : (Raja Jagannath Baksh Singh v. State of Uttar Pradesh, .


'......A classification must not be arbitrary, artificial or evasive and
there must be a reasonable, natural  and substantial distinction in the nature of the class or classes upon which the law operates.    In respect to such distinction, a legislative body has a wide discretion and an Act will not be held invalid unless the  classification is clearly unreasonable and arbitrary.'......But the mere fact that the law could have been extended to
another class of persons, who have certain characteristics similar to a section of the Hindus but have not been so included, is not a ground for striking down the law. In treating a Hindu undivided family as a unit of taxation under the Expenditure-tax Act and not a non-Hindu undivided family, Parliament has not attempted an 'obvious inequality'."


20. After explaining the doctrine of equal protection of the laws, the learned Judge pointed out at page 56, that the Mappilla families governed by the Marumakkattayam law reside in a small part of the countty and form numerically a small community. Parliament has again been accustomed in enacting tax laws to make a distinction between a Hindu undivided family consisting of Hindus and undivided families of Mappillas. By the taxing Acts Parliament could have treated Mappilla tarwads as units of taxation. But the mere fact that the law could have been extended to another class of persons, who have certain characteristics similar to a section of the Hindus but have not been so included, is not a ground for striking down the law. In treating a Hindu undivided family as a unit of taxation under the Expenditure-tax Act and not a non-Hindu undivided family, Parliament has not attempted an "obvious inequality".
21. The same contention which is now put forward by the petitioner's counsel before us was also raised before the Madras High Court in Ramanathan Chettiar v. Assistant Controller of Estate Duty. In that case the validity of Section 34(1)(c) of the Estate Duty Act was challenged as being violative of Article 14 of the Constitution. A Division Bench of the Madras High Court rejected that contention.
22. There are basic differences in the incidents attached to a joint Hindu family in the Mitakshara and the Dayabhaga schools of Hindu law. In the Mitakshara school of Hindu law a son acquires at his birth an equal interest with his father in all the ancestral property held by the father and on his death the son takes the property not as his heir, but by survivorship.


23. According to the Dayabhaga school of Hindu law, the sons do not acquire any interest at birth in the ancestral property. Their rights for the first time arise on the father's death. On the death of their father, sons take such of the property as is left by their father, whether separate or ancestral, as heirs and not by survivorship. Since the sons do not take any interest in the ancestral property in their father's lifetime, there can be no coparcenary in the strict sense of the word, between a father and the sons according to the Dayabhaga law as regards the ancestral property. Sons under the Dayabhaga law have no right of ownership in the wealth of their living parents, but only in the estate of both when deceased.


24. The vital distinction between Dayabhaga and Mitakshara schools of Hindu law, in the rights possessed by the fathers in the ancestral property, establishes that the fathers in one school of law belong to a class different from the fathers in the other school of law. Section 34(1)(c) of the Act applies to one and not to the other. Is it discriminatory and violative of Article 14 of the Constitution, is the question that arises for consideration. The classification is not arbitrary, but based on a rational and substantial basis depending upon the incidents attached to the joint families in the respective schools of law. The principle of aggregation provided in Section 34(1)(c) cannot be applied to the property passing on the death of a father of a Hindu undivided family governed by Dayabhaga school of law. An illustration will make it clear. A joint Hindu family consists of a father and son. The family possesses ancestral properties of the value of rupees one lakh. In Mitakshara school of Hindu law, the son acquires a right by his birth along with his father in all the ancestral properties worth one lakh. On the death of the father the soil does not take those properties of rupees one lakh, or any portion thereof, by inheritance as the heir of his father, but by survivorship. The coparcenary interest of the father ceases on his death and the son acquires it by survivorship. The value of the coparcenary interest of the father ceasing on his death would be Rs. 50,000.
 25. In Dayabhaga school of law the father during his lifetime is the owner of the property worth rupees one lakh. The son does not possess any interest in all or any of those properties during the lifetime of his father. He gets the right of ownership to the entire property on the death of his father as his heir and not by survivorship.


26. The value of- the properties that passed on the death of the father would be Rs. 50,000 if he was a member of the Hindu undivided family under Mitakshara law and rupees one lakh if he was a member of the Hindu undivided family of Dayabhaga school of law.
27. The estate duty is levied on Rs. 50,000 in the case of the deceased who died as a member of the Hindu undivided family governed by Mitakshara school of law, but on rupees one lakh, if the father died as a member of the Hindu undivided family governed by Dayabhaga school of law. It, therefore, follows that the estate duty is levied on Rs. 50,000 or rupees one lakh as the father who died, belonged to the Mitakshara or the Dayabhaga school of law. If the principle of aggregation was not made applicable to a deceased father of Mitakshara school of Hindu undivided family, he would have paid only half the estate duty, which would have been paid, if he had belonged to Dayabhaga school of law. It is only to remove this obvious inequality that Parliament has in its wisdom enacted Section 34(1)(c) and made the principle of aggregation applicable to the death of a coparcener of a Hindu undivided family governed by Mitakshara school of law.
28. By reason of these basic differences in the incidents attached to joint Hindu family under the Mitakshara and Dayabhaga schools, it is evident that a father in the Hindu undivided family in Mitakshara school of law belongs to a class different from the father in the Hindu undivided family under Dayabhaga school of law. The classification, as has already been stated above is based on substantial and reasonable grounds.


29. The classification has also a nexus and reasonable relationship with the object for which the Estate Duty Act has been enacted. One. of the objects for enacting the Estate Duty Act was to reduce the existing inequalities in the distribution of wealth. If the principle of aggregation for fixing the rate of estate duty was not made applicable to the father in a Hindu undivided family governed by Mitakshara school of law, the net wealth which would have been acquired by the sons would have been more than the net wealth which they would have acquired in the case of the Dayabhaga school of law. Precisely, in order to get over this inequality, Section 34(1)(c) of the Act has been enacted.
30. The classification is based upon intelligble differentia which distinguishes one group of fathers from another group of fathers under the two , schools of Hindu law, i.e., Mitakshara and Dayabhaga.
31. We respectfully agree with the decision of the Madras High Court in Ramanathan Chettiar v. Asst. Controller of Estate Duty, and hold that Section 34(1)(c) of the Act is neither violativc nor repugnant to Article 14 of the Constitution.
32. Both the contentions raised by the petitioner fail and are rejected. The writ petition is accordingly dismissed with costs. Advocate's fee Rs. 100.


Public Prosecutor vs Abdul Hameed Khan And Ors. on 20 September, 1960

JUDGMENT Anantanarayana Ayyar, J.


1. Each of these appeals have been filed by the Public Prosecutor against the acquittal of both the accused concerned in the lower appellate Court. There are two accused in each of these cases. The first accused is Abdul Hameed Khan, He was the Central Excise Inspector alias Range Officer in charge of Puttur Range with head-quarters at Puttur during the relevant period i. e., 1951-52. The second accused in each of these cases is a tobacco merchant residing at Kuchivaripally about two miles from the town of Rajampet, Cuddapah District and held a wholesale licence which is called L-2 licence. The following tabular statement gives the details:
 Appeal No. in the      C. C. No. in the trial  Appeal in the lower        Name of the 2nd
High Court             Court.                  appellate Court.           accused.
Crl. Appeal No.        C. C. No. 213/1957.     Cr. A. Nos. 13 & 14 of     A. Pitchayya. T.
509/1958. Crl. A.      C. C. No. 214/57.       1958. Crl. A. Nos. 15 &    Pitehayya. K.
No. 510/58. Crl. A.    CO. No. 215/57. C.      16/58. Crl. A. Nos. 17 &   Vemayya. K. V.
511/58. Crl. A.        C. No. 216/57. C. C.    23/58. Crl. A. Nos. 18 &   Subbayya. D.


512/58. Crl. A.        No. 217/57.             19/58. Crl. A. Nos. 20 &   Pallayya.
513/58.                                        21/58.


The police charge-sheet was filed in each of the cases by the Delhi Special Police Establishment, Hyderabad Branch, charging the accused with various offences before the District Magistrate, Chittoor. These cases ultimately came to be tried by the Judl. Special First Class Magistrate, Chittoor. He framed three charges against the accused in each of the cases. He convicted and sentenced them to various terms of imprisonment. Each of the accused filed an appeal against his convictions and sentences in the Court of the Sessions Judge, Chitoor. The latter allowed each of the appeals in full and set aside the convictions and sentences on each charge and completely acquitted each of the accused in each appeal. The Public Prosecutor has thereupon filed these appeals against the acquittal.

2. The charges in all the cases are similar. The nature of the evidence is also similar, The evidence, especially the official evidence which proves the background of the alleged offences including the law and rules as well as official routine and practice is substantially similar in all the cases. But, there is some difference as between the various cases regarding the details of facts. Also, the offences in each case relate to certain permits concerned in that particular case. Several of the witnesses, especially the Excise Officers, who spoke to the law and rules, the procedure which has to be followed according to law and the procedure which was in fact followed as well as the investigation done into the various offences, are the same. But, in view of the fact that the permits are different and relate to different persons in each case, there are some witnesses deposing in that case alone without deposing in the other cases. All the appeals were heard together by common consent. This common judgment is also written by common consent,


3. Criminal Appeal No. 509 of 1958 has ultimately arisen out of the trial in C. C. No. 213/j 1957. That C, C. contains evidence in a most elaborate form. Most of the documents, which have been marked in all the other cases, have been marked in C. C. No. 213 of 1957 also. For purposes of convenience, the arguments of the learned Public Prosecutor as well as the Advocates for the accused in all the appeals were concentrated and centred on Criminal Appeal No. 509 of 1958 as the main appeal, in dealing with the features common to all the appeals. In addition, the special features in evidence in the other appeals were individually dealt with by them. Accordingly, for purposes of convenience, I am dealing with Criminal Appeal No. 509 of 1958 in the first instance as representative of all the appeals. In the later portion of the judgment, I deal with the various other appeals briefly one by one with reference to the features in evidence and law special to them. The findings and conclusions in each appeal are based on the evidence relating to the appeal.


4. Criminal Appeal No. 509 of 1958. The charges framed in this case are as follows:
Firstly:


That you A-1, formerly Inspector of Central Excise, of Puttur Range, Chitoor District, during the years 1951-52 and A-2 a tobacco Hcencee L-2 No. 41/46 of Kuchivaripalle, Rajampet Taluk have conspired together at Puttur and Kuchivaripalli during the said period 'to deprive the' Central Government of its legitimte revenue by A-1 of you issuing 'bogus T. P, is No. 801924 dated 4-9-1952 for 3800 lbs of tobacco, No. 801933 dated 16-9-1962 for transport of 5785 lbs of tobacco, No. 801963 dated 21-10-1952 for 2932 lbs and No. 81996 dated 26-11-1952 for 2914 lbs. of tobacco in the name of K. Laxmana Chetty L-2 No. 3/46 Keelapet, Puttur Range, Chittoor District, by quoting false documents as payment of duty and handed over them to A-2 of you and on the said bogus documents No. 2 of you obtained fresh T. P. .i's, Nos. 585376, 585385 and 585387 and transported non-duty paid tobacco noted in the said T. P. is to the premises of V. C. Pannappi Chetti, P. Bhoopathy Chetty and V. A. Nataraja Chetty of Madras and thereby contravened the provisions of Section 9 of the Central Excises and Salt Act (I of 1944) and further conspired to cheat the aforesaid persons by making them part with monies on false representation that the said T. P. is are valid and tobacco covered thereunder are duty paid as detailed in the charges


T. P. is are valid and tobacco covered thereunder are duty paid as detailed in the charges below and thereby committed an offence punishable under Section 120-B of the Indian Penal Code and within my cognizance.


Secondly:
That in pursuance of the said conspiracy No. 1 of you being an Inspector of the Central Excise of Puttur Range during the years 1951-52 and holding the said post issued false T. P. is No. 801924 dated 14-9-1952 and 801933 dated 16-9-1952, 801963 dated 21-10-1952 and 801996 dated 26-11-1952 and gave them to A-2 Pitchayya at Puttur abetted the commission of offence of cheating by the said T. Pitchayya which was committed in consequence of your abetment and you thereby committed an offence punishable under Section 109 of the Indian Penal Code read with Section 420 of the Indian Penal Code and within my cognizance.

Thirdly:
That in pursuance of the said conspiracy you A-2, a tobacco licensee L-2 No. 41./.56 while holding, the licence cheated by false representation. V. C. Ponniah Chetty, P. Bhoopathy Chetty and V. A. Nataraja Chetty of Madras by selling to the above said persons non-duty paid tobacco as if duty paid, particulars of which have been noted in charge No. 1 and dishonestly made them part with as follows: V. C. Poonappa Chetty Rs. 1686-8-9. Rs. 1895-14-0 and Rs. 746-11-9, V, A. Nataraja Chetty Rs. 1512-7-8 and P. Bhupathy Chetty Rs. 2253-9-3, Rs. 1888-7-6 and Rs. 600-11-9 and thereby committed an offence punishable under Section 420 of the Indian Penal Code and within my cognizance.


In charge No. 1, the objects of the conspiracy are stated, as follows:
1. To deprive the Central Government of its legitimate revenue by the method mentioned in the charge; and

2. To cheat the merchants of Madras mentioned in the charge.

Charge No. 2 relates to alleged abetment by A-1 of the offence concerned in the third charge which was committed by A-2. The offence committed under Charge No, 2 is also mentioned to have been committed by A-1 in pursuance of the conspiracy.

Charge No. 3 relates to what is said to have taken place (Offences committed by A-2) in pursuance of the second object of the conspiracy.

5. (After narrating the- prosecution evidence and the case put forward by it. and referring to the defence evidence His Lordship proceeded:) The learned Special First Class Magistrate believed the evidence of the P. Ws. especially the evidence of P. W. 7 and the official witnesses and held that all the three charges were proved against the respective accused. He accordingly convicted and sentenced them to various terms of imprisonment.

6. On appeal, the learned Sessions Judge disagreed with the finding of the trial Court and acquitted each accused of the charges framed against him. In particular, the learned Sessions Judge held that P, W. 7 was not a reliable witness and rejected the contention made on behalf of the prosecution that the mention of the various sale notes in each of Exs. P-2, P-4, P-5, P-6, P-7 and P-8 was an interpolation which did not exist originally at the time of the enquiry by the officers and at the time when they were marked in the trial Court and were introduced some time after the trial was over and the appeals were heard.


7. In this Court, a preliminary objection was raised by the learned Counsel for the accused that the prosecution was barred by Section 40 (2) of the Central Excises and Salt Act (Central Act I of 1944). This point had not been raised in the trial Court or in the appellate Court, but it was allowed to be raised here, as it was a question o£ law based on facts which were already on record and beyond dispute and because it was an important point.

               x                         x                           x

8-9. Section 40 (1) and (2) of the Central Excises and Salt Act (Central Act I of 1944) runs as follows:
 Bar of suits and limitation of suits and other legal proceedings:

40. (1) No suit shall lie against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act.

2. No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of.

10. The learned Public Prosecutor has contended that Section 40 (2) does not apply to prosecution by the State and that it would apply only for prosecution by private parties, that is, not the State. I am unable to accept this contention for the following reasons:
1. The wording of Section 40 (2) does not I show that it is meant to apply only to prosecution ( by private parties and not by the State.


2. Rule 207 specifically mentions that a complaint shall be made only by an officer not inferior in rank to an Inspector, that is, by a public servant. Consequently, the prosecution contemplated under this rule- is only by the State.

3. Offences under Section 9 (b) and other offences are liable to detrimentally affect the revenues of the State. It is quite natural that the State would be primarily interested in enforcing the Central Excise Act and its provisions and in proceeding against persons who contravened provisions of the Act or rules framed tinder the Act 01 notifications issued under the Act.

4. Regarding the provision under Section 53 of the Madras District Police Act which is substantially similar to Section 40 (2) of the Central Excises and Salt Act in relevant aspects, prosecution by the State was held to be barred by time (Vide In Re Venugopal, Unreported decision of a Full Bench of this Court in Criminal Appeal Nos. 551 of 1958 and 74 of 1959 : (now ).


11. In C. A. No. 509 of 1958 the thing which was done under this Act and which is concerned in the charges is the issue of the various permits, Exs. P-2 to P-5 by A-1 in favour of P. W. 7. The permits were issued between the dates 4-9-1952 and 26-11-1952. The other subsidiary permits which are concerned in Criminal Appeal Nos. 510 to 513 namely, Exs. P-6 to P-8 and Exs. P-18 to P-21 were issued between the dates 8-9-1951 and 27-8-1952, The Charge-sheets in all these cases were filed on 7-7-1956, that is, after lapse of much more than the six month's period mentioned in Section 40 (2). Consequently, if Section. 40 (2) applies to the prosecution, either as regards A-1 or as regards A-2, to that extent, the prosecution would be barred and the convictions and sentences would be untenable.

12. The learned Counsel for each accused contends that the prosecution is barred as against that accused. On the other hand, the learned Public Prosecutor contends that Section 40 (2) is not applicable to this case.

13. The wording of Section 40 (2} is similar to the wording in Section 53 of the Madras District Police Act in relevant particulars. The latter section runs as follows:
 All actions and prosecutions against any per-son, which may be lawfully brought for anything done ... under the provisions of the Act ... shall be commenced within three months after the act complained of shall have been committed....


14. The question of application of Section 53 of the Madras District Police Act came up for consideration in an Unreported decision of a Full Bench of this Court in Criminal Appeal Nos. 551 of 1958 and 74 of 1959 (now ). In that case, two questions were referred to the Full Bench, as follows:
1. In what circumstances could the bar of limitation prescribed by Section 53 of the Madras District Police Act be available to an accused officer?

2. In the circumstances of this case, is the prosecution of the appellants barred by limitation by reason of the provisions of Section 53 of the Madras Police Act?

The facts of that case related to something which was alleged to have been done by some police officers- viz., extortion of a confession and wrongful confinement of a person, in the course of investigation. The Full Bench answered the first question in the following terms:
 We would, therefore, answer the first question referred to us by saying that the bar of limitation prescribed by Section 53 of this Act would be available to an accused officer only when the act complained of has been committed in the discharge of his official duties.


They also laid down 'that the question as to whether a particular act would be regarded as having been done in the discharge of one's duties would have to be determined on the facts and particular circumstances of the case'. Consequently we have got to decide as to whether the act which is alleged to have been done by A-1 was done in the discharge of his official duties. To decide that point, the relevant facts and particular circumstances of the case have to be considered. The question whether a person was acting in the discharge of his duties is directly concerned in Section 197 Cr. P. C. which required previous sanction of the Government for prosecution. That Section relates to cases 'when any public servant ............... is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty'. The question as to when and under what circumstances a public servant can be said to have acted in the discharge of his official duty has been the subject of many decisions, which are, therefore, available for guidance of this Court in coming to a decision.

15. In Hori Ram Singh v. Emperor, AIR 1939 FC 43 it was observed as follows (at page 56):
 I would observe at the outset that the question is substantially one of fact, to be determined with reference to the act complained of and the attendant circumstances, it seems neither useful nor desirable to paraphrase the language of the section in attempting to lay down hard and fast tests.

16. Though there are no hard and fast tests, a perusal of the various decisions indicate as to what are the features which can be usefully considered in deciding this question of fact and the correct approach.


17. In AIR 1939 FC 43, the Federal Court laid down the following test (at page 51):
 The test appears to be not that the offence is capable of being committed only by a public servant and not by any one else, but that it is committed by a public servant in an act done or purporting to be done in the execution of his duty.

18. In H. H. B. Gill v. The King, AIR 1948 PC 128, the Privy Council observed as follows (at page 133):
 A public servant can only be said to act or purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty ... The test may well be whether the public servant, if challenged, can reasonably claim that, what he does, he does in virtue of his office,

19. In Ramayya v. State of Bombay, , the Supreme Court observed (at page 292) thus:-
 ... But it is not the duty we have to examine so much as the act, because an official act can be performed in the discharge of official duty as well as in dereliction of it.

 X X X ... Therefore, whatever the intention or motive behind the act may have been, the physical part of it remained unaltered, so if it was official in the one case it was equally official in the other, and the only difference would lie in the intention with which it was done; in the one event, it would be done in the discharge of an official duty and in the other, in the purported discharge of it.


20. In Amrik Singh v. State of Pepsu, , it was stated that the test to apply is whether the acts with which the appellant ' is charged directly bear on the duties which he has got to discharge as a public servant. Therein, it was observed as follows (at page 312):
 ... If the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office ...; and that would be so irrespective of whether it was, in fact, a proper discharge of his duties....

The Supreme Court held that the acts complained of should be integrally connected with the duties' attaching to the office and should hinge on his duties as a public servant.

21. In Matajog Dobey v. H.C. Bhari, , the following principles were laid down by the Supreme Court (at page 45):
(a) there must be a reasonable connection between the act and the discharge of official duty;
(b) it does not matter even if the act exceeds what is strictly necessary for the discharge of the duty, as this question will arise only at a later stage when the trial proceeds on the merits. What the Court must find out is whether the act and the official duty are so inter-related that one can postulate reasonably that it was done by the accused in the performance of the official duty, though possibly in excess of the needs and requirements of the situation.

22. In Satwant Singh v. State of Punjab, , the Supreme Court laid down the following principle:
 ... The act must bear such relation to the duty that the public servant could lay a reasonable but cot a pretended or fanciful claim, that he did it in the course of the performance of his duty....


23. In AIR 1939 FC 43 the facts were as follows: A Sub-Assistant Surgeon was charged under Section 409 I.P.C. with having dishonestly removed certain medicines from a hospital which was under his charge, to his own residence, and under Section 477-A with having failed to enter them in the stock book. It was found as a matter of fact that the accused had committed secret misappropriation or conversion to one's own use. It was held by the Federal Court that 'when a public servant simply embezzles some property entrusted to him and thereby commits a criminal breach of trust under Section 409, he is not doing an act, nor even purports to do an act in execution of his duty; when he commits the act, he does not pretend to act in the official discharge of his duty. In the same decision, the learned Judges have shown the distinction between an offence under Section 477-A I.P.C. and the offence like Section 409 I.P.C. As regards Section 477-A it was observed that, 'the official capacity is involved in the very act complained of as amounting to a crime, because the gravamen of the charge is that the accused acted fraudulently in the discharge of his official duty'. Therein, it was further observed as follows:


... But an offence under Section 477-A I. P. C, is committed if an officer or servant or anyone employed or acting in such capacity, wilfully and with intent to defraud falsifies any book or account. Thus, where it is his duty to maintain a record or a register, and in maintaining that register he makes some entries which are false to his knowledge, he is certainly purporting to act; though not actually acting, in the execution of his duty because he is making certain entries in the register, knowing them to be false. He is ostensibly professing to be discharging - his official duty in maintaining the register, which he is bound to maintain correctly. In making the entries he pretends or purports to act in the execution of his duty; but in point of fact he is acting in direct dereliction of it, On the other hand, as regards an offence under Section 409 I.P.C. the learned Judges pointed out that 'the official capacity is material only in connection with the entrustment and does not necessarily enter into the later act of misappropriation or conversion, which is the act complained of. The learned Judge also made observations which are of some importance and help in the present case (at page 52) as follows:-


It is possible to conceive of a case where a criminal breach of trust may be committed in conspiracy with other servants and payment of money is dishonestly ordered ostensibly in execution of duty. The question whether the act purported to have been done in execution of duty or not must depend on the special circumstances of each case ... If the present case had merely been that medicines were openly removed from the hospital dispensary to the house on some pretence, it might have remained ambiguous whether the act purported to be done in execution of duty or not. But apparently the case as put forward in the compounder Din Mohammad's application submitted with the police report, and also as found proved by the Magistrate at the trial was one of secret misappropriation or conversion to one's own use, That case related to an offence under Section 409 I. P. C, in which the act of disposal would come under the category of offences in which the sole act or any one of the acts necessary to constitute the offence can or cannot be done by the public servant in discharge of his official duty, depending upon the facts and circumstances of the case.


24. In AIR 1948 PC 128, the accused was charged under Section 161 I.P.C. with taking bribes and under Section 120-B I.P.C. with conspiracy. On the question whether sanction was necessary under Section 197 (1) Crl. P. C. it was held by the Privy Council that, as the acts with which the accused was charged could not be justified by virtue of his office, no sanction was necessary.

25. In each, of the present cases, as the act concerned in the first object .of the conspiracy if only by way of issue of permit it would come under the category of offences regarding which the sole act of the public servant concerned which constitutes the offence and every act which is necessary to constitute the offence cannot but be done by him in his official capacity or in discharge of his duties. Consequently, Section 40 (2) would be applicable.

26. In the accused, who were Government servants, were in charge of the stores which were kept in the Military Engineering Stores Depot. They had been entrusted with the stores in various capacities, entered into a conspiracy to defraud Government of these properties and in pursuance of this conspiracy 'they arranged to sell them to the approver (P. W. 1) for a sum of RSection 4,000/-. The money is said to have been paid and then the stores were passed out of the depot. The money is alleged to have been pocketed by the three accused and not credited to the Government. A number of charges were framed including criminal breach of trust in furtherance of the common intention of all under Section 409 I, P. C. read with Section 34 I.P.C. The Supreme Court observed as follows in para 19 (page 293):
We have, therefore, first to concentrate on, the word offence.


Now an offence seldom consists of a single act. It is usually composed of several elements and, as a rule, a whole series of acts must be proved before it can be established....

Therefore, the act complained of, namely the disposal could not have been done in any other way. If it was innocent, it was an official act; if dishonest, it was the dishonest doing of an official act, but in either event the act was official because accused 2 could not dispose of the goods save by the doing of an official act, namely official permitting their disposal; and that he did. He actually permitted their release and purported to do it in an official capacity, and apart from the fact that he did not pretend to act privately, there was no other way in which he could have done it ...

In the present case, the concerned act committed by A-1 was in effect, permitting transport just as in that case the concerned act was permitting disposal.

27. The same view has been followed in a number of other decisions -- and Dhannjay Ram v. M. S. Uppadaya, .


28. In the relevant facts were: After the evacuation of Burma the Government was located at Simla. In response to a Notification by the Government of Burma, one Satwant Singh submitted certain claims on the basis of having executed some works and contracts and supplied some materials in Burma. The Government of Burma sent these claims to one Major Henderson of Jhansi in March and May 1943 for verification, as he was the officer who had knowledge of these matters. Major Henderson certified many of these claims to be correct, with the result that Satwant Singh was able to collect money on the claims from the Government. The appeal was filed by Satwant Singh alone and not by Major Henderson. It was contended that the absence of sanction under Section 197 Cr. P. C. vitiated the trial. The Supreme Court observed as follows at page 271:


... Henderson was charged with intentionally aiding the appellant in the commission of an offence punishable under Section 420 of the Indian Penal Code, by falsely stating as a fact in his report that the appellant's claims were true and that statement had been made knowing all the while that the claims in question were false and fraudulent and that he had accordingly committed an offence under Section 420/109 Indian Penal Code. It appears to us to be clear that some offences cannot by their very nature be regarded as having been committed by public servants, while acting or purporting to act in the discharge of their official duty. For instance, acceptance of a bribe, an offence punishable under Section 161 of the Indian Penal Code is one of them and the offence of cheating or abetment thereof is another. We have no hesitation in saying that where a public servant commits the offence of cheating or abates another so to cheat, the offence committed by him is not one while he is acting or 'purporting to act in the discharge of his official duty, as such offences have no necessary connection between them and the performance of the duties of a public servant, the official status furnishing only the occasion or opportunity for the commission of the offences. The act of cheating or abetment thereof has no reasonable connection with the discharge of official duty ..................... It is however to be remembered that Henderson was not prosecuted for any offence concerning his act of certification. He was prosecuted for abetting the appellant to cheat. We are firmly of the opinion that Henderson's offence was not one committed by him while acting or purporting to act in the discharge of his official duty.


29. The position of law can be summed up thus:
There are various statutory provisions giving protection to public servants; some by way of requiring sanction by Government or other higher authority for prosecution and some by way of imposing a period of limitation within which action has to be taken. Some of the statutory provisions postulate specified offences being committed in execution of duty or discharge of official duty. Some other provisions specify the act being done by the public servant under a statute. Both types of provisions are substantially to the same effect and the important criterion is whether the act was done in the discharge or purported discharge of official duty and the act must be an official act. It has got to be seen whether the act was integrally connected with the duties and was inseparable from the duties and that the duties did not furnish a mere occasion or an opportunity for committing the act. The mere fact that the act is an offence is not sufficient to decide the question whether the protection is available.

30. An alleged act committed by a public servant concerned can come under three categories:
1. Act which cannot but be done in official capacity and in discharge of duty. See AIR 1939 FC 43.

2. Act which from its very nature cannot be done in discharge of duty.

3. Act which may or may not have been committed in the discharge of duty dependent on the relevant facts and circumstances of the case, See Albert Westmeads v. The King, AIR 1948 PC 156.


31. When it comes to a question as to whether an offence was committed by the public servant in discharge or purported discharge of his duties, such offences themselves can come under three categories similar to the act:
1. Offences regarding which the sole act of the public servant concerned which constitutes the offence and every act which is necessary to constitute the offence cannot but be done by him in his official capacity or in discharge of his duties (e.g. an offence under Section 477-A, I. P. C.)

2. Offences regarding which the sole act or any one of the acts which is necessary to constitute the offence cannot be done in the discharge of his duties (e.g. offences under Sections 420 and 161 I. P, C. mentioned in ).

3. Offences in which the sole act or any one of the acts which are necessary to constitute the offences can or cannot be done by the public servant in the discharge of his official duties according to the facts and circumstances of the case.

32. Where the basic question is about an act done by a public servant, one has to see under what category it falls. If it comes under category 1 or category 2, the answers will be obvious. If it comes under category 3, the answer will have to be made with reference to surrounding facts and circumstances.

33. When the question is as to whether the statutory protection is applicable to an offence, the following procedure appears to be indicated by various decisions:
1. It has to be seen what are the elements which constitute the alleged offence.

2. It has to be seen as to whether the acts of the accused make out the elements necessary to constitute the offence.

3. Where the acts committed by him do not constitute all the necessary elements for making out the offence, then obviously the offence would not be made out.


4. If it is found that he committed all that acts or the sole act which constitutes the offence it has to be seen as to under what category, the offence fails. If it falls under category (1) o: category (a), the inference will be obvious. If i falls under category (3), then correct finding ha to be arrived at by careful study of the relevan facts and circumstances.

34. In the present case, Charge (3) agains A-1 is for an offence under Section 420 read wit Section 109 I.P.C. This would come under category (2). For, the : offence of abetment of cheating, under Section 420 read with Section 10 I.P.C. concerned in Charge (3) has been specifically mentioned as, such in AIR 1960 SC 261 One element concerned in this offence, namely, issuing of the permits by itself is of the nature of category (i) because such issue can be done by A-1 only in his official capacity. But, that will not bring the offence under category (i) because that element alone cannot make out the offence of abetment of cheating under Section 420/109 I.P.C. There are other elements involved which do not come under category (1) or category (2). Those elements depend on facts and circumstances of the case.

35. Charge No. 1. is under Section 120-B I.P.C. That charge specifically mentions the following two subjects:
1. To deprive the Central Government of its legitimate revenue by A-1 issuing false T. P. is.

2. To cheat the specified persons by making them believe through false representations that the T. P. is were valid and thereby making them part with money.


So far as the second object is concerned, it is cheating which is mentioned in Charge No. 2 against A-2 and in Charge No. 3 against A-1, The offence of cheating comes under category (2). So far as the first object is concerned, the object of depriving the Central Government of its legitimate revenue is an act contemplated in the offence under Section 9 (b) and (d) of Act I of 1944 which comes under category (1) The specific act which A-1 is alleged to have committed by issuing the bogus permits comes under category (1) because he could or could not have issued the permits except in his official capacity and beyond doubt or dispute he did issue them in the discharge of his official duties, irrespective of his motive or intention in issuing them.

36. So far as Section 40 (2) of Act I of 1944 is concerned, the question of intention or motive does not come in, to decide whether the act of the issue of permits was under Act I of 1944. For, as observed in ; if the issue was innocent it was the innocent doing of an official act; and if it was dishonest it was the dishonest doing of an official act.