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Appeal No. 623 of 1975. From the Judgment and Order dated 25 6 74 of the Karna taka 'High Court in Civil Revision No 1981/73. S.S. JavaIi and B.P. Singh, for the Appellants. S.V. Gupte and K.N. Bhatt, for the Respondent. The Judgment of the Court was delivered by RAY, C.J. This appeal by special leave is from the judgment .dated 25 June, 1974 of the Karnataka High Court. The principal question in this appeal whether section 107 of the Karnataka Land Reforms Act, 1961 applies to the land in suit which was leased to the respondent. A large plot of land comprising an area of about 20 acres popularly known as "The Chamaraja Sewage Farm" situate in the city of Bangalore belongs to the appellant Corpora tion. The appellant :leased to the respondent by a regis tered lease dated 14 September, 270 1953 the aforementioned land for a period of 5 years on an annual rent of Rs. 13,555/ . The respondent by notice was called upon to hand over possession of the land immediately after the expiry of the period of lease. The respondent failed to deliver possession. The reason why the appellant required that land is that the Corporation proposed a scheme for the development and construction of a new township on that area. The respondent filed a suit for the grant of a permanent injunction restraining the appellant from interfering with the possession. The Court upheld the contentions of the appellant that the lease had terminated by efflux of time. The respondent 's 'suit was dismissed. An appeal was pre ferred. The appeal was dismissed on 21 August,. The appellant then instituted the suit in appeal claim ing possession from the respondent. The appellant contended that the respondent was a trespasser and claimed damages for unauthorised occupation. The respondent contended that he was still a tenant. The respondent claimed protection under the Mysore Tenants (Temporary Protection from Eviction) Act, 1961 being Act No. 15 of 1961. Section 3 of the Mysore Tenants (Temporary Protection from Evic . tion) Act, 1961 provided for prohibition against eviction. The appellant obtained a decree in the suit. The decree directed the respondent to deliver possession. The respond ent preferred an ' appeal. The High Court remanded the matter to the trial Court for assessment of damages. Upon remand the respondent applied for the amendment of the written statement. The respondent claimed protection under the Karnataka Land Reforms Act, 1961. It may be stated here that the Mysore Tenants (Temporary Protection from Eviction) Act, 1961 ceased to be in force in March, 1966. That is perhaps why the respondent made an applica tion for amendment of the written statement on 2 February 1973. The respondent contended relying on section 133 of the Karnataka Land Reforms Act, 1961 that the. suit should be stayed by the civil court and should be referred to the Tribunal for decision. Section 112(B)(b) of the Karnataka Land Reforms Act, 1961 confers power on the Tribunal to decide inter alia whether a person is a tenant or not. The respondent contended that he was a person who was deemed to be a tenant. The appellant opposed the application for stay of the suit by the civil court and referring to the Tribunal for decision under the Karnataka Land Reforms Act, 1961. The trial Court held that the land ' belonging to the appellant was exempted from the application of the provisions of the Land Reforms Act. The trial Court dismissed the application of the respondent. The respondent presented a revision petition t0 the High Court. The High Court reversed the decision of the trial Court and directed the trial Court to refer such of the issues which are required to be. decided by the Tribunal. 271 Counsel for the respondent contended that the respondent is a tenant within the meaning of the word "tenant" defined in section 2(34) of the Karnataka Land Reforms Act, 1961. "Tenant" is defined to mean an agriculturist who cultivates personally the land he holds on lease from a landlord and includes (i) a person who is deemed to be a tenant under section 4 of the Karnataka Land Reforms Act, 1961, Section of the Karnataka Land Reforms Act, 1961 states that a person lawfully cultivating any land belonging to another person shall be deemed to be a tenant if such land is not cultivat ed personally by the owner and if such person is not (a) a member of the owner 's family, or (b) a servant or a hired labourer on wages, or (c) a mortgage in possession It was, therefore, said that the respondent could raise the con tention whether the respondent was a tenant or not. It was next contended that section 8 of the Karnataka Land Reforms Act, 1961 speaks of rent and rent is referable to tenant and therefore a dispute as to tenancy would be within the ambit of the Karnataka Land Reforms Act, 1961. Section 107 of the Karnataka Land Reforms Act, 1961 states that subject to the provisions of section 110 nothing in this Act, except section 8 shall apply to lands, inter alia (iii) belonging to or held on lease or from a local authority. There is no dispute that the land was given on lease by the local authority. There is also no 'dispute that the land belongs to the local authority. There is also no dispute that the lease was detrmined by efflux of time. The question whether the respondent is a tenant or deemed to be a tenant does not at all arise because the tenancy came to an end. The 'respondent thereafter was a trespasser. Section 107 of the Karnataka Land Reforms Act, 1961 makes it quite clear that the only provision which applies, inter alia, to lands belonging to or hold on lease or from a local authority is section 8. No other section of the Land Reforms Act applies to these lands. Section 8 of the Karna taka Land Reforms Act, 1961 deals with rent. The suit in the present case was not for recovery of rent. The suit is for recovery of possession and for damages, for unauthorised occupation of the respondent. Section 2 of the Karnataka Land Reforms Act, 1961 is not applicable. Therefore, no question can be referred for determination by the Tribunal under section 133. The Mysore Tenants (Temporary Protection from Eviction) Act, 1961 came into effect on 13 December, 1961. The Mysore Tenants (Temporary Protection from Eviction) Act, 1961 remained in force till the month of March, 1966. The re spondent could not draw any support from that Act for pro tection against eviction. The land in question was outside the applicability of the Mysore Tenants (Temporary Protec tion from Eviction) Act, 1961. Further the Act ceased to be in operation in 1966 and no question could be referred for determination as to whether the respondent was a tenant under the Mysore Tenants (Temporary Protection from Evic tion) Act, 1961 or not. The trial Court in the present case rightly said that it could not be said that there was any dispute as to tenancy. 272 The respondent had filed a suit where he claimed to remain in possession. The suit of the respondent was dismissed. The appellant all along contended that the lease dated 14 September 1963 for a period of 5 years expired by efflux of time. The appellant claimed possession on the ground Of unauthorised occupation and claimed damages against the respondent, who was a trespasser. The High Court was clearly in error in referring to the Tribunal under the Karnataka Land Reforms Act 1961 determi nation of the plea taken by the respondent that he was pro tected by the Mysore Tenants (Temporary Protection from Eviction) Act 1961. Counsel for the respondent did not support the judgment on that ground. Counsel for the respondent contended that section 133 of the Karnataka Land Reforms Act 1961 excludes jurisdiction of Civil court in suits for possession where the defendant claims to be a tenant. The plea of the respondent is utterly unsound. Section 133 of the Karnataka Land Reforms Act 1961 cannot apply to lands which are held by a person on lease from the local authority or where the lease had ex pired and the local authority sues for possession on the ground that there is unauthorised occupation. No provision of the Karnataka Land Reforms Act can be relied upon to contend that there should be protection against recovery of possession by the local authority. For the foregoing reasons the judgment of the High Court is set aside. In view of the fact that no costs were al lowed by the High Court, there will be no order as to costs. M.R. Appeal allowed.

The respondent took the disputed land on lease for 5 years from the appellant Corporation, and held it unautho risedly after the lease period expired. His suit for a permanent injunction against interference with his posses sion, was dismissed, and his appeal rejected. The appellant then instituted the suit in appeal, claiming possession. The suit was decreed and the respondent was directed to deliver possession. On appeal, the High Court remanded the case. Upon remand, the respondent applied for an amendment of his written statement, claiming protection under the Karnataka Land Reforms Act, 1961. He also applied for a stay of the suit by the Civil Court, and for a reference to the Tribunal for deciding whether he was a tenant or not. The application was dismissed, but on revision, the High Court reversed the decision. The principal question in appeal before this Court was whether section 107 of the Karnataka Land Reforms Act, 1961, was applicable to the disputed land held by the respondent. Allowing the appeal, the Court, HELD: Section 107 of the Karnataka Land Reforms Act, 1961 makes it . quite clear that the only provision which applies to lands belonging to or held on lease or from a local authority is section 8. There is no dispute that the lease was determined by efflux of time. The question wheth er the respondent is a tenant or deemed to be a tenant does not arise because the tenancy came 'to an end. Section 8 is not applicable. Therefore no question can be referred for determination by the Tribunal under section 133. Section 133 cannot apply where the lease had expired and the local authority sues for possession on the ground that there is unauthorised occupation. [271 D, E, F, 272 C]

N: Criminal Appeal No. 718 of 1979 From the Judgment and Order dated 11 10 1979 of the Gujarat High Court in Criminal Appeal No. 110/77. A.K. Trivedi and S.S. Khanduja for the Appellant. The Judgment of the Court was delivered by FAZAL ALI, J. This appeal is preferred by the three accused in Sessions Case No. 46 of 1976 against their conviction and sentence 354 imposed upon them by the High Court under the . The three appellants were tried by the Sessions Judge for commit ting offences punishable under section 302/120 B/323/324 read with section 34 and 109 of the Indian Penal Code for committing the murder of one Karsan Kala on 19 1 1976. The learned Sessions Judge acquitted all the three appellants of the charges levelled against them. The State of Gujarat filed an appeal against the order of Sessions Judge acquitting them, to the High Court of Gujarat. A division Bench of the High Court in Criminal Appeal No. 110/77 allowed the appeal of the State and reversed the order of acquittal by the Learned Sessions Judge and convicted them for offences under section 302/120 B and sentenced them to imprisonment for life. They were also convicted tor lesser offences and sentenced to varying terms of imprisonment The prosecution strongly relied on the evidence of three eye witnesses Rata Mala, Ganesh and Ruda. Rata Mala was an injured eye witness having receives several incised injuries. The evidence of Ruda not accepted. The complainant Savai Kala, the brother of the deceased saw the latter part of the occurrence when the deceased was being carried away by the accused. When Savai Kala questioned, the accused attacked him and he was also injured The High Court in an elaborate judgment after thoroughly scrutinising the evidence of the eye witnesses accepted their testimony. It observed that the evidence of the eye witnesses Rata Mala is most reliable and trustworthy and so also the evidence of Ganesh. The High Court has referred to the circumstance under which the order of acquittal could be interfered 1, with in the light of the various decisions of this Court. The High Court taking into consideration the reasons given by the Sessions Judge for not accepting the testimony of the eye witnesses found them to be totally unacceptable. We have been taken through the evidence of the material witnesses. We have no hesitation in agreeing with the conclusion arrived at by the High Court that the reasons given by the l rial Court for acquitting the accused are totally unacceptable. After hearing the learned counsel and examining the petition of appeal and after going through the relevant parts of the judgment of the High Court and the Sessions Court. we find that there are no sufficient grounds of interference. The appeal is summarily dismissed under S 384 of the Code of Criminal Procedure. After we pronounced our judgment dismissing the appeal summarily under section 384 of the Code of Criminal Procedure, but before signing 355 the judgment, a decision of this Court Sita Ram & Ors. vs State of U.P. was brought to our notice wherein the scope of the power of the Courts to dismiss an appeal summarily under section 384 of the Code of Criminal Procedure has been referred. In that case an appeal was preferred to this Court under section 379 of the Code of Criminal Procedure, 1973 read with section 2(a) of the . The appeal was listed for preliminary hearing under Rule 15(1) (c) of O.XXI of the Supreme Court Rules 1966. The Appellants filed an application for adducing additional grounds, namely, (1) the provisions under cl. (c) of sub rule (1) of Rule 15 of Order XXI of the Supreme Court Rules empowering the Court to dismiss the appeal summarily is ultra vires being inconsistent with the provisions of the ; (2) the power of the Supreme Court to frame rules under article 145 of the Constitution cannot be extended to annul the rights conferred under an Act of Parliament and (3) an appeal under the cannot be dismissed summarily without calling for the records ordering notice to the State and without giving reasons. When the petition fr leave to adduce additional grounds came up before the Court, this Court ordered : "The appellants have challenged the constitutional validity of cl. (c) of sub rule (1) of rule 15 of O.XXI of the Supreme Court Rules, which enables an appeal of the kind with which we are concerned, to be placed for hearing ex parte before the Court for admission. In that view of the matter, we think that unless the question of the constitutional validity of the rule is decided, we cannot have a preliminary hearing. Of this appeal for admission. Let the records, therefore, be placed before the Hon 'ble the Chief Justice for giving such direction as he may deem fit and proper. " The matter was placed before a Bench of five Judges by the Hon 'ble the Chief Justice as the constitutional validity of cl. (c) of rule 15(1) of O.XXI of Supreme Court Rules, was challenged. Alongwith the question of constitutional validity, two other grounds referred to earlier were also raised. The contention of the Learned Counsel that a right of appeal cast an obligation on the Court to 356 send for records of the case, to hear both the parties and to make reasoned judgment, was not accepted by the judgment of the Court. Reasons given by the Court are as follows: "Counsel for the appellant insisted that an absolute right of appeal as he described it, casts an inflexible obligation on the court to send for the record of the case, to hear both parties, and to make a reasoned Judgment. Therefore, to scuttle the appeal by a summary hearing on a preliminary posting absent record, ex parte and absolved from giving reasons is to be absolutist a position absonent with the mandate of the Enlargement Act Act, indeed, of the Constitution in Article 134(1). Counsel 's ipsi dixit did not convince us but we have pondered over the issue in depth, being disinclined summarily to dismiss. " Regarding the power of the Court to summarily dismiss the appeal under section 384 of the Code of Criminal Procedure, the submission of the Learned Counsel was that the provisions of the Code of Criminal Procedure are not applicable to the Supreme Court which contention was not accepted by the Court. Neither in the application for adducing additional grounds or in the order of the Court directing the matter to be placed before the Constitution Bench, there was any reference to The validity of section 384 of the Code of Criminal Procedure. Neither was it pleaded during the arguments that section 384 of the Code of Criminal Procedure is ultra vires of the Constitution. As the question of validity of section 384 the Code of Criminal Procedure was neither raised nor argued, a discussion by the Court after "pondering over the issue in depth ' would not be a precedent binding on the Courts. The decision is an authority for the proposition that Rule ]5(1)(c) of O.XXI of the Supreme Court Rules should be read down as indicated in the decision. We are satisfied for the reasons stated above that the decision is no authority regarding the scope of section 384 of the Code of Criminal Procedure. The order cf dismissal of the appeal summarily will stand, P.B.R. Appeal dismissed.

The respondent a member of the Indian Air Force, retired from service on June 15, 1965 but was reemployed for a period of two years with effect from June 16, 1965. On September 7, 1966 the respondent was transferred to the Regular Air Force Reserve with effect from June 16, 1965 to June 15, 1970 i.e. for a period of five years. On March 13 1968 the reemployment given to the respondent ceased and his services were terminated with effect from April 1, 1968. A charge sheet was submitted against the respondent for having committed offences under section 5(2) of the Prevention of Corruption Act, 1947, during the period March 29, 1965 to March 16, 1967. The respondent filed a petition before the Special Judge for dropping the proceedings against him on the ground that the Judge could not take any cognizance of the offences in the absence of any valid sanction of the appointing authority OF the respondent. The application was rejected on the ground that as the respondent was not a Commissioned Officer in the Air Force at the time when the cognizance was taken, no sanction of the President was necessary. The respondent moved the High Court in revision, which quashed the proceedings, holding that as the respondent continued to be a public servant within the meaning of section 21 of the Indian Penal Code inasmuch as he remained a member of Air Force Reserve, sanction was necessary before prosecuting the respondent. In the appeal to this Court, it was contended on behalf of the appellant: (1) that as the respondent had retired from the Indian Air Force and his employment was terminated with effect from April 1, 1968 he ceased to be a public servant and therefore no sanction was necessary, and (2) that reemployment under the provisions of the Regular Air Force Reserve Act would not amount to an employment in the Regular Force of the Service and therefore even though the respondent may have been reemployed he could not be said to hold the status of a public servant. Dismissing the appeal, ^ HELD: 1. The prosecution must prove that at the time when cognizance of the offence was taken the respondent ceased to be a public servant. [700 C] In the instant case, the Special Judge took cognizance on June 19. 1969 at a time when the respondent continued to be a public servant having been reemployed and though his services were terminated only on April 1, 1968 he 698 continued to be a member of the Auxiliary Air Force upto July 15, 1970, that is a long time after cognizance of the offence was taken. [700 D] section A. Venkataraman vs The State ; State of West Bengal etc. vs Manmal Bhutoria & Ors. ; referred to. 2(i) The Provisions of the Auxiliary Air Force Act do not expressly contain the nature of the emoluments that the respondent may receive but the general tenor and setting of the Act clearly show that a member of the Auxiliary Force is as much a public servant as an acting member of the Indian Air Force. [703 G] (ii) Even after the respondent was transferred to the Auxiliary Air Force he retained his character as a public servant because he was required to undergo training and to be called up for service as and when required. [703 F]

it Petition (Civil) No. 623 of 1989. (Under Article 32 of the Constitution of India). Rangarajan and San jay Parokh for the Petitioner. G.B. Pai, V.K. Sharma and R.K. Maheshwari for the Respondents. The Judgment of the Court was delivered by 755 OJHA, J. The gravamen of the grievance of the petitioner is that even though she retired on 3 ist October 1977 on reaching the age of superannuation and even though she was entitled to pension, gratuity and other retirement benefits, the respondents have kept her deprived therefrom without any justification for all these long years. She has made a prayer that the respondents may be directed to make the requisite payments to her at least now when she was almost at the fag end of her life. Brief facts necessary for the decision of this petition are that the petitioner joined R.M. Arya Girls Patshala, New Delhi, which was an aided recognised school, as a primary teacher in the year 1952 and had been making contribution towards compulsory Provident Fund. On 17th October, 1975, the Administrator of the Delhi Administration in consultation with the Accountant General, Central Revenues, issued a notification in exercise of the power conferred on him by Rule 126 of the Delhi School Education Rules, 1973 (hereinafter referred to as the Rules) laying down detailed procedure for disbursement of pension and gratuity and accounting of General Provident Fund to the employees of the aided schools under the Delhi Education Act 1973 (for short the Act) and the Rules flamed thereunder. The sad notification, inter alia, provided: "Further rule 126 of the Delhi School Education Rules 1973 lays down that the Administrator shall, in consultation with the A.G.C.R. specify the detailed procedure for accounting of provident fund and payment of pension and gratuity to the employees of the aided schools. In order to implement the provision referred to above the detailed procedure is prescribed hereafter. In regard to matters not specified in the procedure the provi sions of the Central Civil Services (Pension) Rules, 1972 as amended from time to time and other general provisions of the Act/ Rules shall apply. The employees of the aided schools shall be enti tled to pension and/or gratuity in accordance with the provisions and procedure applicable to the employees of the similar categories of Delhi Administration under the exist ing pension rules as contained in the Central Civil Services (Pension) Rules, 1972 as amended from time to time. These rules shall be applicable to these employees of the aided schools who were appointed on or after the commencement of the Act/Rules and also to the existing 756 employees who opt for the pension and gratuity within the stipulated period in the prescribed proforma. " The school in which the petitioner was working being an aided school under the Act and the notification aforesaid being applicable to its employees the petitioner made the requisite option in the prescribed proforma on 29th January 1976 which was duly countersigned by the Education Officer on 2nd April 1976. After her retirement, the petitioner made several representations for payment of pension and gratuity etc. to the authorities concerned but each time the peti tioner did not get any better response than an information that her case was under active consideration. By his letter dated 27th February, 1987, i.e. after nearly 10 years of the petitioner 's retirement, the Joint Director of Education (FIN.) Old Secretariat, Delhi, conveyed to her an additional information apart from the usual one namely that her case was under active consideration, that further action in the matter will be taken by the Department soon after the pro posal is approved by the Government of India. By a subse quent letter dated September 29, 1987, the petitioner was informed by the Education Officer that the Directorate of Education had referred the case to Government of India on 26th March, 1987 for policy decision. Ultimately the Direc torate Of Education, Delhi Administration, promulgated the decision of pension scheme in the primary aided schools on 6th December 1988. This decision, inter alia, provided for payment of grant in aid to the local authorities concerned for the implementation of the pension scheme already noti fied vide notification dated 17th October, 1975. The last paragraph of the decision provides that "pensionary benefits under these orders would apply with immediate effect, i.e. from the date of issue of these orders". The prayer made in this petition has been opposed by the New Delhi Municipal Committee by filing a counter affidavit. The objection raised by the said Committee is that since the pension scheme was finally promulgated in 1988 and has provided therein that the pensionary benefits were to apply from the date of issue of the requisite order in this behalf namely 6th December, 1988, the petitioner who retired on 31st October, 1977 that is more than 11 years before the final promulgation of the scheme was not entitled to any of the benefits claimed by her simply on the ground that she had opted for pension before her retirement in pursuance of the scheme notified on 17th October 1975 which was in the process of finalisation at the time of her retirement. It has also been contended on behalf of the said Committee that since modalities for grant in aid to the local authorities con 757 cerned for the implementation of the pension scheme were provided for by order dated 6th December 1988 the petitioner was not entitled to any pension before this date in any view of the matter. Having heard learned counsel for the parties, we are of the opinion that the pleas raised on behalf of the Municipal Committee have no substance. As seen above, the requirement under the notification dated 17th October, 1975 with regard to the school, the employees of which were entitled to the benefits of the said notification was that it should be an aided school under the Act. The term "aided school" as defined in Section 2(d) of the Act means a recognised pri vate school which is receiving raid in the form of mainte nance grant from the Central Government, Administrator or local authority or any other authority assigned by the Central Government, Administrator or a 1ocal authority. In paragraph 1 of the petition under the caption "Facts" it has been specifically stated that R.M. Arya Girls Patshala was granted permanent recognition on 1.4.1936 and was also given grant in aid. The averments made in this behalf in sub paragraphs (b) and (c) ot paragraph III of the counter affidavit do not seem to seriously challenge what has been stated in paragraph 1 of the petition. It is, therefore, apparent that the school in which the petitioner was working was such, the employees of which were entitled to the bene fits/ conferred by the notification dated 17th October, 1975. The said notification as already pointed out above, inter alia, provided that in regard to matters not specified in the procedure the provisions of the Central Civil Serv ices (Pension), Rules, 1972 as amended from time to time shall apply. Rule 35 of these Rules provides that a superan nuation pension shall be granted to a Government servant who is retired on his attaining the age of compulsory retire ment. Rule 83 of these Rules, on the other hand, inter alia, lays down that the pension shall become payable from the date on which a government servant ceases to be borne on the establishment. Since these Rules will apply to the petition er as contemplated by notification dated 17th October 1975, she is obviously entitled to get pension with effect from the date on which she/ceased to be borne on the establish ment of the school in which she was working consequent upon reaching the age of superannuation. Rule 126 of the Rules under which the notification dated 17th October, 1975 had been issued gives the power to specify procedure for payment of pay and allowances, pension and gratuity etc. to the Administrator in consultation with the Accountant General, Central Revenues. The very opening words of the said notifi cation make it abundantly clear that the said notification had been issued in exercise of the powers conferred by Rule 126 of the Rules by the Administrator 758 in consultation with the Accountant General, Central Reve nues. The notification having thus been issued by the compe tent authority and the petitioner who was an existing em ployee of an aided school on the date of the issue of the said notification having opted for the pension and gratuity within the stipulated period in the prescribed proforma which was duly counter signed by the Education Officer, she obviously became entitled to the benefits conferred by the said notification. This is so all the more in view of the fact that the notification dated 17th October, 1975 did not contemplate finalisation of the modalities about contribu tion towards pension fund as a condition precedent to the entitlement of the benefits under the said notification. The finalisation of the said modalities was a matter of details among the authorities concerned and could have no bearing on the entitlement to the benefits of the notification dated 17th October, 1975. Such finalisation could not even defer the date of the entitlement: Likewise the said notification did not contemplate any approval by the Government of India as a condition precedent to its enforceability. In this connection, it is also of significance that no statutory provision has been brought to our notice which made approval by the Government of India of the notification dated 17th October, 1975 issued by the competent authority as a condition precedent to the enforce ability of the said notification. As seen above, for nearly 10 years after her retirement the petitioner was being informed in reply to her various representations that her case was under active consideration. It is only in 1987 that the plea that further action in the matter will be taken by the Department soon after the proposal is approved by the Government of India was raised and the case was referred by the Directorate of Education to the Government of India on 26th March 1987 for policy decision. Why it became necessary to do so in 1987 is a matter of anybody 's guess. If, at all, it only indicates the callous attitude of the authorities concerned towards the fate of retired employees of aided schools in the matter of grant of pension and other retire ment benefits to them. For ought we know, but for the sin cere effort made by the Indian Council for Legal Aid and Advice in this case, which apparently deserves commendation, the agony which the petitioner must have suffered during the long years after her retirement may have remained unnoticed and unmitigated. No acceptable justification having been given for denying the pension to the petitioner from the date of her retirement as also the other retirement benefits the petitioner is obviously entitled to these benefits. In the result, this petition succeeds and is allowed. The respon 759 dents are directed to pay to the petitioner pension admissi ble to her in pursuance of the notification dated 17th October, 1975 with effect from the date of her retirement and also to pay to her the other retirement benefits. They are further directed to finalise the requisite formalities in this behalf within three months and to issue payment orders immediately thereafter. The petitioner shall be entitled to her costs from respondents 1 and 2 which is assessed at Rs.2,000. G.N. Petition allowed.

M/s Dabur India Limited, petitioner in one set of peti tions, is a public limited company engaged in the manufac ture of Ayurvedic as well as Allopathic medicaments, along with cosmetics. It used to manufacture for and on behalf of M/s Sharda Boiren Laboratories The petitioner in the second set of petitions a Homeopathic tooth paste called 'Homeo dent ' out of the raw materials supplied by M/s Sharda, on job basis. It accordingly manufactured Homeodent during 1985 to 1988, duly paying duties of excise on Homeodent under the Central Excises & Salt Act, 1944. The Superintendent of State Excise visited the factory of M/s Dabur on 18th January, 1988 and enquired about the excisability of Homeodent under the Medicinal & Toilet Preparations (Excise Duties) Act, 1955. He was told that Homeodent had been classified under the 1944 Act in view of the orders passed by the Central Excise authorities. Howev er, when it was revealed that the Homeodent tooth paste was toilet preparation containing alcohol, within the meaning of section 2(k), read with Item 4 of the Schedule, referred to in section 3 of the 1955 Act, the District Excise Officer caused a common notice dated 17.3.1988 to be served on M/s Dabur requiring it to pay duty aggregating to Rs.68,13,334.20 under the provisions of the 1955 Act on such 295 goods manufactured and cleared between January 1985 and January 1988. This order was passed without issuing any notice to show cause, and without affording any opportunity of hearing, to the petitioner. The Petitioner sent a representation requesting for compliance with the principles of natural justice and also disputing the amount claimed as duty. On 18th March, 1988 the Superintendent of State Excise modified the earlier order and confirmed the demand of duty amounting to Rs.46.67 lakhs, on provisional basis. On that day the petitioner deposited a sum of Rs. 11.66 lakhs and further executed a bank guarantee for the balance. Simultaneously, the peti tioner appealed against the order dated 18th March, 1988. The Excise Commissioner dismissed the appeal. No appeal was filed by M/s Sharda against the demand notice of excise duty under the 1955 Act. The petitioner moved the High Court. On 13th May, 1988 the High Court directed the petitioner to file a revision petition with the Central Government. Both the petitioners then approached the Central Government in revision. On 22nd September, 1988 the Additional Secretary to the Government of India in exercise of his revisional powers allowed the revision filed by M/s Dabur and declared the orders of the District Excise Officer and the Excise Commissioner as null and void having been passed in violation of the principles of natural justice. The revision filed by M/s Sharda was not entertained by the Central Government on the ground that a right of appeal was vested in Sharda, which was not availed of. The High Court dismissed Sharda 's petition challenging the order of the Central Government declining to entertain its review. Against the order of the High Court M/s Sharda have filed the special leave petition in this Court. On the basis of the revision order, the petitioners called upon the District Excise Officer to refund the amount of Rs.46.67 lakhs recovered from it by way of cash payment and encashment of bank guarantee. The State Excise authori ties however failed to grant the refund, and instead issued a fresh show cause notice to the petitioners jointly on 2nd November, 1988. In December 1988, M/s Dabur moved the High Court under Article 226 of the Constitution for quashing and setting aside the showcase notice dated 2.11.1988 and for refund of duty amounting to Rs.46.67. The High Court dismissed the writ petition. The High Court was 296 of the opinion that the question whether Homeodent tooth paste was sans alcohol could not be adjudicated upon under the extraordinary writ jurisdiction. The High Court however came to the conclusion that both the 1944 and 1955 Acts operated in different fields and there was no overlapping between the two. The High Court further observed that where the parties fully acquiesced with the matter and subjected themselves to the statutory procedure, no action should be allowed to be taken under Article 226 of the Constitution unless the case was patently without jurisdiction. In this connection, it was emphasised by the High Court that once the parties chose the statutory procedure they must go to the logical end. It was inter alia urged before this Court on behalf of the petitioner that it was not seeking to circumvent the alternative remedy provided under the Act but in view of the conflicting claims of the Central and State Excise authori ties seeking to classify Homeodent tooth paste under the respective Acts of 1944 and 1955, the petitioner was left with no other alternative but to challenge the actions by way of writ petition under Article 226 of the Constitution. It was further contended that Homeodent did not contain alcohol but contained ingredient "mother tincture" contain ing alcohol, which had a tendency to evaporate during the process of manufacture of Homeodent; that no test result as required under the 1955 Act was obtained to establish wheth er Homeodent contained alcohol or not; and that on 31st August, 1987 the Assistant Collector of Central Excise had already passed an order classifying Homeodent under the Act of 1944 which order had been upheld by the Collector of Central Excise (Appeals). The main point that the petitioner sought to emphasis was that the High Court ought to have appreciated that Homeodent tooth paste having been subjected to duty under the provisions of the 1944 Act, the question of levying and recovering duty under the 1955 Act did not and could not arise. Dismissing the petitions, this Court, HELD: (1) Homeodent is a homeopathic preparation but it is also a tooth paste. Therefore, it is a toilet prepara tion. Whether or not such Homeodent would not be dutiable under the Medicinal & Toilet Preparations (Excise Duties) Act, 1955 would depend upon whether it contained alcohol or not. [315E] (2) It is undisputed that mother tincture was one of the components that was used in the preparation of Homeodent and it has been found that alcohol was there and mother tincture was added in the 297 medicinal preparation as its component. [315G] M/s Baidyanath Aryurved Bhawan (Pvt.) Ltd. Jhansi vs The Excise Commissioner U.P., , referred to. (3) The authorities charged with the duties of enforcing a particular Act are enjoined with the task of determining the question whether alcohol is contained therein or not. [310D] (4) It has been determined by the authorities enjoined to enforce the 1955 Act that Homeodent was a medicinal and toilet preparation and liable to excise duty, and such finding has not been assailed on any cogent ground in any proper manner. If that is the position, then it must be upheld that Homeodent was dutiable. [317D] Union of India vs Bombay Tyre International Ltd., ; ; Mohanlal Magan Lal Bhavsar vs Union of India, and N.B. Sanjana, Assistant Collector of Central Excise, Bombay vs The Elphinston Spinning and Weav ing Mills Co. Ltd.; , , referred to. (5) Provisions for rebate of duty on alcohol contained in section 4 of the 1955 Act show that multipoint tax on medicinal preparations containing alcohol was within the contemplation, otherwise there was no purpose in incorporat ing section 4 into the Act. [316B] (6) Justice requires that provisions for claiming refund of this duty should be made more clear. However, in the view of the facts and the circumstances that have happened, it is directed that if the petitioners are entitled to any refund of the duty already paid to the Central Government in view of the duty imposition now upheld against them in favour of the State Government such refund application should be entertained and considered in accordance with law. [316E F] (7) In a case of this nature, where there is some doubt as to whether duty was payable to the Central Government under the 1944 Act or whether the item was dutiable under the 1955 Act, it would be just and proper and in consonance with justice infiscal administration that the Central Gov ernment should consider in the light of the facts found, if an application is made under section 11B of the 1944 Act, and circumstances of this case, the limitation period under section 11B of the 1944 Act should not apply. This direction must be confined in the facts and the circumstances of this case only. [316G H; 317A] 298 Citadel Fine Pharmaceuticals Pvt. Ltd. vs D.R.O., [1973] Mad. Law Journal 99; Union of India vs Bombay Tyre Interna tional Ltd.; , and Assistant Collector of Central Excise vs Madras Rubber Factory Ltd., [1986] supp. SCC 751, referred to. (8) Government should consider feasibility of a machin ery under a Council to be formed under Article 263 of the Constitution to adjudicate and adjust the dues of the re spective Governments. [318D] (9) This Court would not like to hear from a litigant in this country that the Government is coercing citizens of this country to make payment which the litigant is contend ing not leviable. Government, of course, is entitled to enforce payment and for that purpose to take all legal steps but the Government, Central or State, cannot be permitted to play dirty games with the citizens to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take steps but not take extra legal steps or manoeu vre. Therefore, the right of renewal of the petitioner of licence must be judged and attended to in accordance with law and the occasion not utilised to coerce the petitioners to a course of action not warranted by law and procedure. [318A C]

Appeals Nos. 50 of 1968 and 1201 of 1970. From the judgment and Order dated the 20th January 1966, and ' 26th November 1968 of the Madras High Court in Writ Appeals Nos. 1124 of 1963 and 153 of 1966. K.S. Ramamurthy and section Gopalakrishnan, for the appellant (in both the appeals). S.V. Gupte and A.S. Nambiar, for respondent Nos. 1 3 (in both ., the appeals). section Govindaswaminathan, A.V. Rangam, N.S. Sivam and A. Subshashini, for respondent No. 5 (in both the appeals). B.R. Agrawala, for intervener (in C.A. 50/68). The Judgment of A.N. Ray, C.J., H.R. Khanna and A. Alagiri swami, JJ. was delivered by Alagiriswami, J. The dissenting Opinion of ' K.K. Mathew and P.N. Bhagwati JJ. was delivered by Bhagwati, J. ALAGIRISWAMI, J. The appellants are the tenants of a property bearing door Nos. 16 and 17 on the Poonamallee High Road in the city of Madras. They became tenants of this building in May 1929, when the property was with one of the predecessors in title of the present landlords, who are the respondents in these appeals. Though, the appellants became tenants in 1929 a registered lease deed came into existence only in 1935 under which the lease was to run upto 1 5 1969. The lessee was entitled to renewal on the same terms, and conditions for another period of fifteen years. The monthly rent agreed upon was Rs. 225/ and a sum of Rs. 225/ was payable as an annual contribution towards repairs and Rs. 220/ towards public charges and taxes. In 1949 the parties mutually agreed that the tenants were to pay a 25 per cent increase in rent and also certain other amounts, The present landlords purchased the property in 1962 and soon after filed an application under Section 4 of the Madras (now Tamil Nadu) Buildings (Lease and Rent Control) Act, 1960 for fixation of fair rent. Thereupon the tenants filed writ Petition No. 1124 of 1963 seeking, to restrain the landlords from proceeding with that petition. The learned Single Judge who heard the petition felt that in view of a long, series of decisions of Madras High Court under the various Rent Control Acts in force in Madras that they applied also to contractual 632 tenancies in the matter of payment of rent as well as eviction, the matter should be considered by a Full Bench in view of the decisions of this Court in Rent Control cases from certain other States. The Full Bench after an elaborate consideration came to the conclusion that the Act controls both contractual as well as statutory tenancies, that it is a complete Code, and enables both landlords and tenants to seek the benefit of fixation of fair rent, whether a contractual tenancy prevails or it has been determined. Thereafter the matter again came up before the same learned Single Judge who, applying the provisions of the Act to the facts of the case held that the Act did not apply to the premises in question. On appeal by the landlords a Division Bench of the High Court held that the premises were not exempted from the provisions of the Act and the Rent Controller has therefore jurisdiction to entertain and dispose of on merits the application for fixation of fair rent filed by the landlords. These two appeals ;are against the judgments of the Full Bench (reported in and the Division Bench respectively. Before we go further into a discussion of the questions that arise :it is necessary to look into certain relevant provisions of the Act. Clause (6) of section 2 of the Act defines landlord thus : "Landlord" includes the person who is receiving or is entitled to receive the rent of a building, whether on his own account .or on behalf of another or on behalf of himself and others or as an agent, trustee, executor, administrator, receiver or ' .,guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant;" Clause 8, in so far as it is relevant, defines tenant as follows "tenant" means any person by whom or on whose account rent is payable for a building and includes the surviving spouse, or any son, or daughter, or the legal representative of a deceased tenant who had been living with the tenant in the building as a member of the tenant 's family up to the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour. Section 4 provides for an application for fixation of a fair rent by the tenant as well as the landlord. The fair rent for any residential building is to be six per cent gross return per annum on the total cost of the building if it is residential and nine percent if it is nonresidential. The total cost has to be calculated by taking the cost of const ruction at prescribed rates less depreciation at prescribed rates as well as the market value of the site on which the building stands. It is to include allowances for such considerations as locality, features of architectural interest, accessibility to market, dispensary or hospital, nearness to the railway station or educational institution and such ,other amenities as may be prescribed. 633 Section 5 provides that when the fair rent of a building has been fixed no further increase shall be permissible except in cases where some addition, improvement or alteration has been carried out at the landlord 's expense and at the tenant 's request. Similarly,. if there is a decrease or diminution in the accommodation or amenities provided,, the tenant may claim a reduction in the fair rent. Section 6 provides for payment of additional sums in cases where the taxes and cesses payable to local authorities are increased. Section 7 prohibits the landlord from claiming or receiving or stipulating for the payment of any premium or anything in excess of ' fair rent. It also provides that where a fair rent has not been fixed the landlord shall not claim anything in excess of the agreed rent. Section 10 deals with the eviction of tenants and lays down the conditions under which an eviction could be asked for. One of those conditions mentioned in sub section (3) is when the Landlord requires. a residential building for his own occupation or a non residential building for the purpose of his business. Clause (d) of sub section (3) provides that where the tenancy is for a specified period agreed upon between the landlord and the tenant, the landlord shall not be entitled to apply under that sub section before the expiry of such period. Sections 12 and 14 provide for recovery of possession by landlord for repairs or for reconstruction. Section 17 provides that the landlord is not to interfere with the amenities enjoyed by the tenant. Section 30 exempts from the provisions of the Act (1) any building the construction of which was completed after the commencement of the Act, and (2) any residential building in respect of which the monthly rent payable exceeds two hundred and, fifty rupees. We shall refer to other details as and when they become relevant. The above short analysis of the Act would show that the Act provides for every contingency that is likely to arise in the relationship ,of landlord and tenant. On behalf of the appellants reliance is placed upon two decisions of this Court, Bhaiya Punjalal Bhagwanddin vs Dave Bhagwat prasad Prabhuprasad ; and Manujendra vs Purendu Prasad ; They are cases dealing with eviction. In those two cases it was held, broadly speaking, that the provisions of the Acts there under consideration were in addition to and not in derogation of the provisions of the Transfer of Property Act. There are certain general observations in those two decisions upon which reliance was placed to contend that they apply to cases of fixation of rent also. The argument was that as it was held in those cases that the Acts did not provide the landlord with additional rights which he did not possess under his contract of tenancy, similarly where there was a subsisting 634 contract of tenancy it is not open . to the landlord to take advantage of the provisions of the Act to apply for fixation of a fair rent at a figure higher than the contract rent. We are not called upon in this case to consider whether those two cases were correctly decided. But we must point out that the general observations therein should be confined to the facts of those cases. Any general observation ,cannot apply in interpreting the provisions of an Act unless this Court has applied its mind to and analysed the provisions of that particular Act. We may also point out that in both those cases the contract of 'tenancy was not subsisting. In a sense, therefore, the observations therein were not really necessary for deciding those cases. We may also point out that in Rai Brii Raj Krishna vs S.K. Shaw Bros. ; dealing with the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 and interpreting section 11 of that Act this Court observed as follows : '. 'Section 11 begins with the words 'Notwithstanding anything contained in any agreement or law to the,contrary ', and hence any attempt to import the provisions relating to the law of transfer of property for the interpretation of the section would seem to be out of place. Section II is a self contained section, and it is wholly unnecessary to go outside the Act for determining whether a tenant is liable to be evicted or not, and under what conditions he can be evicted. It clearly provides that a tenant is not liable to be evicted except on certain conditions, and one of the conditions laid down for the eviction of a month to month tenant is non payment of rent." 'Similarly in Shri Hem Chand vs Shrimati Sham Devi (ILR 1955 Punj 36) which dealt with the Delhi and Ajmer Merwara Rent Control Act, section 13(i) of which provided that no decree or order for the recovery of possession of any premises shall be passed by any court in favour of the landlord against a tenant, notwithstanding anything to the contrary contained in any other law or any contract, it was h. Id that the Act provided the procedure for obtaining the relief of ejectment and that being so the provisions of section 106 of the Transfer or Property Act had no relevance. Both these cases were referred to in the decision in Bhaiya Punjalal Bhagwanddin vs Dave Bhagwatprasad Prabhuprasad. Therefore, the following observations in Manujendra ,vs Purendu Prosad that "Rent Acts are not ordinarily intended to interfere with contractual leases and are Acts for the protection of tenants and are consequently restrictive and not enabling, conferring no new rights of action but restricting the existing rights either under the contract or under the general law." should not be held to apply to all Rent Acts irrespective of the scheme of those Acts and their provisions. The decision of the Madras High 'Court in R. Krishnamurthy vs Parthasarathy (AIR 1949 Mad. 780 1 949 where it was held that section 7 of the Madras Buildings (Lease and Rent Control) Act of 1946 had its own scheme 635 of procedure and therefore there was no question of an attempt to reconcile that Act with the Transfer of Property Act and that an application for eviction could be made to the Rent Controller even before the contractual tenancy was terminated by a notice to quit, should not have been summarily dismissed on the grounds that it was contrary to the decisions of this Court in Abbasbhai 's Case ; and Mangilal 's Case ; and therefore was not a correct law, without examining the provisions of that Act. Be that as it may, we are now concerned with the question of fixation of a fair rent. The legislation regarding control of rents started during the Second World War. In Madras first two orders under the Defence of India Rules were issued as the Madras House Rent Control Orders, 1941 and the Madras Godown Rent Control Order, 1942. In1945 these orders were reissued with slight changes, as the Madras House Rent Control Order, 1945 and the Madras Non Residential Buildings Rent Control Order, 1945. These were replaced by the Madras Buildings (Lease and Rent Control) Act, 1946. Under that Act for the first time both the tenant as well as the landlord were given the right to apply for fixation of a fair rent. This Act was later replaced by the Madras Buildings (Lease and Rent Control) Act, 1949, which again had a similar provision. But the important thing to note about the fixation of a fair rent under both these Acts is that the fair rent was related to the rents prevailing in April 1940 and only a fixed percentage of increase from 8 11/3 to 50 per cent depending upon the rent payable was allowed. The 1960 Act which replaced the 1949 Act adopted a completely new scheme of its own. It provided for the fixation of a fair rent on the basis of the cost of construction and the cost of land and after allowing for depreciation provided for a return of 6 per cent in the case of residential buildings and 9 per cent in the case of non residential buildings. It also provided for increase in rent for such factors as locality, nearness to railway station, market, hospital, school etc. Another significant fact is that all new buildings constructed after 1960 were exempt from the scope of the Act. Still another departure was that the Act applies, in the case of residential buildings, only if the monthly rent does not exceed Rs. 250. The Act also provides for fixation of fair rent under the new provisions even though fair rent for the building might have been fixed under the earlier repealed enactments. All these show that the Madras Legislature had applied its mind to the problem of housing and control of rents and provided a scheme of its own. It did not proceed on the basis that the legislation regarding rent control was only for the benefit of the tenants. It wanted it to be fair both to the landlord as well as the tenant. Apparently it realised that the pegging of the rents at the 1940 rates had discouraged building construction activity which ultimately is likely to affect every body and therefore in order to encourage new constructions exempted them altogether from the provisions of the Act. It did not proceed on the basis that all tenants belonged to the weaker section of the community and needed protection and that all landlords 636 belonged to the better off classes. It confined the protection of the Act to the weaker section paying rents below Rs. 250. It is. clear, therefore, that the Madras Legislature deliberately proceeded on the basis that fair rent was to be fixed which was to be fair both to the landlords as well as to the tenants and that only the poorer classes of tenants needed protection. The facile assumption on the basis of which an argument was advanced before this Court that all Rent Acts are intended for the protection of tenants and, therefore, this Act also should be held to be intended only for the protection of tenants breaks down when the provisions of the Act are examined in detail. The provision that both the tenant as well as the landlord can apply for fixation of a fair rent would become meaningless if fixation of fair rent can only be downwards from the contracted rent and the contract rent was not to be increased. Of course, it has happened over the last few years that rents have increased enormously and that is why it is argued on behalf of the tenants that the contract rents should not be changed. If we could contemplate a situation where rents and prices are coming down this argument will break down. It is a realisation of the fact that prices and rents have enormously increased and there fore if the rents are pegged at 1940 rates there would be no new construction and the community as a whole would suffer that led the Madras Legislature to exempt new buildings from the scope of the Act, it realised apparently how dangerous was the feeling that only "fools build houses for wise men to live in". At the time the 1960 Act was passed the Madras Legislature had before it the precedent of the Madras Cultivating Tenants (Payment of Fair Rent) Act, 1956. That Act provides for fixation of fair rent. It also provides that the contract rent, if lower, will be payable during the contract period. Even if the contract rent is higher only the fair rent will be payable. After the contract period is over only the fair rent is payable. The Madras Legislature having this Act in mind still made only the fair rent payable and not the contract rent if it happens to be lower. It is clear, therefore, that the fair rent under the present Act is payable during the contract period as well as after the expiry of the contract period. It was argued that the basis of the decisions in Rai Brij Raj Krishan 's Case and Shri Hem Chand 's Case was the non obstante clause in those two Acts. But it is well settled that the intention that a legislation should, take effect notwithstanding any earlier legislation on the subject can be both explicit and implicit and that is the Position in the present case. We do not also feel called upon to refer to the decisions in Glossop vs Ashley , a Newell vs Crayford Cottage Society , and Kerr vs Bryde , nor to the various statements regarding the law in Megarry 's work on the Rent Acts relied upon by Sri K. section Ramamurthy on behalf of the appellants. They are based on the relevant provisions of the Act,in force in England particularly section 3(1) of the Increase of Rent & Mortgage Interest (Restrictions) Act, 1920 which reads. 637 "Nothing in this Act shall be taken to authorise any increase of rent except in respect of a period during which but for this Act the landlord would be entitled to obtain possession. " The provisions of the Act under considerations show that the are to take effect notwithstanding any contract even during the subsistence of the contract. We have already referred to the definition of the terms 'landlord ' and 'tenant ' which applies both to subsisting tenancies as well as tenancies which might have come to an end. We may also refer to the provision in section 7(2) which lays down that where the fair rent of a building has not been fixed the landlord shall not claim anything in addition to the agreed rent, thus showing that the fair rent can be fixed even where there is an agreed rent. That is why we have earlier pointed out that the various English decisions which provide for fixation of rent only where the contractual tenancy has come to an end do not apply here. We may also refer to sub section (3) of section 16 which deals with cases where a landlord requires a residential or non residential building for his own use. Clause (d) of that sub section provides that where the tenancy is for a term the landlord cannot get possession before the expiry of the term, thus showing that in other cases of eviction covered by section 10 eviction is permissible even during the continuance of the contractual tenancy if the conditions laid down in section 10 are satisfied. The Madras High Court reviewed all the decisions of this Court ' except the latest one in Manujendra vs Purendu Prosad. We have already pointed out that the criticism made in that decision regarding Krishnamurthy 's Case was not justified. We are in agreement with the view of the Full Bench of the Madras High Court that the various decisions of this Court were based upon particular provisions of the Acts. which were under consideration, mainly the Bombay Act which is vitally different from the Madras Act. A close analysis of the Madras Act shows that it has a scheme of its own and it is intended to provide a complete code in respect of both contractual tenancies as well as what are popularly called statutory tenancies. As noticed earlier the definition of the term 'landlord ' as well as the term 'tenant ' shows that the Act applies to contractual tenancies as well as cases of "statutory tenants" and their. landlords. On some supposed general principles governing all Rent Acts it cannot be argued that such fixation can only be for the benefit of the tenants when the Act clearly lays down that both landlords and tenants can apply for fixation of fair rent. A close reading of the Act shows that the fair rent is fixed for the building and it is payable by whoever is the tenant whether a contractual tenant. or statutory tenant. What is fixed is not the fair rent payable by the tenant or to the landlord who applies for fixation of fair rent act fair rent for the building, something like an incident of the fair regarding the building. We have then to deal with Civil Appeal No. 1201 of 1970.The learned Single Judge considering that as the total amount annually in respect of these premises was Rs. 5032/ , which lakhs the rent payable to exceed Rs. 400/ a month, the building was outside 15 M602Sup. CI 74 638 the scope of the Act and therefore the petition for fixation of fair rent does not lie. (This provision was removed by an Amending Act of 1964). The learned Judges of the Division Bench on the other hand held that the agreement of the year 1949 between the landlord and the tenant by which the rent was increased was one in variation of a written contract and therefore evidence of it is barred under section 92 of the Evidence Act. Clearly any variation of rent reserved by a registered lease deed must be made by another registered instrument. We are not able to accept the argument of Sri K. section Ramamurthy on behalf of the tenants that the agreement of 1949 was one by the landlord to give up his right to apply for fixation of fair rent in consideration of the additional rent agreed to be paid by the tenant and is, therefore, not covered by section 92 of the Evidence Act. The correspondence between the parties makes it clear beyond doubt that the agreement was to pay increased rent. If this agreement is left out of account the rent payable is below Rs. 400/ a month, and, therefore, the decision of the Division Bench is correct. Before concluding we must refer to one other argument on behalf of the appellants. Under section 30 of the Act, as originally enacted, any residential building the rent of which exceeded Rs. 250 / per month and any non residential building whose rent exceeded Rs. 400/ a month were outside the scope of the Act. In 1964 the Act was amended so as to provide that all non residential buildings would be within the scope of the Act. This amendment was attacked on the ground that it contravened the provisions of article 19(1) of the Constitution. In view of our finding earlier that this case should be decided on the basis of the monthly rent being below Rs. 400/ this argument does not fall to be considered. In the result the appeals are dismissed. The appellants will pay the respondents ' costs. BHAGWATI J. We have had the advantage of reading the judgment prepared by our brother Alagiriswami, J., and though we, agree with him in regard to the decision in Civil Appeal No. 1201 of 1970, we find it difficult to assent to the view taken by him in Civil Appeal No. 50 of 1968. The facts giving rise to the two appeals have been stated clearly and succinctly in the judgment given by our learned brother and we think it would be a futile exercise to reiterate them. We may straight away proceed to examine the question which arises for consideration in. Civil Appeal No. 50 of 1968. The question is whether a landlord can during the subsistence of the contractual tenancy, apply for fixation of fair rent under section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter referred to as the Tamil Nadu Act 18 of 1960). The determination of this question depends on the true interpretation of certain provisions of the Tamil Nadu Act 18 of 1960 and we may, therefore, refer to those provisions and see what is their proper meaning and effect. The long title and the preamble of the Tamil Nadu Act 18 of 1960 show that it is enacted "to amend and consolidate the law relating to the regulation of the letting of residential and non residential buildings and the control of rents of such buildings and the preven 639 tion of unreasonable eviction of tenants therefrom in the State of Tamil .Nadu". See, 2, cl. (6) gives an inclusive definition of 'landlord ' and according to this definition, 'landlord ' includes "the person who is receiving or is entitled to receive rent of a building, whether on his own account or on behalf of another or on behalf of himself and others or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant". Thus the owner of a building which becomes vacant would be 'landlord ' within the meaning of that expression as defined in section 2, cl. (6) and so also would be the landlord during the subsistence of the contractual tenancy as also after the termination of the contractual tenancy where the tenant continues to remain in possession of the building. 'Tenant ' is defined in section 2, cl. (8) to mean "any person by whom or on whose account rent is payable for a building and includes the surviving spouse, or any son, or daughter, or the legal representative of a deceased tenant who had been living with to tenant in the building as a member of the tenant 's family up to the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour". This definition is wide enough to include not only a contractual tenant but also a tenant remaining in possession of the building affect the termi nation of the contractual tenancy. Section 3 enacts detailed provisions regulating the letting of residential and non residential buildings. The broad scheme of this section is that when a building becomes vacant, the landlord is required to give notice of the vacancy to the authorised officer and if the building is required "for the purposes of the State or Central Government or of any local authority or of any public institution under the control of any such Government or for the occupation of any officer of such Government", the authorised officer may give necessary intimation in that behalf to the landlord and on receipt of such intimation, the landlord would be bound to deliver possession of the building to the authorised officer or to the allottee named by the authorised officer, as the case may be, and the Government would be deemed to be the tenant of the landlord on such terms as may be agreed upon between the landlord and the Government, or in default of agreement, determined by the Controller. The rent payable by the Government to the landlord would be the "fair rent, if any, fixed for the. building under the provisions of this Act and if no fair rent has been so fixed, such reasonable rent as the authorised officer may determine", but "the reasonable rent fixed by the authorised officer shall be subject to such fair rent as may be fixed by the Controller". Section 4 provides for fixation of fair rent of a building on the application of the tenant or the landlord. Sub section (1) of the section is material and it says that "The Controller shall, on, application by the tenant or the landlord of a building and .after holding such inquiry as the Controller thinks fit, fix the fair rent for such building in accordance with the principles set out in subsection (2) or in sub section (3) as the case may be, and such other principles as may be prescribed". Sub section (2) lays down the principles for fixation of fair rent of residential building and sub section (3), for fixation of fair rent of non residential building. The fiar rent is to be such as would provide 6 % gross_return per annum on 640 the total cost of the building, if it is residential and 9 gross return per annum on the total cost of the building, if it is non residential. The total cost of the building is to be computed by taking the cost of construction as calculated according to the prescribed rates less depreciation also at the prescribed rates and adding to it the market value of that portion of the site on which the building is constructed and making allowances for such considerations as locality in which the building is situated, features of architectural interest, accessibility to market, dispensary or hospital, nearness to the railway station or educational institution and such other amenities as may be prescribed. It may be pointed out that under the Madras Buildings (Lease and Rent Control) Act, 1946 and the Madras Buildings (Lease and Rent Control) Act, 1949, which preceded the Tamil Nadu Act 18 of 1960, the scheme of fixation of fair rent was different, in that the fair rent was related "to the prevailing rate of rent in the locality for the same or similar accommodation in similar circumstances during the twelve months period to 1st April, 1940" and only a fixed percentage of increase varying from 8 1/3 % to 50 % was allowed on such rate of rent, depending upon whether it exceeded or did not exceed a certain limit ' But the Legislature while enacting the Tamil Nadu Act 18 of 1960 made a departure from that scheme presumably because it felt that in view of the staggering and disproportionately heavy fall in, the purchasing power of the rupee over the last 30 years, it was most, unrealistic to peg the fair rent to the level of rents prevailing during the period of 12 months prior to 1st April, 1940 and allow only an ad hoc percentage of increase, and therefore, in section 4, sub sections (2) and (3), it adopted a different basis for fixation of fair rent which would not unduly depreciate the yield permissible to the landlord and at the same time, be not extortionate or exploitative of the tenant. Now once the fair rent of a building is fixed under section 4, sub section (1), no further increase in such fair rent is 'permissible except in cases where some addition, improvement or alteration has been carried out at the expense of the landlord and if the building is then in the occupation of a tenant, at his request and similarly, if there is a decrease or diminution in the accommodation or amenities, the tenant may claim reduction in such fair rent. Vide section 5. Section 6 provides that where the amount of the taxes and cesses payable in respect of a building to a local authority for any half year commencing on 1st April, 1950 or on any later date exceeds the amount of taxes and cesses payable for the half year commencing on 30th September, 1946 or for the first complete half year after the date on which the building was first let out, whichever is later, the landlord shall be entitled to claim such excess from the tenant in addition to the rent payable for the building. The consequences of fixation of fair rent are set out in section 7, sub s (1) and (3). Sub section (1) says that where the Controller has fixed the fair rent of a building "(a) the landlord shall not claim, receive or stipulate for the payment of (i) any premium or other like sum in addition to such fair rent, or (ii) save as provided in section 5 or section 6, anything. in, excess of such fair rent 641 (b). any premium or other like. sum or any rent paid in addition to, or in excess of, such fair rent whether before or after the date of the commencement of this Act, in consideration of the grant, continuance or re newal of the tenancy of the building after the date of such commencement, shall be refunded by the landlord to the person by whom it was paid or at the option of such person, shall be otherwise adjusted by the landlord; Provided that where before the fixation of the fair rent, has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess for the period commencing on the date of application by the tenant or landlord under sub section (1) of section 4 and ending with the date of such fixation. " Sub sec. (3) declares that any stipulation in contravention of sub section (1) shall be null and void. These are the only provisions of the Tamil Nadu Act 18 of 1960 which have a direct bearing on the determination of the question before us, but reference was also made to certain other provisions of that Act dealing with eviction of tenants for the purpose of drawing support by way of an a logical reasoning from the decisions of this Court interpreting those provisions and we must, therefore, briefly advert to them. Section 10 confers protection on the tenant against eviction "in execution of a decree or otherwise" by providing that he shall not be evicted except in accordance with the provisions of that section or sections 14 to 16. Sub sections (2) and (3) of section 10 set out the grounds on which the tenant my be evicted by the landlord. One of the grounds that set out in cl. (a) of sub section (3) is that the landlord requires the building, if residential, for his ,own occupation or for the occupation of his son, and if non residential, for a business which he or his son is carrying on, but in respect of this ground, there is a limitation imposed by cl. (d) of sub section (3) that when the tenancy is for a specified period agreed upon between the landlord and the tenant, the landlord shall not be entitled to apply for possession under sub section (3) before the expiry of such period. Sections 12 to 14 provide for recovery of possession of the building by the landlord for repairs or reconstruction. These provisions are not material and we need not refer to them in detail. Then we go straight to section 30 which exempts certain buildings from the operation of the Act. Every new building the construction of which is completed after the commencement of the Act is exempted under cl. The reason obviously is that the legislature wanted to encourage construction of new buildings so that more and more buildings would become available for residential as well as non residential purposes and that would help relieve shortage of accommodation. (ii) exempts any residential building or part thereof occupied by any tenant, if the monthly rent paid by him exceeds Rs. 250/Here the object of the Legislature clearly was that the the protection of the beneficent provisions of the Act should be available only to ,small tenants paying rent not exceeding Rs. 250/ per mouth, as they 642 belong to the weaker sections of the community and really need protection against exploitation by rapacious landlords. Those who can afford to pay higher rent would ordinarily be well to do people and they would not be so much in need of protection and can, with,out much difficulty, look after themselves. It is in the light of these provisions of the Tamil Nadu Act 18 of 1960, that we have to consider whether a landlord can, during the subsistence of the contractual tenancy, apply for fixation of fair rent under. section 4, sub section Two basic considerations must guide our approach to this question. The first is that the agreed rent which is the result of contract between the parties must continue to bind them so long as the contract subsists, unless there is anything in the statute which expressly or by necessary implication overrides the contract, It is true that with the decline of the doctrine of laissez faire and the assumption by the State of a more dynamic and activists role, the principle of sanctity of contract which is one of the pillars of a free market economy, has in a number of cases been eroded by legislation. But if we examine such legislation it will be apparent that this has happened invariably in aid of the weaker party to the contract. Where there is unequal bargaining power between the parties, freedom of contract is bound to produce injustice and social legislation therefore steps in and overrides the. contract, with a view to protacting the weaker party from the baneful Consequences of the contract. It is to contract the injustice resulting from inequality in bargaining power and to bring about social or distributive justice that social legislation interferes with sanctity of contract. It seeks to restore the balance in the scales which are otherwise weighted in favour of the stronger party which has larger bargaining power. Ordinarily we do. not find, and indeed it would be a strange and rather incomprehensible phenomenon, that legislation intervenes to disturb the sanctity of contract for the benefit of a stronger party who does not need the protective hand of the legislature. This consideration we must constantly keep. before us while construing the relevant provisions of the Tamil Nadu Act 18 of 1960. Secondly the Tamil Nadu Act 18 of 1960, as its long title and preamble show, has been enacted inter alia with the object of controlling rents of residential and non residential buildings and preventing unreasonable eviction of tenants. Now, there can be no doubt that in so far as it is calculated to prevent unreasonable eviction of tenants, the Tamil Nadu Act 18 of 1960 is a protective measure intended to safeguard tenants against indiscriminate eviction by landlords. Equally, by controlling the rents by keeping them within fair and reasonable limits, the Tamil Nadu Act 18 of 1960 seeks to protect tenants against greedy and rapacious landlords who taking advantage of the great scarcity of housing accommodation which prevails in almost all urban areas, may extract excessive and unconscionable rent from tenants. The Tamil Nadu Act 18 of 1960 is in its essential character as also in its object and purpose similar to what may conveniently be described as rent control legislation, in other States, such as Maharashtra, Gujarat, West Bengal and Madhya Pradesh. 643 Now it is well settled by decisions of this Court that rent control Acts are "not ordinarily intended to interfere with contractual leases and are Acts for the protection of tenants and are consequently restrictive and not enabling or conferring any rights of action but restricting the existing rights either under the contract or under the general law. " That is what this Court said in Manuiendra Dutt vs Purendu Prosad Roy Chowdhury & Ors.(1), while dealing with the Calcutta Thika Tenancy Act, 1949. The same view was taken by this Court in Bhaiya Punjalal Bhagwanddin vs 'Dave Bhagwat Prasad Prabhuprasad(2) in relation to Bombay Rents, Hotel and Lodging House Rates. Control Act, 1947 which prevails in Maharashtra and Gujarat and which has long title and preamble in almost the same terms as the Tamil Nadu Act 18 of 1960. This Court said in that case: "the Act,", that is the Bombay Rent Act "intended therefore to restrict the rights which the landlords possessed either for charging excessive rents or for evicting tenants". The Madhya Pradesh Accommodation Control Act, 1955 was also construed in the same way by this Court in Mangilal vs Sugarchand Bathi.(3) This general purpose and intendment of rent control legislation and its positive thrust and emphasis on the protection of the tenant cannot be lost sight of when we are construing a similar legislation like the Tamil Nadu Act 18 of 1960. We may now turn to examine the relevant provisions of the Tamil Nadu Act 18 of 1960 against the background of these general considerations. Section 4, sub section (1) contemplates that an application for fixation of fair rent of a building may be made by the tenant or the landlord. The definition of "tenant", as we have pointed out above, includes contractual tenant as well as tenant remaining in possession of the building after determination of the contractual tenancy, that is, statutory tenant, and both contractual tenant and statutory tenant can, therefore, apply for fixation of fair rent under section 4, sub section (1). The Government, who is deemed to be the tenant of the landlord under section 3, sub section (5), can also similarly avail of the provision for fixation of fair rent in section 4, sub section The question is as to who are the persons comprehended within the expression 'landlord ' who can apply for fixation of fair rent under section 4, sub section The landlord, where the Government is deemed. to be the tenant under. section 3, sub section (5), would certainly be entitled to make such application and, having regard to the wide definition of the expression 'landlord ', which includes not only contractual landlord but also statutory landlord, if one may use that expression to describe the counterpart of statutory tenant, it was common ground between the parties that the statutory landlord can also avail of this provision, but the dispute was whether the contractual landlord is within the ambit of this provision. Can he apply for fixation of fair rent under section 4, sub section (1)p ? Now prima facie according to 'the definition as also according to its plain natural connotation, the expression 'landlord ' includes contractual landlord and it might, therefore, appear at first blush, on a purely literal construction, that the contractual landlord can make an application for fixation of fair rent under section 4, sub section But is well settled that a definition clause (1) ; (2) ; (3) ; 644 is not to be taken as substituting one set of words for another or as strictly defining what the meaning of a term must be under all circumstances, but as merely declaring what may be comprehended within the term, when the circumstances require that it should be so comprehended. It would, therefore, always be a matter of interpretation whether or not a particular meaning given in the definition clause ,applies to the word as used in the statutory propriety. That would depend on the subject and the context. Moreover, it is equally well established that the meaning of words used in a statute. is to be found, not so much in strict etymological propriety of language, nor even in popular use, as in the subject or occasion on which they are used and the object which is intended to be achieved. The context, the ,collocation and the object of the words may show that they are not intended to be used in the sense which they ordinarily bear, but are meant to be used in a narrow and limited sense. Lord Herschell pointed out in Cox vs Hakes (1) "It cannot, I think, be denied that, for the purpose of construing any enactment, it is right to look, not only at the provision immediately under construction, but at any others found in connection with it which may throw light upon it, and afford an indication that general words employed in it were not intended to be applied without some limitation." However wide in the abstract, general words must be understood as used with reference to the subject matter in the mind of the legislature and limited to it. Thus, in Whethered vs Calcutta(2) a statute which, reciting the inconveniences arising from church wardens and overseers making clandestine rates, enacted that those officers should permit "every inhabitant" of the parish to inspect the rates under a penalty for refusal, was held not to apply to a refusal to one of the church wardens, who was also an inhabitant. As the object of the statute was to protect those in habitants who had previously no access to the rates (which the church wardens had, the meaning of the term 'inhabitants ' was limited to them. The same approach in interpretation must be adopted by us in the present case. We must not allow ourselves to be unduly obsessed by the meaning of 'landlord ' given in the definition or by its ordinary etymological meaning but we must examine the scheme of the relevant provisions of the statute, the contextual setting in which section 4, sub section (1) occurs and the object which the legislation is intended to achieve, in order to determine what is the sense in which the word 'landlord ' is used in section 4. sub section (1) whether it is intended to include contractual landlord. It is necessary for this purpose to consider what are the consequences of fixation of fair rent, for that furnishes the key to the solution of the problem before us. The fair rent, when fixed, becomes an attribute or incidence of the building and there can be no change in it except in the circumstances set out in section 5. When the fair rent is fixed, three possibilities may arise. The fair rent may be the same as the agreed rent in which case no difficulty arises. Or the fair rent may be less than the agreed rent. Where that happens, section 7, sub section (i), ,el. (a) operates and it provides that the landlord shall not be entitled to claim, receive or stipulate for payment of anything in excess of the (2) 645 fair rent. The landlord, can, in such a case, claim, receive or recover only the fair rent and nothing more, despite the contract of tenancy which provides for payment of higher rent. To that extent sanctity of contract is interfered with by the legislation in order to protect the tenant against exploitation by the landlord so that the landlord may not take undue advantage of shortage of housing accommodation and extract excessive rent from a needy and helpless tenant. The stipulation in the contract of tenancy for payment of higher rent would in such a case be clearly in contravention of sub section (1) of section 7 and would be null and void under section 7, sub section But what happens if the fair rent fixed is higher than the agreed rent? Can the landlord claim to recover such fair rent from the tenant, overriding the contract of tenancy which provides for payment of lesser rent? We do not think so. There is nothing in section 7 or in any other provision of the Tamil Nadu Act 18 of 1960 which can by any process of construction be read as authorising the landlord to override the contract of tenancy and claim fair rent higher than the agreed rent from the tenant. If the legislative intent were that, even though the contract of tenancy is subsisting, the landlord should be entitled to recover fair rent higher than the agreed rent, we should have expected the Legislature to say so in so many terms, as it has done in section 7, sub section (1), cl. (a) when it wanted the landlord not to be able to recover the agreed rent where it is in excess of the fair rent. It may no noted that whenever the Legislature intended to confer on the landlord a right to recover any amount which he would not otherwise have under the contract or the general law, the Legislature has done so in clear and specific language as in section 6 of the Act. But here we do not find any such provision, either express or necessarily implied. We may also profitably com pare the language of the provision in section 3, sub section There it is provided that "the reasonable rent fixed by the authorised officer shall be subject to such fair rent as may be fixed by the Controller". The words "subject to" clearly take in both kinds of cases, where the fair rent fixed is higher as well as lower than the reasonable rent. in section 7, sub section (1), cl. (a), however the Legislature has departed from this phraseology and instead of saying that the agreed rent shall be subject to the fair rent or the rent payable by the tenant shall be the fair rent, the Legislature has merely laid an embargo on the landlord prohibiting him from recovering anything in excess of the fair rent. This provi sion is clearly, without doubt, restrictive in character. it is not an enabling provision empowering the landlord to recover the fair rent where it is higher than the agreed rent. But quite apart from these considerations, there is inherent evidence in section 7 itself which strongly reinforces our interpretation and that is to be found in sub section That sub section says that any stipulation in. contravention of sub section shall be null and void. If, therefore, there is a stipulation in the contract of tenancy for payment of rent higher than the fair rent, it would be invalid. , Such a stipulation would not be enforceable by the landlord against the tenant. Only the fair rent would be payable by the tenant. If, however, there is a stipulation for payment of rent which is less than the fair rent, it would not be in contravention of sub sec. (1) and hence would not be invalidated by sub section (3) but would remain 646 enforceable and binding on the parties and if that be so, the landlord would not be entitled to claim the fair rent in breach of such stipulation. Section 7, sub section (3) clearly indicates that the stipulation in the contract of tenancy as regards rent is overridden only where the fair rent is less than the agreed rent and not where it is higher than the agreed rent. This is the only rational construction which, in our opinion, can be placed on the relevant provisions of the Act relating to control of rent. It is not only compelled by grammar and language, but also accords with the broad general considerations we have already discussed. It is difficult to believe that the Legislature should have chosen to interfere with contractual rights and obligations in favour of the landlord who is ordinarily, in view of the acute shortage of housing accommodation, in a stronger and more dominating position than the tenant qua bargaining power. The Legislature while enacting a social legislation could not have intended to confer on the landlord a new right of action a right to override the contract of tenancy and to impose a greater burden on the tenant than that permitted under the contract of tenancy. It would be a startling proposition to assume that the Tamil Nadu Legislature was so solicitous of the welfare of the landlord, who is admittedly, as a class, stronger party and much more favorably situated in respect of bargaining power than the tenant, that it enacted a provision in the Act for relieving the landlord against the consequences of an unwise contract entered into by him with open. To take such a view would be to pervert the legitimate end of a social legislation and proselytise its true object and purpose. These considerations impel us to the conclusion that the Legislature could not have. intended that the landlord should have the right to apply for fixation of fair rent during the subsistence of the contractual tenancy. If it was not the intention of the Legislature to benefit the landlord by giving him a right to override the contract of tenancy and claim fair rent higher than the agreed rent from the tenant during the subsistence of the contractual tenancy, it must follow a fortiorari that it could not have been intended by the Legislature that the landlord should have the right to apply for fixation of fair rent whilst the contract of tenancy is subsisting. Having regard to the basic character of the statute as a rent control legislation and the scheme of its provisions and reading section 4, sub section (1) in its contextual setting and in the light of the other provisions of the statute, the conclusion is inescapable that the word 'landlord ' in section 4, sub section (1) is used in a limited sense and it does not include contractual landlord. The landlord is not given the right to apply for fixation of fair rent during the subsistence of the contractual tenancy. It is only when the contract of tenancy is lawfully determined that he becomes entitled to, apply for fixation of fair rent, for it is only then that he can recover fair rent higher than the agreed rent from the statutory tenant, there being no contract of tenancy to bind him down to the agreed rent. We were referred to certain decisions of this Court relating to the interpretation of the provisions of various Rent Control Acts dealing with the eviction ' of tenants. Some of these decisions have 647 already been noticed by us earlier while discussing the general object and intendment of Rent Control Acts. They have no direct bearing on the determination of the question before us, but they do lend some support to the view we are taking as to the interpretation of the word 'landlord ' in section 4, sub section These decisions which are given in reference to Rent Control Acts of Maharashtra, Gujarat, West Bengal and Madhya Pradesh, clearly establish that the Rent Control Acts do not give a right to the landlord to evict a contractual tenant without first determining the contractual tenancy. So long as the contractual tenancy subsists, the tenant does not need protection because he cannot be evicted in breach of the 'Contract of tenancy. It is only after the contract of tenancy is determined and the landlord becomes entitled to the possession of the premises, that the tenant requires protection and it is there that the Rent Control Acts step in and prevent the landlord from enforcing his right to possession except under certain conditions. The Rent Control Acts do not confer on the landlord a new right of eviction, but merely restrict his existing right to recover possession under the contract or the general law. The landlord cannot, therefore, sue for recovery of possession on any of the grounds recognised as valid by the Rent Control Acts unless he has first determined the contractual tenancy of the tenant. This view. which has been taken by the decisions of this Court in regard to the Rent Control Acts of Maharashtra, Gujarat,, West Bengal and Madhya Pradesh, applies equally in regard to the Tamil Nadu Act 18 of 1960. It is true that the High Court of Madras took a different view in R. Krishnamurti vs Perthasarthi (1) in regard to the Madras Buildings (Lease and Rent Control) Act ' '1945 which was in material respects in almost identical terms as the, Tamil Nadu Act 18 of 1960 and held that section 7 of that Act, corresponding to section 10 of the present Act, had its own scheme of procedure and there was no question of any attempt .to reconcile that Act with the Transfer of Property Act and an application for eviction could, therefore, be made under that Act without terminating the contractual tenancy of the tenant. But in Manujendra Dutt. vs Purendu Prosad Roy Choudhury & ors.(2) this decision of the Madras High Court was expressly overruled and held not to be correct law by this Court. The argument on behalf of the respondents was that the observation of this Court disapproving the view taken by the Madras High Court was a casual observation made without examining the scheme of the Madras Act and no validity could attach to it. We fail to see how such an argument can possibly be advanced with any degree of plausibility. It is clear from the dis cussion of the Madras decision which we find in the judgment of Court that the attention of this Court was specifically directed to the reasoning of the Madras decision which proceeded on the basis that section 7 of the Madras Act had its own self contained scheme which excluded the Transfer of Property Act and it was because this Court found the reasoning to be incorrect, that it held that the Madras decision was not good law. It would not be fair to presume that this Court cavalierly overruled the Madras decision without applying its mind and caring to examine the scheme of the Madras Act. (1) A.I.R. 1949 Mad. (2) ; 648 Such a charge cannot be made merely because this Court did not elaborately discuss the merits of the Madras decision but disposed it of in a few words. The brevity of the discussion does not signify casualness or lack of proper consideration. We must, in the circumstances, hold that the observation of this Court that the Madras decision cannot be regarded as good law was a deliberate and considered pro nouncement and the view taken by this Court in regard to the Rent Control Acts of Maharashtra, Gujarat, West Bengal and Madhya Pradesh must equally prevail in regard to the Tamil Nadu Act 18 of 1960. We may point out that in any event we do not find any cogent reason to question the validity of the observation made by this Court disapproving of the Madras decision. We are wholly in agreement with that observation as we do not see any material difference between the language and the scheme of section 10 of the Tamil Nadu Act 18 of 1960 and the language and scheme of the corresponding provisions of the other Rent Control Acts which came to be construed by this Court. The only distinctive feature which could be pointed out on behalf of the respondents was the provision in section 10, sub s ' (3), cl. But that provision does not make any material difference because all that it provides is that though, in a case where the tenancy is for a specified period and it is determined by forfeiture before the expiration of the term, the landlord would have been, but for cl. (d), entitled to recover possession of the building under cls. (a), (b) or (c), he shall be precluded from doing so until the expiration of the period for which the tenancy was created. If there is any other ground available to him for claiming possession, for example, a ground specified in section 10, sub section (2), he can seek to recover possession on that ground and cl. (d) would not afford the tenant any protection. But cl. (d) would stand in the way of the landlord, if possession is sought on any of the grounds set out in cls, (a), (b) and (c). The object of cl. (d) clearly is that even though the tenancy has come to an end by forfeiture and the landlord has become entitled to the possession of the building under the general law. , the tenant shall be protected from eviction on any of the grounds set out in cls. (a), (b) and (c) so long as the period for which the tenancy was created in his favour has not a expired, This construction receives considerable support from the tact that the Legislature has used the words "before the expiry of such period" and not the words "before the determination of the tenancy" to indicate the length of time for which protection is given to the tenant under cl. We do not therefore think that it would be right to infer from cl. (d) that, save in cases falling within that provision, the landlord would be entitled to apply for possession under sub section (2) or sub cl. (3) of section 10 without determining the tenancy of the tenant. There can be no doubt, having regard to the judicial pronouncements of this Court, that the word 'landlord ' in section 10 of the Tamil Nadu Act 18 of 1960 :is used in a limited sense to refer only to a landlord who has terminated the tenancy of the tenant and does not include a contractual landlord. if the ' word 'landlord ' in section 10 is found subjected to a limitation excluding a contractual landlord, it forms a strong argument for subjecting the word 'landlord ' in s.4.,sub s.(1) also to the like limitation. 649 It may also be noted that, whatever be the correct interpretation of the word 'landlord ' in section IO, it is clear from the decisions of this Court in regard to the other Rent Control Acts. that it is not at all unusual,, having regard to the object and purpose of Rent Control legislation, to read the word 'landlord ' in a limited. sense so as 'to exclude contractual landlord and we are therefore not doing anything startling or extraordinary but merely following the path eked out by the decisions of this Court when we place a limited meaning on the word 'landlord 'in section 4, sub section (1) which would exclude contractual landlord. That is in fact in conformity with the object and purpose of the Tamil Nadu Act 18 of 1960, which, to quote the words used by this Court in P.J. Irani vs State of Madras (1) in reference to the earlier Tamil Nadu Act 25 of 1949 which was in material respects in identical terms as the present Act, is intended to protect "the rights of tenants in occupation of buildings from being charged unreasonable rates of rent" and not to benefit landlords by conferring on them a new right against tenants which they did not possess before. Since we are of the view that it is not competent to the landlord to apply for fixation of fair rent under section 4, sub section (1) during the subsistence of the contractual tenancy, we set aside the decision of the High Court of Tamil Nadu which has taken the view that the Controller has jurisdiction to entertain the application of the respondents and allow Civil Appeal No. 50 of 1968. There will be no order as,. to costs all throughout. ORDER In accordance with the opinion of the majority, the appeal is dismissed. The appellant will pay the respondents costs.

The appellant, a judicial officer, was convicted and sentenced under the , by a Full Bench of the Orissa High Court. Registrar of Orissa High Court vs Bardakanta Mishra & Ors. I.L.R. [1973] Cuttack 134. The appellant 's career as a judicial officer was far from satisfactory. When he was working as Additional District and Sessions Judge he showed gross indiscretion and committed grave judicial misdemeanor. The contempt proceed ings arose out of the representation he made to the Governor for canceling the order of suspension passed against him by the High Court and the allegation he made in a memorandum of appeal he had filed earlier in the Supreme Court. In his representation to the Governor the appellant made false insinuations that the Governor cancelled the previous disciplinary proceedings against him on the ground that the same was vitiated as the High Court prejudged the matter and the government set aside the punishment because three of the judges were biased and were prejudiced against him, that the proceeding involved the Government in heavy expenses on account of the "palpably incorrect views of the High Court", that the High Court did not gracefully accept the Government 's order cancelling his demotion, that the High Court resorted to "subterfuge ' to counteract the said decision of the government by taking a novel step and that the High Court 's action suffered from patent mala fides. He stated that the other judges had no independent judgment of their own and were influenced by the Chief Justice to take a view different from what they bad already taken and characterised the High Court as an "engine of oppression" and his order of suspension as "mysterious". In another representation made to the Governor the appellant alleged that the High Court on the administrative side was seriously prejudiced and biased against him and it acted as if the charges stood established requiring extreme punishment and as such justice May not be meted out to him by the High Court, if it conducted the departmental inquiry. He also stated that he considered it risky to submit his explanation to the High Court and that the High Court in the best interests of justice, should not inquire into these charges again st him. He suggested that "the Court was not in a position to weigh the evidence and consider the materials on record and impose a sentence commensurate with his delinquency. " The action taken by the High Court was branded as "unusual". A copy of this representation was sent to the High Court with the remark that since the High Court was likely to withhold the representation it was submitted direct to the Governor. In the memo of appeal filed in the Supreme Court, the appellant alleged bias and prejudice against the High Court and its Chief Justice. He took the plea that the High Court had become disqualified to deal with the case and expressed the view that "the judges of the High Court had fallen from the path of rectitude and were vindictive" and had decided to impose substantive sentence and that "they were not in a position to mete even handed justice '. In appeal to this Court. it was contended : (i) that the passages about which the complaint was made did not amount to contempt of court since they did not purport to criticize any 'judicial, acts of the judges and criticism of the administrative acts of the High Court even in vilification terms did not amount 28 3 to contempt of court, and (ii) that the acts complained of were in the court of the appellant challenging his suspension and holding of disciplinary proceedings, in an appeal or representation to the Governor from the orders of the High Court and he gave expression to his grievance or had otherwise acted not with a view to malign the court or in defiance of it but with, the sole object of obtaining the reversal of the orders passed by the High Court against him. HELD : The imputations have grossly vilified the High Court tending to affect substantially administration of justice and, therefore, the appellant was rightly convicted of the offence of criminal contempt. [304F] (i)Proceedings in contempt are always with reference to administration of justice. All the three sub clauses of section 2(c) of the , define contempt in terms of obstruction or interference with administration of justice and scandalisation within the meaning of sub clause (1) must be in respect of the court or the Judge with reference to administration of justice. [297C D] Debi Prasad Sharma vs The King Emperor. 70 Indian Appeals. 216, referred to. (a)The question whether contemptuous imputations made with reference to the administrative acts of the High Court amount to contempt of court will depend upon whether the amputations affect the administration of justice. This is the basis on which the contempt is punished and must afford the necessary test. [298E] (b)The mere functions of adjudication between the parties is not the Whole of administration of justice for any court. The presiding judge of a Court embodies in himself the Court. and when engaged in the task of administering justice is assisted by a complement of clerks and ministerial officers. The Acts in which they are engaged are acts in aid of administration of justice. Therefore, when the Chief Justice appoints ministerial officers and assumes disciplinary control over them, that is a function which through described as administrative, is really in the course of administration of justice. Judical integrated function of Judge and cannot suffer any dissection nuance of high standards of rectitude in judical administration administration is an so far as maintain concerned. The whole set up of a court is for who ' purpose of administration of justice and the controlwhich the judge exercises over his assistants has also the object of maintaining the purity of administration of justice. [298F H; 299A] (c)The disciplinary control over the misdemeanors of the subordinate judiciary in their judicial administration is a function which the High Court must exercise in the interest of administration of justice. It is a function Which is essential for the administration of justice in the wide connotation it has received and, therefore, when the High Court functions in a disciplinary capacity, it Only does so in furtherance of administration of justice. it is as important for the superior court to be vigilant about the conduct and behaviour of the subordinately judge as it is to administer the law, because both functions are essential administration of justice. The Judge of the superior court in whom this disciplinary control is vested functions as much as a Judge in such, matters as when he bears and disposes of cases before him. [300E; 299D] (d) What is commonly described as an administrative function has been when vested in the High Court, constantly regarded by statutes as a function in the administration of justice. [299F G] Letters Patent for the High Courts of Bombay, Calcutta and Madras a. 8; High Courts Act, 1861, a. 9; the Government of India Act, 1935, %. 224; Constitution of India, 1950, articles 225, 227 235; State of West Bengal V.Nripendra Nath Bagchi ; referred to. (e)Thus the courts of justice in a State froth the highest to the lowest are by their constitution entrusted with functions directly connected with the administration of justice and it is the expectation and confidence of all those who have or likely to 'have business there that the courts Perform all their functions 284 on a high level of rectitude without fear or favour, affection or ill will. And, it in this traditional confidence in the courts that justice will be administered in them which is Fought to be protected by proceedings in contempt. [300F G] Rex vs Almon [1765] Wilmot 's Notes of Opinions 243, referred to. (f) Scandalisation of the court is a species of contempt and may take several forms. A common form is the vilification of the Judge. When proceedings in contempt are taken for such vilification the question which the court has to ask is whether the vilification is of the Judge as a Judge or it is the vilification of the Judge as an individual. If the latter, the Judge is left to this private remedies and the court has no power to commit for contempt. If the former, the court will proceed to exercise the jurisdiction with scrupulous care in cases which are clear and beyond reasonable doubt. Secondly, the court with have also to consider the degree of harm caused. as affecting administration of justice and if it is slight and beneath notice, courts will not punish for contempt. Ibis salutary practice is adopted by section 13 of the . If the attack on the Judge functioning as a Judge substantially affects administration of justice it becomes a public mischief punishable for contempt, and it matters not whether such an attack is based on what a Judge is alleged to have done in the exercise of his 'administrative ' responsibilities. A Judge 's functions may be divisible, but his integrity and authority are not divisible in the context of administration of justice. [301D F] Queen vs Gray, [1900] (2) Queen 's Bench, 36, at page 40, referred to. (g)"Judicial capacity" is an ambivalent term which means "capacity of or properto a Judge" and is capable of taking in all functional capacities of a Jurodge whetheradministrative, adjudicatory or any other, necessary for the administration of justice. There is no warrant for the narrow view that the offence of scandalisation of the court takes place only when the imputation has reference to the adjudicatory functions of a Judge in the seat of justice. [302D] Rex vs Almon [1765] Wilmot 's Notes of Opinion 243; MOti Lal Ghose and Others, XLV Calcutta, 169, The State of Bombay vs Mr. P. A.I.R. 1959 Bombay, 182, Debi Prasad Sharma vs The King Emperor, 70, Indian Appeals, 216, Special Reference from the Bahama Islands, A.C. 138 at 144, Queen vs Gray , referred to. Brahma Prak ash Sharma and others vs The State of Uttar Pradesh, [1953] S.C.R. 1169, Gobind Ram vs State of Maharashtra. and State vs The Editors and Publishers of Eastern Times and Prajatantra, , held inapplicable. (ii)If in fact the language used amounts to contempt of court it will become punishable as criminal contempt. The right of appeal does not give the right to commit contempt of court nor can it be used as a cover to bring the autho rity of the High Court into disrespect and disregard. [298C D] Jugal Kishore vs Sitamarhi Central Co.op. ; referred to. Per Bhagwati & Krishna Iyer, JJ : (Concurring in ultimate decision) : The dilemma of the law of contempt arises because of the constitutional need to balance, two great but occasionally conflicting principles freedom of expression and f air and fearless justice. It is a moot point whether we should still be bound to the regal moorings of Rex vs Almon. [306E] (i)The emphasis in Ss. 2(c), 3 and 13 of the . to the interference with the course of justice or obstruction of the administration of Justice or scandalising or lowering the authority of the Court not the Judge highlights the judicial area as entitled to inviolability and suggests a functional rather than a personal or 'institutional ' immunity. The unique power to punish for contempt of itself inheres in a Court qua court, In its essential role of dispenser of public justice. The phraseological image projected 285 by the catena of expressions in the Act, the very conspectus of the statutory provisions and the ethos and raison d 'eire of the jurisdiction point to the conclusion that the text of the Act must take its colour from the general context and confine the contempt power to the judicial cum para judicial areas, including such administrative functions as are intimately associated with the exercise of judicial power. In short the accent is on the functional personality which is pivotal to securing justice to the people. Purely administrative acts like recruitmerits, transfers and postings, routine disciplinary action against subordinate staff, executive acts in running the establishment and ministerial business ancillary to office keeping these are common to all departments in the public sector and merely because they relate to the judicial wing of government cannot enjoy a higher immunity from criticism. The quintessence of the contempt power is protection of the public, not judicial personnel. If the slant on judict poalisation as a functional limitation on the contempt jurisdiction is accepted, it must exclude from its ambit interference with purely administrative acts of courts and non judicial functions of judges. This dichotomy is implicit in the decided cases. To treat as the High Court has done. "the image and personality of the lush Court as an integrated one" and to hold that every shadow that darkens it is contempt is to forget life, reason and political progress. The basic 'public duty" of a Judge in his "judicial capacity" is to dispense public justice in Court and anyone who obstructs or interferes in this area does so at his peril. Likewise, personal behaviour of judicial personnel, if criticised severally or even sinisterly. cannot be countered by the weapon of the contempt of court. [309C E, 3 10 A F] The paramount but restrictive jurisdiction to protect the public against substantial interference with the stream of justice cannot be polluted or diffused into an intimidatory power for the judges to strike. at adverse comments on administrative, legislative (as under articles 225, 226 and 227) and extra judicial acts. Commonsense and principle can certainly accept a valid administrative area so closely integrated with court work as to be stamped with judicial character such as constitution of benches, transfer of cases, issue of administrative directions regarding submission of findings or disposal of cases by subordinate courts and the like. Not everything covered by article 225, 227 and 235 will be of this texture. Thus even though Judges and courts have diverse duties functionally and historically and jurisprudentially, the value which is dear to the community and the function which deserves to be pardoned off from public molestation is judicial. Vicious criticism of personal and administrative acts of Judges may indirectly mar their image and weaken the confidence of the public in the judiciary but the countervailing good, not merely of free speech but also of greater faith generated by exposure to the acting light of bona fide even if marginally overzealous, criticism cannot be over looked. [315B E] In the instant case the suspension of the District Judge was so woven into and integrally connected with the administration of justice that it can be regarded as not purely an administrative act but a para judicial function. The appeal was against the suspension which was a preliminary to contemplated disciplinary action which was against the appellant in his judicial capacity for acts of judicial misconduct. The control was, therefore, judicial and hence the unbridled attack on the High Court for the step was punishable impugned conduct of the condemner was qua Judge and the evil a supervisory act of the High Court. [315G H] (ii)A large margin must be allowed for allegations in remedial representation; but extravagance forfeits the protection of good faith. [315H] In the matter of a Special Reference from the Bahama Islands, ; 149; Debi Prasad Sharma vs The King Emperor, [1942] 70 I.A. 216, Kayiath Damodaran vs Induchoodan, A.I.R. 1961 Kerala 321, K. L. Gauba 's case, I.L.R. [1942] Lab. 411, 419, Rex vs B. section Nayyar, A.I.R. 1950 All '. 555, In re section B. Sarbadhicary, [1906] 14 XX I.A. 41, Brahma Prakash Sharma vs State of Uttar Pradesh, , State V. N. Nagamani, A.I.R. 1959 Pat. 373 and In the matter of an. Advocate of Allahabad, A.T.R. 1935 All. 1, referred to. 28 6 Remedial process cannot be a mask to malign a judge. Irrelevant or unvarnished amputations under the pretext of grounds of appeal amount of foul play and perversion of the legal process. In the instant case the appellant, a senior officer who professionally weighs his thoughts and words has no justification for the immoderate abuse he has resorted to. In this sector even truth is no defence, as in the case of criminal insult in the latter because it May produce violent breaches and is forbidden in the name of public peace, and in, the former it may demoralise the community about courts and is forbidden in the interest of public justice as contempt of court. The Court being the guardian of the people 's rights, it has been held repeatedly that the contempt jurisdiction should be exercised with scrupulous care and only when the case is clear and beyond reasonable doubt. [317C E; 318H] State of Uttar Pradesh vs Shyam Sunder Lal, A.I.R. 1954 All. 308, Rex vs R. section Nayyar, A.I.R. 1950 All. 549; 554, State of Madhya Pradesh vs Ravi Sharker. ; Govind Ram vs State of Maharashtra, , Swarnamayi Panigrahi vs B. Nayak, A.I.R. 1959 Orissa 89, Quintin Hogg. 1206 7. C. K. Paphtary vs O. P. Gupta, A.I.R. 1971 S.C. 1132 1141 para '52, R vs Gray,, , Special ,Reference No. 1 of 1964; , 501; referred to. (iii)In sum, the key note word is 'justice, not 'judge '; the 'key note thought is unobstructed public justice, not the self defence of a judge; the corner stone of the contempt law is the accommodation of two constitutional values the right of free speech and the right to independent justice. The ignition of con, tempt action should be substantial. and mala interference with fearless judicial action, not fair comment or trivial reflections on the judicial process and personnel. [319E]

N: Civil Appeal No. 135 of 1991. From the Judgment and order dated 16.6.1989 of the Madras High Court Crl. M.P. No. 2717 of 1988. T.S. Krishnamoorthy Iyer, K. Rajeswara, N.D.B. Raju and K.R. Chaudhary for the Appellant. K.K. Lahiri, R.K. Jain (NP), Sreekant, N. Terdal, Mrs. Sushma Suri and A Subba Rao for the Respondent. The Judgment of the Court was delivered by 745 K.N.SAIKIA, J. Special leave granted. The appellant Captain Subhash Kumar was the Master of the Merchant ship M.V. Eamaco owned by Eamaco Shipping Co. (P) Ltd. Singapore, hereinafter called `the ship '. On 12.8.86 the ship went into distress due to the vessel 's hold Nos. 2 & 3 taking in water, the pumping operations being insufficient and though initially the appellant sent radio message for help he failed to launch the life boats and life crafts and to abandon the ship to enable M.V. Shoun World to pick them up and due to the failure of motor life boats and life crafts, when the ship sank, only 11 out of 28 persons were rescued resulting in loss of life to the remaining persons. At about 18.25 Hrs. that day Madras Radio, which was the communication centre between the land and seafaring ships, informed the office of the Principal Officer, Mercantile Marine Department, Madras, District Madras, hereinafter called as `Principal Officer ', that an urgent message had been received by the said Radio from the appellant and from that communication it was clear that the ship under the command of the appellant was posted at position 11 degrees 08 minutes North, 83 degrees 41 minutes East on 12th at 11.30 Greenwich meantime. The said message further indicated that the vessel 's hold Nos. 2 & 3 were taking in water and the pumping out operation was not sufficient and it called the assistance from all ships in the vicinity. At 20.28 Hrs. the Madras Radio again contacted the Principle officer and said that the Radio had received SOS message (distress message) and he took necessary steps. The Principal Officer filed a complaint in court of 14th Metropolitan Magistrate, Egmore, Madras 8 against the appellant for initiation of an inquiry proceeding under section 363 of the (Central Act No.4 of 1958), hereinafter called `the Act, complaining about the negligence of the appellant while he was the Master of the ship as aforesaid; and that at that time he was residing at Laxmi Niwas, 41, Marshal Road, Egmore, Madras 8 and further stating that the shipping casualty had occurred due to sheer negligence and gross incompetence on the part of the appellant in commanding the ship and the crew; and that the very fact that the life boats and life floats were not used and not even lowered so as to make use of that indicated that the appellant had not even thought about that which a Captain of the ship should have done, resulting in loss of the ship, the cargo and valuable lives of the sailors who had at no time doubted about the competency of the Master or revolted against him. The complaint accordingly said that the Magistrate 's Court by the provisions of section 363 had got powers to make inquiry into the charges of 746 incompetence or of misconduct of the appellant therein. It also said that the inquiry be commenced in accordance with the provisions of the Act so as to cancel the certificates of competency of the Master, namely, the appellant, which had been granted by the Central Government; and that cancellation might be recommended under the Act after holding the aforesaid inquiry. The complaint also said that the appellant rendered himself liable to be proceeded against under the provisions of part XII of the Act which envisaged various modes of investigation and inquiry; and under section 363 the court had powers to make an inquiry into the charges of incompetency or misconduct of the appellant. On 25.3.1988, the appellant received a notice stating that the inquiry proceedings were instituted against him before the 14th Metropolitan Magistrate under section 363 of the Act. The appellant thereupon filed Cr. M.P. No.2717 of 1988 in the High Court under section 482 of the Cr. P.C. stating that the proceedings were by an abuse of process of the court and the Court had no jurisdiction to proceed with the complaint against the appellant when there was no negligence on his part. It was also stated that the fact that the appellant was a holder of a Master certificate issued by the Director General of Shipping, Calcutta would not attract the provisions of the Act inasmuch as the ship was a foreign ship and the Master certificate had been issued by a foreign country and the casualty had occurred in the high seas nearly 232 nautical miles away from India and being in open sea the ship was subject to the jurisdiction and also to the protection of the State under whose maritime flag it sailed. The appellant was, it was further stated, to be in command of the ship by virtue of the certificate issued by the Panamanian Government, the flag of the ship was of Panama and, therefore, the provisions of the Act would not at all apply, much less its section 363. In other words the proceedings were allegedly intended to harass the appellant without jurisdiction and it amounted to an abuse of process of court. The learned Single Judge who heard the petition rejected the contention that in view of the language of section 2 of the Act it would not be applicable and that it would not be a shipping casualty as defined in section 358 of the Act, and held that the Act was applicable in the instant case and the action of the petitioner amounted to sheer negligence and called for investigation and inquiry under the Act. Hence this appeal. Mr. T. Krishnamurthy Iyer, the learned cousel for the appel 747 lant, submits, inter alia, that the negligence complained of having occurred in respect of foreign ship flying foreign flag at a place 232 nautical miles away from India, and as such, outside the territorial waters of India the Act would not be applicable; and that even if it was applicable it would not amount to a shipping casualty as envisaged in part XII of the Act; and lastly that even assuming that chapter XII applied, the complaint could not have been filed by the Principal Officer in the court of the 14th Metropolitan Magistrate, Egmore, Madras 8 under section 363 of the Act. Mr. K. Lahiri, the learned counsel for the respondents submits that the shipping casualty having occurred within the territorial waters of India which extended up to 200 nautical miles, the Act would be applicable and the complaint was rightly filed under section 363 of the Act; and that the High Court under section 482 of the Code of Criminal Procedure rightly refused to quash the proceedings. Three questions, therefore, are to be decided in this appeal. First, whether the Act would at all be applicable in the facts and circumstances of the case; secondly, if the Act was applicable whether part XII of the Act would apply; and thirdly, if both the Act and part XII were applicable whether the complaint made by the Principal Officer under section 363 of the Act would be maintainable. Taking the first question first, the Act is one to foster the development and ensure the efficient maintenance of India Mercantile Marine in the manner best suited to serve the national interest and for that purpose to establish a National Shipping Board and Shipping National Fund to provide for registration of India ship and the law relating to Merchant shipping. Section 2 of the Act deals with its application and says; "(1) Unless otherwise expressly provided, the provisions of this Act which apply to (a) any vessel which is registered in India; or (b) any vessel which is required by this Act to be so registered; or (c) any other vessel which is owned wholly by persons to each of whom any of the descriptions specified in clause (a) or in clause (b) or in clause (c), as the case may be, of 748 section 21 applies, shall so apply wherever the vessel may be. (2) Unless otherwise expressly provided, the provisions of this Act which apply to vessels other than those referred to in sub section (1) shall so apply only while any such vessel is within India, including the territorial waters thereof." In the instant case the ship was not registered in India and was not required by this Act to be so registered. Clause (c) refers so clauses (a), (b) and (c) of section 21 which defines Indian ships, and says: "For the purposes of this Act, a ship shall not be deemed to be an Indian ship unless owned wholly by persons to each to whom any of the following descriptions applies: (a) a citizen of India; or (b) a company which satisfies the following requirements, namely: (i) the principal place of business of the company is in India; (ii) at least seventy five per cent of the share capital of the company is held by citizens of India: Provided that the Central Government may, by notification in the official Gazette, alter such minimum percentage, and where the minimum percentage is so altered, the altered percentage shall, as from the date of the notification, be deemed to be substituted for the percentage specified in this sub clause; (iii) not less than three fourths of the total number of directors of the company are citizens of India; (iv) the chairmen of the board of directions and the managing director, if any, of the company are citizens of India; (v) the managing agents, if any, of the company are citizens of India or in any case where a company is the managing agent, the company satisfies the requirements specified in sub cls. (i), (ii), (iii) and (iv). or 749 (c) a co operative society which satisfies the following requirements, namely: (i) the co operative society is registered or deemed to be registered under the , or any other law relating to co operative societies for the time being in force in any State, (ii) every individual who is a member of the co operative society and where any other co operative society is a member thereof, every individual who is a member of such other co operative society, is a citizen of India. " The ship was not a ship owned wholly by persons each of whom was a citizen of India or by a company satisfying the descriptions under clause (b) or (c). Sub section (2) of section 2 makes the provisions of the Act applicable to vessels other than those referred to in sub section (1) only while any such vessel is within India, including the territorial waters thereof. The ship a Panamanian ship registered in Panama would come within the purview of the Act only it is within India including the territorial waters. This leads us to the question as to the extent of territorial waters of India. The Territorial Waters, Continental shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (Act No. 80 of 1976) is an Act to provide for certain matters relating to the territorial waters continental shelf, exclusive economic zone, and other maritime zones of India. Section 2 of the Act defines "limit" in relation to the territorial waters, the continental shelf, the exclusive economic zone or any other maritime zones of India to mean the limit of such waters shelf or zone with reference to the mainland of India as well as the individual or composite group or groups of islands constituting part of the territory of India. Section 3 deals with sovereignty over, and limits of, territorial waters and says: "(1) The sovereignty of India extends and has always extended to the territorial waters of India (hereinafter referred to as the territorial waters) and to the seabed and subsoil underlying, and the air space over such waters. (2) The limit of the territorial waters is the line every point of which is at a distance of twelve nautical miles from the nearest point of the appropriate baseline. 750 (3) Notwithstanding anything contained in sub section (2), the Central Government may whenever it considers necessary so to do having regard to International Law and State practice, alter, by notification in the Official Gazette, the limit of the territorial waters. (4) No notification shall be issued under sub section (3) unless resolutions approving the issue of such notification are passed by both Houses of Parliament." Thus sub section (2) clearly provides that the limit of the territorial waters is a line every point of which is at a distance of 12 nautical miles from the nearest point of the appropriate baseline. Under Article 297 of the Constitution of India things of value within territorial waters or continental shelf and resources of the exclusive economic zone to vest in the Union. It says: "(1) All lands, minerals and other things of value underlying the ocean within the territorial waters, or the continental shelf, or the exclusive economic zone, of India shall vest in the Union and be held for the purposes of the Union. (2) All other resources of the exclusive economic zone of India shall also vest in the Union and be held for the purposes of the Union. (3) The limits of the territorial waters, the continental shelf, the exclusive economic zone, and other maritime zone, of India shall be such as may be specified, from time to time, by or under any law made by Parliament. " Sub section (3), thus, empowers the Central Government if it considers necessary so to do having regard to the International Law and State practice, alter, by notification in the Official Gazette, the limit of territorial waters. Under sub section (4) no such notification shall be issued unless resolutions approving the issue of such notification are passed by both Houses of Parliament. A proclamation was made by the President of India published on September 30, 1967 in the Gazette of India Extraordinary, Part III, section 2 Notification of the Government of India in the Ministry of External Affairs No. FL/III (1) 67. By a Notification of the Government of India dated 15th 751 January, 1977 the exclusive economic zone of India has been extended upto a distance of 200 nautical miles into the sea from shore and other maritime zones, 1976 under the 40th Constitution Amendment Act, 1976. The concepts of territorial waters, continental shelf and exclusive economic zone are different concepts and the proclamation of exclusive economic zone to the limit of 200 nautical miles into the sea from the shore baseline would in no way extend the limit of territorial waters which extends to 12 nautical miles measured from the appropriate baseline. The submission that territorial waters extends to the limit of 200 nautical miles by virtue of the notification extending exclusive economic zone to 200 nautical miles has, therefore, to be rejected. Admittedly the ship (M.V.Eamaco) at the time of the casualty was at a place beyond the territorial waters of India and even the exclusive economic zone of India. If this be the position, the ship would not be covered by the provisions of section 2 of the Act and consequently the provisions of the Act would not apply to the instant casualty. Taking the second question it is obvious that the Act itself having not been applicable Chapter XII being a part of the Act will also not be applicable. This Chapter deals with investigations and inquiries and contain sections 357 to 389. Section 357 defines "coasts" to include the coasts of creeks and tidal rivers. Section 358 deals with shipping casualties and report thereof and says: "(1) For the purpose of investigations and inquiries under this Part, a shipping casualty shall be deemed to occur when (a) on or near the coasts of India, any ship is lost, abandoned, stranded or materially damaged; (b) on or near the coasts of India, any ship causes loss of material damage to any other ship; (c) any loss of life ensues by reason of any casualty happening to or on board any ship on or near the coasts of India; (d) in any place, any such loss, abandonment, stranding, material damage or casualty as above mentioned occurs to or on board any India ship and any competent witness thereof is found in India; 752 (e) any Indian ship is lost or is supposed to have been lost and any evidence is obtainable in India as to the circumstances under which she proceeded to sea or was last heard of. (2) In the cases mentioned in clauses (a), (b) and (c) of sub section (1), the master, pilot, harbour master or other person in charge of the ship, or (where two ships are concerned) in charge of each ship at the time of the shipping casualty, and in the cases mentioned in clause (d) of sub section (1), where the master of the ship concerned or (except in the case of a loss) where the ship concerned proceeds to any place in India from the place where the shipping casualty has occurred, the master of the ship, shall, on arriving in India, give immediate notice of the shipping casualty to the officer appointed in this behalf by the Central Government. " Clause (d) envisages shipping casualty in any place but occurring to or on board any Indian ship whether the Master of the ship concerned (except in the case of a loss) where the ship concerned proceeds to any place in India from the place where the shipping casualty of the ship has occurred, the Master of the ship. Thus this provision will not cover the ship. The conclusion, therefore, is inescapable that the casualty in the instant case would not be a shipping casualty envisaged in section 358. Subsequent sections, namely, 359, 360, 361 and 362, relate to shipping casualties as envisaged in section 358. The impugned complaint was ex facie made under section 363 of the Act which deals with power of Central Government to direct inquiry into the charges of incompetency or misconduct, it says: "(1) If the Central Government has reason to believe that there are grounds for charging any master, mate or engineer with incompetency or misconduct, otherwise than in the course of a formal investigation into shipping casualty, the Central Government. (a) if the master, mate or engineer holds a certificate under this Act, in any case; 753 (b) if the master, mate or engineer holds a certificate under the law of any country outside India, in any case where the incompetency or misconduct has occurred on board an Indian ship; may transmit a statement of the case of any court having jurisdiction under section 361 which is at or nearest to the place where it may be convenient for the parties and witnesses to attend, and may direct that court to make an inquiry into that charge. (2) Before commencing the inquiry, the court shall cause the master, mate or engineer so charged to be furnished with a copy of the statement transmitted by the Central Government. " From the above provisions it appears that section 359 envisages the officers referred to in sub section (2) of section 358. Receiving the information that a shipping casualty has occurred and reporting in writing the information to the Central Government and his proceeding to make a preliminary inquiry into the casualty and sending a report thereof to the Central Government or such other authority as may be appointed by it in that behalf. Under section 360 the officer, whether he has made a preliminary inquiry or not, may, and, where the Central Government so directs, shall make an application to the court empowered under section 361 requesting it to make a formal investigation into any shipping casualty and the court shall thereupon make such investigation. Thus the officer himself may or when directed by the Central Government shall make an application to the court requesting it to make a formal investigation into any shipping casualty. Section 361 empowers the court to make a formal investigation under Part XII. A Judicial Magistrate of the first class specially empowered in this behalf by the Central Government and a Metropolitan Magistrate shall have jurisdiction to make formal investigation into any shipping casualty under Part XII. What has to be noted in this section is that the court on an application of the officer makes a formal investigation into shipping casualties and not a preliminary inquiry which could have been done by the officer referred to in sub section (2) of section 358, and under section 359 send a report to the Central Government. Section 360 also envisages making of application to court by the officer whether he had made preliminary inquiry or not, requesting it to make formal investigation into any shipping casualty. Thus under section 361 what is being envisaged is a formal investigation into a shipping 754 casualty and not a preliminary inquiry. Section 362 deals with only formal investigation and says that while making such investigation into a shipping casualty the court may inquire, into any charge of incompetency or misconduct arising, in the course of the investigation, against any master, mate or engineer, as well as into any charge of a wrongful act or default on his part causing the shipping casualty. Under sub section (2) a statement of the case has to be furnished to the Master, mate or Engineer. Section 362 does not envisage inquiring into any charge of incompetency or misconduct otherwise than in the course of the formal investigation into a shipping casualty, Section 363 (1) envisages the Central Government, when it has reason to believe that there are grounds for charging any master, mate or engineer with incompetency or misconduct, otherwise than in the course of a formal investigation into shipping casualty, (b) if he holds a certificate under the law or any country outside India, in any case where the incompetency or misconduct has occurred on board an Indian ship, and the transmitting of the statement of the case to any court having jurisdiction under section 361 where it may be convenient for the parties and witnesses to attend, and the Central Government may direct that court to make an inquiry into that charge. Under clause (a) the Central Government may exercise the power if the Master, mate or Engineer holds a certificate under the Act, in any case. Thus under this section the Central Government must have reason to believe that there are grounds for charging any master etc. with incompetency or misconduct, otherwise than in the course of a formal investigation into shipping casualty, in case of a master of a foreign ship who holds a certificate under the Act "in any case". It also envisages the transmitting the statement of the case to any court having a jurisdiction under section 361. The question is what would be the meaning of the words "in any case". Would it mean any case of shipping casualty, or it would mean any case irrespective of shipping casualty. In other words, under the above provisions if the appellant was the master of the ship and the casualty was outside the territorial waters of India and the ship involved was a foreign ship would the expression "in any case" cover the instanct case? If the preceding sections of Part XII dealt with only Shipping casualty, will it be permissible to interpret the words "in any case" irrespective of shipping casualty and anywhere outside the territorial waters of India and whoever is the owner of the Vessel? Will not the ejusdem generis rule apply? Again when the Act itself is not applicable to a case, can these words be given a meaning beyond the applicability of the Act? Verba secundum materiam subjectam intelligi nemo est qui nesciat. There is no one who does not know that words are to be understood according to their subject matter. The subject matter of 755 Part XII is investigations and inquiries into shipping casualty. Would 'in any case" then mean in any case of shipping casualty? We have read the other relevant provisions of the Act. Nemo aliquam partem recti intelligere potest, antequam totum interum atque itrerum parlegerit. No one can properly understand any part of a statute till he had read through the whole again and again. We find that Part VI of the Act deals with certificates of officers, namely, Masters, mates and Engineers, Section 76(1) provides: "Every foreign going Indian ship, every home trade Indian ship of two hundred tons gross or more when going to sea from any port or place in India and every ship carrying passengers between ports or places in India shall be provided with officers duly certificated under this Act according to the following scale, namely: (a) in every case, with a duly certificated master; (b) if the ship is a foreign going ship or a home trade passenger ship of one hundred and fifty tons gross or more, with at least one officer besides the master holding a certificate not lower than that of first mate in the case of a foreign going ship and of mate in the case of a home trade passenger ship; (c) if the ship is a home trade ship, not being a passenger ship, of four hundred and fifty tons gross or more, with at least one officer besides the master holding a certificate not lower than that of mate. (d) if the ship is a foreign going ship and carries more than one mate, then with the second mate duly certificated. " Section 79 deals with examination for, and grant of, certificate. Section 82 provides that a note of all orders made for canceling, suspending, altering or otherwise affecting any certificate of competency, in pursuance of the powers contained in this Act, shall be entered on the copy of the certificate kept under section 81. Section 87 empowers the Central Government to make rules, inter alia, to (f) prescribe the circumstances or cases if which certificates of competency may be canceled or suspended. Section 363 of the Act does not refer to Part VI and the rules for 756 suspension or cancellation of certificates. This would be consistent with the view that section 363 confines itself to cases of misconduct or incompetency associated with a shipping casualty. Assuming that it covers a case of a foreign ship on high seas, it would only be to make an inquiry into that charge and not into the shipping casualty itself. The question then arises, as has been submitted by Mr. Krishnamurthy Iyer, when the entire Act is not applicable to there instant casualty would it be consistent with the extent of applicability of the Act to pick up three words, namely, "in any case" and apply it to the prejudice of the appellant. Mr Lahiri submits that the certificate of competency issued under the Act by the appropriate authorities under part VI are valuable certificates and if the holder of such a certificate of competency issued under the provisions of Part VI is alleged to have committed misconduct or acts of incompetency there is no reason why an inquiry into that misconduct or incompetency cannot be ordered by the Central Government to a court competent to exercise jurisdiction under section 361 of the Act. Section 363 does not envisage the court acting on a statement transmitted by the Central Government to conduct a formal investigation into the shipping casualty but only the courts ' making an inquiry into the charge of incompetency or misconduct. Section 364 provides giving of opportunity to the person to make defence. Section 365 empowers the court to regulate its proceedings. Section 369 provides that the court shall, in the case of all investigations or inquiries under this Part, transmit to the Central Government a full report or its conclusions which it has arrived at together with the evidence. Under sub section (2) of that section where the investigation or inquiry affects master or an officer of a ship other than an Indian ship who holds a certificate under the law of any country outside India, the Central Government may tansmit a copy of the report together with the evidence to the proper authority in that country. Section 370 deals with power of court as to certificates granted by Central Government. A certificate can be canceled or suspended under clause (a) by a court holding formal investigation and under clause (v) by a court holding inquiry under this part into the conduct of the master, mate or engineer if the court finds that he is incompetent or has been guilty of any gross act of drunkenness, tyranny or other misconduct or in a case of collision has failed to render such assistance or gave such information as is required by section 348. Under sub section (3), where the court 757 cancels or suspends a certificate, the court shall forward it to the Central Government together with the report which it is required by this Part to transmit to it. Thus, this section deals with power of the court while holding a formal investigation into a shipping casualty under clause (a) and while holding an inquiry into the conduct of the master, mate or engineer i.e. otherwise than while holding a formal investigation into shipping casualty. If the expression "In any case" is interpreted to cover a foreign ship by a foreign master but holding an Indian certificate having a shipping casualty outside the territorial water sections 363 and 370b) may be applicable. If on the other hand the words "in any case" is not allowed to be interpreted to include such a master of such a ship and in such a casualty it may not be covered. The question then is whether the instant complaint can be construed as a statement of the Central Government as envisaged in section 363. One of the requisites of section 363 is that the Central Government must have reason to believe that there are grounds for charging any master etc. with incompetency or misconduct; and such reason to believe must have been arrived at otherwise than in the course of a formal investigation into the shipping casualty and it is the Central Government who why transmit the statement of a case to a court having jurisdiction under section 361. We have to examine whether the complaint is ex facie under section 363. It nowhere mentions that the Central Government had such reason to believe. It nowhere mentions that it was a transmission of the statement of a case to the court by the Central Government. It also nowhere mentions that reason to believe had been found otherwise than in the course of a formal investigation into the shipping casualty. On the other hand in para 2 it says that the complainant is the Principal Officer who is competent person appointed under the Act to complain about the negligence of the accused. There is no doubt that he is not empowered under section 363. In para 6 the complaint says that the court under section 363 has got powers to make an inquiry into the charges of incompetency or misconduct of the accused and para 8 mentions: "The inquiry so as to cancel the certificate of the competency of the master namely the accused which has been granted by the Central Government may be recommended under this Act after holding the above said inquiry and thus render justice." Therefore, prima facie the complaint does not disclose the ingredients required under section 363. We enquired of the respondents as to whether there have been earlier instances of such an inquiry having ever been made; and the 758 answer is in the negative. We feel that had such interpretation been given earlier the Act being an old one of 1958, some instances ought to have been available. However, the instant appeal is from an order of the High Court refusing to quash the complaint and the proceedings. Quashing of the complaint could have been done, if taken on its face value it failed to disclose any ingredient of the offence. The High Court found as fact that the appellant had two certificates issued under section 78 of the Act from the Director General of Shipping, Calcutta and Bombay respectively. The High Court correctly observed that section 363 enables the Central Government to transmit a case to the court which has jurisdiction under section 361 to make an inquiry against master, mate or engineer into the charges for incompetency or misconduct otherwise than in the course of formal investigation into shipping casualties but the High Court failed to notice that the complainant himself had no power under section 363. High Court has not considered the extent of applicability of the Act and whether all ingredients required under section 363 were satisfied in the impugned complaint. We accordingly set aside the Judgment of the High Court, quash the complaint and the proceedings before the 14th Metropolitan Magistrate, Egmore, Madras 8, but make it clear the it shall still be open for the Central Government to act under section 363 of the Act according to law if it so decides. Appeal allowed. R.S.S. Appeal allowed.

The grandfather of the appellants and respondents had two wives. The first wife and her only son died during his life time. The pre deceased son left behind four sons and a daughter. In 1947, the grand father made three oral gifts of certain properties in favour of his second wife, in lieu of maintenance. Later, the grandmother gifted some of these properties to two step grandsons. The gift was challenged by the other two grandsons. The lower court held that she had the absolute estate in the properties after the possing of the . In Second Appeal, the High Court held that she derived only a limited estate inasmuch as the gift in her favour would fall directly under section 14(2) of the and as such her limited estate would not stand enlarged into an absolute estate. This appeal is against the said judgment of the High Court. Allowing the appeal, this Court, HELD: 1. There is no doubt that the donee had the right of maintenance and the gift was explicitly in lieu of maintenance. It was a case of her acquiring any new property by virtue of the gift but it was a case of her right of maintenance being given to her by way of a gift. It was a property acquired by gift in lieu of maintenance. The acquisition made on 26th April, 1947 having been prior to the , and she having acquired the property by way of gift in lieu of her antecedent right to maintenance, it would fail under sub section (1) and not under sub section (2) of section 14 of the and she derived absolute estate in the properties. [387E F] Bai Vajia (Dead) by Lrs. vs Thakorbhai Chelabhai & Ors. ; ; Gulwant Kaur & Anr. vs Mohinder Singh & Ors., ; ; Maharaja Pillai Lakshmi Ammal vs Maharaja Pillai Thillanayakom Pillai & Anr. , ; ; Jaswant Kaur V. Major 386 Harpal Singh, ; relied on. Karmi vs Amru & Ors., ; Kothi Satyanarayana vs Galla Sithayya & Ors. , ; ; distinguished.

ivil Appeal No. 2010 of 1986. From the Judgment and Order dated 15.4. 1986 of the Andhra Pradesh High Court in A.A.O. Nos. 737 of 1981 275 of 1982 and 69 of 1984. Shanker Ghosh, A.V. Rangam and T.V. Ratnam for the Appellant. Ashok Sen. A. Subba Rao, Qamaruddin, Mrs, Qamaruddin, C.S.S. Rao and S.V. Deshpande for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal by special leave is from the judgment and order of the High Court of Andhra Pradesh dated 15th April, 1986. On or about th of April. 1948 Sail Nawaz Jung, the then ruler of Mukkalla State, South Yeman in Arabia settled some of the properties with which the appeal is concerned by a Registered Tamleeknama in favour of his son Sultan Awaz and his grand son Galib Bin Awaz. In 1954, there was Wakfnama by the said Sail Nawaz Jung. On or about 23rd of August, 1963 the Military Estate Officer, Secunderabad of. Andhra Pradesh requested for the requisition of the property named as "Sail Gulshan" with a vast extent of land and palaces with roads and surrounded by a compound wail measuring 19 acres and 10 guntas situated in the heart of Hyderabad city near Sarojini Devi Hospital. The property in question was taken possession of on or about 12th of September, 1963. In this appeal we are concerned with the claim for compensation for the said acquisition by one Abdul Khader who was a flower picker. He had claimed rights as a tenant during the requisition. His claim for compensation for requisition was settled by sharing the rent in or about 1969. The appellant is one of the owners of the property in question deriving their title 1233 and right from the said Sail Nawaz Jung. On or about 3rd February, 1970 the Collector issued notice for acquisition of the property under section 7(1) of the being Act 30 of 1952 (hereinafter called the Central Act). The Gazette Notification for the acquisition was issued on 12th March, 1970. The controversy in this case relates to the question whether Abdul Khader was 'a protected tenant ' under the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Lands Act, 1950 being Act No. XXI of 1950 (hereinafter called the Andhra Pradesh Act). The purpose of the said Act as the Preamble states was, inter alia, to enable the land holders to prevent the excessive sub division of agricultur al holdings and empower government to assume in certain circumstances the management of agricultural lands, to provide for the registration of Co operative Farms and to make further provision for matters incidental thereto. Section 2(r) states that the expression 'protected ' means a person who is deemed to be a protected tenant under the provisions of the said Act. Chapter IV of the Andhra Pradesh Act deals with protected tenants and section 34 of the said Act provides who is to be considered as a protected tenant and uses the expression that a person shall, subject to the provisions of sub sections (2) and (3), be deemed to be a protected tenant in respect of the land if he has fulfilled the conditions mentioned in clauses (a) and (b) of sub section (1) of Section 34 of the said Act. Sub section (2) of Section 34 of the said Act also deals with "to be deemed to be a protected tenant in respect of any land", for cer tain purposes. Section 35 of the said Act deals with deci sion on claims and stipulates by sub section (1) of Section 35 of the said Act that if any question arises whether any person, and if so what person, is deemed under Section 34 to be a protected tenant in respect of any land, the landhold er, or any person claiming to be so deemed, may, within one year from the commencement of the Act apply in the pre scribed form to the Tahsildar for the decision of the ques tion and the Tahsildar shall after enquiring into the claim or claims in the manner prescribed, declare what person is entitled to be deemed to be protected tenant or as the case may be, that no person is so entitled. Sub section (2) of Section 35 stipulates that a declaration by the Tahsildar that the person is deemed to be a protected tenant or, in the event of an appeal from the Tahsildar 's decision such declaration by the Collector on first appeal or by the Board of Revenue on second appeal, shall be conclusive that such person is a protected tenant and his rights as such shall be recorded in the Record of Right of where there is no Record of Rights in such village record as may be prescribed. Section 36 of the said Act deals with the recovery of pos session by protected tenant. Section 37 deals with persons not entitled 1234 under section 34 to be deemed in certain circumstances as protected tenants. Section 38 of the said Act deals with right of protected tenant to purchase land. Section 39 deals with right of protected tenants to exchange lands. Section 40 of the said Act makes rights of protected tenant herita ble. Sub section (2) of section 40 of the said Act indicates who are the heirs who would be entitled to hold the tenancy on the death of the protected tenant and on what terms. Sub section (3) of section 40 of the said Act provides that if a protected tenant dies without leaving any heirs all his rights shall be so extinguished. The explanation to sub section (3) of section 40 of the said Act provides who should be 'deemed to be the heirs ' of a protected tenant. Subsection (4) of section 40 stipulates that the interest of a protected tenant in the land held by him as a protected tenant shall form sixty per cent. It is necessary also to note the provisions of section 99 of the Act. It is as follows: "99. Bar of Jurisdiction: (1) Save as provid ed in this Act no Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act re quired to be settled, decided or dealt with by the Tahsildar, Tribunal or Collector or by the Board of Revenue or Government. (2) No order of the Tahsildar, Tribunal or Collector or of the Board of Revenue or Government made under this Act, shall be questioned in any Civil or Criminal Court. ' Section 102 of the said Act stipulates that the Act shall not apply to certain lands and areas and provides inter alia as follows: "102. Nothing in this Act shall apply (a) to lands leased, granted, alien ated or acquired in favour of or by the Cen tral Government or the State Government, a local authority or a Cooperative Society. " It is relevant at this stage to refer to certain provi sions of the Central Act to consider the controversy in volved in this appeal. The Central Act was enacted giving power for requisitioning and acquisi 1235 tion of immovable property for Union purposes. Section 3 of the said Act gave power to requisition immovable property. Section 4 of the said Act empowers taking possession of requisitioned property. Section 5 deals with rights over requisitioned property. Section 6 deals with the power of release from the requisitioning. Section 7 authorises the Central Government where it is of the opinion that it is necessary to do so to acquire requisitioned property. Sec tion 8 deals with 'principles and method of determining compensation either for requisitioning or acquisition of the property and, inter alia, provides for appointment of an arbitrator in certain contingencies in case there was no agreement for determining compensation. Section 9 deals with the payment of compensation and provides that the amount of compensation payable under an award shall, subject to any rules made under that Act, be paid by a competent authority to the person or persons entitled thereto in such manner and within such time as may be specified in the award. Suspect ing that the entry in the Protected Tenancy Register might not be genuine, on or about 24th of October, 1970 the Tah sildar passed an order cancelling that entry. The main question centres around the right of Abdul Khader, respond ent No. 1 herein to the compensation awarded by the arbitra tor, it is therefore, necessary to refer to the relevant portion of the said order which inter alia, stated as fol lows: "By perusal of the Tenancy Register of 1958 it is evident that Sri Mohd. Abdul Khader is not a genuine protected tenant. The entries of this particular so called tenant is doubtful. I suspect that somebody has tampered the register and entered the name of Sri Mohd. Abdul Khader. Separate enquiry in this connec tion is going on in this office to know under what circumstances such entry has been made and copy also issued without knowledge of the Tahsildar. Hence I suspect the entry and order to cancel the copy of the tenancy issued in favour of Sri Modh. Abdul Khader. Sd Tahsildar. Hyderabad West Taluk. " This order of cancellation was challenged by Abdul Khadar by filing a writ petition in the High Court of Andhra Pradesh being W .P. No. 1786 of 197 1 and by judgment and order passed on 27th August, 197 1, the learned single Judge, Vaidya, J. held, inter alia, as follows: 1236 "Whether the petitioner (Abdul Khader) is a protected tenant or whether he has any prima facie interest in the suit property are mat ters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the 'Central Act '. " In the appeal of Abdul Khader the proceedings of Revenue Divisional Officer while questioning entry of the name of Abdul Khader in the Register is a genuine one or net and while it is stated that it was entered in the Register in such suspicious way by giving Serial No. 1/A between Serial Nos. 1 and 2 of Register being Exhibit A. 106 and Exhibit A. 107, it ultimately held that Abdul Khader was a protected tenant under section 37A of the Andhra Pradesh Act. On or about 19th of April, 1972 the order was passed by the Dis trict Revenue Officer who held that Abdul Khader was not a protected tenant. He held further that Khasra Pahani which is the basic record of occupancy period after spot inspec tions does not find the name of Abdul Khader and further held that all entries except this entry in the Protected Tenancy Register prepared under section 37A of the Andhra Pradesh Act was supported by an enquiry. It was in those circumstances held by him that the entry was a spurious one. In Civil Revision Petition No. 1006 of 1972 which was filed by Abdul Khader as against others, Justice R. Ramachandra Raju of the Andhra Pradesh High Court on or about 19th August, 1974 held that Abdul Khader was not a protected tenant and directed deletion of entry made in the Final Record of tenancies as a spurious one. The learned Judge observed, inter alia, as follows: "I am told by the counsel for both the parties that the lands in question were already ac quired for military purpose under the Requisi tion and Acquisition of Immovable property Act, 1952 and that Sri M.S. Sharma, the Addi tional Chief Judge, City Civil Court, Hydera bad has already been appointed as Arbitrator under the Act for determining the compensation and the persons entitled to it. Not only that, in the writ petition filed by the present petitioner in this Court, it was held that it is not necessary to go into the question whether the petitioner is a protected tenant or whether he has any prima facie interest in the property because they are the matters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the Act. Now, as the arbitrator has already been appointed, he will go into the matter as to whether the 1237 petitioner was a protected tenant of the lands or not and if he was the protected tenant to what share in the compensation amount he would be entitled to. Under these circumstances, the C.R.P. is dismissed with a direction that the entry made in the Final Record of Tenancies that the petitioner was the protect ed tenant, for the lands in question which is spurious as found by both the Revenue Divi sional Officer and the District Revenue Offi cer should be deleted. " The matter was brought to this Court by a special leave application and this Court in Special Leave Petition (Civil) No. 10 of 1975 on or about 30th January. 1975 held that since the question whether the petitioner in that case namely, Abdul Khader was a protected tenant had been left open by the High Court to be decided by the Arbitrator under section 8 of the Central Act, special leave petition was rejected with those observations. Thereafter there was an order appointing arbitrator on 29th of March, 1975 under section 8(1)(b) of the Central Act. Claim petition was filed by the appellant before the arbitrator ' Claim petition was also filed by Abdul Khader claiming 60 '% of compensation as a 'protected tenant '. There was an award by the arbitrator holding that as this Court had left it open to decide whether Abdul Khader was a protected tenant. Despite the objection exercising the jurisdiction of the Arbitrator to go into the question of protected tenant, the arbitrator held that Abdul Khader was a protected tenant. Aggrieved by the aforesaid award, the appellant claiming as one of the owners of the property filed a statutory appeal to the High Court. In the meantime Abdul Khader filed an application on or about 21st of Octo ber, 1984 for adducing additional evidence to mark Kaulnama dated 2nd of December, 1950 for the first time and Oubu liatnama dated 2nd December, 1950 as exhibits in deciding the protected tenancy rights. The appellant objected to that application but the High Court on 1st April, 1985 appointed Advocate Commissioner to record additional evidence. On or about 22nd of April, 1985 the appellant filed the objection reserving the right of raising the jurisdiction of the Arbitrator to go into the question whether Abdul Khader was a protected tenant in the light of the Act 21 of 1950. Three civil appeals were filed before this Court against the order of the High Court on 15th May, 1985. This Court passed the order, on 19th August, 1985. The said order is important and reads as follows: 1238 "Special leave are granted. The appeal is heard. Dr. Chitale learned counsel for the appellants submitted that the High Court should be directed to consider the issues relating to the jurisdic tion of the arbitrator appointed and function ing under the , 195 i to decide whether a person is protected tenant of an agricultural land or not in the light of Sections 99 and 102 of the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Land Act, 1950. We have heard the learned counsel for the respondents on the above question. After giving our due consideration to the question we are of the view that the High Court should determine this question. The High Court shall decide the question of juris diction referred to above in light of the submissions to be made by both the parties. Shri Subba Rao, learned counsel for the respondents submits that the appellants should not be permitted to withdraw from the authorities concerned more than 40 per cent of the total compensation awarded in respect of the lands in question pending disposal of the appeal before the High Court. We agree with his submission. We direct that the appellants shall withdraw not more than 40 per cent of the compensation pending disposal of the appeal before the High Court. The remaining 60 per cent shall be disbursed in accordance with the directions to be given by the High Court after hearing all the parties concerned. " The appeals were disposed of accordingly. Other C.M.Ps. were filed for clarification of the second part of the order dated 19th August, 1985 and this Court on 29th November, 1985 in CMPs. Nos. 4692 to 4694 of 1985 clarified and ob served that there was no need for further clarification. It was observed that the High Court was at liberty to consider the claims to be made by both the parties and pass any fresh order with regard to the disbursement of the remaining 60% of the compensation. The judgment under appeal was passed on 15th of April, 1986. This appeal arises out of the said judgment. In the judgment under appeal which is directed against the award made by the arbitrator formulated the following four issues (1) what is the value of the land; (2) who are entitled to the compensation amount; (3) whether Abdul Khader is a protected tenant of Sail Gulshan of the area 19 02 guntas excluding the 1239 land of buildings, wells, etc. and (4) what share is to be apportioned to successors of Sail Nawaz Jung. It has to be borne in mind that in the award, the arbitrator after ex haustively discussing the evidence on record held that Abdul Khader was a protected tenant and as such further held that he was entitled to 60% of the compensation money payable for the acquisition of the land excluding the land of buildings, wells etc. In this appeal we are concerned with the question wheth er the High Court was right in upholding the award of the arbitrator so far as it has held in favour of Abdul Khader and his rights to get 60% of the compensation. The High Court dealt with the value of the land. We are not concerned with the challenge to this aspect in this appeal. The High Court further modified a portion of the order in view of the decision of this Court in Bhag Singh vs Union Territory of Chandigarh, ; on the question of solati um and interest on the amount awarded. The judgment also dealt with the question as to who were the successors of Nawaz Jung. We are also not concerned with this aspect of the matter inasmuch as the same is the subject matter of another appeal being Civil Appeal No. 4406 of 1986. We are concerned in this appeal with the right of Abdul Khader. The High Court discussed 18 documents out of which two are challans and other depositions. Kowlnama executed in favour of Shaik Hussain was not filed. The Kowlnama executed in favour of the son, Mohd. Abdul Khader, on December 3, 1950 was filed and was marked as Exhibit C 1. The document recited: "permitted to utilise garden fruits, flowers and mango fruits". The tenant was permitted to raise flower trees at his own expenses. The High Court took into consid eration the judgment in Suit No. 13(1) of 195 1 52 by the tenant. The High Court on consideration of these documents was of the view that these documents showed unequivocally that the tenancy was in favour of Shaik Hussain from 1935. After his death Mohd. Abdul Khader was recognised as the tenant. The land was taken possession of under a panchanama dated 12th of September, 1963. According to the High Court the documents discussed in the judgment indicated that Shaik Hussain was a tenant from 1935. After his death on July 18, 1949, his son Mohd. Abdul Khader became a tenant. In this background the Court addressed itself to the question wheth er Abdul Khader was a protected tenant or not entitled to 60% of the compensation. No document was filed to show that Abdul Khader was declared by the revenue courts as a pro tected tenant. 1240 The High Court was of the view that there was surfeit of evidence prior to the commencement of the Andhra Pradesh Act that Shaik Hussain was a tenant of the land. The question was whether on enforcement of the said Act Abdul Khader, respondent herein, was a protected tenant. The High Court thereafter discussed the facts mentioned hereinbefore about the order of the District Revenue Officer and the orders of this Court referred to hereinbefore. The High Court noticed the position that under the said Andhra Pradesh Act it was for the revenue authorities to order whether a tenant is a protected tenant under section 34, section 37 'and section 37A of the said Act. Section 37A was enacted on 12th of March, 1956. The High Court was, however, of the view that it cannot be said that it was for the revenue authorities alone to decide the issue because the arbitrator was ordered to decide the issue by the High Court on 19th August, 1974 and by this Court on 30th of January, 1975. The High Court also referred to the directions of this Court dated 19th August, 1985 mentioned hereinbefore. The High Court was of the view that the arbitrator was to decide that question and the arbitrator was not in error in deciding the issue in the manner it did. The Court reiterated that there was surfeit of evidence to declare that Abdul Khader was a tenant. If he was a tenant, the High Court observed. he was a protected tenant under section 34 read with section 37 or under sec tion 37 A of the Andhra Pradesh Act. The High Court on reciting the facts came to the conclusions, inter alia: (a) that Abdul Khader because he was a tenant between January, 1942 to January, 1948 for six years, therefore, was a pro tected tenant under sub clause (ii) of clause (1) of section 34 of the Andhra Pradesh Act; (b) that Abdul Khader held the land from October, 1943 to October, 1949, therefore, was a protected tenant of Sail Gulshan under sub clause (iii) of clause (1) of section 34 of Act 21 of 1950. In these circum stances, the High Court held that Adbul Khader was entitled to 60% of the compensation paid. Aggrieved by the aforesaid decision, the appellants being the successor of the owner of the land in question is in appeal before us. Shri Shanker Ghosh, learned counsel for the appellant, urged that under the said Andhra Pradesh Act it was mandatory under section 99 read with section 102 of the said Act in conjunction with the definition of section 2(r) of the Act for the revenue authorities to decide wheth er Abdul Khader was a protected tenant or not. There being no such finding by the revenue officer, on the other hand there being a finding mat Abdul Khader was not a protected tenant by the revenue authorities it was not open to the arbitrator to decide the question of 1241 protected tenancy. The arbitrator therefore, exceeded his jurisdiction and the High Court was in error. Shri A.K. Sen, on behalf of the respondents on the other hand contended that the compensation payable in respect of the requisitioning and acquisition must be determined under the Central Act and the arbitrator was the authority to decide that question. The question of Abdul Khader 's right to compensation had to be decided in accordance with law. He had claimed rights of a protected tenant. He had sought to establish his rights which must be found within the fourcor ners of the Andhra Pradesh Act along with other documents because under section 40(4) of the Andhra Pradesh Act the interest of a protected tenant in the land held by him as a protected tenant formed 60%. The rights of the protected tenants have been defined in the Andhra Pradesh Act and relevant provisions of that Act namely, sections 34, 37, 37A and 40 in conjunction with the definition under section 2(r) have to be taken into consideration in the background of the facts and circumstances of the case. The two orders of this Court as we have mentioned hereinbefore dated 30th of Janu ary, 1975 and 19th of August. 1985 reiterated the position that it was for the arbitrator to decide the question and he should decide the question in the light of sections 99 and 102 of the Andhra Pradesh Act as set out hereinbefore. On behalf of the appellant it was submitted that there was a complete bar for any civil court to go into the question whether Abdul Khader was a protected tenant and as such the arbitrator and the High Court had no jurisdiction to decide this question. For this reliance was placed on Section 102 of the Andhra Pradesh Act which lays down that the Act will not apply to lands leased, granted, alienated or acquired in favour of or by the Central Government or the State Govern ment etc. and on Section 99 of the Act which bars the jurisdiction of civil courts to deal with any question which is under the Andhra Pradesh Act required to be settled, to be decided or dealt with by the Tahsildar, Tribunal or Collector. According to the appellant inasmuch as whether Abdul Khader was a protected tenant had not to be settled by the Collector or the Tribunal, the arbitrator and the High Court were in error in going to that question. We are unable to accept this submission. By the scheme of the Central Act compensation was payable to persons who had interest in the land acquired. Who are the persons who have interest in the land had to be decided in accordance with the law and the evidence. Determination by the revenue authorities and non determination is not conclusive or decisive. It is clear that section 102 of the Andhra 1242 Pradesh Act mentions that after acquisition the Act was not to apply in respect of certain land. Therefore, it was submitted by the respondents that section 99 of the Andhra Pradesh Act. which made the determination by the Tahsildar to be final and debarred other courts from going into the question did not apply in case of compensation payable. In the background of the totality of circumstances as manifest in the different orders it appeared to the arbitrator and the Court that the entry which was made in favour of Abdul Khader as the protected tenant was of doubtful validity. We are of the opinion that the High Court was not in error in so holding. It was the observation of the revenue authori ties that it was spurious. That in any event what was the interest of Abdul Khader had to be determined in determining the question of payment of compensation to him and in so determining the facts and circumstances and the proceedings before the revenue authorities and entries and subsequent deletions had to be taken into consideration by the arbitra tor. The arbitrator has done so. He had jurisdiction to do so. The High Court has so held. This Court by the two orders referred to hereinbefore had also affirmed this position. In that view of the matter we are unable to accept the challenge to the award. Furthermore, under section 99 of the Andhra Pradesh Act the bar was not against the arbitrator but against a civil court. In determining the amount of compensation payable to Abdul Khader under the Central Act, his interests in the property had to be determined. In another context, the High Court of Andhra Pradesh enunciated the position that it was necessary to determine the interest of the persons claiming compensation. Reference may be made to the decision in the case of Archi Appalareddi and another vs Special Tahsildar, land Acquisition, Visakhapatnam Municipality and mother, [1979] Andhra Weekly Reporter, Vol. 1 p. 101, where the Court observed in the context of the Land Acquisition Act that a tenant was a 'person inter ested ' as defined in clause (b) of section 3 of the Land Acquisition Act. He has a right to object to the acquisition and/or the quantum of compensation. The Land Acquisition Officer or the Court, as the case may be, had to ascertain the value of a claimant 's right in the property acquired and compensate him in that behalf. We may mention that in the two orders of this Court dated 30th of January, 1975 and 19th of August, 1985 referred to here inbefore, this Court had left it open to the High Court and to the arbitrator to decide whether he is a protected tenant or not. the arbitrator has decided that question and the High Court found 1243 over wheiming evidence in support of it. In that view of the matter we must uphold that decision however unsatisfactory it might appear that a fruit plucker gets 60% of the compen sation while the owners get only If that is the law let it be. In the aforesaid view of the matter this appeal must fail and is accordingly dismissed with costs. P.S.S. Appeal dismissed.

% The appellants were contractors for the supply of ballast to PWD. They were detained under section 3(2) of the . It was stated in the grounds of detention that on account of business rivalry, appellants and their companions attacked the complainant with fire arms and hand grenades with intent to kill him, FIR was lodged by the complainant, a case was registered against them under section 147, 149, 307 I.P.C. and section 6 of the Explosives Act, and a chargesheet put up against the appellants, and since they had applied for bail, and if released there was a possibility that they will again start activities causing breach of public order, it was necessary to detain them in order to prevent them from so acting. The detention orders were approved by the State Government under section 3(4) of the Act, and the representations made by the appellants having been rejected they were directed to be detained for a period of 12 months. Challenging their detention, the appellants filed writ petitions before the High Court contending that the alleged assault on the complainant affected only an individual and such a solitary act could not be considered to be an act prejudicial to the maintenance of public order. The High Court, dismissing the writ petitions, held that the assault was to teach a lesson to the complainant and serve as warning to prospective tenderers who may not dare to submit their tenders and that the impact and reach of the act went beyond the individual and affected the community of contractors who take contracts for executing the public works. Allowing the appeals to this Court, 774 ^ HELD: Disturbance of public order is to be distinguished from acts directed against individuals which do not disturb the society to the extent of causing a general disturbance of public tranquility. An act by itself is not determinant of its own gravity In its quality it may not differ from another but in its potentiality it may be different. [778C D] A solitary act of omission or commission can be taken into consideration for being subjectively satisfied, by the detaining authority to pass an Order of detention if the reach, effect and potentiality of the act is such that it disturbs public tranquility by creating terror and panic in the society or a considerable number of the people in a specified locality where the act is alleged to have been committed. It is the degree and extent of the reach of the act upon the society which is vital for considering the question whether a man has committed only a breach of law and order or has acted in a manner likely to cause disturbance to public order. [779A C] In the instant case, the alleged act of assault by fire arms is confined to the complainant and not to others. It is an act infringing law and order and the reach and effect of the act is not so extensive as to affect considerable members of the society. In other words, this act does not disturb public tranquility, nor does it create any terror or panic in the minds of the people of the locality nor does it affect in any manner the even tempo of the life of the community. This criminal act emanates from business rivalry between the detenus and the complainant. Therefore, such an act cannot be the basis for subjective satisfaction of the detaining authority to pass an order of detention on the ground that the impugned act purports to affect public order i.e. the even tempo of the life of the community, which is the sole basis for clamping the order of detention. Moreover, no injury was caused to the person of the complainant, by the appellants nor any damage was caused to the car though hand grenade was alleged to have been thrown on the car. No mark has been caused to the car also. [778E H] Gulab Mehra vs State of U. P. & Ors., 3 SC 559, applied.

ivil Appeal Nos. 1399 to 1403 of 1970. 479 Appeal from the Judgment and order dated 20th December 1 968 A the Madras High Court in Tax Case No. 314/64 (Reference No. 82 of 1964) and Civil Appeal No. 301 of 1974 Appeal from the Judgment and order dated 3rd April 1972 of the Madras High Court in Tax Case No. 328 of 1966 (Reference No. 88/66). section T. Desai, J. Ramamurthi; for the appellant (In CA 1399 1403 of 1970). section Swaminathan, Mrs. section Gopalakrishnan for the Respondent in all the appeals. The Judgment of the Court was delivered by JASWANT SINGH, J. These Appeals Nos. 1399 to 1403 of 1970 and 301 of 1974 by certificates granted by the High Court of Madras shall be disposed of together by this judgment as they raise common question of law and fact. The circumstances giving rise to these appeals are: The late R. Sridharan along with his father and brothers constituted a Hindu undivided family governed by Mitakshara law. On June 28, 1952, while he was still unmarried, a partition took place between him, his brothers and his father. As a result of this partition, a block of shares in T. V. Sundaram Iyengar and Sons Private Limited and three other limited companies fell to his share. On June 14, 1956, Sridharan married Rosa Maria Steinbchler, a Christian woman of Austrian descent, under the . On November 29, 1957, a son named Nicolas Sundaram was born out of this wedlock. For the assessment years 1957 58, and 1958 59, Sridharan was assessed to income tax and wealth tax in the status of an 'individual ' on his own declaration to that effect. In the assessment proceedings in respect of income tax and wealth tax for the assessment years 1959 60, 1960 61 and 1961 62 and in the assessment proceedings under the Expenditure Tax Act for the year 1961 62, he claimed to be assessed in the status of a member of Hindu undivided family consisting of himself and his son, Nicolas Sundaram, contending that the property held by him was ancestral and Nicolas Sundaram was a Hindu. The Income Tax officer, Wealth Tax officer and Expenditure Tax officer refused to accede to the contention of Sridharan and assessed him in the status of an `individual ' as in the previous years on the grounds that the value of the share and other investments standing in his name being his exclusive properties and by virtue of section 21 of the , succession to the property of a person whose marriage has been solemnized under that Act being governed by the , and not by the ordinary Hindu law, Nicolas Sundaram could not become a member of Hindu undivided family with his father. Sridharan thereupon went up in appeal to the Appellate Assistant Commissioner but remained unsuccessful. The orders passed by the Income 480 Tax /Wealth Tax/Expenditure Tax officers and the Appellate Assistant Commissioner were also affirmed in appeals against the assessments respectively made under the Income tax Act`, Wealth Tax Act and the Expenditure Tax Act by the Appellate Tribunal. In the course of its consolidated order rejecting the appeals, the appellate Tribunal observed that although section 21 of the pre served some of the rights in the family property of the children born out of marriage solemnized under that Act, it did not clothe such off spring with the character of Hindus and therefore, there was no Hindu undivided family of Sridharan and his son which could claim to be taxed as Hindu undivided family. Thereafter on the applications made by Sridharan under section 27 ( 1 ) of the Wealth Tax Act, section 66 ( 1 ) of the Income tax Act and section 25(l) of the Expenditure Tax Act, the Income tax Appellate Tribunal referred the following common question of law arising from its aforesaid decision for the opinion of the High Court: "Whether, on the facts and in the circumstances of the case, the assessee and his son constituted a Hindu undivided family for purposes of assessment under the Income tax, Wealth tax and Expenditure tax Acts ?" The High Court following the decision of this Court in Gowli Buddanna vs Commissioner of Income tax(l) held that Sridharan 's claim to be reckoned as Hindu undivided family was well merited and the Tribunal was in error in holding that there was no Hindu undivided family of Sridharan and his son which could claim to be assessed and taxed as such either under the Income tax Act, or Wealth Tax Act or the Expenditure Tax Act. The High Court accordingly answered the question in the affirmative but granted certificate of fitness for appeal to this Court. Sridharan died on April 9, 1962. A few days after the valuation date relevant for the assessment year 1963 64, his widow Mrs. Rosa Maria Steinbchler filed a wealth tax return claiming that the assessment for the assessment year 1962 63 should be made in the status of Hindu undivided family. The Wealth Tax officer following his earlier decision in the assessment proceedings in respect of the previous years rejected the claim of Rosa Maria Steinbchler holding that she was not a Hindu and in any case since her marriage with Sridharan was under the , Nicolas Sundaram had no right by birth in the properties obtained by the assessee on partition. He further held that Nicolas Sundaram could claim Sridharan 's property only under the and not under the Hindu law. on appeal, the Appellate Assistant Commissioner affirmed the order of the Wealth Tax officer. A further appeal was 481 "Whether the assessee, Sridharan and his son constituted A in law a Hindu undivided family for the purpose of assessment under the ?" The High Court answered the question in the affirmative i.e. against the Revenue observing that the decision in the previous reference directly governed the facts of the fresh reference. Aggrieved by this order of the High Court, the appellant applied and obtained leave to appeal to this Court under section 29(1) of the q and Article 133(1)(c) of the Constitution of India. This is how the appeals are before us. Counsel appearing for the appellants and respondents have repeated before us the contentions respectively advanced on behalf of the parties before the High Court. It cannot be disputed that a joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. It cannot also be disputed that property obtained by Sridharan on partition between his father and brothers could become ancestral property so far as his sons, grandsons and great grandsons were concerned who could according to Mitakshara law acquire an interest therein by birth. The sole question which, however, falls for our consideration in these appeals is whether Nicolas Sundaram is a Hindu governed by Hindu law. It is a matter of common knowledge that Hinduism embraces within itself so many diverse forms of beliefs, faiths, practices and worship that it is difficult to define the term 'Hindu ' with precision. The historical and etymological genesis of the word "Hindu" has been succinctly explained by Gajendragadkar, C.J. in Shastri Yagnapurushdasji & ors. vs Muldas Bhundardas Vaishya & Anr.(l). In Unabridged Edition of Webster 's Third New International Dictionary of the English language, the term 'Hinduism ' has been defined as meaning "a complex body of social, cultural, and religious beliefs and practices evolved in and largely confined to the Indian subcontinent and marked by a caste system, an outlook tending to view all forms and theories as aspects of one eternal being and truth, a belief in ahimsa, karma, dharma, sansara, and moksha, and the practice of the way of works, the way of knowledge, or the way of devotion as the means of release from the bound of rebirths; the way of life and form r of thought of a Hindu". In Encyclopaedia Britannica (15th Edition), the term 'Hinduism ' has been defined as meaning "the civilization of Hindus (originally, the inhabitants of the land of the Indus River). It properly denotes the Indian civilization of approximately the last 2,000 years, which (1) ; 33 833 SCI/76 482 gradually evolved from Vedism, the religion of the ancient Indo European peoples who settled in India in the last centuries of the 2nd millennium BC. Because it integrates a large variety of heterogeneous elements, Hinduism constitutes a very complex but largely continuous whole, and since it covers the whole of life, it has religious, social, economic, literary, and artistic aspects. As a religion, Hinduism is an utterly diverse conglomerate of doctrines, cults, and way of life . In principle, Hinduism incorporates all forms of belief and worship without necessitating the selection or elimination of any. The Hindu is inclined to revere the divine in every manifestation, whatever it may be, and is doctrinally tolerant, leaving others including both Hindus and non Hindus whatever creed and worship practices suit them best. A Hindu may embrace a non Hindu religion without ceasing to be a Hindu, and since the Hindu is disposed to think synthetically and to regard other forms of worship, strange gods, and divergent doctrines as inadequate rather than wrong or objectionable, he tends to believe that the highest divine powers complement each other for the well being of the world and mankind. Few religious ideas are considered to be finally irreconcilable. The core of religion does not even depend on the existence or non existence of God or on whether there is one god or many. Since religious truth is said to transcend all verbal definition it is not conceived in dogmatic terms. Hinduism is, then both a civilization and a conglomerate of religions, with neither a beginning, a founder, nor a central authority, hierarchy, or organization. Every attempt at a specific definition of Hinduism has proved unsatisfactory in one way or another, the more so because the finest Indian scholars of Hinduism, including Hindus themselves, have emphasized different aspects of the whole". In his celebrated treatise "Gitarahasaya", B.G. Tilak has given the following broad description of the Hindu religion: : "Acceptance of the Vedas with reverence; recognition of the fact that the means or ways of salvation are diverse; and realisation of the truth that the number of gods to be worshipped is large, that indeed is the distinguishing feature of Hindu religion". In Bhagwan Koer vs J. C. Bose & ors.(l) it was held that Hindu religion is marvellously catholic and elastic. Its theology is marked by eclecticism and tolerance and almost unlimited freedom of private worship. Its social code is much more stringent, but amongst its different castes and sections, exhibits wide diversity of practice. No trait is more marked of Hindu society in general than its herror of using the meat of the cow. This being the scope and nature of the religion, it is not strange that it holds within its fold men of divergent views and traditions who have very little in common except a vague faith in what may be called the fundamentals of the Hindu religion. (1) Cal. 483 It will be advantageous at this stage to refer to page 671 of Mulla 's A Principles of Hindu Law (Fourteenth Edition), where the position is stated thus: : "The word 'Hindu ' does not denote any particular religion or community. During the last hundred years and more it has been a nomenclature used to refer comprehensively to various categories of people for purposes of personal law. It has been applied to dissenters and non comformists and even to those who have entirely repudiated Brahminism. It has been applied to various religious sects and bodies which at various periods and in circumstances developed out of or split off from, the Hindu system but whose members have nevertheless continued to live under the Hindu law and the Courts have generally put a liberal construction upon enactments relating to the personal laws applicable to Hindus". In paragraph 6 of Chapter I of Mulla 's aforesaid Treatise, the following have been enumerated as persons to whom Hindu law applies: "(i) not only to Hindu by birth, but also to Hindus by religion, i.e. converts to Hinduism; (ii) to illegitimate children where both parents are Hindus; (iii)to illegitimate children where the father is a Christian and the mother is a Hindu, and the children are brought up as Hindus. But the Hindu law of coparcenary, which contemplates the father as the head of the family and the. sons as coparceners by birth with rights of survivorship, cannot from the very nature of the case apply to such children; (iv) to Jains, Buddhists in India, Sikhs and Nambudri Brahmins except so far as such law is varied by custom and to Lingayat who are considered Sudras; (v) to a Hindu by birth who, having renounced Hinduism, has reverted to it after performing the religious rites of expiation and repentence. Or even without a formal ritual of reconversion when he was recognised as a Hindu by his community; (vi) to sons of Hindu dancing girls of the Naik caste converted to Mahomedanism, where the sons are taken into the family of the Hindu grandparents and are brought up as Hindus; (vii) to Brahmos; to Arya Samajists; and to Santhals of Chota Nagpur and also to Santhals of Manbhum except so far as it is not varied by custom; and 484 (viii) to Hindus who made a declaration that they were not Hindus for the purpose of the Special Marriage Act, 1872. " This enumeration is based upon decisions of various courts relating to old uncodified Hindu law. In Lingappa vs Esudasen(l) which related to maintenance, it was held that Hindu law does not apply to the illegitimate children of a Hindu father by a Christian mother who are brought up a Christians. This decision indirectly leads to the conclusion that legitimate children of a Hindu father by a Christian mother who are brought up as Hindus would be governed by Hindu law. In Mothey Anja Ratna Raja Kumar vs Koney Narayana Rao & ors.(2) whole approving the observations made in Ananthaya vs Vishnu(3) this Court inter alia held that under the Mitakshara law, an illegitimate son is entitled to maintenance as long as he lives, in recognition of his status as a member of his father 's family. Under the codifying Acts namely the , the , the Hindu Minority and Guardian ship Act, 1956 and the Hindu Adoption and Maintenance Act, 1956, the orthodox concept of the term 'Hindu ' has undergone a radical change and it has been given an extended meaning. The aforesaid codifying Acts not only apply to Hindus by birth or religion i.e. to converts to Hinduism but also to a large number of other persons. According to explanation (b) to section 2(1) of the , Hindu Adoption and Maintenance Act, 1956 and as also according to explanation (ii) to section 3(1) of the Hindu Minority and Guardianship Act, 1956, any child legitimate or illegitimate, one of whose parents is a Hindu by religion and who is brought up as a Hindu is a Hindu. In the present case, Sridharan is a Hindu by birth and was lawfully married to Rosa Maria Steinbchler. Even after his marriage, he did not renounce Hinduism but continued to profess that religion. Having been begotten out of the aforesaid valid and lawful wedlock, Nicolas Sundaram is a legitimate child and lineal descendant of Sridharan. There is no material on the record to show that Nicolas Sundaram was not brought up as a Hindu or that he did not conform to the habits and usages of Hinduism or that he was not recognised as a Hindu by the society surrounding him or that he became a convert to another faith. Sridharan has also unequivocally acknowledged and expressly declared that he and his son, Nicolas Sundaram formed a Hindu undivided family. This declaration in the circumstances is sufficient, as also found by the High Court? to establish that Nicolas Sundaram was brought up as a Hindu member of the family to which his father belonged. At page 290 of his Treatise on Hindu Law, and Usage (Eleventh Edition), Mayne says that a child in India, under ordinary circumstances, must be presumed to have his father 's (1) (2) A.I.R. 1953 S.C. 433. (3) 17 Mad. 485 religion, and his corresponding civil and social status. He, there A fore, have no hesitation in holding that Nicolas Sundaram is a Hindu and he could validly be a member of the Hindu undivided family headed by his father and be governed by Hindu law. Section 21 of the Special Marriage Act which has been heavily relied upon by the Revenue has, in our opinion, no bearing on the present case. That section provides that succession to the property of a person whose marriage has been solemnized under the and the property of the issue of such marriage shall be governed by the provisions of the (XXXIX of 1925). In other words, the section guarantees inter alia to the issue of the person whose marriage has been solemnized under the a collateral statutory right of succession to the estate of the latter in case he dies intestate. It does not in any way impair or alter the joint family structure between an assessee and his son. Nor does it effect, as observed by the High Court, the discretion vested in a Hindu assessee to treat his properties as joint family properties by taking into his fold his Hindu sons so as to constitute joint family properties. For the foregoing reasons, we are of the opinion that the aforesaid question referred to the High Court was rightly answered by it on both the occasions. In the result, we find no merit in these appeals which are dismissed with costs. M.R. Appeals dismissed.

Schedule II, Article 11 of the Court Fees prescribes a sum of Rs. 2/ as court fees in the case of a memorandum of appeal presented to a High Court when the appeal is not from a decree or order having the force of a decree. The Tribunal appointed under the dismissed the petition filed by the appellant claiming certain sums from the respondents. In appeal to the High Court from the decision of the Tribunal did not amount to a decree within the meaning of section 2(2) of the Code of Civil Procedure. The taxing Judge, to whom question of payment of court fees was referred, came to the conclusion that the appellant should pay ad valorem court fees under Schedule I, Article 1 of the Court Fees Act. On the question whether the decision of the Tribunal was a decree within the meaning of section 2(2) C.P.C. Allowing the appeal to this Court, ^ HELD: The memorandum of appeal in the instant case falls within the ambit of Schedule II, Article 11 of the Court Fees Act and the view of the taxing Judge that ad valorem court fees were payable under Schedule I Article 1 was legally erroneous. [683C] (1) (a) In the definition of "decree" contained in section 2(2) of the Code of Civil Procedure, three essential conditions are necessary: (i) that the adjudication must be given in suit; (ii) that the suit must start with a plaint and culminate in a decree; and (iii) that the adjudication must be formal and final and must be given by a civil or revenue court. [677E F] Under the 1951 Act, special Tribunal was created to enquire into the claims of displaced debtors or creditors. It cannot be called a court in any sense of the term because the legislature had made a clear distinction between a Tribunal and a courts. Secondly, since proceedings before a Tribunal statute with an application and not with a plaint the other important ingredient of a decree is wholly wanting. Thirdly the claim before the Tribunal had been described as a preceding rather than a suit. Therefore, none of the requirements of a decree is to be found in the decision given by the Tribunal even though the legislature may have described the decision given by the Tribunal even though the legislature may have described the decision as a decree. A mere description of the decision of the Tribunal as a decree does not make it a decree within the meaning of the Court Fees Act. [677G H] (b) The term "decree" used in Schedule II, Article 11, is referable to a decree as defined in section 2(2) of the Code of Civil Procedure. As the decision of the Tribunal in the instant case does not fulfil the requirements of a decree, 665 it is not a decree within the meaning of Schedule II, Article 11 of the Court Fees Act. [678D] Mannan Lal vs Mst. Chhotaka Bibi ; Ram Prasad vs Tirloki Nath, ; Dawood Karim Ashrafi vs City Improvement Board. ; Antala Gope vs Sarbo Gopain, AIR [1962] Pat. 489; Mrs. Panzy Fernadas vs Mrs. M. F. Cusoros & others AIR [1963] All. 153; Dundoppa vs S G. Motor Transport Company. AIR [1966] Mys,. 150; Irshad Husain vs Bakshish Hussain ; Harrish Chandra Chatteree vg. Bhaoba Tarini Debi, 8 C.W.N. 321; Taxing Officer, High Court Appellate side vs Jamnadas Dharamdas ILR ; Barras vs Aberdeen Steam Trawling and Fishing Company ; 411; Parmanand Lokumal and others vs Khudabadi Bhaibund Co operative Credit Bank Ltd. and others, AIR [1958] Raj. 146; The Punjab National Bank Ltd. vs The American Insurance Company Ltd. ILR and section Sohan Singh vs Liverpool and London and Globe Insurance Co. Ltd. AIR , referred to. Parmanand Lokumal and others vs Khudabadi Bhaibund Co opertive Credit Bank Ltd. and others, AIR [1958] Cal. 675; Punjab National Bank Ltd. vs Firm Isardas Kaluram AIR ; Kishandas vs Parasram AIR and Sita Ram vs Mool Chand, ,. not approved. (c) Where a legislature uses an expression bearing a well known legal connotation it must be presumed to have used the said expression in the sense in which it has been so understood. Therefore, when the Court Fees Act uses the word "decree" which had a well known legal significance, the legislature must be presumed to have use this term in the sense in which it is which it is understood in the Civil Procedure Code.[678F; 679B] Barras vs Aberdeen Steam Trawling and Fishing Company ; , 411. referred to. There is no force in the contention of the respondent that under section 5 of the Court Fees Act the decision of the taxing Judge was final and could not be re opened in any court and as such no appeal under Article 136 was maintainable. Even though the order of the taxing Judge may be final under section 5, the power of this Court under Article 136 will over ride any stamp of finality given by a statute. The finality under section 5 cannot derogate from the power conferred by the Constitution on the Supreme Court. [683E] section Rm Ar. section Sp. Satheppa Chettiar vs section Rm. Ramanathan Chettiar , held inapplicable.

Civil Appeal No. 3011 of 1979. From the Judgment and Order dated the 7th September, 1979 of the Patna High Court in Election Petition No. 4 of 1977. Shanti Bhushan and M.P. Jha for the Appellant. S.K. Sinha for the Respondent. The Judgment of the Court was delivered by VARADARAJAN, J. This election appeal is directed against the judgment of the Patna High Court dismissing Election Petition No. 4 of 1977 with costs of Rs. 1000/ . The appellant Dharmesh Prasad Verma, who is stated to have contested the election as a Janata candidate, had pleaded four items of corrupt practice in his election petition filed against the respondent Faiyazal Azam who is stated to have contested the election as a Congress I candidate. The poll in this case was held on 12.6.1977 for the election of a member of the Bihar Legislative Assembly from No. 5 Sikta Constituency in West Champaran district. The appellant secured 1795 votes while the respondent secured 28324 votes and was declared elected on 15.6.1977. The election petition was filed on 18.7.1977. The Legislative Assembly was dissolved in 1980 and fresh election had been held in that year and the respondent is stated to have contested as a non Congress I candidate and to have been elected from the same constituency. The appellant is, however, interested in pursuing this election petition relating to the election of the year 1977 in order to prove corrupt practice on the part of the respondent. Mr. Shanti Bhushan, Senior Counsel, appearing for the appellant, restricted his arguments to the first charge alone and that too regarding the use of the jeep USJ 5226 which is alleged to have belonged to one Kabir Ahmed. That charge is that respondent committed the corrupt practice falling under section 123(5) of the Representation of the People Act, 1951 (hereinafter 14 referred to as the "Act") by procuring and using the jeep for the free conveyance of voters to the polling station on the date of poll. The respondent denied the charge in his written statement and contended that the appellant had not complied with the mandatory provisions of sections 81, 82 and 83 read with order VI, Rule 15 of the Code of Civil Procedure and section 117 of the Act and that the election petition is, therefore, liable to be dismissed. The learned Single Judge who tried the election petition, after observing that it is common knowledge that every politician realises the importance of vehicles during general elections, noticed this Court 's observations in Rahim Khan vs Khurseed Ahmed that proceedings arising out of election petitions are quasi criminal in nature and that the evidence relating to corrupt practices should be scrutinized with scrupulous care and merciless severity, and then proceeded to consider the evidence adduced by the parties. On the evidence the learned Judge found that the jeep bearing No. USJ 5226 while carrying five ladies was seized by the District Magistrate and the Superintendent of Police of the district from a road near a canal situate about 1.5 or 2 miles away from the Sarkiatola booth on the date of the poll and that the five ladies including Murati @ Deokalia (P.W. 19), Mehrunnissa (P.W. 11) and Rasulia (P.W. 42) were voters who were being carried free of cost for casting votes on behalf of the respondent. The learned Judge found that at the time of the seizure of the jeep it was driven by Kabir Ahmed 's nephew Tabrez Ahmed and that Kabir Ahmed was a great friend of the respondent and he and his father worked for the respondent in the election and were present in the booth on the date of the poll and that the respondent 's polling agent Manager Prasad stood surety for the release of the jeep. However, the learned Judge held that these facts are not sufficient by themselves to hold that the respondent himself procured the jeep from Kabir Ahmed. The learned Judge further found that since the jeep with the voters was caught not at the polling station but at some distance away from it, in any event, it was only a case of an attempt at corrupt practice and not corrupt practice itself as per section 123(5) of the Act. Thus the learned Judge rejected the appellant 's case in regard to this instance of corrupt practice as also the other instances and dismissed the election petition. 15 Section 123(5) of the Act read thus: "section 123. The following shall be deemed to be corrupt practice for the purpose of this Act: (1) . . . . (2) . . . . (3) . . . . (4) . . . . (5) The hiring or procuring, whether on payment or other wise, of any vehicle or vessel by a candidate or his agent or by any other person with the consent of a candidate or his election agent, or the use of such vehicle or vessel for the free conveyance of any elector other than the candidate himself, the members of his family or his agent, to or from any polling station provided under section 25 or a place fixed under sub section(1) of section 29 for the poll: Provided that the hiring of a vehicle or vessel by an elector or by several electors at their joint costs for the purpose of conveying him or them to and from any such polling station or place fixed for the poll shall not be deemed to be a corrupt practice under this clause if the vehicle or vessel so hired is a vehicle or vessel not propelled by mechanical power: Provided further that the use of any public transport vehicle or vessel or any tram car or railway carriage by any elector at his own cost for the purpose of going to or coming from any such polling station or place fixed for the poll shall not be deemed to be a corrupt practice under this clause. Explanation: In this clause, the expression 'vehicle ' means any vehicle used or capable of being used for the purpose of road transport whether propelled by mechanical power or otherwise and whether used for drawing other vehicles or otherwise." 16 In clauses (5) of section 123 the word "or" is used in several places and the word "and" is used in two places in the first proviso and the explanation. Prima facie, Parliament must be deemed to have used the word "or" and "and" for different purposes or objects. If the matter is res integra it could be said that the main clause (5) consists of two separate parts, namely (1) the hiring or procuring, whether on payment or otherwise, of any vehicle or vessel by a candidate or his agent or by any other person, with the consent of a candidate or his election agent for the free conveyance of any elector to or from any polling station, or (2) the use of any vehicle or vessel by any candidate or his agent or by any other person with the consent of a candidate or his election agent for the purpose of free conveyance of any elector to or from any polling station. It is true that in the latter part of clause (5) the word "such" issued before the words "vehicle or vessel for the free conveyance of any elector to or from any polling station". But the matter is no longer res integra. In Joshibhai Chunibhai Patel vs Anwar Beg Mirza Hidayattullah, C.J. speaking for himself and G.K. Mitter, J. has observed: "This brings us to the examination of section 123(5) with a view to finding out what are its requirements. We have already indicated that in our opinion the election petitioner must prove in addition to the other ingredients of the section that the vehicle was used for free conveyance of voters which ingredient we have stated was not attempted to be established in the case. . . This section defined one of the corrupt practices and it consists of hiring and procuring whether on payment or otherwise of any vehicle. This hiring and procuring must be by any other person with the consent of the candidate or his election agent and the hiring according to the section must be for the free conveyance of any elector other than the candidate himself or members of his family or his agent to and from any polling station. It will, therefore, appear that the section requires three things, (1) hiring or procuring of a vehicle; (2) by a candidate or his agent etc. and (3) for the free conveyance of an elector. It will be noticed that the section also speaks of the use but it speaks of the use of such vehicle which 17 connects the two parts, namely, hiring or procuring of vehicle and the use. The requirement of the law therefore is that in addition to proving the hiring or procuring and the carriage of electors to and from any polling station, it should also be proved that the electors used the vehicle free of cost to themselves. " In Razik Ram vs Jaswant Singh Chouhan, Sarkaria, J. speaking for himself and Alagiriswami, J. has observed: "On analysis, clause (5) of Section 123 falls into two parts. The requirements of the first part are; (i) The hiring or procuring, whether on payment or otherwise, of any vehicle or vessel for the free conveyance of voters (ii) Such hiring or procuring must be by a candidate or his election agent or by any other person with the consent of a candidate or of his election agent. The second part envisages the "use of such vehicle or vessel for the free conveyance of any elector (other than the candidate himself, the members of his family, or his election agent) to or from any polling station". The two parts are connected by the conjunction "or" which is capable of two constructions. In one sense, it is a particle coordinating the two parts of the clause and creating an alternative between them. In the other sense which is akin to the sense of "and" it can be construed as conjoining and combining the first part of the clause with the second. The latter construction appears to comport better with the aim and object of the amendment of 1966. In this connection, it is not worthy that even before the amendment, this Court in Balwan Singh vs Lakshmi Narain ; , held that in considering whether a corrupt practice described in Section 123(5) is committed conveying of electors cannot be dissociated from the hiring of a vehicle. Even if the word "or" is understood as a coordinating conjunction introducing alternatives then also a petitioner in order to succeed on the ground of a corrupt 18 practice under the second part of the clause, must prove, in addition to the use of the vehicle or vessel for the free conveyance of any elector to or from any polling station, the hiring or procuring of that vehicle or vessel. This is so because the word "such" in the phrase introduced by the 1966 amendment, expressly imports these elements of the first into the second part of the clause. In the view we take we are fortified by the dictum of this Court in Joshibhai Patel vs Anwar Beg Mirza ; , wherein Hidayatullah, C.J., speaking for the Court analysed the requirements of the clause, thus: It will be noticed that this section also speaks of the use of such vehicle which connects the two parts, namely, hiring or procuring of vehicle and its use. The requirement of the law therefore is that in addition to proving the hiring or procuring and the carriage of electors to and from any polling station, it should also be proved that the electors used the vehicle free of cost to themselves. " In Dadasahib Dattatraya Pawar vs Pandurang Raoji, Jagtap, Jaswant Singh, J. speaking for the Court has observed: In regard to section 123(5) of the Representation of People Act, 1951 which before its amendment by Act 47 of 1966 was identical in terms with section 144 1(3) of the Act, it was held by this Court in Shri Balwant Singh vs Shri Lakshmi Narain that in considering whether a corrupt practice described in section 123(5) is committed conveying of electors cannot be dissociated from the hiring of a vehicle. It has also been held by this Court in Ch. Razik Ram vs J.S. Chouhan and Ors. that 19 to establish the corrupt practice under section 123(5) of the Representation of the People Act, 1951, it is necessary for an election petitioner to prove (i) that any vehicle or vessel was hired or was procured, whether on payment or otherwise by the returned candidate or by his election agent or by any other person with the consent of the candidate or of his election agent; (ii) that it was used for conveyance of the electors to or from any polling station and (iii) that such conveyance was free of cost to the electors. Failure to substantiate any one of these ingredients leads to the collapse of the whole charge. " We shall now proceed to consider the evidence adduced by the parties alleged by the appellant. On the day of poll, 12.6.1977 J.K. Dutta, P.W. 69, the then District Magistrate, West Champaran was proceeding to Sikta in a jeep accompanied by the Superintendent of Police in the course of his duties in relation to the election. Finding a jeep carrying some ladies, P.W. 69 instructed the Superintendent of Police to make the necessary enquiry. After the necessary enquiry was made by the police the jeep with the occupants and the driver was taken to the police station by the Station House Officer, Sikta Police Station, who found the jeep having been detained by the District Magistrate and the Superintendent of Police on the road near a canal situate about 1.5 or 2 miles away from the Sarakiatola booth when he was proceeding towards Parsa village with some policemen. Subsequently, the ladies who were in the jeep were taken from the police station by a government jeep to the place from where the private jeep with the occupants and the driver was taken by the officials to the Sikta Police Station. Anil Kumar, P.W. 73. the then Superintendent of Police, Bettiah who accompanied P.W. 69, has given a little more detailed evidence regarding what happened when he was accompanying P.W. 69 to Sikta. He has deposed that since they suspected that the four or five rustic ladies who were being carried by the jeep could not be its owners, he seized the jeep, evidently under the impression that the ladies were being carried free of charge to the booth, near a canal situate about 1.5 or 2 miles from the booth and took it alongwith the driver and its occupants to the police station. After the statements of the ladies and the driver were recorded by the Station House Officer at the Sikta Police Station, they were taken back 20 by a government jeep to the place from which the private jeep in which they were travelling earlier was seized so that they could go and cast their votes. P.Ws. 69 and 73 do not remember the number of the jeep and P.W. 69 does not know to whom the jeep belonged. Amal Ranjan Sarkar, P.W. 81, is the Station House Officer who took the jeep with its occupants and the driver to the police station after he found the jeep having been detained by P.Ws. 69 and 73. Kabir Ahmad 's nephew Tabrez Ahmad was driving the jeep. P.W. 81 obtained the statement, exhibit 13, written and signed by Tabrez Ahmad as also the statements of five ladies who were found travelling in the jeep. The jeep USJ 5226 which was taken into custody was later released to Kabir Ahmad on 17.6.1977 under exhibit (c) after one Managar Prasad, who is proved to have been the polling agent of the respondent, furnished security under exhibit 14 (b). There is evidence of Sheikh Ejazul, P.W. 8 that the jeep USJ 5226 which was used in the election belonged to Kabir Ahmad and that it was driven by Tabrez Ahmad. There is evidence to show that Kabir Ahmad 's brother Nazir Ahmad was another polling agent to the respondent like Managar Prasad. The learned Trial Judge has found that Managar Parasad was the respondent 's polling agent. This fact, to which our attention was drawn by Mr. Shanti Bhushan was not disputed by the respondent 's learned counsel. The respondent, R.W. 45 has admitted that Kabir Ahmad 's brother Nazir Ahmad was his polling agent and that Tabrez Ahmad is the nephew of Kabir Ahmad and Nazir Ahmad. But he has stated that the does not know if Managar Prasad whom he knows was his polling agent or whether he had furnished security for the release of the jeep by the Police to Kabir Ahmad. D.N. Pandey, P.W. 75 the then Anchal Adhikari of Sikta who had been deputed to work as the Sub Zonal officer during the election in 1977 has also deposed about the seizure of Kabir Ahmad 's jeep driven by Tabrez Ahmad. He was present at the Sikta Police Station when the jeep with some women sitting in it was brought to the police station. He has stated that Kabir Ahmad, who was very friendly with respondent, came to the police station to get the women and the jeep released from the custody of the police. The evidence of Muratiwa @ Deokha, P.W. 10, Mehrunoissa, P.W. 11 and Rasulia, P.W. 42 who travelled in the jeep alongwith two other ladies including Queresha P.W. 67 21 is that Kabir Ahmad got them released from the police station on the day of the poll after they and the two other ladies who were travelling with them by the jeep had been taken to the police station. The aforesaid evidence of P.Ws. 69, 73, 81, 75, 10, 11 and 42 which has not been seriously challenged in the cross examination establishes satisfactorily that the jeep USJ 5226 belonging to Kabir Ahmad was seen being driven by Kabir Ahmad 's nephew Tabraz Ahmad with five women electors including P.Ws. 10, 11, 42 and 67 on the road near a canal situate about 1 or two miles away from the Sarakiatola booth on the day of the poll, that the jeep with the ladies and the driver was seized on suspicion that it was being used for carrying electors to the booth free of cost, that the statements of the five ladies and the driver Tabrez Ahmad were recorded at the Sikta Police Station by the Station House officer, P.W. 81, in the presence of P.Ws. 69, 73 and 75, that Kabir Ahmad got the ladies released from police custody on the same day and they were thereafter brought by a government jeep from the police station to the place from where they had been previously taken to the police station in Kabir Ahmad 's jeep, that the jeep was released to Kabir Ahmad on 17.6.1977 under exhibit 14(c) and that the respondent 's polling agent Manager Prasad furnished security under exhibit 14(b) for the release of the jeep to Kabir Ahmad. The appellant 's contention is that the respondent procured the jeep USJ 5226 from Kabir Ahmad and it was used for the conveyance of electors free of cost to themselves for the purpose of casting votes in favour of the respondent and that the respondent is thus guilty of corrupt practice under section 123(5) of the Act. The evidence referred to above establishes the requirement of clause (5) of s 123 that the vehicle USJ 5226 which is proved to belong to the respondents close friend Kabir Ahmad was used for the conveyance of electors who were proceeding to cast votes in favour of the respondent on the day of the poll. It is not possible to agree with the learned Trial Judge that what this evidence establishes is only an attempt to convey electors to the polling booth and not actual conveyance of the electors merely because the jeep with the electors who were being carried in it was intercepted at a distance of 1 or 2 miles away from the booth and taken to the police station by the official who had suspected that an election 22 offence had been committed. The jeep was seized when it was being used for carrying electors who were proceeding to vote for the respondent, no doubt at a distance of 1 or 2 miles away from the polling booth. Even the learned counsel for the respondent did not contend before us that what has. been established is only an attempt at conveying electors by the jeep of Kabir Ahmad to the polling booth and not actual conveyance. There is overwhelming evidence on record including that of the Anchal Adhikari, P.W. 75 who had worked as the Secretary of a Cement Committee of which the respondent was the President, to show that the respondent is a good friend of Kabir Ahmad, whose brother Nazir Ahmad was admittedly the respondent 's polling agent. The respondent had used to him for the purchase of a motor cycle for the benefit of Nazir Ahmad who admittedly advanced the money required for its purchase and was using the vehicle which stood nominally registered in the name of the respondent. The respondent has professed ignorance in his evidence whether Kabir Ahmad owned the jeep USJ 5226 at all and he has denied that the jeep was used for carrying electors for casting votes in his favour on the day of poll. A reading of the evidence of R.W. 45 shows that his evidence is totally unreliable. We may state at this stage that the respondent 's learned counsel Mr. S.K. Sinha found it practically impossible to deny any aspect of the appellant 's case in regard to this item of corrupt practice except the part relating to the procurement of the jeep USJ 5226 by the respondent from its owner Kabir Ahmad. We find that this part of the appellants case relating to this item of corrupt practice is clearly established by the evidence referred to above. The next point for consideration is whether the electors were carried free of cost to themselves by the jeep USJ 5226 on the day of poll. On this aspect of the appellants case there is direct evidence of the electors P.Ws. 10, 11 and 42 besides that of some other evidence. The appellant 's polling agent Jang Bahadur Mian, P.W.6, has stated in his evidence that the jeep 23 USJ 5226 was being used for carrying electors to cast votes in favour of the respondent, that the respondent met the expenses of electors and that the jeep was seized by the District Magistrate and the police on the day of poll. He has denied the suggestion that the jeep USJ 5226 was not used for carrying electors at all. In view of the other evidence referred to above we are of the opinion that there is no substance at all in this suggestion made P.W. 9 who was an elector from Parsa village in the election held in 1977 has stated in his evidence that electors were carried by Kabir Ahmad 's jeep on behalf of the respondent. The suggestion made to him and denied by him is that he has given false evidence. The electors P.Ws. 10, 11 and 42 belong to same Parsa Village. P.W. 10 has stated that Kabir Ahmad has asked her to vote for the candidate whose symbol consisted of cow and calf, i.e. the respondent, that she and four other women electors were being carried in Kabir Ahmad 's jeep driven by Kabir Ahmad 's nephew when the jeep was seized and taken to the police station and that they did not pay anything to the owner or the driver of the jeep for their conveyance. To the same effect is the evidence of P.Ws. 11 and 42 who also have stated clearly in their evidence that they did not pay anything for their conveyance to the owner or the owner or the driver of the jeep and that they and the other women were carried in the jeep free of cost to themselves. What has been elicited from P.W. 10 in the cross examination is that she does not know the names of the other ladies who travelled with her in the jeep. P.W. 11 has denied the suggestion that she has been tutored to give false evidence. P.W. 42 has denied the suggestion that she was not an elector at all and that she has given false evidence. P.W. 10 is a Hindu while PWs. 11, 42 and 67 are Muslims. Yaqub Mian, PW 43, the husband of P.W. 42 also has stated in his evidence that the electors were carried by the jeep free of cost and that after learning that the jeep had been taken to the police station he went to the police station and found that Kabir Ahmad had already obtained the release of the electors from the police. He too has denied the suggestion that he has been tutored to give false evidence and that he had worked for the appellant in that election. We are of the opinion that there is no reason for disbelieving the evidence of P.Ws. 10, 11, 42 and 43 that the electors who travelled by the jeep which was intercepted by the officials and taken to the police 24 station were being carried to the polling booth free of cost to themselves for casting their votes in favour of the respondent. This part of the appellant 's case is clearly proved by the evidence of these four witnesses. We may state that the respondent 's learned counsel has not disputed that the evidence of these four witnesses proves that the electors were being carried to the booth by the jeep USJ 5226 for casting their votes in favour of the respondent free of cost to themselves. We find that the evidence referred to above proves the second requirement of clause (5) of section 123 of the Act. The third point which alone is seriously disputed by the learned counsel for the respondent is the question of procuring Kabir Ahmed 's jeep USJ 5226 by the respondent for carrying electors to vote for him. Since it has been found that the jeep USJ 5226 belonging to the respondent 's close friend Kabir Ahmed was actually used for the conveyance of voters who were proceeding to cast votes in favour of the respondent free of cost to themselves, the jeep could have been put in use for the purpose either by Kabir Ahmed himself or some other person without reference to the respondent or his agent or it could have been procured by the respondent. It could not have become available for carrying electors who were proceeding to vote for the respondent in any other manner. It is not the respondent 's case that Kabir Ahmed or any other person put the jeep to use for carrying electors to vote for him free of cost to themselves without any reference whatsoever to him. The details relating to the jeep USJ 5226 had been given in the election petition. The respondent could have made necessary enquiries from Kabir Ahmed, the owner of the jeep and pleaded that the jeep was used for carrying electors for his benefit without any reference to him voluntarily by its owner Kabir Ahmed or by any other person if that were so. The respondent has not come forward with any such plea. Therefore, it is not possible to accept the submission of the respondent 's learned counsel Mr. S.K. Sinha that in view of the fact that it is the appellant 's case that Kabir Ahmed is a very close friend of the respondent, Kabir Ahmed himself could have put his jeep to use for carrying electors for the benefit of the respondent without any request for the use or the jeep on the part of 25 the respondent. Therefore, the only other possibility is that the respondent or someone else acting as his agent had procured the jeep from Kabir Ahmed for the purpose of using it for the benefit of the respondent in connection with the election, namely, to carry electors for voting in his favour free of cost to themselves. Having regard to this probability we are of the opinion that even slight evidence in this regard would be sufficient for proving this aspect of the appellant 's case. Regarding this aspect of the appellant 's, case on the side of the respondent there is the interested evidence of the respondent alone and he has stated that he had not asked for any jeep or any other help from Kabir Ahmed in connection with the election held in 1977 and that Kabir Ahmed did not help him in any way in that election. The evidence of the respondent is absolutely unreliable as stated earlier having regard to the fact that it is clearly established by the evidence that the jeep USJ 5226 belonging to Kabir Ahmed was actually used for carrying electors who were proceeding to vote in favour of the respondent free of cost to themselves and that it was seized by the officials when it was being driven by Kabir Ahmed 's nephew Tabrez Ahmed, white the electors seated in the jeep. The evidence on record clearly proves and it is not challenged by the respondent 's learned counsel but is on the other hand conceded by him that Kabir Ahmed had helped the respondent by allowing his jeep USJ 5226 driven by his own nephew Tabrez Ahmed for the free conveyance of electors who were proceeding to the booth for voting in favour of the respondent. The appellant 's polling agent P.W. 6 has stated in his evidence that the respondent had borrowed Kabir Ahmed 's jeep for the conveyance of electors from their respective places to the booth had for their return to their places from the booth. He has also stated that one of the two jeeps used for carrying electors to vote for the respondent is USJ 5226. He has denied the suggestion that the jeep USJ 5226 was not used at all for carrying electors on the day of poll. Sahib Mian, P.W. 16 is a muslim barber belonging to Haripur, which is also known as Sikta. He was an elector who had cast his vote in the election held in 1977. He knows the respondent as well as Kabir Ahmed who 26 owns a jeep and a mill at Parsa. He has deposed that when he was given a share to Kabir Ahmed at his mill in Parsa, three persons including the respondent went there and that the respondent asked, Kabir Ahmed agreed to give it to him. He has denied the suggestion that he has given false evidence. P.W. 43 has stated in his evidence that the respondent and Kabir Ahmed went to his village on day prior to the day of the poll and asked him to vote for the respondent and told him that a jeep had been borrowed from Kabir Ahmed to carry voters and that accordingly a jeep driven by Tabrej Ahmed came on the next day and carried female electors. No doubt, P.W. 43 and his wife P.W. 42 are casual laborers P.W. 43 has denied the suggestion that he had worked for the appellant in that election and that he has been tutored to give false evidence. There is no satisfactory reason for disbelieving the evidence of these three witnesses P.Ws. 6, 16 and 43 of whom P.W. 6 was no doubt the appellant 's polling agent. It is not possible to reject the evidence of P.W. 6 merely because he was admittedly the appellant 's polling agent, especially having regard to the fact that his evidence is in a way corroborated by the evidence of P.Ws. 16 and 43. The respondent R.W. 43 has admitted in his evidence that Kabir Ahmed and others own a mill and that Kabir Ahmed is a partner in that mill business. As stated earlier, he has admitted that Kabir Ahmed 's brother Nazir Ahmed was his polling agent and that Tabrez Ahmed is the nephew of Kabir Ahmed and Nazir Ahmed. The evidence of P.W. 75 shows that Tabrej Ahmed did not even hold driving licence when the was found to be driving the jeep USJ 5226 carrying electors to the booth on the day of poll and that he was prosecuted separately for that offence under the Motors Vehicles Act. There is evidence of Daroga Mahato, P.W. 56, to show that the respondent and Kabir Ahmed were good friends and that Kabir Ahmad 's father Sharif Ahmad was sitting about 100 yards away from the booth on the day of poll. The learned Trial Judge has found that Kabir Ahmad is a good friend of the respondent and that he and his father had worked for the respondent in the election held in 1977. Inspite of all these facts the respondent has not called Kabir Ahmad as his witness to deny that he had procured the jeep USJ 5116 from Kabir Ahmed for the conveyance of his electors. He has not examined even Tabrez Ahmad though he had been admittedly named as one of his witnesses in 27 the list of witnesses submitted on his behalf. He would say that to the best of his knowledge Kabir Ahmad did not possess any jeep and that he submitted the list of witnesses by merely looking into the voters list without applying his mind because he was pressurized by his lawyer to file a tentative list of witnesses as soon as possible and was informed by his lawyer that if he did not file his list of witnesses he would lose his case on that ground alone. It is not possible to accept this evidence of the respondent as well having regard to the fact that it is stated without any denial that he himself is a lawyer, it is improbable that he would have been pressurize by his lawyer and that he filed the list of witnesses merely by booking into the voters ' list without applying his mind as to who should be cited as his witness. In these circumstances, we are of the opinion that it is not possible to place any reliance on the interested evidence of the respondent R.W. 45 on the question of procuring the jeep USJ 5226 from its owner Kabir Ahmad. The evidence of P.W. 16 is most natural and reliable. There is absolutely no reason whatsoever for rejecting his evidence which could not be outrode evidence. We accept the evidence of P.Ws. 6, 16 and 43 on this aspect of the appellant 's case and find that the respondent had procured the jeep USJ 5226 from his close friend Kabir Ahmad for the free conveyance of his electors and that the jeep was, thereafter used for that purpose on the day of poll and seized by the officials P.Ws. 69, 73 and 81 when it was being used for the conveyance of the electors P.Ws. 10,11, 42 and others including P.W. 67 free of cost to themselves. The appellant has thus proved satisfactorily all the three requirements of clause (5) of section 123 of the Act. The respondent has therefore, to be held guilty of corrupt practice falling under that clause which is ordinarily difficult to prove. We think that such corrupt practice which is very largely resorted to in the elections could be avoided by either locating polling booths within walking distance of the electors or by having mobile polling stations. We accordingly allow this appeal in regard to this item of corrupt practical one with costs qualified Rs. 5,000 and hold that the res 28 pondent was guilty of corrupt practice under section 123(5) of the Act in regard to his election in 1977 as a member of the Bihar Legislative Assembly from No. 5 Sikta Constituency in West Champaran district. N.V.K. Appeal allowed.

On the basis of a simple mortgage executed in his favour in the year 1948, the appellant obtained a decree on 4 9 1967, brought the mortgaged property to sale, purchased it himself on 24 7 1968 and got the sale confirmed by court on 28 8 1968. The first respondent who held a promissory note executed in his favour by the owner of the said property in 1961, instituted a suit for recovery of the sum on 24 9 1964 and got the property attached before judgment on the same day and thereafter obtained a money decree on 30 3 1967, and filed an execution petition for realising the money due under the decree by bringing the property to sale. Thereupon the appellant filed a claim petition under O.21, r. 58 C.P.C., for getting the attachment raised. The claim petition was resisted by the first respondent inter alia on the ground that it was incompetent as the appellant had neither any interest in the equity of redemption nor was he in possession of the property. The trail court allowed the claim petition holding inter alia that what was attached on 24 9 1964 was the entire property and not the equity of redemption alone. The Civil Revision Petition filed by the first respondent against the order of the trial court was allowed by the High Court which held that the appellant having failed to prove that he had an interest in the property on the date of the attachment and was in possession of the property, either actual or constructive, on that date he was not entitled to have the attachment raised. Dismissing the appeal, HELD: The trial court erred in observing that what was attached before judgment on 24 9 1964 was not the equity of redemption but the entire property. There could be no doubt that on 24 9 1964 when the property was attached before judgment long after the mortgage dated 31 7 1948 and two years before the suit was filed on the mortgage in 1966, the mortgagor had the equity of redemption and that what could have been attached in law on 24 9 1964 was the equity of redemption alone and not the entire interest in the property. The property. The appellant had no doubt an interest in the property as mortgagee, but he could not have been in possession of the property as he was only a 113 simple mortgagee. He was a secured creditor as he had a mortgage in his favour, and any attachment effected after the date of the mortgage and during its subsistence could only be subject to that mortgage. Since he had no interest in the equity of redemption on the date of attachment, he could not have had any objection to that right of the mortgagor being attached by the first respondent. Therefore, he was not a person who could, in law, file any claim petition under O. 21; r. 58 objecting to the attachment of the equity of redemption. [116 A; C D; F H] The attaching creditor can bring the property to sale only subject to the mortgage as long as it is subsisting. That is to say, he could bring only the mortgagor 's equity of redemption to sale if it had not already been extinguished by it sale in execution of any decree obtained on that mortgage. But if the equity of redemption has already been sold after the date of the attachment, the attaching decree holder could proceed only against the balance, if any, of the sale price left after satisfying the mortgagee decree holder 's claim under the decree. The mortgagee 's right is thus not affected all. [117 B C]

Petition No. 6693 of 1986 etc. in Writ Petition (Crl) No. 1171 of 1982. Under Article 32 of the Constitution of India. Petitioner in person. B. Datta, Additional Solicitor General, Jagdeep Kishore, T.V.S.N. Chari, Ms. K. Jaiswal, D.N. Mishra, B.M. Bagaria, P.H. Parekh, M.K.D. Namboodri, Kailash Vasdev, H.K. Puri, R.K. Mehta, section Kaushal and C.V.S. Rao for the Respondent/Applicant. The Judgment of the 'Court was delivered by Crl. M.P. No. 3141/86 BHAGWATI, C J: This application has been filed by the Indian Council for Child Welfare for obtaining a direction that when it is required to act as a scrutinising agency by the Court, a certain amount should be directed to be paid to it for the scrutinising services rendered by it, since the scrutinising services would require employment of staff and other necessary expenditure. Though this application is made only by the Indian Council for Child Welfare, we apprehend that all other scrutinising agencies must also be facing the same difficulty. We would therefore direct that when the Court makes an order appointing a foreign parent as guardian of a child with a view to its eventual adoption in the foreign country, the Court will provide that such amount shall be paid to the scrutinising agency for its services as the Court thinks reasonable, having regard to the nature of the case and the extent and volume of the services rendered by the scrutinising agency. We think that in the case of an application for appointment of a foreign parent as guardian of a child the Court would be justified in directing payment of any reasonable amount varying between 388 Rs.450 and Rs.500 but in appropriate cases where the Court so thinks fit, such amount may even exceed Rs.500. This amount shall be directed to be paid to the scrutinising agency by the recognised placement agency which has proc essed the application of the foreign parent for being ap pointed guardian of the child with a view to its eventual adoption and the such placement agency shall have the right to recover such amount from the foreign parent whose appli cation for guardianship it has processed. This direction will also apply mutatis mutandis in cases where an, Indian parent makes an application for appointing himself or her self as guardian of a child or a Hindu parent applies for permission to adopt a child under section 9 sub section (4) of the and the case is referred to a scrutinising agency by the Court, but in such cases the amount to be fixed by the Court for meet ing the expenses of the scrutinising agency shall not exceed Rs.150. Both in the case of an application on behalf of a foreign parents as also in the case of an application on behalf of an Indian or Hindu parent, a copy of the order made by the Court appointing the scrutinising agency shall be supplied to the scrutinising agency immediately after the order is made, together with the papers and documents sub mitted to the Court in support of the application for ap pointment of guardian or for permission to adopt. Crl M.P. No. 3142/86 This application has been made by the petitioner since according to the petitioner there have been instances of illegal sales of babies. We may point out that by its very nature it is not possible to devise a fool proof formula which will in all cases prevent illegal sales of babies but a procedure can and must be formulated which will definitely reduce the possibility of such illegal sales. With this end in view, we would direct that all nursing homes and hospi tals which come across abandoned or destitute children or find such children abandoned in their pre points or other wise shall immediately give information in regard to the discovery or find of such children to the Social Welfare Department of the concerned Government where such nursing homes or hospitals are situate in the capital of the State and in other cases to the collector of the District and copies of such intimation will also be sent to the Foster Care Home where there is such a home run by the Government as also to the recognised placement agencies functioning in the city or town where such nursing homes or hospitals are situate. The Social Welfare Department has also the Collec tor of the District will take care to ensure that this direction given by us is followed by the nursing homes and hospitals within their jurisdiction and if necessary intima tion in regard to the discovery or find of abandoned or destitute children, if not sent by any particular nursing homes or hospitals to the Foster Care Home and the recog nised placement agencies shall be forwarded to them by the Social Welfare Department and the Collector of the District. 389 The Foster Care Home run by the Government as also the recognised placement agencies in the capital of the State or in the District will also exchange with one another informa tion regarding Indian parents who wish to take children in adoption so that the Foster Care Home as also each recog nised placement agency will have a consolidated list of such Indian parents. Each Indian parent who is registered with the Foster Care Home or a recognised placement agency as a prospective parent wishing to take a child in adoption and who has been informed by the recognised placement agency that a child is available for adoption will be entitled to information about all the children available for adoption in the group specified by him, according to the consolidated list maintained by the recognised placement agency. CrL M.P. No. 4455/86 This Court directed in paragraph 22 of the main judgment dated 6th February 1984 that the notice of the application for guardianship should not be published in any newspaper and this was reiterated in the Supplementary Judgment dated 27th September, 1985, because otherwise the biological parents would come to know as to who are the parents taking the child in adoption. The question raised in the present application is as to whether this direction should be con fined only to cases of adoption by foreign parents or it should be extended to cover cases where Hindu parents seek to take a child in adoption and make an application to the Court for that purpose. We are of the view that having regard to the object and purpose for which this direction has been given, it cannot be confined to the case of adop tion by foreign parents. It must also cover the cases where Hindu Parents make an application under section 9 sub sec tion (4) of the . We would, therefore, clarify the direction given by us and direct that notice of an application under Section 9 sub section (4) of the will also not be published in any newspaper. The present application will stand disposed of accordingly. Crt M.P. 4064/86 This application has been filed by the Karnataka State Council for Child Welfare complaining that the object and purpose for which various directions were given by this Court in its main Judgment dated 6th February, 1984 and the supplemental Judgment dated 27th September, 1985 is being defeated by the practice which has been adopted in some places in the State of Karnataka where unrecognised agencies are using recognised placement agencies as post offices for processing cases in respect of children which are in the custody of the unrecognised agencies and with which the recognised placement agencies have nothing to do. The result of this practice is that the recognised placement 390 agencies merely act as conduit pipes for making and process ing applications for appointment of a foreigner as guardian of a child, even though the child is not with them at all and they are not even in contact with the foreign sponsoring agency or the foreigner wishing to take the child in adop tion. This practice, if it is prevalent in any part of the State of Karnataka or for that matter, in the country, must meet with our disapprobation. It is the recognised placement agency which has to prepare the child study report including the medical report for submission to the Court alongwith the application for appointment of the foreigner as guardian of the child and this obviously cannot be done unless the child is with the recognised placement agency, because the recog nised placement agency has to observe the child and gather full information about it in order to be able to make the report for submission to the Court. The recognised placement agency must therefore necessarily have the custody of the child for a period of at least one month before it can prepare d really genuine and satisfactory child study report alongwith the medical report. If we permit the recognised placement agency to act merely as post office or conduit pipe for making and processing an application for guardian ship on behalf of an unrecognised agency, it would lead to manifold evils which it has been our endeavour to eliminate. We would therefore direct that no recognised placement agency shall make and process an application for appointment of a foreigner as guardian of a child with a view to its eventual adoption, unless the child has been in the custody of the recognised placement agency for a period of at least one month before the making of the application and it shall not be permitted to act merely as a post office or conduit pipe for the benefit of an unrecognised agency. M.P. No. 4065/86 This application of the Delhi Council for Child Welfare seeks clarification in respect of certain observations made by this Court in paragraph 6 of the supplemental judgment dated 27th September 1985. This Court, while providing that children who are found abandoned should not be assumed to be free for adoption but they must be produced before the Juvenile Court so that further inquiries can be made and their parents or guardians can be traced, directed the Juvenile Courts "that when children are selected for adop tion, release order should be passed by them expeditiously and without delay and proper vigilance in this behalf must be exercised by the High Court". The Delhi Council for Child Welfare has pointed out in this application made by it for clarification that the Juvenile Courts are construing this observation literally and mechanically and are taking the view that release orders in respect of the children produced before them are to be passed "expeditiously and without delay" only in cases where it can be said that the children "are selected for adoption" and since no child can possibly be offered in adoption unless it is 391 declared legally free for adoption by the Juvenile Court, this direction given by the court for expeditious passing of release orders in cases where "children are selected for adoption" has become meaningless and futile and the Court should suitably modify it. This contention raised on behalf of the Delhi Council for Child Welfare is well founded, because obviously no child can be offered for adoption unless the release order is passed in respect of it and it would therefore be futile to provide that release order shall be passed expeditiously and without delay in case of children selected for adoption. We would therefore modify this direction given by us in paragraph 6 of the supplemen tal Judgment dated 27th September 1985 by providing that whenever a child is produced before the Juvenile Court by a recognised placement agency for a release order declaring that the child is abandoned or destitute so as to be legally free for adoption, the Juvenile Court must in all such cases complete the inquiry within one month from the date of the application and proper vigilance should be exercised by the High Court for the purpose of ensuring that this new direc tion given by us is complied with by the Juvenile Courts. We would ask the High Courts to all for monthly reports from the Juvenile Courts stating as to how many applications for release orders, that is, for declaring children abandoned or destitute, are pending before each Juvenile Court, when they were filed and if they have not been disposed of within one month, what is the reason for the delay. We are very anxious that in respect of abandoned or destitute children, there should be no undue delay in offering them for adoption to Indian parents and, failing Indian parents, to foreign parents, because it is absolutely essential that such chil dren should be able to secure love and affection of adoptive parents at the earliest. Indeed, nothing can take the place of love and affection of parents and every effort must therefore be made to see that no procedural delays hold up the process of such children being taken in adoption. This new direction given by us will also be applicable in cases where, the Juvenile Court not being in existence, applica tion for release order is required to be made to the Social Welfare Department in the capital of the State or to the Collector of the District in other places. The Social Wel fare Department or the Collector, as the case may be, will dispose of such application within one month of its making. M.P. No. 6693/85 There were several points raised in this application filed on behalf of Church of North India, Holy Cross Social Service Centre, Missionaries of Charity and Delhi Council for Child Welfare. The first point related to a practice which is being followed in Delhi in regard to making of an application. for appointment of a foreigner as guardian of a child with a view to its eventual adoption. The practice which is followed in Delhi is that the application for appointment of a foreigner as guardian is required to be signed by the representative of the recognised placement agency not only as Attorney of the 392 foreigner but also in his personal capacity, so that the application becomes an application for appointment of the foreigner as well as the representative of the recognised placement agency as joint guardians of the child. The Court granting the application also appoints the foreigner as well as the representative of the recognised placement agency as joint guardians and both continue as joint guardians until the child is adopted by the foreigner in his own country. This procedure entails a continued obligation on the part of the recognised placement agency which is totally unnecessary and in fact, such procedure is not followed in any other part of the country. It would in our opinion be sufficient to ensure the eventual adoption of the child and its proper care and welfare in the meantime, if a bond is taken from the recognised placement agency to secure performance of the obligations and conditions laid down by the Court. We would therefore direct that the court entertaining an application for appointment of a foreigner as guardian of a child should not require the representative of the recognised placement agency processing the application to join the application as a co petitioner nor should the court insist on appointing such representative as joint guardian of the child alongwith the foreigner. Where a representative of the recognised placement agency has already been appointed joint guardian prior to the making of this Order, he or she will stand discharged on the child being adopted by the foreign par ents. The second point raised on behalf of the applicants was in regard to the delay which is at present occurring in the procedure forgiving a child in adoption to a foreigner in view of the time schedule fixed by the court in the main judgment dated 6th February, 1984 and the supplemental judgment dated 27th September 1985. The applicants contended that the entire process laid down by the court is a long drawn out process running into a period of about 8 to 9 months and that would defeat the object of expedition in giving a child in adoption. The applicants pointed out that under our judgments, where there is a child surrendered by the biological parents, a minimum period of three months is allowed to the biological parents to reconsider their deci sion and in case of an abandoned or destitute child, a period of three months is provided for the Juvenile Court, Social Welfare Department or the Collector to clear the child and declare it free for adoption and after the child is declared free for adoption, a maximum period of two months is provided to find an Indian family for the child which period is now curtailed to three to four weeks and thereafter it takes another four weeks in mail for sending the child study and medical reports to the sponsoring agency abroad for being handed over to the for eigner for his approval and awaiting the receipt of approval and then a further period of two months is allowed for the court to process the case and thereafter on an average it takes another month or more to get the passport and visa formalities completed. It thus takes about 8 to 9 months after the abandonment of the child before the child is able to join its adoptive parents. 393 This is, according to the applicants, too long a period and the directions given by us should be modified with a view to curtailing this period. We agree that the point raised on behalf of the applicants deserves serious consideration. We would therefore direct that in cases where a child is relin quished by its biological parents or by an unwed mother under a Deed of Relinquishment executed by the biological parents or the unwed mother it should not be necessary to go through the Juvenile Court or the Social Welfare Department of the Collector to obtain a release order declaring the child free for adoption but it would be enough to produce the Deed of Relinquishment before the court which consider the application for appointment of a foreigner as guardian of the child. It is only where a child is found abandoned or is picked up as a destitute that the procedure of going through the Juvenile Court or the Social Welfare Department or the Collector would have to be adopted. As soon as aban doned or destitute child is found by a social or child welfare agency, a report should be immediately lodged with the local police station along with a photograph of the child. The Inspector General of Police or the Commissioner of Police, as the case may be, should instruct every police station within his jurisdiction to immediately undertake an inquiry for the purpose of ascertaining and tracing the parents of the child in respect of which the report is made and such inquiry must be completed within one month of the report being lodged with the police station. Meanwhile, the social or child welfare agency which has found the abandoned or destitute child may make an application to the Juvenile Court or to the Social Welfare Department or the Collector, as the case may be, for a release order declaring that the child is legally free for adoption and since the report the inquiry to be made by the police has under this direction to be completed within one month, it should be possible for the Juvenile Court or the Social Welfare Department or the Collector to make a release order declaring the child legal ly free for adoption within a period of five weeks from the date of making the application. If, as a result of the inquiry by the police the biological parents are traced, the Juvenile Court or the Social Welfare Department or the Collector, as the case may be, will issue a notice to the biological parents and give them an opportunity to reconsid er their decision after explaining the implications of the child being declared legally free for adoption. But, this opportunity shall be availed of by the biological parents within a period of one week and no more. This procedure will considerably reduce the time taken up in giving an opportu nity to the biological parents to reconsider their decision as also in getting the child cleared for adoption by the Juvenile Court or the Social Welfare Department or the Collector. Whilst the application for a release order is pending before the Juvenile Court or the Social Welfare Department or the Collector, the recognised placement agency which has found the child or to which the child is trans ferred by the social or child welfare agency finding the child, may proceed to explore the possibility of offering the child in adoption and the child may be offered simulta neously to Indian parents as well as foreign 394 parents, subject to the clearance of the child for adoption by the Juvenile Court or the Social Welfare Department or the Collector; The recognised placement agency need not wait until the release order is made by the Juvenile Court or the Social Welfare 'Department or the Collector, before offering the child in adoption, because otherwise even with the reduced time limit which we have now provided, it would take at least six weeks before the child can be offered in adop tion. This time lag of six weeks can be eliminated if the child is allowed to be offered in adoption even while the application for release order is pending and this would also eliminate the delay of about two months which would occur if the child is not allowed to be offered in adoption to the foreign parents until after the effort to find an Indian parent for the child has failed. If this procedure is fol lowed, it should be possible to find an Indian parent or, failing that, a foreign parent to take the child in adoption within a period, of about 6 to 8 weeks from the time when the abandoned or destitute child is formed by the concerned social or child welfare agency. We are informed that this procedure is already being followed in Bombay and, in our view, it should be adopted in all jurisdictions. We then turn to the third point raised on behalf of the applicants and that relates to transfer of children from one State to another for the purpose of being given in adoption. We have already dealt with this subject in paragraph 7 of the supplemental judgment dated 27th September 1985 and we do not propose to depart from what we have said in that paragraph of the judgment. But we should like to make it dear that where an abandoned or destitute child is found by a recognised placement agency or is brought to it by another social or child welfare agency or individual, it should be open to such recognised placement agency to transfer the child to its branch in another State after the completion of the inquiry by the Juvenile Court or Social Welfare Depart ment or the Collector, as the case may be. Where such recog nised placement agency has an associate social or child welfare agency in another State, it should be open to the recognised placement agency to transfer the child to such associate social or child welfare agency in the other State, provided firstly, that the inquiry is complete by the Juve nile Court or the Social Welfare Department or the Collector and a release order is passed, and secondly, the associate social or child welfare agency has been notified by the recognised placement agency as its associate to the Govern ment of the State where the recognised placement agency is functioning as also to the Government of the State where the associate social or child welfare agency is operating. If, for any compelling reason, it becomes necessary for the recognised placement agency to transfer a child either to its own branch or 'to an associate social or child welfare agency before completion of the inquiry by the Juvenile COurt or the Social Welfare Department or the Collector, as the case may be, the recognised placement agency shall be allowed to do so after obtaining permission of the Juvenile 395 Court or the Social Welfare Department or the Collector in that behalf. We would also direct the Government of India to publish at least once in a year a list of recognised placement agencies and their associate social or child welfare agen cies operating in each State in two leading newspapers having wide circulation in that State, one in the English language and the other in the regional language of that State, so that the people may know which are the recognised placement agencies and their associates which are function ing in that State. We would also direct the Government of India to send to the District Courts in each State through the High Court a list of the recognised placement agencies functioning within the State together with the names and particulars of their associate social or child welfare agencies. Such list must be supplied to the District Judges at least once in a year and whenever any charges or modifi cations are made in the list, such changes/or modifications must be intimated to the District Judges through the High Court. One other point raised on behalf of the applicants was that the outer limit of Rs.4,000 fixed by the Court in the supplemental judgment dated 27th September 1985 for reim bursement of expenses including legal expenses, administra tive expenses, preparation of child study report, prepara tion of medical and I.Q. Reports, passport and visa expenses and conveyance expenses, was inadequate, particularly having regard to the high fees charged by lawyers and increase in the visa charges for United States and some other countries and that this outer limit should, therefore, be raised from Rs.4,000 to Rs.6,000. There is force in this submission made on behalf of the applicants, because there is no doubt that the fees of lawyer have gone up quite high and the visa expenses have also more than doubled in recent times. We, therefore, agree that the recognised placement agency proc essing the application of a foreigner for being appointed guardian of a child with a view to its eventual adoption, should be entitled to recover from the foreigner, cost incurred in preparing and filing the application and prose cuting it in court including legal expenses, administrative expenses, preparation of child study report, preparation of medical and I.Q. reports, passport and visa expenses and conveyance expenses and that such expenses may be fixed by the court at a figure not exceeding Rs.6000. The applicants also drew our attention to the case of foreigners living in India for one or more years and stressed the difficulty involved in requiring their cases to be sponsored by a foreign social or child welfare agency and the homestudy report in their cases to be prepared by such sponsoring foreign agency. This difficulty is a genuine difficulty. It would be quite impracticable to ask a for eigner living in India and wishing to take an Indian child in adoption to obtain a home study report from an agency base in his home country. It would 396 be impossible for any foreign social or child welfare agency to sponsor the case of such foreigner who is living in India and it would equally be impossible for any such social or child welfare agency to prepare a home,study report in respect of such foreigner. We would, therefore, direct that in case of a foreigner who has been living in India for one year or more, the home study report and other connected documents may be allowed to be prepared by the recognised placement agency which is processing the application of such foreigner for guardianship of a child with a view to its eventual adoption and that in such a case the court should not insist on sponsoring of such foreigner by a social or child welfare agency based in the country to which such foreigner belongs nor should a home study report in respect of such foreigner be required to be obtained from any such foreign social or child welfare agency. The home study report and other connected documents prepared by the recog nised placement agency should be regarded as sufficient. The last point raised on behalf of the applicants arises out of paragraph 12 of the supplemental judgment dated 27th September 1985. We pointed out in that paragraph of the supplemental judgment that ordinarily the court entertaining an application on behalf of a foreigner for being appointed guardian of a child with a view to its eventual adoption should not insist on making of deposit by the foreigner as and by way of security for due performance of the obliga tions undertaken by him, but in an appropriate case, the court exceptionally pass an order requiring him to make such deposit. We observed that the execution of a bond would ordinarily be sufficient: and we made two alternative sug gestions which may be implemented in regard to the execution of such bond. We have considered this question once again in view of the plea raised on behalf of the applicants and we are of the view that the court need not insist on security or cash deposit or hank guarantee and it should be enough if a bond is taken from the recognised placement agency which is processing the application and such recognised placement agency may in its turn take a corresponding bond from the sponsoring social or child welfare agency in the foreign country. Ordinarily, the sponsoring social or child welfare agency in the foreign country would honour the bond in case the condition of the bond is broken, because, obviously: if it fails to do so, no recognised placement agency in India would in future deal with it and moreover the name of such foreign social or child welfare agency would be liable to be deleted from the list of foreign social or child welfare agencies which are recognised as sponsoring agencies for the purpose of adoption. These were the only points raised for our consideration in the applications made on behalf of various social and child welfare agencies. We have dealt with these points in some detail and we hope and trust that the 397 clarifications given by us will go a long way towards reduc ing the delay in the procedure to be followed in giving a child in adoption to a foreigner and will also at the same time protect and safeguard the interest of the child by preventing any possibility of abuse.

The Supreme Court in the judgment of Laxmi Kant Pandey vs Union of India dated 6th February, 1984 and the supple mental judgment dated 27th September, 1985 had formulated the normative and procedural safeguards to be followed in giving an Indian child in adoption to foreign parents. Since there were certain difficulties in implementing the afore said norms and principles, the petitioners moved the present criminal miscellaneous petitions for seeking clarification/further directions in the matter. Disposing of the petitions, 384 HELD: 1. When the court makes an order appointing a foreign parent as guardian of a child with a view to its eventual adoption in the foreign country, the court will provide that such amount shall be paid to the scrutinising agency for its services as the court thinks reasonable having regard to the nature of the case and the extent and volume of the services rendered by the scrutinising agency. In case of an application for appointment of a foreign parent as guardian of a child the Court would be justified in directing payment of any reasonable amount varying be tween Rs.450 and Rs.500 but in appropriate cases where the courts so think fit. such amount may even exceed Rs.500. This amount shall be directed to be paid to the scrutinising agency by the recognised placement agency and such placement agency shall have the right to recover such amount from the foreign parent whose application for guardianship it has processed. This direction will also apply mutaris mutandis in cases where an Indian parent makes an application for appointing himself or herself as guardian of a child or a Hindu parent applies for permission to adopt a child under s.9 sub s.(4) of the and the case is referred to a scrutinising agency by the Court, but in such cases the amount to be fixed by the Court for meeting the expenses of the scrutinising agency shall not exceed Rs.150. [387G 388C] 2.1 All nursing homes and hospitals which come across abandoned or destitute children or find such children aban doned in their precincts or otherwise shall immediately give information in regard to the discovery or find of such children to the Social Welfare Department of the concerned Government where such nursing homes or hospitals are situate in the capital of the State and in other cases to the Col lector of the District and copies of such intimation will also be sent to the Foster Care Home where there is such a home run by the Government as also to the recognised place ment agencies functioning in the city or town where such nursing homes or hospitals are situate. [388F G] 2.2 Each Indian parent who is registered with the Foster Care Home or a recognised placement agency as a prospective parent wishing to take a child in adoption and who has been informed by the recognised placement agency that a child is available for adoption will be entitled to information about all the children available for adoption in the group speci fied by him, according to the consolidated list maintained by the recognised placement agency. [389B] 3. The Supreme Court had directed in paragraph 22 of the main judgment that the notice of the application for guard ianship in cases of adoption by foreign parents should not be published in any newspaper because otherwise the biologi cal parents would come to know as to who are the parents taking the child in adoption. This.direction must also cover the cases where 385 Hindu Parents make an application under s.9 sub s.(4) of the . [389D E] 4. No recognised placement agency shall make and process an application for appointment of a foreigner as guardian of a child with a view to its eventual adoption, unless the child has been in the custody of the recognised placement agency for a period of at least one month before the making of the application and it shall not be permitted to act merely as a post office or conduit pipe for the benefit of an unrecognised agency. [390D E] 5. Whenever a child is produced before the Juvenile Court by a recognised placement agency for a release order declaring that the child is abandoned or destitute so as to be legally free for adoption, the Juvenile Court must in all such cases complete the inquiry within one month from the date of the application and proper vigilance should be exercised by the High Court. High Courts should call for monthly reports from the Juvenile Courts stating as to how many applications for release orders, that is, for declaring children abandoned or destitute, are pending before each Juvenile Court, when they were filed and if they have not been disposed of within one month, what is the reason for the delay. Where the Juvenile Court is not in existence, application for release order is required to be made to the Social Welfare Department in the capital of the State or to the Collector of the District in other places. The Social Welfare Department or the Collector, as the case may be, will dispose of such application within one month of its making. [391B D, F] 6. The Court entertaining an application for appointment of a foreigner as guardian of a child should not require the representative,of the recognised placement agency processing the application to join the application as a co petitioner nor should the court insist on appointing such representa tive as joint guardian of the child alongwith the foreigner. [392C] 7. Where a child is relinquished by its biological parents or by an unwed mother under a Deed of Relinquishment executed by the biological parents or the unwed mother it should not be necessary to go through the Juvenile Court or the Social Welfare Department or the Collector to obtain a release order declaring the child free for adoption but it would be enough to produce the Deed of Relinquishment before the court which considered the application for appointment of a foreigner as guardian of the child. [393B] 8.1 Where an abandoned or destitute child is found by a recognised placement agency or is brought to it by another social or child welfare agency or individual it should be open to such recognised placement agency to transfer the child to its branch in another State after the completion of the inquiry by the 386 juvenile court or Social Welfare Department or the Collec tor, as the case may be. Where such recognised placement agency has an associate social or child welfare agency in another State, it should be open to the recognised placement agency to transfer the child to such associate social or child welfare agency in the other State, provided firstly, that the inquiry is complete by the juvenile court or the Social Welfare Department or the Collector and a release order is passed, and secondly, the associate social or child welfare agency has been notified by the recognised placement agency as its associate to the Government of the State where the recognised placement agency is functioning as also to the Government of the State where the associate social or child welfare agency is operating. If, for any compelling reason, it becomes necessary for the recognised placement agency to transfer a child either to its own branch or to an associate social or child welfare agency before completion of the inquiry by the juvenile court or the Social Welfare Department or the Collector, as the case may be, the recog nised placement agency shall be allowed to do so after obtaining permission of the juvenile court or the Social Welfare Department or the Collector in that behalf. [394E 395A] 8.2 The Government of India is directed (i) to publish at least once in a year a list of recognised placement agencies and all their associate social or child welfare agencies operating in each State in two leading newspapers; and (ii) to send to the District Courts in each State through the High Court a list of the recognised placement agencies functioning within the State together with the names and particulars of their associate social or child welfare agencies. Such list must be supplied to the District Judges at least Once in a year and whenever any changes or modifications are made in the list, such change or modifica tions most be intimated to the District JUdges through the High Court. [395 B C] 9. The recognised placement agency processing the appli cation of a foreigner for being appointed guardian of a child with a view to its eventual adoption, should be enti tled to recover from the foreigner, cost incurred in prepar ing and filing the application and prosecuting it in court including legal expenses, administrative expenses prepara tion of child study report, preparation of medical and I.Q. Reports, passport and visa expenses and conveyance expenses and that such expenses may be fixed by the court at a figure not exceeding Rs.6000. [395F] 10. In case of a foreigner who has been living in India for one year or more, the home study report and other con nected documents may be allowed to the prepared by the recognised placement agency which is processing the applica tion of such foreigner for guardianship of a child with a view to its eventual adoption and that in such a case the court should not insist on sponsoring of such foreigner by a social or child welfare agency based in the 387 country to which such foreigner belongs nor should a home study report in respect of such foreigner be required to be obtained from any such foreign social or child welfare agency. [396B] 11. The court entertaining an application on behalf of a foreigner for being appointed guardian of a child with a view to its eventual adoption need not insist on security or cash deposit or bank guarantee and it should be enough if a bond is taken from the recognised placement agency which is processing the application and such recognised placement agency may in its turn take a corresponding bond from the sponsoring social or child welfare agency in the foreign country. [396D F]

N: Criminal Appeal No. 191 of 1971. (Appeal by special leave from the judgment and order of the Bombay High Court dated 25 2 1972 in criminal appeal No. 683 of 1971.) M/s. M. K. Ramamurthi & Co. for the appellant. M. N. Shroff and Vineet Kumar, for the respondents. The Judgment of the Court was delivered by BEG, J. The allegations, on questions of fact raised in the appeal now before us, were quite unusual. The judgment of a Division Bench of the High Court of Bombay in Criminal Appeal No. 683 of 1971, in respect of coaccused Syed Ali Naki Hade Hasan, who was acquitted on 25 2 1972, shows the nature of the allegations made by the prosecutor 688 in this case. On those allegations, it became necessary to consider whether the accused, who had been put on trial together with six others, was actually in possession of a Hotel. The appellant claimed to be the owner of a hotel of which Jagannath, complainant, was said to be the manager. The case of the Manager was that he had been forcefully dispossessed by the accused and that certain properties belonging to him and others, including some money, were mis appropriated by the accused. Therefore, the appellant and five others were charged under Section 395 Indian Penal Code as well as under Section 452 read with Section 34 I.P.C. According to the accused, Shri Jagannath and his brother, the complainant, were only licensees. However, these are questions relating to the merits of a case in which the Trial Court had acquitted accused numbers 3 to 8 and the High Court acquitted accused No. 2. The appeal of the only remaining accused, accused No. 1, who is the appellant before us by special leave was, however, rejected in limine by the High Court without giving any reasons for the rejection. There is a whole catena of cases which have come up here from the Bombay High Court in which this Court has consistently disapproved of the practice followed by the Bombay High Court of not giving reasons when exercising its power of summary dismissal of criminal s appeals which lie both on questions of fact and law. In other High Courts, such appeals are automatically admitted. In any case, it is not possible for this Court to exercise its powers satisfactorily without giving an appellant, who may have an arguable case, an opportunity of first presenting his case to the High Court and getting a decision from it. The power of a summary rejection of a criminal 1st appeal, even though it is exercisable under the provisions of Section 421 Criminal Procedure Code, should, in our opinion, be only exercised when the Court is satisfied, from a perusal of the judgment as well as the record, that there is absolutely no reasonable possibility of its success for the reasons mentioned in the order. In a case such as the one now before us, it cannot be said that there are no such arguable points that, after the High Court had an opportunity of fully considering both sides of the case, it must necessarily dismiss the appeal. At least, in such cases, where there are arguable points, the High Court should give its grounds and reasons in support of its decision to reject summarily on some absolutely clinching ground. This Court has laid down the duty upon the High Court to record reasons. (See: Mushtak Hussein vs The State of Bombay (13; Krishna Vithu Surosha vs State of Maharashtra (2); Mustaq Ahmed Mohmed Hussain & Anr. vs The State of Gujarat(3); Kapurchand Kesrimal Jain vs The State of Maharashtra(4) . It is difficult to believe that judgments of this Court have neither come to the knowledge of the Bombay High Court nor were cited on behalf of the appellant. In any case, the law having been declared by this Court, it is the duty of the Bombay High Court to act in accord (1) (2) ; (3) ; (4) 689 ance with Article 141 of the Constitution and to apply it by giving proper reasons to justify whatever be its view. Accordingly, we allow the appeal and set aside the order of the High Court rejecting the appeal summarily and order that the case will be treated as admitted for regular hearing of both sides by the Bombay High Court, and disposed of in accordance with the law. ,, P.H.P. Appeal allowed.

The appellant an owner of a hotel was prosecuted along with five others for forcibly dispossessing the complainant who was the Manager of the Hotel and further for misappropriating certain properties including some money belonging to the complainant. According to the appellant, the complainant was merely a licensee. The Trial Court acquitted accused Nos. 3 to 6 and convicted accused No. 1 and 2. The High Court admitted the appeal of accused No. 2 and acquitted him. The appeal of the appellant accused No. 1 was, however, rejected by the High Court it limine without giving any reasons for the rejection. On an appeal by Special Leave, ^ HELD: 1. There is a whole catena of cases which have come up to this Court from the Bombay High Court in which this Court has consistently disapproved of the practice followed by the Bombay High Court of not giving reasons when exercising its power of summary dismissal of criminal appeals which lie both on questions of fact and law. In other High Courts such appeals are automatically admitted. The power of summary rejection under section 421 of the Criminal Procedure Code should be only exercised when the Court is satisfied from a, perusal of the judgment as well as the record that there is absolutely no reasonable possibility of its success for reasons to be mentioned in the order of dismissal. In the present case, it cannot be said that there are no arguable points. It is difficult to believe that the judgments of this court have neither come to the knowledge of the Bombay High Court nor were cited on behalf of ' the appellant In any case, the law having been declared by this Court, it is the duty of the Bombay High Court to act in accordance with Article 141 of the constitution and to apply it by giving proper reasons to justify whatever be its view. The judgment of the Bombay High Court was set aside and it was directed that the case should, be treated as admitted for regular hearing in she Bombay High Court and should be disposed of in accordance with law. [688 C, E, F, G, 689 AB] F

No. 131 of 1966. Petition tinder article 32 of the Constitution of India for the enforcement of fundamental rights. A. K. Sen and K. B. Mehta, for the petitioners. B. Sen and R. H. Dhebar for respondents Nos. 1 and 2. B. P. Maheshwari and section M. Jain, for respondent No. 4. The Judgment of the Court was delivered by Bhargava, J. section K. Ghosh and A. M. Narula, the two petition ers in this petition under Article 32 of the Constitution, appeared for the examination held in October, 1945 for recruitment to the Indian Audit and Accounts Service and other Allied Central Services. On the basis of the result of the examination, both of them were selected for appointment to the Postal Superintendents ' Service Class II Petitioner No. 1, section K. Ghosh, joined a post in that Service on probation with effect from 9th April, 1947, while petitioner No. 2, A. M. Narula, joined as a probationer on 11 th February, 1947. At that time there was no Class I Service in the Postal Department. In Class II Service, to which these two petitioners were appointed, recruitment was made by a competitive examination to the extent of 50 per cent, while the remaining 50 per cent posts were filled by promotion from lower cadres of the Department. On 24th May, 1948, the Government sanctioned the creation of Indian Postal Service Class I with four grades as follows (i) Directors of Postal Services, Grade I, (ii) Directors of Postal Services, Grade II, (iii) Senior Time Scale, and (iv) Junior Time Scale. This decision of the Government was communicated to the Director General, Posts and Telegraphs, by their letter dated 13th November, 1948, which also laid down the manner of recruitment to the Service and the various sources from which recruitment was to be made. The normal rule laid down was that appointment to the junior time scale were to be made by direct recruitment against 75% of the vacancies and the remaining 25% were to be filled by promotion by selection of the best officers in the Postal Superintendents ' Service Class II, seniority being regarded only when all other qualifications were practically equal. To this rule, however, an exception was laid down to the effect that all initial appointments to the time scale cadres of the Indian Postal Service Class I consisting of 64 posts (23 in the senior scale and 41 in the junior scale) were to be made by promotion from amongst officers of Postal Superintendents ' Service Class II by selection. Future recruitment was to be governed by the general rule cited above. Appointments to Grade IT of the Directors of Postal Services was to be made by promotion by selection 633 of the best officers in the senior time scale of the Indian Postal Service, Class 1, seniority being regarded only where other qualifications were practically equal. These promotions were to be made through a Departmental Promotion Committee consisting of the Director General, Posts and Telegraphs, Senior Deputy Director General, Posts and Telegraphs, and a member of the Federal Public Service Commission. Appointments to Grade I of Directors of Postal Services were to be made by promotion from Grade 11 of Directors in the order of seniority, provided the senior officer was considered fit for such promotion. The Service under these rules was, in fact, constituted with effect from 15th September, 1948, and, even in cases where appointments were actually made later, they were made effective retrospectively from 15 th September, 1948. for purposes of confirmation. The two petitioners were still probationers in Postal Superintendents ' Service Class II on 15th September, 1948; and, since only persons holding permanent posts in the cadre of Class 11 were to be considered for appointment to this Class I Service, the petitioners were not considered at the initial stage. Both the petitioners completed their probation in Class 11 Service in the year 1949. According to the petitioners, petitioner No. 1 was promoted to Class I Service on 2nd December, 1949, and petitioner No. 2 on 5th December, 1949. They were shown as officiating in this Service. Subsequently, petitioner No. 1 was confirmed in the junior time scale of Class I Service with effect from IIth May, 1951, while petitioner No. 2 was confirmed with effect from 12th February, 1952. In the meantime, direct recruitment to Class I Service was also made on the basis of competitive examinations held in the years 1948 and 1949, and a number of direct recruits were selected for appointment to this Service. Amongst them were K. Ramamurti, N. C. Talukdar, Shiv Nath, section L. Rajan and B. N. Dubey, respondents Nos. 3 to 7 in the petition. Besides these, a number of other direct recruits were also taken, but it is unnecessary to take notice of them, because the petitioners have sought relief against these five respondents only, the others having already retired by the time this petition was filed. These five respondents joined Class 1 Service as probationers on various dates falling between 16th March, 1950 and 22nd November, 1950. Thereafter, the question of fixing seniority inter se between the direct recruits and officers promoted from Class II Service came up for consideration of the Government. Government communicated their final decision through 'the letter dated 30th January, 1957. The letter indicated the considerations that led the Government to fix the seniority of the various officers and to the letter was annexed an Appendix giving the seniority of junior time scale officers. In this list, the two petitioners were placed at Nos. 31 and 32, while the five respondents were placed junior to them at Nos. 33, 36, 41, 42 and 44. In the letter, the Government speci 634 fically stated that, in arriving at the decisions, the Government had given due consideration to all the representations submitted by officers on the subject and replies to these representations were not, therefore, being sent separately. Only one representation of A. C. Mohamedi was still under consideration; but, with that representation, we are not concerned in the present writ petition. The Government added that the seniority list along with a copy of the memorandum was to be given to all the officers concerned for their information and they were to be informed that any further representations against the principles on the basis of which the seniority list had been prepared, would not be entertained. At the time when this seniority was fixed, the principles, which, according to the petitioners, were applicable, were those laid down in the Ministry of Home Affairs ' Office Memorandum dated 22nd June, 1949, paragraph 2 of which contained the decision that seniority in respect of persons employed in any particular grade should, as a general rule, be determined on the basis of the length of service in that Grade as well as service in an equivalent Grade, irrespective of whether the latter was under the Central or Provincial Government in India or Pakistan. The order of seniority laid down 'by the order dated 30th January, 1957 continued in force for a number of years. The Ministry of Home Affairs subsequently issued an Office Memorandum on 22nd December, 1959, laying down general principles for determining seniority of various categories of persons employed in Central Services. This Memo. referred to various earlier Office Memoranda, including the one dated 22nd June, 1949 issued by the Home Ministry. Paragraph 3 of this Office Memo. laid down that the instructions contained in those various Office Memoranda were thereby cancelled but made an exception in regard to determination of seniority of persons appointed to the various Central Services prior to the date of this Office Memorandum. The revised General Principles embodied in the Annexure to this Memorandum were not to apply with retrospective effect, but were to come into force with effect from the date of issue of these orders, unless a different date in respect of any particular service/grade from which these revised principles were to be adopted for purposes of determining seniority had already been or was to be thereafter agreed to by the Home Ministry. In para. 2 of the Annexure it was again laid down that, subject to the provision of para. 3 below, persons appointed in a substantive or officiating capacity to a grade prior to the issue of these general principles were to retain the relative seniority already assigned to them or such seniority as might thereafter be assigned to them under the existing orders applicable to their cases and were to be en bloc senior to all others in that grade. It was. the case of the petitioners that this Office Memorandum of 2nd December, 1959 did not in any way affect their seniority 635 Government dated 30th January, 1957. Subsequently, the petitioners as well as respondents Nos. 3 to 7 were promoted as Directors. The common case of both the parties was that, by the time these promotions were made, the two grades of Directors of Postal Services were amalgamated into one single grade, and the promotions of the petitioners as well as respondents Nos. 3 to 7 were to that grade. The case of the petitioners was that respondents Nos. 3 to 7 were promoted as Directors after the petitioners, so that the petitioners were recognised as seniors in the grade of Directors also. These promotions, according to the petitioners, were made some time in the years 1961 and 1962. Subsequently, by an Order dated 5th June, 1965, the Govern ment suddenly revised the seniority of these various officers. The letter dated 5th June, 1965 mentioned the subject as "Revision of seniority in the erstwhile Junior Time Scale of the Indian Postal Service, Class 1 of direct recruits from the combined competitive examinations held in 'the years 1947, 1948 and 1949. " As a result of this revision of seniority in the junior time scale of the Indian Postal Service Class 1, respondents Nos. 3 to 7 were shown as senior to the petitioners. The places allotted to respondents Nos. 3 to 7 were at Nos. 17, 20, 22, 23 and 25, while the two petitioners were placed below them at Nos. 26 and 27. Later, again another Order was issued on 17th January 1966 revising the seniority in the grade of Directors of Postal Services, and, in that revision also, respondents Nos. 3 to 7 were placed as seniors at Nos. 14, 15, 17, 18 and 19, while the two petitioners were shown as junior to them at Nos. 20 and 21. The petitioners, consequently, filed this petition under Article 32 of the Constitution challenging the revision of their seniority in the junior time scale by the order dated 5th June, 1965 as well as 'the revision of their seniority in the grade of Directors of Postal Services by the order dated 17th January, 1966. The principal round, on which these orders were challenged by the petitioners, was that they had been made by the Government arbitrarily in exercise of their power to fix seniority and. by such arbitrary action, had adversely affected the rights of the petitioners vis a vis respondents Nos. 3 to 7 in violation of Article 16 of the Constitution. The point taken was that the seniority having once been fixed by the Order dated 30th January, 1957 in accordance with the Rules then in force could not be arbitrarily disturbed by the Government, particularly when the Rules were never revised subsequently, nor were any fresh Rules issued governing the seniority of these officers who had been appointed to the junior time scale of Class 1 Service prior to 30th January. Learned counsel appearing for the petitioners formulated four different grounds for challenge of the Order dated 5th June, 636 1965, all leading to the contention that that Order violated article 16 of the Constitution, or was passed against the principles of natural justice. In addition, the Order dated 17th January, 1966 was challenged on one more ground, viz., that, even if it be held that the re fixation of seniority in the junior scale of Class I Service was justified, the Order of the Government revising the seniority in the grade of Directors was in any case void and illegal. This point was urged on the basis that appointment to the Directors ' grade was made on the basis of selection and there could not be automatic revision of seniority in that grade consequent upon the revision of seniority in the time scale of the Service. The petition was opposed by respondents 1 and 2, the Union of India, and the Director General of Posts and Telegraphs, as on behalf of some of the other respondents. Most of the facts put forward by the petitioners have been admitted, but the inferences and conclusions drawn by the petitioners as well as the submissions on their behalf in the writ petition were challenged. The principal contention for resisting the petition was that the order dated 30th January 1957 fixing the seniority had been made by mistake as a result of the Government having ignored Supplementary Rule 2(15), the effect of which was that for purposes of seniority the service of respondents 3 to 7 in junior time scale Grade I was wrongly taken as commencing from the date of their confirmation in the Service, while, correctly, it should have been taken from the date on which these respondents joined as probationers. It was urged that, on a correct interpretation of the Rules, respondents Nos. 3 to 7 should have been held, even initially, to be senior to the petitioners in the _junior scale of the Class T. Service. It was further urged that, since the revision of seniority in the junior time scale of Class I Service was justified and not arbitrary, the consequential revision of seniority in the grade of Directors of Postal Services was also valid. Arguments were addressed at length on both aspects of the case, but we think that it is not necessary for us in this case to decide the first point raised on behalf of the petitioners regarding the validity of the refixation of their seniority in the junior time scale of Class I Service by the order dated 5th June, 1965, because the petitioners could even obtain adequate relief on the alternative ground that the revision of seniority in the grade of Directors by the order dated 17th January, 1966 was void. The peti tioners in para. 4 of their petition made a definite assertion that respondents 3 to 7 were all promoted as Directors after the petitioners. This factual assertion made in this paragraph has not been denied in any counter affidavit filed on behalf of the various respondents. In the course of arguments before us, it was urged by learned counsel appearing for the respondents that the peti 637 tioners as well as respondents 3 to 7 were only shown as officiating in the grade of Directors in the Civil List and, consequently we should not base our decision on acceptance of the allegation made 'by the petitioners that the petitioners and respondents 3 to 7 had all been promoted as Directors. We are unable to accept this submission. The entry in the Civil List is no proof that the petitioners and the live respondents have not been promoted in accordance with the Rules laid down by the Government for promotion. If it was a fact that there had been no promotion in com pliance with those Rules, the assertion made on behalf of the petitioners in the petition should have been specifically controverted. The principles for appointment to the post of Directors of Postal Services were initially laid down by the Home Ministry 's Memorandum dated 24th May, 1948 to which we have already ,referred. As indicated earlier, it was laid down that appointments to Grade It of the Directors of Postal Services were to be made by promotion by selection of the best officers in the senior time scale of the Indian Postal Services Class 1, seniority being regarded only where other qualifications were practically equal. From the very first stage, therefore, appointments to the Posts of Directors of Postal Services were to be made on the basis of merit and not on the basis of seniority. Seniority was to be taken into account only if other qualifications were practically equal. it appears that, after 'the two grades of Directors of Postal Services were amalgamated, some fresh rules were promulgated. The relevant Rules have been brought to our notice by placing before us extracts from Posts and Telegraphs Manual Volume IV, 4th Edn., in which paragraph 153 mentioned that the rules for recruitment to the grade of Directors of Postal Services in the Indian Postal Service Class I in the Posts and Telegraphs Department are given in Appendix 6 A. A copy of Appendix 6 A has also been placed before us. The Appendix bears the heading "Rules for recruitment to the grade of Directors of Postal Services in the Indian Postal Services, Class I in the Posts and Telegraph Department". Rule 2 in this Appendix lays down the scale of ' pay of the post in the grade which is admittedly Rs. 1,300 601,600. Rule 3 prescribes the method of recruitment and is as Follows: " Recruitment to posts in the grade shall be by selection from among the officers of the Senior Time Scale of the Indian Postal Service, Class I,, one post being reserved for promotion of Presidency Postmasters, on the basis of selection. " This Rule also makes it clear that appointment to the grade of Directors of Postal Services is made by selection and not on the basis of promotion in accordance with seniority. The presumption exists that the promotion of the petitioners and respondents 638 3 to 7 to the grade of Directors must have been made in accordance with these instructions and rules, so that the appointment of all these concerned parties as Directors was based on merit to be taken into account at the time of selection and not on seniority in the time scale of Class I Service. Once a member of the Class I Service in the time scale was selected for promotion to the grade of Director and given seniority over another officer selected later, the seniority so determined as a result of selection could not be made dependent on the seniority in the time scale. It is clear that, in these circumstances, even if there was justification for revising the seniority inter se of the petitioners and respondents 3 to 7 in the time scale of Class I Service, that revision of seniority could not in any way affect their order of seniority in the grade of Directors to which they were promoted on the basis of selection in accordance with the rules. It is, therefore, clear that, even if it be held that the order of the Government dated 5th June, 1965 revising the seniority of these officers in the junior time scale was valid, the order dated 17th January, 1966 revising the seniority in the grade of Directors of Postal Services is not valid and justified. The seniority in the grade of Directors of Postal Services was not dependent on the inter se seniority in the junior time scale and any alteration in the seniority in the latter could not form the basis for revising 'the seniority in the former grade. No other justification for the revision of the seniority in the grade of Directors of Postal Services was put forward on behalf of any of the respondents. It is, thus, clear that the revision of seniority in the grade of Directors of Postal Services by the order dated 17th January, 1966 was not based on any rule or appropriate principle applicable to determination of seniority in that grade, and must, therefore, be held to be totally arbitrary. Such an arbitrary order, which affects the civil rights of the petitioners in respect of future promotion, must, therefore, be struck down as violating article 16 of the Constitution. Once this order dated 17th January, 1966 is quashed, the petitioners will no longer be affected in future by the revision of their seniority in the time scale of the Service by the order dated 5th June, 1965 and, consequently, we have refrained from going into the question of the validity of that order. The petitioners are not claiming any relief on the basis of the invalidity of the order dated 5th June, 1965 which would give to them any additional benefit over and above the relief which they can obtain on the order dated 17th January, 1966 being quashed. As a result, we allow this petition and quash the order dated 17th January, 1966, revising the seniority of the petitioners and respondents Nos. 3 to 7 in the grade of Directors of Postal Services. In the circumstances of this case, we direct that the petitioners 'will receive their costs from respondent No. 1. ' V.P.S. Petition allowed. L7Sup. C.I./68 2,500 Sec. VI 24 4 69 GIPF.

The petitioners were promoted from the Postal Superintendents Service Class II to the time scale of Class I Service, and, respondents 3 to 7 were direct recruits to the time scale of Class I service. On 30th January 1957, Government fixed the inter se seniority between them by showing the petitioners as senior to respondents 3 to 7. Subsequently, the petitioners were promoted as Directors of Postal Services, and some time later, respondents 3 to 7 were also promoted as Directors so that, the petitioners were senior to respondents 3 to 7 even in the grade of Directors. On 5th June 1965 Government revised the seniority of these officers in the time scale of Class I service, by showing respondents 3 to 7 as senior to the petitioners, and on 17th January 1966, their seniority in the grade of Directors was also revised placing respondents 3 to 7 as senior to the petitioners. The petitioners challenged the two orders in a petition under article 32. The Government justified its orders on the grounds, that, the order of 30th January 1957 was passed by mistake as a relevant rule, namely, Supplementary r. 2(15) was not given effect to, and, since the revision of seniority in the time scale of Class I Service was justified, the consequiential revision of seniority in the grade of Directors was also valid. HELD : The revision of seniority in the grade of Directors by order dated 17th January 1966 was not based on any rule or applicable principle. it was therefore arbitrary and violative of article 16 and must be struck down. Once that order was quashed, the petitioners would not be affected by the order dated 5th June 1965, and therefore, it was not necessary to decide on its validity. [638 E G]. Rule 3 of the Rule,; for recruitment lo the grade of Directors of Postal Services in Indian Postal Services Class 1. in the Posts and Telegraphs Department, shows that appointment to the grade of Directors is made by selection and not on the basis of seniority in the time scale. It Must therefore be presumed that the promotion and appointment, of the petitioners and respondents 3 to 7 as Director , was based on merit, which was to be taken into account at the time of selection and not on seniority in the time scale of Class I Service. Once a member of Class I Service in the time scale was selected for promotion to the grade of Directors and given seniority over another officer selected later, the seniority so determined as a result of selection could not be made dependent on the seniority in the time scale. Therefore, even if there was justification for revising the seniority inter se of the petitioners and respondents 3 to 7 in the time scale of Class I Service, that revision could not in any way affecttheir order of seniority in the grade of Directors to which they were promoted on the basis of selection is accordance with the Rules. [637 G H;] 638 A C].

241 and 242 of 1960. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. P. B. DaS, K. Choudhoury, Balbhadra Prasad Singh and I. N. Shroff, for the petitioners. M. C. Setalvad, Attorney General of India, B. Sen and R. H. Dhebar, for the respondents. February 10. The Judgment of the Court was delivered by MUDHOLKAR, J. The petitioner in W. P. 241 of 1960, Messrs. Burrakur Coal Co., Ltd., and the petitioner in W. P. 242 of 1960, Messrs. East India Coal Co., Ltd., claim to have acquired mining rights in two blocks in Mouza Sudamdih and Mouza Sutikdih respectively situated in Dhanbad district in the State of Bihar. On July 28, 1960, the Central Government published a notification bearing No. section 0. 1927 under section 4 of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (No. 20 of 1957), stating its intention to prospect for coal in an area approximately five sq. miles which includes Sudamdih colliery aud Sutikdih colliery. The petitioners have stated in their respective petitions that in consequence of the issue of the aforesaid notification they are precluded from carrying on any mining operations in the respective collieries and that the Central Government is entitled to acquire mining rights in the area covered by the notification within a period of two years from the date of notification or within such further period not exceeding one year as the Central Government may specify by notification in the Official Gazette. The petitioners have come up to this Court under article 32 of the Constitution contending that the aforesaid notification is ultra vires and illegal inasmuch as it interfere,% with their fundamental right to own property and to carry on business. Assuming that an incorporated company is a citizen we may point out that the East India Coal Co., Ltd. is incorporated in the United Kingdom while the Burrakur Coal Co., Ltd. is 47 incorporated in India. Therefore, in so far as the rights conferred by article 19 are concerned it may only be the latter which is entitled to the protection of the Constitution but not the former company. Both the petitioners, however, contend that the right conferred by article 31(2) of the Constitution is also infringed by the aforesaid notification and if their contention is correct they will be entitled to protection in respect of that right inasmuch as it is not limited to the citizens of India as is the case with regard to the rights enumerated in article 19. Both the petitions were argued together though the arguments were addressed mainly with reference to the case of Burrakur Coal Co., Ltd. and, therefore, it is that case with which we will deal fully. After dealing with the arguments advanced with reference to that case we will deal briefly with the other case. The challenge to the notification rests on two grounds, firstly that the notification is ultra vire8 the Act and secondly that the Act is itself ultra vires the Constitution. The petitioner 's learned counsel Mr. P. R. Das contends that the Act applies to "unworked" coal mines which according to him, mean virgin lands and not to those which are being worked at present or which were worked in the past. In support of this contention he strongly relies upon the preamble to the Act. The preamble runs thus: "An Act to establish in the economic interest of India greater public control over the coal mining industry and its development by providing for the acquisition by the State of unworked land containing or likely to contain, coal deposits or of rights in or over such land, for the extinguishment, or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise. and for matters connected therewith. " His argument proceeds to the length of saying that even abandoned mines are not touched by the Act. According to him, however, the Sudamdih colliery was not an abandoned mine nor could it be regarded as abandoned because, though it was not actually worked 48 between the year 1932 and the month of May. 1960. the petitioner had purchased it for a large consideration amounting to over Rs. 1,46,000 and thereafter it paid annually the minimum rent and royalty which totals upto over Rs. 1,23,000 from May 1, 1939, to June 30, 1960. According to the petitioner the mine was not actually worked during this period because in the petitioner 's opinion it was uneconomical to work it. The petitioner in fact made ' an application on December 3, 1959, to the Coal Board as required by the provisions of the Coal Mines (Conservation and Safety) Act, 1952 (XII of 1952), for permission to reopen the colliery but it did not receive any reply from the Coal Board. Even so, the petitioner commenced drilling operations in the beginning of May, 1960 and carried them on till August 12, 1960, during which a depth of 235 ft. was reached at one point. The petitioner, however, stopped these operations consequent upon the publication of the impugned notification in the Gazette of August 6, 1960. We are mentioning. these facts because on their basis a further argument is raised by Mr. Das to the effect that prior to the issue of the notification the mine was being actually worked. Before, however, we deal with that argument we must consider the main contention of Mr. Das which is to the effect that the Act applies only to virgin land. Mr. Das contended that the preamble to an Act is a key to understanding the provisions of the Act and referred us in this connection to the advisory opinion of this Court in re the Kerala Education Bill, 1957 In that case Das, C. J., who delivered the opinion of the Court has observed: "The long title of the said Bill (The Kerala Education Bill, 1957) describes it as A Bill to provide for the better organisation and development of educational institutions in the State '. Its preamble recites thus: 'Whereas it is deemed necessary to provide for the better organisation and development of educational institutions in the State provid ing a varied and comprehensive educational service (1) [1959] S.C.R. 995, 1022. 49 throughout the State '. We must, therefore, approach the substantive provisions of the said Bill in the light of the policy and purpose deducible from the terms of the aforesaid long title and the preamble and so construe the clauses of the said Bill as will subserve the said policy and purpose". While. holding that it is permissible to look at the preamble for understanding the import of the various clauses contained in the Bill this Court has not said that full effect should not be given to the express provisions of the Bill even though they appear to go beyond the terms of the preamble. It is one of the cardinal principles of construction that where the language of an Act is clear, the preamble must be disregarded. Though, where the object or meaning of an enactment is not clear, the preamble may be resorted to explain it. Again, where very general language is used in an enactment which, it is clear must be intended to have a limited application, the preamble may be used to indicate to what particular instances the enactment is intended to apply (1). We cannot, therefore, start with the preamble for construing the provisions of an Act, though we would be justified in resorting to it, nay, we will be required to do so, if we find that the language used by Parliament is ambiguous or is too general though in point of fact Parliament intended that it should have a limited application. Mr. Das then contended that the various provisions of the Act clearly show that Parliament intended the Act to apply only to virgin land. In support of this contention he referred to the provisions of as. 4,5,6, 7 and 8 of the Act. He pointed out that whenever it appears to the Central Government that coal is likely to be obtained from land in any locality it is empowered by sub a. (1) of section 4 to give notice of its intention to prospect for coal therein. According to him, where a mine has been worked at some time in the past all the necessary information would be available in the working plan of the mine, and, by way of illustration pointed out that the fullest information (1) Craies Interprotation of Statutes, 5th Edn., pp. 188, 189. 50 was available in the working plan, Annexure B1 of the Sudamdih colliery. He further pointed out that this information was in fact in the possession of the Government as would appear from Annexure B which was appended to the notification of July 20, 1960. We may point out that this annexure sets out that this is a statement of percentage of worked and unworked areas in different coal mines and. after setting out the various seams which have been proved, the percentages of worked and unworked areas have been specified therein. Prospecting, according to Mr. Das, would be necessary only if nothing is known about an area and therefore there can possibly be no need for prospecting when a mine has been worked. Admittedly, sub section (1) of a. 4 does not specifically say that it applies to unworked land. All the same, according to Mr. Das, it must be so construed as to apply to unworked land only; for, there would be no need for the Government to undertake prospecting for coal in worked land on which there is a colliery. We cannot accept the argument of Mr. Das. The bulk of the coal in a mine is underground and even though the existence of some seems may have been proved in particular areas it is impossible to say that the information obtained when it was prospected once or when it was being worked, as to the quality and quantity of coal or the dimensions of the seams is complete. The seams are not necessarily horizontal and more often are inclined and sometimes even folded. Then again there may be faulting in the strata of coal as a result of which an impression may be created that a seam has disappeared at a particular place though further borings or drilling may show that even. beyond that point but at greater depths the same seam reappears. So where a mine was worked in the past but mining operations therein were stopped either because the coal therein was thought to have been exhausted or because it was not thought to be of a sufficiently good quality such as to make the working of the mine economic, further prospecting may well reveal the existence of additional coal bearing strata or of a better type of coal than that found 51 earlier. On the plain language of sub a. (1) of section 4 the Central Government has been empowered to issue a notification with reference to its intention of prospecting any land in a locality and not only such land as is virgin in the sense in which Mr. Das uses that expression. Then Mr. Das referred sub section (3) of a. 4 and said that the whole of the country has been subjected to a geological survey of a very detailed kind and all known coal fields are mentioned in one report or the other of the department of Geological Survey of India. Collieries which have been worked at some time in the past must have been mentioned in one of these reports and. , therefore, it would be wholly unnecessary for the legislature to confer upon the Government the power as is done by cl. (a) of sub section (3) of section 4 to enter upon and survey any land in the locality in which such colliery is situate. The very fact that power has been given to the Central Government to enter upon and survey land for ' the purpose of ascertaining whether there is any coal in that land shows that the legislature had in mind only that land which has not been mentioned as coal bearing in any of the reports of the Geological Survey of India. Here again we may point out that the object of survey of land is to enable the Government to satisfy itself not merely about the fact that any coal exists in that land but also about the quality and quantity of coal therein and whether it would be an economical proposition to work the mines already existing on that land. Indeed a perusal of the provisions of sub a. (4) of section 4 would show that the Act is not restricted to unworked lands only but applies equally to those lands on which there are existing mines but those mines are not being worked. That sub.section reads as follows: "In issuing a notification under this section the Central Government shall exclude therefrom that portion of any land in which coal mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order for the time being in force or any premises on which any process ancillary to the getting, dressing or 52 preparation for sale of coal obtained as a result of such operations is being carried on are situate". Under this provision the Central Government is required to exclude that portion of any land in which coal mining operations are being carried on "in conformity with any enactment, rule or order". This would indicate that the language of sub section (1) of section 4 was understood as applying also to that land in which coal mining operations were actually being carried on. Unless we hold so, the whole of sub section (4) would be rendered otiose. Mr. Das, however, says that sub section (4) enacts a "rule of exclusion" and that it had been enacted by way of abundant caution. We cannot accede to this argument for the simple reason that if the language of sub section (1) of section 4 is capable of being interpreted as applying to any land in which coal mining operations are actually being carried on, then there is all the greater reason why that provision should be held also to apply to land in which coal mining operations were carried on in the past, though they are not being carried on at present. If Parliament was cautious enough to exclude land in which coal mining operations are actually being carried on why did it stop there and not exercise the same caution with respect to land in which coal mining operations were once being carried on but have now ceased? For, on the plain meaning of the word "unworked" such lands would more readily fall within the terms of sub section (1) of section 4 than land in which coal mining operations were actually being carried on, that is to say, "worked lands". Then Mr. Das referred to cl. (b) of section 5 which runs thus: "any mining lease in so far as it authorises the lessee or any person claiming through him to undertake any operation in the laid, shall cease to have effect for so long as the notification under that sub. section is in force". He contended that what this provision prohibits is the undertaking of any operation in the land and not carrying on of an operation. Undertaking of an operation, according to himself 'relates to the initial 53 working of the mine and riot to the resumption of work on the mine after work thereon had stopped nor to carrying on work on a mine the working of which had not been stopped. As a consequence of the issue of a notification under sub section (1) or section 4 what the lessee of a mining lease is prohibited from doing is undertaking any operation on land on which no operations were being carried on. But he is not prohibited from continuing to carry on operations which he was carrying on at the date of the notification. We cannot, however, accede to the contention that the resumption of mining operations on a land is outside the bar created by this pro vision. The words used in the section are "to undertake any operations in the land" which, according to the Concise Oxford Dictionary mean "to enter upon (work, enterprise, responsibility)". The meaning of the provision, therefore, is that what the lessee is prohibited from doing is something which he was not doing at the date of the notification though he was authorised to do it under his lease. Thus if a colliery was not functioning at the date of the notification then by virtue of the provisions of a. 5(b) he would not be permitted to work it. Undoubtedly the provision has to be interpreted reasonably and it does not mean that if the notification came into force on the Monday and the mine was not worked on Sunday because of a holiday, the lessee was prohibited by the notification from working it. The resumption of working of a mine after a casual closure or a closure in the ordinary course of working a mine would not fall within the bar created by section 5(b). In this connection we may refer to r. 7 of the Coal Mines Regulations of 1957, which provides that when it is intended to reopen a mine after abandonment for a period exceeding 60 days not less than 30 days notice before resumption of mining operations must be given to certain authorities. The Coal Mines Regulations of 1957 have been framed under section 57 of the Mines Act of 1952, section 16 of which provides for the giving of notice before commencement of mining operations. It is in the light of these provisions that we must interpret the provisions of section 5(b) of the Act. So what must be said to have 54 been prohibited would be the undertaking of an operation on land not for the first time only but also the resumption of an operation which had been abandoned or discontinued. Mr. Das then contended that a mining area is always extensive and it is not possible to work on every bit of it simultaneously and, therefore, if work is carried on at one point in a colliery the whole colliery must be deemed to be working, that is to say, coal mining operations must be deemed to have been carried on over the entire area on which the colliery is situate. In support of his contention he relied upon the decision of the Privy Council in Nageswar Bux Roy vs Bengal Coal Co., Ltd. (1), and upon a passage in Halsbury 's Laws of England(2). Both the decision of the Privy Council as well as the passage in Halsbury deal with the question of possession and state the law to be that a person can be said to be in possession of minerals contained in a well defined mining area even though his actual physical possession is confined to a small portion, that is, to the mine which is being actually worked. The decision of the Privy Council as well as the passage in Halsbury are nus not in point. Further it is difficult to see how an exemption under section 4(4) is admissible in the case of the Sudamdih colliery or Sutkidih colliery unless it is shown that they were actually being worked at the date of the notification in conformity with the provisions of "any enactment, rule or order for the time being in force". It is an admitted fact that though a notice was given under section 16 of the , by the Sutkidih Colliery, the petitioners in W.P. 242 of 1960, it aid not actually start working the colliery in view of the impugned notification. As we have al. ready pointed out the Burrakur Coal Co., Ltd. did commence working the Sudamdih Colliery in May, 1960, even though it had not obtained the permission of the appropriate authorities. We must, therefore, examine here the argument of Mr. Das that every colliery must be held to be exempted under sub section (4) of section 4. We have already referred (1) (1930) L.R. 58 I A. 29. (2). 3rd Edn., Vol. 26, p. 630. 55 to section 16 of the , and regulation 7 of Mining Regulations, 1957. In addition, there is Regulation 3 of 1957 which requires that the notice contemplated by section 16 should be submitted in Form I. No doubt the petitioner had given notice as required by these provisions. No doubt also that it was necessary for the authorities concerned to take appropriate action on the notice. But it is difficult to say that the inaction of the authorities can be availed of by the petitioner. We must give effect to the plain lan guage of sub section (4) of section 4. That provision in clear terms makes an exclusion or exemption only with regard to that portion of the land in which coal mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order. Therefore, it is clear that Parliament was exempting only such collieries as were being worked in consonance 'with the provisions of law. Mr. Das 's argument, however, is that the Act prescribes penal ties for the breach of its provisions and of those of the regulations and so the petitioner could well be visited with an appropriate penalty but that its right to run the mine could not be affected. We are not here concerned with the question whether the failure of the petitioner to comply with the requirements of the Coal or of the Regulations of 1957 precludes the petitioner under that Act or under those regulations from carrying on mining operations. We are concerned here only with one point, and that is whether the petitioner could be said in point of fact to have been carrying on mining operations in accord ance with law. That the petitioner was not doing so is not even denied by Mr. Das and in the circumstances it is clear that the petitioner is not entitled to the benefit of sub section (4) of section 4. We should have dealt with this part of Mr. Das 's argument elsewhere but in order to avoid repetition we have thought it convenient to deal with it here. Adverting to section 6(1) of the. Act which deals with compensation for any necessary damage done under section 4 of the Act, learned counsel contended that Parliament plainly intended the Act to apply to virgin land. 56 If the section was intended to apply to worked mines there would have been provision, according to learned counsel, for payment of compensation to the owner or lessee of the mine, for being deprived of his right to work the mine consequent upon the . issue of the notification. It is sufficient to point out that section 4 does not contemplate entering upon any land which is actually being worked and there will thus be no deprivation in fact of the owner 's or lessee 's right of working the mine. The Act applies only to "unworked lands". This expression would include not only virgin lands but also lands on which mines may have been opened and worked sometime in the past but working on those mines was either discontinued or abandoned. Of course, it is possible to say that the action of the Government would interfere with the potential right of the owner or the lessee to work the mines and this would interfere with his right to hold property and carry on his business. When we deal with the other part of Mr. Das 's argument we shall deal with this question. It was next contended that section 7 which deals with the power of the Central Government to acquire land or rights in or over land notified under section 4 also indicates the limited operation of the Act. Sub section (1) of section 7 runs thus: "If the Central Government is satisfied that coal is obtainable in the whole or any part of the land notified under sub section (1) o f section 4, it may, within a period of two years from the date of the said notification or within such further period not exceeding one year in the aggregate as the Central Government may specify in this behalf, by notification in the official Gazette, give notice of its intention to acquire the whole or any part of the land or of any rights in or over such land, as the case may be". The argument was that in respect of mines which have already been worked at some time in the past all the relevant material would be at the disposal of the Government even previous to the issuing of a notification under sub section (1) of section 4 and, therefore, there 57 could be no necessity for the Government to enter on and prospect the land for being satisfied that coal is obtainable therefrom. Therefore, the argument proceeds, the provision could not have been intended to apply to land other than virgin land. This is really a repetition of the argument which was addressed to us in connection with sub. (1) of section 4 and what we have said with regard to that sub section would equally apply here. Sub section (1) of section 7 provides for a period of two years within which a notice of acquisition could be given by the Central Government. It is argued that this period is too long for keeping out an owner or lessee of land, the mines on which had been worked in the past and that Parliament could not have intended this effect. Therefore, the argument proceeds, this provision also points to the conclusion that the word "land" wherever it occurs in the Act should be read as virgin land. Prospecting operations are necessarily prolonged because what lies under the surface of land cannot be easily ascertained except by undertaking drilling or other appropriate operations at a number of places. Such operations are bound to be prolonged. Parliament apparently thought that it would be reasonable to allow a period of two years to the Government for carrying on the necessary operations and for, making up its mind. The mere length of the period so allowed to the Government cannot be regarded as indicative of the intention of Parliament to give to the word 'land ' the meaning 'virgin land '. Reliance was placed on the explanation to sub a. (1) of section 8. That sub section and the explanation are as follows: "Any person interested in any land in respect of which a notification under section 7 has been issued may, within ' thirty days of the issue of the notification, object to the acquisition of the whole or any part of the land or of any rights in or over such land. Explanation. It shall not be an objection within the meaning of this section for any person to say 58 that he himself desires to undertake mining operations in the land for the production of coal and that such operations should not be undertaken by the Central Government or by any other person". It was argued that in the explanation the words used are "to undertake mining operations" and not "to carry on mining operations" and therefore the Act could not be intended to apply to worked mines. Here again the argument is similar to that advanced on the basis of cl. (b) of section 5 and what we have said regarding it would equally apply here. Adverting to section 13 of the Act which deals with compensation for prospecting licences ceasing to have effect and rights under mining leases being acquired, it was contended that as there is no provision for compensation in respect of the minerals lying underground, Parliament could not be deemed to have enacted this law for the purpose of acquiring mines which have been worked in the past. According to Mr. Das if we have understood him right, when a person has acquired land either as an owner or as a lessee carrying with it the rights to win minerals and has opened in that land mines which he worked for sometime, there takes place a severance between the right to the surface and right to the minerals and that consequently such person will thereafter be holding the minerals as separate tenement, that is, something apart from the land demised and this separate tenement cannot be acquired under the terms of the present Act or, if it can be so acquired, it has to be specifically compensated for. Reference to the several provisions of the Act and in particular to those of section 13 indicates, according to learned counsel, the limited scope of the Act. It is difficult to appreciate the contention that merely because the owner or the lessee of a land had opened mines on that land, a severance is effected between the surface and the underground minerals. It may be that a trespasser by adverse possession for the statutory period can acquire rights to underground minerals. It may also be that if that happens the surface rights would become severed from the mineral rights as a result of which the 59 minerals underground would form a separate tenement. It is, however, difficult to see how the owner or the lessee of land who has right to win minerals can effect such a severance between the mineral rights and surface rights by opening and operating the mines of that land. For, even while he is carrying on mining operations he continues to enjoy the surface rights also. We cannot, therefore, accept the contention that there was any severance of the mineral rights and surface rights in either of these two cases. It is no doubt true that section 13 does not make any specific provision for compensation in respect of minerals, but on the other hand it provides in the explanation to el. (a) of sub section (5) that the value of minerals lying in the land shall not be taken into consideration in assessing compensation. Whether the absence of a provision for compensation ' would make the Act ultra vire8 in so far as it contemplates acquisition of land will be considered presently. We may, however, point out that the Act does not make provision for compensation for minerals in respect of even virgin land and the argument of Mr. Das would equally apply to such land. Therefore, no point can be made from the absence of a provision for compensation for minerals that the Act was applicable only to virgin lands. For all these reasons it is clear that the notification is not ultra vires the Act because, in our view the Act applies not only to virgin lands but also to dormant collieries or unworked lands. To sum up, in our view, the preamble of this Act need not be resolved to for construing its provisions and in particular for understanding the meaning of the word "land" used in the Act; that even if the preamble is taken into consideration the expression "unworked land" occurring in the preamble should be given its ordinary meaning, that is to say, land which was not being worked at the time of the notification issued under the Act, which would include dormant mines; that the provisions of the Act and in particular those of sub section (4) of section 4 and section 5(b) clearly militate against the contention that the Act was intended to apply only to virgin lands, to the exclusion of land on 60 which there are dormant mines, and that the absence of a provision in section 13 of the Act providing for compensation for mineral rights cannot by itself justify the conclusion that the Act was intended to apply to virgin land only. Now we come to the second part of the argument. It is contended that sections 4, 5 and 6 invade the fundamental rights of the petitioner under article 19(1)(g) of the Constitution because under section 5, a mining lease ceases to have effect for two years and possibly for three years. Mr. Das concedes that reasonable restrictions can be placed by the State upon the rights enumerated in this article in the interests of the general public but he contends that the period of two to three years is too long and, therefore, the restrictions cannot be regarded as reasonable. We have already indicated that prospecting operations, in their very nature, must take a long time to complete and presumably Parliament had fixed this period after bearing in mind this factor and also on the basis of expert advice. Of course, there are no pleadings to that effect in the affidavit of the State. But in our opinion the petitioner cannot be permitted to complain of the absence of pleadings because it has not itself stated in the petition what would be reasonable time for conducting prospecting operations. We are, therefore, unable to accede to the argument. The next attack, and that is a more formidable one, is based upon the ground that the Act does not contain any provision for compensation for the deprivation of the petitioners right to carry on its business for two to three years and that consequently one of its fundamental rights is infringed. It is no doubt true that in a. 13(4) which deals with the question of compensation there is no provision for payment of compensation for the deprivation of the right of a mine owner or a lessee to carry on his business for a period of two or three years, but the petitioner cannot complain about it. In article 31A, cl. (1), sub el. (e), of the Constitution, which was inserted by the Constitution First Amendment Act, 1951, it is provided that "notwithstanding anything contained in article 13, no 61 law providing for. . . the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on :the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or Art 31. " Then follows a proviso with which we are not concerned. The effect of a notification under section 4(1) of the Act read with section 5(b) is to prevent an owner or lessee of a mine from working his mine far a certain period of time. His rights are thus modified by the notification. According to Mr. Das, however, the effect of the notification is to suspend the rights of a mine owner or lessee of the mine for a certain period and that such suspension is not modification. In this connection he relied upon the observations of Mahajan, J., (as he then was), in Thakur Raghbir Singh vs Court of Wards, Ajmer (1). That was a case where, in connection with a notification issued under the Court of Wards Act, the learned Judge observed that the word "modification" used in the aforesaid provision of the Constitution does not include suspension of a right. The observations made in that case fell for consideration by this Court in Sri Ram Ram Narain Medhi vs The State of Bombay (2) and Atma Ram vs The State of Punjab and Ors. Explaining them this Court observed in the latter case: "Those observations must be strictly limited to the facts of the case, and cannot possibly be extended to the provisions of Acts wholly dissimilar to those of the Ajmer Tenancy and Land Records Act, XLII of 1950, which was the subject matter of the challenge in the case then before this Court. This Court held, on a construction of the provision of that Act, that they only suspended the right of management but did not amount to any extinguishment or modification of any proprietary rights (1) ; ,1053. (2) [1959] Supp. S.C.R. 489, 519 (3) [1959] SUPP. S.C.R. 748, 767. 62 in an estate. The provisions of the Act then under consideration of this Court, have absolutely no resemblance to those of the Act now before us, and it is impossible to put a similar interpretation on these provisions. In the recent decision of this Court (not yet reported) this Court had been invited to apply the observations of this Court referred t o above, to the provisions of the Bombay Act. It was pointed out in that case that those observations of Mahajan, J., (as he then was), must be read as limited to an Act which only brings about a suspension of the right of management of an estate, and could not be extended to the provisions of an Act which either extinguishes or modifies certain rights of a proprietor in an estate or a portion thereof". This Court did not intend to lay down as law in Thakur Raghbir Singh vs Court of Wards, Ajmer (1) that article 1A(i)(e) is inapplicable to a case where the property rights of a person are kept in abeyance for a certain period. The meaning of the word "modify" fell to be considered, in re The As pointed out in the opinion of Kania, C. J., the word "modify" means, according to Oxford Dictionary, to limit, restrain, to assuage, to make less severe, rigorous, or decisive; to tone down". It also means "to make partial changes in; to alter without radical transformation". In Rowland Burrows" 'Words and Phrases ', the word "modify" has, however, been defined as meaning "vary, extend or enlarge, limit or restrict". According to the learned Chief Justice "It has been held that modification implies an alteration. it may narrow or enlarge the provisions of the former Act". Bearing in mind the principle that a constitutional enactment must be construed liberally we would be right in according the dictionary meaning to the word " modification" occurring in the aforesaid provision. Mr. Das, however, contends that for a thing to amount to a modification of a right it must be of a permanent character and not of a temporary duration. We see no ground whatsoever for holding that for a (1) ; ,1053. (2) 63 thing to be a modification it must be of a permanent duration. A right may well be modified for all time or for a limited duration and in either case the right must be regarded as having been modified. For these reasons we hold that the provisions of article 31A, cl. (1)(e), debar the petitioners from challenging the validity of sections 4 and 5 of the Act on the ground that they infringe the provisions of article 31(2) of the Constitution. What remains to be considered is whether the provisions permitting acquisition of land are ultra vires the Constitution because they offend article 31(2) of the Constitution. According to the learned Attorney General the petitioners have no present grievance on that score because the notification in question empowers the State only to prospect for coal in the petitioner 's land and not to acquire it. We cannot accept this contention. The whole object of Parliament in enacting the law was to empower the State to acquire coal bearing lands. Prospecting on a piece of land for coal is merely a stage preceding the actual acquisition of that land. If, therefore, those provisions of the law which deal with the question 'of acquisition are unconstitutional the whole Act will be rendered unconstitutional. Article 31(2) of the Constitution, as amended by the Fourth Amendment Act, 1955, runs thus: "No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate". Mr. Das pointed out that section 13 of the Act, though it deals with the payment of compensation, does not contain any provision for payment of compensation for mineral rights. Not only that, but the explanation to cl. (a) of section 5 clearly lays down that in computing the 64 compensation for the land the value of minerals will not be taken into account. The acquisition of mineral rights would, therefore, according to him, be impermissible under article 31(2) without payment of compensation. The learned Attorney General quite rightly pointed out that section 13 deals with the whole subject of payment of compensation to the owner or lessee of the mine for his entire interest in the land including the rights to minerals and even though that section specifically says that the value of the minerals cannot be taken into account in determining the amount of compensation, the concluding words of article 31(2) preclude the petitioners from challenging the law. Mr. Das pointed out that the only ground on which the Central Government in their affidavit have tried to sustain the validity of the provisions relating to the acquisition of land under the Act is that a challenge to the validity of the law is barred by the provisions of article 3lA(1)(e) and that it is not now open to the Central Government to say that the law can be sustained on another ground. We cannot accept this contention. Where the validity of a law made by a competent legislature is challenged in a Court of law that Court is bound to presume in favour of its validity. Further, while considering the validity of the law the court will not consider itself restricted to the pleadings of the State and would be free to satisfy itself whether under any provision of the Constitution the law can be sustained. There is no doubt that the entire Act cannot be sustained by resorting only to article 31A(1)(e) or to article 31(2A) of the Constitution because these provisions do not deal with the question of acquisition and the Attorney General fairly admitted that it could not be so sustained. The opening words of sub section (2) of section 13 read thus: "Where the rights under a mining lease are acquired under this Act, there shall be paid to the person interested compensation, the amount of which shall be a sum made up of the following items, namely. . Then follow the items which have to be added up Undoubtedly they are items of expenditure and 65 interest on such expenditure. Sub section (3) deals with the procedure to be adopted where the rights acquired under section 9 relate only to part of the land covered by the mining lease. Sub section (4) deals with the compensation to be paid where the mining lease ceases to have effect for any period under cl. (b) of section 5. Subsection (5) provides for payment of compensation for any land acquired under section 9 and lays down the principles to be followed in computing the compensation. Sub section (6) provides for payment of com pensation for damage done to the surface of any land or any works thereon and in respect whereof no provision for compensation is made elsewhere in the Act. Sub section (7) deals with the question of compensation for maps, charts and other documents. Section 14 of the Act deals with the method of determining the compensation. It will be clear from these provisions that the Act specifies the principles on which and the manner in which the compensation should be determined and given. This is all that is required of a law relating to the acquisition of property by article 31(2) of the Constitution. Where provisions of this kind exist in a law that Article lays down that such law cannot be called in question in any court on the ground that the compensation provided by that law is not adequate. Here compensation is specifically provided for the land which is to be acquired under the Act. The land includes all that lies beneath the surface or, as Mr. Das put it, all that is "locked up " in the land. Parliament has laid down in sub B. (5) of section 13 how the value of this land is to be calculated. The contention that the provisions made by Parliament for computing the amount of compensation for the land do not take into account the value of the minerals is in effect a challenge to the adequacy of the compensation payable under the Act. The concluding words of article 31(2) preclude such a challenge being made. But Mr. Das contended that the minerals are separate tenement and have to be separately compensated for. We have already dealt with the contention of Mr. Das that the minerals underlying the surface are a separate tenement and we need not repeat here all 66 that we have said before. In our opinion the minerals cannot be regarded as a separate tenement except perhaps in a case of a trespass and, therefore, there is no question of the law providing for a separate compensation for them. Apart from that if minerals have become a separate tenement then the present Act may not apply to such a tenement at all. As we have pointed out the coal contained in the two collieries in question is not held by the respective petitioners as a tenement separate from the surface. In the circumstances the challenge to the validity of the Act on the ground that it offends article 31(4) of the Constitution fails, and we dismiss the petition with costs. We must say a few words about W. P. 242 of 1960. Out of 737 bighas of land held by the petitioner in that writ petition, we are informed that 321 bighas have been worked. The working,of this mine was closed in the year 1928 on the ground that the mine was flooded. An application Was made by the petitioner for reopening the mine on June 5, 1957. Repeated reminders were sent subsequently but there was no reply to any of them either. In its application the petitioner, it may be stated, did not apply for opening new mines. Since the necessary permission was not received, it did not commence any operations. We are informed that over a million tons of coal was extracted by the petitioner from its colliery in the past. Even so, we do not think that any different considerations could apply to the petitioner 's case from those which apply to the case of the Burrakar Coal Co. The petitioner 's colliery was also dormant for too long a period and was thus an "unworked mine". The impugned Act and the notification made thereunder both apply to it in the same way as they apply to the Sudamdih colliery belonging to Burrakur Coal, Co., Ltd. The writ petition thus fails and is dismissed with costs. Cost of the hearing be paid half and half by the two petitioners. There will be only one hearing fee, to be divided equally between the two petitioners. Petitions dismissed.

The appellant was convicted of an offence under section 92 of the , for working a salt works without obtaining a licence. The salt works extended over an area of about 250 acres ' The only buildings on this land were temporary shelters for the resident labour and for an office ; at some places ,there where pucca platforms for fixing the water pump where 593 required to pump water from the sea. The appellant contend ed (i) that the salt works was not a factory as defined in section 2(m) of the Act, (ii) that the word " premises " in the definition of factory did not include open land, and (iii) that in converting sea water into salt the appellant was not carrying on any manufacturing process as defined in section 2(k). Held, that the salt works was a factory within the definition given in the Act and that the appellant was rightly convicted for working it without a licence. The word " premises " is a generic term meaning open land or land with buildings or buildings alone; the salt works came within the expression "premises" in the definition of the word " factory ". The extraction of salt from sea water was not due merely to natural forces but was due to human efforts aided by natural forces. The process of conversion of sea water into salt was a " manufacturing process " as defined in cl. (k) of section 2, inasmuch as salt was manufactured from sea water by a process of treatment and adaptation. By this process sea water, a non commercial article, was converted into a different thing salt, a commercial article. Kent vs Astley, , Redgrave vs Lee, and Nash vs Hollinshead, [1901] 1 K.B. 700, distinguished. Sedgwick vs Watney, Combe, Reid & Co. Ltd. , Grove vs Lloyds British Testing Co. Ltd. , Kaye vs Burrows & Ors. and Hines vs Eastern Counties Farmers ' Co operative Association Ltd. , The State of Kerala vs V. M. Patel, Cr. 42 of 1959, decided on 12 10 1960, In re: Chinniah, Manager, Sangu Soap Works, A.I.R. 1957 Mad. 755. Paterson vs Hunt , Law vs Graham, , Hoare vs Truman, Hanbury, Buxton & CO. , and McNicol vs Pinch, , referred to.

iminal Appeal No. 48 of 1952. Appeal under article 134(1) (c) of the Constitution of India from the Judgment and Order dated the 21st March, 1952, of the High Court of Judicature at Calcutta (Das Gupta and Lahiri JJ.) in Criminal Appeal No. 77 of 1950 arising out of the Judgment and Order dated the 29th April, 1950, of the Court of the Additional Sessions Judge, Burdwan in Session Trial No. I of 1950. N.C. Chakravarti and Sukumar Ghose for the appellant. B. Sen and I. N. Shroff for the respondent. G. N. Joshi and P. G. Gokhale for the Intervener (The Union of India). April 20. The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J. This is an appeal under article 134(1) (c) of the Constitution of India from the judgment of the High Court at Calcutta dated the 21 st of March, 1952, whereby the High Court upheld the conviction of the appellant under section 467 of the Indian Penal Code but reduced the sentence passed upon him by the Additional Sessions Judge of Burdwan. The appeal concerns one of a series of cases known generally as " The Burdwan Test Relief Fraud Cases " which had their origin in the test relief operations held in the District of Burdwan in 1943, during the Bengal famine of that year. The acute scarcity and the prevailing distress of the famine stricken people in the district called for immediate relief and test relief operations were undertaken by the District Board in pursuance of the advice of the District Magistrate. The Government of Bengal sanctioned four lakhs of rupees as advance to the District Board for such test relief operations. The District Board, however, instead of 227 conducting the relief work directly, appointed several agents on commission basis through whom the test relief operations were carried out. This was in 'Clear violation of the Bengal Famine Code and the Famine Manual, 1941, and as exceedingly large sums were being spent the suspicions of the Government were aroused about the bona fides of the test relief work carried out through their agent&. This led to an inquiry and as a result of this several cases were started against various persons and the appellant 's case is one of them. The Government reached the decision that these cases were not fit for trial by jury and accordingly on 24th February, 1947, a notification was issued for trial of these cases by the Court of Sessions with the aid of assessors. The notification is in these terms: "No. 4591 17th February, 1947. Whereas by a notification dated the 27th March, 1893, published in the Calcutta Gazette of the same date, it was ordered that on and after the 1st day of April, 1893, the trial of certain offences under the Indian Penal Code before any Court of Session in certain districts including the District of Burdwan shall be by jury; "And whereas by notification No. 3347 1, dated the 22nd September, 1939, published at page 2505 of Part I of the Calcutta Gazette of the 28th September, 1939, it was ordered that on and from the 1st day of January, 1940, the trial of certain other offences under the Indian Penal Code before any Court of Session shall be by jury; "And whereas certain persons 'are alleged to have committed offences under sections 120 B, 420,467, 468, 471 and 477 A of the Indian Penal Code in a set of cases known as the Burdwan Test Relief Fraud Cases ' of whom the accused persons in two cases, namely Emperor vs Dhirendra Nath Chatterjee and Others and (2) Emperor vs Golam Rahman and Others, have been committed to the Court of Session at Burdwan for trial and the accused persons in the remaining cases may hereafter be committed to the said Court for trial; "Now, therefore, the Governor in exercise of the power conferred by subsection (1) of section 269 of the 228 Code of Criminal Procedure, 1898, is pleased to revoke the said notifications in so far as they apply to the trial of the offences with which the accused in the said cases are charged in the Court of Session. " In pursuance of this notification the appellant along with six others was sent up for trial before the Additional Sessions Judge of Burdwan. The charge against him was under section 420 read with section 120 B, Indian Penal Code, for conspiracy to cheat the District Board of Burdwan and some of its officers in charge of the test relief operations between the 21st May, and the 21st July, 1943. The appellant was also charged on 24 counts of forgery under section 467, Indian Penal Code and the case for the prosecution against the appellant on these counts was that he committed forgery by putting his own thumb impressions on pay sheets on which the thumb impressions of persons who received payment for work done on a road which was constructed as part of a scheme for the relief of the people in Burdwan ought to have been taken. He was one 'of the persons appointed by Jnanendra Nath Choudhuri, an agent, and it was his duty to disburse the money to the mates in charge of the gangs and to take thumb impressions on pay sheets in token of receipt of payment. It was alleged that the appellant put his own thumb impressions in several cases mentioned in the charges with full knowledge that no payment had been made and put names of imaginary persons against the thumb impressions to make it appear that payments had been made to real persons and by this process had obtained wrongful gain for himself and for his employers. The appellant 's plea in defence was that the thumb impressions were not his and alternatively if the thumb impressions were his, he put them on the authority of persons. whose names were shown against the thumb impressions and that in putting these thumb impressions he did not act dishonestly or fraudulently. The learned Additional Sessions Judge acquitted the appellant and all other accused persons on the charge of conspiracy to cheat under section 420 read with 229 section 120 B, Indian Penal Code. He, however, convicted the appellant under eleven specific charges of forgery, under section 467, Indian Penal Code, and sentenced him to undergo rigorous imprisonment for a period of one year. On appeal the conviction of the appellant was affirmed in regard to nine counts only and 'the sentence was reduced. The main point urged by the appellant in the High Court was that the trial was vitiated inasmuch as he was denied the equal protection of laws under article 14 of the Constitution. The High Court rejected this contention and held that the appellant 's trial before the Additional Sessions Judge with the aid of assessors was a valid trial in accordance with law. Das Gupta J. who delivered the judgment of the Court observed as follows : "By this notification, the Government acting in .the exercise of powers under section 269 of the Code of Criminal Procedure formed one class of all the cases known as the Burdwan Test Relief Cases, in which some persons had prior to the date of the notification alleged to have committed some specified offences and withdrew from these trial by jury so that these became triable by the aid of assessors. The question is whether this classification satisfied the test that has been laid down, mentioned above. In my judgment, these cases, which are put in one class, have the common feature that a mass of evidence regarding the genuineness of thumb impressions and regarding the existence or otherwise of persons required consideration. This was bound to take such a long time that it would be very difficult, if not impossible, for a juror to keep proper measure of the evidence. This common feature distinguished this class from other cases involving offences under the same sections of the Indian Penal Code. The classification is in my judgment reasonable with respect to the difference made, viz., the withdrawal of jury trial and is not arbitrary or evasive. " The appellant made an application to the High Court for leave to appeal to this Court and the leave was allowed. It was contended at the time of the leave 230 that by a notice of revocation the State Government could not deprive particular persons of the right of trial 'by jury leaving other persons charged of the same class or classes of offences with a right to be tried by a jury. The Bench thought that this was a point of considerable difficulty and was a fit one to be decided by this Court. The learned counsel for the appellant urged two points :before us. In the first instance, he contended that the notification was in excess of the powers conferred on the State Government under section 269(1) of the Code of Criminal Procedure and that it travelled beyond that section. Secondly it was urged that the notification denied the appellant equal protection of the laws and was thus an abridgement of his fundamental right under article 14 of the Constitution and the view of the High Court that the classification was not arbitrary or evasive was incorrect. At this stage it may be mentioned that the Union Government, at its request, was allowed to intervene in this appeal, in view of the contention raised by the appellant that section 269(1) of the Code of Criminal Procedure was void by reason of its being inconsistent with the provisions of Part III of the Constitution. The intervention, however, became unnecessary because the learned counsel for the appellant abandoned this point at the hearing and did not argue it before us. As regards the two points urged by the learned counsel, it seems to us that both the contentions raised are well founded. The notification, in our opinion, travels beyond the ambit of section 269(1) of the Code of Criminal Procedure. This section is in these terms : "The State Government may by order in the Official Gazette, direct that the trial of all offences, or of any particular class of offences, before any Court of Session, shall be by jury in any district, and may revoke or alter such order." Though the trial by jury is undoubtedly one of the most valuable rights which the accused can have, it has not been guaranteed by the Constitution. Section 269(1) of the Code of Criminal Procedure is an enabling 231 section and empowers the State Government to direct that the trial of all offences or of any particular class of offences before any Court of Session shall be by jury. It has the further power to revoke or alter such an order. There is nothing wrong if the State discontinues trial by jury in any district with regard to all or any particular class of offences, but the question is whether it can direct that the trial of a particular case or of a ' particular accused shall be in the Court of Session by jury while in respect of other cases involving the same offence the trial shall be by means of assessors. It appears to us that the section does not empower the State Government to direct that the trial of a particular case or of a particular accused person shall be by jury while the trial of other persons accused of the same offence shall not be by jury. On a plain construction of the language employed in the section it is clear that the State Government has been empowered to direct that the trial of all offences or of any Particular class of offences before any Court of Session shall be by jury in any district. The section does not take notice of individual accused or of individual cases. It only speaks of offences or of a particular class of offences, and does not direct its attention to particular cases on classes of cases and it does not envisage that persons accused of the same offence but involved in different cases can be tried by the Court of Session by a different procedure, namely, some of them by jury and some of them with the help of assessors. The ambit of the power of revocation or alteration is co extensive with the power conferred by the opening words of the section and cannot go beyond those words. In exercise of the power of revocation also the State Government cannot pick out a particular case or set of cases and revoke the notification qua these cases only and leave cases of other persons charged with the same offence triable by the Court of Session by jury. This was the construction plated on the section by Mr. Justice Chakravarti and was endorsed by some of us in this Court in The State of West Bengal vs Anwar Ali Sarkar(1). it was there pointed out that a jury trial could (1) , 326, 232 not be revoked in respect of a particular case or a particular accused while in respect of other cases involving the same offences that order still remained in force. The notification in this case clearly refers to accused persons involved in the " Burdwan Test Relief Fraud cases and does not remove from the category of offences made triable by jury offences under sections 120 B, 467,468,477 etc. , no matter by whom committed or even committed within a particular area. The cases of persons other than the accused and involved in offences under sections 120 B, 420, 467, 468, 477 are still triable by a Court of Session by jury. The language of the earlier notification of 1893, and of the second notification of 1939, by which it was directed that the trial in Court of Session of certain offences in certain districts shall be by jury is significant and is in sharp contrast to the language used in the operative portion of the impugned notification. By the notification of the 27th March, 1893, it was ordered that on or after the last day of April, 1893, the trial of certain offences under the Indian Penal Code before any Court of Session in certain districts including the District of Burdwan shall be by jury. It will be noticed that this notification has no reference to cases of any individuals or particular accused persons; it is general in its terms. By the notification dated the 22nd September, 1939, it was ordered that on and from the 1st day of January, 1940, the trial of certain other offences under the Indian Penal Code before any Court of Session shall be by jury. This notification is also in general terms. In other words, the first notification made out a schedule of offences and directed that those offences, irrespective of the fact by whom they were committed, be tried by a Court of Session by jury. The second notification added a number of other offences to that list. The revocation order does not subtract any offences from the list; it leaves them intact. What it does is that it denies to certain individuals the right to be tried by jury while retaining that right in the case of other individuals who have committed the same or similar offences and in this respect it travels beyond 233 the power conferred on the State Government by section 269(1) of the Code of Criminal Procedure, and is thus void and inoperative. We are further of the opinion that the notification is also bad as it contravenes the provisions of article 14 of the Constitution. The High Court negatived this contention on the ground that the classification made for withdrawal of jury trial in these cases was reasonable and was neither arbitrary nor evasive. It was said that these cases formed one class of cases and that they had the common feature that a mass 'of evidence regarding the genuineness of thumb impressions and regarding the existence or otherwise of persons required consideration and that this was bound to take such a long time that it would be very difficult, if not impossible, for a juror to keep proper measure of the evidence, and that these common features distinguished this class of cases from other cases involving offences under the same sections of the Indian Penal Code. Now it is well settled that though article 14 is designed to prevent any person or class of persons from being singled out as a special subject for discriminatory legislation, it is not implied that every law must have universal application to all persons who are not by nature, attainment or circumstance, in the same position, and that by process of classification the State has power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject; but the classification, however, 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. The notification, in express terms, has not indicated the grounds on which this set of cases has been segregated from other set of cases falling under the same sections of the Indian Penal Code. The learned Judges of the High Court however thought that this set of cases was put into one class because of their having the "common features that a mask; of evidence regarding the genuineness 234 of thumb impressions and regarding the existence or otherwise of persons required consideration and this was bound to take such a long time that it would be very difficult, if not impossible, for a juror to keep proper measure of the evidence. " In our opinion this classification has no relation to the object in view, that is, the withdrawal of jury trial in these cases. There can be mass of evidence in the case of persons accused of the same offence in other cases or sets of cases. The mere circumstance of a mass of evidence, and the suggestion that owing to the length of time the jurors might forget what evidence was led before them furnishes no reasonable basis for denying these persons the right of trial by jury. It is difficult to see how assessors can be expected to have better memory than jurors in regard to cases in which a mass of evidence has to be recorded and which may take a long time. It is a matter of daily experience that jury trials take place in a number of cases of dacoity, conspiracy,, murder etc. where the trial goes on for months and months and there is a mass of evidence. On that ground alone a jury trial is not denied, as that is not a reasonable basis for denying it. The memory of jurors, assessors, judges and of other persons who have to form their judgment on the facts of any case, can afford no reasonable basis for a. classification and for denial of equal protection of the laws. Similarly, the quantum of evidence in a particular case can form no reasonable basis for classification and thus can have no just relation to the object in view. The features mentioned by the High Court can be common to all cases of forgery, conspiracy, dacoity, etc. Mr. Sen for the respondent State contended in the first instance, that the defect in the trial, if any, was cured by the provisions of section 536 of the Code of Criminal Procedure as this objection was not taken in the trial Court. In our opinion, this contention is without force. Section 536 postulates irregularities at the trial after the commencement of the proceedings but it does not concern itself with a notification made under section 269 (1) which travels beyond the limits of that 235 section or which contravenes article 14 of the Constitution. The chapter of the Code of Criminal Procedure in which this section is included deals with mere procedural irregularities in the procedure committed by a Court and envisages that when an objection is taken, the Court is then enabled to cure the irregularity. This argument cannot apply to a case like the present. The Court had no power to direct a trial by jury when the Government had revoked its notification with reference to these cases. Moreover the nature of the objection is such that it goes to the very root of the jurisdiction of the Court, and such an objection can be taken notice of at any, stage. Mr. Sen placed reliance on a Bench decision of the Madras High Court in Queen Empress vs Ganapathi Vannianar and Others(1). The matter there was not considered from the point of view mentioned above and we do not think that that case was correctly decided. Mr. Sen further argued that in any case the notification in this case was issued in February, 1947, three years before the Constitution came into force, and that though the trial had not concluded before the coming into force of the Constitution, the trial that had started by the Court of Session with the help of assessors was a good trial and it cannot be said that it was vitiated in any manner. Now it is obvious that if the assessors here were in the status of jurors and gave the verdict of "not guilty" as they did in this case, the accused would have been acquitted unless there were reasons for the Sessions Judge to make a reference to the High Court to quash the trial. Clearly therefore the accused was prejudiced by a trial that continued after the inauguration of the Constitution and under a procedure which was inconsistent with the provisions of article 14 of the Constitution. It was also vitiated because the notification which authorised it also travelled beyond the powers conferred on the State Government by section 269 (1) of the Code of Criminal Procedure. Mr. Sen, for the contention that the continuation of the trial after the inauguration of the Constitution (1) I.L.R. 236 under the notification of 1947, even if that notification was discriminatory in character, was not invalid, placed reliance on two decisions of this Court (1) Syed Kasim Razvi vs The State of Hyderabad(1) and (2) Habeeb Mahomed vs The State of Hyderabad(2). In our opinion, these decisions, instead of helping his contention, completely negative it so far as the facts of this case are concerned. In both these decisions, it was pointed out that for the purpose of determining whether the accused was deprived of the protection under article 14, the Court has to see first of all, whether after eliminating the discriminatory provisions it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law; and, if so, whether that was actually done in the particular case. Now it is obvious that it is impossible to convert a trial held by means of assessors into a trial by jury and a trial by jury could not be introduced at the stage when the procedure prescribed by the notification became discriminatory in character, It is not a case where the discriminatory provision of the law can be separated from the rest. Again, a fair measure of equality in the matter of procedure cannot be secured to the accused in this kind of cases. As pointed, out in Syed Kasim Razvi 's case(1) if the normal procedure is trial by jury or with the aid of assessors, and as a matter of fact there was no jury or assessor trial at the beginning, it would not be possible to introduce it at any ' subsequent stage ' and that having once adopted the summary procedure it is not possible to pass on to a different procedure at a later date. In such cases the whole trial would have to be condemned as bad. The same was the view taken by this Court in Lachmandas Kewalram Ahuja vs The State of Bombay (1). That case proceeded on the assumption that it was not possible for the Special Court to avoid the discriminatory procedure after the 26th January, 1950. Therefore the trial was bad. In view of these observations, it is not possible to accept this part of Mr. Sen 's contention. (1) [I953] S.C.R. 589. (3) [1952]S.C.R. 710. (2) ; 237 Mr. Sen, in his quiet manner, faintly suggested that in view of the decisions of this Court in Kathi Ranig Rawat vs The State of Saurashtra(1) and Kedar Nath Bajoria vs The State of West Benga(2)the decision of this Court in Anwar Ali Sarkar 's case (3), in which it was pointed out that the State Government could not pick out a particular case and send it to Special Court for trial, had lost much of its force. It seems to us that this suggestion is based on a wrong assumption that there is any real conflict between the decision in Anwar Ali Sarkar 's case(3) and the decision in the Saurashtra case(1) or in the case of Kedar Nath Bajoria(2). It has been clearly pointed out by this Court in Kedar Nath Bajoria 's case that whether an enactment providing for special procedure for the trial of certain offences is or is not discriminatory and violates article 14 of the Constitution must be determined in each case as it arises, and no general rule applicable to all cases can be laid down. Different views have been expressed on the question of application of article 14 to the facts and circumstances of each case but there is no difference on any principle as to the construction or scope of article 14 of the Constitution. The majority judgment in Kedar Nath Bajoria vs The State of West Bengal(2) distinguished Anwar Ali Sarkar 's Case(3) on the ground that the law in Bajoria 's case(2) was based on a classification which, in the context of the abnormal post war economic and social conditions, was readily intelligible and obviously calculated to subserve the legislative purpose, but did not throw any doubt whatsoever on the correctness of that decision. The present notification is more on the lines of the Ordinance that was in question in Anwar Ali Sarkar 's case(3) and has no affinity to the Ordinance and the attending circumstances that were considered in the Saurashtra case(1) or in the case of Kedar Nath Bajoria(2) and in the light of that deci sion it must be held that the notification issued in 1947 became discriminatory in character on coming into force of the Constitution and was hit by article 14 of the Constitution. (1) ; (2) ; (3) [1952) S.C.R. 284. 238 The result therefore is that the trial of the appellant after the 26th January, 1950, by the Sessions Judge with the aid of assessors was bad and must therefore be quashed and the conviction set aside. In our opinion, it would not advance the ends of justice if at this stage a fresh trial by jury is ordered in this case. We therefore allow the appeal, set aside the conviction of the appellant and direct that he be set free. Appeal allowed.

Trial by jury is undoubtedly one of the most valuable rights which an accused can have but it has not been guaranteed by the Constitution. Section 269(1) of the Code of Criminal Procedure is an enabling section and empowers the State Government to direct (1) 75 I.A. 41 (2) 76 1,A. 10 225 that the trial of all offences or of any particular class of offences before any Court of Session shall be by jury. It has the further power to revoke or alter such an order. There is nothing wrong if the State discontinues trial by jury in any district with regard to all or any particular class of offences. The section does not empower the State Government to direct that the trial of a particular case or of a particular accused person shall be by jury while the trial of other persons accused of the same offence shall not be by jury. The section does not envisage that persons accused of the, same offence but involved in different cases can be tried by the Court of Session by a different procedure namely some of them by jury and some of them with the help of assessors. The ambit of the power of revocation or alteration is co extensive with the power conferred by the opening words of the section and cannot go beyond those words. The impugned notification of the year 1947 revoking the pre vious two notifications had denied to certain individuals the right to be tried by jury while retaining that right in the case of other individuals who had committed the same or similar offences and thus it had travelled beyond the powers conferred on the State Government by section 269(1) of the Code of Criminal Procedure and was thus void and inoperative. The impugned notification also contravened the provisions of article 14 of the Constitution inasmuch as the classification was not based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained but was made arbitrary and without any substantial basis. The impugned notification did not in express terms indicate the grounds on which this set of cases had been segregated from other sets of cases falling under the same sections of the Indian Penal Code. The classification as formulated by the High Court had no relation to the object in view, that is, the withdrawal of jury trial in these cases. The contention that the defect in the trial, if any, was cured by section 536 of the Code of Criminal Procedure as this objection was not taken in the trial Court, was without force as section 536 postulates irregularities at the trial after the commencement of the proceedings but it does not concern itself with a notification made under section 269(1) which travels beyond the limits of that section or which contravenes article 14 of the Constitution. This objection which goes to the very root of the jurisdiction of the Court can be taken notice of at any stage. The impugned notification issued in 1947 was on the lines of the Ordinance that was in question in Anwar Ali Sarkar 's case ; The State of West Bengal vs Anwar Ali Sarkar ([1952] S.C.R. 284), Queen Empress vs Ganapathi Vannianar and Others (I.L.R. , Syed Kasim Razvi vs The State, of Hyderabad ([1953] 29 226 S.C.R. 589), Habeeb Mahomed vs The State of Hyderabad ( ; , Lachmandas Kewalram Ahuja vs The State of Bombay ([1952] S.C.R. 710), Kathi Raning Rawat vs The State of Saurashtra ([19521 S.C.R. 435), Kedar Nath Bajoria vs The State of West Bengal ( (1954] S.C.R. 30) referred to.

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

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

ION: Special Leave Petition (Civil) No. 7534 of 1987. From the Judgment and Order dated 4.11. 1986 of the Kerala High Court in M.F.A. No. 64 of 1982. E.M.S. Anam for the Petitioner. The Order of the Court was delivered by VENKATARAMIAH, J. The petitioner was the owner of a bus bearing No. KLD 9327 which was being run as a stage car riage. On 24.7.1978 while the said bus was carrying passen gers it met with an accident and Saheeda, who was one of the passengers in the bus, died as a consequence of the said accident. The accident took place, according to the Motor Accidents Claims Tribunal, due to the negligence on the part of the driver of the vehicle who had been employed by the petitioner. The Tribunal found that the compensation payable by the petitioner to the legal representatives of Saheeda was Rs.56,800. It, however, held that the liability of the insurer to indemnify the petitioner was limited to Rs.5,000 as the policy specifically limited the insurer 's 1153 liability to what had been provided by section 95(2)(b)(ii)(2) and (4) of (herein after referred to as the Act '). Aggrieved by the decision of the Tribunal the petitioner filed an appeal before the High Court of Kerala. The said appeal was dismissed. This peti tion is filed under Article 136 of the Constitution for special leave to appeal against the judgment of the High Court. The contention of the petitioner before this Court is that the insurer was liable to indemnify the petitioner upto a limit of Rs.75,000 under section 95(2)(b)(ii)(2) of the Act and that the further limit mentioned in section 95(2)(b)(ii)(4) of the Act was inapplicable to the case of the petitioner. The relevant part of section 95 of the Act during the relevant time read as follows: "95(2). Subject to the proviso to sub section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely (a) where the vehicle is a goods vehicle, a limit of fifty thousand rupees in all, including the liabilities, if any, aris ing under the (8 of 1923), in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle; (b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment , (i) in respect of persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all; (ii) in respect of passengers, (1) a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers; (2) a limit of seventy five thou sand rupees in all where the vehicle is regis tered to carry more than thirty but not more than sixty passengers; 1154 (3) a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers; and (4) subject to the limits aforesaid, ten thousand rupees for each individual pas senger where the vehicle is a motor cab, and five thousand rupees for each individual passenger in any other case; (c) save as provided in clause (d), where the vehicle is a vehicle of any other class, the amount of liability incurred; (d) irrespective of the class of the vehicle, a limit of rupees two thousand in all in respect of damage to any property of a third party. Section 95 of the Act sets out the requirements of the policies of insurance which must be taken by the owners of motor vehicles and the limits of liabilities thereunder. A policy of insurance should subject to the proviso to sub section (1) of section 95 of the Act cover any liability incurred in respect of any one accident upto the limits specified in sub section (2) of section 95 of the Act. Clause (a) of section 95(2) of the Act during the relevant time provided that where the vehicle was a goods vehicle the policy should cover the liability upto Rs.50,000 in all including the liabilities, if any, arising under the Work men 's Compensation Act, 1923 in respect of death of or bodily injury to the workmen (other than the driver) not exceeding six in number being carried in the vehicle. This clause came up for consideration before this Court in Motor Owners Insurance Co. Ltd. vs Jadavji Keshavji Modi & Ors., In that case this Court held that clause (a) of section 95(2) of the Act qualified the extent of the insurer 's liability by the use of the unambiguous expression "in all" and since that expression was specially introduced by an amendment, it must be allowed its full play. The legislature must be presumed to have intended what it had plainly said. But clause (a) did not stand alone and was not the only provision to be considered for determining the outside limit of the insurer 's liability. It was necessary to give effect to the words 'any one accident ' which formed part in the opening part of sub section (2) of section 95 of the Act. The Court, therefore, held that if more than one person was injured during the course of the same transaction each one of the persons must be deemed to have met with an accident. Accordingly, 1155 the Court held that each of the persons who was entitled to claim compensation under clause (a) of sub section (2) of section 95 of the Act was entitled to claim a sum of Rs.50,000 which was the limit prescribed by the said clause on the date on which the accident, referred to in that case, occurred. The Court, however, distinguished the decision of this Court in Sheikhupura Transport Co. Ltd. vs Northern India Transport Insurance Co., [1971] Supp. SCR 20 which was a case in which clause (b) of sub section (2) of section 95 of the Act had arisen for consideration. In doing so the Court observed thus: "The judgment of the Punjab High Court was brought in appeal to this Court in Sheikhupura Transport Co. Ltd. vs Northern India Transport Co. For reasons aforesaid, the judgment in that case is not an authority on the interpretation of clause (a) of section 95(2). After setting out the relevant provi sions of section 95(2) at pages 24 and 25 of the Report, Hegde J. speaking for himself and Jaganmohan Reddy, J. concluded: 'In the present case we are dealing with a vehicle in which more than six passen gers were allowed to be carried. Hence the maximum liability imposed under section 95(2) on the insurer is Rs.2,000 per passenger though the total liability may go upto Rs.20,000. ' Towards the end of the judgment, it was observed that reading the provision con tained in sections 95 and 96 together ' . it is clear that the statutory liability of the insurer to indemnify the insured is as prescribed in section 95(2). Hence the High Court was right in its conclusion that the liability of the insurer in the present case only ex tends upto Rs.2,000 each, in the case of Bachan Singh and Narinder Nath. ' In view of the limit on the insurer 's liability in re spect of each passenger, the argument on the construction of the words 'any one accident ' had no relevance and was therefore neither made nor considered by the Court. Different considerations may arise under clause (b), as amended by Act 56 of 1969, but we do not propose to make any observations on that aspect of the matter, since it does not di rectly arise before us. " Section 95(2)(b) as it existed before its amendment in 1982 dealt with the limits of the liability of an insurer in the case of motor vehicles 1156 in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment. Sub clause (i) of section 95(2)(b) provided that in respect of death of or injury to persons other than passengers carried for hire or reward a limit of Rs.50,000 in all was the limit of the liability of the insurer. Sub clause (ii) dealt with the liability in respect of death of or injury to passen gers. Under that sub clause there were two specific limits on the liability of the insurer in the case of motor vehi cles carrying passengers. The first limit related to the aggregate liability of the insurer in any one accident. It was fixed at Rs.50,000 in all where the vehicle was regis tered to carry not more than thirty passengers, at Rs.75,000 in all where the vehicle was registered to carry more than thirty but not more than sixty passengers and at Rs. 1,00,000 in all where the vehicle was registered to carry more than sixty passengers. The said sub clause proceeded to lay down the other limit in respect of each passenger by providing that subject to the limits aforesaid as regards the aggregate liability, the liability extended up to Rs. 10,000 for each individual passenger where the vehicle was a motor cab and Rs.5,000 for each individual passenger in any other case. Neither of the two limits can be ignored. In the present case the vehicle in question being a bus carrying passengers for hire or reward registered to carry more than thirty but not more than sixty passengers the limit of the aggregate liability of the insurer in any one accident was Rs.75,000 and subject to the said limit the liability in respect of each individual passenger was Rs.5,000. We find it difficult to hold that the limit prescribed in section 95(2)(b)(ii)(4) was only the minimum liability prescribed by law. The amount mentioned in that provision provides the maximum amount payable by an insurer in respect of each passenger who has suffered on account of the accident. This appears to us to be a fair construction of section 95(2) of the Act as it existed at the time when the accident took place. Our view receives support from at least two decisions of this Court. In Sheikhupura Transport Co. Ltd. vs Northern India Transport Insurance Co. (supra) the motor vehicle involved was a passenger bus. On account of an accident which took place on account of the negligence of the driver of the said vehicle two persons died on the spot. Their legal represen tatives claimed compensation before the Motor Accidents Claims Tribunal. The Tribunal found that the legal represen tatives of each of the two persons who had died on account of the accident, were entitled to compensation of Rs. 18,000 and directed that the entire sum should be paid by the insurance company. On appeal by the legal representatives as well as by the insurance company the High Court enhanced the compensation payable to the legal 1157 representatives of each of the two deceased persons to Rs.36,000 and also allowed the appeal of the insurance company and limited its liability to the tune of Rs.2,000 in respect of each of the two deceased persons in accordance with section 95(2)(b) of the Act as it stood at the relevant time which provided that where the vehicle was a vehicle in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment in respect of persons other than passengers carried for hire or reward, a limit of Rs.20,000 and in respect of passengers a limit of Rs.20,000 in all and Rs.2,000 in respect of an individual passenger if the vehicle was registered to carry more than six persons excluding the driver. The Court ob served that since in the said case the vehicle was one in which more than six persons were allowed to be carried the maximum liability imposed under section 95(2) of the Act on the insurer was Rs.2,000 per passenger though the total liability might go upto Rs.20,000 in a given case where large number of persons had suffered on account of the accident. Accordingly the Court affirmed the judgment of the High Court insofar as the question of the liability of the insurer was concerned. Clause (b) of section 95(2) of the Act again came up for consideration before this Court in Manjusri Raha & Ors. etc. vs B.L. Gupta & Ors. ; In that case also the motor vehicle which was involved in the accident was a bus carrying passengers on a route in the State of Madhya Pradesh. The Court followed the decision in the case of Sheikhupura Transport Co. Ltd. vs Northern India Trans port Insurance Co., (supra) and limited the liability of the insurer to Rs.2,000 as provided by the Act at that time. The Court found itself in complete agreement with the observa tions made by the Kerala High Court in P.B. Kader & Ors. vs Thatchamma and Ors., AIR 1970 Kerala 241, and approved the following observations made by the Kerala High Court: "It is sad that an Indian life should be so devalued by an Indian law as to cost only Rs.2,000, apart from the fact that the value of the Indian rupee has been eroded and Indian life has become dealer since the time the statute was enacted, and the consciousness of the comforts and amenities of life in the Indian community has arisen, it would have been quite appropriate to revise this fossil figure of Rs.2,000 per individual, involved in an accident, to make it more realistic and humane, but that is a matter for the legisla ture; and the observation that I have made is calculated to remind the law makers that humanism is the basis of law and justice." 1158 The Court also suggested on its own that instead of limiting the liability of the insurance companies to a specified sum of rupees as representing the value of human life, the amount should be left to be determined by a Court in the special circumstances of each case, even in the case where passenger vehicles were responsible for the incident. Fazal Ali, J. who delivered the judgment in the above case further observed at pages 950 95 1 thus: "While our Legislature has made laws to cover every possible situation, yet it is well nigh impossible to make provisions for all kinds of situations. Nevertheless where the social need of the hour requires that precious human lives lost in motor accidents leaving a trail of economic disaster in the shape of their unpro vided for families call for special attention of the law makers to meet this social need by providing for heavy and adequate compensation particularly through insurance companies. It is true that while our law makers are the best judges of the requirements of the society, yet it is indeed surprising that such an important aspect of the matter has missed their atten tion. Our country can iII afford the loss of a precious life when we are building a progres sive society and if any person engaged in industry, office, business or any other occu pation dies, a void is created which is bound to result in a serious set back to the indus try or occupation concerned. Apart from that the death of a worker creates a serious eco nomic problem for the family which he leaves behind. In these circumstances it is only just and fair that the Legislature should make a suitable provision so as to pay adequate compensation by properly evaluating the pre cious life of a citizen in its true perspec tive rather than devaluing human lives on the basis of an artificial mathematical formula. It is common knowledge that where a passenger travelling by a plane dies in an accident, he gets a compensation of Rs.1,00,000 or like large sums, and yet when death comes to him not through a plane but through a motor vehi cle he is entitled only to Rs.2,000. Does it indicate that the life of a passenger travel ling by plane becomes more precious merely because he has chosen a particular conveyance and the value of his life is considerably reduced if he happens to choose a conveyance of a lesser value like a motor vehicle? Such an invidious distinction is absolutely shock ing to any judicial or social conscience and yet section 95(2)(d) of the seems to suggest such a distinction. We 1159 hope and trust that our law makers will give serious attention to this aspect of the matter and remove this serious lacuna in section 95(2)(d) of the . " These observations were quoted with approval by this Court in the course of its judgment in Motor Owners Insur ance Co. Ltd. vs Jadavji Keshavji Modi & Ors., (supra) and while doing so the Court observed that the above observa tions were still languishing in the cold. storage of pious wishes. Immediately after the decision in the Motor Owners Insurance Co. Ltd. vs Jadavji Keshavji Modi & Ors. (supra) Parliament took steps to amend sub clause (ii) of clause (b) of section 95(2) of the Act by Act 47 of 1982. After the said amendment subclause (ii) of clause (b) of section 95(2) of the Act reads thus: "95(2)(b). Where the vehicle is a vehicle in which passengers are carried for hire or reward of by reason of or in pursuance of a contract of employment . . . . . . . . . . . (ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger. . . . . . . . . . . " As the law stands today the insurer is liable to pay upto Rs.15,000 in respect of death of any passenger or any injury caused to him. In the Statement of Objects and Rea sons attached to the Bill which ultimately became Act 47 of 1982 it was stated that the limit with respect to an insur er 's liability to a passenger involved in an accident in a public service vehicle was being fixed at Rs.15,000. After the above amendment, which was intended to increase the liability of the insurer, instead of Rs.10,000 in the case of each individual passenger where the vehicle was a motor cab and Rs.5,000 for each individual passenger in other cases which were the limits in force immediately prior to the said amendment the liability in respect of an individual passenger is now raised to Rs.15,000. This clearly demon strates that Parliament never intended that the aggregate liability of the insurer mentioned in subclauses (1), (2) and (3) of section 95(2)(b)(ii) of the Act would be the liability of the insurer even when one passenger had died or suffered injury on account of an accident. Such liability was always further limited by sub clause (4) of section 95(2)(b)(ii) of the Act. Even in the latest Bill, i.e., Bill No. 56 of 1987 which was introduced in the Lok Sabha on the 11th of May, 1987 for the purpose of consolidating and amending the law in regard to the motor vehicles it is proposed by 1160 section 147 to retain the provision regarding the limit of the insurer 's liability in respect of vehicles in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment as it was provided by Act 47 of 1982. Section 147(2)(b)(ii) of the Bill reads thus: "147(2). Subject to the proviso to sub section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely: . . . . . . . . . . . (b) where the vehicle is a vehicle in which passengers are carried for hire or, reward or by reason of or in pursuance of a contract of employment; . . . . . . . . . . (ii) in respect of passengers, a limit of fifteen thousand, rupees for each individual passenger, . . . . . . . . . . Having regard to the large number of motor vehicles accidents which are taking place on roads and also to the fact that a large number of public service vehicles carrying passengers are involved in them, we are of the view that the limit of Rs.15,000 fixed in the case of each passenger appears to be still meagre and we hope that Parliament while enacting the Bill into law would take steps to increase the insurer 's liability keeping in view the need for providing for adequate compensation as a measure of social security. We should at this stage state that the High Court of Madras in K.R. Sivagami, Proprietor, Rajendran Tourist vs Mahaboob Nisa Bi and Others, has taken the same view as regards the effect of section 95(2)(b)(ii) of the Act as it stood before its amendment in 1982. It has observed that the said provision specifically provided for two limitations on the liability of the insurer in respect of an accident in which a vehicle carrying passengers was involved, the first limitation being the limitation con tained in sub clauses (1), (2) and (3) of section 95(2)(b)(ii) which provided that for the aggregate liability of the insurer in an accident and the second limitation being the one contained in sub clause (4) of section 95(2)(b)(ii) which provided that subject to the limits aforesaid Rs.10,000 for each individual passenger where the vehicle was a motor cab and Rs.5,000 1161 for each individual passenger in any other case. Khalid, J., as he then was, of the Kerala High Court has also accepted the same construction of section 95(2)(b) in Madras Motor and General Insurance Co. Ltd. by its successor: The United Fire and General Insurance Co. Ltd. and others vs V.P. Balakrishnan and others. , The High Court of Allahabad in New India Assurance Co. Ltd. vs Mahmood Ahmad and others, the High Court of Bombay in Shivahari Rama Tiloji and another vs Kashi Vishnu Agarwadekar and others, and the High Court of Patna in National Insurance Co. Ltd. vs Shanim Ahmad and others, and in Tara Pada Roy vs Dwijendra Nath Sen and others, have over looked the cumulative effect of sub clauses (1), (2) and (3) and of sub clause (4) of section 95(2)(b)(ii) of the Act. They have failed to give effect to section 95(2)(b)(ii)(4) of the Act. We are of the view that these decisions do not lay down the correct view. We may, however, state here that in Noor Mohammad and another vs Phoola Rani and others, 18 and in Raghib Nasim and another vs Naseem Ahmed and others, two Division Benches of the Allahabad High Court have construed the provision in ques tion as we have done in this case. The decision of the Single Judge of the Allahabad High Court in New India Assur ance Co. Ltd. vs Mahmood Ahmad and others, (supra) is dis sented from in the later decision of the Division Bench of the Allahabad High Court in Raghib Nasim and another vs Naseem Ahmad and others, (supra). Having regard to the statute as it stood prior to the amendments by Act 47 of 1982 we hold that the insurer was liable to pay upto Rs.10,000 for each individual passenger where the vehicle involved was a motor cab and upto Rs.5,000 for each individual passenger in any other case. The judg ment of the Kerala High Court against which this petition is filed has followed the above construction. We do not find any ground to interfere with it. This petition is, there fore, dismissed. In the end we propose to make a few suggestions to the Central Government in respect of certain provisions in Chapters X, XI and XII of the Motor Vehicles Bill No. 56 of 1987 now pending before Parliament which relate to the liability without fault in certain cases, insurance of motor vehicles against third party risks and Claims Tribunals. Sections 140, 147, 161 and 166 in the Motor Vehicles Bill No. 56 of 1987 correspond to sections 92A, 95, 109A and 110A of the present Act. The Bill does not propose to introduce any change in sections 1162 140, 147, 161 and 166 of the Bill from what the law is today. They are almost identical with the existing provi sions. In section 140 of the Bill which corresponds to section 92A of the Act the liability to pay compensation in the case of death of any person or in the case of permanent disablement of any person is proposed to be retained at Rs. 15,000 and Rs.7,500 respectively in the same way in which the law stands today. Having regard to the inflationary pressures and the consequent loss of purchasing power of the rupee we feel that the amount of Rs.15,000 and the amount of Rs.7,500 in the above provisions appear to have become unrealistic. We, therefore, suggest that the limits of compensation in respect of death and in respect of permanent disablement, payable in the event of there being no proof of fault, should be raised adequately to meet the current situation. Section 147 in the Bill corresponds to section 95 of the present Act, Here again the Government may consider whether it is necessary to continue the distinction between public service vehicles and other motor vehicles in regard to the liability of the insurer to pay compensation. We also do not find any justification for continuing the distinction between the liability of the insurer to pay compensation to passengers and the liability of the insurer to pay compensa tion to other third parties under the said provisions. Even among the public service vehicles a distinction is made in the said provisions between vehicles used as goods carriages and vehicles used for the purpose of carrying passengers. The Central Government may consider whether the limits of liability of the insurer now incorporated in section 147 of the Bill should not be altered suitably. Section 161 in the Bill corresponds to section 109A of the present Act which makes special provisions as to compensation payable in cases of hit and run motor accidents. This provision provides for payment of Rs.5,000 in respect of death of any person re sulting from a hit and run motor accident and for the pay ment of Rs.1,000 in respect of grievous injury to a person from a hit and run motor accident. It is a matter of common knowledge that hit and run motor accidents are increasing in number. The society and the State which are responsible for such large number of motor vehicles being put on road should carry also the responsibility of protecting the interests of the innocent victims of hit and run motor accidents. A sum of Rs.5,000 and a sum of Rs.1,000 provided as compensation in respect of death or grievous hurt respectively appear to be highly inadequate. The Government may consider whether these figures should not be increased in an appropriate manner. Lastly we come to section 166 of the Bill which corresponds to section 110A of the present Act. This con tains the provisions relating to application for compensa tion to be filed before Claims Tribunals. It is stated therein that where death has resulted from the accident an application for compensation may be 1163 made by all or any of the legal representatives of the deceased. The expression 'legal representative ' has not been defined in the Act and it has led to serious doubts in the course of judicial proceedings. Attention of the Government is drawn to the decision of this Court in Gujarat State Road Transport Corporation, Ahmedabad vs Ramanbhai Prabhatbhai and Another, ; and the reference made in the said decision to the Report of the English Royal Commission on Civil Liberty and Compensation for Personal Injury under the Chairmanship of Lord Pearson. The Government may consid er whether it would not be advisable to define the expres sion 'legal representative ' for purposes of making claims before Claims Tribunal where death had resulted from a motor vehicle accident in the same way in which the English Law has been amended. Since the Bill is on the anvil of Parlia ment we feel that this is the appropriate time for the Central Government to reconsider the above issues. A copy of this Order may be sent to the Secretary to the Government of India, Ministry of Transport, for information. N.P.V. Petition dismissed.

The petitioner was the owner of a bus being run as a stage carriage. On 24.7.78 while carrying passengers this bus met with an accident, as a result of which one passenger died. The Motor Accident Claims Tribunal held that the accident took place due to the negligence on the part of the driver and awarded compensation of Rs.56,800 to the legal representatives of the deceased. It further held that the liability of the insurer to indemnify the petitioner was limited to Rs.5,000 as the policy specifically limited the insurer 's liability to what had been provided by section 95(2)(b)(ii)(2) and (4) of . The appeal filed by the Petitioner was dismissed by the High Court. In the Special Leave Petition before this Court, it was contended on behalf of the petitioner that the insurer was liable to indemnify the petitioner upto a limit of Rs.75,000 under section 95(2)(b)(ii)(2) of the and that the further limit mentioned in section 95(2)(b) (ii)(4) was inapplicable to the case of the petitioner. Dismissing the Special Leave Petition, this Court, HELD: 1. Having regard to the as it stood prior to the amendments by Act 47 of 1982. the insurer was liable to pay upto Rs.10,000 for each individual passenger where the vehicle involved was a motor cab and upto Rs.5,000 for each individual passenger in any other case. [1161F] 2.1 Section 95(2)(b) as it existed before its amendment in 1982 1150 dealt with the limits of the liability of an insurer in the case of motor vehicles in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment. [1155H; 1156A] Sub clause (i) of section 95(2)(b) provided that in respect of death of or injury to persons other than passen gers carried for hire or reward, a limit of Rs.50,000 in all was the limit of the liability of the insurer. [1156A] Under sub clause (ii) there were two specific limits on the liability of the insurer in the case of motor vehicles carrying passengers. The first limit related to the aggre gate liability of the insurer in any one accident. It was fixed at Rs.50,000 in all where the vehicle was registered to carry not more than thirty passengers, at Rs.75,000 in all where the vehicle was registered to carry more than thirty but not more than sixty passengers and at Rs.1,00,000 in all where the vehicle was registered to carry more than sixty passengers. The other limit was in respect of each passenger, which provided that subject to the limits afore said as regards the aggregate liability, the liability extended up to Rs.10,000 for each individual passenger where the vehicle was a motor cab and Rs.5,000 for each individual passenger in any other case. Neither of the two limits can be ignored. [1156B D] 2.2 The limit prescribed in section 95(2)(b)(ii)(4) cannot be said to be only the minimum liability prescribed by law. The amount mentioned in that provision provides the maximum amount payable by an insurer in respect of each passenger who has suffered on account of an accident. This is a fair construction of section 95(2) of the Act as it existed at the time when the accident took place. [1156E] 2.3 After the 1982 amendment the liability of the insur er in respect of each individual passenger is Rs.15,000 as against Rs.10,000 in the case of each individual passenger where the vehicle was a motor cab and Rs.5,000 for each individual passenger in other cases, prior to the said amendment. This shows that Parliament never intended that the aggregate liability of the insurer mentioned in sub clauses (1), (2) and (3) of section 95(2)(b)(ii) would be the liability of the insurer even when one passenger had died or suffered injury on account of an accident. Such liability was always further limited by sub clause (4) of section 95(2)(b)(ii). [1159F G] 2.4 In the instant case, the vehicle in question being a bus carrying passengers for hire or reward registered to carry more than thirty 1151 but not more than sixty passengers, the limit of the aggre gate liability of the insurer in any one accident was Rs.75,000 and subject to the said limit the liability in respect of each passenger was Rs.5,000. [1156D] 2.5 As the law stands today the insurer is liable to pay upto Rs.15,000 in respect of death of any passenger or any injury caused to him. Having regard to the large number of motor vehicle accidents which are taking place on roads and also to the fact that a large number of public service vehicles carrying passengers are involved in them, limit of Rs.15,000 fixed in the case of each passenger appears to be still meagre. [1159E; 1160E] 3. The following suggestions in respect of certain provisions of the are made for considera tion of the Central Government: (i) The limits of compensation in respect of death or permanent disablement payable in the event of there being no proof of fault have become unrealistic in view of inflation ary pressures and consequent loss of purchasing power of the rupee. These limits should, therefore, be raised adequately. [1162B C] (ii) There is no justification for continuing the dis tinction between public service vehicles and other vehicles and also between passengers and third parties with regard to the liability of the insurer to pay compensation. Even among the public service vehicles a distinction is made between vehicles used as goods carriages and those used for carrying passengers. It may be considered whether it is necessary to continue these distinctions and also whether the limits of liability of the insurer should not be altered suitably. [1162D E] (iii) The society and the State which are responsible for a large number of motor vehicles being put on road should carry also the responsibility of protecting the interests of innocent victims of hit and run motor accidents which are increasing in number. The amounts of Rs.5,000 and Rs.1,000 provided as compensation in respect of death or grievous hurt respectively appear to be highly inadequate. It may be considered whether these figures should not be increased in an appropriate manner. [1162F G] (iv) The expression "legal representative" has not been defined in the Act and it has led to serious doubts in the course of judicial proceedings. It may be considered whether it would not be advisable to define the said expression for purposes of making claims before Claims 1152 Tribunals where death has resulted from a motor vehicle accident in the same way in which the English Law has been amended. [1163A C] Motor Owners Insurance Co. Ltd. vs Jadavji Keshavji Modi Northern India Transport Insurance Co., [1971] Supp. SCR 20; Manjusri Raha & Ors. B.L. Gupta & Ors. ; , ; P.B. Kader & Ors. vs Thatchamma and Ors., AIR 1970 Kerala 241; K.R. Sivagami, Proprietor, Rajendran Tourist vs Mahaboob Nisa Bi and others, ; Madras Motor and General Insurance Co. Ltd. by its successor: The United Fire and General Insurance Co. Ltd. and others vs V.P. Ba lakrishnan and others, ; New India Assurance Co. Ltd. vs Mahmood Ahmad and others, ; Shiva hari Rama Tiloli and another vs Kashi Vishnu Agarwadekar and others, ; National Insurance Co. Ltd. vs Shanim Ahmad and others, ; Tara Pada Roy vs Dwijendra Nath Sen and others, ; Noor Mohammad and another vs Phoola Rani and others, ; Raghib Nasim and another vs Naseem Ahmad and others, and Gujarat State Road Transport Corporation, Ahme dabad vs Ramanbhai Prabhatbhai and Another, ; , referred to.

Civil Appeal No. 1110 (NT) of 1986 From the Judgment and Order dated 24.11.1984 of the High Court of Madhya Pradesh, Indore Bench, passed in M.P. NO. 104 of 1984. Gobind Das, Mrs. Sushma Suri, Mrs. Indra Sawhney and C.V.S. Rao for the Appellants. Dr. Y.S. Chitale, Sanjay Sarin, Abdul Chitale and S.K. Gambhir, for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an appeal against the judgment of a Division Bench of the Madhya Pradesh High Court, Jabalpur (Indore Bench) in M. Petition No. 104 of 1984. The appeal is filed at the instance of the 841 Union of India, Collector of Central Excise, Indore and two other excise officers. The respondents are the original petitioners in the aforesaid petition. We propose to refer to the parties by the description in the petition. The facts necessary for the disposal of this appeal can be shortly stated. The petitioner No. 1 is a Company manufacturing spun yarn. According to the petitioners, in the manufacture of the said product they use as raw material cellulosic fibres and non cellulosic fibres. Some time prior to 7th July, 1983, the petitioners filed a classification list in respect of the spun yarn manufactured by them showing the same as covered by Item No. 18(III) (i) in the First Schedule to the (referred to hereinafter as the "Central Excise Act"). The said schedule is generally referred to as the "Central Excises Tariff". This classification was on the basis that the spun yarn was manufactured by them out of non cellulosic synthetic waste. The said classification list was approved by the excise authorities on 7th July, 1983. A supplementary classification list was approved on 15th October, 1983. The petitioners were clearing the goods on the basis of aforesaid classification lists. It appears that samples were drawn out of the spun yarn manufactured by the petitioners and sent for chemical examination. There are some reports submitted by the Chemical Analyser, with the details of which we are not concerned. Without giving any show cause notice or affording any opportunity to the petitioners to be heard, on 7th February, 1984, the Superintendent of Central Excise issued a notice of demand for a total sum of Rs.26,47,749.39 against the petitioner No. 1 on the footing that there was short payment of excise duty. This was done on the ground that the yarn manufactured by the petitioners had been manufactured out of waste of synthetic fibres in blend of viscose fibres (of noncellulosic origin) and hence the said goods manufactured by them were liable to be classified under Central Excises Tariff Item No. 18(III)(ii). It is an admitted position that the yarn manufacturing process used by the petitioners was with the aid of power. The petitioners filed the aforesaid writ petition in the High Court of Madhya Pradesh challenging the validity of the said notice of demand dated 7th February, 1984. The High Court granted an interim stay of the operation of the demand notice on 9th February, 1984. On the same day, namely, 9th February, 1984, an order was passed by the Assistant Collector of Central Excise modifying the approval granted to the aforesaid classification lists submitted by the petitioners which had been approved 842 as aforesaid and classifying the aforesaid product under Item No. 18(III) (ii) of Schedule 1 of the Central Excises Act. On 10th February, 1984 a notice was issued by the Superintendent, Central Excise on the petitioner No. 1 reciting inter alia that the Assistant Collector had modified the approval of the classification lists on 9th February, 1984 and calling upon the petitioner No. 1 to show cause why the duty short levied should not be recovered from them under the provisions of Section 11 A of the Central Excises Act. A second similar show cause notice was also issued. The petitioner No. 1 wrote to the excise authorities pointing out that in view of the aforesaid writ petition filed by the appellant, the adjudication proceedings should be stayed till writ petition was disposed of. This request was turned down on 5th March, 1984 and orders of adjudication were passed by the Assistant Collector modifying the classification lists and confirming the demand made under the aforesaid notice of demand. The petitioners thereupon amended the aforesaid writ petition filed by them and challenged the two show cause notices as well as the said orders of adjudication dated 5th March, 1984. The petitioners also filed an appeal before the Collector of Central Excises (Appeal) against the orders of adjudication dated 5th March, 1984. On 24th November, 1984 by the impugned judgment, the Madhya Pradesh High Court allowed the aforesaid writ petition in part. Mulye, J. held by his judgment that the writ petition was allowed to the extent that the demand for recovery of Rs.26,47,749.39 for the period 15th August, 1983 to 6th February, 1984, which was the period referred to in the demand notice was quashed. However, the learned Judge directed the Collector, Central Excise before whom the appeal filed by the petitioners was pending to decide the appeal in respect of the demand made by the excise authorities for the subsequent period. Giani, J., the other learned judge, in his concurring judgment set aside the two roders issued by the Assistant Collector, Central Excise, Ujjain Division both dated 5th March, 1984 as set out earlier. Copies of these adjudication orders are at Annexure R/10 and R/11 respectively to the writ petition. Very shortly put, both the Judges held that the notice of demand and the orders modifying the classification list served on the petitioners were bad in law and ordered that the same be quashed. A perusal of the judgment also clearly indicates that the Division Bench directed that the Collector, Central Excise (Appeal) should hear the appeal of the petitioners on merits after giving the petitioners an adequate opportunity to put their case and their evidence before him in respect of the period from 7th February, 1984 onwards. Thus, the Division Bench took the view that the show cause notice served on the petitioners could be treated as valid and effective only in respect of the period 843 from 7th February, 1984 onwards and not retrospectively from 15th August, 1983 to 6th February, 1984 being the period for which the demand has already been made in the demand notice dated 9th February, 1984. As far as the relevant items in the First Schedule of the Central Excises Act are concerned, it is not necessary to set out the same in detail. It will be enough to point out that if the cellulosic spun yarn made by a manufacturer with the aid of power contains man made fibre of non cellulosic origin, it will fall under Item No. 18(III) (ii), but if it does not contain any man made fibre of non cellulosic origin, it will fall under Item No. 18(III) (i) and duty would be leviable there at a lower rate. The relevant portion of Section 11 A of the Central Excises Act runs as follows: "When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful mis statement or suppression of fact, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub section shall have effect, as if for the words "Central Excise Officer", the words "Collector of Central Excise" and for the words "six months", the words "five years" were substituted. " A perusal of the aforesaid provisions shows that before any demand is made on any person chargeable in respect of non levy or short levy or under payment of duty, a notice requiring him to show cause why he should not pay the amounts specified in the notice must be served on him. It is the admitted position in the present case that no such notice was served. It would thus appear that the aforesaid demand notice dated 7th February, 1984 was in violation of the provisions of Section 11 A and is bad in law. Mr. Govind Das, learned 844 counsel for the appellant, however, contended that although the aforesaid Section provides that no demand could be made against a person thereunder without affording that person an adequate opportunity to show cause against the same, in the present case, though no prior show cause notice was given and the petitioners were not given an opportunity to be heard before the notice of demand was issued, such a notice was issued and an opportunity to show cause was given after the demand was made and the demand confirmed after hearing and hence it must be regarded as valid. It was submitted by him that a post facto show cause notice should be regarded as adequate in law. In support of this contention Mr. Govind Das tried to place reliance on certain decisions where a view has been taken that in cases where urgent and emergent action is required, an opportunity to be heard can be given after the order affecting a person adversely is passed and that where a particular Act does not provide for any such opportunity to be heard being given before an adverse order is passed, a post facto opportunity to be heard might, in certain cases, be regarded as adequate compliance with principles of natural justice. We are of the view these cases have no relevance in considering the questions before us because it is quite apparent that in the present case no urgent or emergent action was required and Section 11 A of the Central Excises Act clearly provides that prior show cause notice must be issued to the person against whom any demand on ground of short levy or non levy of payment of excise duty is proposed to be made. In Gokak Patel Vokkart Ltd. vs Collector of Central Excise, Belgaum, ; this Court has held that the provisions of Section 11 A(1) & (2) of make it clear that the statutory scheme is that in the situations covered by sub section (1), a notice of show cause has to be issued and sub Section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made before making the order. Notice is thus a condition precedent to a demand under sub Section (2). In view of the aforesaid decision the submission of Mr. Govind Das must be rejected and it must be held that the aforesaid notice of demand was clearly bad in law and the High Court was fully, with respect, justified in quashing the same. The next submission of Mr. Govind Das was that, in any event, 845 as the Collector of Central Excise (Appeals) had been directed to examine the merits of the matter in respect of alleged short levy or non levy and the modification of the classification lists after allowing adequate opportunity to the petitioners to show cause in respect of the period from 7th February, 1984, onwards, the question as to whether there was short levy or non levy in respect of the period from 15th August, 1983 to 6th February, 1984 should even also be allowed to be decided by the Collector. It was submitted by Mr. Govind Das that although the notice of demand may be set aside the notice to show cause dated 9/10th February, 1984 should be treated as a valid and effective notice in respect of the period from 15th August, 1983 to 6th February, 1984 as well as the period from 7th February, 1984 onwards. In this connection, it is the submission of Dr. Chitale that this notice merely asked the petitioners to show cause against calculation or determination of the amount of short levy and not against the alteration in the classification lists on the basis of which short levy was alleged and hence, in respect of the said period from 15th August, 1983 to 6th February, 1984 the show cause notice is liable to be struck down. In our view the submission of Dr. Chitale deserves to be accepted. The opening paragraph of the show cause notice refers to the service of notice of demand dated 7th February, 1984 for Rs.26,47,749.39 on the petitioner. Paragraphs 2 and 3 of the said notice run as follows: "AND whereas the Assistant Collector Central Excise, Ujjain under his letter C.N. V(18)III/I/1/83/371 1374 dated 9th Feb., 84 has modified approval of the classification lists of the party and has directed that the short levied should be quantified by the Inspector, Central Excise, Biaora/Superintendent Central Excise, Ujjain and confirmation or otherwise of such short levied and recoveries if any would be ordered by him (Assistant Collector Central Excise, Division Ujjain) after following the prescribed procedure. THEREFORE, in accordance with the said order of the Assistant Collector, Central Excise Division, Ujjain, you are called upon to show cause to the Assistant Collector, Central Excise, Ujjain within 10 days of the receipt of this show cause notice as to why the short levies of Rs.26,47,749.39 should not be recovered from you, under Section 11 A of the Central Excise and Salt Act, 1944. " A reading of these paragraphs clearly shows that the notice set 846 out as an established fact that the classification lists submitted by the petitioners had been modified by the Assistant Collector, Central Excise, Ujjain and the only matter with respect to which the petitioners were asked to show cause was with regard to the quantification of the amount of the short levy and consequently, the amount which was liable to be recovered from the petitioner No. 1. This notice, therefore, cannot be regarded as a show cause notice against the modification of the classification lists in respect of the aforesaid period. In these circumstances, the show cause notice is bad in law and of no legal effect as far as the said earlier period is concerned. Under Section 11 A of the Central Excise Act, the notice can relate only to a period of six months prior to the issue of that notice except in cases where it is alleged the short levy or short payment has occurred by reason of fraud, collusion or wilful misrepresentation or suppression of facts or contravention of the provisions of the said Act or rules made by the period concerned, as contemplated in the proviso to sub Section (1) of Section 11 A. No such case has been sought to be made here in the said show cause notice. The result is that the said show cause notice must be struck down in so far as period upto 6th February, 1984 is concerned, and can be regarded as a proper show cause notice only in respect of the subsequent period from 7th February, 1984 onwards. We are, therefore, of the view that under the said show cause notice the question of short levy or non levy of excise duty prior to 6th February, 1984 cannot be gone into by the Collector and the High Court was right in the view which it took. In the result, the appeal fails and is dismissed with costs. S.L. Appeal dismissed.

The respondent No. 1 in this appeal was manufacturing Spun yarn. In the manufacture of the said product, the respondents used as raw material cellulosic fibres and non cellulosic fibres. Prior to 7th July, 1983, the respondents had filed a classification list in respect of the spun yarn manufactured by them showing the same as covered by Item No. 18 (III) (i) in the first schedule to the Central Excises and Salts Act, 1944 ("Central Excises Act"). This classification was on the basis that the spun yarn was manufactured by them out of non collulosic synthetic waste. The said classification list was approved by the excise authorities on 7th July, 1983. A supplementary classification list was approved on 15th October, 1983. Samples were drawn out of the spun yarn manufactured by the respondents and sent for chemical analysis. Reports were submitted by the Chemical Analyser. On 7th February, 1984, the Superintendent of Central Excises issued a demand notice against the respondent No. 1 on the footing that there was short payment of excise duty as the goods manufactured by the respondents were liable to be classified under Central Excises Tariff Item No. 18(III) (ii). The respondents filed a writ petition in the High Court, challenging the notice of demand. On 9th February, 1984, the Assistant Collector of Central Excises passed an order modifying the approval granted to the classification lists submitted by the respondents and classifying the aforesaid product of the respondents under Item No. 18(III) (ii) of Schedule I of the Central Excises Act, on the basis of which the Superintendent, Central Excises, issued on the 10th February, 1984, a notice to the respondent No. 1, calling upon them to show cause why duty short levied should not be recovered from them under the provisions of section 11 A of the Central Excises Act. A second similar show cause notice was also issued. The Assistant Collector passed orders of adjudication dated 5th 839 March, 1984, modifying the classification lists and confirming the demand made under the aforesaid notice of demand. The respondents petitioners thereupon amended their aforesaid writ petition to challenge the two show cause notices and the orders of adjudication. The petitioners also filed an appeal before the Collector of Central Excises against the said orders of adjudication. The High Court allowed the writ petition in part, quashing the notice of demand for the period 15th August, 1983 to 6th February, 1984, and the orders modifying the classification lists, and directing the Collector, Central Excises to hear the appeal of the petitioners on merits considering their evidence in respect of the period from 7th February, 1984 onwards. The High Court took the view that the show cause notice served on the petitioner could be treated as valid only in respect of the period from 7th February, 1984, onwards and not retrospectively from 15th August, 1983 to 6th February, 1984. The Union of India, the Collector of Central Excises and other Excise officers then moved this Court by this appeal against the decision of the High Court. Dismissing the appeal, the Court, ^ HELD: If the Cellulosic spun yarn made by a manufacturer with the aid of power contains man made fibre of non cellulosic origin, it will fall under Item No, 18(III) (ii), but if it does not contain any man made fibre of non cellulosic origin, it will fall under Item No. 18(III) (i) and duty would be leviable there at a lower rate. [843B C] Under the provisions of Section 11 A of the Central Excises Act, before any demand is made on any person chargeable in respect of non levy or short levy or under payment of duty, a notice requiring him to show cause why he should not pay the amounts specified in the notice must be served on him. In this case, no such notice was served. The aforesaid notice of demand dated 7th February, 1984, was in violation of the provisions of Section 11 A and is bad in law, and the High Court was fully justified in quashing the same. [843G H;844G H] The appellants contended that although the notice of demand might be set aside, the notice to show cause dated 9th/10th February, 1984, should be treated as a valid notice in respect of the period from 15th August, 1983 to 6th February, 1984 and the period from 7th February, 1984, onwards. The notice referred to the service of notice of demand dated 7th February, 1984 on the respondent No. 1. The notice set out as an established fact that the classification lists submitted by the 840 respondents had been modified by the Assistant Collector, and the only matter with respect to which the respondents were asked to show cause was with regard to the quantification of the amount of short levy which was liable to be recovered from the respondent No. 1. The Notice could not be regarded as a show cause notice against the modification of the classification lists in respect of the aforesaid period. The show cause notice was bad in law and of no legal effect as far as the earlier period was concerned. Under Section 11 A of the Central Excises Act, the notice can relate only to a period of six months period to the issue of that notice except in cases where it is alleged that the short levy or payment has occurred by reason of fraud, collusion or wilful misrepresentation or suppression of facts or contravention of the provisions of the said Act or rules, as contemplated in the proviso to sub section (1) of Section 11 A. No such case was made out in the said show cause notice. The said show cause notice must be struck down in so far as the period upto 6th February, 1984, was concerned and could be regarded as a proper show cause notice only in respect of the subsequent period from 7th February, 1984 onwards. Under the said show cause notice, the question of short levy or non levy of excise duty prior to 6th February, 1984, could not be gone into by the Collector and the High Court was right in the view it took. [845B C;846A E] Gokak Patel Vokkart Ltd. vs Collector of Central Excise, Belgaum, ; , referred to.

(Civil) No. 1410 of 1987. (Under Article 32 of the Constitution of India). WITH Writ Petition (Criminal) No. 528 of 1987. AND Writ Petition (Civil) No. 1372 of 1987. J.P. Verghese, Aby T. Varkey and N.N. Sharma for the Petitioners. Altar Ahmed, ASG. U.N. Bachawat, R.B. Mishra, Ms. A. Subhashini and Uma Nath Singh for the Respondents. The Judgment of the Court was delivered by SHARMA, J. By these three petitions under Article 32 of the Constitution, the petitioners who are foreign nationals, have challenged the order dated 8.7.1987 whereby their prayer for further extension of the period of their stay in India was rejected and they were 153 asked to leave the country by the 3 1st July, 1987. Mr. Louis De Raedt, petitioner in W.P. (C) No. 1410 of 1987, came to India in 1937 on a Belgium passport with British visa and Mr. B.E. Getter the petitioner in W.P. (Crl.) No. 528 of 1987 in 1948 on an American passport and both have been engaged in Christian missionary work. The petitioner in W.P. (C) No. 1372 of 1987, Mrs. S.J. Getter is Mr. B.E. Getter 's wife. Mr. Verghese, the learned counsel, who ap peared for the three petitioners, referred to the facts in W.P. (C) No. 1410 of 1987 and stated that the cases of the other two petitioners are similar and they are entitled to the same relief as Mr. Louis De Raedt. According to his case, Mr. Louis De Raedt has been staying in India continuously since 1937 excepting on two occasions when he went to Belgium for short periods in 1966 and 1973. It has been contended that by virtue of the provi sions of Article 5(c) of the Constitution of India the petitioner became a citizen of this country on 26.11.1949, and he cannot, therefore, be expelled on the assumption that he is a foreigner. Referring to the it was urged that power under Section 3(2)(c) could not be exer cised because the Rules under the Act have not been framed so far. Alternatively, it has been argued that the power to expel an alien also has to be exercised only in accordance with the principles of natural justice and a foreigner is also entitled to be heard before he is expelled. For all these reasons it is claimed that the impugned order dated 8.7.1987 being arbitrary should be quashed and the authori ties should be directed to permit the petitioners to stay on. It has been contended by Mr. Verghese that after the independence of India, appropriate orders were passed per mitting many foreign Christian missionaries to stay on permanently in the country but, as in 1950 petitioner Mr. Louis De Raedt was working in certain remote area of the Adivasi belt in Bihar, he could not obtain the necessary order in this regard. Later, however, he had also filed applications for the purpose which have remained undisposed of till today. 1985 an order was passed asking him to leave the country, and he made a representation to the authorities on 20.9. 1985, a true copy Whereof is Annexure I to the writ petition. On 1.3.1986 he filed another application for naturalisation, a copy whereof has been marked as Annexure II. A copy of his third application dated 15.3.1986 is Annexure III. The impugned order Annexure IV was passed in this background. The main ground urged by the learned counsel is based on 154 Article 5 of the Constitution, which reads as follows: "5. Citizenship at the commencement of the Constitution At the commencement of this Constitution every person who has his domicile in the territory of India and (a) who was born in the territory of India, or (b) either of whose parents was born in the territory of India; or (c) who has been ordinarily resident in the territory of India for not less than five years immediately preceding such commencement, shall be a citizen of India. " The argument is that since Mr. Louis De Raedt was staying in this country since 1937, that is, for a period of more than five years immediately preceding the commencement of the Constitution, he must be held to have duly acquired Indian citizenship. One of the necessary conditions mentioned in Article 5 of the Constitution is that the person concerned must be having his domicile in the territory of India at the com mencement of the Constitution. The question is as to whether the petitioner fulfils this condition? The facts stated by the petitioner himself do not leave any room for doubt that he did not have his domicile here. In his application dated 20.9.1985 addressed to the Home Minister, Government of Madhya Pradesh, Bhopal, Annexure I, the petitioner stated that he had been staying in this country on the basis of residential permit renewed from time to time and when he had gone to Belgium, "No Objection to Return" Certificate was issued without difficulty. He asserted that since he was working in education and social work for a long period he was "more Indian than Belgium". Towards the end of his application he stated thus: "Therefore, I plead for a cancellation of the above order on compassionate ground. I would request Your Honour to kindly allow me to stay in India till the end of my life by extending my residential permit. For this act of kindness I will be ever grate ful to (emphasis added) 155 In his application dated 1.3. 1986 addressed to the Collec tor, Surguja (Madhya Pradesh), which is Annexure II, he mentioned the subject as "request for naturalisation". In this application he referred to the provisions of Article 5 of the Constitution as a basis of his claim but concluded his prayer thus: "If however Government decides that I have LOST my citizenship (sic) would be grateful to be informed about it. So that I can apply under one of the naturalisation Act. (Sic)" He reiterated his stand in Annexure III dated 15.3. The entire relevant official records were available with the learned counsel for the respondents during the hearing of the case, which indicated that the impugned order (Annexure IV) was passed on the basis of another application of the petitioner filed earlier on 25.1. Photostat copies of the said application were filed and kept on the records of the case. It was stated therein that the autho rised period for his stay in India was going to expire on 3.3. 1980. It contained a prayer for the extension of the period of stay by one year. The petitioner mentioned the reason for extension of this stay thus: "to do further social work as a missionary". The purpose of his visit to India was also similarly mentioned: "to do social work as a missionary". There was no indication whatsoever in the said application that he intended to stay in this country on a permanent basis. The period for which the extension was asked for being one year only indicated that by 1980 he had not decided to reside here permanently. Mr. Verghese has contended that the fact that the petitioner has been staying in this country since 1937 and visited Belgium only twice is sufficient by itself to estab lish his case of domicile in India. It was argued that the petitioner 's case cannot be rejected merely for the reason that he has been holding a foreign passport. Reliance was placed on Mohd. Ayub Khan vs Commissioner of Police, Madras and Another, and Kedar Pandey vs Narain Bikram Sah, ; Reference was also made to Union of India vs Ghaus Mohammed, ; , and it was argued that 'a proceeding ought to have been started against the petitioner under Section 9 of the where he should have been allowed to defend. The learned counsel submitted that even a foreigner who comes on the strength of a foreign passport, in case of his overstaying has to be heard before he can be thrown out, and this has been denied to the petitioners. 156 8. Lastly, Mr. Verghese contended that in no event the Superintendent of Police who signed the impugned order, i.e. Annexure, IV, is authorised to direct deportation of the petitioner. There is no force in the argument of Mr. Verghese thai for the sole reason that the petitioner has been stay ing in this country for more than a decade before the com mencement of the Constitution, he must be deemed to have acquired his domicile in this country and consequently the Indian citizenship. Although it is impossible to lay down an absolute definition of domicile, as was stated in Central Bank of India vs Ram Narain, ; it is fully established that an intention to reside for ever in a coun try where one has taken up his residence is an essential constituent element for the existence of domicile in that country. Domicile has been described in Halsbury 's Laws of England, 4th edition, Volume 8, Paragraph 42 1) as the legal relationship between individual and a territory with a distinctive legal system which invokes that system as his personal law. Every person must have a personal law, and accordingly every one must have a domicile. He receives at birth a domicile of origin which remains his domicile, wherever he goes, unless and until he acquires a new domi cile. The new domicile, acquired subsequently, is generally called a domicile of choice. The domicile of origin is received by operation of law at birth and for acquisition of a domicile of choice one of the necessary conditions is the intention to remain there permanently. The domicile of origin is retained and cannot be divested until the acquisi tion of the domicile of choice. By merely leaving his coun try, even permanently, one will not, in the eye of law, lose his domicile until he acquires a new one. This aspect was discussed in Central Bank of India vs Ram Narain (supra) where it was pointed out that if a person leaves the country of his origin with undoubted intention of never returning to it again, nevertheless his domicile of origin adheres to him until he actually settles with the requisite intention in some other country. The position was summed in Halsbury thus: "He may have his home in one country, but be deemed to be domiciled in another." Thus the proposition that the domicile of origin is retained until the acquisition of a domicile of choice is well estab lished and does not admit of any exception. For the acquisition of a domicile of choice, it must he shown that the person concerned had a certain state of mind, the animus manendi. If he claims that he acquired a new domicile at a particular time, he must prove that he had formed the inten tion of making his permanent home in the country of resi dence and of continuing to reside there permanently. Resi dence alone, unaccompanied by this state of mind, is insuf ficient. Coming to the facts of the present cases the ques tion which has to be answered is whether at the commencement of the Constitution of India the petitioners had an inten tion of staying here permanently. The burden to prove such an intention lies on them. Far from establishing the case which is now pressed before us, the available materials on the record leave no room for doubt that the petitioners did not have such intention. At best it can be said that they were incertain about their permanent home. During the rele vant period very significant and vital political and social changes were taking place in this country, and those who were able to make up their mind to adopt this country as their own, took appropriate legal steps. So far the three petitioners are concerned, they preferred to stay on, on the basis of their passports issued by other countries, and obtained from time to time permission of the Indian authorities for their further stay for specific periods. None of the applications filed by the petitioners in this connection even remotely suggests that they had formed any intention of permanently residing here. None of the cases relied upon on behalf of the petitioners is of any help to them. The case of Mohd. Ayub Khan was one where the appellant had made an application to the Central Government under Section 9(2) of the Indian for the determination of his citizen ship. Section 9(1) says that if any citizen of India ac quired the citizenship of another country between 26.1. 1950 and the commencement of the , he ceased to be a citizen of India and sub section (2) directs that if any question arises as to whether, when or how any person has acquired the citizenship of another country, he shall be determined by the prescribed authority. Mohd. Ayub Khan was a citizen of this country at the commencement of the constitution of India and was asked to leave the country for the reason that he had obtained a Pakistani Passport. The question which thus arose in that case was entirely differ ent. The case of Kedar Pandey vs Narain Bikram Sah, (supra), does not help the petitioners at all. On a consideration of the entire facts and circumstances this Court concluded that "the requisite animus manendi as has been proved in the finding of the High Court is correct". The Respondent Narain Bikram Sah, who claimed to have acquired Indian citizenship, had extensive properties at large number of different places in India and had pro 158 duced many judgments showing that he was earlier involved in litigations relating to title, going upto the High Courts in India and some time the Privy Council stage. He was born at Banaras and his marriage with a girl from Himachal Pradesh also took place at Banaras and his children were born and brought up in India. Besides his other activities supporting his case, he also produced his Indian passport. In the cases before us the learned counsel could not point out a single piece of evidence or circumstance which can support the petitioners ' case, and on the other hand they have chosen to remain here on foreign passports with permission of Indian authorities to stay, on the basis of the said passports. Their claim, as pressed must, therefore, be rejected. The next point taken on behalf of the petitioners, that the foreigners also enjoy some fundamental right under the Constitution of this country, is also of not much help to them. The fundamental right of the foreigner is confined to Article 21 for life and liberty and does not include the right to reside and settle in this country, as mentioned in Article 19(1)(e), which is applicable only to the citizens of this country. It was held by the Constitution Bench in Hans Muller of Nurenburg vs Superintendent, Presidency Jail, Calcutta and Ors, ; that the power of the Government in India to expel foreigners is absolute and unlimited and there is no provision in the Constitution lettering this discretion. It was pointed out that the legal position on this aspect is not uniform in all the countries but so far the law which operates in India is concerned, the Executive Government has unrestricted right to expel a foreigner. So far the right to be heard is concerned, there cannot be any hard and fast rule about the manner in which a person concerned has to be given an opportunity to place his case and it is not claimed that if the authority concerned had served a notice before passing the impugned order, the petitioners could have produced some relevant material in support of their claim of acquisition of citizenship, which they failed to do in the absence of a notice. The last point that the impugned order (Annexure IV) passed. by the Superintendent of Police, who was not autho rised to so, is also devoid of any merit. The order was not passed by the Superintendent of Police; the decision was of the Central Government which was being executed by the Superintendent, as is clear from the order itself. For the reasons mentioned above, we do not find any merit in the petitions, which are accordingly dismissed, but without costs. G.N. Petitions dismissed.

The Petitioners, foreign nationals engaged in Christian missionary work have been staying in India continuously for a long time since pre independence period. They continued to stay on the basis of resi 149 150 dential permits renewed from time to time. In 1985 an order was passed asking them to leave the country and they made representations to the authorities, followed by further representations in 1986 for naturalisation further extension of stay. However by order dated 8.7.1987 their request was rejected and they were asked to leave the country by 31st July, 1987. The petitioners challenged the said order in the writ petitions filed before this Court. It was contended by the petitioners that since they were staying in this country for a period of more than five years immediately preceding the commencement of the Consti tution, they should be held to have duly acquired Indian citizenship on the basis of Article 5(e) of the Constitution of India; that their continuous stay in India has estab lished their case of domicile in India which cannot be rejected merely because were holding foreign passports; that proceedings against them have been initiated under section 9 of the enabling them to defend their case; that they were denied hearing; and that in no event the Superintendent of Police who had signed the deportation order was authorised to do so. Dismissing the Writ Petitions, this Court, HELD: 1. Every person must have a personal law, and accord ingly every one must have a domicile. He receives at birth a domicile of origin which remains his domicile, wherever he goes, unless and until he acquires a new domicile. The new domicile, acquired subsequently, is generally called a domicile of choice. The domicile of origin is received by operation of law at birth and for acquisition of a domicile of choice one of the necessary conditions is the intention to remain there permanently. The domicile of origin is retained and cannot be divested until the acquisition of the domicile of choice. By merely leaving his country, even permanently, one will not, in the eye of law, lose his domicile until he acquires a new one. This proposition that the domicile of origin is retained until the acquisition of a domicile of choice is well established and does not admit of any exception. [156D F] Central Bank of India vs Ram Narain, ; , relied on. Halsbury 's Laws of England, 4th Edn., Vol. 8, para 421, referred to. One of the necessary conditions mentioned in Article 5 of the 151 Constitution is that the person concerned must be having his domicile in the territory of India at the commencement of the Constitution. It is not established that they had such an intention for the sole reason that the Petitioners 'have been staying in India for more than a decade before the commencement of the Constitution, and it cannot be deemed that they acquired domicile in India and consequently Indian citizenship. [154E] 3.1. For the acquisition of a domicile of choice, it must be shown that the person concerned had a certain State of mind, the animus manendi. If he claims that he acquired a new domicile at a particular time, he must prove that he had formed the intention of making his permanent home in the country of residence and of continuing to reside there permanently. Residence alone, unaccompanied by this state of mind, is insufficient. [156H; 157A] 3.2. The burden to prove that the petitioners had an intention to stay permanently in India lies on them. The available materials on the record leave no room for doubt that the petitioners did not have such intention. At best it can be said that they were uncertain about their permanent home. During the relevant period very significant and vital political and social changes were taking place in this country, and those who were able to make up their mind to adopt this country as their own, took appropriate legal steps. The petitioners preferred to stay on, on the basis of their passports issued by other countries, and obtained from time to time permission of the Indian authorities for their further stay for specific periods. None of the applications filed by the petitioners in this connection even remotely suggested that they had formed an intention of permanently residing here. [157B D] Mohd. Ayub Khan vs Commissioner of Police, Madras, and Kedar Pandey vs Narain Bikram Sah, ; , distinguished. Union of India vs Ghaus Mohammed, ; , referred to. The fundamental right of the foreigner is confined to Article 21 for life and liberty and does not include the right to reside and settle in this country, as mentioned in Article 19(1)(e), which is applicable only to the citizens of this country. The power of the Government in India to expel foreigners is absolute and unlimited and there is no provision in the Constitution fettering this discretion. The legal position on this aspect is not uniform in all the countries but so far the law which 152 operates in India is concerned, the Executive Government has unrestricted right to expel a foreigner. [158C E] Hans Muller of Nurenburg vs Superintendent, Presidency Jail, Calcutta & Ors., ; , relied on. So far the right to be heard is concerned, there cannot be any hard and fast rule about the manner in which a person concerned has to be given an opportunity to place his case and it is not claimed that if the authority concerned had served a notice before passing the impugned order, the petitioners could have produced some relevant material in support of their claim of acquisition of citizenship, which they failed to do in the absence of a notice. [158E F] 6. The contention that the Superintendent of Police was not authorised to direct deportation of the petitioners, is devoid of merit. Actually the order was not passed by the Superintendent of Police. It was the decision of the Central Government, which was being executed by the Superintendent of Police. This is clear from the order. [158G]

Appeal No. 427 of 1959. Appeal by special leave from the Award dated February 18, 1958, of the Industrial Tribunal (Textiles) U.P., Allahabad, in Petitions (under section 6 E) Nos. (Tex.) 3 and 4 of 1957 and 1 of 1958. M. C. Setalvad, Attorney General for India and G. C. Mathur, for the appellant. B. P. Maheshwari, for the respondents. December 12. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. Three applications made by the appellant the Lord Krishna Textile Mills under section 6 E(2)(b) of the United Provinces (Act XXVIII of 1947) for obtaining the approval of the Industrial Tribunal to the dismissal of 8 of its workmen have been rejected; and the Tribunal has refused to accord its approval to the action taken by the appellant. This appeal by special leave challenges the legality, validity as well as the propriety of the said order, and the principal question which it seeks to raise is in regard to the scope of the enquiry permissible under section 6 E(2)(b) as well as the extent of the jurisdiction of the Tribunal in holding such an enquiry. Section 6 E(2) of the U. P. Act is identical in terms with section 33 of the (XIV of 1947) (hereafter called the Act), and for convenience we would refer to the latter section because what we decide in the present appeal will 206 apply as much to cases falling under section 6 E(2)(b) of the U. P. Act as those falling under section 33(2)(b) of the Act. It appears that on October 12, 1957 when the appellant 's Controller of Production and the General Superintendent were discussing certain matters in the office of the appellant mills, Har Prasad, one of the 8 workmen dismissed by the appellant, came to see the Controller along with some other workmen. These workmen placed before the Controller some of their grievances; and when the Controller told their leader Har Prasad that the grievances set forth by them were not justified Har Prasad replied that the Controller was in charge of the management of the appellant mills and could do what he liked, but he added that the ways adopted by the management were not proper and "it may bring very unsatisfactory results". With these words Har Prasad and his companions left the office of the Controller. Two days thereafter Har Prasad and Mool Chand saw the Controller again in his office and complained that one of the Back Sizers Yamin had reported to them that the Controller had beaten him; the Controller denied the allegation whereupon the two workmen left his office. At about 6 p.m. the same evening a number of workmen of the appellant mills surrounded Mr. Contractor, the General Superintendent, and Mr. Surti when they were returning to their bungalows from the mills and assaulted and beat them. The two officers then lodged a First Information Report at Thana Sadar Bazar, Saharanpur about 9 p.m.; thereupon the Inspector of Police went to the scene of the offence, and on making local enquiries arrested two workmen Ramesh Chander Kaushik and Tika Ram. This offence naturally led to grave disorder in the mills, and the officers of the mills felt great resentment in consequence of which the mills remained closed for three days. The appellant 's management then started its own investigations and on October 17 it suspended five workmen Har Prasad, Majid, Zinda, Yamin and Manak Chand. Notice was served on each of these suspended workmen calling upon them to explain their conduct and 207 to show cause why they should not be dismissed from the service of the mills. As a result of further investigation the management suspended two more workmen Om Parkash and Satnam on October 24 and served similar notices on them. Ramesh Chander Kaushik and Tika Ram were then in police custody. After they were released from police custody notices were served on them on November 24 asking them to show cause why their services should not be terminated. All the workmen to whom notices were thus served gave their explanations and denied the charges levelled against them. An enquiry was then held according to the Standing Orders. At 'the said enquiry all the. workmen concerned as well as the representatives of the union were allowed to be present and the offending workmen were given full opportunity to produce their witnesses as also to cross examine the witnesses produced by the management against them. As a result of the enquiry thus held the management found the charges proved against the workmen concerned, and on November 19 Om Parkash, Satnam, Majid, Yamin, Zinda and Har Prasad were dismissed. These dismissed workmen were asked to take their final dues together with one month 's pay in lieu of notice as required by the Standing Orders, On Decem ber 20, the enquiry held against Tika Ram and Ramesh Chander concluded and as a result of the findings that the charges were proved against them the said two workmen were also dismissed from service and required to take their final dues with one month 's wages in lieu of notice. At this time an industrial dispute in respect of bonus for the relevant year was pending before the Industrial Tribunal (Textile) U.P., Allahabad. The appellant, therefore, made three applications before the Tribunal under section 6 E(2) of the U. P. Act on November 21 and 27 and December 21, 1957 respectively. By these applications the appellant prayed that the Industrial Tribunal should accord its approval to the dismissal of the workmen concerned. On February 18, 1958 the Tribunal found that the appellant had failed to make out a case for dismissing the 208 workmen in question, and so it refused to accord its approval to their dismissal. Accordingly it directed the appellant to reinstate the said workmen to their original jobs with effect from the dates on which they were suspended with continuity of service, and it ordered that the appellant should pay them full wages for the period of unemployment. It is on these facts that the question about the construction of section 6 E(2)(b) of the U.P. Act falls to be considered. As we have already observed the material provisions of section 6 E of the U. P. Act are the same as section 33 of the Act after its amendment made by Act 36 of 1956; and since the fatter section is of general application we propose to read the relevant provisions of section 33 of the Act and deal with them. All that we say about this section will automatically apply to the corresponding provisions of section 6 E of the U. P. Act. Section 33 occurs in Chapter VII of the Act which contains miscellaneous provisions. The object of section 33 clearly is to allow continuance of industrial proceedings pending before any authority prescribed by the Act in a calm and peaceful atmosphere undisturbed by any other industrial dispute; that is why the plain object of the section is to maintain status quo as far as is reasonably possible during the pendency of the said proceedings. Prior to its amendment by Act 36 of 1956 section 33 applied generally to all cases where alteration in the conditions of service was intended to be made by the employer, or an order of discharge or dismissal was proposed to be passed against an employee without making a distinction as to whether the said alteration or the said order of discharge or dismissal was in any manner connected with the dispute pending before an industrial authority. In other words, the effect of the unamended section was that pending an industrial dispute the employer could make no alteration in the conditions of service to the prejudice of workmen and could pass no order of discharge or dismissal against any of his employees even though the proposed alteration or the intended action had no connection whatever with the dispute pending. between him and his employees. This led to a general 209 complaint by the employers that several applications had to be made for obtaining the permission of the specified authorities in regard to matters which were not connected with the industrial dispute pending adjudication; and in many cases where alterations in conditions of service were urgently required to be made or immediate action against an offending workman was essential in the interest of discipline, the employers were powerless to do the needful and had to submit to the delay involved in the process of making an application for permission in that behalf and obtaining the consent of the Tribunal. That is why, by the amendment made in section 33 in 1956 the Legislature has made a broad division between action proposed to be taken by the employer in regard to any matter connected with the dispute on the one hand, and action proposed to be taken in regard to a matter not connected with the dispute pending before the authority on the other. Section 33(1) provides that during the pendency of such industrial proceedings no employer shall (a) in regard to any matter connected with the dispute alter to the prejudice of the workmen concerned in such dispute the conditions of service applicable to them immediately before the commencement of such proceedings, or (b) for any misconduct connected with the dispute discharge or punish whether by dismissal or otherwise any workman connected with such dis pute, save with the express permission in writing of the authority before which the proceeding is pending. Thus the original unamended section has now been confined to cases where the proposed action on the part of the employer is in regard to a matter connected with a dispute pending before an industrial authority. Under section 33(1) if an employer wants to change the conditions of service in regard to a matter connected with a pending dispute he can do so only with the express permission in writing of the appropriate authority. Similarly, if he wants to take any action against an employee on the ground of an alleged misconduct connected with the pending dispute he 27 210 cannot do so unless he obtains previous permission in writing of the appropriate authority. The object of placing this ban on the employer 's right to take action pending adjudication of an industrial dispute has been considered by this Court on several occasions. In the case of the Punjab National Bank Ltd. V. Its Workmen (1) this Court examined its earlier decisions on the point and considered the nature of the enquiry which the appropriate authority can hold when an application is made before it by the employer under section 33(1) and the extent of the jurisdiction which it can exercise in such an enquiry. "The purpose the Legislature had in view in enacting section 33", it was held, "was to maintain the status quo by placing a ban on any action by the employer pending adjudication"; and it was added "but the jurisdiction conferred on the Industrial Tribunal by section 33 was a limited one. Where a proper enquiry had been held and no victimisation or unfair labour practice had been resorted to, the Tribunal in granting permission had only to satisfy itself that there was a prima facie case against the employee and not to consider the propriety or adequacy of the proposed action". It is significant that the Tribunal can impose no conditions and must either grant permission or refuse it. It is also significant that the effect of the permission when granted was only to remove the ban imposed by section 33; it does not necessarily validate the dismissal or prevent the said dismissal from being challenged in an industrial dispute. This position is not disputed before us. What is in dispute before us is the nature of the enquiry and the extent of the authority 's jurisdiction in holding such an enquiry under section 33(2). Section 33(2) deals with the alterations in the conditions of service as well as discharge or dismissal of workmen concerned in any pending dispute where such alteration or such discharge or dismissal is in regard to a matter not connected with the said pending dispute. This class of cases where the matter giving rise to the proposed action is unconnected with the pending industrial dispute has now been taken (1) ; 211 out of the scope of section 33(1) and dealt with separately by section 33(2) and the following sub sections of section 33. Section 33(2) reads thus: "During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute, (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or (b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman: Provided that no such workman shall be discharged or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer. " It would be noticed that even during the pendency of an industrial dispute the employer 's right is now recognised to make an alteration in the conditions of service so long as it does not relate to a matter connected with the pending dispute, and this right can be exercised by him in accordance with the relevant standing orders. In regard to such alteration no application is required to be made and no approval required to be obtained. When an employer, however, wants to dismiss or discharge a workman for alleged misconduct not connected with the dispute he can do so in accordance with the standing orders but a ban is imposed on the exercise of this power by the proviso. The proviso requires that no such workmen shall be discharged or dismissed unless two conditions are satisfied; the first is that the employee concerned should have been paid wages for one month, and the second is that an application should have been made by the employer to the appropriate authority for approval of the action taken by the employer. It is plain that whereas in cases falling under section 33(1) no action can be taken by the employer unless he has 212 obtained previously the express permission of the appropriate authority in writing, in cases falling under sub section (2) the employer is required to satisfy the specified conditions but he need not necessarily obtain the previous consent in writing before he takes any action. The requirement that he must obtain approval as distinguished from the requirement that he must obtain previous permission indicates that the ban imposed by section 33(2) is not as rigid or rigorous as that imposed by section 33(1). The jurisdiction to give or withhold permission is prima facie wider than the jurisdiction to give or withhold approval. In dealing with cases falling under section 33(2) the industrial authority will be entitled to enquire whether the proposed action is in accordance with the standing orders, whether the employee concerned has been paid wages for one month, and whether an application has been made for approval as prescribed by the said sub section. It is obvious that in cases of alteration of conditions of service falling under section 33(2)(a) no such approval is required and the right of the employer remains unaffected by any ban. Therefore, putting it negatively the jurisdiction of the appropriate industrial authority in holding an enquiry under section 33(2)(b) cannot be wider and is, if at all, more limited, than that permitted under section 33(1), and in exercising its powers under section 33(2) the appropriate authority must bear in mind the departure deliberately made by the Legislature in separating the two classes of cases falling under the two sub sections, and in providing for express permission in one case and only approval in the other. It is true that it would be competent to the authority in a proper case to refuse to give approval, for section 33(5) expressly empowers the authority to pass such order in relation to the application made before it under the proviso to section 33(2)(b) as it may deem fit; it may either approve or refuse to approve; it can, however, impose no conditions and pass no conditional order. Section 33(3) deals with cases of protected workmen and it assimilates cases of alterations of conditions of service or orders of discharge or dismissal proposed to 213 be made or passed in respect of them to cases falling under section 33(1); in other words, where an employer wants to alter conditions of service in regard to a protected workman, or to pass an order of discharge or dismissal against him, a ban is imposed on his rights to take such action in the same manner in which it has been imposed under section 33(1). Sub section (4) provides for the recognition of protected workmen, and limits their number as therein indicated; and sub section (5) requires that where an employer has made an application under the proviso to sub section (2), the authority concerned shall without delay hear such application and pass as expeditiously as possible such orders in relation thereto as it deems fit. This provision brings out the legislative intention that, though an express permission in writing is not required in cases falling under the proviso to section 33(2)(b), it is desirable that there should not be any time lag between the action taken by the employer and the order passed by the appropriate authority in an enquiry under the said. proviso. Before we proceed to deal with the merits of the dispute, however, we may incidentally refer to another problem of construction which may arise for decision under section 33(2)(b) and which has been argued before us at some length. When is the employer required to make an application under the proviso to section 33(2)(b)? Two views are possible on this point. It may be that the proviso imposes two conditions precedent for the exercise of the right recognised in the employer to dismiss or discharge his workman pending a dispute. The use of the word "unless" can be pressed into service in support of the argument that the two conditions are conditions precedent; he has to pay wages for one month to the employee, and he has to make an application for approval; and both these conditions must be satisfied before the employee is discharged or dismissed. On this view it would be open to the employer to discharge or dismiss his employee after satisfying the said two conditions without waiting for the final order which the authority may pass on the application made before it in that 214 behalf. The Legislature has indicated that there should be no time lag between the making of the application and its final disposal, and so by sub section (5) it has specifically and expressly provided that such application should be disposed of as expeditiously as possible. This view proceeds on the assumption that the word "unless" really means "until" and introduces a condition precedent. On the other hand, it is possible to contend that the application need not be made before any action has been taken, and that is clear from the fact that the application is required to be made for approval of the action taken by the employer. "Approval" according to its dictionary meaning suggests that what has to be approved has already taken place; it is in the nature of ratification of what has already happened or taken place. The word "approval" in contrast with the word "previous permission" shows that the action is taken first and approval obtained afterwards. Besides, the words "action taken" which are underlined by us, it may be argued, show that the order of discharge or dismissal has been passed, and approval for action thus taken is sought for by the application made by the employer. On the first construction the words "action taken" have to be construed as meaning action proposed to be taken, whereas on the latter construction the said words are given their literal meaning, and it is said that the discharge or dismissal has taken place and it is the action thus taken for which approval is prayed. In support of the first view it may be urged that the words "action taken" can well be interpreted to mean "action proposed to be taken" because it is plain that the condition as to payment of wages cannot be literally construed and must include cases where wages may have been tendered to the workman but may not have been accepted by him. In other words, the argument in support of the first interpretation is that in the construction of both the conditions the words "paid" and "action taken" cannot be literally construed, and in the context should receive a more liberal interpretation. "Paid wages" would on that view mean "wages 215 tendered" and "action taken" would mean "action proposed to be taken". If these two words are literally construed there may be some inconsistency between the notion introduced by the use of the word "unless" and these words thus literally construed. It may also be urged in support of the first contention that if the ban imposed by the proviso does not mean that an application has to be made before any action is taken by the employer it would be left to the sweet will of the employer to make the requisite application at any time he likes. The section does not provide for any reasonable period within which the application should be made and prescribes no penalty for default on the part of the employer in making such an application within any time. On the other hand, this argument can be met by reference to section 33A of the Act. If an employer does not make an application within a reasonable time the employee may treat that as contravention of section 33(2)(b) and make a complaint under section 33A, and such a complaint would be tried as if it is an industrial dispute; but, on the other hand an employer can attempt to make such a complaint ineffective by immediately proceeding to comply with section 33(2)(b) by making an application in that behalf and the authority may then have to consider whether the delay made by the employer in making the required application under section 33(2)(b) amounts to a contravention of the said provision, and such an enquiry could not have been intended by the Legislature; that is why the making of the applica tion should be treated as a condition precedent under the proviso. If that be the true position then the employer has to make an application before he actually takes the action just as he has to tender money to the employee before dismissing or discharging him. But, if it is not a condition precedent, then he may pass an order of discharge or dismissal and make an application in that behalf within reasonable time. We have set forth the rival contentions in regard to the construction of the proviso, but we do not propose to express our decision on the point, because, having regard to their pleadings, we cannot allow the respondents to raise this question for our decision in the 216 present appeal. It is clear from the contentions raised before the Tribunal and the pleas specifically raised by the respondents in their statement of case before this Court that both parties agreed that the application in question had been properly made under the proviso; and the only point at issue between them is about the validity and propriety of the order under appeal having regard to the limited jurisdiction of the enquiry under section 33(2)(b), and it, is to that question that we must now return. Before we do so, however, we ought to add that our attention had been drawn to three decisions of this Court in which, without any discussion of the point, the validity of the employers ' applications made under section 33(2)(b) appears to have been assumed though the said applications were presumably made after the employers had dismissed their employees. They are: Delhi Cloth and General Mills Ltd vs Kushal Bhan (1); The Management of Swatantra Bharat Mills, New Delhi vs Ratan Lal (2 ); and The Central India Coal fields Ltd., Calcutta vs Ram Bilas Shobnath (3). We wish to make it clear that these decisions should not be taken to have decided the point one way or the other since it was obviously not argued before the Court and had not been considered at all. In view of the limited nature and extent of the enquiry permissible under section 33(2)(b) all that the authority can do in dealing with an employer 's application is to consider whether a prima facie case for according approval is made out by him or not. If before dismissing an employee the employer has held a proper domestic enquiry and has proceeded to pass the impugned order as a result of the said enquiry, all that the authority can do is to enquire whether the conditions prescribed by section 33(2)(b) and the proviso are satisfied or not. Do the standing orders justify the order of dismissal? Has an enquiry been held an provided by the standing order? Have the wages for the month been paid as required by the proviso?; and, has an application been made as prescribed by the proviso? This last (1) ; (2) Civil Appeal No. 392 of 1959 decided on 28.3.1960 (3) Civil Appeal No. 162 of 1959 decided on 31.3.1960 217 question does not fall to be decided in the present appeal because it is common ground that the application has been properly made. Standing Order 21 specifies ' acts of omission which would be treated as misconduct, and it is clear that under 21(s) threatening or intimidating any operative or employee within the factory premises is misconduct for which dismissal is prescribed as punishment. This position also is not in dispute. There is also no dispute that proper charge sheets were given to the employees in question, an enquiry was properly held, and opportunity wag given to the employees to lead their evidence and to cross examine the evidence adduced against them; in other words, the enquiry is found by the Tribunal to have been regular and proper. As a result of the enquiry the officer who held the enquiry came to the conclusion that the charges as framed had been proved against the workmen concerned, and so orders of dismissal were passed against them. In such a case it is difficult to understand how the Tribunal felt justified in refusing to accord approval to the action taken by the appellant. It has been urged before us by the appellant that in holding the present enquiry the Tribunal has assumed powers of an appellate court which is entitled to go into all questions of fact; this criticism seems to us to be fully justified. One has merely to read the order to be satisfied that the Tribunal has exceeded its jurisdiction in attempting to enquire if the conclusions ,of fact recorded in the enquiry were justified on the merits. It did not hold that the enquiry was defective or the requirements of natural justice had not been satisfied in any manner. On the other hand it has expressly proceeded to consider questions of fact and has given reasons some of which would be inappropriate and irrelevant if not fantastic even if the Tribunal was dealing with the relevant questions as an appellate court. "The script in which the statements have been recorded", observes the Tribunal, "is not clear and fully decipherable". How this can be any reason in upsetting.the finding of the enquiry it is impossible to 28 218 understand. The Tribunal has also observed that the evidence adduced was not adequate and that it had not been properly discussed. According to the Tribunal the charge sheets should have been more specific and clear and the evidence,should have been more satisfactory. Then the Tribunal has proceeded to examine the evidence, referred to some discrepancies in the statements made by witnesses and has come to the conclusion that the domestic enquiry should not have recorded the conclusion that the charges have been proved against the workmen in question. In our opinion, in making these comments against the findings of the enquiry the Tribunal clearly lost sight of the limitations statutorily placed upon its power and authority in holding the enquiry under section 33(2)(b). It is well known that the question about the adequacy of evidence or its sufficiency or satisfactory character can be raised in a court of facts and may fall to be considered by an appellate court which is entitled to consider facts; but these considerations are irrelevant where the jurisdiction of the court is limited as under section 33(2)(b). It is conceivable that even in holding an enquiry under section 33(2)(b) if the authority is satisfied that the finding recorded at the domestic enquiry is perverse in the sense that it is not justified by any legal evidence whatever, only in such a case it may be entitled to consider whether approval should be accorded to the employer or not; but it is essential to bear in mind the difference between a finding which is not supported by any legal evidence and a finding which may appear to be not supported by sufficient or adequate or satisfactory evidence. Having carefully considered the reasons given by the Tribunal in its award under appeal, we have no hesitation in holding that the appellant is fully justified in contending that the Tribunal has assumed jurisdiction not vested in it by law, and consequently its refusal to accord approval to the action taken by the appellant is patently erroneous in law. Mr. Maheshwari, however, wanted us to examine the case of Har Prasad, because, according to him, Har Prasad has been victimised by the employer for 219 his trade union activities. Har Prasad is the President of the Kapra Mill Mazdoor Union, Saharanpur, and it is because of his activities as such President that the appellant does not like him. It is common ground that at the relevant time Har Prasad was not recognised as a protected workman, and so his case does not fall under section 33(3). The Tribunal has observed that this workman has not been named by any witness as having taken part in any assault, and it was therefore inclined to take the view that his dismissal amounted to victimisation. We have carefully considered this workman 's case, and we are satisfied that the Tribunal was not justified in refusing to accord approval even to his dismissal. It is common ground that Har Prasad led the deputation to the Controller of Production both on October 12 and October 14; and the threat held out by him on the earlier occasion is not denied by him. In terms he told the Controller that his conduct would bring trouble. It is significant that some of the workmen who assaulted the officers on October 14 had accompanied Har Prasad and were present when he gave the threat to the Controller. Sushil Kumar, who is the appellant 's Controller of Production, has deposed to this threat. The sequence of events that took place on October 14 unambiguously indicates that it was the threat held out by Har Prasad and the incitement given by him that led to the assault on the evening of October 14. Mr. Sushil Kumar 's evidence appears to be straightforward and honest. He has frankly admitted that in the past Har Prasad had been co operating with him and that he had. never instigated any attack on the officers on any previous occasion. Har Prasad no doubt denied that there was any exchange of hot words during the course of his interview with the officers but he has not disputed Mr. Sushil Kumar 's evidence that he uttered a warning at the time of the said interview. In fact his contention appears to have been that action should have been taken against him soon after he uttered the threat. On the evidence led at the enquiry, the enquiry officer came to the conclusion that the charge framed against this workman had 220 been clearly proved. The charge was that he had plotted and hatched a conspiracy for assaulting the General Superintendent, Weaving Master, Chief Engineer, Factory Manager and the Controller of Production. The details of the charge were specified, and at the enquiry it was held that these charges had been proved. There is no doubt that these charges, if proved, deserve the punishment of dismissal under the relevant standing orders. The Tribunal, however, purported to examine the propriety of the finding recorded against Har Prasad and came to the conclusion that the said finding was not justified on the merits. As we have already pointed out the Tribunal had no jurisdiction to sit in appeal over the findings of the enquiry as it has purported to do. The result is that the conclusion of the Tribunal in regard to all the workmen is unjustified and without jurisdiction. The appeal is accordingly allowed, the order passed by the Tribunal is set aside, and approval is accorded to the action taken by the appellant under section 6E. There will be no order as to costs. Appeal allowed.

Village P in the State of Andhra Pradesh was originally comprised of a village of the same name and a fairly large hamlet called PP, but in view of the difficulties in the two being treated as one unit for purposes of village administration the Board of Revenue sanctioned the bifurcation of P into two villages, P and PP. On the division of the village all the hereditary village offices of the original village ceased to exist under section 6(1) of the Madras Hereditary Village Offices Act, 1895, and new offices were created for the two villages. The section provided, inter alia, that "in choosing persons to fill such new offices the Collector shall select the persons whom he may consider the best qualified from among the families of the last holders of the offices which have been abolished." Though applications for the post of Village Munsif of PP had been invited by the Revenue authorities and the petitioner among others had made the application, respondent 4 who was the son of the Village Munsif of the old village, P, was selected on the ground that in view of section 6(1) of the Act, as the last holder of the office was appointed to the new village, P, after bifurcation, respondent 4 as the son of the last holder and nearest heir had a preferential claim for the post of Village Munsif for PP. The petitioner challenged the validity of the order of the Revenue authorities on the grounds (1) that the office of Village Munsif was an office under the State, and that the order in favour of 932 respondent 4 which expressly stated that they proceeded on the basis of the hereditary principle laid down in section 6(1) of the Act, discriminated against him as a citizen on the ground of descent only and violated the guarantee of equal opportunity enshrined in article 16 of the Constitution of India, and (2) that section 6(1) of the Act, to the extent that it permitted such discrimination was void under article 13(1) of the Constitution. The plea of the respondents was (1) that the expression "office under the State" in article 16 had no, reference to an office like that of the Village Munsif which in its origin was a customary village office later recognised and regulated by law, and (2) that article 16 did not apply to a hereditary office because a person entitled to it under the Act had a pre existing right to the office and its emoluments which could be enforced by a suit. Held: (1) that a village office like that of the Village Munsif was an office under the State within the meaning of article 16 of the Constitution of India; M. Ramappa vs Sangappa and otheys; , 167, referred to. (2) that a person entitled to an office under section 6(1) of the Madras Hereditary Village Offices Act, 1895, did not have any pre existing right to property in the shape of emoluments of the office, independent or irrespective of the office, and consequently to such an office article 16 applied; and, (3) that section 6(1) of the Act embodied a principle of discrimination on the ground of descent only and was in contravention of article 16(2) of the Constitution.

: Contempt Appeal No. 19 of 1981. From the judgment and order dated the 17th November, 1980 of the Himachal Pradesh High Court at Simla in Contempt Petition (Crl.) No. 7 of 1980. V. M. Tarkunde, section section Ray, K.K.Venugopal, Dr. L. M. Singhvi, Kapil Sibbal, C. M. Nayar and L. K. Pandey for the Appellant. L. N. Sinha, Attorney General for the Respondent (Registrar, High Court) K. Parasaran, Soli. General and Miss A. Subhashini for the Respondent (State of H. P.) 538 The Judgment of the Court was delivered by CHANDRACHUD,C. J. This is an appeal under sec. 19(1)b of the , ("the ",) against the judgment of the High Court of Himachal Pradesh dated November 17, 1980 in Contempt Case (Criminal) No. 7 of 1980, whereby the appellant was sentenced to simple imprisonment for six months and a fine of Rs. 200. The appellant practises as an Advocate at Solan which is a district place in the State of Himachal Pradesh. It appears that only one court generally sits at Solan which is that of the Senior Sub Judge cum Chief Judicial Magistrate. The learned Judge, who presides over that Court, also exercises the powers of a Rent Controller and of the Court of Small Causes. On June 18, 1980, Shri Kuldip Chand Sud, who was the Presiding Officer of the Court, was hearing a petition under the Rent in which the petitioner was represented by the appellant. When the case was called out for hearing, the learned Judge noticed that the petitioner had not paid the process fee, as a result of which the summons could not be issued to the respondent. The Judge therefore proceeded to dismiss the petition under Order 9, Rule 2 of the Civil Procedure Code. Taking umbrage at the dismissal of the petition, the appellant hurled his shoe at the Judge which hit him on the shoulder. The Judge asked his Orderly to take the appellant in custody but the appellant slipped away. The Judge evidently wanted to proceed under section 228 of the Penal Code for which purpose he issued a warrant of arrest against the appellant. The appellant successfully evaded the warrant and managed to prevent proceedings being taken by the Judge for the contempt of his court. The Judge then made a reference to the High Court of Himachal Pradesh under section 15(2) of the . The High Court issued notice to the appellant enclosing therewith a copy of the reference made by the Judge. The appellant did not dispute in the High Court that he hurled a shoe at the Judge. He explained his conduct by saying that he acted under an irresistible impulse generated by the provocative language used by the Judge. The appellant 's version is like this: On the previous date of hearing, the Judge had directed the appellant to pay fresh process fee and to supply the address of the respondent to the Rent petition. The appellant informed the Judge that he was unable to comply 539 with that order since the respondent had been admitted to a hospital and had since left the hospital. The house in which the respondent lived was locked. The Judge then declared that he proposed to take action under Order 9 Rule 2 of the Civil Procedure Code. The appellant asked the Judge to record his statement as to why he was unable to pay the process fee and supply the address of the respondent. Instead of recording the appellant 's statement, the Judge remarked: "You rascal, I will set you right". The appellant protested at the abusive language used by the Judge, but the Judge retorted: "I repeat what I said". The appellant thereafter lost control over himself and under the "extreme heat of moment and passion, his hand fell on his shoe" which he threw towards the dais. Many persons were present in the court who witnessed the incident. After hurling the shoe at the dais, the appellant took off his coat and tie and told the court: "An unfortunate incident has happened. Do you want to take any action against me ? I surrender". Upon this the Judge remarked: "You scoundrel get out of my court". The appellant thereafter left the court room. The High Court had called for the comments of the Judge on the version of the appellant, from which it was satisfied that the appellant was making a false allegation that the Judge had used abusive language against him. The High Court also held that the appellant had given an untrue version of the very genesis of the incident since the Judge had not given any direction for furnishing the complete address of the respondent before him. Many technical contentions were raised in the High Court, one of them being that section 10 of the was a bar to the High Court taking cognizance of the matter. It is unnecessary to go into that question or into various other matters raised in the High Court on behalf of the appellant since, Shri V. M. Tarkunde and Shri section section Ray who appear on behalf of the appellant, stated before us that the appellant did not desire to take a contentious attitude. It was stated on behalf of the appellant that he was prepared to tender an unconditional written apology to this Court and to produce evidence before us of his having tendered a similar apology to the trial court. Such apologies have been duly tendered. Learned counsel appearing on behalf of the appellant appealed to us in all their persuation that in view of the fact that the appellant 540 was genuinely repentant for his conduct, he should be enlarged on a mere admonition. Counsel plead that the appellant evidently lost his balance and whether or not there was any justification for it, he acted under the impulse of grave passion for which he has been sufficiently punished by the publicity which the incident has received and the notoriety which he has invited for himself. We had made it clear to the learned counsel at the very time when they conveyed to us the willingness of the appellant to apologise that we offer no promise or inducement that if the appellant apologises we will take a lenient view of the matter. In our opinion the appellant is guilty of conduct which is highly unbecoming of a practising lawyer. He hurled his shoe at the Judge in order evidently to overawe him and to bully him into accepting his submission that the case should not be dismissed under Order 9 Rule 2, C.P.C. The appellant did his best or worst to see that the petition was not dismissed for non payment of process fee and finding that the Judge was not willing to accept his argument, he took out his shoe in show of his physical prowess. We cannot adequately condemn the appellant 's behaviour which strikes us as most reprehensible, remembering that, as a practising lawyer, he is an officer of the court. Such incidents can easily multiply considering the devaluation of respect for all authority, whether in law, education or politics. We do not, however, propose to impose a long sentence of imprisonment on the appellant, since he has tendered an unconditional apology to this Court and to learned trial Judge. The appellant was present in our Court at the time when his appeal was argued and though, on such occasions, histrionics cannot entirely be ruled out, we did form an impression, backed by our small little experience of life and its affairs, that the appellant is deeply regretful and genuinely contrite. He has suffered enough in mind and reputation and no greater purpose is going to be served by subjecting him to a long bodily suffering. Accordingly, we reduce the sentence of six months to a period of one month, enhance the fine from Rs. 200 to Rs. 1000 and direct that the fine, if recovered, shall be paid over to a Legal Aid Society, if any, functioning in the State of Himachal Pradesh. The High Court will decide which society should get the money, if there is more than one such society, of which there is precious little likelihood. Order accordingly. We will be failing in our duty if before parting with the case we did not draw attention to what the appellant 's counsel Shri 541 Bhagirath Das said in the High Court during the course of his arguments. Shri Bhagirath Das told the learned Judges of the High Court: "Better part of discretion is to ignore it instead of fanning it. It is a tussle between legal profession and judiciary". (emphasis supplied since it must have been placed). This part of the argument of the appellant 's counsel in the High Court is as much to be regretted as the conduct of the appellant before the learned trial Judge. Discretion is undoubtedly the better part of valour but we did not know, until we read the argument advanced by the appellant 's counsel in the High Court, that the better part of discretion is to ignore that a practising advocate had hurled a shoe at a Judge. We are also unable to understand how the High Court was "fanning" the incident by taking cognizance of it, which it was its clear duty to do. It makes sorry reading that "a tussle between legal profession and judiciary" should find its culmination in a member of that noble profession throwing a shoe at a Judge. Those who are informed of the question and think deeply upon it entertain no doubt that the Bar and the Bench are an integral part of the same mechanism which administers justice to the people. Many members of the Bench are drawn from the Bar and their past association is a source of inspiration and pride to them. It ought to be a matter of equal pride to the Bar. It is unquestionably true that courtesy breeds courtesy and just as charity has to begin at home, courtesy must begin with the Judge. A discourteous Judge is like an ill tuned instrument in the setting of a courtroom. But members of the Bar will do well to remember that such flagrant violations of professional ethics and cultured conduct will only result in the ultimate destruction of a system without which no democracy can survive. All this, of course, is said without meaning any disrespect to Shri Bhagirath Das. Not he, but what he said, is the cause of this comment. N.V.K. Appeal partly allowed.

Two Trade Unions of Workmen function at appellant 's factory. The State Government made a reference under the Industrial Dispute Act, 1947 for adjudication of an Industrial Dispute between the appellant and its workmen regarding their demands. A joint charter of Demands was later submitted by the Unions raising certain other demands. On behalf of one of the union a negotiation committee was formed composed of some of the office bearers of that union to participate in the negotiations for a settlement. Ultimately a memorandum of settlement was signed. The members of the negotiation committee of aforesaid union who happened to be office bearers of that union signed the settlement for their union. The settlement covered the disputes mentioned in the reference and also certain other disputes between the management and workmen. A joint petition for passing an award in terms of the settlement was filed before the tribunal. A few days later the executive committee of the aforesaid Union rejected the agreement on the ground that the agreement had given rise to discontent among a section of the workers whose problems had not been satisfactorily solved. The question was whether the agreement was a settlement within the meaning of section 2(p) of the from which the Union could not resile. 30 The Tribunal by its award held that the agreement was not a settlement within the meaning of section 2(p) of the Act. Hence this appeal by special leave. It was argued on behalf of the appellants that as the agreement was signed in the manner prescribed by rule 62(2)(b) of the Industrial Disputes (Bombay) Rules, 1957 and as the requirements of rule 62(4) have been complied with, the agreement must be accepted as a settlement within the meaning of section 2(p) of the , and as such was binding on the Union under Section 18(1) of the Act. Dismissing the appeal, ^ HELD: 1. In this case it has been found that the office bearers who signed the agreement were not competent to enter into a settlement with the company and as such it cannot be said that an agreement was reached between the employer and the workmen represented by the Union. [35 E F] 2. What is binding as a settlement under section 18 (1) of the is an agreement between the employer and workmen and the Tribunal found that there was no agreement between the Management and the Union. [35 E F] Workmen of M/s Delhi Cloth & General Mills vs Management of M/s Delhi Cloth & General Mills ; referred to. The procedure prescribed by either rule 58 of the Central Rules or Rule 62 of the Bombay Rules pre supposes the existence of a valid settlement. But neither rule 58 of the Central Rules nor rule 62 of the Bombay Rules contains anything to suggest that any officer of a trade union who is entitled to sign a settlement reached between the parties must be deemed to have had the authority to enter into the settlement. Rule 62 only prescribes the form of memorandum of settlement and by whom it should be signed and the question whether the procedure has been complied with will arise only if there is in existence a valid settlement. [36 F H] The Sirsilk Ltd. and others vs Govt. of Andhra Pradesh 31 Hindustan Housing Factory Ltd. vs Hindustan Housing Factory Employees ' Union & Others approved.

Appeal No. 937 of 1965. Appeal from the judgment and order dated September 13. 1963 of the Punjab High Court in Civil Writ No. 841 of 1962 and Civil Appeal No. 938 of 1965. Appeal from the order dated September 13, 1963 of the Punjab High Court in Civil Writ No. 526 of 1963 and Civil Appeal No. 1195 of 1967. Appeal from the order dated August 6, 1964 of the Punjab High Court in Letters Patent Appeal No. 136 of 1964. D. R. Prem, R. N. Sachthey and section P. Nayar, for the appellants (in C.A. No. 937 of 1965). R. N. Sachthey, and section P. Nayar, for the appellants (in C.A. s Nos. 938 of 1965 and 1195 of 1967). section V. Gupte, Bhawani Lal and B. P. Jha, for respondent Nos. 1 to 3 (in C.A. No. 937 of 1965). R. V. Pillai, for the respondent (in C.A. No. 938 of 1965). H. L. Mittal and Naunit Lal, for the respondents (in C.A. No. 1195 of 1967). 657 Civil Appeal No. 937 of 1965 The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by certificate, from the judgment of the Punjab High Court dated September 13, 1963 in Civil Writ No. 841 of 1962. Nanak Chand owned agricultural lands in Bahawalpur Statenow forming part of West Pakistan. He also owned some property at Kot Kapura, Tehsil Faridkot, District Bhatinda now located in India. Nanak Chand had in normal course of business come to Bhatinda where he died in June, 1947 leaving behind three sons, Om Parkash, Sat Narain and Ram Parshotam who are the respondents in this appeal. As a result of the partition of India the land originally owned by Nanak Chand and after his. death by his sons in Bahawalpur State had to be abandoned. After the partition of India the three respondents migrated to India and filed separate claims in accordance with law and obtained allotment of certain area in village Kot Kapura, district Bhatinda in lieu of the land abandoned by them in Pakistan. The Revenue Authorities allotted an area measuring 206.8 1/2 standard acres in village Kot Kapura, District Bhatinda. After the allotment was made one Rur Singh filed a complaint before the Managing Officer that these respondents had received double allotments in villager Kot Kapura. The complaint was examined by Shri Shankar Das Katyal, Managing Officer who held that Shri Rur Singh failed to substantiate the allegation of double allotment. But the Managing Officer came to the conclusion that Nanak Chand although he had died long before the partition of the country must be treated as a displaced land holder for the purpose of allotment of land. The reason given was that his name continued to be shown in the Jamabandi as the owner of the abandoned land in Pakistan. In consequence of this finding a large portion of the land allotted to, the three respondents was cancelled by the Managing Officer by his order dated September 18, 1961. The three respondents pre ferred an appeal before the Assistant Settlement Commissioner and a revision petition before the Chief Settlement Commissioner Punjab but the appeal and the revision petition were both dismissed. In dismissing the revision petition the Chief Settlement Commissioner relied, upon paragraph 17 of Tarlok Singh 's Land Resettlement Manual, 1952 Edition, page 180 which was to the following effect : "Even where a displaced land holder in whose name the land stands in the records received from West Punjab has died, the allotment is made in the name of the deceased. In the fard taqsim, 'therefore, the entry will be in the name of the deceased land holder. Possession is ordinarily given to the heirs but there must be regular 658 mutation proceedings before the entry in column 3 of the fard taqsim is altered in favour of the heirs. " It was held by the Chief Settlement Commissioner that this paragraph related to all persons who continued to be shown as owners in the revenue records irrespective of the fact whether they had died before or after migration. In other words, the Chief Settlement Commissioner took the view that the land could only be allotted in the name of Nanak Chand even assuming that he had died in June, 1947. Against the order of the Chief Settlement Commissioner the respondents filed a Writ Petition (Civil Writ No. 841 of 1961) before the Punjab High Court. The Writ Petition was allowed by the High Court by its order dated September 13, 1963 and the orders of the Chief Settlement Commissioner ,dated June 8, 1962, of the Assistant Settlement Commissioner dated December 26, 1961 and of the Managing Officer dated September 18, 1961 were all quashed by the grant of a writ in the nature of certiorari. It is necessary at this stage to set out the provisions of the relevant statutes. Section 2(b) of the East Punjab Evacuees ' (Administration of Property) Act, 1947 (East Punjab Act No. XIV of 1947) defines an "evacuee" as meaning "a person ordinarily resident in or owning property or carrying on business within the territories comprised in the Province of East Punjab, who on account of civil disturbances, or the fear of such disturbances, or the partition of the country : (i) leaves or has since the first day of March 1947, left the said territories for a place outside India, or (ii) cannot personally occupy or supervise hi,; property or business. " Section 4 of that Act provided that "All evacuee property situated within the Province shall vest in the Custodian for the purposes of this Act and shall continue to be so vested until the Provincial Government by notification otherwise directs." In pursuance of the powers conferred by the rules made by the State Government under cls. (f) and (ff) of section 22(2) of the East Punjab Evacuees, (Administration of Property) Act, 1947, the Custodian issued a notification No. 4892/S on July 8, 1949 regarding the conditions on which he was prepared to grant allotment of land vested in him under the provisions of the said Act to displaced persons. Para 2(e) of this notification states " "Displaced person" means a land holder in the territories now comprised in the province of West Punjab or a person of Punjabi extraction who holds land in the Provinces of North Western Frontier Province, Sind or Baluchistan or any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1st day of March , 1947, abandoned or been made to abandon his land in the 659 said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country. " Section 2(d) of the East Punjab Refugees (Registration of Land, Claims) Act. 1948 (East Punjab Act No. XII of 1948) states "2. Interpretation. In this Act unless there is anything repugnant in the subject or context, (d) 'refugee ' means a landholder in the territories now comprised in the Province of West Punjab, or who or whose ancestor migrated as a colonist from the Punjab since 1901 to the Provinces of North West Frontier Province, Sind or Baluchistan or to any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1 st day of March, 1947, abandoned or been made to abandon his land in the said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country;" Section 2(c) defines a "landholder" to mean "an owner of land. or a tenant having a right of occupancy under the Punjab Tenancy Act, 1887 (XVI of 1887) or a tenant as defined in section 3 of the Colonization of Government Lands Act, 1912 (Punjab Act V of 1912) and such other holder or grantee of land as may be specified by the Provincial Government;". Section 2(c) of the East Punjab Displaced Persons (Land Resettlement) Act,1949 (East Punjab Act No. XXXVI of 1949) defines a "displaced person" as follows : " 'displaced person ' means a land holder in the territories now comprised in the Province of West Punjab or a person of Punjabi extraction who holds land in the Provinces of North West Frontier Province, Sind or Baluchistan or any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1st day of March 1947, abandoned or been made to abandon his land in the said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country". Section 2(b) of this Act defines an "allottee" as follows " allottee ' means a displaced person to whom land is allotted by the Custodian under the conditions published with East Punjab Government notification No. 4892/S, dated the 8th July, 1949, and includes his heirs,. legal representatives and sub lessees". 660 The main question to be considered in this appeal is whether Nanak Chand was a 'displaced person ' as defined in para 2 (e) of the notification dated July 8, 1949 ,or a "refugee" as defined under section 2(d) of Act No. XII of 1948 and whether he was entitled for allotment of land. It is manifest that the expression "displaced person" or the word "refugee" has been used in the relevant enactments with reference to a person who has migrated to India as a result of disturbances or fear of disturbances or the partition of the country. Therefore if a person had died before the disturbances took place or he had never migrated to India as a result of the disturbances and he died before such migration, he could not come within the meaning of the expression "displaced person" or the word "refugee" under the relevant statutory enactments. It is manifest in the present case that Nanak Chand died in June, 1947 long before the partition of the country and he did not abandon or was not made to abandon his land in Bahawalpur on account of the civil disturbances or the fear of such disturbances or the partition of the country. It was, however, contended by Mr. D. R. Prem on behalf of the appellants that even though Nanak Chand never became a refugee or a displaced land holder, the allotment had to be made in his name because he was shown in the revenue records received from West Punjab as the owner of the land and there had been no mutation of the names of the respondents in the revenue records. Reference was made in this connection to paragraph 17 of Tarlok Singh 's Land Resettlement Manual which has already been quoted. It was contended by Mr. Prem that the instructions contained in this paragraph would apply even though Nanak Chand had never become a refugee or a displaced land holder and the allotment has to be made in his name by the revenue authorities because his name still stands in the revenue records received from West Punjab. , We are unable to accept this argument as correct. It is not disputed that paragraph 17 of Tarlok Singh 's Manual has no statutory authority but it merely embodies executive or administrative instructions for general guidance. If there is a conflict between the provisions contained in this paragraph and the statutory enactments already referred to it is manifest that the statutory provisions must take precedence and must prevail over the directions contained in para 17 of Tarlok Singh 's Manual. In this context it is essential to emphasise that under our constitutional system the authority to make the law is vested in the Parliament and the State Legislatures and other law making bodies and whatever legislative power the executive administration possesses must be derived directly from the delegation of the legislature and exercised validly only within the limits prescribed. The notion of inherent or autonomous law making power in the executive administration is a notion that must be emphatically reject 661 ed. As observed by Jackson, J. in a recent American case Youngstown Sheet & Tube Co. vs Sawyer(1) "With all its defects delays and inconveniences men have discovered no technique for long preserving free government except that the Executive be under the law, and that the law be made by parliamentary deliberations. " In our constitutional system, the central and most characteristic feature is the concept of the rule of law which means, in the present context, the authority of the law courts to test all administrative action by the standard of legality. The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings the appropriate action in the competent court. The rule of law rejects the con ception of the Dual State (2 ) in which governmental action is placed in a privileged position of immunity from control by law. Such a notion is foreign to our basic constitutional concept. In our opinion, however, it is possible to give a restricted interpretation to paragraph 17 of Tarlok Singh 's Manual so as to make it consistent with the requirements of the statutory enactments. The intention of para 17 is that it is applicable only to such persons who are land holders at the time of their becoming displaced persons or refugees and who died afterwards before allotment could be made in their favour. In other words, the paragraph applies to a displaced land holder who dies after having become a "displaced person" within the meaning of the relevant statutory enactments referred to above. The paragraph does not apply to a case of, a person who was not a displaced land holder at the time of his death. In the present case it is admitted that Nanak Chand never became a displaced land holder. On the other hand, Nanak Chand died before he became a displaced land holder and therefore para 17 of Tarlok Singh 's Manual has no application to the facts of the present case. For these reasons we hold that this appeal has no merit and it must be dismissed with costs. Civil Appeals Nos. 938 of 1965 & 1195 of 1967 The question arising in these two appeals is identical with the question of law in Civil Appeal No. 937 of 1965. For the reasons given in that judgment we hold that the decision of the High Court challenged in these appeals is correct and these appeals must be dismissed with costs. R.K.P.S. Appeals dismissed. (1) ; , 655. (2) This term is derived from Fraenkel, The Dual State (1941).

N owned agricultural lands in Bahawalpur State now forming part of Pakistan and also owned some property in Punjab in India. He died in June 1947 while on a visit to India in the normal course of business, leaving behind three sons, the respondents in the appeal. On the partition of India, the land in Pakistan originally owned by N and after his death by his sons, had to be abandoned. After migrating to India, the three respondents filed separate claims as displaced persons and were allotted an area of land in Punjab. Thereafter a complaint was filed before the Managing Officer that these respondents had received double allotments. The Managing Officer, held this allegation was not substantiated but came to the conclusion that N, although he had died before the partition, must be treated as a displaced land holder for the purpose of allotment of land as his name continued to be shown in the Jamabandi as the owner of the abandoned land in Pakistan. In consequence of this finding a large portion of the land allotted to the three respondents was cancelled by an order of the Managing Officer dated September 18, 1961. Appeals made by the respondents to the Assistant Settlement Commissioner as well as revision petitions before the Chief Settlement Commissioner Punjab, were dismissed. In dismissing the revision petitions, the Chief Settlement Commissioner relied on para. 17 of "Tarlok Singh 's Land Resettlement Manual" 1952 edition Page 180, to the effect that "Even where a displaced land holder in whose name the land stands in the records received from West Punjab has died, the allotment is made in the name of the deceased". He therefore upheld the view 4 at the land could only be allotted in the name of N. The respondents then filed a writ petition against the orders of the Chief Settlement Commissioner which was allowed. On appeal to this Court, HELD:Dismissing the appeal, The definition of a "displaced person" in para 2(e) of the Notification of July 8, 1949, issued by the Custodian in accordance with provisions of the East Punjab Evacuees (Administration of Property) Act 1947, and the Rules made thereunder, or of a "Refugee" in Section 2(d) of the East Punjab Refugees (Registration of Land Claims) Act 12 of 656 1948, show that these expressions have been used in the relevant enactments with reference to a person who has migrated to India as a result of disturbances or fear of disturbances or the partition of the country. Therefore if a person had died before the disturbances took place or he had never migrated to India as a result of the disturbances and he died before such migration, he could not come within the meaning of the expression "displaced person" or the word "refugee" under the relevant statutory enactments. N died in June, 1947, long before the partition of the country and he did not abandon or was not made to abandon his land in Bahawalpur on account of the civil disturbances or the fear of such disturbances or the partition of the country. [660 A D] There was no force in the contention that even though N never became a refugee or a displaced land holder, the allotment had to be made in his name because he was shown in the revenue records received from West Punjab as the owner of the land and there had been no mutation of the names of the respondents in the revenue records. The rule in para 17 of "Tarlok Singh 's Manual" consistently with the statutory enactments, would be applicable only to such persons who were land holders 'it the time of their becoming displaced persons or refugees and who died afterwards before allotment could be made in their favour. It does not apply to a person like N who was not a displaced land holder at the time of his death. [661 D F]

Appeal No. 782 of 1991. From the Judgment and Order dated 10.7.1990 of the Bombay 484 High Court in Appeal No. 423 of 1987. Ashok H. Desai, Vinay Tulzapurkar, Raghu Kothare and Rajiv Dutta for the Appeallant. Soli J. Sorabjee, D.R. Poddar, Ms. Purnima, Atul Sharma, A.V.Palli, E.C.Agrawala and V.B.Joshi for the Respondents. The Judgments of the Court was delivered by OJHA, J. Special leave granted. This appeal by special leave has been preferred against the judgment dated 10th July, 1990 of the Bombay High Court in Appeal No. 423 of 1987. Respondent No. I is a private limited company whereas Respondents 2 to 4 are its Directors. Respondent No. 1, for setting up a factory, sought financial assistance from the appellant and the appellant sanctioned a loan of Rupees thirty lakhs. In order to secure the loan Respondent No. 1 executed a deed of mortgage of certain properties on 29th June, 1979 and Respondents 2 to 4 on the same date by executing a deed of guarantee stood surety for repayment of the said loan. It was a case of personal guarantee only as no property was given in security. For the sake of brevity the appellant, Respondent No. I and Respondents 2 to 4 shall hereinafter be referred to as the Corporation, the Company and the sureties respectively. The amount of loan was to be advanced in phases and after the Corporation had advanced a part of the total sanctioned loan, the Company did not want to avail of the balance of the amount as it seems to have lost interest in setting up the factory for reasons with which we are not concerned. The Corporation consequently called upon the Company to repay the amount already advanced together with interest and on its failure to do so took possession under Section 29 of the (for short the Act) over the industrial concern, a term defined under Section 2(c) of the Act and took steps to realise its outstanding dues by transfer of property in the manner provided therein. However, notwithstanding advertisement for sale thereof having been made on several occasions the Corporation could not get an offer of more than about Rupees five lakhs. Having failed to recover the amount due to it in the manner stated above, the Corporation proceeded to recover the same from the sureties whose liability was coextensive and for this purpose it filed a petition in the High Court under Sections 31 and 32 of the Act arraying 485 the Company as Respondent No. I and the sureties as Resondents 2 to 4, with the prayer that "the respondents be jointly and severally ordered and decreed to pay the petitioners the sum of Rs 15,87,391.20 as per particulars hereto annexed and marked exhibit H. with further interest at the rates of 14 1/2% per annum till payment and may further "be ordered to pay to the petitioners costs of the petition". Thus, according to the relief claimed in the petition the liability of the respondents with regard to the amount payable to the Corporation on the date of making of the petition was for a sum which was more than Rupees fifty thousand which, as will be presently shown, represents maximum amount over which the Bombay City Civil Court has pecuniary jurisdiction. The respondents contested the petition and raised three pleas in defence: (1) A petition under Sections 31 and 32 of the Act could be filed only in the Bombay City Civil Court and the High Court had no jurisdiction to entertain it, (2) the relief claimed in the petition could not be granted under Sections 31 and 32 of the Act inasmuch as these sections did not contemplate passing of a money decree not only against the principal debtor but also against the sureties; and (3) the provisions in the Act relating to enforcement of the liability of a surety were ultra vires Article 14 of the Constitution. The learned Single Judge of the High Court before whom the petition came up for hearing did not, in view of his finding on the first two pleas, entertain any argument on the last plea nor has the said plea been raised before us and as such the same does not need to be gone into. As regards the second plea it was conceded before the learned Single Judge on behalf of the Corporation by its learned counsel that no such money decree could be passed against the Company as was claimed in the petition. It was, however, asserted that such a decree could be passed as against the sureties. In this view of the matter the petition was treated and decided as being confined against the sureties only. In regard to the plea of jurisdiction the learned Single Judge took the view that since an appeal was pending before a Division Bench of the High Court against the judgment of a Single Judge in Misc Petition No. 357 of 1985, Maharashtra State Financial Corporation vs Hindtex Engineers Pvt. Ltd., decided on 3rd December, 1986 (since reported in , in which it had been held that such a petition was maintainable in the High Court, he would proceed to decide the petition on merits on the assumption that he had jurisdiction to entertain it. On merits, he took the view that no money decree could be passed in a petition under Sections 31 and 32 of the Act 486 even against the sureties and since in the instant case sureties had admittedly not given any security except their personal guarantee the said surety could be enforced only in the ordinary course and not under the special machinery provided under the Act. The petition was accordingly dismissed. Aggrieved by the judgment of the learned Single Judge the Corporation preferred an appeal before a Division Bench which has been dismissed by the judgment under appeal. The Division Bench not only upheld the finding of the Single Judge on merits but also over ruled the decision reported in and held that the High Court had no jurisdiction to entertain a petition under Sections 31 and 32 of the Act. Shri Ashok Desai, Senior Advocate appearing for the Appellant Corporation has assailed the findings of the High Court in the judgment under appeal both on merits and on the plea about jurisdiction. Shri Soli J. Sorabjee, Senior Advocate appearing for the respondents has in reply asserted that the findings of the High Court on both the pleas were unassailable. An application for intervention being I.A. No. 3 of 1990 has been made on behalf of Nav Bharat Udyog, a partnernship firm having its office at Mehta Building, 2nd Floor, 47, Nagindas Marg, Bombay, confined to the plea with regard to jurisdiction and it has been urged by learned counsel for the intervenor also, in line with the submission made by learned counsel for the respondents, that it is only the Bombay City Civil Court and not the High Court which has jurisdiction to entertain a petition under sections 31 and 32 of the Act. For the sake of facility in considering the respective submissions made by learned counsel for the parties we find it useful to refer to the statutory provisions relevant in this behalf. Section 2 of the Bombay City Civil Court Act, 1948 contains definitions and inter alia provides: "2. In this Act unless there is anything repugnant in the subject or context, (1) "City Court" means the Court established under Section 3; (2) "High Court" means the High Court of Judicature at Bombay" 487 Section 3 in its turn provides: "3. The State Government may by notification in the Official Gazette, establish for the Greater Bombay a court, to be called the Bombay city Civil Court. Notwithstanding anything contained in any law, such court shall have jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding fifty thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognizable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debtors, or (c) by the High Court under any special law other than the Letters Patent; or (d) by the Small Cause Court: Provided that the State Government may, from time to time, after consultation with the High Court, by a like notification extend the jurisdiction of the City Court to any suits or proceedings which are cognizable by the High Court as a court having testamentary or intestate jurisdiction or for the relief of insolvent debtor. " The other Section which is relevant is Section 12 which reads: "12. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognizable by the City Court; Provided that the High Court may, for any special reason, and at any stage remove for trial by itself any suit or proceeding from the City Court. " As regards Sections 31 and 32 of the , since the submissions made by learned counsel for the 488 parties referred to most of the provisions contained therein these two Sections may be quoted in their entirety. They read: "31. (1) Where an industrial concern, in breach of any agreement makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment, then, without prejudice to the provisions of section 29 of this Act and of section 69 of the any officer of the Financial Corporation, generally or specifically authorised by the Board in this behalf, may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely: (a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under sub section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed. (1) When the application is for the reliefs mentioned in clauses (a) and (c) of sub section (1) of section 31, the 489 district judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation, together with the costs of the proceedings taken under section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. (IA) When the application is for the relief mentioned in clause (aa) of sub section (1) of section 31, the district judge shall issue a notice calling upon the surety to show cause on a date to be specified in the notice why his liability should not be enforced. (2) When the application is for the relief mentioned in clause (b) of sub section (1) of section 31, the district judge shall grant an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment and issue a notice calling upon the industrial concern to show cause, on a date to be specified in the notice, why the management of the industrial concern should not be transferred to the Financial Corporation. (3) Before passing any order under sub section I) or sub section (2) or issuing a notice under sub section (IA), the district judge may, if he thinks fit, examine the officer making the application. (4) At the same time as he passes an order under sub section (1), the district judge shall issue to the industrial concern or to the owner of the security attached a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it or him to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (4A) If no cause is shown on or before the date specified in the notice under sub section (IA), the district judge shall forthwith order the enforcement of the liability of the surety. 490 (5) If no cause is shown on or before the date specified in the notice under sub sections (2) and (4), the district judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction. (6) If cause is shown, the district judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil Procedure, 1908, in so far as such provisions may be applied thereto. (7) After making an investigation under sub section (6), the district judge may (a) confirm the order of attachment and direct the sale of the attached property; (b) vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; (c) release the property from attachment; (d) confirm or dissolve the injunction; (da) direct the enforcement of the liability of the surety or reject the claim made in this behalf, or (e) transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf; Provided that when making an order under clause (c) or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e), the district judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit: 491 Provided further that unless the Financial Corporation intimates to the district judge that it will not appeal against any order releasing any property from attachment or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation, such order shall not be given effect to, until the expiry of the period fixed under sub section (9) within which an appeal may be preferred or, if an appeal is preferred, unless the High Court otherwise directs until the appeal is disposed of. (8) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decree holder. (8A) An order under this section transferring the management of an industrial concern to the Financial Corporation shall be carried into effect, as far as may be practicable, in the manner provided in the Code of Civil Procedure, 1908, for the possession of immovable property or the delivery of immovable property in execution of a decree, as if the Financial Corporation were the decree holder. (9) Any party aggrieved by an order under sub section (4A), sub section (5) or sub section (7) may, within thirty days from, the date of the order, appeal to the High Court, and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper. (10) Where proceedings for liquidation in respect of an industrial concern have commenced before an application is made under sub section (1) of section 31, nothing in this section shall be construed as giving to the Financial Corporation any preference over the other creditors of the industrial concern not conferred on it by any other law. (11) The functions of a district judge under this section shall be exercisable 492 (a) in a presidency town, where there is a City Civil Court having jurisdiction, by a judge of that court and in the absence of such court, by the High Court; and b) elsewhere, also by an additional district judge or by any judge of the principal court of civil jurisdiction. (12) For the removal of doubts it is hereby declared that any court competent to grant an ad interim injunction under this section shall also have the power to appoint a Receiver and to exercise all the court powers incidental thereto. At this place it may be pointed out that with regard to the enforcement of the liability of a surety it was held by a Full Bench of the Allahabad High Court in Munnalal Gupta vs Uttar Pradesh Financial Corporation and Another, A.I.R. 1975 Allahabad 416 that from the scheme of the Act it is clear that the speedy remedy contained in Section 31 is available not against the surety but against the borrower only. In arriving at this conclusion reference was made inter alia to the reliefs (a), (b) and (c) contained in sub section (1) of Section 31 and to sub section (4) of Section 32 of the Act as it then stood. It was pointed out that this sub section (4) contemplated a notice to the borrower industrial concern after an interim order had been passed to show cause why the ad interim injunction should not be made absolute but did not contemplate a notice to the surety and that it would be unthinkable that the Legislature intended that the property of the surety may be attached and put to sale without even a notice to him. It appears that in order to meet the difficulty in enforcing the liability of a surety as pointed out in the case of Munnalal Gupta (supra) Parliament found it necessary to make specific provisions in this behalf and passed the State Financial Corporations (Amendment) Act, 1985 (hereinafter referred to as Act 43 of 1985). Among other amendments made by Act 43 of 1985 were the following: (i) In sub section (1) of Section 31 clause (aa) was inserted. (ii) In Section 32 a new sub section (lA) and in sub section (3) thereof the words "or issuing a notice under sub section (lA)" were inserted. 493 (iii) Sub section (4) of Section 32 was substituted with an inclusion of sub section (4A). (iv) The word "or" occurring at the end of clause (d) of sub section (7) was omitted and a new clause (da) was inserted. (v) In the first proviso after sub section (7) the words "or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e)" and in the second provis1on the words "or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation" were inserted and in sub section (9) the words "under sub section (4A), sub section (5)" were substituted for "under sub section (5)" By the same Act 43 of 1985 a new Section 32G was inserted which reads: "32G. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue. " Having extracted the relevant statutory provisions we now take up the question of jurisdiction. Sub section (1) of Section 31 of the Act contemplates making of the petition thereunder "to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business". A petition so made is to be decided in the manner provided by Section 32 of the Act, subsection (11) whereof inter alia provides that the functions of a district judge under the said Section shall be exercisable, in a Presidency town, where there is a City Civil Court having jurisdiction, by a judge 494 of the court and in the absence of such court, by the High Court. It has been urged by learned counsel for the appellant that in a case to which the provisions contained in sub section (1) of Section 32 of the Act and of the Bombay City Civil Court apply, if the extent of the liability sought to be enforced against a surety is upto Rupees fifty thousand a petition under Section 31 read with Section 32 of the Act would lie before the Bombay City Civil Court and if the liability is more than the said amount it would lie before the High Court. This, according to him is apparent from the use of the words "having jurisdiction" in sub section (11) of Section 32 of the Act and the extent of the pecuniary jurisdiction of the Bombay City Civil Court as contained in Section 3 of the Bombay City Civil Court Act. According to him since in the instant case the liability sought to be enforced against the sureties was for a sum of more than Rupees fifty thousand the petition made by the appellant was maintainable in the High Court alone and not in the Bombay City Civil Court. On the other hand, it has been urged on behalf of the respondents and the intervenor by their learned counsel that word "jurisdiction" used in sub section (1) of Section 31 and sub section (11) of Section 32 of the Act connotes territorial jurisdiction alone and that the concept of pecuniary jurisdiction is beyond the scope of Sections 31 and 32 in view of the decision of this Court in Gujarat State Financial Corporation vs Natson Manufacturing Co. Pvt. Ltd. and Ors., relied on in M/s. Everest Industrial Corporation and Ors. vs Gujarat State Financial Corporation, [ ; and Maganlal vs M/s. Jaiswal Industries, Neemach and Ors., [ ; which lays down that an application under Section 31(1) of the Act is neither a plaint as contemplated by Article I of Schedule I nor an application in the nature of a plaint as contemplated by Article 7 of the Court Fees Act, 1870, that the special procedure contained in Section 3 1(1) was not even something akin to a suit of a mortgagee to recover mortgage money by sale of mortgaged property, that even if the Corporation applicant so chooses it cannot pray for a preliminary decree for accounts or final decree for payment of money nor can it seek any personal liability, that the Corporation cannot pray for a decree of its outstanding dues, that the reliefs contemplated by Section 31(1) on being granted do not result in a money decree or decree for recovery of outstanding loans or advance, that a substantive relief in an application under Section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree and that such relief cannot be valued in terms of the monetary gain or prevention of monetary loss. 495 Having given our anxious consideration to the question we are inclined to agree with the submission made by learned counsel for the appellant. The three decisions of this Court referred to above and relied on by learned counsel for the respondents were not cases relating to the enforcement of a liability of a surety made possible by the amendments by Act 43 of 1985. In our opinion, what has been laid down therein does not in any way militate against ascertaining in monetary terms value or the extent of the liability of a surety, which is sought to be enforced and there is intrinsic evidence in Sections 31 and 32 themselves to support this view. Sub section (2) of Section 31 makes it obligatory to state the "extent of the liability (1) of Section 32 refers to "an amount equivalent in value to the outstanding liability". Sub section (lA) of Section 32 contemplates notice to the surety to show cause "why his liability" should not be enforced. Sub section (6) of Section 32 contemplates investigation and determination of "the claim" of the Financial Corporation which is to be recovered. If the application under Section 3 1(1) is made before the district judge, there is no difficulty because he has unlimited pecuniary jurisdiction. The difficulty arises, as in the instant case, when such application is to be made either before the city Civil Court or the High Court as contemplated by sub section (11) of Section 32. In our opinion, the extent of the liability stated in the application as contemplated by sub section (2) of Section 31 of the Act would represent the value of the claim of the Corporation and if such value is upto Rupees fifty thousand the application would lie in the City Civil Court and if it is more than that amount it would lie in the High Court. This interpretation would give meaning and relevance to the words "having jurisdiction" used in sub section (11) of Section 32. A different interpretation would render superfluous or otiose not only the words "having jurisdiction" but also the words"and in the absence of such court, by the High Court" occurring in the said sub section (11) inasmuch as in a Presidency town, in terms of territorial jurisdiction, the jurisdiction of the City Civil Court and of the High Court is co terminus. That it is so is clear from Section 3 of the Bombay city Civil Court Act and the definition of the term "Presidency town" contained in Section 3(44) of the according to which "Presidency town" shall mean the local limits for the time being of the ordinary original civil jurisdiction of the High Court of Judicature at Calcutta, Madras or Bombay, as the case may be. It is a settled rule of interpretation of statutes that if the language and words used are plain and unambiguous, full effect must be given to them as they stand and in the garb of finding out the intention of the 496 Legislature no words should be added thereto or subtracted there from. Likewise, it is again a settled rule of interpretation that statutory provisions should be construed in a manner which subserves the purpose of the enactment and does not defeat it and that no part thereof is rendered surplus or otiose. The aforesaid interpretation of sub section (II) of Section 32 of the Act is not only in conformity with the rule of interpretation referred to above, it also does not militate in any way with the concept of an application under Section 31(1) of the Act, not being a plaint in a suit for recovery of money. Reliance in this behalf has been placed by learned counsel for the intervenor on a decision of the Delhi High Court in Parkash Playing Cards Manufacturing Company vs Delhi Financial Corporation, In our opinion, however, the said decision is of little assistance in resolving the plea of jurisdiction raised in the instant case, namely, whether in a Presidency town an application under Section 31(1) of the Act is to be made before a City Civil Court or High Court. In the case of Parkash Cards Manufacturing Company (supra), the provision which came up for consideration in the forefront was Section 5 of the and the question of jurisdiction was largely considered on that basis. Sub section (11) of Section 32 with pointed reference to the jurisdiction exercisable by a City Civil Court in a Presidency town and the High Court did not fall for consideration in that case. The case which throws some light on the point is a decision of the Calcutta Court Court in West Bengal Financial Corporation vs Gluco Series Private Limited, where it was held: "Section 32 sub section (1 1) does not say that the City Civil Court will have exclusive jurisdiction but states "in the Presidency Town where there is City Civil Court having jurisdiction, by a Judge of that Court and in the absence of such Court by the High Court. " The words "in the absence of such Court" mean in the absence of such Court having jurisdiction in the matter. The City Civil Court has no jurisdiction to entertain and try suits and proceedings of Civil nature exceeding Rs.50,000 in value. Here the value of the claims in the proceedings exceeds much more than Rs.50,000 and, therefore, under Section 32, sub section (11) this proceeding has been duly instituted in the High Court. 497 In the instant case the extent of the liability of the surety being more than Rupees fifty thousand, the application could only have been filed and was rightly filed in the High Court and the finding in the judgment under appeal to the contrary for holding that the High Court had no jurisdiction to entertain the application cannot be sustained. Now we come to the second plea raised on behalf of the respondents, namely, that the relief claimed in the petition could not be granted under Sections 31 and 32 of the Act inasmuch as these sections did not contemplate passing of a money decree not only against the principal debtor but also against the sureties. In so far as the special machinery provided under Sections 31 and 32 of the Act being applied to a surety who has given some property in security, it has been pointed out by learned counsel for the appellant that even before the amendment introduced in these sections by Act 43 of 1985 a Division Bench of the Kerala High Court had, in Thressiamma Varghese vs K. section F. Corporation, AIR 1986 Kerala 222, taken the view that the provisions contained in these sections would be applicable. According to teamed counsel, in any view of the matter, after the amendment of these sections by Act 43 of 1985 introducing specific provisions for enforcement of the liability of a surety, the matter is now beyond doubt that the procedure contained in these sections shall be applicable for the enforcement of the liability of such surety who has given some property in security. According to him even in the judgment under appeal the High Court has accepted this proposition and has expressed its reservation with regard to enforcement of the liability of a surety who has not given any property in security and has given only a personal guarantee. Reference in this connection has been made to the following observations in the judgment under appeal: "Even if the Corporation s now entitled to obtain relief also against any property which might have been given a security by the surety, the further question would remain whether the Corporation is entitled under Section 31(l)(aa) to obtain any relief personally against such a surety. " Indeed, the submission even before us which was made by learned counsel for the appellant has been that the only effect of the 1985 amendment is that it enables proceedings to be taken for the realisation of the security given by the surety in respect of his own 498 liability whereas such proceedings could not be taken before the amendment. He, however, asserted that the Act even after the amendment does not enable a monetary decree to be passed against the surety any more than a decree can be passed against the principal debtor. According to him, in this view of the matter, in the instant case, the liability of the sureties could not be enforced under Sections 31 and 32 of the Act in as much as they had given only personal guarantee and had not given any property in security. In the background of the rules of interpretation of statutes adverted to earlier and the specific provisions with regard to enforcement of the liability of a surety introduced in Sections 31 and 32 of the Act by Act 43 of 1985 we find it difficult to agree with the submission made by learned counsel for the respondents. It is true, as has been indicated above, that this Court has in the case of Gujarat State Financial Corporation (supra) taken the view that Sections 31 and 32 of the Act do not contemplate the passing of a money decree and the principle laid down in that case has been relied on in two later decisions referred to above. The said principle would, in our opinion, not come in the way of enforcing the liability under Sections 31 and 32 of the Act even against the surety who has given only a personal guarantee. As indicated earlier those were not cases dealing with the question of enforcement of the liability of such a surety and naturally, therefore, the provisions in this behalf specifically introduced in Sections 31 and 32 of the Act by Act 43 of 1985 were not considered in those cases. However, in this connection what is of significance is that clause (aa) inserted in sub section (1) of Section 31 of the Act by Act 43 of 1985 uses the words "any surety". On its plain grammatical meaning there can be no doubt that the term "any surety" will include not only a surety who has given some security but also one who has given only a personal guarantee. If the submission made by learned counsel for the respondents is accepted the words "who has given property by way of security" will have to be added after the words "any surety". Such a course not only militates against the normal rule of interpretation but also tends to defeat the very purpose of the amendment introduced by Act 43 of 1985 enabling the Financial Corporation to make an application under Section 31(1) of the Act "for enforcing the liability of any surety", inasmuch as it would have the effect of restricting or qualifying the amplitude of the term "any surety" which the Legislature has in its wisdom thought it fit to use in its widest sense. The procedure, in our opinion, for enforcing the liability of a surety who has given only a personal guarantee would, after the amendment introduced by Act 43 of 1985, be that an application under Section 31(1) shall lie for enforc 499 ing the liability of such surety as contemplated by clause (aa) of the said section. On such an application being made notice shall be issued to the surety as contemplated by sub section (1A) of Section 32. This may, in view of sub section (3), be done after examining the officer making the application. If no cause is shown in pursuance of the notice served on him by the surety sub section (4A) of Section 32 contemplates passing of an order forthwith for the enforcement of the liability of surety. If, on the other hand, cause is shown the claim of the Financial Corporation shall be determined as contemplated by sub section (6) of Section 32 and thereafter a direction as contemplated by clause (da) of sub section (7) shall be issued for the enforcement of the liability of the surety or rejecting the claim made in this behalf. In the case of Maganlal (supra) which related to the relief contemplated by clause (a) of Section 31(1) of the Act it was pointed out that the purpose of enacting Sections 31 and 32 of the Act was apparently to provide for a speedy remedy for recovery of the dues of the Financial Corporation and that these sections had the effect of cutting across and dispensing with the provisions of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code) from the stage of filing a suit to the stage of obtaining a decree in execution whereof such properties as are referred to in clause (a) of sub section (1) of Section 31 could be sold. In our opinion, on the same principle, even in a case where the relief claimed in the application under Section 31(1) of the Act is for enforcing the liability of a surety who has given only a personal guarantee, sub section (4A) of Section 32 where no cause is shown and clause (da) of sub section (7) where cause is shown contemplate cutting across and dispensing with the provisions of the Code from the stage of filing a suit to the stage of obtaining a decree against the surety, the passing of an order which can straightaway be executed as if it were a decree against the surety which may be passed in the event of a suit being filed. As seen above, sub section (2) of Section 31 enjoins upon the Financial Corporation to state the "extent of the liability of the industrial concern" in the application to be made under sub section (1) thereof. Since the liability of the surety is co extensive the same shall, in the absence of anything contrary in the surety bond, be the liability of the surety also. In a case where there is any provision confining the liability of the surety, the extent of the liability to be shown in the application shall be such as is in conformity with the surety bond. When no cause is shown by the surety on being served with the show cause notice the order which will be passed under sub section (4A) of Section 32 would be for the enforcement against the surety of that liability which is stated in the application. Where, however, cause has been shown by the surety the extent of his liability shall be determined 500 as contemplated in sub section (6) of Section 32 and it is the liability so determined which shall be enforced under clause (da) of sub section (7) of Section 32. It does not require any elucidation that the extent of the liability referred to above will necessarily have to be in the very nature of things in terms of monetary value even though it may not be possible to call it a decree stricto sensu defined in Section 2(2) of the Code for recovery of money. Here, Section 46B of the Act may be usefully extracted: "46B. The provision of this Act and of any rule or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern. On its plain language, in the absence of anything inconsistent in the Act, the provisions of the Code shall obviously be applicable for the enforcement of the liability of the surety directed to be enforced as aforesaid in the same manner as a decree is enforced in a suit instituted in this behalf. It is true, as has been emphasised by learned counsel for the respondents, that there is no provision corresponding to sub section (8) of Section 32 for the enforcement of the liability of a surety who has given only personal guarantee but, in our opinion, keeping in view the amendments introduced by Act 43 of 1985, it is not very significant. To us it appears that in view of Section 46B of the Act and for the reasons to be stated shortly even if Section 46B was not there, in the absence of any provision to the contrary in the Act, that order also, which was passed in a case where relief contemplated by clause (a) of Section 31(1) of the Act was claimed, could have been enforced in the manner provided in the Code. The purpose of yet inserting sub section (8) in Section 32 seems to be that it was not intended to apply the provisions of execution of a decree for attachment or sale of property as contained in the Code in its entirety and to achieve this purpose the words "as far as practicable" were used in that sub section. To us it appears that in the absence of any provision such as sub section (8) of Section 32 applying the manner provided in the Code for the execution of a decree against a surety only "as far as practicable" the entire provision contained in this behalf in the Code 501 shall be applicable. this would be so in view of the use of the expression "any other law for the time being applicable to an industrial concern". That the Code is applicable to an industrial concern also is not in dispute and cannot be doubted. We may now state our reasons for holding that even if Section 46B of the Act was not there the provisions of the Code for the execution of a decree against a surety who had given only personal guarantee would, in the absence of any provision to the contrary in the Act, be applicable. In view of the decision of this Court in The Central Taikies Ltd. Kanpur vs Dwarka Prasad, ; , where it was held that a persona designata is a person selected as an individual in his private capacity, and not in his capacity as filling a particular character or office, since the term used in Section 31(1) of the Act is "district judge" it cannot be doubted that the district judge is not a persona designata but a court of ordinary civil jurisdiction while exercising jurisdiction under Sections 31 and 32 of the Act. In National Sewing Thread Co. Ltd. vs James Chadwick & Bros. Ltd., ; while repelling the objection that an appeal under the Letters Patent against the judgment of a Single Judge passed in an appeal against the decision of the Registrar under Section 76(1) of the was not maintainable it was held at pages 1033 34 of the Report: "Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and procedure of that Court and in accordance with the provisions of the charter under which that court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction. The rule is well settled that when a statute directs that an appeal shall lie to a Court already established, then that appeal must be regulated by the practice and procedure of that Court. This rule was very succinctly stated by Viscount Haldane L.C. in National Telephone Co. Ltd. vs Postmaster General, in these terms: "When a question is stated to referred to an established Court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. " 502 The same view was expressed by their Lordships of the Privy Council in R.M.A.R.A. Adaikappa Chettiar vs Ra. Chandrasekhara Thevar, wherein it was said: "Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not, in terms confer a right of appeal." Again in Secretary of State for India vs Chellikani Rama Rao, when dealing with the case under the Madras Forest Act their Lordships observed as follows: "It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent, these being excluded by the terms of the statute just quoted. In their Lordships ' opinion this objection is not well founded. Their view is that when proceedings of this character reach the District Court, that Court is appealed to as one of the ordinary Courts of the country, with regard to whose procedure, orders, and decrees the ordinary rules of the Civil Procedure Code apply." Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case, the principle enunciated therein is one of general application and has an apposite application to the facts and circumstances of the present case. Section 76 of the confers a right of appeal to the High Court and says nothing more about it. That being so, the High Court being seized as such of the appellate jurisdiction conferred by section 76 it has to exercise that jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge, his judgment becomes subject to appeal under clause 15 of the Letters Patent there being nothing to the contrary in the . And it is in view of this decision that we are of the opinion that the provisions of the Code would have, even in the absence of Section 503 46B of the Act, been attracted in the matter of enforcing the liability of a surety. In view of the foregoing discussion, the finding of the High Court even on this point cannot be sustained. Since, however, the High Court has not made a determination of the liability of the sureties as contemplated by sub section (6) of Section 32 of the Act, the matter has to be sent back to it for doing so and thereafter to pass an order as contemplated by clause (da) of sub section (7) of Section 32 of the Act and to proceed to enforce the liability so determined an against the sureties. In the result, this appeal succeeds and is allowed with costs and the judgment of the Division Bench and also of the Single Judge of the High Court are set aside. The High Court shall now decide the application made by the appellant in accordance with law and in the light of the observations made above. S.C. AGRAWAL, J. Special leave granted. In this appeal two questions arise for consideration: 1) whether a petition under sections 31 and 32 of the (hereinafter referred to as 'the Act ') can be filed only in the Bombay Civil City Court and the Bombay High Court, on its original side, has no jurisdiction to entertain it? and 2) whether in such a petition, a decree/order can be passed directing payment of money by respondents nos. 2 to 4 who stood surety for repayment of the loan advanced by the appellant, Financial Corporation to respondent No. 1? The Division Bench of the Bombay High Court has answered both these questions against the appellant. My learned brother Ojha, J. has disagreed with this view of the Bombay High Court on both the questions. He has held that as the extent of the liability of the surety is more than Rupees fifty thousand the application could only have been filed and was rightly filed in the High Court which had the jurisdiction to entertain it. He has also held that in view of the amendments introduced in the Act by the Amending Act 43 of 1985, an order for payment of money can be passed against the surety who has given only a personal guarantee. While I am fully in agreement with the decision of my learned brother on the first question with regard to the jurisdiction of the Bombay High Court to entertain the petition filed by the appellant, I have not been able to persuade myself to agree with the view taken by him on the second question. Section 31 of the Act has been described in the marginal note as special provisions for enforcement of claims by the Financial Corpora 504 tion. It deals with a situation where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 of the Act and the industrial concern fails to make such repayment. It enables an officer of the Financial Corporation, generally or specially authorised by the Board in this behalf, to apply to the District Judge within the limits of whose jurisdiction the Industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs: (a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. Clause (aa) was inserted in sub section (1) of section 31 by section 19 of Act 43 of 1985. Section 32 of the Act prescribes the procedure to be followed by the District Judge in respect of applications under section 31 of the Act. Prior to the amendments introduced in it by Act 43 of 1985, the said section read as under: "32. Procedure of district judge in respect of applications under Section 31. (1) When the application is for the reliefs mentioned in clauses (a) and (c) of sub section (1) of section 31, the district judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding 505 liability of the industrial concern to the Financial Corporation, together with the costs of the poceedings taken under section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. (2) When the application is for the relief mentioned in clause (b) of sub section (1) of section 31, the district judge shall grant an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment and issue a notice calling upon the industrial concern to show cause, on a date to be specified in the notice, why the management of the industrial concern should not be transferred to the Financial Corporation. (3) Before passing any order under sub section (1) or sub section (2) the district judge may, if he thinks fit, examine the officer making the application. (4) At the same time as he passes an order under sub section (1), the district judge shall issue to the industrial concern a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (5) If no cause is shown on or before the date specified in the notice under sub sections (2) and (4), the district judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction. (6) If cause is shown, the district judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil procedure, 1908, in so far as such provisions may be applied thereto. (7) After making an investigation under sub section (6), the district judge may 506 (a) confirm the order of attachment and direct the sale of the attached property: (b) Vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; (c) release the property from attachment; (d) confirm or dissolve the injunction; or (e) transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf: Provided that when making an order under clause (c) the district judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit: Provided further that unless the Financial Corporation intimates to the district judge that it will not appeal against any order releasing any property from attachment, such order shall not be given effect to, untill the expiry of the period fixed under sub section (9) within which an appeal may be preferred or, if an appeal is preferred, unless the High Court otherwise directs until the appeal is disposed of. (8) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 for the attachment or sale of property in execution of a decree, as if the Financial Corporation were the decree holder. (8A) An order under this section transferring the management of an industrial concern to the Financial Corporation shall be carried into effect, as far as may be practicable, in the manner provided in the Code of Civil Procedure, 1908, for the possession of immovable property of the delivery of movable property in execution of a decree, as if the Financial Corporation were the decree holder. 507 (9) Any party aggrieved by an order under sub section (5) or sub section (7) may, within thirty days from the date of the order, appeal to the High Court, and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper. (10) Where proceedings for liquidation in respect of an industrial concern have commenced before an application is made under sub section (1) of section 31, nothing in this section shall be construed as giving to the Financial Corporation any preference over the other creditors of the industrial concern not conferred on it by any other law. (11) The functions of a district judge under this section shall be exercisable (a) in a presidency town, where there is a city civil court having jurisdiction, by a judge of that court and in the absence of such court, by the High Court; and (b) elsewhere, also by an additional district judge or by any judge of the principal court of civil jurisdiction. (12) For the removal of doubts it is hereby declared that any court competent to grant an ad interim injunction under this section shall also have the power to appoint a Receiver and to exercise all the other powers incidental thereto. " By Act 43 of 1985, the following amendments have been introduced in section 32 of the Act: (1) Sub section (1A) which reads as under was inserted: "(1A) When the application is for the relief mentioned in clause (aa) of sub section (1) of section 31, the district judge shall issue a notice calling upon the surety to show cause on a date to be specified in the notice why his liability should not be enforced." (2) In sub section (3), the words, or issuing a notice under sub section (1A) "were inserted after the words" "or sub section (2)". 508 (3) Subsection (4) was substituted by sub sections (4) and (4A), which read as under: "(4) At the same time as he passes an order under subsection (1), the district judge shall issue to the industrial concern or to the owner of the security attached a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it or him to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (4A) If no cause is shown on or before the date specified in the notice under sub section (1A), the district judge shall forthwith order the enforcement of the liability of the surety. (4) In sub section (7), clause (da) was inserted which provides as under: "(da) direct the enforcement of the liability of the surety or reject the claim made in this behalf; or" (5) In the first proviso to sub section (7), the words "or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e)" were inserted after the words "order under clause (c)". (6) In the second proviso to sub section (7), the following words were inserted after words "any property from attachment": or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation." (7) In sub section (9), for the words "sub section (5)", the words "under sub section (4A), sub section (5)" were substituted. In order to find an answer to the second question, it is necessary to construe the words "for enforcing the liability of any surety" which were introduced by way of clause (aa) in sub section (1) of section 31 509 by the Act 43 of 1985, and also find mention in sub sections (IA), (4A) and (7) of section 32. The learned counsel for the appellant has urged that the said words are wide in their amplitude and would cover a case where the surety has given a personal guarantee only and his liability is purely monetary. The learned counsel for the sureties, viz., respondents Nos. 2, 3 and 4, has, on the other hand, submitted that the said words must be construed in a more limited sense to cover only those cases where surety has given security of property to guarantee the repayment of loan and in such an event the remedy provided by sections 31 and 32 of the Act can be invoked against the surety and that the said provisions do not enable passing of an order for payment of a monetary sum against the surety who has given personal guarantee only. In order to deal with these rival contentions, it would be of relevance to take note of the state of law existing on the date of the enactment of Act 43 of 1985 whereby amendments were introduced in sections 31 and 32 of the Act. The provisions contained in sections 31 and 32 of the Act came up for consideration before this Court in Gujarat State Financial Corporation vs M/s Natson Manufacturing Co. (P) Ltd. & Ors., ; That case related to payment of court fee on an application submitted under section 31(1) of the Act and the question for consideration was whether such an application should be treated on par with a suit by a mortgagee to enforce the mortgage debt by sale of the mortgaged property which is being treated as a money suit failing within the purview of Article 1 of Schedule I to the Bombay Court Fees Act, 1959 or it should bear a fixed court fee under the residuary Article 1(c) to Schedule II of the said Act. This Court disagreeing withthe view of the Gujarat High Court, held that an application under section 31(1) of the Act would be covered by the residuary Article 1(c) of Schedule II to the said Act and it should bear a fixed court fee. In this context, this Court has examined the nature of the proceedings contemplated by section 31(1) of the Act. After referring to the provisions of the Act, this Court has held that "it would be inappropriate to say that an application under section 31(1) is something akin to a suit by a mortgagee to recover mortgage money by sale of mortgaged property" and that "in an application under section 31(1), the Corporation does not and cannot pray for a decree for its outstanding dues" and that none of the three reliefs mentioned in sub section (1) of section 31, if granted, "results in a money decree or decree for recovery of outstanding loans or advance" (pages 378 379). After referring to the provisions contained in sub section (6) of section 32, which provides for investigation of the claim of the Financial Corporation in 510 accordance with the provisions contained in the code of Civil Procedure, 1908, this Court has laid down: "The claim of the Corporation is not the monetary claim to be investigated though it may become necessary to specify the figure for the purpose of determining how much of the security should be sold. But the investigation of the claim does not involve all the contentions that can be raised in a suit. The claim of the Corporation is that there is a breach of agreement or default in making repayment of loan or advance or instalment thereof and, therefore, the mortgaged property should be sold. It is not a money claim. The contest can be that the jurisdictional fact which enables the Corporation to seek the relief of sale of property is not available to it or no case is made out for transfer of management of the industrial concern. " (p.381) This Court has further emphasised that sub section (7) of section 32 "prescribes what reliefs can be given after investigation under subsection (6) is made, and it clearly gives a clue to the nature of contest under sub section (6)" and further that sub section (8) of section 32 . 'only prescribes the mode and method of executing the order of attachment or sale of property as provided in the Code of Civil Procedure". According to this Court, "the provision contained in sub section (6) does not expand the contest in the application under section 31(1) as to render the application to be a suit between a mortgagee and the mortgagor for sale of mortgaged property" (p.381). This Court has held that "the substantive relief in an application under section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree" (p.382). In Everest Industrial Corporation & Ors. vs Gujarat State Financial Corporation, this Court was examining the question whether the rate of interest on the amount payable under an order passed under section 32 of the Act from the date said order is governed by section 34 of the Code of Civil Procedure, 1908 or whether it is payable at the contractual rate. This Court held that section 34 CPC was not applicable to these proceedings. After referring to the earlier decision in Gujarat State Financial Corporation vs M/s Natson Manufacturing Co. (P) Ltd. & Ors. case (supra), this Court has reiterated that the proceedings instituted under section 31(1) of the Act is something akin to an application for attachment of property in execution of a decree at a stage posterior 511 to the passing of the decree and, therefore, no question of passing any order under section 34 CPC would arise since section 34 CPC would be applicable only at the stage of the passing of the decree and not to a stage posterior to the passing of the decree. In Maganlal etc. vs Jaiswal Industries Neemach & Ors., , after referring to the decisions mentioned above, this Court has observed: "In view of these two decisions, the law seems to be settled that an application under section 31(1) of the Act cannot be put on par to a suit for enforcement of a mortgage nor the order passed thereon under section 32 of the Act be put on par as if it was an order in a suit between a mortgagee and the mortgagor for sale of mortgaged property. On the other hand the substantive relief in an application section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree." (p.710) The question whether the provisions of sections 31 and 32 of the Act could be invoked against the property of the surety came up for consideration before a full bench of the Allahabad High Court in Munnalal Gupta vs Uttar Pradesh Financial Corporation & Anr., AIR 1975 ALL 416. In that case, the surety had mortgaged his house by way of collateral security for the loan granted to the borrower industrial concern and the Financial Corporation had moved an application under section 31 of the Act for sale of the property of the surety which had been mortgaged as well as the property of the principal debtor which had been mortgaged and the question was whether an order for sale of the property of the surety could be passed on an application under section 31( 1) of the Act. It was held that the relief which can be granted by a District Judge under section 32 of the Act must be confined against the borrower industrial concern and its property and that the District Judge can pass an ad interim order attaching the security or so much of the property of the industrial concern as would be sufficient in his opinion to satisfy the outstanding liability. It was laid down that the order of attachment is restricted to the property of industrial concern given to the Corporation by way of surety and he is not empowered to attach the property of a person other than an industrial concern. According to the said decision, a surety, who is not a partner or otherwise interested in the industrial concern, cannot be proceeded against under section 31 so that his property, even if mortgaged with the Corporation, cannot be attached 512 by the District Judge. In this context, the teamed Judges pointed out the sub section (4) of section 32 contemplates a notice to the borrower industrial concern after an interim order has been passed to show cause why the ad interim injunction should not be made absolute and the said provision does not contemplate a notice to the surety and that it would be unthinkable that the legislature intended that the property of the surety may be attached and put to sale without even a notice to him. The amendments introduced in sections 31 and 32 by Act 43 of 1985 seek to remove the lacunae in those provisions as pointed out in the aforesaid judgment of the Allahabad High Court and with that end in view clause (aa) has been inserted in sub section (1) of section 31 whereby a Financial Corporation can move an application under section 31(1) for enforcing the liability of any surety and amendments have been made in section 32 to prescribe the procedure for grant of the said relief on such application. Express provision has been made in sub section (1A) of section 32 for issuing a notice to the surety requiring him to show cause why his liability should not be enforced. It is argued on behalf of the appellant that the words "for enforcing the liability of any surety" are wide in their amplitude to cover the monetary liability of a surety who has given personal guarantee only and has not given his property as security for repayment of the loan by the borrower industrial concern, though it is not disputed that in so far as the borrower industrial concern is concerned, the amendments introduced in sections 31 and 32 by Act 43 of 1985 do not alter the existing law and no order in the nature of a money decree can be passed against him in these proceedings. It is, however, urged that in so far as the surety is concerned the position is different and in view of the amendments introduced in sections 31 and 32, an order in the nature of a money decree can be passed against the surety who has given personal guarantee only and has not given security of his property for repayment of the loan. This argument implies that as a result of the amendments introduced in sections 31 and 32 by Act 43 of 1985 while the nature of the proceedings as against the borrower industrial concern remains unchanged and the said proceedings continue to be proceedings akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree, the nature of these poceedings has been changed in so far as the surety is concerned and they have become proceedings in which an order in the nature of a money decree can be passed. In other words, in a case where the borrower industrial concern has obtained a loan from the Financial Corporation without furnishing the security of property on the basis of 513 a personal guarantee given by the surety, the Financial Corporation will have to proceed against the borrower industrial concern by instituting a regular suit for recovery of the dues whereas it can proceed against the surety under sections 31 and 32 of the Act. It means that as compared to the principal debtor the Financial Corporation vis a vis the surety has been placed on a more advantageous Position. It may, however, be mentioned that under the common law, which finds re enactment in section 128 of the , the liability of the surety is coextensive with that of the principal debtor unless it is otherwise provided by the contract. It means that the liability must be proved against the surety in the same way as against the principal debtor. Thus under the general law the surety stands on the same footing as the principal debtor. These submissions raise the question: can the legislature be attributed the intention to alter the existing law so as to bring about a change in the nature of proceedings under sections 31 and 32 of the Act and also to alter the general law relating to the enforcement of the liability of the surety? I find it difficult to answer this question in the affirmative. In the matter of interpretation of statutes, a principle which is well recognised in England is: "it is thought to be in the highest degree improbable that Parliament would depart from the general system of law without expressing its intention with irresistible clearness, and to give any such effect to general words merely because this would be their widest, usual, natural or literal meaning would be to place on them a construction other than that which Parliament must be supposed to have intended." (See: Mexwell on The Interpretation of Statutes, 12th Edition, p. 116). In Minet vs Leman, [1955] (20) Eeav. Sir John Romilly, M.R. stated as a principle of construction, which could not be disputed, that "the general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the existing policy untouched". In this context, it would be of relevance to take note of the decision of this court in M.K.Ranganathan & Anr. vs Government of Madras & Ors. , ; In that case this Court was required to construe the words "or any sale held without leave of the Court of any of the properties of the Company" which were added in section 232 (1) of the Indian Companies Act, 1913 by Act 22 of 1936. the said amendment was introduced with a view to get over the decision of the Allahabad High Court in Kayastha Training and Banking Corporation Ltd vs Sat Narain Singh, All. 433. The question was whether the words which had been added refer only to sales held through the intervention of the 514 court or whether they included the sales effected by the secured creditors outside the winding up and without the intervention of the court. This Court held that the said words referred only to sales held through the intervention of the Court and that the amendments whereby these words were introduced were not intended to bring within the sweep of the general words "sales effected by the secured creditors outside the winding up". In order to arrive at this conclusion, this Court placed reliance on the principle of interpretation referred to above and it was observed: "If the construction sought to be put upon the words "or any sale held without leave of the Court of any of the properties" by the Appellants were accepted it would effect a fundamental alteration in the law as it stood before the amendment was inserted in section 232 by Act XXII of 1936. Whereas before the amendment the secured creditor stood outside the winding up and could if the mortgage deed so provided, realise his security without the intervention of the Court by effecting a sale either by private treaty or by public auction, no such sale could be effected by him after the amendment and that was certainly a fundamental alteration in the law which could not be effected unless one found words used which pointed unmistakably to that conclusion or unless such intention was expressed with irresistible clearness. Having regard to the circumstances under which the amendment was inserted in section 232 by Act XXII of 1936 and also having regard to the context we are not prepared to hold that the Legislature in inserting that amendment intended to effect a fundamental alteration in law with irresistible clearness. Such a great and sudden change of policy could not be attributed to the Legislature and it would be legitimate therefore to adopt the narrower interpretation of those words of the amendment rather than an interpretation which would have the contrary effect." (p. 388) In my opinion, regard must be had of this principle of interpretation while construing the expression "for enforcing the liability of any surety" which has been inserted by way of clause (aa) in sub section (1) of section 31 by Act 43 of 1985. Considering the amendments introduced in sections 31 and 32 of the Act by Act 43 of 1985 and having regard to the principle of interpretation referred to above I do not find any provision in the said amendments which may indicate that 515 Parliament has evinced an intention to effect a fundamental alteration in the law with irresistible clearness. In this context, it would be of relevance to note that while introducing the said amendments Parliament has chosen not to make any alteration in relation to the following matters: (1) In the marginal note, section 31 is described as `special provisions for enforcement of claims by Financial Corporation '. No alteration has been made therein by Act 43 of 1985 and section 31 continues to be a special provision for enforcement of claims by Financial Corporation. (2) Parliament has not expressly indicated that an order for payment of money only may be passed against the surety. (3) Although in sub sections (8) and (8A) of section 32, express provision has been made prescribing the procedure for carrying into effect an order of attachment and sale of property and an order transferring the management of an industrial concern to the Financial Corporation passed under sub section (7) of section 32, no specific provision was made prescribing the procedure for carrying into effect of an order passed under clause (da) of sub section (7) of section 32 directing the enforcement of the liability of the surety. It cannot be comprehended that while making a provision which would enable passing of an order in the nature of a money decree against a surety on an application under section 31 of the Act, Parliament would have refrained from making a corresponding provision prescribing the procedure for carrying into effect of such an order. Having regard to the features referred to above, it appears to be more in consonance with the scheme of the Act and the object underlying sections 31 and 32 that by introducing the amendments in sections 31 and 32 of the Act, Parliament intended to place the surety on the same footing as the principal debtor in the matter of enforcement of the claims of the Financial Corporation so as to enable the Financial Corporation to obtain relief against the properties of the principal debtor as well as the surety. If considered in this perspective, the expression "enforcing the liability of any surety" in clause (aa) of section 31(1) would mean enforcing the liability of a surety in the same manner as the liability of principal debtor is enforced, i.e., by attachment and sale of property keeping in view that the proceedings under sections 31 and 32 of the Act are akin to an application for attachment of property in execution of a decree at a stage posterior to the passing 516 of the decree. This construction would obviate the need for a procedure for carrying into effect of the order passed under clause (da) of sub section (7) of section 32 of the Act because such an order would be an order for attachment and sale of the property of the surety and it can be carried into effect in accordance with sub section (8) of section 32 which prescribes the procedure for carrying into effect an order for attachment and sale of property. This construction will also preserve the special nature of the proceedings under section 31 and would not result in bringing about a fundamental alteration in the law laid down by this Court with regard to the nature of these proceedings as well as the general law whereunder a surety is to be treated on par with the principal debtor. For the reasons aforesaid, I am in agreement with the view of the Division Bench of the High Court on this question and I am unable to concur with the decision of my learned brother Ojha, J. I would, therefore, uphold the decision of the Division Bench of the High Court that the petition whereby the appellant had sought the relief of a money decree for payment of Rs. 15,87,391.20 paise against respondents 2 to 4 was not maintainable and the said relief could not be granted to the appellant in proceedings under section 31 of the Act. As a result, the petition filed by the appellant must be dismissed and for the same reason this appeal also must fail. R. N. J. Appeal allowed.

Respondent No. 1 a Private Limited Company, was sanctioned a loan of Rs.30 lakh by the Appellant Corporation for the setting up of a factory. To secure this loan a mortgage deed of certain properties was executed by the Company and Respondents 2 to 4 as its directors had executed a personal Surety Bond without any security for its repayment. After obtaining a part of the sanctioned loan, which was to be given in phases, the Company became disinterested in availing of the balance amount. Consequently the Corporation demanded back the amount ahead taken together with interest and on the company 's failure to do so, it took over the Industrial Concern under section 29 of the Act and initiated steps to realise its dues by putting the property to sale. Having failed to recover the amount as no adequate offer was forthcoming despite repeated advertisements, it filed a petition before the Bombay High Court under sections 31 and 32 of the Act both against the Company as well as its directors sureties praying for a decree in the sum of Rs. 15,87,391.20 to be passed against them jointly and severally. The respondents contested the petition contending (a) that a petition under sections 31 and 32 of the Act could be filed only before the City Civil Court and the High Court had no jurisdiction to entertain it, (b) that no money decree can be passed under sections 31 and 32 of the Act, and (c) that the provision in the Act relating to enforcement of the 481 liablity of surety were ultra vires of Article 149 of the Constitution. The learned single judge relying on an earlier decision of the Bombay High Court reported in 1987 Mah. L.J 243 held that the High Court had to entertain the petition but on merits took the view that no money decree could be passed under sections 31 and 32 even against the sureties and since in the instant case the sureties had not given any security except their personal guarantee, the same could be enforced only in the ordinary course and not under the special machinery provided under the Act. In view of his findings on the first two pleas no arguments were entertained on the last plea and accordingly the petition was dismissed. The Division Bench while dismissing the appeal not only upheld the finding of the single Judge on merits but also overruled the decision reported in and held that the High Court had no jurisdiction to entertain a petition under sections 31 and 32 of the Act. The Corporation came up in appeal before this court by special leave against this decision of the High Court of Bombay. The impugned judgement was assailed by the Appellant Corporation both on merites and on the plea of juridiction. The respondents in reply asserted that the findings of the High Court on both pleas were unassailable. Allowing the appeal, by a majority decision, HELD: A. By the Full Court (i)The extent of the liability stated in the application as contemplated by sub section (2) of section 31 of the Act would represent the value of the claim of the Corporation and if since value is upto Rupees Fifty Thousand, the application would lie in the City City Court and if it is more than that amount it would lie in the High Court. This interpretation would give meaning and relevance to the words "having jurisdiction" used in sub section (11) of section 32. A different interpretation would render superfluous or otiose not only the words "having jurisdiction" but also the words and in the absence such court, by the High Court, occurring in the said sub section (11) inasmuch as in a Presidency town, in terms of territorial jurisdiction, the jurisdiction of the City Civil Court and of the High Court is co terminus [495D F] (ii) In the instant case the extent of liability of the surety being more than Rupees fifty thousand, the application could only have been filed and was rightly filed in the High Court and the finding in the 482 judgment under appeal to the contrary for holding that the High Court had no jurisdiction to entertain the application cannot be sustained. [497A] B. Per N. D. Ojha, J. for himself and Ranganathan, J. (iii) There can be no doubt that the term, "any surety" used in clause (aa) in sub section (1) of section 31 of the Act, will include not only a surety who has given some security but also one who has given only a personal guarantee. In our opinion, in a case where the relief claimed in the application under section 31(1) of the Act is for enforcing the liability of a surety who has given only a personal guarantee, sub section 4(A) of section 32 where no cause is shown and clause (da) of sub section (7) where cause is shown, contemplate cutting across and dispensing with the provisions of the Code of Civil Procedure from the stage of filing a suit to the stage of obtaining a decree against the surety, the passing of an order which can straightaway be executed as if it were a decree against the surety which may be passed in the event of suit being filed. [498F, 499E] (iv) In the absence of any provision such as sub section (8) of section 32 of the Act applying the manner provided in the Code for the execution of a decree against a surety only "as far as practicable" the entire provision contained in this behalf in the Code shall be applicable. This would be so in view of the use of the expression "any other law for the time being applicable to an industrial concern" used in section 46B of the Act. That the Code is applicable to an industrial concern also is not in dispute and cannot be doubted. [50OH 501A] (v) Even in the absence of section 46B of the Act the provisions of the Code would have been attracted in the matter of enforcing the liability of a surety in view of the decision of this Court in National Sewing Thread Co. Ltd. vs James Chadwick & Bros. Ltd., ; inasmuch as the District Judge while exercising jurisdiction under sections 31 and 32 of the Act is not a persona designate but a court of ordinary civil jurisdiction. [501B D] (Per section C. Agrawal, J. Dissenting.) It cannot be comprehended that while making provision which would enable passing of an order in the nature of a money decree against a surety on an application under section 31 of the Act, Parliament would have refrained from making a corresponding provision prescribing the procedure for carrying into effect such an order. It 483 appears to be more in consonance with the scheme of the Act and the object underlying sections 31 and 32 that by introducing the amendments in sections 31 and 32 of the Act the Parliament intended to place the surety on the same footing as the principal debtor so as to enable the Financial Corporation to obtain relief against the properties of the principal debtor as well as the surety [515E G] If considered in this perspective, the expression "enforcing the liability of any surety" in clause (aa) of section 31(1) would mean enforcing the liability of a surety in the same manner as the liability of principal debtor is enforced, by attachment and sale of property keeping in view that the proceedings under sections 31 and 32 of the Act are akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree. The relief of a money decree sought against the sureties respondents 2 to 4 was not maintainable and the said relief could not be granted to the appellant in proceedings under section 31 of the Act. As a result, the petition filed by the appellant must be dismissed and for the same reason this appeal must fail. [515G 516A, 516D E] Munnalal Gupta vs Uttar Pradesh Financial Corporation & Anr. ,A.I.R. 1975 Allahabad 416; Thressiamma Varghese vs K. section F. Corporation, A.I.R. 1986 Kerala 222; Maharashtra State Financial Corporation vs Hindtex Engineers Pvt. Ltd., ; Kayastha Training & Banking Corporation Ltd vs Sat Narain Singh, All. 433; M. K. Ranganathan & Anr. vs Government of Madras & Ors. ,[1955] 2 S.C.R. 374; The Central Talkies Ltd., Kanpur vs Dwarka Prasad, ; , referred to. Maganlal V. MIS. Jaiswal Industries, Neemach & Ors., ; ; M/s. Everest Industrial Corporation & Ors. vs Gujarat State Financial Corporation, [1987] 3S.C.C. 597; Parkash Playing Cards Manufacturing Co. vs Delhi Financial Corporation, ; Gujarat State Financial Corporation V. Natson Manufacturing Co. Pvt. Ltd. & Ors., , distinguished. West Bengal Financial Corporation vs Gluco Series Pvt. Ltd. ,A.I.R. , approved.

Appeal No. 222 of 1956. 40 Appeal by special leave from the judgment and decree dated December 8, 1953, of the former Nagpur High Court in Misc. Civil Case No. 55 of 1950. C. K. Daphtary, Solicitor General of India, K. K. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant. The respondent did not appear. October 3. The Judgment of the Court was delivered by SARKAR J. This is an appeal brought by special leave against the judgment of the High Court at Nagpur, delivered on a reference under section 66(1) of the Income tax Act. The appeal is by the Commissioner of Income tax, Madhya Pradesh and Bhopal. The respondents are the assessees Vyas & Dotiwala. The respondents have not appeared in this appeal. We shall presently set out the facts but before we do that, we wish to state that the assessment years concerned were 1945 46 and 1946 47. Though there were two separate assessment orders in respect of these years, ultimately when they came up before the Appellate Tribunal they were consolidated into one appeal. The appeal before us likewise concerns both these assessment years. It appears that in or about July 1943 when considerable difficulty was being felt about cloth, the Deputy Commissioner, Amraoti, evolved a scheme to solve that difficulty. Under that scheme Kisanlal Vyas and a firm called Edulji Framji Dotiwala who have in these proceedings been referred to as Dotiwala, undertook to finance the scheme without charging any interest or profit and were appointed as financiers and also distributors of a variety of cloth called standard cloth for the town and camp of Amraoti and certain areas in the interior It is not necessary to set out the various details of the scheme and it will be sufficient to state that Vyas and Dotiwala, who as an association of persons are the assessees concerned, agreed to open an account in the Imperial Bank of India to be operated by them out of which the purchases 41 of the cloth were to be financed. The orders for the cloth were to be placed by the Government with the mills and on the arrival of a consignment of cloth, the assessees were to pay to the Deputy Commissioner, Amraoti, the value of the consignment together with 6 1/4 per cent. of the ex mill price. The consignment was thereupon to be opened and its contents checked by the assessees and the officials and delivered to the assessees on their granting a receipt for the same. The Deputy Commissioner would pay 4 1/2 per cent. of the ex mill price to the assessees out of the amount paid by the latter as aforesaid for contingent expenses of working the scheme. The scheme provided that the contingent expenses were not to exceed 3 percent. of the ex mill price. The cloth coming to the hands of the assessees was to be distributed in Amraoti town and camp through a shop to be opened by the assessees and in the interiors of the area concerned through Tehsildars with Patils under them. The substance of the arrangement of distribution appears to have been that it would be entirely under the control of the Deputy Commissioner who made himself responsible to the assessees for the sale proceeds receivable from the Tehsildars. The Deputy Commissioner was to decide the price for which the cloth was to be sold to the consumers and also the persons entitled to buy the cloth. Out of the sale proceeds the Deputy Commissioner was to pay to the assessees whatever they had advanced on account of the cloth. The most important provision in this scheme is para. 14 which is set out below. Profits resulting from the scheme shall be utilised for such charitable purposes as may be decided on by the Deputy Commissioner in consultation with the advisory committee appointed to supervise the scheme. It appears that the books of the assessees showed Rs. 34,737/ for the assessment year 1945 46 and Rs. 17,682/ for the assessment year 1946 47 as profits earned in working the scheme. The Income tax Officer assessed the assessees to tax on the profits so earned. 6 42 The assessment orders made by this officer would appear to show that the only point urged by the assessees before him against the assessment was that the income was exempt from taxation under section 4(3)(i a) of the Indian Income tax Act, 1922. The officer rejected this contention. The assessees went up in appeal to the Appellate Assistant Commissioner, before whom the same contention appears to have been repeated. The Appellate Commissioner confirmed the order of the Income tax Officer. The assessees then appealed to the Appellate Tribunal. The Tribunal held that the assessees had objected to the assessment before the Income tax Officer on two grounds, namely, that the income was Dot the income of the assessees and that the income was exempt from taxation under section 4(3)(i a), as appeared from their letter dated January 22, 1947. One of these alone had been dealt with by that officer, as appears from his order earlier referred to. The Appellate Tribunal agreed with the conten tion of the assessees that they were not liable to be taxed on the profits because these did not form their income. The Tribunal was of the view that the scheme was the scheme of the Deputy Commissioner and completely under his control; that the assessees were merely the financiers and also managers under the Deputy Commissioner to carry out the scheme and that the assessees only helped to work the scheme. The Tribunal held that the profits that may have resulted from such working were not therefore theirs nor represented their income and the assessees could not be assessed to income tax thereon. In this view of the matter the Tribunal set aside the orders of assessment. Thereafter, on the application of the revenue authorities the Tribunal referred the following question to the High Court under section 66(1) of the Act: Whether on the facts of this case any income accrued to Messrs. Vyas and Dotiwala as the result of their associating themselves as financiers in the scheme for the distribution of standard cloth; and, if so whether such income was assessable in their hands. 43 On that reference the High Court held that under the charging section in the Indian Income tax Act, 1922, namely, section 4, it was necessary for the revenue authorities to prove that the assessees received or should be deemed to have received income or profit from the scheme during the relevant period. It held that the asseess had not actually received any such income and further that the expression " deemed to be received " in that section only meant deemed by the provision of the Act to be received, and no such provisions of the Act had been relied upon on behalf of the revenue authorities. In this view of the matter the High Court answered the question framed, in the negative. The learned Solicitor General contends that the High Court failed to appreciate the real question. He says that the question was not whether income was received or deemed to be received but whether income had accrued and the point for decision was, as appeared from the judgment of the Tribunal, whether the profits formed the income of the assesses. We agree with this criticism of the judgment of the High Court. On the point that arises from the question framed, we think that the Tribunal went wrong. It is not disputed that the assessees worked the scheme and such working produced the profits as found in the assessment orders. The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner, the assessees could not be said to have carried on business by working the scheme. We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only comes to this that the assessees had agreed to do business in a certain manner. The fact that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, to the assessees would indicate that the assessees were treated as the owners of the business. It would indicate that if there had been no such guarantee, the loss due to the failure of the Tehsildars to pay their dues would have to be borne 44 by the assessees. Again the claim, may be in the alternative, by the assessees for exemption under section 4(3)(i a) would not arise unless the assessees were carrying on a business. Lastly, para. 14 of the scheme which we, have earlier set out, clearly contemplates profits resulting from the scheme. The provision that the profits would be devoted to charity to be decided by the Deputy Commissioner, would indicate that without it the profits would have been utilisable by the assessees. The profits belonged to the assessees and hence the necessity for this agreement so that the assessees might be made to spend them on charity. If, as the Tribunal thought, the profits were of the Government, there was no necessity for the Government providing for the profits being expended on charity, for the Government if minded to do so, could have done it without such a provision. The fact remains that the working of the scheme produced profits and apart from para. 14 such profits undoubtedly belonged to the assessees. If they chose to agree by para. 14 to devote the profits to charity, that was their business; the profits made by them would not change their character and cease to be the assessees ' income because they agreed to devote their income to charity. We might also say that there is nothing in the scheme which shows that the assessees had undertaken not to make any profits on the distribution work under the scheme; they had only agreed to finance the scheme without receiving any interest or profit. Furthermore, since the assessees actually made the profits, they are liable to pay tax thereon whether they agreed not to make any profits or not. We wish also to point out that it is not the assessees ' case that they have been made to pay out the profits for any charity. For these reasons we think that the profits were the profits of the assessees and they are liable to pay tax on them. With regard to the assessees ' claim for exemption under section 4(3)(i a), they are clearly not entitled to any. That claim of the assessees has not been accepted by any of the Courts below. Section 4(3)(i a) applies to income derived from business carried on on behalf of a religious and charitable institution when the income 45 is applied solely to the purpose of the institution and the business is carried on in the manner provided. It is enough to say that the scheme, considered as a business, was not carried on on behalf of any religious or charitable institution. Once it is held that the assessees made the profit, how they use it would not matter. In the result, we would answer both parts of the question framed, in the affirmative. We hold that the profits were the income which accrued to the assessees and such income is assessable to income tax and is not exempt from taxation under section 4(3)(i a). The appeal is allowed with costs here and below. Appeal allowed.

Some of the erstwhile employees of Burmah Shell, in an earlier writ petition, claimed restoration of the commuted portion of pension and enhancement of pension on par with the pensioners of Hindustan Petroleum Corporation Limited, (HPCL). At the time of hearing, the claim for restoration of the commuted portion of pension was given up. This Court accepted the claim of the petitioners as regards enhancement of pension and ordered a sizeable hike in the pension. The present writ petition claims the same relief which was given up at the time of hearing of the earlier writ petition, viz., restoration of commuted portion of pension. Admitted ly, HPCL had deferred its decision till 1992 in this regard. On behalf of the petitioners it was contended that though, HPCL has deferred its decision till 1992, the peti tioners were not precluded from approaching this Court and that the earlier decision did not operate as res judicata. On behalf of the respondents it was contended that as soon as HPCL revises its scheme the petitioners would also be entitled to the benefit thereof and that grant of the relief earlier would create disparity between the persons who receive pension from HPCL and those from the Respondent. Dismissing the writ petition, this Court, HELD: 1.1. It would be inappropriate to interfere and grant the relief as prayed for at this stage since that would create disparity between the personnel who receive pension from Hindustan Petroleum Corporation Ltd. and the respondent Corporation. [965B] 963 1.2. This Court has already held that the retired per sonnel of Burmah Shell would be entitled to a hike in pen sion at par with pensioners of HPCL. (W.P. No. 590/87 decid ed on 11.5. 1988). HPCL has not accorded to its pensioners the relief of restoration of the commuted portion of pension after the expiry of 15 years. The order passed by this Court is as recent as May 11, 1988. After such a short time lag and in the absence of any substantial change in the posi tion, it is not desirable to entertain the claim for resto ration of commuted pension. The petitioners are governed by a special scheme, which is not at par with Government em ployees or the other Public Sector Undertakings. [964G H; 965A] Common Cause & Ors. vs Union of India, ; , referred to.

N: Civil Appeal No. 569 of 1961. Appeal by special leave from the order dated September 9, 1960, of the Chief Commissioner, Pondicherry in Appeal No. 94 of 1960. WITH Writ Petition No. 347 of 1960. Petition 'tinder article 32 of the Constitution of India for enforcement of Fundamental Rights. 658 N. C. Chatterjee, R. K. Garg and section C. Agarwala for the Appellant. C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and R. N. Sachthey, for respondent No. 1 (in C. A. No. 569/61). R. Mahalinga Iyer, for respondent No. 2 (in C.A.569/61). N. C. Chatterjee, R. K. Garg and section C. Agarwala, for the petitioner and the intervener. C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and R. N. Sachthey, for respondent No. 1 (in W. I,. No. 347/60). R. Thiagarajan, for respondent No. 3 (in W. P. No. 347/60). January 22. The judgment of the Court was delivered by WANCHOO, J. The appeal and the writ petition arise out of the same order of the Chief Commissioner of Pondicherry acting as the appellate authority under the Motor Vehicles Act and will be dealt with together. The petitioner is one of fourteen persons who had applied for a stage carriage permit before the State Transport Authority, Pondicherry. The petitioner 's application was rejected and the permit was granted to Perumal Padayatchi, one of the respondents before us. The State Transport Authority considered various factors one of which was that Perumal Padayatchi was a native of Pondicherry and taking all the factors into account, the permit was granted to Perumal Padayatchi. The petitioner went in appeal before the Appellate Authority, who is the Chief Commissioner of Pondicherry. The Appellate Authority dismissed 659 the appeal and observed that even if it were conceded. that the claim% of the petitioner were more or less equal to those of Perumal Padayatchi, the latter would be entitled to preference on the ground that he is a native of Pondicherry. We may. add that though the petitioner used to live in Pondicherry, he was not a native of Pondicherry. This order rejecting the appeal was passed on September 9, 1960. The appeal has been filed with special leave against this order. 'I he petitioner has also filed the writ petition against this order in which he raises, the same points. The main contention urged on behalf of the petitioner is that the order of the appellate Authority shows that preference was granted to Perumal Padayatchi on the ground that he was a native of Pondicherry (i. e. he was born in Pondicherry), while the petitioner was merely a resident of Pondicherry (i. e. he was born in Pondicherry). The petitioner contends that such grant of preference on the ground of place of birth is hit by article 15 of the Constitution as the petitioner is a citizen of India, and article 15 lays down that "the State shall not discriminate against any citizen on grounds only of religion, race, case, sex, place of birth or any of them". This contention of the petitioner is met on behalf of the respondents in this way. The respondents submit that at the relevant time, Pondicherry was not within the territory of India and the Constitution did not apply to it. Therefore, the petitioner would have no right to apply to this Court for special leave under article 136 of the Constitution; nor would the petitioner have a right to proceed by way of a writ petition under article 32 against an order which was passed by the Appellate Authority in Pondicherry at a time when Pondicherry was not in the territory of India. Reliance in this connection is placed on behalf of the respondents on the decision of this 660 Court in N. Masthan Sahib vs Chief Commissioner, Pondicherry(1) The petitioner also relies on the same decision of this Court. It is conceded on his behalf that in view of that decision it was not open to the petitioner to apply to this Court under article 136 and therefore the appeal may not be maintainable. But it is urged that under article 12 ,,,the State" for the purpose of part III of the Constitution is defined to include " 'the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India". It is therefore contended that even though Pondicherry was not a part of India when the order under challenge was passed, the Appellate Authority which passed the order was a "local or other authority under the control of the Government of India" and therefore was amenable to a writ under article 32 of the Constitution. Further it is urged that whatever may have been the position when Masthan Sahib 's case (1), wag decided, Pondicherry is now within the territory of India since August 1962 and therefore this Court can now issue a writ to the Appellate Authority if the order under challenge, violates article 15 of the Constitution. The respondents however contend that the fact that Pondicherry is now within the territory of India makes no difference in the application of the decision in Masthan Sahib 's case (1). It is submitted that the reasons which led the majority in that case to refuse to issue a writ clearly imply (even if there is no actual decision in express terms on the question now raised) that a judicial or quasi judicial authority cannot be said to be an authority "under the control of the Government of India" within the meaning of article 12, and therefore the. Appellate Authority which was a quasi ,judicial authority was not under the (1) [1962] Supp. 1 S.C.R. 981. 661 control of the Government of India and could not be amenable to a writ under article 32 at the time when the order under challenge was passed. Further as the Constitution is not retrospective in operation the fact that Pondicherry since August 1962 is part of the territory of India would not give this Court jurisdiction to issue a writ now when it could not issue a writ to the Appellate Authority in September, 1960, even reading article 32 along with article 12 of the Constitution. Before we come to consider the questions thus raised in the writ petition, we may state that so far as the appeal is concerned, it is concluded by the decision in Masthan Sahib 's case (1). Article 136 gives power to this Court to grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. Admittedly, Pondicherry was not within the territory of India when the order was passed and therefore article 136 would not apply to such an order. We have already indicated that this position is conceded on behalf of the petitioner. So far therefore as the appeal is concerned it must be dismissed on the authority of Masthan Sahib 's case (1), though in the circumstances we shall pass no order as to costs. Turning now to the writ petition, the main question that falls for consideration is the effect of article 12 and whether on a proper interpretation of that Article, the Appellate Authority could in this case be said to be " 'a local or other authority under the control of the Government of India". It is submitted on behalf of the respondents that this matter is also concluded by the decision of the majority in Masthan Sahib 's case (1), and that the effect of that decision is that a judicial or a quasijudicial authority would not be an authority "under the control of the Government of India". ' On the (1) [1962] Supp. 1 S.C.R. 981. 662 other hand, the petitioner contends that there was no such decision in that case as will appear from the concluding portion of the judgment and therefore the question is open for consideration before us. As both parties rely on that decision we may quote the relevant part thereof. Before we do so we may mention that the decision in that case was in two parts, the first part being delivered on April 28, 1961 and the final part on December 8, 1961, though the report contains only the final part. Relevant part of that decision which appears in the first part delivered on April 28, 1961, is as below : "Learned counsel pointed out that for the purpose of the exercise of this Court 's power under article 32 of the Constitution for the enforcement of the fundamental rights its jurisdiction was not limited to the authorities functioning within the territory of India but that it extended also to the giving of directions and the issuing of orders to authorities functioning even outside the territory of India provided that such authorities were subject to the control of the Government of India. This submission.appears to us well founded and the power of this Court under article 32 of the Constitution is not circumscribed by any territorial limitations it extends not merely over every authority within the territory of India but also those functioning outside, provided that such authorities are under the control of the Government of India". Then after considering articles 142 and 144 of the Constitution and pointing out that in view of the limitations imposed by article 142 on the territory within which alone the orders or directions of this Court could be directly enforced, a question was posted whether a writ in the nature of certiorari or 663 other appropriate order or direction to quash a quasi judicial order passed by an authority outside the territory of India, though such authority is under the control of the Government of India could issue. The majority judgment observed as follows in answer to the question thus posed : "If the order of the authority under the control of the Government of India but functioning outside the territory of India was of an executive or administrative nature, relief could be afforded to a petitioner under article 32 by passing suitable orders against the Government of India directing them to give effect to the decision of this Court by the exercise of their powers of control over the authority outside the territory of India. Such an order could be enforceable by virtue of article 144, as also article 142. But in a case where the order of the outside authority is of a quasi judicial nature, as in the case before us, we consider that resort to such a procedure is not possible and that if the orders or directions of this Court could Dot be directly enforced against the authority in Pondicherry, the order would be ineffective and that the Court will not stultify itself by passing such an order." In the final order, however, at p. 1009 of the Report, the majority observed as follows: "The writ petitions must also fail and be dismissed for the reason that having regard to the nature of the relief sought and the authority against whose orders relief is claimed they too must fail. They are also dismissed. We would add that these dismissals would not preclude the petitioners from approaching this Court, if so desired in the event of Pondicherry becoming part of the territory of India". 664 it is contended on behalf of the petitioner that the majority decision in that case seems to imply that the Appellate Authority was under the control of the Government of India as otherwise it would not have been necessary to put the two questions which were out to the Government of India by the first part of the decision. Further it is contended that the observations in the final part of the judgment that the petitioners in that case were not precluded from approaching this Court, if so desired, in the event of Pondicherry becoming part of the territory of India, also show that it was not held in that decision that judicial or quasi judicial authorities could not be under the control of the Government of India. On the other hand, it is contended on behalf of the respondents that judicial or quasi judicial authorities were not under the control of the Government of India, for if they were a writ would have been issued in that case in the same way as in the case of an executive or administrative authority, i.e. a writ could issue to the Government of India "directing them to give effect to the decision of this Court by the exercise of their powers of control over the authority outside the territory of India". We have carefully considered the observations in the majority decision in this connection and it must be held that that decision is not a direct authority on the question that is now posed before us., for the point was not then specifically raised; and expressly decided, though as we will later point out, the implication of the said decision is against the contention raised by the petitioner. We have therefore to examine the contentions of either party as to the exact scope and effect of the words " 'all local or other authorities within the territory of India or under the control of the Government of India", as if the question is res integra. The first contention on behalf of the petitioner is that the words " 'under the control of the Government 665 of India" in article 12 do not qualify the word "authorities" therein but qualify the word "territory". The petitioner would therefore read the relevant words of article 12 like this : "All local or other authorities within the territory of India or all local or other authorities within the territory under the control of the Government of India". Thus, according to the petitioner, all that is required is that the territory even if it is not the territory of India, should be under the control of the Government of India, and if the territory is under the control of the Government of India all, local or other authorities in such territory would be included in the words "the State". On the other hand, the contention on behalf of the respondents is that the words "under the control of the Government of India" qualify the word "authorities" and not the word "territory" in the relevant part of article 12 and that that part on its true interpretation would read thus : "all local or other authorities within the territory of India or all local or other authorities under the control of the Government of India". Having given our anxious consideration to this matter we are of opinion that the interpretation put on the relevant words on behalf of the respondents is the right one, both gramatically and otherwise. article 12 gives an inclusive definition of the words "the State" and within these words of that Article are included, (i) the Government and Parlia ment of India, (ii) the Government and the legislature of each of the States, and (iii) all local or other authorities. These are the only authorities which are included in the words "the State" in article 12 for the purpose of Part III. Then follow the words which qualify the words "all local or other authorities". These local or other authorities which are included within the words " 'the State" of article 12 are of two kinds, namely, (i) those within the territory of India, and (ii) those under the control of the 666 Government, of India. There are thus two qualifying clauses to "all local or other authorities. " These clauses are : (i)within the territory of India and (ii) under the control of the Government of India. It would in our opinion be gramatically wrong to read the words "under the control of the Government of India" as qualifying the word territory". From the scheme of ' article 12 it is clear that three classes of authorities are meant to be included in the words ',the State", there; and the third class is of two kinds and the qualifying words which follow "all local or other authorities" define the two types of such local or other authorities as already indicated above. Further all local or other authorities within the territory of India include all authorities within the territory of India whether under the control of the Government of India or the Governments of various States and even autonomous authorities which may not be under the control of the Government at all. In contradistinction to this the second qualifying clause refers only to such authorities as are under the control of the Government of India and so the second qualifying clause must govern the word "authorities". ' Therefore, the interpretation put forward on behalf of the respondents seems to us to be correct both gramatically and otherwise. "All local or other authorities" would thus be of two kinds, namely, (i) those within the territory of India, and (ii) those under the control of the Government of India. In the latter case there is no qualification that they should be within the territory of India. It is enough if they are under the control of the Government of India wherever they may be. We are therefore of opinion that no writ could issue to the appellate authority at the time when the order under challenge was passed, unless it could be called "other authority under the control of the Government of India Further,, there can be no doubt that if no writ could issue to the Appellate Authority at the time the order was passed, no writ could issue now after 667 Pondicherry has become part of the territory of India, for that would be giving retrospective operation to the Constitution for this purpose which obviously cannot be done: (see Janardan Reddy vs the State(1)). The next question is whether a judicial or quasijudicial authority outside the territory of India but within the territory under the administration of the Government of India can be said to be under the control of the Government of India. For this purpose we have to find out the meaning of the words "under the control of the Government of India" as used in article 12. It is submitted on behalf of the petitioner that if an authority is appointed by the Government of India, is paid by the Government of India and is liable to disciplinary action by the Government of India, it would be an authority "under the control of the Government of India". It is urged that as the Chief Commissioner, who is the appellate Authority, was appointed by the Government of India, was paid by the Government of India and was under the disciplinary control of the Government of India, he would be an authority under the control of the Government of India and this court would therefore have been entitled to issue a writ against him even when the order was passed and therefore all the more so,, when Pondicherry is now within the territory of India. The contention however that this Court could issue a writ under article 32 against the Appellate Authority even at the time when the order was passed, is clearly negatived by the majority decision in Masthan Sahib 's case (2), for if that could be done, writ would have been issued in that case. The reason why writ was not issued in Masthan Sahib 's case (2), was that the quasi judicial authority was outside the territory of India and this Court held that if the authority were of an executive or administrative nature, a writ could have been issued to the Government of India ""directing them to give effect to the decision of this Court by the exercise of their powers (1) ; (2) [1962] Supp. 1 S.C.R. 981. 668 of control over the authority outside the territory of India". But as the authority in that case 'just like the authority in the present case was a quasi judicial authority resort to such a procedure was not possible and if the orders or directions could not be directly enforced against the authority in Pondicherry, the order would be ineffective. This clearly implies that the quasi judicial authority was not under the control of the Government of India like an executive or administrative authority and therefore it was not possible for this Court to issue a direction to the Government of India to direct a quasi judicial authority to give effect to the decision of this Court "by the exercise of their powers of control over the authority outside the territory of India". It follows from these observations in the majority decision in that case that the control envisaged by the words "under the control of the Government of India" in article 12 is not the control which arises out of mere appointment, payment and the right to take disciplinary action; the control envisaged under article 12 is a control of the functions of the authorities concerned, and the right of the Government of India by virtue of that control to give directions to the authority to function in a particular manner with respect to such functions. Now if the authorities were administrative or executive the control of the Government of India would not only be by virtue of appointment, payment and disciplinary action, but it would also extend to directing the authority to carry out its functions in a particular manner and a purely executive or administrative authority can always be directed by the Government of India under which it is functioning to act in a particular manner with respect to its functions. This, however,cannot be said of a quasi judicial or judicial authority even though the Government of India may have appointed the authority and may be paying it and may have the right to take disciplinary action against it in certain eventualities. It was not open 669 to the Government of India to control the functions of a quasi judicial or judicial authority and direct it to decide a particular matter before it in a particular way. It seems to us therefore that the control envisaged under article 12 is control of the functions of the authorities and it is only when the Government of India can control the function of an authority that it can be said that the authority is under the control of the Government of India. Such control is possible in the case of a purely executive or administrative authority; it is impossible in the case of a quasi judicial or judicial authority, for in the very nature of things, where rule of ' law prevails, it is not open to the Government, be it the Government of India or the Government of a State, to direct a quasi judicial or judicial authority to decide a particular ' matter before it in a particular manner. Therefore, this being the nature of the control which the Government of India must exercise in order that an authority functioning outside the territory of India may be said to be an authority under the control of the Government of India within the meaning of article 12, a quasi judicial or judicial authority cannot be said to be an authority under the control of the Government of India within this meaning. We are therefore of opinion that the Appellate authority being quasi judicial could not be directed by the Government of India to decide a particular matter before it in a particular manner and therefore it cannot be said that it is an authority under the control of the Government of India. As we have already indicated, this follows from the reasoning of the majority in Masthan Sahib 's Case (1), though it was not decided specifically as such in that case. We are therefore of opinion that judicial or quasi .judicial authorities functioning in territories administered by the Government of India but outside the territory of India cannot be said to be authorities under the control of the Government of India within the meaning of article 12, and therefore article 12 would not apply to 670 such authorities functioning outside the territory of India. Consequently it would not be open to this Court to issue a writ under article 32 read with article 12 against a quasi .judicial authority outside the territory of India even though that authority might have been appointed by the Government of India, might be paid by the Government of India or the Government of India might have the power of disciplinary action against it. The Appellate Authority being a quasijudicial authority would thus not be under the control of the Government of India within the meaning of article 12. Therefore it would not have been open to this Court to issue a writ against the order under challenge when it was passed. In consequence it is not open to this Court now that Pondicherry has become part of India to issue a writ to the Appellate Authority with respect to an order passed by it before Pondicherry became part of India, as the Constitution for this purpose is not retrospective. The matter can be looked at in another way. article 15 prohibits the State from discriminating against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. Therefore it is only when the State as defined in article 12 (for there is nothing in the context of article 15 to require otherwise) discriminates, that a citizen can complain of the breach of article 15 and ask for relief from this Court under article 32. We have however held that the Chief Commissioner being a quasi judicial authority was not under the control of the Government of India within the meaning of article 12. Therefore, he could not be the State within that Article. If so, it follows that the discrimination (assuming there was any) was by an authority which was not the State. The protection of article 1.5 is against discrimination by "the State." The petitioner therefore would not be entitled to any protection under article 15 against the Chief Commissioner at the time the impugned order 671 was made. That is another reason why the present petition must fail. We therefore dismiss the appeal and pass no order as to costs in respect thereof. We dismiss the writ petition with costs. Appeal dismissed. Writ petition dismissed.

In the year of account relevant to the assessment year 1942 43, the assessee received Rs. 9,180/ , but submitted no return of her income. On July 25, 1949, the Income tax Officer, on receipt of definite information that such income had escaped assessment, issued a notice to her under section 34 of the Indian Income tax Act, 1922, as amended by the Indian Income tax and Business Profits Tax (Amendment) Act, 1948. Thereafter, she was assessed on the aforesaid income on October 24, 1949. She challenged the validity of the proceedings under section 34 initiated on July 25, 1949, on the grounds, that the right to revive the assessment was governed by the provisions of section 34, before it was amended in 1948, under which the period of limitation prescribed was four years in the case of a failure to file a return and that this period having expired on March 31, 1947, and the Amending Act of 1948 having come into force only March 30, 1948, the eight years ' period provided therein could not be invoked. For the Income tax Authorities, the validity of the notice was sought to be sustained by the additional ground that, in any case, section 31 of the Indian Income tax (Amendment) Act, 1953, validated the notice. Held (per Sarkar, Hidayatullah and Reghubar Dayal, JJ., Das and Kapur,JJ., dissenting), that section 34 of the Indian Income tax and Business Profits Tax (Amendment) Act, 1948, was applicable to the proceedings in the present case and that the notice dated July 25, 1949, was valid. 138 Per Das and Kapur,JJ. The limitation of eight years prescribed by section 34 as amended by the Amending Act of 1948 did not apply to the present assessee which was a case of failure to submit the return, when the period of four years had expired before March 30, 1948, when the amendment in section 34 was made by the Amending Act of 1948. Section 31 of the %mending Act of 1953 did not enlarge the scope of the amended section 34, and did not validate the notice dated July 25, 1949. Per Sarkar, J. By virtue of section 31 of the Amending Act of 1953, a notice issued and an order of assessment made in respect of a year ended before April 1, 1948, where the proceedings were commenced after September 8, 1948, were to be held valid if the notice was issued in accordance with sub s, (1) of section 34 as it stood after 1948 amendment and the assessment was completed in pursuance of such notice within the time specified in sub section The notice and assessment in the present case satisfied all these conditions and, therefore, section 34 as amended in 1948 was applicable. Such a notice and an assessment order valid under section 34 as amended in 1948 would be valid even if the time prescribed in respect of them by section 34 as it stood before the 1948 amendment had expired. Per Hidayatullah and Raghubar Dayal, JJ. The action was taken after 1948 amendment by which income, profits and gains which had escaped assessment by reason of the omission or failure of the assessee to make a return of the income could be brought to tax after serving a notice within eight years from the end of the relevant year. Hence the notice in 1949 was within eight years from 1942 43 and was validly issued section C. Prashar, Income tax Officer vs Vasantsen Dwarkadas, [1964] Vol. 1 S.C.R. 29. , relied on.

Appeal No. 245 of 1965. 396 Appeal by special leave from the judgment and order dated October 31, 1962 of the Andhra Pradesh High Court in Appeal No. 563 of 1959. K.R. Chaudhuri, for the appellants. K. Sen and T. Satyanarayana, for respondents Nos. 1 to 3. The Judgment of the Court was delivered by Mitter, J. This is an appeal by special leave from a judgment and decree of the High Court of Andhra Pradesh confirming the decree passed by the Subordinate Judge at Eluru in O.S. No. 112 of 1955. The only question involved in this appeal is, whether, under the terms of the will of one Boddu Adilakshmi, defendants 4 and 5 took her properties as joint tenants or tenants in common. The facts leading to the litigation may be stated as follows. The testatrix, Adilakshmi, who was childless herself brought up defendants 4 and 5, Boddu Ramarao and Kosury Lakshmamma, from their infancy. At the date of the will executed on June 28, 1913 the girl (defendant 5) had been with her for 15 years and the boy (defendant 4) for 10 years and both were minors at the time. In order to provide for them after her death she executed a will covering all her properties, movable and immovable. The translation of the relevant portion of the will which was in vernacular is as follows : " . . my entire property should hereafter my lifetime pass to. both these minors, Lakshmamma and Ramarao, that until their minority period is over, Banda Ramaswamy Garu should act as their guardian and deal with all the affairs, that after their minority period is over the entire property should be in possession of both of them, that both of them should enjoy throughout their lifetime the said property without powers of gift transfer and sale and that after their death the children that may be born to them should enjoy the same with powers of gift, transfer and sale. " The testatrix died within a few days after the execution of the will. Defendants 4 and 5 divided the properties left by the testatrix by a registered partition deed dated December 27, 1929 ' by which those mentioned in Schedule A to the plaint fell to the share of the 4th defendant while the others mentioned in Schedule B fell to the share of the 5th defendant. The 4th defendant married the 1st defendant, Boddu Satyavathi who is the 'daughter of the 5th defendant. The 2nd defendant is the daughter born out of this wedlock. Some years thereafter, the 4th defendant married one Boddu Manikyam. the plaintiffs 1 to 4 being the issues of the marriage of the 4th defendant with her. The 5th defendant 397 and the 1st defendant mortgaged the B schedule properties with the 3rd defendant who brought a suit on the mortgage and obtained a decree. The plaintiffs filed the suit against all the defendants in 1955. for a declaration that after the death praying of defendants 4 and 5, the 1st defendant and the children of the 4th defendant or such of them as may be alive at the time would be entitled to share the properties in suit equally between them and that any alienation made by defendants 4 and 5 or their assignees or alienees would not bind the interests of 'the ultimate feversloners beyond their lifetime and further that the mortgage decree mentioned above was not binding on the plaintiffs or the ultimate reversioners. In the trial court a 'number of issues were framed but the only question canvassed before the High Court on appeal related to the effect of the will of Adilakshmi. The trial court came to the conclusion that defendants 4 and 5 were only the holders of life estate and that they had succeeded to the estate of Adilakshmi as tenants in common. The High Court held that "the right of 'the children of defendants 4 and 5 to step into the shoes of the parents has been expressly mentioned in the instrument. The residuary estate has been given to the children. that may be bor n to the legatees who. it is provided, should enjoy the properties with powers of gift. transfer and sale. A life estate has been given to defendants 4 and 5 and an absolute estate to their children. On a fair construction of the language. it is difficult to accede to the contention of the appellants that the children of defendants 4 and 5 who may be actually alive at the time of the death of defendants 4 and 5, would take the properties per capita." The High Court further held that the conduct of the defendants in partitioning the properties went to fortify the above conclusion. The ultimate conclusion of the High Court was "the bequest in favour of defendants 4 and 5 was that of a life estate with a vested remainder in favour of their children and that the children should take the vested remainder per stripes and not per capita." In our view. the High Court came to the correct conclusion. Before examining the principles of law involved, we may consider the intention of the testatrix in giving her properties to defendants 4 ,red 5. She brought them up like her own children but she did not want them to have the power of sale or alienation and desired that the properties be preserved for the benefit of their children. would be reasonable therefore for her to make provision in such way that the 'foster children would enjoy the income of the properties for their lives and that their children should inherit the Ip. C. l68 111 398 properties as full owners on the death of their parents. The donees of the life estate were minors at the date of the will and there was no knowing when they would get married and how many children each would have. It would therefore be reason able to expect that the testatrix would so arrange her affairs that each of the foster children should get half of the income of the property for life and that their children should succeed to the respective interest of their parents. It is hardly likely that the testatrix would know the difference between joint tenants and tenants in common and she would naturally be eager to treat the foster children as her own children so that the heirs of the foster children would take share and share alike the properties be in divided per stirpes among them. Let us now consider the position in law. The law has bee n summarised in Mulla 's Transfer of Property Act (Fifth Edition at page 226. As early as 1896 it was held by the Judicial Committee of the Privy Council in Jogeswar Narain Deo vs Ram Chand Dutt & others(1) that "The principle of joint tenancy appears to be unknown to Hindu law. except in the case of coparcenary between the members of an undivided family." and that it was not right to import into the construction of a Hindu will an extremely technical rule of English conveyancing. Many years later the principle was reiterated in the case of Babu Rani vs Rajendra Baksh Singh(2). It was argued before us that there were indications in the will that the intention of the testatrix was that the foster children should take as joint tenants and that this was apparent from the clause in the will which provided that "the entire property should be in possession of both of them and that both of them should enjoy throughout their lifetime the said property and that after their death the children that may be born to them should enjoy the same . " We do not think that from this one can spell out a joint tenancy which is unknown to Hindu law except as above stated. The testatrix did not expressly mention that on the death of one all the properties would pass to the other by right of survivorship. We have no doubt on a construction of the will that 'the testatrix never intended the foster children to take the property as joint tenants. The foster children who became tenants in common partitioned the property in exercise of their right. (1) 23 I.A. 37 at 44. (2) 60 l. A.95 at 10 399 As by the will the foster children were to have a life interest with a vested remainder to their children, the latter could only take per stirpes and not per capita. As Halsbury points out (Volume 39 Third Edition) at page 1106, article 1638 that a stirpital distribution would be adopted "where the gift was to a number of parents and their children in such a manner that the children were substituted for, or took on the death of, their respective parents; and gifts to several parents and at, or after, their deaths to their children, or to their issue, have received this construction as meaning at or after their respective deaths. " It is not necessary to cite many instances where this construction has been adopted. In re Hutchinson 's Trusts(1) the testatrix bequeathed personality in trust for A.B. for life and after his decease for his issue, and on failure of his issue to F.H.S. and R.S. share and share alike, and after the decease of the said F.H.S. and R.S. to their children share and share alike, and to their heirs for ever. Kay, J. felt that he was bound by authority to say that the words "after the decease of the said Francis Hutchinson Synge and his brother Robert Synge mean after their respective deaths, or after the decease of each of them, and that there is a disposition of the share of each which was an absolute interest in the first instance upon his death." (see at page 816). This rule was further amplified by Romer. J. in Errington, In re. Gibbs vs Lassam(1) where he said (at p. 425) "The rule, stated in its simplest way is this: Where a testator gives the income of his estate to two people, A. and B., for their lives and follows that gift by a direction that at their death, or at their deaths, or at or after the death or deaths of A. and B. the property is to go to their issue, the Court does not construe the gift as a gift only to take effect on the death of both in favour of the issue of both, but construes it as a gift, to take effect on the death of each, of the share to the income of which the deceased was entitled, to the issue of the deceased." (1) (2) 400 In Mcdonnell vs Neil(1) the Judicial Committee referred to the dictum of Kay, J. in re Hutchinson 's Trusts(2) and observed that the construction was borne out by a long line of authority. In the result, the appeal will stand dismissed with costs. appellant must pay the court fees. G.C. Appeal dismissed.

A childless Hindu lady brought up a boy B and a girl K as foster children. She made a will whereby after her death B and K were to get a life estate in her property and 'after their death the children that may be born to them should enjoy the same with powers of gift transfer and sale '. After the lady 's death B and K divided the property in equal shares by a partition deed. B married K 's daughter and had a child by her. He then took another wife and had four children by her. The said four children filed a suit for a declaration, inter alia, that after the death of B and K, their children namely, K 's daughter and B 's children would be entitled to take the property in equal shares. The trial court as well as the High Court held that B and K had inherited a life estate as tenants in common and their descendants would inherit per stirpes and not per capita. The plaintiffs appellants came to this Court. It was urged on their behalf that B and K had inherited as joint tenants and not as tenants in common. HELD: A joint tenancy is unknown to Hindu law except in the case of a coparcenary between members of an undivided family. The terms of the will also did not in the present case spell out a joint tenancy. As by the will the foster children were to have a life interest with a vested remainder to their children, the latter could only take per stirpes and not per capita. [398 G 399 A] Jogeswar Narain Deo vs Ram Chund Dutt & Ors. 23 I.A. 37 and Babu Rani vs Rajendra Baksh Singh, 60 I.A. 95, relied on. In re Hutchinson 's Trusts, , Errington, In re: Gibbs vs Lassam. and Mcdonnel vs Neil. , referred to. The donees of the life estate were minors at the date of the will and there was no knowing when they would get married and how many children each would have. It would therefore be reasonable to expect that the testarix would so arrange her affairs that each of the foster children should get half of the income of the property for life and that their children should succeed to the respective interests of their parents. It is hardly likely that the testatrix would know the difference between joint tenants and tenants in common and she would naturally be eager to treat the foster children as her own children so that the heirs of the foster children would take share and share alike the properties being divided per stirpes between them. 1398 A B]

: Criminal Appeal No. 70 of 1979. Appeal by Special Leave from the Judgment and order dated 1 2 1978 of the Calcutta High Court in Criminal Appeal No. 273 of 1976 and death Reference No. 4/76. H. C. Mittal (Amicus Curiae) for the Appellant. G. section Chatterjee for the Respondent. The following Judgments were delivered: CHINNAPPA REDDY, J. "The murderer has killed. It is wrong to kill. Let us kill the murderer". That was how a Mr. Bonsall of Manchester (quoted by Arthur Koestler in his 'Drinkers of Infinity '), in a letter to the Press, neatly summed up the paradox and the pathology of the Death Penalty. The unsoundness of the rationale of the demand of death for murder has been discussed and exposed by my brother Krishna Iyer, J., in a recent pronouncement in Rajendra Prasad vs State of Uttar Pradesh(1). I would like to add an appendix to what has been said there. The dilemma of the Judge in every murder case, "Death or life imprisonment for the murderer ?" is the question with which we are faced in this appeal. The very nature of the penalty of death appears to make it imperative that at every suitable opportunity life imprisonment should be preferred to the death penalty. "The penalty of death differs from all other forms of criminal punishment, not in degree but in kind. It is unique in its total irrevocability. It is unique in its rejection of rehabilitation of the convict as a basic purpose of criminal justice. And, it is unique finally in its absolute renunciation of all that is embodied in our concept of humanity" (per Stewart J., in Furman vs Georgia) (2). "Death is irrevocable, life imprisonment is not. Death, of course, makes rehabilitation impossible, life imprisonment does not" (per Marshall, J., in Furman vs Georgia). Theories of punishment, there are many reformative, preventive, retributive, denunciatory and deterrent. Let us examine which cap fits capital punishment. The reformative theory is irrelevant where 360 death is the punishment since life and not death can reform. The preventive theory is unimportant where the choice is between death and life imprisonment as in India. The retributive theory is incongruous in an era of enlightenment. It is inadequate as a theory since it does not attempt to justify punishment by any beneficial results either to the society or to the persons punished. It is, however, necessary to clear a common misunderstanding that the retributive theory justifies the death penalty. According to the retributivist society has the right and the duty to vindicate the wrong done to it and it must impose a punishment which fits the crime. It does not mean returning of evil for evil but the righting of a wrong. It implies the imposition of a just but no more than a just penalty and automatically rules out excessive punishment and, therefore, capital punishment. According to a modern exponent of the retributive theory of justice "capital punishment. . is with out foundation in a theory of just punishment. Indeed one could go further and assert that capital punishment is antithetical to the purposes and principles of punitive sanctions in the law. Requital, when properly understood in terms of a concept of just law, undoubtedly does have a legitimate role in punishment. However, neither requital nor punishment in general is a returning of evil for evil, and, therefore, I see no support for the demand that a murder (or an act of treason, or some other serious offence) be paid for with a life". The Biblical injunction 'an eye for an eye and a tooth for a tooth ' is often quoted as if it was a command to do retributive justice. It was not. Jewish history shows that it was meant to be merciful and set limits to harsh punishments which were imposed earlier including the death penalty for blasphamy, Sabbath breaking, adultery, false prophecy, cursing, striking a parent etc. And, as one abolitionist reminds us, who, one may ask, remembers the voice of the other Jew: "Whoever shall smite on thy right cheek, turn to him the other also ?". The denunciatory theory of punishment is only a different shade of the retributive theory but from a sternly moral plain. Lord Denning advanced the view before the Royal Commission on Capital Punishment: "The punishment inflicted for grave crimes should adequately reflect the revulsion felt by the great majority of citizens for them. It is a mistake to consider the objects of punishment as being deterrent or reformative or preventive and nothing else. The ultimate justification of any punishment is not that it is a deterrent but that it is the emphatic denunciation by the community of a crime, and from this point of view there are some murders which in the present state of opinion demand the most emphatic denunciation of all, namely the 361 death penalty" . "The truth is that some crimes are so outrageous that society insists on adequate punishment, because the wrong doer deserves it, irrespective of whether it is a deterrent or not". The implication of this statement is that the death penalty is necessary not because the preservation of society requires it but because society demands it. Despite the high moral tone and phrase, the denunciatory theory, as propounded, is nothing but an echo of the retributive theory as explained by Stephen who had said earlier: "The criminal law stands to the passion of revenge in much the same relation as marriage to the sexual appetite". The denunciatory theory is as inadequate as the retributive theory since it does not justify punishment by its results. As Prof. Hart points out the idea that we may punish offenders not to prevent harm or suffering or even the reptition of the offence but simply as a means of emphatically expressing our condemnation, is uncomfortably close to human sacrifice as an expression of righteousness. And, the question remains: "Why should denunciation take the form of punishment". The deterrent theory may now be considered. It is important to notice here that the question is not whether the penalty of death has deterrent effect on potential murderers but whether it deters more effectively than other penalties say, a sentence of imprisonment for a long term ? Is Capital Punishment the most desirable and the most effective instrument for protecting the community from violent crime ? What is the evidence that it has a uniquely deterrent force compared with the alternative of protracted imprisonment ? If the death penalty really and appreciably decreases murder, if there is equally no effective substitute and if its incidents are not injurious to society, we may well support the death penalty. But all studies made on the subject, as I will presently point out, appear to have led to the conclusion that the death penalty is inconsequential as a deterrent. Sir James Fitz James Stephen, a great Victorian Judge and a vigorous exponent of the deterrent theory said in his Essay on Capital Punishment: "No other punishment of death. This is one of those committing crimes as the punishment of death. This is one of those propositions which it is difficult to prove simply because they are in themselves more obvious than any proof can make them. It is possible to display ingenuity in arguing against it, but that is all. The whole experience of mankind is in the other direction. The threat of instant death is the one to which resort has always been made when there was an absolute necessity of producing some results. No one goes to certain inevitable death except by compulsion. Put the 362 matter the other way, was there ever yet a criminal who when sentenced to death and brought out to die would refuse the offer of a commutation of a sentence for a severest secondary punishment? Surely not. Why is this? It can only be because 'all that a man has will be given for his life". In any secondary punishment however terrible, there is hope; but death is death; its terrors cannot be described more forcibly". Stephen 's statement was admittedly a dogmatic assertion since he himself stated that it was a proposition difficult to prove though according to him, self evident. The great fallacy in the argument of Stephen has been pointed out by several criminologists. Stephen makes no distinction between a threat of certain and imminent punishment which faces the convicted murderer and the threat of a different problamatic punishment which may or may not influence a potential murderer. Murder may be unpremeditated, under the stress of some disturbing emotion or it may be premeditated after planning and deliberation. Where the murder is premeditated any thought of possibility of punishment is blurred by emotion and the penalty of death can no more deter than any other penalty. Where murder is premeditated the offender disregards the risk of punishment because he thinks there is no chance of detection. What weighs with him is the uncertainty of detection and consequent punishment rather than the nature of the punishment. The Advisory Council on the Treatment of Offenders appointed by the Government of Great Britain stated in their report in 1960 "We were impressed by the argument that the greatest deterrent to crime is not the fear of punishment, but the certainty of detection". Prof. Hart countered Stephen 's argument with these observations: 'This (Stephen 's) estimate of the paramount place in human motivation of the fear of death reads impressively but surely contains a suggestio falsi and once this is detected its congency as an argument in favour of the death penalty for murder vanishes for there is really no parallel between the situation of a convicted murderer over the alternative of life imprisonment in the shadow of the gallows and the situation of the murderer contemplating his crime. The certainty of death is one thing, perhaps for normal people nothing can be compared with it. But the existence of the death penalty does not mean for the murderer certainty of death now. It means not very high probability of death in the future. And, futurity and uncertainty, the hope of an escape, rational or irrational fastly diminishes the difference between death and imprisonment as deterrent, and may diminish to vanishing point. The way in which the convicted 363 murderer may view the immediate prospect of the gallows after he has been caught must be a poor guide to the effect of this prospect upon him when he is contemplating committing his crime". A hundred and fifty years ago a study was made by the Joint Select Committee appointed by the General Assembly of Connecticut and they reported "Your Committee do not hesitate to express their firm belief that a well devised system of imprisonment, one which should render the punishment certain and perpetual would be far more effectual to restrain from crime than punishment of death". One of the most comprehensive enquiries ever undertaken on the subject was that made by the Royal Commission on Capital Punishment. The Commission visited several countries of Europe and the United States, addressed questionnaires to many other countries in search of information and examined celebrated experts and jurists. The Commission 's conclusions are of significance. They said: "There is no clear evidence in any of the figures we have examined that the abolition of Capital Punishment has led to an increase in the homicide rate, or that its reintroduction to a fall. prima facie the penalty of death is likely to have a stronger effect as a deterrent to normal human beings than any other form of punishment and there is some evidence (though no convincing statistical evidence) that this is in fact so. But its effect does not operate universally or uniformly and there are many offenders on whom it is limited and may often be negligible. It is accordingly important to view this question in just perspective and not to base a penal policy in relation to murder on exaggerated estimates of the uniquely deterrent force of the death penalty". Prof. Thorsten Sellin who made a serious and through study of the entire subject in the United States on behalf of the American Law Institute stated his conclusion: "Any one who carefully examines the above data is bound to arrive at the conclusion that the death penalty, as we use it, exercises no influence on the extent or fluctuating rate of capital crime. It has failed as a deterrent". In 1962 statistics were compiled and a report was prepared at the instance of the United Nations Economic and Social Council on the question of Capital Punishment, the laws and practices relating thereto and the effects of capital punishment and the abolition thereof on the rate of criminality. According to the report all the information available appeared to confirm that neither total abolition of the death penalty nor its partial abolition in regard to certain crimes only had 364 been followed by any notable rise in the incidence of crime which was previously punishable with death. Late Prime Minister Bhandarnaike of Sri Lanka suspended the death penalty in 1956. A Commission of Inquiry on Capital Punishment was appointed and it reported "If the experience of the many countries which have suspended or abolished capital punishment is taken into account there is in our view, cogent evidence of the unlikelihood of this 'hidden protection '. It is, therefore, our view that the statistics of homicide in Ceylon when related to the social changes since the suspension of the death penalty in Ceylon and when related to the experience of other countries tend to disprove the assumption of the uniquely deterrent effect of the death penalty, and that in deciding on the question of reintroduction or abolition of the capital punishment reintroduction cannot be justified on the argument that it is a more effective deterrent to potential killers than the alternative of protracted imprisonment". It is a tragic irony that Prime Minister Bhandarnaike who suspended the Capital Punishment in Ceylon was murdered by a fanatic and in the panic that ensued death penalty was reintroduced in Ceylon. In the United States of America several studies have been made but 'the results simply have been inconclusive '. The majority Judges of the United States Supreme Court who upheld the constitutionality of the death penalty in the State of Georgia in Gregg vs Georgia(1) were compelled to observe "Although some of the studies suggest that the death penalty may not function as a significantly greater deterrent than lesser penalties, there is no convincing empirical evidence supporting or refuting this view". In the same case the minority Judges Brennan, J., and Marshall, J., were convinced that 'capital punishment was not necessary as a deterrent to crime in our society '. In India no systematic study of the problem whether the death penalty is a greater deterrent to murder than the penalty of life imprisonment has yet been undertaken. A few years ago I made a little research into the matter and studied the statistics relating to capital crime in several districts of Andhra Pradesh from 1935 to 1970.(2) The pattern was most eratic but it can be boldly asserted that the figures do not justify a conclusion that the death penalty has been a deterrent, but, then, the figures do not also lead inevitably to the conclusion that the death penalty has not been deterrent. One of the complicating factors is the discretion given to Judges to inflict 365 death penalty or imprisonment for life (about which more later) which destroys the utility of any study based on statistics. The most reasonable conclusion is that there is no positive indication that the death penalty has been deterrent. In other words, the efficacy of the death penalty as a deterrent is unproven. "The death penalty, rather than deterring murder, actually deters the proper administration of criminal justice".(1) There is the absolute finality and irrevocability of the death penalty. Human justice can never be infallible. The most conscientious judge is no proof against sad mistakes. Every criminal lawyer of experience will admit that cases are not unknown where innocent persons have been hanged in India and elsewhere. And, it is not the only way the death penalty strikes at the administration of criminal justice. Some Judges and Juries have an abhorrence of the death penalty that they would rather find a guilty person not guilty than send even a guilty person to the gallows. The refusal of Juries to convict persons of murder because of the death penalty is a well known phenomenon throughout the world. A perusal of some of the judgments of the Superior Courts in India dealing with cases where Trial Courts have imposed sentences of death reveals the same reluctance to convict because the result would otherwise be to confirm the sentence of death. Thus a guilty person is prevented from conviction by a possibility that a death penalty may otherwise be the result. That is not all. There is yet a more 'grievous injury ' which the death penalty inflicts on the administration of Criminal Justice. It rejects reformation and rehabilitation of offenders as among the most important objectives of Criminal Justice, though the conscience of the World Community speaking through the voices of the Legislature of several countries of the world has accepted reformation and rehabilitation as among the basic purposes of Criminal Justice. Death penalty is the brooding giant in the path of reform and treatment of Crime and Criminals, "inevitably sabotaging any social or institutional programme to reformation '. It is the 'fifth column ' in the administration of criminal justice. There is also the compelling class complexion of the death penalty. A tragic by product of social and economic deprivation is that the "have nots" in every society always have been subject to greater pressure to commit crimes and to fewer constraints than their more affluent fellow citizens. So, the burden of capital punishment falls more frequently upon the ignorant, the impoverished and the underpriviledged. In the words of Marshall, J., "Their impotence leaves them 366 victims of a sanction that the welthier, better represented, just as guilty person can escape. So long as the capital sanction is used only against the forlorn, easily forgotten members of society, legislators are content to maintain the status quo because change would draw attention to the problem and concern might develop. Ignorance is perpetuated and apathy soon becomes its mate and we have today 's situation". As a matter of historical interest it may be mentioned here that when in 1956, in Great Britain, the House of Commons adopted a resolution "That this House believes that the death penalty for murder no longer accords with the needs or the true interests of a civilised society, and calls on Her Majesty 's Government to introduce forthwith legislation for its abolition or for its suspension for an experimental period", and the death penalty Abolition Bill was introduced, 'from the hills and forests of darkest Britain they came: the halt, the lame, the deaf, the obscrue, the senile and the forgotten the hereditary peers of England, united in their determination to use their medieval powers to retain a medieval institution",(1) and the bill was torpedoed by the House of Lords. Capital Punishment was however abolished in Great Britain in 1966. There is finally the question whether the death penalty conforms to the current standards of 'decency '. Can there be any higher basic human right than the right to life and can anything be more offensive to human dignity than a violation of that right by the infliction of the death penalty. Brennan, J., observed in Furman vs Georgia(2) "In comparison to all other punishments today. the deliberate extinguishment of human life by the State is uniquely degrading to human dignity. death for whatever crime and under all circumstances is truly an awesome punishment. The calculated killing of a human being by the State involves, by its very nature, a denial of the executed person 's humanity. as executed person has indeed lost the right to have rights". Senor Tejera of Uruguay in the debate in the United Nations said "A death penalty is an anachronism in the twentieth Century and it is significant that no one in the committee has defended it. It is the duty of the United Nations to promote progress and to protect man from the prejudices and barbarity surviving from the past". In a large number of countries in the world where the murder rate is higher than in India, the death penalty has been abolished. In most Latin American countries, in Argentina, Brazil, Columbia, Costa 367 Rica, Ecuador, Maxico, Panama, Peru and Uruguas, Venezuala, in European countries, in Austria, Belgium, Denmark, Germany, Italy, Netherlands, Norway, Sweden, and Switzerland, in Iceland, in Israel, in many Australian States and in many of the States in the United States of America, death sentence has been abolished. It is in the light of the right to life as a basic concept of human dignity, in the context of the unproven efficacy of the death penalty as a deterrent and in the background of modern theories of criminology based upon progress in the fields of science, medicine, psychiatry and sociology and in the setting of the march of the movement for abolition of Capital Punishment, that Judges in India are required to decide which sentence to impose in a case of murder, death or imprisonment for life? Judges in India have the discretion to impose or not to impose the death penalty. It is one of the great burdens which Judges in this country have to carry. In the past, the reasons which weighed in the matter of awarding or not awarding the sentence of death varied widely and there was certainly room for complaint that there was an unequal application of the law in the matter of imposition of the sentence of death. The varying outlook on the part of Judges was well brought out a few years ago by two decisions of the Andhra Pradesh High Court. In the first case, while confirming the conviction of certain "Naxalites" for murder, the judges set aside the sentence of death and awarded life imprisonment instead. That the murder was not for any personal motive but was in pursuit of some mistaken ideology was the reason which weighed with the judges for substituting the sentence of life imprisonment for the sentence of death. Within a few months this view was subjected to severe criticism by two other Judges, who, in the second case confirmed the sentence of death. Realising that discretion, even judicial, must proceed along perceptive lines, but, conscious, all the same, that such discretion cannot be reduced to formulae or put into pigeon holes, this Court has been at great pains eversince Ediga Annamma to point the path along which to proceed. In the latest pronouncement of this Court in Rajendra Prasad vs State of Uttar Pradesh (supra) several relevant principles have been enunciated to guide the exercise of discretion in making the choice between the penalties of death and life imprisonment. I express my agreement with the elucidation of the principles in Rajendra Prasad vs State of Uttar Pradesh. (supra). Section 302 Indian Penal Code prescribes death or life imprisonment as the penalty for murder. While so, the Code of Criminal Procedure instructs the Court as to its application. The changes which 368 the Code has undergone in the last 25 years clearly indicate that Parliament is taking note of contemporary criminological thought and movement. Prior to 1955, Section 367(5) of the Code of Criminal Procedure 1898 insisted upon the Court stating its reasons if the sentence of death was not imposed in a case of murder. The result was that it was thought that in the absence of extenuating circumstances, which were to be stated by the Court, the ordinary penalty for murder was death. In 1955, sub section (5) of Section 367 was deleted and the deletion was interpreted, at any rate by some Courts, to mean that the sentence of life imprisonment was the normal sentence for murder and the sentence of death could be imposed only if there were aggravating circumstances. In the Code of Criminal Procedure of 1973, there is a further swing towards life imprisonment. Section 354(3) of the new Code now provides: "When the conviction is for an offence punishable with death or, in the alternative imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of sentence of death, the Special reasons for such sentence." So, the discretion to impose the sentence of death or life imprisonment is not so wide, after all. Section 354(3) has narrowed the discretion Death Sentence is ordinarily ruled out and can only be imposed for 'Special reasons ', Judges are left with the task of discovering 'Special reasons '. Let us first examine if the Code of Criminal Procedure gives any clue leading to the discovery of 'Special reasons '. Apart from Section 354(3) there is another provision in the Code which also uses the significant expression 'special reasons '. It is Section 361. Section 360 of the 1973 code re enacts, in substance, Section 562 of the 1898 Code and provides for the release on probation of good conduct or after admonition any person not under twenty one years of age who is convicted of an offence punishable with fine only or with imprisonment for a term of seven years or less, or any person under twenty one years of age or any women who is convicted of an offence not punishable with death or imprisonment of life, if no previous offence is proved against the offender, and if it appears to the Court, having regard to the age, character or antecedents of the offender, and to the circumstances in which the offence was committed, that it is expedient that the offender should be released on probation of good conduct or after admonition. If the Court refrains from dealing 369 with an offender under Section 360 or under the provisions of the Probation of Offenders Act, or any other law for the treatment, training, or rehabilitation of youthful offenders, where the Court could have done so, Section 361, which is a new provision in the 1973 Code makes it mandatory for the Court to record in its judgment the 'special reasons ' for not doing so. Section 361 thus casts a duty upon the Court to apply the provisions of Section 360 wherever it is possible to do so and, to state "special reasons" if it does not do so. In the context of Section 360, the "special reasons" contemplated by Section 361 must be such as to compel the Court to hold that it is impossible to reform and rehabilitate the offender after examining the matter with due regard to the age, character and antecedents of the offender and the circumstances in which the offence was committed. This is some indication by the Legislature that reformation and rehabilitation of offenders, and not mere deterrence, are now among the foremost objects of the administration of criminal Justice in our country. Section 361 and Section 354(3) have both entered the Statute Book at the same time and they are part of the emerging picture of acceptance by the Indian Parliament of the new trends in criminilogy. We will not, therefore, be wrong in assuming that the personality of the offender as revealed by his age, character, antecedents and other circumstances and the tractability of the offender to reform must necessarily play the most prominent role in determining the sentence to be awarded. Special reasons must have some relation to these factors. Criminal justice is not a computer machine. It deals with complex human problems and diverse human beings. It deals with persons who are otherwise like the rest of us, who work and play, who laugh and mourn, who love and hate, who yearn for affection and approval, as all of us do, who think, learn and forget. Like the rest of us they too are the creatures of circumstance. Heredity, environment, home neighborhood, upbringing, school, friends, associates, even casual acquaintenances, the books that one reads, newspapers, radio and TV, the economics of the household, the opportunities provided by circumstances and the calamities resulting thereform, the success and failure of one 's undertakings, the affairs of the heart, ambitions and frustrations, the ideas and ideologies of the time, these and several other ordinary and extra ordinary incidents of life contribute to a person 's personality and influence his conduct. Differently shaped and differently circumstanced individuals react differently in given situations. A Judge has to balance the personality of the offender with the circumstance the situations and the reactions and choose the appropriate 370 sentence to be imposed. A judge must try to answer a myried questions such as was the offence committed without premeditation or was it after due deliberation ? What was the motive for the crime ? Was it for gain ? Was it the outcome of a village feud ? Was it the result of a petty, drunken, street brawl, or a domestic bickering between a hapless husband and a helpless wife ? Was it due to sexual jealousy ? Was the murder committed under some stress, emotional or otherwise ? What is the background of the offender ? What is his social and economic status? What is the level of his education or intelligence? Do his actions betray a particularly callous indifference towards the welfare of society or, on the other hand, do they show a great concern for humanity and are in fact inspired by such concern ? Is the offender so perpetually and constitutionally at war with society that there is no hope of ever reclaiming him from being a menace to society ? Or is he a person who is patently amenable to reform ? Well, may one exclaim with Prof. Vrij "What audacity is involved in these three tasks: to interpret life, explain an act, predict the latest inclination of a human mind." 'Special reasons ', we may, therefore say, are reasons which are special with reference to the offender, with reference to constitutional and legislative directives and with reference to the times, that is, with reference to contemporary ideas in the fields of Criminology and connected sciences. Special reasons are those which lead inevitably to the conclusion that the offender is beyond redemption, having due regard to his personality and proclivity, to the legislative policy of reformation of the offender and to the advances made in the methods of treatment etc. I will not attempt to catalogue and 'Special reasons '. I have said enough and perhaps more than what I intended, to indicate what according to me should be the approach to the question. Whatever I have said is but to supplement what my brother Krishna Iyer has already said in Rajendra Prasad vs State of U.P.(1) Coming to the case before us, our brothers Jaswant Singh and Kailasam, JJ. , ordered 'notice confined to the question of sentence only. ' At the last hearing we granted special leave to appeal on the question of sentence. The appellant was convicted by the learned Additional Sessions Judge, Alipore, for the murder of his son and sentenced to death. The High Court of Calcutta confirmed the conviction and sentence. The reason given by the learned Sessions Judge for giving the sentence of death was that the murder was 'cruel and 371 brutal ' and that the facts show the 'grim determination ' of the accused to kill the deceased. The Sessions Judge made no reference to the motive of the accused for the commission of the murder. The High Court while confirming the sentence observed that the accused had previously murdered his wife, suspecting her infidelity and suspecting that the deceased in the present case was not his own son, that the sentence of imrisonment imposed on him for the murder of his wife had no sobering affect and that he had murdered his own son without any mercy or remorse and that he, therefore, deserved no mercy. We do not think that either the Sessions Judge or the High Court made the right approach to the question. The Sessions Judge was wrong in imposing the sentence of death without even a reference to the reason why the appellant committed the murder. The observation of the High Court that the appellant deserved no mercy because he showed no mercy smacks very much of punishment by way of retribution. We have examined the facts of the case. We find some vague evidence to the effect that the appellant suspected that the deceased was not his own son and that he used to get angry with the deceased for not obeying him. There is also vague evidence that he had killed the mother of the deceased and had suffered sentence of imprisonment for that offence. From the vague evidence that is available we gather that the appellant was a moody person who had for years been brooding over the suspected infidelity of his wife and the injustice of having a son foisted on him. We do not think that the mere use of adjectives like 'cruel and brutal ' supplies the special reasons contemplated by Section 354(3) Criminal Procedure Code. In the light of the principles enunciated in Rajendra Prasad vs State of U.P.,(1) and in the light of what we have said earlier, we do not think that there are any 'special reasons ' justifying the imposition of the death penalty. We accordingly allow the appeal as regards sentence, set aside the sentence of death and impose in its place the sentence of life imprisonment. KRISHNA IYER, J. I have had the advantage of reading the Judgment of my learned brother, Shri Justice Chinnappa Reddy. I wholly agree with his reasoning and conclusion. Indeed, the ratio of Rajendra Prasad etc. vs State of Uttar Pradesh etc.(1), if applied to the present case, as it must be, leads to the conclusion that death sentence cannot be awarded in the circumstances of the present case. Counsel for the State, if I recollect aright, did state that in view of the criteria laid 372 down in Rajendra Prasad 's case the State did not propose to file any written submissions against commutation to life imprisonment. I concur with my learned brother and direct that the appeal, confined to sentence, be allowed and the alternative of life imprisonment imposed.

The original vendor of the lands in dispute sold them to the first vendee. In the meantime three decrees for pre emption were passed in favour of the pre emptor and against the vendor and his vendees. After satisfying the conditions imposed in the decrees regarding deposit of certain sums of money the pre emptor sold the lands to the appellants. In the execution petition filed by the appellants the original vendor as well as the first vendees filed their objections challenging the right of the appellants to execute the decrees on the ground that the right of pre emption being a personal right of the pre emptor, the decrees could not be assigned and that the present appellants being subsequent vendees from the pre emptor were not entitled to execute the decrees granted in his favour. Rejecting the objections of the first vendees the executing court held that the appellants were entitled to execute the decrees. On appeal the Additional District Judge held that the pre emptor having complied with the directions contained in the decree his title to the lands was perfected and that the appellants were entitled to recover possession under section 146, CPC. In execution second appeals of the first vendees the High Court held that the right of pre emption being a personal right, the decree for pre emption would be a personal decree and was not assignable and even if the pre emptor had complied with the provisions of Or. XX r. 14 CPC, the appellants would not be entitled to execute the decree for possession because the decree was not assigned and section 146 would not help the present appellants. Allowing the appeals, ^ HELD: 1(i) The question whether the right of pre emption was a personal right or it created an interest in property was concluded by the decision of this Court between the same parties in an earlier round of litigation. The earlier litigation being inter partes and, therefore, binding on the respondents, it cannot be reopened or re examined at the instance of the respondents. [226 H 227 B] (ii) The contention that decree in a suit for pre emption is a personal decree and creates no interest in land must fail. [228 B] (iii) The distinction between a voluntary inter vivos transfer and an involuntary transfer such as by way of inheritance is immaterial as for as the present case is concerned because the question in terms disposed of by 223 this Court in the earlier case is that the pre emptor having complied with O. XX, r. 14 had become the owner of the lands and his legal representatives on his death were rightly substituted in the proceedings. [227 H 228 A] Hazari & Ors. vs Neki & Ors. , ; ; referred to. Section 146 CPC provides that where some proceedings could be taken or application could be made by a person under the Code of Civil Procedure any other person claiming under him is entitled to make and maintain such an application. The only limitation on the exercise of this right is in the expression, 'save as otherwise provided by this Code, ' occurring in the section. [229 E] 3. If the assignee of a decree can avail himself of the provisions contained under Or. XXI R. 16 by establishing that he is such an assignee he must only avail himself of that provision. But if he fails to establish his title as a transferee by assignment in writing or by operation of law within the meaning of Or. XXI r. 16, there is nothing in that provision which prohibits him from availing himself of section 146 if the provision of that section can be availed of by him. [230 E] Jugal Kishore Saraf vs Raw Cotton Co. Ltd., ; ; referred to. In the instant case though the sale deed in respect of land would show that the decree itself was not assigned, the lands having been sold by the decree holder after perfecting his title and purchased by the present appellants, they would be persons claiming under the original pre emptor decree holder and if he could have made an application for execution of the decree as decree holder, the applications for execution by the present appellants would be maintainable under section 146, and they are therefore entitled to execute the decrees for possession. [231 C D] Smt. Saila Bala Dassi vs Smt. Nirmala Sundari Dassi & Anr., ; ; referred to.

Civil Appeal No. 63 of 1971. Appeal by Special Leave from the Judgment and order dated the 19th February 1970 of the Andhra Pradesh High Court in R.C. No. 50 of 1966. section T. Desai and K. Rajendre Choudhary, for the Appellant G. C. Sharma and section P. Nayar, for the Respondent. The Judgment of the Court was delivered by GUPTA, J. This appeal by special leave is directed against an order of the High Court of Andhra Pradesh at Hyderabad answering in the negative and in favour of the revenue the following question referred to it under sec. 66(1) of the Indian Income Tax Act, 192 (hereinafter referred to as the Act). "Whether the Assessee is entitled to registration under Section 26A of the Income Tax Act, 1922 for the assessment year 1961 62. " The assessee is a firm. The instrument of partnership was executed on January S, 1959 but the application for registration under sec. 26A remained undisposed of until the assessment for the year 1961 62 was taken up. The instrument shows that three persons, Mandyala Narayana, Mandyala Venkatramaiah, Mandyala Srinivasulu and a minor, Mandyala Jaganmohan who was admitted to the benefits of the partnership, held the following shares: Narayana 31 per cent, Venkatramaiah 23 per cent, Srinivasulu 23 per cent, and minor Jaganmohan 23 per cent: Clause 2 of the instrument which sets out the 133 shares of the partners add that the profits of the above partnership A business shall be divided and enjoyed according to the shares specified above. " There is no clause in the instrument specifying the proportion in which the three adult partners were to share the losses, if any. Having set out all the terms of agreement, the instrument closes with clause 9 which states: "We (the partners) are bound to act according to the above mentioned stipulations and also according to the provisions of the Indian Partnership Act. " The High Court was of the view that unless the instrument of partnership specified the shares of the partners not only in the profits hut also in the losses, the firm would not be entitled to registration under sec. 26A, and negatived the contention raised on behalf of the assessee that clause 9 of the instrument indicated how losses were to be apportioned between the partners. The correctness of this decision is challenged by the appellant firm. It is not that a firm to be able to trade must be registered under sec. 26A. A firm, registered or unregistered, is an assessee under the Act and can do business as such. However, registration under sec. 26A "confers on the partners a benefit", as would appear from the provisions of sec. 23 (5) of the Act, "to which they would not have been entitled but for section 26A, and such a right being a creature of the statute, can be claimed only in accordance with the statute which confers it, and a person who seeks relief under section 26A must bring himself strictly within its terms before he can claim the benefit of it": Rao Bahadur Ravulu Subba Rao and others vs Commissioner of Income tax, Madras.(1) The question in this case is whether in the absence of a specific statement in the instrument as to the proportion in which the partners were to share the losses, the requirement of sec. 26A can be said to have been satisfied. Sec 26A reads: "26A. (1) Application may be made to the Income tax officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons, and at such times and shall contain such particulars shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the Income tax officer in such manner as may be prescribed. " The required particulars are specified in rules 2 and 3 of the Rules framed under the Act and the form of application including the Schedule annexed to rule 3. Paragraph 3 of the Form requires the partners to ` 'certify that the profits (or loss if any) " of the relevant period were or will (1) 134 be, as the case is, '`divided or credited, as shown in Section 8 of the Schedule". In Section 8 of the Schedule are to be recorded the "particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year between the partners who in that previous year were entitled to share in such income, profits or gains (or loss)". Note (2) appended to this Schedule states that if any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses, this fact should be indicated. It is clear therefore that the application for registration which has to be made in the prescribed form must include particulars of the apportionment of the loss, if any. It does not appear to have been considered in this case whether the application for registration made by the firm conforms to the prescribed rules; the dispute is confined to the question whether sec. 26A requires the instrument of partnership to specify the individual shares of the partners in the profits as well as the losses of the business. Section 23(5) of the Act provides different procedures in the assessment of a registered firm and a firm that is unregistered. Without going into details, in the case of a registered firm the share of each partner in the firm 's profits is added to his other income and he is assessed on his total income which includes his share of the profits and the tax payable by him is determined accordingly. There is a proviso which lays down that "if such share of any partner is a loss it shall be set off against his other income or carried forward and set off in accordance with the provisions of section 24". Thus, the loss, if any, affects the assessment proceeding and therefore the Income tax officer has to know what are the respective shares of the partners in the losses before allowing the firm to be registered. It is not disputed that the Income tax officer must be in a position to ascertain how losses are to be apportioned; the question is whether it is a condition for registration under sec. 26A that the instrument of partnership must specify the respective shares of the partners in the losses. According to the appellant sec. 26A has no such requirement. The appellant contends that sec. 26A does not require specification of the shares in losses in the instrument of partnership and it is sufficient if the proportion in which the losses are to be shared is otherwise ascertainable, and that, assuming the section did so require, clause 9 of the instrument satisfies that requirement. The contention that clause 9 specifies the respective shares of the partners in the losses is obviously untenable. This clause says that the partners are "bound to act according to the provisions of the Indian Partnership Act"; that they are in any case, and it is not clear which provision of the Partnership Act indicated the proportion in which the partners were to bear the losses in this case. Counsel for the appellant refers to sec. 13(b) of the Partnership Act in this connection. 12(b) reads: "Subject to contract between the partners (a) x x x x (b) the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm :" 135 We shall refer to sec. 13(b) in more detail when we consider the other contention of the appellant, but assuming that this provision has any relevance to the facts of this case, which it has not, bringing in by implication sec. 13(b) from a general statement that the partners are to act in accordance with the Partnership Act does not amount to specification of the partners ' shares in the losses, and the instrument of partnership, it must therefore be held, fails to comply with sec. 26A of the Act, were this a requirement of that section. The other contention of the appellant is that it is not essential for registration under sec. 26A of the Act that the shares of the partners in the losses must be specified in the partnership deed. In support of this contention reliance is placed mainly on two decisions, one of the Mysore High Court: R. Sannappa and Sons vs Commissioner of Income tax, Mysore (1) and the other of the Allahabad High Court: Hiralal Jagannath Prasad vs Commissioner of Income tax, U.P. (2) on behalf of the revenue it is claimed on the authority of a decision of the Gujarat High Court, Thacker & Co. vs Commissioner of Income tax, Gujarat (3), that the shares in the profits and losses have both to be specifically stated in the instrument of. partnership in order to comply with the conditions laid down in sec. 26A to obtain registration. The view taken by the Gujarat High Court appears to have been followed by the Kerala High Court in the following cases among others: C. T. Palu & Sons vs Commissioner of Income tax, Kerala (4) and Commissioner of Income tax, Kerala vs Ithappiri & George (5), There is thus a conflict of opinion in the High Courts on the point. It will not be necessary, however, for the purpose of this appeal to consider at any length the conflicting views of the different High Courts and decide which view is correct according to us because on the facts of the case the appeal is bound to fail on any view. It is not, and it cannot be, disputed that the Income tax officer before allowing the application for registration must be in a position to ascertain the shares of the partners in the losses even if sec. 26A did not require the shares in the losses to be specified in the instrument of partnership. Counsel for the appellant argues that clause 9 of the instrument refers to sec. 13(b) of the Partnership Act by implication and, accordingly, in the absence of any contrary indication, it must be held that the partners are liable to share the losses equally. The argument is not based on a correct appreciation of the scope of sec. 13(b) and the facts of the case. 13(b), it seems plain to us, makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits. In this case the shares of the partners are not equal. In the absence of any indication to the contrary, where the partners have agreed to share the profits in certain proportions, the presumption is that the losses are also to be shared in like proportions. Jessel M. R. states the principle in In re Albion Life Assurance Society (G) as follows: (1) (2) (3)[1966] (4) (5) (6) 16 Ch. 83 (87). 10 L1276SCI/75 136 "It is said, as a general proposition of law, that in ordinary mercantile partnerships where there is a community of profits in a definite proportion, the fair inference is that losses are to be shared in the same proportion. " In the case before us the partners having unequal shares in the profits, there can be no presumption that the losses are to be equally shared between them Sec. 13(b) of the reproduces the provisions of the repealed sec. 253(2) of the . In K. Pitchiah Chettiar vs G.Subramaniam Chettiar(1), Ramesam J. explained the scope of sec. 253 (2) of the : "Section 253(2) of the lays down that all partners are entitled to share equally in the profits of the partnership business, and must contribute equally towards the losses sustained by the partnership. As I read the section, it lays down two presumptions with which the Court should start. The two presumption are clubbed in one sub section. The first is, if no specific contract is proved, the shares of the partners must be presumed to be equal. In the present case the plaintiff alleged unequal shares which were not denied by the defendants. So the parties being agreed on their pleadings as to the shares possessed by them in the profits, there is no scope for the application of this first presumption. The second presumption is that where the partners are to participate in the profits in certain shares they should also participate in the losses in similar shares. Now the section says that both should be in equal shares but implies that if unequal shares are admitted by the partners as to profits that applies equally to losses. In the absence of a special agreement, that this should be the presumption with which one should start is merely a matter of common sense and in India one has only to rely on section 114 of the Evidence Act for such a principle. " The law stated here in the context of sec. 253(2) of the Contract Act, 1872 applies equally to sec. 13(b) of the Partnership Act, 1932: the two provisions are in identical terms. On the facts of the present case, and having regard to the scope of sec. 13(b), the section has plainly no application. (1) I. L. R. (28). 137 The other rule that where the shares in the profits are unequal, the A losses must be shared in the same proportions as the profits if there is no agreement as to how the losses are to be apportioned, does not also apply to this case. In this case even if the adult partners bear the losses in proportion to their respective shares in the profits, the amount of loss in the minor 's share would still remain undistributed. Will the partners between them bear this loss equally, or to the extent of their own individual shares ? To this the instrument of partnership does not even suggest an answer. There is therefore no means of ascertaining in this case how the losses are to be apportioned. For the reasons stated above, the appeal fails and is dismissed with costs. P.H.P.Appeal dismissed.

The respondent landlord filed a suit for eviction against the appellant tenant on the ground of bona fide personal requirement and that he has no other resonably suitable accommodation of his own which is one of the grounds of eviction under the Madhya Pradesh Accommodation Control Act. The appellant filed a Written Statement denying the claim of the respondent. After some evidence was recorded the parties entered into a compromise and filed it in the Court. The compromise deed mentioned that "due to the necessity of the plaintiffs for their own business opening grocery shop, the decree for ejectment may be granted to them against the defendant". The Trial Court passed a decree in terms of the compromise after coming to the conclusion that the compromise was legal. the appellant was given 3 years ' time to vacate the premises under the compromise. On the appellant 's failure to vacate after the expiry of three years, the respondent filed Execution Application. The appellant objected to the execution on the ground that the compromise decree was void and inexecutable as being against the provisions of the Act. The Execution Court accepted the appellant 's objection and dismissed the Execution Case. The District Judge dismissed the appeal filed by the respondent. The High Court allowing the Second Miscellaneous Appeal came to the conclusion that the decree was not a nullity and that it was executable. In an appeal by Special Leave the Appellant contended that the decree was nullity since the Court was not satisfied that the eviction was in accordance with the provisions of the Act. The counsel further contended that even if what is stated in the compromise deed might be accepted as admission, the admission is only about the bona fide requirement and that there is no admission about the landlord not having any other suitable accommodation. ^ HELD: dismissing the appeal: 1. In order to get a decree or order for eviction against a tenant whose tenancy is governed by any Rent Restriction or Eviction Control Act the Suitor must make out a case for eviction in accordance with the provisions of the Act. When the suit is contested the issue goes to trial. The Court passes a decree for eviction only if it is satisfied on evidence that a ground for passing such a decree in accordance with the requirement of the Statute has been established. Even when the trial proceeds ex parte, this is so. If, however, parties choose to enter into a compromise due to any reason such as to avoid the risk of protracted litigation, expenses it is open to them to do so. The Court can pass a decree on the basis of the compromise. In such a situation the only thing to be seen is whether the compromise is in violation of the requirement of the law. In other words, parties cannot be permitted to have a tenant 's eviction merely by agreement without anything more. The compromise must indicate either on its face or in the background of other materials in the case that the tenant expressly or impliedly is agreeing to suffer a decree for eviction because the landlord, in the circumstances, is entitled to have such a decree under the law. The case of K. K. Chari vs P. M. Seshadri, followed [882 A D] 2. It is too late in the day to contend that the provisions of order 23 rule 3 of the Code of Civil Procedure cannot apply to eviction suits governed by the special statutes. A compromise of suit is permissible under the said provisions of law. [882 E F] 879 3. If the compromise for the eviction of the tenant is found on the facts of a particular case to be in violation of a Rent Control Act, the Court would refuse to record the compromise as it would not be a lawful agreement. If the Court is satisfied on consideration of the terms of the compromise and if necessary by considering them in the context of the pleadings and other materials in the case that the agreement is lawful as in any other suit in an eviction suit the court is bound to record the compromise and pass a decree in accordance therewith. [882 F G] 4. The meaning of the term the bona fide requirement in the compromise deed is clear and definite specially in the background of the pleadings of the parties and it makes out a case of eviction within the meaning of the Act. [883 C]

Civil Appeals Nos. 201 and 202 of 1961. 404 Appeals from the judgment and decree dated May, 16, 1958 of the Patna High Court in L. P. As. Nos 13 and 14 of 1957. A. V. Viswanatha Sastri, R. K. Garg, M. K. Ramamurthi, D. P. Singh and section C. Agarwala, for the appellants. M. C. Setalvad, Attorney General for India. B. P. Rajgarhia and K. K. Sinha, for the respondents. December 22. The Judgment of the Court was delivered by DAS GUPTA, J. These appeals raise a question as to the manner in which a creditor company can validly cast its vote at a meeting of the creditors held under the provisions of section 153 of the Indian Companies Act, 1913. The question arises in connection with such a meeting held of the creditors of the Gaya Sugar Mills Ltd. On November 14, 1951, an order was made by the Company Judge in the Patna High Court for the winding up of the Gaya Sugar Mills Ltd. On October 6, 1953, an order was made by the learned Judge for action to be taken under section 153 of the Indian Companies Act. Mr. G. C. Banerjee, who was appointed Chairman to hold the meeting of the creditors held separate meetings of the debenture holders, secured creditors and of the unsecured creditors. In his Report he stated as regards the meeting of the unsecured creditors that "thirty unsecured creditors either in person or through proxy attended and took part in the meeting," and that ultimately a resolution proposed by one of the creditors, the Standard Vacuum Oil Company and seconded by another creditor Shri K. C. Agarwal was passed "by the creditors present by majority in number as well as three fourth in value. " It appears that at this meeting one Arjun Prasad claiming to represent two creditor companies, viz., Bhandani Bros., and the Hindustan 405 Coal Company Ltd., cast his votes on behalf of these two companies, in support of the resolution. No objection was taken at the meeting to the validity of these votes by any of the creditors who opposed the resolution and the Chairman proceeded on the basis that these votes were validly cast. It is not disputed that if these votes were not validly cast the requisite majority of three fourths in value would not be obtained. When the application came up for final hearing before the Court an objection was taken on behalf of creditors who opposed the scheme that the votes cast by Arjun Prasad on behalf of the two creditor companies, viz., Bhandani Brothers and the Hindustan Coal Company were not valid votes and so the requisite majority of three fourths in value of the creditors had not been obtained. The Company Judge was of the opinion that there was no sufficient explanation as to why the objection as to the validity of the votes was not taken earlier and so the objection raised at the late stage could not be entertained. On the merits also he held that the resolution passed by the creditor companies authorising Arjun Prasad, to attend the meeting of the unsecured creditors of the Gaya Sugar Mills Ltd., and vote on behalf of the companies, were sufficient in law to make his attendance at the meeting the attendance of the companies "in person" and his voting on behalf of the companies valid voting of the companies. Accordingly, he rejected this objection. On appeal a Division Bench of the Patna High Court has allowed the objection, being of opinion that the delay in raising the objection would not entitle the Court to ignore the legal defect of the votes and that in law the votes cast by Arjun Prasad were not valid votes of these two creditor companies, viz., Bhandani Brothers and the Hindustan Coal Company. A contention that no appeal 406 lay to the High Court from the order of the Company Judge was rejected. Therefore, the learned Judges set aside the order of the Company Judge as to this part of the case. They, however, gave a certificate that as regards the value and nature of the case, it fulfils the requirements of article 133(1)(a) of the Constitution and is a fit one for appeal to this Court. On this certificate the present appeals have been filed. Three points were raised before us by Mr. Sastri in support of the appeals. The first is that from the decision of the Company Judge, an appeal lay to this Court and not to the High Court. Secondly, it was urged that the objection to the validity of the votes not having been taken earlier should not be allowed to be raised for the first time during arguments at the final hearing of the application. Lastly, it was urged that the votes were valid. As regards the first point it is to be noticed that sub section 7 of section 153, which was added in 1936 provides that an appeal shall lie from any order made by the court exercising original jurisdiction under the section to the authority authorised to hear appeals from the decisions of the Court. It therefore could not be disputed and was not disputed that an appeal did lie from the order made by the Company Judge on October 6, 1953. The controversy is whether the appeal lay to this Court or the High Court. In other words, the question is, which is the authority authorised to hear appeals from the decisions of the Court ? The "Court" here cannot but mean the Court exercising original jurisdiction. When the Company Judge exercises the jurisdiction he does it under the provisions of section 3 of the Companies Act which says that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate. The authority authorised to hear appeals from 407 appealable decisions of a Single Judge of the Patna High Court when exercising original jurisdiction lie to the High Court and not to this Court. (Vide Clause 10 of the Letters Patent). It necessarily follows that the appeal from the order of the Company Judge lay to the High Court and not to this Court. There is, therefore, no substance in the first point raised on behalf of the appellant. The next contention that the objection cannot be entertained for the first time at the final hearing of the application appears to us to be equally unsound. It is undoubtedly true that the opposing creditors were guilty of negligence in not drawing the attention of the Chairman to what they considered to be a defect in the voting on behalf of the two creditor companies, viz., Bhandani Brothers and the Hindustan Coal Co., and no less negligence in not bringing this to the Court 's notice at the earliest opportunity. Laches on the part of some creditors cannot however justify the Chairman or the Court in disobeying the requirements of the Act. If in law the two votes cast by Arjun Prasad for these two creditor companies were not validly cast he three fourth majority requisite under section 153, sub section 2, would not be there and so no further action under section 153 could be taken by the Court in the matter. How can the Court turn a blind eye to the fact, if proved, that on the basis of valid votes at the meeting the requisite majority was not obtained, merely because the Chairman 's attention was not drawn to the defect or it was not brought to the Court 's notice earlier ? In our opinion, the learned Judges who heard the appeal were right in thinking that however deplorable the delay by opposing creditors in raising the objection might be, that would not be a sufficient reason for refusing to entertain the objection. This brings us to the main question in controversy, viz., whether the resolutions passed by the 408 two creditor companies, viz., Bhandani Brothers and the Hindustan Coal Company, authorising Arjun Prasad to attend the meeting on their behalf and to vote there on their behalf made Arjun Prasad 's voting valid voting. Section 153(2) of the Indian Companies Act is in these words : "If a majority in number representing three fourths in value of the creditors or class of creditors, or members or class of members, as the case may be, present either in person, or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court be binding on all the creditors or the class of creditors, or on all members or class of members, as the case may be, and also on the company, or, in the case of a company in the course of being wound up, on the liquidator and contributories of the Company. " The agreement has to be of a majority in number representing three fourths in value of those who are present either in person or by proxy at the meeting. The agreement of those who are not present at the meeting either in person or by proxy cannot be taken into consideration. Any creditor whether a corporation or a natural person can be present at a meeting by proxy. A natural person can of course be present at a meeting "in person". Can a corporation be present at a meeting "in person"? It appears to us that unless there is some special provision by a law, a company which is not a physical person cannot "be present" at any place "in person. " It is true that under the , a company is a "Person", so that whenever the word "person" is used in any statute a company would be included thereunder. The definition in the can however be of no assistance in interpreting the words "to be present in person", and the difficulty in the way of a company being present in person can be obviated only by statutory provisions or rules having the force of law. 409 Nor can the appellant derive any assistance from the English Case In re Kelantan Coco, Limited and Reduced cited by the learned counsel. In that case, the Court was dealing with a petition for reduction of capital. In deciding whether the special resolution to reduce the capital of the company had been duly passed, the Court had to consider whether there was a quorum at the confirmatory meeting, at which one member of the company and one representative appointed under s.68 of the Companies (Consolidation) Act, 1908, to represent a shareholder of the company, the Eastern Development Corporation, Limited, were present. The articles of Association provided: "two members personally present shall be a quorum. " It was held that a representative appointed under section 68 should be taken into account in considering whether there was a quorum. The provisions of section 68 were similar to those of section 80 of the Indian Companies Act, 1913, and thereunder a company which is a member of another company may, act as its representative at any meeting of that other company. The presence of such a representative was taken in the above case to amount to personal presence of a member of the company. The case does not deal with the question of a creditor company. In the , a provision has been introduced under which a company which is a creditor of another company may by resolution of its directors, authorises such person as it thinks fit to act its representative at any meeting of any creditors of the company held in pursuance of the Act and a person authorised in this manner shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the company, (section 187(1)(b) and 2). No such provision however is to be found in the Indian Companies Act, 1913. It is unnecessary for us to 410 consider whether under this new provision the attendance of a person authorised in this manner at a meeting of the creditors will amount to attendance of the creditor company "in person". For, the present case is governed by the provisions of the Indian Companies Act, 1913, and not by this new provision. When the Companies Act was amended in 1936, an addition was made in section 246 which empowers the High Court to make rules, concerning the mode of proceedings inter alia "for the holding of meetings of creditors and members in connection with proceedings under section 153 of this Act." Accordingly, a number of Rules were framed by the Patna High Court in exercise of this additional power. Rule 144 of the Rules states that a creditor or contributor may vote either in person or by proxy. Rules 145 to 153 deal with various questions as regards proxies. Of these Rule 150 lays down how a proxy is to be given where a creditor is a corporation. Admittedly, no proxy in accordance with Rule 150 was given by the two creditor companies, Bhandani Brothers and the Hindustan Coal Company, in the present case. There is nothing in these rules which can assist Mr. Sastri 's argument that a resolution by the directors of the company authorising a director or some other person to represent the company at the creditors ' meeting makes him a "present in person" in law for that company at the meeting. Mr. Sastri 's last argument was that as the business of the company has to be managed by the directors and the directors can delegate any of their powers to any one of themselves, the attendance of Arjun Prasad at the meeting should reasonably be construed as the attendance of all the directors and so the attendance of the company "in person". As we have already indicated it does not appear to us that in the Act of 1913 their is any provision 411 for attendance of the company "in person", but apart from that we wish to point out that the resolution made by the two companies do not appear to us to delegate the powers of the directors to Arjun Prasad. The conclusion of the High Court that the votes cast by Arjun Prasad on behalf of the two companies., viz., Bhandani Brothers and the Hindustan Coal Company, were not valid votes in our opinion, correct. The appeals are accordingly dismissed with costs. One set of hearing fee. Appeals dismissed.

Subsequent to an order made for the winding up of a company, the Company Judge made a direction for action to be taken under provisions of section 153 of the Indian Companies At the meeting of the unsecured creditors of the company a resolution was passed by the creditors present, either in person or through proxy, by majority in number as well as three fourths in value. At this meeting the appellant claiming to represent two of the creditor companies cast his votes on behalf of the said companies in support of the resolution. No objection was taken at the meeting to the validity of the votes by any of the creditors who opposed the resolution. When the matter came up for orders before the Company Judge an objection was raised that the votes cast by the appellant on behalf of the two creditor companies were not valid, inasmuch as section 153(2) of the Act requires that the creditors should be present either in person or by proxy at the meeting and that, in the present case, the two creditor companies, being corporations, could not be considered to have been present at the meeting "in person". The Company Judge overruled the objection on the grounds that it was raised at a late stage and that, in any case, the votes were valid because the appellant 's attendance at the meeting amounted to the attendance of the companies "in person". On appeal, a Division Bench of the Patna High Court rejected the contention that no appeal lay to the High Court from the order of the Company Judge but only to the Supreme Court and, on the merits, set aside his order. ^ Held, that: (1) the word "Court" in section 153(7) of the Indian Companies Act, 1913, means the Court exercising original jurisdiction, and. therefore, an appeal from the order of the Company Judge lay to the High Court under cl. 10 of the Letters Patent; (2) though under the , a company is a "person" so that whenever the word "person" is used in any statute a company would be included thereunder, unless there is some special provision by a law a company which is not a physical person cannot "be present" at any place "in person"; and (3) in the present case the votes cast by the appellant were not valid in law and it being admitted that if the votes were invalid the requisite majority of three fourths in value requisite under section 153(2) of the Indian Companies Act, 1913, would not be obtained and therefore no further action could be taken by the Court in the matter, the delay in raising the objection would not entitle the Court to ignore the legal defect of the votes.

Appeal No. 2462 of 1968. Appeal by Special Leave from the Judgment and Order dated 17 5 1968 of the Allahabad High Court in First Appeal No. 13 of 1956. M. N. Phadke, M. Qamaruddin, (Mrs.) M. Qamaruddin, M. Y. Omar, N. Aly Khan and V. M. Phadke for the appellant. 889 Lal Narain Sinha, D. P. Singh, section C. Agarwal, A. Gupta, section Mohdkazum and P. P. Singh; for the Respondent. The Judgment of the Court was delivered by UNTWALIA, J. This is an appeal by special leave. Bibi Saddiqa Fatima, the appellant, was the plaintiff in Suit No. 86 of 1952 filed in the Court of the Civil Judge it Aligarh in which the defendant was Saiyed Mohammad Hasan. He was the sole respondent in this appeal also. He died during the pendency of the appeal and on his death his legal heirs and representatives were substituted as respondents. For the sake of convenience hereinafter in this judgment by the respondent would be meant the original respondent. One Smt. Sughra Begum was a Shia Muslim Lady. She was a resident of Asgharabad in the District of Aligarh. She was possessed of vast Zamindari and other properties. On October 6, 1928, she created a waqf of the entire properties dividing them in three qurras. Raja Haji Saiyad Mohammad Mahmood Hasan was appointed by the waqifa as the Mutawalli of qurra No. 1. His brother was appointed the Mutawalli of the second qurra. The waqifa appointed herself the Mutawalli of the third qurra. The dispute in this case relates to a property concerning qurra No. 1. The Raja 's first wife was Smt. Akbari Begum. She died in the year 1931 leaving behind four sons and six daughters. Raja Sahib, when he was about 50 years of age, took the plaintiff as his second wife in the year 1933. The plaintiff, at the time of her marriage with the Raja, was a young lady of seventeen. Raja died in September, 1939. On January 22, 1935, a permanent lease was executed on behalf of one Saiyed Anwarul Rahman in respect of the disputed land in the name of the plaintiff. The rent fixed was Rs. 80/ per year. Between the years 1937 and 1939 a Kothi (Bungalow) was constructed on the said land, which was named as 'Mahmood Manzil '. The suit property in this litigation is the said Kothi together with the land appertaining to it. In short the plaintiff 's case is that the disputed property belongs to her. The defendant was inducted as a tenant of the Kothi an and from 1st of March, 1947 on a rental of Rs. 60/ per month. He paid rent upto May, 1950 but did not pay any rent thereafter. In the year 1952, the plaintiff served a notice on the defendant to pay the arrears of rent and deliver vacant possession of the Kothi. The defendant, in his reply, refuted the claim of the plaintiff and asserted that the Kothi did not belong to her nor was be a tenant of the same. Hence the appellant instituted the suit for realisation of arrears of rent, damages and recovery of possession of the suit property. The respondent, inter alia, pleaded that Raja Sahib, the. first Mutawalli of qurra No. 1, had acquired the lease of the land and constructed the Kothi with the waqf fund as Mutawalli of the waqf. It was a waqf property. After the death of the Raja, the respondent became the Mutawalli of qurra No. 1 including the Kothi in question. He occupied the Kothi as a Mutawalli and not as a tenant. The Trial Court accepted the case of the defendant, rejected that of the plaintiff and 6 329SCI/78 890 dismissed her suit. The ' Allahabad High Court has dismissed her appeal. She has preferred this appeal in this Court on grant of special leave. Shri M. N. Phadke advanced a very strenuous argument in sup port of this appeal. Shri Lal Narayan Sinha combated his argument on behalf of the respondent. It would be convenient to refer to some more facts and facets of the case from the pleadings of the parties and judgments of the Courts below before enunciating and enumerating the submissions made on their behalf. The case pleaded in the plaint by the appellant was like this, Raja Sahib out of great love for the plaintiff "used to pay her a handsome amount every month as pin money and also a good deal of money occasionally. " The plaintiff, with the object of constructing a Kothi, took on lease the disputed land measuring about 4 bighas and had been paying the annual rent of Rs. 80/ since the execution of the lease. She pleads in para 4: "After the execution of the said lease, the plaintiff with her personal fund built a kothi and the out houses on the land mentioned in paragraph No. 3 above and named it as Mahmood Manzil after the name of her husband. The construction of this Kothi bad been completed by May 1938, after which the plaintiff herself used lo stay in that Kothi whenever she came from Asgharabad to Aligarh." The plaintiff bad only one daughter born to her out of the wedlock with the Raja. She is Smt. Abrar Fatima. She was married on the 25th May, 1950 to one Saiyed Mohammed Raza Ali Khan. The defendant was quite obedient and faithful to the plaintiff until the marriage of her daughter. But after the said marriage, he gradually turned hostile and thereupon the plaintiff mostly lived with her daughter. According to the respondent 's case in his written statement the lease was taken by Raja Sahib and the sum of Rs. 786/spent on 'Nazrana ' etc. for taking the lease was paid by him from the income of the waqf property and he constructed the Kothi from the wakf fund of Asgharabad estate. He had neither any money of his own to invest in acquisition of the property nor was the property acquired by the plaintiff with her personal fund. The appellant was examined on commission as a witness to support her case at the trial. In her examination in chief, she stated that her husband used to give her Rs. 500/ per month as pin money besides, meeting her expenses regarding food and clothing. Over and above this, he used to send money on the occasions of Id and Bakrid and also gave her money whenever she demanded. She constructed the Kothi at Aligarh by investing about Rs. 20,000/ . In other words she meant to convey in her examination in chief that she had acquired the land and constructed the Kothi out of the savings she had from the various amounts of money given by the Raja monthly or from time to time. At a later stage of her deposition (probably in cross examination) she demolished her case and claimed to be in possession of Rs. 50,000/ at the time of the death of her husband, 891 which sum was her total savings out of the money paid to her monthly or from time to time by the Raja. Thus in her evidence she could not explain as to out of which personal fund she claimed to have acquired the disputed property. The Civil Judge framed for trial several issues out of which issues 1 and 5 were, in the following terms "1. Whether the plaintiff is the owner of the property in suit as alleged and is she entitled to the possession claimed ? 5. Whether the defendant possesses the disputed property as the Mutawalli ' as alleged by him The defendant 's case was that the 'Patta ' was obtained by the old Raja tinder the influence of her young wife benami in her name though it was acquired with the waqf fund. The Raja, as Mutawalli, was the real lessee of the land. He had constructed the Kothi out of the income of the waqf property. A Mutawalli is not an owner of the waqf property, but whatever property of the waqf was there from before or acquired subsequently must, ordinarily, be in the name of the Mutawalli. A property could be acquired in the name of any beneficiary, like the plaintiff, but she would be; merely a benamidar of the Mutawalli and the property will be a waqf property. The Civil Judge has noted in his judgement that the plaintiff did not put forth a plea that the Kothi was built by late Raja out of his personal money and that she was owner, on the basis of the equitable deoctrine of advancement. He has said further: "Thus the only point on which the parties were at issue was with respect to the source of the money out of which the patta was obtained and the building constructed and the plaintiff could succeed only if she proved that she had obtained the patta and built the kothi out of the money given to her by her late husband as pocket expenses, etc. " The Civil Judge also remarked "Had she stated that she built the kothi out of the money which she had saved, that would have been consistent with her allegations in the plaint. But she admitted that the whole of her savings were still with her and that out of them she had spent a little when she filed the present suit." The Trial Court, thereafter, considered the voluminous documentary evidence in the light of the oral evidence adduced and came to the conclusion that the plaintiff did not provide any money either for the lease of the land or for the construction of the Kothi thereon and that the money for both the purposes was provided out of the waqf estate. Hence it was held, while deciding issues 1 and 5, that the plaintiff was not the owner of the Kothi in suit and the defendant was in possession of it in his capacity as the successor Mutawalli. 892 It would be advantageous to note at this stage the stand taken by the appellant in the High Court in her Memo of Appeal as also in argument. On perusal of the grounds set out in the Memorandum of Appeal, especially ground Nos. 6, 8, 9, 11, 13 and 27, it would appear that the case made out therein was that the Raja had his personal money kept in the waqf estate treasury alongwith the waqf money. The amount spent in constructing the Kothi was mostly taken out of the treasury from his personal fund with the intention of making his wife the owner of the property even though the doctrine of advancement did not apply in India, and that the observation of the learned Civil Judge that the plaintiff failed to prove that she did not provide any money out of her personal fund was wholly irrelevant for the decision of issue No. 1. In argument, however, a stand like the one taken in the Trial Court was reiterated but consistently and concurrently rejected because the evidence in favour of the defendant 's case was so overwhelming to show that the lease had been taken and the Kothi had been constructed with the money coming out of the waqf fund that no other view was reasonably probable to be taken. At one place in its judgment the High Court says "Counsel for the appellant has strongly relied on these documents in proof of the fact that the Kothi was constructed with her money and belonged to her." In the teeth of the overwhelming evidence the appellant was obliged to take 'an entirely new stand in her petition for special leave and in the argument before us. In paragraph 23 of the petition it was stated That the case of the applicant had been that the lease was obtained with the applicant 's funds and that she had constructed the Kothi with her own money and it was also her alternative case put forward before the Hon 'ble High Court that even if it be assumed that the money utilised for constructing the Kothi did not pass directly from the plain tiff 's hand: and even if it be the finding of the Court that the money so utilised bad proceeded from Raja Mahmudul Hasan then on the admitted case of the defendant that this fund was waqf fund, the plaintiff 's claim ought to have been decreed inasmuch as on the ground that the usufruct or the profit of the waqf property though arising out of the waqf property did not belong to waqf as waqf property but it was by its very nature the property of the beneficiary and in the absence of any evidence to the contrary Raja Mahmoodul Hasan. I held that those funds for the beneficiaries and the amount spent by him in the construction of the Kothi should be the money belonging to the applicant." Mr. Phadke made the following submissions (1) The Raja intended to acquire the land on lease and construct the Kothi for the plaintiff by investing from time to time money taken out of the waqf estate treasury, which had the effect of disbursement and payment of the money by the Mutawalli to his wife, 893 the beneficiary, for the purpose of the, acquisition of the Kohi. The source of Money in that event is immaterial. (2) The intention of the Raja to provide a separate Kothi to the plaintiff evidenced by numerous documents taken and standing in her name must be respected. (3) The Raja went on giving money in driblets for construction of the Kothi by taking out the money from the waqf fund from time to time. It was open to him to do so in accordance with clause 18 of the waqf deed Ext. (4) The intention of the Raja is further fortified 'by the recital in his Will Ext. (5) That there is a number of circumstances in support of the contentions aforesaid. (6) The rules of pleading should not be too strictly applied in India and no party should be defeated on that account when both sides adduced evidence and proceeded to trial of the real issues in the case 'with their full knowledge and understanding. (7) That there is no substantial variance in the case made out in the pleadings and the evidence and in argument either in the Courts below or in this Court. (8) The burden of proof to displace the ostensible title of the appellant and to show that she was a benamidar was on the respondent. In absence of any clinching evidence on either side, the ostensible title prevails. (9) Although the doctrine of advancement does not apply in India, the Mutawalli being the owner of the waqf property had full and unlimited power of disposal over its usufruct and income. Mr. Lal Narayan Sinha, while refuting the submissions made on behalf of the appellant, contended that it is a settled law that the question whether a particular transaction is, benami or not is purely one of fact and this Court in exercise of its jurisdiction under Article 136 of the Constitution does not, ordinarily and generally, review the comment findings of the Courts below in that regard. Counsel submitted that the Courts below had correctly applied the Muslim law applicable to Shias in respect of the waqf property and its income. They have rightly come to the conclusion that the suit property appertained to the waqf. It was clear, according to the submis 894 sion of Mr. Sinha, that the parties went to trial to prove their respective cases as to whether the property had been acquired with the personal funds of the Plaintiff or those of the waqf. The plaintiff 's case failed in view of the overwhelming evidence against her and she should not be permitted to make out an entirely new case in this Court. He also contended, firstly, that the theory of onus probandi is not strictly applicable when both parties have adduced evidence;in such a situation it becomes the duty ' of the Court to arrive at the true facts on the basis of reasonable probabilities. Secondly, in the instant case the strict tests to prove the benami character of the transaction cannot be applied, as, to do so will be in the teeth of the, well settled principles of Mohammedan law in relation to waqfs. We proceed to examine the correctness of the rival contentions of the parties but not exactly in the Order it has been stated above. It is undisputed in this case that a valid waqf was created by Smt. Sughra Begum. It is further indisputably clear from the waqf deed that except a portion of money which was to be spent for public, religious or charitable objects the waqf was primarily of a private nature for the benefit of the. settler 's family and their descendants, which is called wakf alal aulad. The ultimate object of the waqf was to spend income, if any, in the service of the Almighty God. In Abdul Fata Mahomed vs Rasamaya (1) their Lordships of the Privy Council held that the gift to charity was illusory, and that the sole object of the settler was to create a family settlement in perpetuity. The waqf of this kind was, therefore, invalid. Ibis decision aforesaid caused considerable dissatisfaction in the Mohammedan community in India. This led to the passing of the which was made retrospective in opera tion by a subsequent Act of 1930. In view of the Validating Act of 1913 the validity of the wakf was beyond the pale of challenge. Although in respect of the law applicable to waqfs there is some difference in regard to some matters between the Shia law and the various other schools of Mohamedan law applicable to Sunnis, in very many fields the law is identical. After the Validating Act of 1913, on the basis of the law as it prevailed even before, creation of a waqf for the purpose of the maintenance of the members of the waqif 's family and their descendants is also a charitable purpose. We now proceed to notice some salient features of the law as applicable to waqfs and especially of the Shias. Tyabji 's Muslim Law, Fourth edition, Chapter X deals with waqf. According to Shia law the waqf is irrevocable after possession is given to the beneficiaries or the Multawalli. The settler divests himself of the ownership of the property and of everything in the nature of usfufruct from the moment the wakf is created. In purely metaphorical sense the expression "ownership of God" is used but unlike Hindu Law, since conception of a personal God is not recognized, there is no (1) 22 Indian Appeals, 76. 895 ownership of God or no property belongs to God in the jural sense, although "the ownership of the property becomes reverted in God as he is originally the owner of all things" (vide page 523). The Shia authorities considered the property as transferred to the beneficiaries or to the object of the, waqf. Strictly speaking, the ownership of the waqf property has no jural conception with any exactitude. The corpus is tied 'down and is made inalienable. Only the usufruct and the income from the corpus of the waqf property is available for carrying out the objects of the wakf. The Sharaiu 'l Islam says "Waqf is a contract the fruit or effect of which is (a) to tie up the original and (b) to leave its usufruct free " "the waqf or subject of appropriation (corpus) is transferred, so to become the property of the mowkoof alehi, [or 'person on whom the settlement is made '] for he has a right to the advantage or benefits (usufruct) to be derived from it." (vide page 494, In the foot note at the same page occurs a passage which runs thus "But it should not be overlooked that question about ownership of property after dedication, refers merely to scientulla juris, supposed to remain undisposed of although entire usufruct, (all benefits, & C.) are assigned away. Question in whom property rests, therefore, entirely academical. " Mutawalli is like a Manager rather than a trustee (see page 498). The Mutawalli, so far as the waqf property is concerned, has to see that the beneficiaries got the advantage of usufruct. We have already pointed out that under the Shia law the property does not remain with the waqif. It is transferred to God or to the beneficiaries. At page 554 of Tyabji 's famous book it is stated : "The support and maintenance of the waqf 's family, & c. would seem under the Act to be deemed a purpose recognized by the Muslim law as religious, pious or charitable : section 2. This view was put forward by Ameer Ali, J., with great learning in his dissenting judgment in Bikani Mia 's case." ' Section 527 at page 593 runs thus "The mutawalli has no ownership, right or estate in the waqf property: in that respect he, is not a trustee in the technical sense : he holds the property as a manager for ful filling the purpose of the waqf. " A contrary statement of law at page 202 of Mullas Mohamedan Law, seventeenth edition based on the decision of the Allahabad High Court in Mohammad Qamar Shah Khan vs Mohammad Salamat Ali Khan(1) (1) A.I.R. 1933 Allahabad 407. 896 to the effect that "the mutawalli is not a mere superintendent or manager but is practically speaking the owner" is not correct statement of law. In a later Full Bench decision of the same court in Moattar Raza and others vs Joint Director of Consolidation, U.P. Camp at Bareilly and others(1) while over ruling the earlier decision, it has been said at pages 513 14 : "the legal status and position of a mutawalli under a waqf under the Musalman Law is that of a Manager or Superintendent. " The general powers of the Mutawalli as mentioned in section 529 of Tyabji 's book are that he "may do all acts reasonable and proper for the protection of the wakf property, and for the administration of the waqf. " It will be useful to point out the Law as regards, distribution of distributable income of the waqf properties amongst the beneficiaries as mentioned in the various subsections of section 545 at pages 606 608. Unless a different intention appear, subsection (4) says: "The benefit of a waqf for a person 's "sons and his children, and the children of his children for ever so long as there are descendants, is taken per capita, males and females taking equally and the children of daughters being included. " Attention must be called to an important statement of law in the well known authoritative book of Mohamedan Law by Ameer Ali Vol. 1, fourth edition, page 472. It runs thus : "It is lawful for a mutawalli with the income of a waqf to erect shops, houses, & c., which may yield profit to the waqf, as all this is for the benefit of the waqf. All properties purchased by the mutawalli out of the proceeds of the waqf become part of the waqf and are subject to the same legal incidents as the original waqf estate." Mr. Phadke cited the decision of this Court in Ahmed G. H. Ariff & Ors. vs Commissioner of Wealth Tax, Calcutta(2) and contended that the right of the beneficiaries to get money out of the income of the waqf property for their maintenance and support was their property. In our opinion the case does not help the appellant at an in regard to the point at issue. A hanafi Muslim had created a wakf alalaulad and on a proper construction of the relevant clauses in the waqf deed it was held that the aliquot share of the income provided for the beneficiaries was not meant merely for their maintenance and support but even if it was so, it would be an asset within the meaning of section 2 (a) of the Wealth Tax Act, 1957. The definition of the term 'asses, was very wide in the Wealth Tax Act. The share of the income which a beneficiary was getting under the said waqf was assessable to income tax and following the particular method of evaluation it was held to be an asset for the purposes of the Wealth Tax. The question at issue in the present case is entirely different as will be shown and discussed (1) A.I.R. 1970 Allahabad, 509. (2) ; 897 hereinafter. But in support of what we have said above in relation to the waqf property and the position of the Mutawalli we may quote a few lines from tills judgment also which am at page 24 : "As mentioned before, the moment a wakf is created, all rights of property pass out of the Wakif and vest in the Almighty. Therefore, the Mutawalli has no right in the property belonging to the wakf. He is not a trustee in the technical sense, his position being merely that of a superintendent or a manager. " It would be convenient to briefly discuss the questions of fact and the evidence in relation thereto before we advert to the discussion of some other questions of law argued before us on either side as those principles of law will be better"appreciated and applied in the. background of the facts of this case. As has been stated already the evidence is overwhelming on the question as to what was the source of money for the acquisition of the disputed property, either the land or the kothi. It came from the waqf fund. This position could not be seriously challenged before us. What was argued will be alluded to a bit later. We may just cursorily refer to some, of the pieces of the evidence on the question aforesaid. A 35 is a written direction by the Raja to Mahmud Syedullah Tahvildar directing him to debit a sum of Rs. 741/ to his personal account for the acquisition of the. plot in question. The details of the expenses and the Nazrana money are given therein. The payment was from the funds of the waqf estate. But the Raja made a feable and futile attempt to get this debit entry made as a repayment of the loan money said to have been advanced by him to the waqf estate. The High Court as also the Trial Court has rightly remarked that the entry like Ext. A443 was got made by the Raja in the account books of the waqf estate as a fictitious countervailing entry in his attempt to show that some of the sums of money which he had withdrawn from the waqf estate were on account of the repayment of his alleged loans. The High Court has rightly pointed out that they were all fictitious entries. Mr. Phadke endeavored to show that the approximate gross income of the waqf estate was not Rs. 43,515/ as is shown by the High Court but it was in the neighbourhood of Rs. 58,000/ . We shall accept it to be so. Thus the net distributable income at the disposal of the Raja was about Rs. 30,000/ instead of Rs. 15,5101 mentioned in the judgment of the High Court. There were 13 beneficiaries in qurra No. 1 of which the Raja was the Mutawalli. In that capacity he was getting a monthly allowance of Rs. 70/ only from the estate account. He bad no other personal property or source of income from which he could advance any loan to the waqf estate. Nor could it be shown that the waqf estate at any point of time was in need of any loan from the Raja. Therefore, the attempt of the Raja to put a show of acquiring the land in the name of his young wife out of his personal money was a very crude attempt to disguise the real source of that 898 money. The concurrent findings of the Courts below that the expenses for the acquisition of the lease were incurred from the waqf estate funds could not be successfully assailed. The High Court has referred next to the question of payment of rent of the land to the lessor. The plaintiff produced six rent receipts. 13 and 14 were of the year 1952 when disputes between the parties had started. As regards four other receipts the High Court was inclined to believe the explanation of the defendant that the plaintiff had surreptitiously obtained their possession. On the other band, the defendant filed four rent receipts of the period when the Raja was alive. Since the lease had been taken in the name of the plaintiff, naturally all the receipts were in her name. The High Court has also referred to the satisfaction of a decree for rent obtained by the lessor in a suit instituted against the plaintiff as well as the defendant and has come to the conclusion that the entire decretal amount, the expenses of the auction sale and the costs were deposited in the Court out of the waqf fund. Then comes the evidence regarding the construction of the Kothi. All documents for obtaining permission from 'be Municipal Board and for electric connection etc. obviously stood in the name of the plaintiff as the lease wag, standing in her name. As in the High Court, so here, Mr. Phadke strongly relied upon those documents to show that the Kothi was constructed for and on behalf of the plaintiff. As already stated the stand in the High Court was, that it was constructed with her money. Here it was a completely different stand. It was urged that the money came from the waqf fund but as and when the money was being spent by the Raja for the construction of the Kothi it amounted, in law, as payment of the money by the Raja to his wife and the construction of the Kothi should thus be treated as having been made with her money. We shall scrutinize the correctness of this branch of the argument a bit later. Numerous documents are mentioned in the judgments of the Trial Court as also of the High Court to show that every bit of expenditure in the construction of the Kothi came out of the ' waqf fund under the direction of the Raja. We need not discuss these documents in any detail as the concurrent finding of the Courts below could not be assailed in face of these documents and that led the appellant to make a somersault here and to take an ingenuous stand. These documents are Ext. A 449 series; Ext. A 450 series; Ext. A 452; Ext. A 453; Ext. A 455; Ext. A 458; Ext. A 460; Ext. A 463; Ext. A 486; Ext. A 491; Ext. A 493 series; Ext. A 495 and Ext. A 518. A 3 shows that Ramlal, a mason who had worked as a contractor in the construction of the Kothi instituted a suit for recovery of Rs. 2,917/10/ , the amount which was not paid during the life time of the Raja. The suit was instituted in the year 1941. It was decreed in 1942. A 36, A 43 and A 44 are the receipts in proof of the fact that eventually the decree was satisfied by the defendant on payment of money to Ramlal. A 45 is a similar receipt dated January 2, 1942 showing payment of Rs. 923/ by the defendant to Zafaruddin in satisfaction of his decretal dues on account of the construction of the Kothi. The 899 plaintiff 's claim of the payment of Rs. 2,000/ to Ramlal was too slippery to be accepted by the Courts below and it need not detain us either. The High Court has also relied upon two letters Exts. A 28 and A 27 written by the Raja to the Supervisor of the building operations indicating that if the foundation of the Kothi was not laid within a certain time, loss would be caused to the Riyasat namely the waqf estate. It may be emphasised here that the countervailing fictitious entries got made by the Raja were very few and far between and the entire amount spent in the acquisition of the Kothi which was in the neighbourhood of Rs. 21,000/ (both for the land and ,the building) could not be. shown to be the personal money of the Raja by this spurious method. A major portion of the total amount obviously, clearly, and admittedly too, had come from the waqf fund., And that compelled the appellant to take an entirely new stand in this Court. We now proceed to deal with the new stand. It is necessary in that connection to refer to some of the important recitals in Ext. A 2 the waqf deed. In the preamble of the document it is recited that the waqf is being created with some religious purposes and for the regular support and maintenance of the descendants of the waqif for all times to come so that they may get their support from generation to generation. The ultimate object is for charitable purposes in the service of the God Fisaliilah. After referring to the Act of 1913 it is stated : "Hence the entire property given below having become Waqf Alal aulad in perpetuity, has become, uninheritable and non transferable". Each Mutawalli of his respective qurra was appointed " the principal manager with full and complete powers of entire waqf property." From clauses 7 and 13 of the waqf deed it was rightly Pointed out on behalf of the appellant, and not disputed by the respondent either, that Rs. 6,000/ amiually had to be spent by Mutawalli of qurra No. 1 for the religious purposes mentioned therein. This was the first obligation of the Mutawalli before he could apply the rest of the usufruct in the support and maintenance of the family beneficiaries. Then comes the most important clause in the waqf deed namely clause 18. The said clause as translated and printed in the paper book runs as follows "Syed Mahmood Hasan the Mutawalli of the, first lot is vested with the power to fix stipends for his children and their descendants and for his wives during his life time whatsoever he pleases or to lay down conditions by means 0 a registered document or may get any writing kept reserved in the custody of the district judge, so that after him it be binding upon every Mutawalli, such in case he might not get any writing registered or kept in the custody of the district judge of the district, then under such circumstances the twenty percent (20%) of the income of the waqf property having been set apart for the expenditure of collection and realisation and right of the, Mutwalliship and the amount of Rs. 6,000/ (Rupees six thousand) for meeting 900 the expenditure of Azadari ' as detailed at para No. 7 above; the entire remaining will be distributed among the heirs of Mahmood Hasan according to their respective legal share provided under Mohammadan Law. " The High Court referring to this clause has said that the power given to the Raja in clause 18 could be exercised by him during his life time in the fixation of the stipends but it was to come in operation after his death. With the help of learned counsel for both sides,. we looked into the original clause 18 and found that there is some inaccuracy in the translation as made and printed in the paper book. But substantially there is not much difference. Correctly appreciated, the meaning of the clause is that Saiyed Mohammad Hasan, the Raja, was given a special power and right to fix stipends for his children, wives and descendants either by a registered document and or by a document in writing kept in the custody of the District Judge so that after him it may be binding on every subsequent Mutawalli. If he failed to do so, then after setting apart 20% of the gross income to meet the expenditure of collection and realisation and Rs. 6,000/the charitable expenditure mentioned in clause 7, the balance was to be distributed amongst the heirs of Saiyed Mohammad Hasan according to their respective legal shares provided under the Mahomedan law. The bone of contention between the parties before us was that according to the appellant such a power of fixation of stipends for the wives and children was given to the Raja even to be operative during his life time, while according to the respondent it was only to be effective after his death. We do not think it necessary to meticulously examine the terms of clause 18 and resolve this. difference. We shall assume in favour of the respondent that, in terms, the power was given which was meant to be operative after his death. But then, does it stand to reason that he had no such power during his life time ? On a reasonable view of the matter, either by way of construction of clause 18, or as a necessary implication of it, we find no difficulty in assuming in favour of the appellant that the Raja was vested with the power to fix stipends for his children and their descendants and for his wives during his life time also. A question, however, arises was this power completely unfettered, unguided and not controlled by the general principles of Mohamedan law ? Apart from the fact that in clause 27 of the waqf deed it is specifically mentioned that any condition or phrase laid down in any of the paras of the waqf deed was not meant to go against the, Mohamedan law and was not to be of any effect, if it did so, it is difficult to conclude that the Raja was conferred an absolute power or discretion to fix any stipend for any beneficiary and no stipend for some beneficiary. Equality amongst all is a golden thread which runs throughout the Mohamedan law. It is a chief trait of that law. We have already pointed out from Tyabji 's book that each beneficiary was entitled to share the usufruct of the waqf property per capita. The Power given to the Raja under clause 18 had to be reasonably exercised within a reasonable limit of variation according to the exigencies and special needs of a particular beneficiary. He had no power to spend money quite disproportionately for the benefit of one 901 beneficiary may she be his young wife or young daughter or be he a young son. He had no power to spend money for acquisition of any immovable property for a beneficiary. No income from the waqf estate could be, spent for acquisition of an immovable property, and particularly a big property with which we are concerned in this case, to benefit only one beneficiary ignoring the others who were about a dozen. The money had to be spent equitably for the support and maintenance of each and every beneficiary. Of course, the Raja had the discretion to spend more money say on the education of a particular beneficiary it was necessary to do so or for the treatment of an ailing one. There it would be preposterous to suggest that money bad to be equally spent. It is, however, difficult to spell out from Clause 18, as was argued by Mr. Phadke, that the Raja should be deemed to have fixed as stipends for the young lady all the numerous sums of money spent from time to time in the various items of the acquisition of land or the construction of the Kothi. Such a construction will, not only militate against the tenets of the Mahomedan law as quoted from Ameer Ali 's book, but would be obviously against the spirit of clause 24 of the waqf deed itself. The said clause says "If any property will be purchased out of the funds of the State, it shall also be deemed to be property included in and belonging to the waqf. It shall not become the private or personal property of any one. " Taking a permanent lease of the land and constructing a Kothi thereupon to all intents and purposes, is a purchase of the property out of the funds of the estate. It will be a startling proposition of Mahomedan law to cull out from clause 1 8 of the waqf deed that a property acquired obviously and clearly out of the funds of the waqf estate in the name of one of the beneficiaries should be treated as having been acquired for him or her in exercise of the power under clause 18. It should be remembered that apart from the properties which were mentioned in the waqf deed and which had been tied and made inalienable if any further property was to be acquired, in the, eye of law, according to the concept of Mahomedan law, there was no legal entity available in whose name the property could be acquired except the Mutawalli or the beneficiary. Unlike Hindu law, no property could be acquired in the name of the God. Nor could it be acquired in the name of any religious institution like the waqf estate. Necessarily the property had to be taken in the name of one of the living persons. Ordinarily and generally the acquisition of property out of the waqf funds should have been made in the name of the Mutawalli. But it did not cease to be, a waqf property merely because it was acquired in the name of one of the beneficiaries. We are empbasizing this aspect of the matter at this stage to point out that the law relating to benami transactions, strictly speaking, cannot be applied in all its aspects to a transaction of the kind we are concerned with in this case. We, however, hasten to add that even if applied, there will be no escape from the position that the real owner of the property was the Raja in his capacity as Mutawalli and the plaintiff was 902 a mere benamidar. The property in reality, therefore, belong to the waqf estate as concurrently and rightly held by the two courts be low. It is a very novel and ingenuous stand which was taken in this Court to say that all money spent from time to time in acquiring the land and constructing the Kothi was payment by the Raja as Mutawalli to his wife and therefore the property must be held to have been acquired by the lady herself out of her own personal fund. At no stage of this litigation except in this Court such a case was made out in pleading or evidence or in argument. The defendant was never asked to meet such a case. Parties went to trial and evidence was adduced upon the footing that the plaintiff claimed that out of the money given to her by the Raja as pin money or on the occasions of festivals or otherwise she had saved a lot and out of those savings she had spent the money in acquiring the property. The defendant asserted and proved that the case of the plaintiff was untrue and that all the money came from the waqf fund directly to meet the cost of the ac quisition of the property. In such a situation it is difficult to accept the argument put forward by Mr. Phadke that pleadings 'should not be construed too strictly. He relied upon three authorities of this Court in support of this argument namely, (1) Srinivas Ram Kumar vs Mahabir Prasad and others(1); (2) Nagubai Ammal & others vs B. Shama Rao & others(2), and (3) Kunju Kesavan vs M. M. Philip I.C.S. and others(3). Let us see whether any of them helps the appellant in advancing her case any further. In the case of Srinivas Ram Kumar (supra) the suit for specific performance of the contract failed. The defendant had admitted the receipt of Rs. 30,000/ . In that event, it was held that a decree could be passed in favour of the plaintiff for the recovery of Rs. 30,000/ and interest remaining due under the agreement of loan pleaded by the defendant, even though the plaintiff had not set up such a case and it was even inconsistent with the allegations in the plaint. The Trial Court had passed a decree for the sum of Rs. 30,000/ . The High Court upturned it. In that connection, while delivering the judgment of the Court, it was observed by Mukherjea J., as he then was, at page 282 : "The question, however, arises whether, in the absence of any such alternative case in the plaint it is open to the Court to give him relief on that basis. The rule undoubtedly is that the Court cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side was not called upon or had an opportunity to meat. But when the alternative case, which the plaintiff could have made, was not only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff a decree upon the case which the defendant him self makes." (1) ; (2) ; (3) [1964]3 S.C.R. 634. 903 In the instant case, there is no question of giving any alternative relief to the plaintiff. The relief asked for is one and the same. The plaintiff claimed that she had acquired the property with her personal funds. The defendant successfully combated this case. He had not said anything on the basis of which any alternative relief could be given to the plaintiff. The facts of the case of Nagubai Ammal (supra) would clearly show that the decision of this Court does not help the appellant at all. The respondent did not specifically raise the question of his pending in his pleading nor was an issue framed or. the point, but he raised the question at the very commencement of the trial in his deposition, proved relevant documents which were admitted into evidence without any objection from the appellants who filed their own documents, cross examined the respondent and invited the Court to hold that the suit for maintenance and a charge and the connected proceedings evidenced by these documents were collusive in order to avoid the operation of section 52 of the Transfer of Property Act. The matter was decided with reference to section 52. In such a situation it was held by this Court that the decisions of the Courts below were correct and in the facts and circumstances of thecase the omission of the respondent to specifically raise the questionof his pending in his pleading did not take the appellants by surprise. It was a mere irregularity which resulted in no prejudice to the appellants. In the instant case no body at any stage of the litigation before the appeal came up to this Court had taken any stand or said a word any where that money spent in acquisition of the property was the personal money of the plaintiff because as and when the sums were spent they went on becoming her personal money. The evidence adduced and the stand taken in arguments were wholly different. No party had said anything on the lines of the case made out in this Court. Similar is the position in regard to the decision of this Court in the case of Kunju Kesavan. At page 648 Hidayatullah J., as he then was,has stated, "The. parties went to trial fully understanding the central fact whether the succession as laid down in the Ezhava Act applied to Bhagavathi Valli or not. The absence of an issue, therefore, did not lead to a mis trial sufficient to vitiate the decision. " It was further added that the plea was hardly necessary in view of the plea made by the plaintiff in the replication. Mr. Lal Narayan Sinha placed reliance upon the decision of this Court in Meenakshi Mills, Madurai vs The Commissioner of Income tax, Madras(1) in support of his submission that the question of benami is essentially a question of fact and this Court would not ordinarily and generally review the concurrent findings of the courts below in that regard. Mr. Phadke submitted that his case was covered by some exceptionscarved out in the decision of the Federal Court in Gangadara Ayyarand others vs Subramania Sastrjgal and others.(2) (1) ; (2) A.T.R. 904 In our opinion it is not necessary to decide as to on which side of the dividing line this case falls in the light of the principles enunciated, in the case aforementioned. Truly speaking, the concurrent findings of the Courts below on the, primary facts could not be seriously challenged. They are obviously correct. But a new stand was taken on ' the basis of clause 18 of the waqf deed which we have already discussed and rejected. Mr. Phadke, heavily relied upon clause 19 of the Win dated 17 6 1938 Ext. 15 executed by the Raja fixing various amounts of stipends to be paid to the beneficiaries after his death. He had executed two other wills prior to this Will. In an earlier litigation, a question had arisen as to which Will would prevail the first one or the last one. The amounts fixed for the plaintiff in the last Will was much higher than the amount fixed for her in the first Will. in an earlier judgment dated 3 9 1949 Ext. 3 which was a judgment inter partes it was held that the amount fixed in the first Will would prevail. Clause 18 of the waqf deed was also interpreted in a particular manner. Mr. Lal Narayan Sinha endeavoured to use this judgment operating as res judicata in regard to some of the questions falling for decision in this litigation. We do not propose to make use of that judgment in that form. Nor do we propose to express any final opinion as to which amount of stipend was effective the first one or the last one. shall assume in favour of the plaintiff that the. amount fixed by the last Will was effective and binding on the subsequent Mutawalli. We are, however, concerned to read clause 19 of the last Will which runs as follows "My wife Siddique Fatima has got a kothi known as (main (?) Shagird Pasha in mauza Doodhpur (paper torn) by taking on perpetual lease. I or the state has no concern with the same. It has been 'constructed by her with her own funds. All the articles lying there belong to her and have been purchased by her from her own money. I have certainly given some articles to her which belonged to me personally. In short all the articles, of whatever sort they may be are her property and nobody has got any right in respect thereof because the state or any one else has got no concern or right in respect thereof. Hence she(?) has got the right to dispose the same off or to make a waqf of the same. She may give it to any of my sons, who renders obedience and service to her or may give the same to any of my grandsons. My other heirs shall have no right in respect thereof. If any body brings, any claim, in order to harass her, the same shall be false. " Let us see whether this clause advances the case of the appellant any further. On a close scrutiny, it would be found that it directly demolishes her stand taken in this Court. The recital by the Raja in clause 19 is that his wife bad taken the perpetual lease and constructed the kothi with her own funds. All the articles lying there have been purchased by her from her own money. He had certainly given some articles to her which belonged to him personally. There is 905 no recital that the Raja had constructed the kothi ',for the plaintiff out of his own funds nor was there a recital that he had constructed the kothi by taking the money from the waqf estate and treating it as payment of stipends to her as and when the sums of money were paid. By no stretch of law such a recital could create a title in favour of the plaintiff and finish the right of the, waqf to the property. The recital was demonstrably false and could not bind the subsequent Mutawalli. If the property became the acquired property of the waqf a Mutawalli,as the Raja was, by his mere declaration contained in clause 19 ofthe Will could not make it a property of the lady. The recital of fact could be pressed into service only to lend additional support to the plaintiff 's case if she would have stuck to that case and proved it by evidence aliunde. The appellant 's counsel relied upon the various circumstances to, advance her case in this Court the foremost of them is based upon clause 18 of the waqf deed, which we have already dealt with. It was next contended that the real question was that the property was of waqf alal aulad of which the main object was the maintenance and support of the members of the settler 's family and to tie up the corpus of the property in perpetuity so as to, make it inalienable. The Raja, however, according to the submission was left free duringhis life time to make disbursement of the income in any manner he chose and liked. Acquiring a property with the waqf fund was the fulfillment of the object of the wakf. It was a part of making a provision for the maintenance and support of the wife of the Mutawallii. It was an integral part of the object of the waqf and was not in breach of the trust. We are not impressed with this argument and have already dealt with it in the earlier portion of this judgment. True it is that the property was not acquired by the sale of the corpus of any of the waqf property but even acquisition of an immovable property directly with the, waqf fund was an accretion to the waqf property. The Raja had no power while administering the waqf to acquire a property for a particular beneficiary by way of maintenance and support of such a beneficiary. As indicated earlier, a Mutawalli of a waqt although not a trustee in the true sense of the terms is still bound by the various obligations of a trustee. He like a trustee or a person standing in a fiduciary capacity, cannot advance his own interests or the interests of his close relations by virtue of the position held by him. The use of the funds of the waqf for acquisition of a property by a Mutawalli in the name of his wife 'would amount to a breach of trust and the property so acquired would be treated as waqf property. In the tenth edition of The Law of Trusts by Keaton and Sheridan it has been pointed out at page 329, Chapter XX "The general rule that a trustee must not take. heed of one beneficiary to the detriment of others has already been discussed. Put in another way, the rule implies that although a trustee, may be the servant of all the beneficiaries, he is not the servant of any one of them, but an arbitrator, who must hold the scales evenly. " The position of the Mutawalli under the. Mahomedan law is in no way different and all the beneficiaries are entitled to benefit equally, 7 329 SCI/78 906 of course, subject to the special power conferred on the Mutawalli as the one provided in clause 18 of the waqf deed and to the extent and in the manner interpreted by us above. Exhibit A 22 an account of daily expenses incurred in the construction of the Kothi was attacked as a spurious document. we do not attach much importance to Ext. A 22 in face of the other pieces of evidence to indicate that the expenses were all met from the waqf fund. It is not necessary to lay any stress on Ext. A 22 Our attention was drawn to some statements made in the testimony of the defendant himself who was examined as D.W. 2 and D.W. 1the brother of the Raja. It may be mentioned here that Hamid Hasan brother of the defendant was examined at P.W.3. The plaintiff had examined herself in the house in which P.W. 3 was living and in his presence. Without discussing in any detail a few lines here for a few lines there in their evidence, suffice it to say that their evidence could not and did not establish the plaintiffs case as made out in the Courts below nor did they lend any support to the new case made out here. We, therefore, do not think it necessary to encumber this judgment by a detailed discussion of the evidence, because it has all been dealt with in full by the Trial Court and to a large extent by the High Court also. We now proceed to consider, the law of benami prevalent in India and especially in regard to acquisition of a property by the husband in the name of the wife. We would also in this connection be discussing whether the, doctrine of advancement is applicable in India or any principle analogous to that can be pressed into service on behalf of the appellant as was sought to be done by her learned counsel. Alongwith the discussion of the points aforesaid, we shall be adverting to the appellant 's argument of burden of proof being on the person to prove that a transaction which is apparent on the face of the document of title is not a real one but a benami deal. In conclusion, we shall show that neither the Trial Court nor the High Court has deviated from the application of the well settled principles in this regard, although at places the Trial Court seems to have apparently thrown the onus on the plaintiff. But as a matter of fact neither of the two Courts below has committed any error in the application (,it the real principle. In Gopeekrist Gosain and Gungaparsaud Gosain(1) it was pointed out as early as 1854, at page 72 : "It is very much the habit in India to make purchases in the names of others, and, from whatever cause or causes the practice may have arisen, it has existed for a series of years, and these transactions are known as "Benamee transactions." Lord Justice Knight Bruce proceeds to observe further at Pages 7475 that if the money for acquisition of property has been provided by a person other than the individual in whose name the purchase was effected and if such a person was a stranger or a distant relative of the person providing the money,, "he would have. been prima (1)6 Moore 's Indian Appeals, 53. 907 facia a trustee". It was observed further that even when the purchaser was the son of the real purchaser the English doctrine of advancement was not applicable in India. This case was followed by the Board in Bilas Kunwar and Desraj Ranjit Singh and others(1) Sir George Farwell has said at page 205 : "The exception in our law by way of advancement in favour of wife or child does not apply in India : Gopeekrist vs Gangaparsaud; (1854) 6 Moo, Ind. Ap. 53 but the relationship is a circumstance which is taken into consideration in India in determining whether the transaction is benami or not. The general rule in India in the absence of all other relevant circumstances is thus stated by Lord Campbell in Dhurm Das Pandey vs Mussumat Shama Soondari Dibiah (1843) 3 Moo. Ind. Ap. 229; "The criterion in these cases in India is to consider from what source the money comes with which the purchase money is paid." Lord Atkinson reiterated the same view in Kerwick and Kerwick (2) at page 278 in these terms : "In such a case there is, under the general law in India, no presumption of an intended advancement as there is in England. " It will be useful to quote a few lines from the judgment of the Judicial Committee of the Privy Council delivered by Sir John Edge in the case of Sura Lakshmiah Chetty and others vs Kothandarama Pillai ( 3 ) The lines occurring at page 289 run thus : "There can be no doubt now that a purchase in India by a native of India of property in India in the name of his wife unexplained by other proved or admitted facts is to be regarded as a benami transaction, by which the beneficial interest in the property is in the husband, although the ostensible title is in the wife. The rule of the law of England that such a purchase by a husband in England is to be assumed to be a purchase for the advance ment of the wife does not apply in India. " In the well known treatise of the law of Trusts referred to above the learned authors say at page 173 : "The best example of a trust implied by law is where property is purchased by A in the name of B; that is to say, A supplies the purchase money, and B takes the conveyance. Here, in the absence of any explanatory facts, such as an intention to give the property to B, equity presumes that A intended B to hold the property in trust for him. " It may here be made clear that much could be said in favour of the appellant if the Raja would have acquired the property with his own money intending to acquire it for her. But such an intention was of (1) 42 Indian Appeals, 202. (2) 47 Indian Appeals, 275. (3) 52 Indian Appeals, 286. 908 no avail to the appellant when the money for the acquisition of the property came from the coffers of the waqf estate over which the Raja had no unbridled or uncontrolled power of ownership. He was himself in the position of a trustee owing a duty and obligations to the beneficiaries. He had no free volition in the matter to spend and invest the trust fund in any manner he liked and for showing undue advantage to his wife. At one stage of the argument Mr. Phadke felt persuaded to place reliance upon the decision of Yorke and Agarwal JJ in Mt. Sardar Jahan and others vs Mt. Afzal Begam(1). At page 291, column 1 the observation seems to have been made per in curium to the effect: "As regards this question of pleading, it does not appear to us that there was anything to prevent the plaintiff from falling back on the plea of advancement in case she was unable to satisfy the court that the moneys expended were her own." Yorke J realised the inaccuracy of the above proposition and said so in Mt. Siddique Begam vs Abdul Jabber Khan and others(2) and then concluded at page 312 column 1 thus : "In point of fact it has been laid down by their Lordships in earlier cases that the burden of proof that a transfer is benami does lie in the first instance upon the person asserting it to be so, but that burden is discharged upon the said person showing that the purchase money was provided by him. " In the case of Gangadara Ayyar and others (supra) Mahajan J., enunciated the law pithily, if we may say so with respect, in paragraph 14 at page 92 : "It is settled law that the onus of establishing that a transaction is benami is on the plaintiff and it must be strictly made out. The decision of the Court cannot rest on mere suspicion, but must rest on legal grounds and legal testimony. In the absence of evidence, the apparent title must prevail. It is also well established that in a case ' where it is asserted that an assignment in the name of one person is in reality for the benefit of another, the real test is the source whence the consideration came and that when it is not possible to obtain evidence which conclusively establishes or rebuts the allegation, the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted facts. " While dealing with the question of burden of proof, one must remember a very salutary principle reiterated by this Court in Kalwa Davadattam and two others vs The Union of India and other(3) at page 205. Says the learned Judge: (1) A.I.R. 1941, oudh, 288. (2) A.I.R. 1942, Allahabad, 308. (3) ; 909 The question of onus probandi is certainly important in the early stages of a case. It may also assume importance where no evidence at all is led on the question in dispute by either side; in such a contingency the party on whom the onus lies to prove a certain fact must fail. Where however evidence has been led by the contesting parties on the question in issue, abstract considerations of onus are out of place; truth or otherwise of the case must always be adjudged on the evidence led by the parties." Shinghal J. recently followed this dictum in the case of Union of India vs Moksh Builders and Financiers Ltd. and ors. etc.(1) at page 973. Mr. Phadke heavily relied upon the decisions of this Court in (1) Kanakarathanammual vs V. section Loganatha Mudaliar and another(2) (2) Jaydayal Poddar (deceased) through his L. Rs and another vs Mst. Bibi Hazra and ors(3) and (3) Krishnanand vs The State of Madhya Pradesh (4). A question of some fine distinction arose in Kanakarathanammal 's case. The question was whether the property purchased in the name of the wife by the money given to her by the husband was a property gifted to her under section 10(2) (b) of the Mysore Hindu Law women 's Rights Act, 1933 or was it a property in which fell under clause (d) of section 10(2). If it was a property gifted by the husband to the wife, then the appellant 's contention was right and it became a property gifted under section 10(2) (b). If, on the other hand, it was a property purchased with the money gifted by the husband to the wife, then it would not be so. According tothe finding of the Courts below, the whole of the consideration waspaid by the appellant 's father and not by her mother. The majorityview expressed by Gajendragadkar J., as he then was, at page 9 of the report is : "We have carefully considered the arguments thus presented to us by the respective parties and we are satisfied that it would be straining the language of section (2)(b) to hold that the property purchased in the name of the wife with the money gifted to her by her husband should be taken to amount to a property gifted under section 10(2) (b). " It would thusbe seen that indisputably in that case the property was of the wife. The only dispute was whether the property itself was acquired as agift from her husband or it was acquired with the money gifted to her by the husband. In our opinion, therefore, this case is of no help, to the appellant in this appeal. In Jaydayal Poddar 's case (supra) one of us (Sarkaria J.) while delivering the judgment on behalf of the Court was dealing with a case where the question was whether the property purchased by Abdul Karim in the name of his wife Mst. Hakimunnissa was a benami purchase in the name of the latter. The Trial Court held that she was benamidar. The High (1) ; (2) ; (3) (4) [1977]1 S.C.R. 816. 910 Court reversed the decision and held that the plaintiffs had failed to show that Mst. Hakimunnissa in whose name the sale deed stood, was only a benamidar and not the real purchaser. While affirming the view of the High Court, it was aptly said at pages 91 92 : "It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of Benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his ' favour that the apparent estate of affairs is the real state of affairs. Though the question, whether a particular sale is Benami ornot, is largely one of fact, and for determining this question,no absolute formulae or acid tests, uniformally applicable inall situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicate, the courts are usually guided by these circumstances : (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale. The above indicate are not exhaustive and their efficacy varies according to the facts of each case. Nevertheless No. 1, viz. the source whence the purchase, money came, is by far the most important test for determining whether the sale standing in the name of one person is in reality for the benefit of another." Apart from the fact that in the present appeal we are not concerned with a simple case of purchase of the property by the husband in the name of the wife with his own money, the purchase being with the waqf money, even applying the principles extracted above it would be noticed that the concurrent findings of the courts below that the appellant was benamidar on behalf of the waqf does not suffer from any infirmity to justify our interference with the said finding. ] 'lie burden has been strictly discharged by the respondent so much 911 so that the finding as recorded could not be assailed. It was merely attempted to be availed of to support a new case in this Court. It should be remembered that 'by far the most important test for determining whether the sale standing in the name of one person is in reality for the benefit of another ' namely the source whence the purchase money came has been established beyond doubt. The nature and possession of the property after the acquisition was such that it did not lead to the conclusion that it was not a waqf property and was a property in exclusive possession of the appellant through her tenants including tile respondent. The motive to, acquire the property in the name of the wife is clearly spoken of by D.W.I.brother of the Raja when he said at page 37 of the paper book "Raja Sahib was also present at the time of the execution of the lease. At that time there was no debt against him. On being asked by me he said that the plaintiff used to, trouble him and that in order to please her he was getting a fictitious lease executed in her favour. " It was argued for the appellant that the Raja wanted to make a provision for his young wife to protect her interests from being trampled with by her sons and daughters. This is not correct. Although the defendant was not pulling on well with the Raja after he had married the plaintiff, according to her own case pleaded 'in the plaint she was pulling on well with the defendant upto the year 1950 and the relations between them got strained when her daughter was married to Saiyed Mohammed Raja Ali Khan. The position of the parties, namely, the Raja and the plaintiff, was such that one could be inclined to believe that in all probability the Raja could provide funds for acquisition of the property not only in the name of his wife but for her and her alone provided the funds expended were his personal funds. But no such inference is possible on the unmistakable position of thiscase that the funds came from the coffer of the waqf estate. The custody of the title deed and other papers, except a few, were not with the plaintiff. But on the facts of this case one, cannot attach much importance to this circumstance either way. The conduct of the parties concerned in dealing with the property after acquisition also goes in favour the defendant and against the plaintiff. It could not be shown that the plaintiff bad realised rent from the other tenants who had been there in the Kothi before 1947. Nor was there anything to show that the defendant himself was inducted as a tenant in the Kothi by the plaintiff. We, therefore, hold that even on the application of the salutary principles of law enunciated in Jaydyal Poddar 's case the appellant cannot succeed. This case was merely followed in Krishnanand 's case by Bhagwati J. We may again emphasize that in a case of this nature, all the aspects of the benami law including the question of burden of proof cannot justifiably be applied fully. Once it is found, as it has been consistently found, that the property was acquired with the money of with the money of the waqf, a presumption would arise that the property is a waqf property irrespective of the fact as to in whose name it was acquired. The Mutawalli by transgressing the limits of his power and showing undue favour to one of the beneficiaries in disregard to a large 912 number of other beneficiaries could not be and should not be permitted to gain advantage by this method for one beneficiary which in substance would be gaining advantage for himself. In such a situation it will not be unreasonable to say rather it would be quite legitimate to infer, that it was for the plaintiff to establish that the property acquired was her personal property and not the property of the waqf Is it possible to decree her appeal in face of her three varying stands in the three courts ? They are (1) in the Trial Court case of acquisition of property with her personal money; (2) in the High Court acquisition of property with the personal money of her husband and (3) in this Court the waqf fund invested from time to time became her personal money and enabled her to acquire the property. For the reasons stated above, we dismiss the appeal, but with this direction that the parties will bear their own costs throughout. Before we part with this case, we would like to put on record that a suggestion was thrown from the Court to the parties to arrive, at some kind of lawful settlement which may not go against the terms of the waqf deed or the Mahomedan law in relation to waqf. Pursuant to the said suggestion, an offer was made on behalf of the substituted respondents to pay a sum of Rs. 30,000/ to the, appellant within a period of one year. This was on the footing, as suggested by the Court, as if the lease hold in the land upon which the Kothi stands was the property of the appellant, but the Kothi was of the waqf. Unfortunately this offer was not accepted by the appellant. Still we hope and trust that the respondent will honour their unilateral offer and pay the sum of Rs. 30,000/ to the appellant within a period of one year from today, preferably in 4 three monthly equal instalments of Rs. 7,500/ each. The amount so paid would be over and above the duty and the obligation which is there under the waqf on the present Mutawalli out of the substituted respondents. We have tried to take a compassionate view for the appellant to the, extent to which we thought we could justifiably go. We have relieved her of costs in all the three Courts. We believe that the respondents will not belie our hopes merely because an executable decree in respect of the sum of Rs. 30,000/ in absence of them acceptance of the offer by the appellant cannot be passed. S.R. Appeal dismissed.

One Smt. Sughra Begum, a Shia Muslim lady was possessed of vast Zamindari and other properties. On October 6, 1928, she created a waqf of the entire properties dividing them in three qurras, Raja Haji Saiyed Mohammad Mahmood Hasan was appointed by the waqifa as the Mutawalli of qurra No. 1. After the death of his first wife Smt. Akbari Begum. the Raja took the plaintiff appellant as his second wife in the year 1933. On January 22, 1935, a permanent lease was executed on behalf of one Saiyad Anwarul Rahman in respect of the disputed land in the name of the plaintiff. The rent fixed was Rs. 80/per year. Between the years 1937 and 1939 a bungalow was constructed on the said land which was named as "Mahmood Manzil". The Raja died in September, 1939. The plaintiff appellant filed a suit No. 86 of 1952 in the Court of the Civil Judge, Aligarh in which the original respondent was the sole defendant. The plaintiffs case was that the disputed property belonged to her and that the defendant was inducted as a tenant of the 'kothi ' on and from 1 3 1947 on a rental of Rs. 60/ p.m., that he paid rent upto May 1950, but did not pay any rent thereafter, that she served a notice on him to pay the arrears of rent and deliver vacant possession of the Kothi. The defendant respondent pleaded inter alia that Raja Sahib, the first Mutawali of qurra No. 1 had acquired the lease of the land and constructed the Kothi with the waqf fund as Mutawalli of the waqf and therefore it was a waqf property, that after the death of the Raja, he became the Mutawalli of qurra No. 1 including the Kothi in question and that he occupied the Kothi as a Mutawalli and not as a tenant. The Trial Court accepted the case of the defendant, rejected that of the plaintiff and dismissed her suit. Her appeal before the High Court was dismissed. Dismissing the appeal by special leave, the Court HELD : 1. According to Shia law, the waqf is irrevocable after possession is given to the beneficiaries or the Mutawalli. The settler divests himself of the ownership of the property and of everything in the nature of usufruct from, the moment the waqf is created. In pure metaphorical sense, the expression "ownership of God" is used but unlike Hindu law, since conception of a personal God is not recognised there is no ownership of God or no property belongs to God in the jural sense, although "the ownership of the property becomes reverted in God as he is originally the owner of all things". The property is considered as transferred to the beneficiaries or the Mutawalli for the object of the waqf. Strictly speaking, the ownership of the waqf property has no jural conception with any exactitude. The corpus is tied down and is made inalienable. Only the usufract and the income from the corpus or the waqf property is available for carrying out the objects of the waqf. Creation of waqf for the purpose of maintenance of the waqif 's family and their descendants is also a charitable purpose. [894 G 14, 895 A B] 2. A Mutawalli is like a manager rather than a trustee. The Mutawalli, so far as the waqf property is concerned, has to see that the beneficiaries got the advantage of usufruct. The Mutawalli may do all acts reasonable and proper for the protection of the waqf property, and for the administration of the waqf. [895 E, 896 D] 887 2(a) A Mutawalli of a waqf although not a trustee in the true sense of the term is still bound by the various obligations of a trustee. He like a trustee or a person standing in a fiduciary capacity cannot advance his own interests or the interests of one class of relations by virtue of the position held by him. The use of the funds of the waqf for acquisition of a property by a Mutawalli in the name of his wife would amount to a breach of trust and the property so acquired would be treated as waqf property. [905 E G] Moattar Raza and Ors. vs Joint Director of Consolidation U.P., Camp at Bareilly and Ors., A.1,R. 1970 All. 509 explained. Mohammad Qamer Shah Khan vs Mahammed Salamat Ali Khan A.I.R. 1933, All. 407 over ruled. The law as regards distribution of distributable income of the waqf property amongst the beneficiaries is that the benefit of a waqf for a person 's "sons and his children, and the children of his children for ever so long as there are descendants, is taken per capita, males and females taking equally and the children of daughters being included." [896 C F] Ahmed G. H. Ariff and Ors. vs Commissioner of Wealth Tax, Calcutta, ; ; explained and held inapplicable. In the eye of law, according to the concept of Mohammedan law, there was no legal entity available in whose name the property could be acquired except the Mutawalli or the beneficiary. Unlike Hindu law, no property could be acquired in the name of God. Nor could it be acquired in the name of any religious institution like the waqf estate. Necessarily the property bad to be taken in the name of one of the living persons. Ordinarily and generally the acquisition of property out of the waqf funds should have been in the name of the Mutawalli. But it did not cease to be a waqf property merely because it was acquired in the name of one of the beneficiaries. [901 E G] 5. (a) The burden of proof that a particular sale is benami and the apparent purchaser is not the real owner always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. [910 A B] (b) The law relating to benami transactions strictly speaking, cannot, be applied in all its aspects to a transaction of such a kind. Even if applied there will be no escape from the position that the real owner of the property was the Raja in the instant case in his capacity as Mutawalli and the appellant was a mere benamidar. The property in reality, therefore belong to the waqf estate as concurrently and rightly field by the two Courts below. [901 G H, 902 A] Gopeekrist Gosain and Gangaparsaud Gosain, 6 Moore 's Indian Appeals, 53. Bilas Kunwar and Desraj Ranjit Singh and Ors., 42 Indian Appeals, 202, Kerwick and Kerwick, 47 Indian Appeals, 275, Sura Lakshmiah Chetty and Ors. vs Kothandarama Pillai 52 Indian Appeals, 286 Mt. Sardar Jahan and Ors. vs Mt. Afzal Begam, A.I.R. 1941, Oudh, 288, Mt. Siddique Begam vs Abdul Jabbar Khan and Ors. , A.I.R. 1942, Allahabad, 308, Kalwa Devadattam and two Ors. vs The Union of India and Ors, ; Union of India vs Moksh Builders and Financiers Ltd. and Ors., ; Kana karathanammal vs V. section Loganatha Mudaliar and Anr. ; , Jaydayal Poddar (deceased) through 1. rs. and Anr. vs Mst. Bibi Hazra and Ors., and Krishnanand vs The State of Madhya Pradesh, [1977] 1 S.C.C. 816 referred to. In the instant case (a) It is not possible to decree the appeal in face of her three varying stands in the three Courts viz. (1) in the Trial Court case of acquisition of property with her personal money; (2) in the High Court acquisition of property with the personal money of her husband and (3) in this Court the waqf fund invested from time to time became her personal money and enabled her to acquire the property. [912 B C] 888 (b) A valid waqf was created by Smt. Sughra Begum. Except a Portion of money which was to be spent for public, religious or charitable objects the waqf was primarily of a private nature for the benefit of the settler 's family and their descendants, which is called waqf alal aulad. The ultimate object was to spend income, if any, in the service of the Almighty God. [894 C] Abdul Fata Mohammad vs Rasamaya, 22 Indian Appeals 76 referred to. (c) The evidence is overwhelming on the question as to what was the source of money for the acquisition of the disputed property, either the land and Kothi. It came from the waqf fund. [897 C] (d) Though the Raja was vested with the power to fix stipends for his children and their descendants and for his wives during his life time also, he was not conferred an absolute power or discretion to fix any stipend for any beneficiary and no stipend for some beneficiary. Equality amongst all is a golden thread which runs throughout the Mohammadan law. It is a chief trait of that law. [900 G] (e) Clause 19 of the last will of the Raja cannot create a title in favour of the plaintiff and finish the right of the waqf to the property. If the property became the acquired property of the waqf, a Mutawalli; as the Raja was, by his own declaration contained in clause 19 of the Will could not make it a property of the plaintiff appellant. The recital of fact could be pressed into service only to lend additional support to the plaintiff 's case if she would have stuck to that case and proved it by evidence aliunde. [905 A B] (f) The concurrent findings of the Courts below that the appellant was benamidar on behalf of the waqf does not suffer from any infirmity to justify this court 's interference with the said finding. The burden has been discharged by the respondent so much so that the finding as recorded could not be assailed. It was merely attempted to be availed of to support a new case in this Court. It should be remembered that 'by far the most important test for determining whether the sale standing in the name of one person is in reality for the benefit of another ' namely the source whence the purchase money came has been established beyond doubt. The nature and possession of the property after the acquisition was such that it did not lead to the conclusion that it was not a waqf property and was a property in exclusive possession of the appellant through her tenants including the respondent. [910 H, 911 A B] (g) In a case of this nature, all the aspects of the benami law including the question of burden of proof cannot justifiably be applied fully. Once it is found, as it has been consistently found, that the property was acquired with the money of the waqf, a presumption would arise that the property is a waqf property irrespective of the fact as to in whose name it was acquired. The Mutawalli by transgressing the limits of his power and showing undue favour to one of the beneficiaries in disregard to a large number of other beneficiaries could not be and should not be permitted to gain advantage by this method for one beneficiary which in substance would be gaining advantage for himself. In such a situation it will not be unreasonable to say rather it would be quite legitimate to infer, that it was for the plaintiff to establish that the property acquired was her personal property and not the property of the waqf. [911 G H, 912 A B]

Civil Appeal Nos. 1896/76, 265 300/77 and 29 38/77 and 5/77. (From the Judgment and Order dated 3 12 1976 of the Andhra Pradesh High Court in Writ Petition Nos. 1634/76, 2068, 2426, 2477, 2585, 3026, 2914, 2918, 2926, 2965, 3471, 2517, 2522, 2581, 2597, 2401, 2461 2462, 2465, 2469, 2485, 2507, 2877, 2949, 3213, 3469, 2492, 2509, 2513, 2514, 2520, 2523, 2818, 2935, 2951 and 2936 of 1976, 2509, 2513, 2514, 2520, 2523, 2818, 2932, 2935, 2936 and 2951/76 and 2492 of 1976). AND WRIT PETITION NO. 350 OF 1977 (Under Article 32 of the Constitution) section V. Gupte, Attorney General of India (1896/76), U.R. Lalit (1896/76) R. N. Sachthey, Girish Chandra, K. N. Bhatt (1896/76) Miss A. Subhashini for the Appellants in C.As. 1896 and 265 300/ 77 for Respondent No. 1 in W.P. 350/77 and for the Union of India in C.As. 29 38/77 and Respondent No. 4 in C.A. 5/77. V. M. Tarkunde, K. K. Mehrish, section M. Jain and section K. Jain for the Petitioner in W.P. 350/77. T. V. section Narasimhachari and M. section Ganesh for the Appellant in CAs. 5 and 29 38/77. K. K. Venugopal, Addl. and section section Khanduja for Respondents 2 3 in W.P. 350/77. B. Kanta Rao for RR 1 50, 53 66, 68 83, 85 91, 93 95, 97 100 and 112 114 in C.A. 1896/76. Vepa P. Sarathi and B. Parthasarathi for RR 28 and 53 in C.A. 276/77. P. Ram Reddy, A. V. V. Nair and Subodh Markendaya for the other appearing Respondents in C.As. 279, 280 84, 286 and 293/77. R. K. Mehta, for Advocate General for the State of Orissa. Badridas Sharma, for Advocate General for the State of Rajasthan. 809 The Judgment of the Court was delivered by SEN, J. These appeals, by certificate, are directed against the judgment and order of the Andhra Pradesh High Court dated December 3, 1976 allowing a batch of thirty seven writ petitions. The appeals raise an important question, namely, whether the Urban Land (Ceiling and Regulation) Act, 1976 is ultra vires the Parliament so far as the State of Andhra Pradesh is concerned. A subsidiary question is also involved as to whether even assuming the Act is in force in the State, it is not applicable to Warangal because there was no master plan prepared in accordance with the requirements of section 244(1) (c) of the Andhra Pradesh (Telengana Area) District Municipalities Act, 1956. A further question arises in a connected writ petition under article 32 of the Constitution, whether the inclusion of the State of Rajasthan in Schedule I to the Urban Land (Ceiling and Regulation) Act, 1976 and the categorisation of the urban agglomerations of the cities and towns of Jaipur and Jodhpur in category 'C ' and Ajmer, Kota and Bikaner in category 'D ' therein, is beyond the legislative competence of Parliament and, therefore, the Act is liable to be struck down to that extent. The State Legislatures of eleven States, namely, all the Houses of the Legislature of the States of Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Orissa, Punjab, Tripura, Uttar Pradesh and West Bengal considered it desirable to have a uniform legislation enacted by Parliament for the imposition of a ceiling on urban property for the country as a whole and in compliance with cl. (1) of article 252 of the Constitution passed a resolution to that effect. One merit of such Central legislation is that property owned by families anywhere in India can be aggregated for valuation purposes, and the basis of acquisition and compensation can be uniform all over the country. The Parliament accordingly, enacted the Urban Land (Ceiling and Regulation) Act, 1976. In the first instance, the Act came into force on the date of its introduction in the Lok Sabha, i.e., January 28, 1976 and covered the Union Territories and the eleven States which had already passed the requisite resolution under article 252(1) of the Constitution, including the State of Andhra Pradesh. Subsequently, the Act was adopted, after passing resolutions under article 252(1) of the Constitution by the State Legislature of Assam on March 25, 1976, and those of Bihar on April 1, 1976, Madhya Pradesh on September 9, 1976, Manipur on March 12, 1976, 810 Meghalaya on April 7, 1976 and Rajasthan on March 9, 1976. Thus, the Act is in force in seventeen States, and all the Union territories in the country. Schedule I to the Act lists out all States, irrespective of whether or not they have passed a resolution under article 252(1) authorising the Parliament to enact a law imposing a ceiling on urban immovable property, and the urban agglomerations in them having a population of two lacs or more. The ceiling limit of vacant land of metropolitan areas of Delhi, Bombay, Calcutta and Madras having a population exceeding ten lacs falling under category 'A ' is 500 sq. ; urban agglomerations with a population of ten lacs and above, excluding the four metropolitan areas falling under category 'B ' is 1000 sq. ; urban agglomerations with a population between three lacs and ten lacs falling under category 'C ' is 1500 sq. mtrs., and urban agglomerations with a population between two lacs and three lacs falling under category 'D ' is 2000 sq. The schedule does not mention the urban agglomerations having a population of one lac and above; but if a particular State which passed a resolution under s.252(1), or if a State which subsequently adopts the Act, wants to extend the Act to such areas, it could do so by a notification under section 2(n)(B) or section 2(n)(A)(ii), as the case may be, after obtaining the previous approval of the Central Government. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976, 'the Act ', as the long title and the preamble show, is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles of article 39(b) and (c). The legislation falls under entry 18, List II of Seventh Schedule of the Constitution, which refers to: 'Land, that is to say, rights in or over land, etc. ' Admittedly, the State Legislatures alone are competent to enact any legislation relating to land of every description including lands situate in urban areas. The two Houses of the Andhra Pradesh Legislature, however, passed the following resolution on April 8, 1972 and April 7, 1972 respectively: 811 "Resolution passed by the Andhra Pradesh Legislative Assembly on the 8th April, 1972. RESOLUTION Whereas this Assembly considers that there should be a ceiling on Urban Immovable Property; And whereas the imposition of such a ceiling and acquisition of urban immovable property in excess of that ceiling are matters with respect to which Parliament has no power to make law for the State except as provided in Articles 249 and 250 of the Constitution of India; And whereas it appears to the Andhra Pradesh Legislative Assembly to be desirable that the aforesaid matters should be regulated in the State of Andhra Pradesh by Parliament by law; Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Andhra Pradesh by Parliament by law. " The record shows that similar resolutions were passed by all the remaining ten State Legislatures. These resolutions vested in the Parliament the power to regulate in the aforesaid eleven States by law the imposition of a ceiling on urban immovable property and acquisition of such property in excess of this ceiling, as well as in respect of 'all matters connected therewith and ancillary or incidental thereto '. The expression 'immovable property ' takes in lands of every description, i.e. agricultural lands, urban lands or of any other kind. The High Court was of the view that the term 'legislature ' in article 252(1) of the Constitution comprises both the Houses of Legislature i.e., the Legislative Assembly and the Legislative Council and the Governor of the State. It struck down the Act on the ground that the Parliament was not competent to enact the impugned Act for the State of Andhra Pradesh inasmuch as the Governor of Andhra Pradesh did not participate in the process of authorization for the passing of the Act by the Parliament. It observed, since two distinct terms 'Legislature ' and 'Houses of Legislature ' were used in the same article they must, as a matter of construction, bear different meanings. In that view, if went on to say that the passing of an Act in terms of the first part of article 252(1) is a condition pre requisite to the passing of a resolution by the House or Houses 812 of Legislature, as the case may be, entrusting to the Parliament the power to legislate on a State subject, stating: "In our opinion, the only way in which the Legislature of a State, consisting of the Governor and one or two Houses of Legislature, as the case may be, can express its view that it is desirable to enact a law regulating a particular matter, is by enacting a law and passing an Act to that effect. Because it is difficult to conceive of the Legislature consisting of the Governor and the House or Houses of the Legislature of a State acting in any manner than by passing an enactment; no such Act has been passed by the Legislature of the State of Andhra Pradesh consisting of the Governor and the Houses of Legislature of Andhra Pradesh, expressing the desirability of having the matter of imposition of a ceiling on urban lands regulated by Parliament." (Emphasis supplied) We are afraid, the construction placed by the High Court on article 252 (1) cannot be sustained. Article 252 (1) of the Constitution reads: "If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House, or where there are two Houses, by each of the Houses of the Legislature of that State." In order to appreciate the content, scope and meaning of the provisions of article 252, it is necessary to refer to the scheme of the Constitution. It appears in Part XI headed 'Relations between the Union and the States ' and occurs in Chapter I relating to 'Legislative Relations ', i.e., dealing with the distribution of legislative powers between the Union and the States. It would appear that our Constitution though broadly federal in structure, is modelled on the British Parliamentary System, with unitary features. Thus, 813 even apart from emergencies, the Parliament may assume legislative power (though temporarily) over any subject under article 249, by a two third vote that such legislation is necessary in 'the national interest '. While a Proclamation of Emergency under article 352 is in operation the Parliament is also competent under article 250 to legislate with respect to any such matter in the State list. Article 251 makes it clear that the legislative power of the State legislatures to make any law which they have power under the Constitution to make, is restricted by the provisions of articles 249 and 250; but, if any law made by the legislature of a State is repugnant to any provision of a law enacted by the Parliament, the law made by Parliament shall prevail and the law made by the State legislature to the extent of repugnancy shall not be valid so long as the law enacted by Parliament is effective and operative. Reverting back to article 252, it will be noticed that this article corresponds to section 103 of the Government of India Act, 1935. It empowers the Parliament to legislate for two or more States on any of the matters with respect to which it has no power to make laws except as provided in articles 249 and 250. The effect of the passing of a resolution under cl. (1) of article 252 is that Parliament, which has no power to legislate with respect to the matter which is the subject of the resolution, becomes entitled to legislate with respect to it. On the other hand, the State legislature ceases to have a power to make a law relating to that matter. While article 263 provides for the creation of an Inter State Council for effecting administrative co ordination between the States in matters of common interest, article 252 provides the legislative means to attain that object. After the enactment of a law by the Parliament under this article, it is open to any of the other States to adopt the Act for such State by merely passing a resolution to that effect in its Legislature, but the operation of the Act in such State cannot be from a date earlier than the date of the resolution passed in the Legislature adopting the Act. The question as to whether or not there is surrender by the State Legislature of its power to legislate, and if so, to what extent, must depend on the language of the resolution passed under article 252 (1): M/s. R.M.D.C. (Mysore) Private Ltd. vs The State of Mysore.(1) Clause (2) specifically lays down that after Parliament makes an Act in pursuance of the resolution, such Act cannot be amended or repealed by the State Legislature even though the matter to which the Act of Parliament relates was included in List II of the Seventh Schedule of the Constitution. 814 The learned Attorney General rightly contends that the term 'legislature ' must, in the context, mean the House or the Houses of Legislature, as the case may be and it does not include the Governor. It is urged that the key to the interpretation of the first part of cl. (1) of article 252 lies in the words 'to that effect ' and they obviously refer to the 'desirability ' of Parliament making a law on a State subject. It is pointed out that though the Governor is the component part of the State Legislature under article 168, he is precluded by the terms of article 158(1) from being a member of either House of Parliament or of a House of the Legislature of any State. Not being a member of the House or Houses of Legislature of a State, as the case may be, the question of his participation, it is said, in the proceedings of the State Legislature in passing a resolution under article 252(1) does not at all arise. He drew our attention to different provisions of the Constitution, and in particular to proviso to article 368(2) which requires a ratification by the Legislatures of not less than one half of the States to a Bill passed by the Parliament under article 368(1) in exercise of its constituent powers to amend the Constitution. It is urged that to concede to the Governor the power to participate in the process of authorization for the passing of a law by the Parliament on a State subject under article 252(1), as the High Court had done, or to the process of ratification of a constitutional amendment by the State Legislatures under proviso to article 368(2) to a constitutional amendment by the Parliament under article 368(1), would create a dangerous situation and would be destructive of our constitutional system based on the Westminster model, under which the Governor is only the constitutional head of the State. The contentions of the learned Attorney General must, in our opinion, be accepted. In the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga & Ors.(1) in repelling the contention that the words 'law ' and 'legislature ' were deliberately used in article 31(3) as a special safeguard, which, in order to ensure that no hasty or unjust expropriatory legislation is passed by a State Legislature, requires for such legislation the assent of both the Governor and the President, Patanajali Sastri C.J. observed: "It is true that the "Legislature" of a State includes the Governor and that a bill passed by such Legislature cannot become a law until it receives the Governor 's assent . . The term "legislature" is not always used in the Constitution as including the Governor, though article 168 makes him a component Part of the State Legislature. In article 815 173, for instance, the word is clearly used in the sense of the "Houses of legislature" and excludes the Governor. There are other provisions also where the word is used in contexts which exclude the Governor. Similarly the word 'law ' is sometimes loosely used in referring to a bill. Article 31(4), for instance, speaks of a "bill" being reserved for the President 's assent "after it has been passed" by the "legislature of a State" and of "the law so assented to. " If the expression "passed by the legislature" were taken to mean "passed by the Houses of the legislature and assented to by the Governor". then, it would cease to be a "bill" and could not longer be reserved as such. Nor is the phrase "law so assented to" strictly accurate, as the previous portion of the clause makes it clear that what is reserved for the President 's assent and what he assents to is a "bill" and not a "law. " This decision really clinches the whole issue. Article 252(1) is in two parts. The first part merely recites about the "desirability" of the Parliament legislating on a subject in respect of which it has no power to make laws except as provided in Articles 249 and 250. This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by the Parliament on such matter in List II, i.e., with respect to which the Parliament has no power to make laws for the States, and all the Houses of the Legislatures of those States express such desire by passing a resolution to that effect. The Legislatures of those States should not only think it desirable and expedient, but actually pass resolution that the Parliament should regulate the matter in those States, in order to invest the Parliament with the power to legislate on such subject. The passing of such resolution by the State Legislatures of two or more States, is a condition precedent for investing the Parliament with the power to make a law on that topic or matter, and then only it shall be lawful for the Parliament to make a law for regulating that matter accordingly. The law so made or enacted by the Parliament under Art 252(1) will apply only to those States whose Legislatures have passed resolutions under that provision and also to those States which have afterwards adopted the same by resolution passed by the Legislatures of such States in that behalf. It would appear that the first part of the article is only introductory, the second is the operative part. The words "to that effect" in the first part, therefore, refer to the 'desirability ' for effecting administrative control by the Parliament over two or more States in respect of matters 816 of common interest. Thus, the word 'legislature ' in the first part of article 252(1), in the context in which it appears, cannot, mean the three component parts of the State Legislature contemplated by article 168, but only the House or Houses of Legislature, as the case may be, i.e., excluding the Governor. There is a clear distinction between 'an Act of legislature ', 'a legislative act ' and 'a resolution of the House '. The High Court has completely overlooked this distinction. The Governor is a constitutional head of the State Executive, and has, therefore, to act on the advice of a Council of Ministers under article 163. The Governor is, however, made a component part of the State Legislature under article 164, just as the President is a part of Parliament. The Governor has a right of addressing and sending messages to under articles 175 and 176, and of summoning, proroguing and dissolving under article 174, the State Legislature, just as the President has in relation to Parliament. He also has a similar power of causing to be laid before the State Legislature the annual financial statement under article 202(1), and of making demands for grants and recommending 'Money Bills ' under article 207 (1). In all these matters the Governor as the constitutional head of the State is bound by the advice of the Council of Ministers. The Governor is, however, made a component part of the legislature of a State under article 168, because every Bill passed by the State legislature has to be reserved for his assent under article 200. Under that article, the Governor can adopt one of the three courses, namely (i) he may give his assent to it, in which case the Bill becomes a law; or (ii) he may except in the case of a 'Money Bill ' withhold his assent therefrom, in which case the Bill falls through unless the procedure indicated in the first proviso is followed, i.e., return the Bill to the Assembly for reconsideration with a message, or (iii) he may (subject to Ministerial advice) reserve the Bill for the consideration of the President, in which case the President will adopt the procedure laid down in article 201. The first proviso to article 200 deals with a situation where the Governor is bound to give his assent when the Bill is reconsidered and passed by the Assembly. The second proviso to that article makes the reservation for consideration of the President obligatory where the Bill would, 'if it became law ', derogate from the powers of the High Court. Thus, it is clear that a Bill passed by a State Assembly may become law if the Governor gives his assent to it, or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President. The Governor is, therefore, one of 817 the three components of a State legislature. The only other legislative function of the Governor is that of promulgating Ordinances under article 213(1) when both the Houses of the State legislature or the Legislative Assembly, where the legislature is unicameral, are not in session. The Ordinance making power of the Governor is similar to that of the President, and it is co extensive with the legislative powers of the States legislature. From an enumeration of the powers, functions and duties of the Governor, it is quite clear that he cannot, in the very nature of things, participate in the proceedings of the House or Houses of Legislature, while the State legislature passes a resolution in terms of article 252(1), not being a member of the legislature under Art 158. The function assigned to the Governor under article 176(1) of addressing the House or Houses of Legislature, at the commencement of the first session of each year, is strictly not a legislative function but the object of this address is to acquaint the members of the Houses with the policies and programmes of the Government. It is really a policy statement prepared by the Council of Ministers which the Governor has to read out. Then again, the right of the Governor to send messages to the House or Houses of the Legislature under article 175(2), with respect to a Bill then pending in the legislature or otherwise, normally arises when the Governor withholds his assent to a Bill under article 200, or when the President, for whose consideration a Bill is reserved for assent, returns the Bill withholding his assent. As already stated, a 'Bill ' is something quite different from a 'resolution of the House ' and, therefore, there is no question of the Governor sending any message under article 175(2) with regard to a resolution pending before the House or Houses of the Legislature. Similar considerations must also arise with regard to ratification of a Bill passed by the Parliament in exercise of its constituent power of amending the Constitution under article 368(1). In Jatin Chakravorty vs Sri Justice H. K. Bose(1) D. N. Sinha J., as he then was rightly negatived a challenge to the constitutional validity of the Constitution (Fifteenth Amendment) Act, 1963, which amended article 217 of the Constitution raising the age of retirement of a Judge of the High Court from 60 to 62 years on the ground that no assent of the Governor in the State of West Bengal was taken, observing: "A legislature discharges a variety of functions. The House has to be summoned or prorogued, bills have to 818 be introduced, voted upon and passed, debates take place on important political questions, ministers are interrogated, and so on. The Governor, though a limb of the legislature does not take part in every such action. While the Governor summons the House and may prorogue or dissolve it (article 174) or address the legislature (article 175), he does not sit in the House or vote upon any issue. When a Bill has been passed by the House or Houses, article 200 requires that it shall be presented to the Governor for assent. The assent of the Governor is necessary, only because the Constitution expressly requires it. Whenever the assent of the Governor is necessary or the assent of the President is necessary, it is specifically provided for in the Constitution (see Articles 31 A, 200, 201 and 304). The necessity of such assent cannot be implied, where not specifically provided for." (Emphasis supplied) Reverting to the constitutional requirement under proviso to article 368(2) of a ratification by the legislatures of not less than one half of the States he observed: "So far as the State legislatures are concerned, it requires that a resolution should be passed ratifying the amendment. Such a resolution requires voting, and the Governor never votes upon any issue." (Emphasis supplied) The interpretation placed by D. N. Sinha J. upon the proviso to article 360(2) in Jatin Chakravorty 's case (supra) is in consonance with the constitutional system. Any other construction would result in an alarming situation as constitutional amendments by the Parliament under article 368(1), could be held up by the Governor of a State. What is true of a ratification by the State legislatures under proviso to article 368(2), is equally true of a resolution of the House or Houses of the Legislature under article 252(1). The Governor, in our view, nowhere comes in the picture at all in these matters. It is, however, argued, on behalf of the respondents that both the expressions 'legislature ' as well as 'Houses of Legislature ' are used in article 252 and, therefore, the term 'Legislature ' must be understood in the sense in which it is used in article 168. In support of the contention, it is said that it is the 'Legislature ' which is surrendering its sovereign legislative functions and, therefore, it must be the legislature, as defined in article 168, which should do that, and not a part of the legislature. It is pointed out that article 168 does not use the words. 819 'unless the context otherwise requires '. It is, accordingly, urged that the words 'to that effect ' in article 252(1) mean that the legislature, meaning the House or Houses of Legislature and the Governor, is desirous that the Parliament should legislate on a State subject. Conceptually, it is said to be the better interpretation of the term 'legislature ' in the first part of article 252(1). The respondents ' contention in the present appeals is the same as that prevailed in the High Court. The point has already been dealt with by us at length. The contention cannot be accepted because it runs counter to this Court 's decision in Kameshwar Singh 's case (supra). The absence of the words 'unless the context otherwise requires ' in article 168, cannot control the meaning of the term 'legislature ' in article 252(1). It was fairly conceded at the Bar that even without these words, a word or a phrase may have a different meaning, if the context so requires, than the meaning attached to it in the definition clause. The term 'legislature ' in the context in which it appears, can only mean the House or Houses of Legislature, as the case may be. Learned counsel for the respondents, tries to draw sustenance from section 103 of the Government of India Act, 1935, which read: "If it appears to the Legislatures of two or more Provinces to be desirable that any of the matters enumerated in the Provincial Legislative List should be regulated in those Provinces by Act of the Federal Legislature, and if resolutions to that effect are passed by all the Chambers of those Provincial Legislatures, it shall be lawful for the Federal Legislature to pass an Act for regulating that matter accordingly but any Act so passed may, as respects any Province to which it applies, be amended or repealed by an Act of the Legislature of that Province. " It is submitted that when an Act passed by the Federal Legislature in respect of any of the matters enumerated in the Provincial Legislative List based on the resolution of the Legislatures of two or more Provinces, could be amended or repealed by an Act of the Legislature of that Province, the Governor had necessarily to be consulted at the stage of introduction of a resolution before the Legislature of that Province. There is a fallacy in the argument. The second part of section 103 of the Government of India Act is replaced by article 252(2) of the Constitution which takes away the power of repeal from the State Legislature and entrusts it to the Parliament. When his attention was drawn to the fact that cl. (2) of article 252 of the Constitution 820 differs from the provisions of section 103 of the Government of India Act, 1935, the learned counsel did not pursue the point any further. Under article 252(2) an amending or repealing Bill must go through the same procedure as prescribed for the original Bill i.e., by the process laid down in cl.(1) of article 252. The surrender or abdication of the legislative power of the State Legislature places the matter entirely in the hands of the Parliament. Next, it is urged that the impugned Act passed by the Parliament was without legislative competence. It is said that the resolution, as passed by the State Legislature, gave authority to Parliament to legislate on a particular subject, i.e., 'ceiling on immovable property ', whereas the Parliament contrary to the resolution, passed a law on a different subject i.e., 'ceiling on urban land '. It is pointed out that the Working Group with the Secretary to Government of India, Ministry of Works, Housing and Urban Development, in its report dated July 25, 1970 recommended that the ceiling on urban property should be imposed on the basis of the monetary value of properties and suggested a ceiling of 4 to 5 lacs of rupees. The Prime Minister forwarded the aforesaid report of the Working Group along with a draft Bill, prepared on the basis of its recommendations, to the Chief Ministers of various States, with a view to securing concurrence and authorisation of the State legislatures under article 252(1) to enable the Parliament for enacting a uniform law for the whole country. It was said that the State Legislature gave the authorisation to the Parliament on the distinct understanding that there was to be a law for the imposition of ceiling on the basis of valuation of immovable property. It is said that the authorisation was for ceiling on ownership of immovable property and not on area of land. Idea of ceiling, it is said, has been transferred from persons to objects. It is, accordingly, urged that the impugned Act, insofar as it provides for ceiling for acquisition of vacant land by the State was not in conformity with the real intendment of the resolution. We are afraid, the contention cannot be accepted. It is not disputed that the subject matter of Entry 18, List II of the Seventh Schedule i.e., 'land ' covers 'land and buildings ' and would, therefore, necessarily include 'vacant land '. The expression 'urban immovable property ' may mean 'land and buildings ', or 'buildings ' or 'land '. It would take in lands of every description, i.e., agricultural land, urban land or any other kind and it necessarily includes vacant land. The Union of India before the High Court in its counter averred that, before the Act was introduced in the Lok Sabha on January 821 28, 1976, it was preceded by State wise deep consideration and consultation by the respective States, including the State of Andhra Pradesh for a period of over five years starting from 1970. A Working Group was constituted under the Chairmanship of the Secretary, Ministry of Works, Housing and Urban Development. The report of the Working Group shows that the proposal was to impose a ceiling on urban immovable property. In its report the said Working Group defined`urban area ' to include the area within the territorial limits of municipalities or other local bodies and also the peripheral area outside the said limits. Such inclusion of the peripheral limits in an urban area was accepted by the Government and a Model Bill prepared in pursuance thereof also contained such a definition. A copy of each of the report of the Working Group and the Model Bill referred to was placed on the table of the Parliament on December 15, 1970 and March 22, 1972 respectively. The said documents were forwarded to the State Government of Andhra Pradesh, besides other State Governments, for consideration by the State Legislatures before they passed a resolution under article 252(1). The State Legislatures were, therefore, aware of the position when they passed a resolution authorising the Parliament to make a law in respect of urban immovable property. Their intention was to include the lands within the territorial area of a municipality or other local body of an urban area and also its peripheral area. The concept of ceiling on urban immovable property and the nature and content of urban agglomeration ultimately defined by section 2(n) of the impugned Act was, therefore, fully understood by the State Governments. In this Court the Union of India has placed on record an Approach Paper of the Study Group which indicated that the Parliament was faced with several practical difficulties to implement the proposal to place a ceiling on ownership of built up properties, namely: "Firstly, the valuation of such properties is very difficult task, Secondly, it varies from urban area to urban area and within the same area also and might result in inequitable application. Thirdly, in our inflationary situation the values of properties quickly change from time to time. Fourthly, investment by persons in housing and building is like other forms of investment and, subject to certain restrictions, primarily to prevent speculation, needs to be encouraged to serve social purposes. Fifthly, the management of properties which may vest with the government on account of any ceiling would pose serious problems; perhaps, a large number of properties may be in the form of slums or dilapidated 822 buildings and in respect of other types of houses it may not be possible to manage or dispose them of economically. " It was, therefore, suggested that ceiling in respect of built up properties was to be brought about through fiscal and other restrictive measures. It is but axiomatic that once the legislature of two or more States, by a resolution in terms of article 252(1), abdicate or surrender the area, i.e., their power of legislation on a State subject, the Parliament is competent to make a law relating to the subject. It would indeed be contrary to the terms of article 252(1) to read the resolution passed by the State Legislature subject to any restriction. The resolution, contemplated under article 252(1) is not hedged in with conditions. In making such a law, the Parliament was not bound to exhaust the whole field of legislation. It could make a law, like the present Act, with respect to ceiling on vacant land in an urban agglomeration, as a first step towards the eventual imposition of ceiling on immovable property of every other description. There is no need to dilate on the question any further in this judgment, as it can be better dealt with separately. It is sufficient for purposes of these appeals to say that when Parliament was invested with the power to legislate on the subject i.e., `ceiling on immovable property ', it was competent for the Parliament to enact the impugned Act, i.e., a law relating to `ceiling on urban land '. In our opinion, therefore, the High Court was clearly in error in holding that the Urban Land (Ceiling and Regulation) Act, 1976, was not applicable to the State of Andhra Pradesh. In reaching that conclusion, it proceeded on the wrong assumption that `legislature ' for purposes of article 252(1) means the House or Houses of Legislature, as the case may be, and the Governor. In consequence whereof, it felt into an error in holding that the State Legislature of Andhra Pradesh could not, in law, be regarded to have authorised the Parliament to enact the impugned Act, in relation to that State, due to the non participation of the Governor. There still remains the question whether the Act is not applicable to Warangal for the reason that there was no master plan prepared in conformity with section 244(1) (c) (iii) of the Andhra Pradesh (Telengana Area) District Municipalities Act, 1956. The section, so far as material, runs thus: "244(1) (c) The Master Plan shall include such maps and such descriptive matter as may be deemed necessary to illustrate the proposals, and in particular: (i). . . . . . . . . . 823 (ii). . . . . . . . . (iii) designate the land subject to compulsory acquisition under the powers in that behalf conferred by this Act or any other law for the time being in force. " The High Court has clearly erred in holding that the Urban Land (Ceiling and Regulation) Act, 1976 cannot apply to the urban agglomeration of Warangal. In reaching that conclusion, it observed that under section 244(1) (c) (iii) the master plan must designate the land subject to compulsory acquisition under the powers in that behalf conferred by the Act or any other law for the time being in force; otherwise, the master plan prepared for the town cannot be treated to be a master plan as prepared in accordance with law. The view taken by the High Court is wholly unwarranted and proceeds on a misconception of the scheme of the Act. Section 3 of the Act provides that except as otherwise provided in the Act, on and from the commencement thereof, no person shall be entitled to hold any `vacant land ' in excess of the ceiling limit in the territories to which this Act applies under sub s.(2) of section 1. By section 4(1)(d), the ceiling limit placed on such land situate in an `urban agglomeration ' falling within category `D ' specified in Schedule I, is fixed at two thousand square metres. An urban agglomeration is made up of the main town together with the adjoining areas of urban growth and is treated as one urban spread. The expression `vacant land ' is defined in section 2(q) as meaning land, not being land mainly used for the purpose of agriculture, in an urban agglomeration, but does not include certain categories thereof. The term `urban land ' is defined in section 2(o) as meaning: "(o) `Urban land ' means. (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or (ii) In a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called), a notified area committee, a town area committee, a city and town committee, a small town committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture." 824 The expression "urban agglomeration", as defined in section 2(n) of the Act, so far as material, reads: (n) "urban agglomeration, (A) in relation to any State or Union Territory specified in column (1) of Schedule I, means: (i) the urban agglomeration specified in the corresponding entry in column (2) thereof and includes the peripheral area specified in the corresponding entry in column (3) thereof; and" The urban agglomeration of Warangal is specified in Schedule I to the Act. The relevant entry reads: "States Towns Peripheral Category (1) (2) (3) (4) 1. Andhra Pradesh 5.Warangal 1m 1Km. D" It is quite clear that under the scheme of the Act the imposition of a ceiling on vacant land in urban agglomerations does not depend on the existence of a master plan. The definition of `urban land ', as contained in section 2(o) of the Act is in two parts, namely (1) in a case where there is a master plan prepared under the law for the time being in force, any land within the limits of an urban agglomeration and referred to as such in the master plan, is treated to be urban land, and (2) in a case where there is no master plan, or the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limit of a municipality or other local authorities is regarded as such. The existence of a master plan within the meaning of section 2(h) is, therefore, not a sine qua non for the applicability of the Act to an urban agglomeration. The only difference is that where there is a master plan, the Act extends to all lands situate within the local limits of a municipality or other local authority, and also covers the peripheral area thereof; but where there is no such master plan, its applicability is confined to the municipal limits or the local area, as the case may be. It is common ground that there was a master plan prepared for Warangal on October 26, 1949. On September 7, 1963, the Warangal Municipality resolved by a resolution to prepare a fresh master plan and on February 18, 1966, the State Government directed that untill the new plan was prepared, the old master plan should continue. There after, a revised master plan was prepared by the Direc 825 tor of Town Planning, Hyderabad after conducting physical and socio economic surveys and sent to the Municipal Council, Warangal for adoption and approval, in pursuance of its resolution dated September 7, 1963. The Municipal Council by its resolution dated April 30, 1969 approved the same with some modifications. The revised master plan was submitted by the Municipal Council, Warangal to the State Government for sanction under section 244, sub s.(1), cl.(d) of the, Andhra Pradesh (Telengana Area) District Municipalities Act, 1956. On November 25, 1971, the old master plan was revoked by the State Government and a new master plan sanctioned. The master plan contains proposals for areas required to be covered by section 244, sub s.(1), cl.(c), contiguous and adjacent to the municipal limits of Warangal which were under the jurisdiction of various gram panchayats and all such lands were deemed to be lands needed for public purpose within the meaning of the Hyderabad Land Acquisition Act, 1309 Fasli, and the Municipality could under section 251 of the Andhra Pradesh (Telengana Area) District Municipalities Act, 1956 acquire the lands required for the implementation of for the master plan. The learned Attorney General has placed before us the relevant notifications. The word "shall" in cl. (c) of sub section (1) of section 244 of the Andhra Pradesh (Telengana Area) District Municipalities Act, 1956 in its context and setting, is directory. A master plan prepared by a municipality may or may not contain a proposal for compulsory acquisition of land, or any descriptive matter or map to illustrate a scheme for development. Mere absence of such proposal for compulsory acquisition or a map or descriptive matter would not be tantamount to there being no master plan. A master plan may include proposals for development of areas required to be covered by section 244, sub section (1), cl.(c), contiguous and adjacent to the municipal limits of a city or town, but may not designate the land to be compulsorily acquired, the absence of which would not invalidate the scheme. It is because the municipality has always the power under section 250 of the Act to acquire the land required for implementation of such scheme. It appears that the revised master plan prepared for Warangal does, as it should, provide for various development schemes. For ought we know, it also designates the lands subject to compulsory acquisition. Even if it were not so, the master plan prepared under section 244, sub section (1), cl. (c) did not cease to be `a master plan prepared in accordance with law for the time being in force ', within the meaning of section 2(h) of the Act, in relation to the town of Warangal. The Act, is, therefore, clearly applicable to the urban agglomerations of 826 Warangal and it extends not only to all the lands included within the local limits of the Warangal Municipality but also includes the peripheral areas specified, i.e. one kilometre around such limits. In this group of cases, there is a writ petition filed by Maharao Sabeb Bhim Singhji, former ruler of the erstwhile princely State of Kota. It raises the question whether the Parliament had legislative competence to enact the Urban Land (Ceiling and Regulation) Act, 1976, in relation to the State of Rajasthan. The question involved is common to all the States which subsequently adopted the Act. The Bill, after it was passed by both the Houses of Parliament, received the assent of the President on February 17, 1976. There is a schedule annexed to the Act and among the various States specified in the schedule, is the State of Rajasthan with the urban agglomerations of Jaipur, Jodhpur, Ajmer, Kota and Bikaner. Of these, the cities of Jaipur and Jodhpur are declared to be agglomerations belonging to category `C ' while Ajmer, Kota and Bikaner are placed in category `D '. On March 9, 1976, the State Legislature of Rajathan passed the following resolution adopting the Act: "Whereas the Legislature of Rajasthan State considers it expedient to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good. And whereas the Parliament has no power to make laws for the States with regard to the matters aforesaid except as provided in Article 249 and 250 of the Constitution. And whereas this Legislature is of the opinion that aforesaid matter may be regulated in Rajasthan State by the Urban Land (Ceiling and Regulation) Act, 1976 (33 of Central Act of 1976) enacted by the Parliament. Now therefore the Legislature of Rajasthan State passes the following resolution in pursuance of Article 252:, clause (1) : "Rajasthan State adopts the Urban Land (Ceiling and Regulation) Act, 1976 (33 of Central Act of 1976) for this State". " 827 When the Bill was introduced in the Lok Sabha on January 28, 1976, it cannot be denied that the State of Rajasthan was not one of the eleven States which had passed a resolution under the first part of article 252(1), and the question that arises is whether the Parliament had the legislative competence to enact a law in relation to that State. It is argued that the inclusion of the State of Rajasthan in the Schedule as one of the States specified to which the Act applies, or the categorisation of the various cities and towns of that State, including the town of Kota, was non est. It is submitted that the legislature of the State of Rajasthan never authorised the Parliament to enact a law for the imposition of ceiling on immovable properties in that State and, therefore, the Act was still born in respect of the State of Rajasthan. It is accordingly urged that the Act being legislatively incompetent in so far as the State of Rajasthan was concerned, it could not be adopted by a subsequent resolution passed by the State legislature of Rajasthan on March 9, 1976. The learned Attorney General, however, tries to meet the challenge to the applicability of the Act to the State of Rajasthan from two aspects. He contends that the Parliament was undoubtedly invested with legislative competence to enact a law for the imposition of a ceiling on urban land for the State of Rajasthan, both under article 250 as well as under article 252. First of all, he points out that while there was a Proclamation of Emergency in force on February 17, 1976, the Parliament had the power to legislate with respect to any matter in the State List under Article 250, which reads: "250. (1) Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to any of the matter enumerated in the State List. (2) A law made by Parliament which Parliament would not but for the issue of a Proclamation of Emergency have been competent to make shall, to the extent of the incompetency, cease to have effect on the expiration of a period of six months after the Proclamation has ceased to operate, except as respects things done or omitted to be done before the expiration of the said period. " The learned Attorney General is no doubt right in saying that if a Proclamation of Emergency is in operation, under article 250(1) the power of the Parliament extends to the making of laws for the whole or any part of the territory of India with respect to any of the matters 828 enumerated in the State List, but the Act so passed will die out with the revocation of the Proclamation of Emergency, by reason of Art 250(2) on the expiration of a period of six months after the Proclamation has ceased to operate, except as respects things done or omitted to be done before the expiration of the said period. That conclusion is inevitable from the words "shall cease to have effect" appearing in article 250(2). Now, the further difficulty in accepting the learned Attorney General 's contention is that the Parliament never professed to act under Art 250(1). Although he drew our attention to the second part of the preamble to the Act which reads: "AND WHEREAS Parliament has no power to make laws for the States with respect to the matters aforesaid except as provided in Articles 249 and 250 of the Constitution;" it is amply clear from the third part of the preamble, which reads: "AND WHEREAS in pursuance of clause (1) of Article 252 of the Constitution resolutions have been passed by all the Houses of the Legislatures of the States of Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Orissa, Punjab, Tripura, Uttar Pradesh and West Bengal that the matters aforesaid should be regulated in those States by Parliament by law;" that the Parliament never intended to take recourse to its powers under article 250(1), but proceeded to make such a law, being clothed with its powers to legislate on the subject under article 252(1). The Act was, therefore, a law enacted by the Parliament by virtue of its powers under article 252(1). The Statement of objects and Reasons really places the matter beyond all doubt. Its material portion reads: "Statement of Objects and Reasons There has been a demand for imposing a ceiling on urban property also, especially after the imposition of a ceiling on agricultural lands by the State Governments. With the growth of population and increases in urbanization, a need for orderly development of urban areas has also been felt. It is, therefore, considered necessary to take measures for exercising social control over the scarce resource of urban land with a view to ensuring its equitable distribution amongst the various sections of society and also avoiding speculative transactions relating to land in urban agglomera 829 tions. With a view to ensuring uniformity in approach Government of India addressed the State Governments in this regard; eleven States have so far passed resolutions under article 252(1) of the Constitution empowering Parliament to undertake legislation in this behalf. The present proposal is to enact a Parliamentary legislation in pursuance of these resolutions." (Emphasis supplied) There is also some difficulty in accepting the contention of the learned Attorney General on a matter of construction of article 252(1). The question of adoption of a law made by the Parliament in respect of any of the matters in State List arises under the second part of article 252(1) and is dependent upon the `desirability ' expressed by the legislatures of two or more States empowering the Parliament to make such a law under the first part thereof. We are inclined to think that some meaning must be given to the words "any Act so passed". The power of adoption, is, therefore, related to a law made under article 252 (1) and cannot be exercised in respect of laws made by the Parliament under article 250(1) while a Proclamation of Emergency is in force. Furthermore, such a law, in terms of article 250(2), ceases to have effect on the expiration of a period of six months after the Proclamation has ceased to operate. The learned Attorney General, however, rightly contends, in the alternative, that the Parliament being invested with the power by resolutions passed under the first part of article 252(1) by as many as eleven States, to legislate on the subject, i.e., to make a law for the imposition of a ceiling or immovable property, it had the competence to so structure the Act that it was capable of being adopted by other States under the second part of article 252(1). A fortiori, the specification of the State of Rajasthan by which the Act may be adopted, as well as the categorisation of the urban agglomerations therein to which it may apply, had to be there. It is, however, strenuously urged on behalf of the petitioner that law made by the Parliament under article 252(1) cannot be so designated as to extend to the States which had not sponsored a resolution. Emphasis is laid upon the words "in such States", and it is said that they mean "in those States", i.e., the sponsoring States. In support of the contention, our attention was particularly drawn to the word Accordingly ', and it is urged that the law passed by the Parliament under article 252(1) must be restricted in its operation to those States, i.e., to those States in which the Legislature passed a resolution. We are afraid, the contention cannot be accepted. 830 In our considered judgment, the Parliament having been invested with powers to legislate on a State subject, by resolutions passed by Legislatures of two or more States under article 252(1), has plenary powers to make suitable legislation. It follows, as a necessary corollary, that the Act passed by the Parliament under article 252(1) can be so structured as to be capable of being effectively adopted by the other States. Article 252(1) undoubtedly enables the Parliament to make a uniform law. The Act so passed would automatically apply to the States the legislatures of which have passed a resolution in terms of article 252(1), and at the same time it must be capable of beings adopted by other States which have not sponsored a resolution, i.e., the non sponsoring States. The second part of article 252(1) will be meaningful only if it were so interpreted; otherwise, it would be rendered wholly redundant. To illustrate, if the part of the Schedule relating to the State of Rajasthan is treated as non est, the schedule which forms part of the Act cannot be amended except under article 252(2), i.e., `in the like manner '. We fail to appreciate how two or more States can now pass a resolution for extension of the Act to the State of Rajasthan. In a law relating to the imposition of ceiling on vacant land in urban agglomerations throughout the territory of India, it was competent for the Parliament under Entry 18, List II of Seventh Schedule is not only to have the States specified in the Schedule to the Act where the law will extend, but also include the categorisation of urban agglomerations in respect of the whole of the territory of India. The Act would automatically apply from the date of its application to those States which had passed the resolution in terms of the first part of article 252(1), and would extend to the adopting States from the date of the resolutions passed by the legislatures of such States. The Parliament had, therefore, in fact and in law, competence to legislate on the subject of the imposition of ceiling on urban immovable property, and the Schedule to the Act cannot, therefore, be struck down in relation to the State of Rajasthan. It is conceded by learned counsel for the petitioner that if the Act had been enacted without the Schedule, with an appropriate definition, of `an urban agglomeration ' in section 2(n), in general terms, making the law applicable to cities and towns having, for example, a population of one lac and above, five lacs and above etc., it would have been within the legislative competence of the Parliament. If that be so, then it is inexplicable why simply because some of the areas in some of the States have been specified, although their State legislatures had not sponsored any resolution, the schedule, in so far as those States are 831 concerned should be regarded as non est. If it is competent for the Parliament to make a general law under article 252(1) to facilitate its adoption by other States, it must logically follow that the Parliament could also pass the Act in its present form. We are of the opinion that the Act with the Schedule annexed became applicable in those States where the legislatures passed resolutions expressing the `desirability ' for the Parliament to make a law for the imposition of ceiling on urban immovable property, and it lay dormant insofar as the other States were concerned. It became applicable to these other States from the date that their Houses of Legislatures adopted it. In that view, we must hold that the impugned Act is not beyond the legislative competence of the Parliament insofar as the State of Rajasthan is concerned. In the result, the appeals succeed and are allowed. The judgment of the Andhra Pradesh High Court is set aside, and it is declared that the Urban Land (Ceiling and Regulation) Act, 1976, is, and has always been, in force in the State of Andhra Pradesh w.e.f. January 28, 1976. It is further declared that the Act extends to the urban agglomerations of Warangal. It must, for reasons already stated, also be held that the Act applies to the State of Rajasthan w.e.f. March 9, 1976. The remaining contentions advanced in the writ petition will be dealt with separately. There shall be no order as to costs in these proceedings. N.V.K. Appeals allowed.

The State Legislatures of eleven States, (Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, orissa, Punjab, Tripura, U.P. and West Bengal) considered it desirable to have a uniform legislation enacted by Parliament for the imposition of a ceiling on urban property for the country as a whole and in compliance with cl. (1) of article 252 of the Constitution passed a resolution to that effect. Parliament accordingly, enacted the Urban Land (Ceiling and Regulation) Act, 1976. In the first instance, the Act came into force on the date of its introduction in the Lok Sabha i.e. January 28,1976 and covered the Union Territories and the eleven States which had already passed the requisite resolution under article 252(1) of the Constitution, including the State of Andhra Pradesh. Subsequently, the Act was adopted, after passing resolutions under article 252(1) of the Constitution by the State Legislatures of Assam, Bihar, Madhya Pradesh, Manipur, Meghalaya and Rajasthan. The Act is in force in seventeen States and all the Union Territories in the country. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 was to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles of Articles 39(b) and (c). 803 The legislation falls under Entry 18, List II of Seventh Schedule of the Constitution, which refers to 'Land, that is to say, rights in or over land, etc. ' The State Legislatures alone are competent to enact any legislation relating to land of every description including lands situate in urban areas. The resolutions passed by the State Legislatures, vested in Parliament the power to regulate by law, the imposition of a ceiling on urban immovable property and acquisition of such property in excess of this ceiling, as well as in respect of 'all matters connected therewith and ancillary or incidental thereto. ' In writ petitions filed by the respondents, the High Court being of the view that the term 'legislature ' in article 252(1) of the Constitution comprises both the Houses of Legislature, (the Legislative Assembly and the Legislative Council) and the Governor of the State, struck down the Act on the ground that the Parliament was not competent to enact the impugned Act for the State of Andhra Pradesh inasmuch as the Governor of Andhra Pradesh did not participate in the process of authorisation for the passing of the Act by the Parliament. The High Court observed that since two distinct terms 'legislature ' and 'Houses of Legislature ' were used in the same article they must, as a matter of construction, bear different meanings, and The Urban Land (Ceiling and Regulation) Act 1976 is ultra vires the Parliament so far as the State of Andhra Pradesh is concerned. It also held that even assuming the Act is in force in the State, it is not applicable to Warangal because there was no master plan prepared in accordance with the requirements of section 244(1) (c) of the Andhra Pradesh (Telengana Area) District Municipalities Act, 1956. In the connected writ petition under article 32, the question raised was whether the inclusion of the State of Rajasthan in Schedule I to the Urban (Land Ceiling and Regulation) Act, 1976 and the categorisation of the urban agglomeration of the cities and towns of Jaipur and Jodhpur in category 'C ' and Ajmer, Kota and Bikaner in category 'D ' therein is beyond the legislative competence of Parliament and, therefore, the Act is liable to be struck down to that extent. In the appeals to this Court, it was contended on behalf of the appellant, that the term 'legislature ' in article 252(1) must, in the context, mean the House or the Houses of Legislature, as the case may be and it does not include the Governor. The key to the interpretation of the first part of cl. (1) of article 252 lies in the words 'to that effect ', and they obviously refer to the 'desirability ' of Parliament making a law on a State subject. It was pointed out that though the Governor is the component part of the State Legislature under article 168, he is precluded by the terms of article 158(1) from being a member of either House of Parliament or of a House of Legislature of any State. Not being a member of the House or Houses of Legislature of a State, as the case may be, the question of his participation, in the proceedings of the State Legislature in passing a resolution under article 252(1) does not at all arise. To concede to the Governor the power to participate in the process of authorization for the passing of a law by the Parliament on a State subject under article 252(1), as the High Court had done, or to the process of ratification of a constitutional amendment by the State Legislature under proviso to article 368(2) to a constitutional amendment by the Parliament under article 368(1), would create a dangerous situation and would be destructive of the constitutional system which is based on the Westminster model under which the Governor is only the constitutional head of the state. 804 The Parliament being invested with the power by resolution passed under the first part of article 252(1) by as many as eleven states, to legislate on the subject i.e. to make a law for the imposition of a ceiling on immovable property, it had the competence to so structure the Act that it was capable of being adopted by other States under the second part of article 252(1). A fortiori, the specification of the State of Rajasthan by which the Act may be adopted, as well as the categorisation of the urban agglomerations therein to which it may apply, had to be there. Allowing the appeals and dismissing the writ petition; ^ HELD: 1 (a) Declared that the Urban Land (Ceiling and Regulation) Act 1976 a law enacted by the Parliament by virtue of its powers under Article 252(1) is and has always been in force in the State of Andhra Pradesh with effect from January 28, 1976. [831D] (b) Declared that the Act extends to the Urban agglomerations of Warangal. [831D] (c) The Act applies to the States of Rajasthan with effect from March 9, 1976. [831D] 2. article 252 appears in Part XI headed 'Relations between the Union and the States ' and occurs in Chapter I relating to 'Legislative Relations ', i.e., dealing with the distribution of legislative powers between the Union and the States. Our constitution though broadly federal in structure is modelled on the British Parliamentary system, with unitary features. Parliament may assume legislative powers (though temporarily) over any subject under article 249, by a two third vote that such legislation is necessary in 'the national interest ', while a Proclamation of Emergency under article 352 is in operation, Parliament is also competent under article 250 to legislate with respect to any such matter in the State List. article 251 makes it clear that the legislative power of the State legislatures to make any law which they have power under the Constitution to make, is restricted by the provisions of Articles 249 and 250, but, if any law made by the legislature of a State is repugnant to any provision of a law enacted by the Parliament, the law made by Parliament shall prevail and the law made by the State legislature to the extent of repugnancy shall not be valid so long as the law enacted by Parliament is effective and operative. [812H 813C] 3. While article 263 provides for the creation of an Inter State Council for effecting administrative co ordination between the States in matters of common interest, article 252 provides the legislative means to attain that object. [813F] 4. The effect of the passing of a resolution under cl.(1) of article 252 is that Parliament, which has no power to legislate with respect to the matter which is the subject of the resolution, becomes entitled to legislate with respect to it, and the State legislature ceases to have a power to make a law relating to that matter. After the enactment of a law by the Parliament under this Article, it is open to any of the other States to adopt the Act for such State by merely passing a resolution to that effect in its legislature, but the operation of the Act in such State cannot be from a date earlier than the date of the resolution passed in the Legislature adopting the Act. The question as to whether or not there is surrender by the State Legislature of its power to legislate, and if so, to what extent, must depend on the language of the resolution passed under article 252(1). [813G] M/S. R.M.D.C. (Mysore) Private Ltd. vs The State of Mysore referred to: 6. Article 252(2) specifically lays down that after Parliament makes an Act in pursuance of the resolution, such Act cannot be amended or repealed by the State Legislature even though the matter to which the Act of Parliament relates was included in List II of the Seventh Schedule of the Constitution. [813H] 7. article 252(1) is in two parts. The first part of the Article is only introductory the second is the operative part. The first part merely recites about the "desirability" of the Parliament legislating on a subject in respect of which it has no power to make laws except as provided in Articles 249 and 250. The words "to that effect" in the first part, therefore, refer to the 'desirability ' for effecting administrative control by the Parliament over two or more States in respect of matters of common interest. Thus the word 'legislature ' in the first part of article 252(1), in the context in which it appears, cannot mean the three component parts of the State Legislature, contemplated by article 168, but only the House or Houses of Legislature, as the case may be, i.e. excluding the Governor. [815D, 815H 816A] 8. The High Court had completely overlooked the fact that there is a clear distinction between 'an Act of legislature, ' 'a legislative act ' and 'a resolution of the House. [816B] 9. It is quite clear from an enumeration of the powers, functions and duties of the Governor, that he cannot, in the very nature of things, participate in the proceedings of the House or Houses of Legislature, while the State Legislature passes a 'resolution ' in terms of article 252(1), he not being a member of the legislature under article 158. [817C] 10. The right of the Governor to send messages to the House or Houses of the Legislature under article 175 (2), with respect to a Bill pending in the legislature or otherwise, normally arises when the Governor withholds his assent to a Bill under article 200, or when the President, for whose consideration a Bill is reserved for assent, returns the Bill withholding his assent. [817E] 12. A 'Bill ' is something quite different from a 'resolution of the House ' and, therefore, there is no question of the Governor sending any message under article 175 (2) with regard to a resolution pending before the House or Houses of the Legislature. [817F] 12. The constitutional requirement under proviso to article 368 (2) of a ratification by the legislature of not less than one half of the States is that so far as the State legislatures are concerned, it requires that a resolution should be passed ratifying the amendment. Such a resolution requires voting, and the Governor never votes upon any issue. [818E] Jatin Chakravarty vs Shri H. K. Bose A.I.R. 1964 Cal. 500 approved. What is true of a ratification by the State legislatures under proviso to article 368(2), is equally true of a resolution of the House or Houses of the 806 Legislature under article 252(1). The Governor, nowhere comes in the picture at all in those matters. [818F] 14. The absence of the words 'unless the context otherwise requires ' in article 168, cannot control the meaning of the term 'legislature ' in article 252(1). The term 'legislature ', in the context in which it appears, can only mean the House or Houses of Legislature, as the case may be. [819C, D] 15. The subject matter of Entry 18, List II of the Seventh Schedule i.e. 'land ' covers 'land and buildings ' and would, therefore, necessarily include 'vacant land. ' The expression 'urban immovable property ' may mean 'land and buildings ' or 'buildings ' or 'land '. It would take in lands of every description i.e. agricultural land, urban land or any other kind and it necessarily includes vacant land. [820G H] 16. Before the Act was introduced in the Lok Sabha on January 28, 1976 it was preceded by State wise deep consideration and consultation by the respective States, including the State of Andhra Pradesh. A working Group was constituted and in its report it proposed the imposition of a ceiling on urban immovable property and defined 'urban area ' to include the area within the territorial limits of municipalities or other local bodies and also the peripheral areas outside the said limits. The Govt. prepared a Model Bill in pursuance of the Report and a copy of each of the Report of the working Group and the Model Bill was placed on the table of Parliament. The said documents were forwarded to the State Government of Andhra Pradesh, besides other State Governments for consideration by the State Legislatures before they passed a resolution under article 252(1). [821A C] 17. The State Legislatures were, therefore, aware of the position when they passed a resolution authorising the Parliament to make a law in respect of urban immovable property. Their intention was to include the lands within the territorial area of a municipality or other local body of an urban area and also its peripheral area. The concept of ceiling on urban immovable property and the nature and content of urban agglomeration ultimately defined by section 2(n) of the impugned Act, was, therefore, fully understood by the State Governments. [821D E] 18. It is but axiomatic that once the legislatures of two or more states, by a resolution in terms of article 252(1), abdicate or surrender the area i.e. their power of legislation on a State subject, the Parliament is competent to make a law relating to the subject. It would indeed be contrary to the terms of article 252(1) to read the resolution passed by the State Legislature subject to any restriction. The resolution, contemplated under article 252(1) is not hedged in with conditions. In making such a law, the Parliament was not bound to exhaust the whole field of legislation. It could make a law, like the present Act, with respect to ceiling on vacant land in an urban agglomeration, as a first step towards the eventual imposition of ceiling on immovable property of every other description. [822B D] 19. Under the scheme of the Act the imposition of a ceiling on vacant land in urban agglomeration does not depend on the existence of a master plan. The definition of 'urban land ', as contained in section 2(o) of the Act is in two parts, namely (i) in a case where there is a master plan prepared under the 807 law, for the time being in force, any land within the limits of an urban agglomeration and referred to as such in the master plan, is treated to be urban land, and (2) in a case where there is no master plan, or the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situate in any area included within the local limits of a municipality or other local authorities is regarded as such. The existence of a master plan within the meaning of section 2(h) is, therefore, not a sine qua non for the applicability of the Act to an urban agglomeration. [824D F] 20. A master plan prepared by a municipality may or may not contain a proposal for compulsory acquisition of land, or any descriptive matter or map to illustrate a scheme for development. Mere absence of such proposal for compulsory acquisition or a map or descriptive matter would not be tantamount to there being no master plan. A master plan may include proposals for development of areas required to be covered by section 244, sub s.(1), cl.(c) contiguous and adjacent to the municipal limits of a city or town, but may not designate the land to be compulsorily acquired, the absence of which would not invalidate the scheme. This is because the municipality has always the power under section 250 of the Act to acquire the land required for implementation of such scheme. [825E F] 21. The revised master plan prepared for Warangal does, as it should provide for various development schemes, it also designates the lands subject to compulsory acquisition. Even, if it were not so, the master plan prepared under section 244, sub s.(1), cl.(c) did not cease to be 'a master plan prepared in accordance with the law for the time being in force ', within the meaning of section 2(h) of the Act, in relation to the town of Warangal. The Act is, therefore clearly applicable to the urban agglomerations of Warangal and it extends not only to all the lands included within the local limits of the Warangal Municipality but also includes the peripheral areas specified i.e. one kilometre around such limits. [825G 826A] 22. The Parliament having been invested with powers to legislate on a State subject, by resolutions passed by Legislatures of two or more States under article 252(1) has plenary powers to make suitable legislation. It follows, as a necessary corollary, that the Act passed by the Parliament under article 252(1) can be so structured as to be capable of being effectively adopted by the other States. Article 252(1) undoubtedly enables the Parliament to make a uniform law. The Act so passed would automatically apply to the States, the legislatures of which have passed a resolution in terms of article 252(1), and at the same time it must be capable of being adopted by other States which have not sponsored a resolution, i.e. the non sponsoring States. The second part of article 252(1) will be meaningful only if it were so interpreted otherwise, it would be rendered wholly redundant. [830A C] 23. The Act would automatically apply from the date of its application to those States which had passed the resolution in terms of the first part of article 252(1), and would extend to the adopting States from the date of the resolutions passed by the legislatures of such States. The Parliament had, therefore, in fact and in law, competence to legislate on the subject of the imposition of ceiling on urban immovable property, and the Schedule to the Act cannot therefore, be struck down in relation to the State of Rajasthan. [830F] 808 24. In a law relating to the imposition of ceiling on vacant land in urban agglomerations throughout the territory of India, it was competent for the Parliament under Entry 18, List II of Seventh Schedule not only to have the States specified in the Schedule to the Act where the law will extend, but also include the categorisation of urban agglomerations in respect of the whole of the territory of India. [830E]

N: Criminal Appeal No. 350 of 1978. (From the Judgment and order dt. 29 5 78 of the Gujarat High Court in Spl. Criminal Appln. No. 20 of 1978) Ram Jethmalani and Mrs. K. Hingorani for the appellant. section K. Mehta and M. N. Shroff for the respondent. The Judgment of the Court was delivered by TULZAPURKAR, J. On September 29, 1978 the detenu herein was directed to be released forthwith on his detention order being set aside and we had stated that we would give our reasons for our order later which we do presently. 217 By a detention order passed on January 4, 1978 under section 3(1) of the (hereinafter referred to as "COFEPOSA") the detenu Gopal Ghermal Mehta was detained by the Additional Chief Secretary to the Government of Gujarat (Respondent No. 1) with a view to preventing him from engaging in transporting smuggled goods. The grounds of detention were served upon him on the same day i.e. On January 4, 1978. Briefly stated the grounds disclosed the following material against the detenu: on receipt of certain information on December 12, 1977 by the Customs officers of Ahmedabad, the said officers had kept a watch for a Fiat Car No. GTI 6020 and the said car with five occupants was intercepted in the early hours of December 13, 1977 near Naroda Railway Crossing and the occupants (the detenu and four others) were taken to the Customs Divisional Office, Paldi, Ahmedabad for examination. The detenu and the other four occupants of the car denied that they were carrying any smuggled gold or prohibited articles, but on search of one of the occupants Sheveram Atmaram Chandwani two cloth bags were recovered D, from him, in one of which there were 27 gold bars of foreign marking weighing 19 tolas valued at Rs. 2,16,00 and in the other there were 18 pieces of gold bearing 'Trishul ' mark valued at Rs. 1,94,400/ . Chandwani in his statement before the Customs officers stated that the two bags which he was carrying on his person belonged to the detenu who was dealing in Silver and Gold in Udaipur and that he was merely a carrier who used to receive remuneration of Rs. 100/ per trip from the detenu. Two statements of the detenu were recorded by the Customs officers on December 13 and 14, 197$, in which he corroborated the version of Chandwani but added that the entire quantity of foreign marked gold and the 'Trishul ' marked gold belonged to one Prem of Chandni Chowk, Delhi, for and on whose behalf he was carrying the gold from Delhi to Udaipur and from Udaipur to Ahmedabad for disposing it of to two persons, Namely, Poonamchand Laxmanji and Bhagubhai in Ahmedabad. The detenu also stated that this had been going on for about six to eight months and that he had made five to six trips in a month and on each such trip he used to carry 2 1/2 to 3 kgs. of gold. He further admitted that the Fiat Car in question had been purchased for this purpose for Rs. 15,000/ which money had been provided by Prem. He further stated that after disposal of the gold belonging to Prem at Ahmedabad he used to carry the sale proceeds to Prem and account for the same at the time of the next transaction between him and Prem. Counsel for the petitioner (being the wife of the detenu) did not dispute that the aforesaid material disclosed in the grounds was 15 817SCI/78 218 prima facie sufficient to show the detenu 's involvement in the racket of smuggling gold, namely, transporting smuggled gold from Delhi to Udaipur and from Udaipur to Ahmedabad but he challenged the detention order on the ground that procedural safeguards had not been followed vitiating the requisite satisfaction on the part of the detaining authority under section 4(1). It appears that when the interrogation of the detenu was going on while he was in custody of the Customs officials, Smt. Devyantiben Shah, an Advocate of the detenu addressed a letter as also a telegram, both dated December 14, 1977, making a grievance about the wrongful restraint and illegal custody of the detenu by the Customs officers beyond 24 hours and expressing apprehension that . the detenu had been so detained with a view to obtain confessional statements against his will. The receipt of the letter was disputed but the Assistant Collector of Customs admitted the receipt of the telegram from the Advocate on December 15, 1977. By his reply dated December 15, 1977 sent to the Advocate, the Assistant Collector denied the allegations made in the telegram. Admittedly on December 14, 1977, the Advocate had gone to the Customs office and had sought permission to remain present at the time of the interrogation of the detenu but her request was not acceded to as the Customs Officers were of the view that there was no provision in law permitting an Advocate to remain present at the time of interrogation. Further on this occasion the Advocate was told that the detenu will be produced before the Magistrate at 5.30 p.m. On that very day and, therefore, she waited in the Magistrate 's Court upto 5.30 p.m. to obtain bail for the detenu but as the detenu was not produced the Magistrate declined to pass any order on the bail application. On December 15, 1977 the detenu was produced before the Magistrate who remanded him to Customs custody for five days in spite of opposition by the Advocate. On December 20, 1977 the detenu was again produced before the Magistrate and even on this occasion bail was refused but the detenu was remanded to judicial custody permitting further interrogation by Customs Officers. On December 22, 1977 while he was in judicial custody the detenu was interrogated by Customs officers and his statement was recorded on that day but the detenu refused to sign the same and instead made an endorsement that his earlier statements dated December 13 and 14, 1977 and the facts stated therein were not correct. In other words, in his statement dated December 22, 1977 the detenu had resiled from his earlier confessional statements and had squarely repudiated the facts stated therein. On January 3, 1978 the Advocate of the detenu made another application for getting him released on bail as the period of remand was to expire on January 1978 and that application was fixed for hearing on January 6, 1978 but on January 4, 1978 itself while the 219 detenu was in judicial custody the Additional Chief Secretary to the Gujarat Government (Respondent No. 1) passed the impugned order under s.3(1) of the "COFEPOSA" and the detenu was detained thereunder. The aforesaid detention was challenged by the appellant (wife of the detenu) before the Gujarat High Court under Article 226 of the Constitution by filing Special Criminal Application No. 20 of 1978 seeking a writ of habeas corpus for the release of the detenu principally on the ground that there was complete non application of mind on the part of the detaining authority (respondent No. 1) to the attendant circumstances in which the confessional statement of the detenu on which the detention order was mainly based were recorded, particularly the vital facts that transpired during the interrogation as also those that followed the recording of those statements. It was contended that apart from the apprehension expressed in the Advocate 's telegram that the detenu was being detained with a view to obtain his confessional statements under duress, the said confessional statements had actually been retracted by the detenu at the first available opportunity when he was in judicial custody on the ground that these had been involuntarily extorted from him and that such retraction of the confessional statements was not intimated to the detaining authority and was not considered by it before passing the impugned detention order and as such for want of considering such vital fact the subjective satisfaction of the detaining authority got vitiated and the impugned order was liable to be set aside. The High Court, however, rejected the said contention as also the other contentions urged on behalf of the appellant (the wife of the detenu) and dismissed the said application on May 29, 1978. Against this dismissal the present appeal has been preferred. Counsel for the petitioner contended before us that the High Court had clearly erred in taking the view that since the contents of the telegram dated December 14, 1977 expressing the apprehension had been made known to the detaining authority it could not be said that this material aspect of the case had been kept back from the detaining authority. It was pointed out that the mere expression of an apprehension that confessional statements might be extorted was different from the actual obtaining of the statements under pressure of which a complaint had been made by the detenu in his statement recorded on December 22, 1977 wherein the earlier statements had been completely retracted and it was urged that the fact that there was such retraction of the confessional statements by the detenu at the first 220 available opportunity was not communicated or placed before the detaining authority when it considered the question of passing the impugned order. Counsel further contended that instead of considering whether these facts were vital enough to require the application of mind by the detaining authority, the High Court went on to record findings of fact, to the effect (i) that it could not be said that the detenu was in illegal custody: (ii) that the confessional statements could not have been extracted under compulsion and (iii) that the said statements were not obtained under duress and in doing so the High Court clearly acted in excess of jurisdiction and contrary to the well established principles applicable to the issue of habeas corpus in preventive detention case. In any case it was for the detaining authority to apply its mind to these aspects before deciding to issue the impugned order. Counsel further contended that it was undisputed that the Advocate was not allowed to be present nor allowed to be consulted during the interrogation in spite of request having been made in that behalf which clearly showed that the detenu was under duress and not a free person. In any event, counsel contended, the satisfaction of the detaining authority must be regarded as vitiated inasmuch as these vital facts, namely, (i) that during interrogation in spite of request neither the presence nor the consultation of the Advocate was permitted; (ii) that in spite of intimation to the Advocate in that behalf the detenu was not produced before the Magistrate at 5.30 p.m. On December 14, 1977 and (iii) that the confessional statements had been squarely retracted by the detenu on December 22, 1977 at the first available opportunity while he was in judicial custody all of which had a material bearing and would have influenced the mind of the detaining authority one way or the other were neither placed before nor considered by the detaining authority before passing the detention order on January 4, 1978 and, therefore, the impugned order was liable to be set aside. We find considerable force in these contentions urged by counsel for the appellant before us. It is well settled that the subjective satisfaction requisite on the part of the detaining authority, the formation of which is a condition precedent to the passing of the detention order will get vitiated if material or vital facts which would have a bearing on the issue and would influence the mind of the detaining authority one way or the other are ignored or not considered by the detaining authority before issuing the detention order. In Sk. Nizamuddin vs State of West Bengal(1) the order o`f detention was made on September 10, 197 under s.3(2) (a) of MISA based on the subjective satisfaction of the District Magistrate that it was necessary to detain the petitioner with (1) ; 221 a view to preventing him from acting in a manner prejudicial to the maintenance of supplies and services essential to the community and his subjective satisfaction, according to the ground of detention furnished to the petitioner, was founded on a solitary incident of theft of aluminium wire alleged to have been committed by the petitioner on April 14, 1973. In respect of this incident of theft a criminal case was filed inter alia against the petitioner in the Court of the Sub Divisional Magistrate Asansol, but the criminal case was ultimately dropped as witnesses were not willing to come forward to give evidence for fear of danger W their life and the petitioner was discharged. It appeared clear on record that the history sheet of the petitioner which was before the District Magistrate when he made the order of detention did not make any reference to the criminal case launched against tho petitioner, much less to the fact that the prosecution had been dropped or the date when the petitioner was discharged from that case. ID connection with this aspect this Court observed as follows: "We should have thought that the fact that a criminal case is pending against the person who is sought to be proceeded against by way of preventive detention is a very material circumstance which ought to be placed before the District Magistrate. That circumstance might quite possibly have an impact on his decision whether or not to make an order of detention. It is not altogether unlikely that the District Magistrate may in a given case take the view that since a criminal case is pending against the person sought to be detained, no order of detention should be made for the present, but the criminal case should be allowed to run its full course and only if it fails to result in conviction, then preventive detention should be resorted to. It would be most unfair to the person sought to be detained not to disclose the pendency of a criminal case against him to the District Magistrate. " It is true that the detention order in that case was ultimately set aside on other grounds but the observations are quite significant. These observations were approved by this Court in Suresh Mahato vs The District Magistrate, Burdwan and others(1). The principle that could be clearly deduced from the above observations is that if material or vital facts which would influence the mind of the detaining authority one way or the other on the question whether or not to make the detention order, are not placed before or are not considered by the detaining authority it would vitiate its subjective satisfaction rendering the detention order illegal. After all the detaining authority must exercise (1) A.I.R. 1975 S.C. 728. 222 Due care and caution and act fairly and justly in exercising the power of detention and if taking into account matters extraneous to the scope and purpose of the statute vitiates the subjective satisfaction and renders the detention order invalid then failure to take into consideration the most material or vital facts likely to influence the mind of the authority one way or the other would equally vitiate the subjective satisfaction and invalidate the detention order. In the instant case admittedly three facts were not communicated to or placed before the detaining authority before it passed the impugned order against the detenu, namely, (i) that during interrogation of the detenu, in spite of request neither the presence nor the consultation of the Advocate was permitted; (ii) that in spite of intimation to the Advocate in that behalf the detenu was not produced before the Magistrate on December 14, 1977 and (iii) that the confessional statements were squarely retracted by the detenu on December 22, 1977 at the first available opportunity while he was in judicial custody; the first two had a bearing on the question whether the confessional statements had been extorted under duress from the detenu or not, while the third obviously was in relation to the confessional statements which formed the main foundation of the impugned order and such were vital facts having & bearing on the main issue before the detaining authority. As regards the first this Court in Nandini Satpathy 's(1) case has observed in para 63 of the judgment thus: "Lawyer 's presence is a constitutional claim in some circumstances in our country also, and, in the context of Article 20(3), is an assurance of awareness and observance of the right to silence. The Miranda decision has insisted that if an accused person asks for lawyer 's assistance, at the stage of interrogation, it shall be granted before commencing or continuing with the questioning. We think that Article 20(3) and Article 22(1) may, in a way, be telescoped by making it prudent for the police to permit the advocate of the accused, if there be one, to be present at the time he is examined. Overreaching Article 20(3) and Section 16(2) will be obviated by this requirement. We do not lay down that the police must secure the services of a lawyer. That will Lead to 'police station lawyer ' system, an abuse which breeds other vices. But all that we mean is that if an accused person expresses the wish to have his lawyer by his side when his examination goes on, this facility shall not be denied, without being exposed to the serious reproof that involuntary self crimination secured in secrecy and by coercing the will, was the project." (1)[978] 2 S.C.C.424. 223 In this case the request to have the presence/consultation of a lawyer was turned down owing to some misconception of the legal position but that apart, the fact that such a request was made and refused ought to have been intimated to the detaining authority. Further, in passing the detention order the detaining authority obviously based its decision on the detenu 's confessional statement of December 13 and 14, 1977 and, therefore, it was obligatory upon the Customs officers to report the retraction of those statements by the detenu on December 22, 1977 to the detaining authority, for, it cannot be disputed that the fact of retraction would have its own impact one way or the other on the detaining authority before making up its mind whether or not to issue the impugned order of detention. Questions whether the confessional statements recorded on December 13 and 14, 1977 were voluntary statements or were statements which were obtained from the detenu under duress or whether the subsequent retraction of those statements by the detenu on December 22, 1977 was in the nature of an after thought, were primarily for the detaining authority to consider before deciding to issue the impugned detention order but since admittedly the aforesaid vital facts which would have influenced the mind of the detaining authority one way or the other were neither placed before nor considered by the detaining authority it must be held that there was non application of mind to the most material and vital facts vitiating the requisite satisfaction of the detaining authority thereby rendering the impugned detention order invalid and illegal. For these reasons we set aside the impugned detention order. P.B.R. Appeal allowed.

An executing court cannot go behind a decree so as to vary its terms and when the obligations it imposes on the parties are reciprocal and inseverable, rendering partial execution impossible, the decree must be executed wholly as it stands or not at all. This is particularly true of a decree for specific performance where the party who seeks execution must satisfy the executing court that he is in a position to perform the obligations which the decree imposes on him. That in cases where the identity or substance of what the decree directs a party to give to the other is in dispute, the executing court alone has the power to decide it under section 47 of the Code of Civil Procedure and under section 42 of the Code the powers of the court executing a decree on transfer are identical with those of the court which passed the decree. That although the remedy provided by O. XXI, r. 32(1) of the Code of Civil Procedure is available in execution of a decree for specific performance, it can be used only by a person entitled to execute the decree and if, by reason of his own incapacity to perform his part, he is precluded from seeking execution, 0. XXI, r. 32(1), can have no application. Consequently, in a case where, as in the present, the defendant sought to execute a decree for specific performance of a contract but was himself unable to perform one of the obligations the decree imposed on his party, namely, to transfer five annas share in a partnership firm, for the reason that the firm had ceased to exist by dissolution before the date of execution, he was not entitled to execute the decree. Held further, that the defendant could not be allowed to substitute five annas share in the assets of the dissolved firm instead, as that would amount to an alteration of the decree which the execution court was not competent to make.

ivil Appeal Nos. 160 63 of 1990. From the Order dated 25.9.89 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/1883/85 C, E/2031/85 C, E/ 1468/88 C and E/ 1986/88 C (Order No. 543 546 of 1989 C). M.L. Lahoty, Mrs. Meeta Sharma and P.S. Jha (NP) for the Appellant. M. Chander Sekaran, Additional Solicitor General (N.P.). M. Gouri Shanker Murthy, G. Venkatesh Rao and P. Parameshwaran for the Respondent. The Judgment of the Court was delivered by 320 S.C. AGRAWAL, J. These appeals raise for consideration the question as to whether egg trays and other similar products manufactured by the appellant can be regarded as 'Containers ' under the relevant entries in the Central Excise Tariff. Till February 28, 1986 the excise tariff was contained in the First Schedule to the (hereinafter referred to as 'the old Tariff ') and with effect from March 1, 1986, the excise tariff is contained in the Schedule to the (hereinafter referred to as 'the new Tariff). The relevant entry in the old Tariff was Item 17. During the period March 1, 1982 to February, 1983, the said Item 17 read thus: "Paper and paper board, all sorts (including paste board, mill board, straw board, cardboard and corrugated board) and articles thereof specified below, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power (1) Uncoated and coated printing and writing paper (other than poster paper) (2) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing), not elsewhere specified. (a) All sorts of paper commonly known as Kraft paper, including paper and paper board of the type known as Kraft liner or corrugating medium, of a substance equal to or exceedings 65 gram per square metre in each case. (b) Others. (3) Carbon and other copying papers (including duplicator stencils) and transfer papers, whether or not cut to size and whether or not put up in boxes. (4) Boxes, cartons, bags and other packing containers (including flattened or folded cartons, whether or not printed and whether in cartons), whether or not printed and whether in assembled or unassembled conditions." 321 Item 68 of the old Tariff was in the nature of residuary entry. By notification No. 66/82 CE dated February 28, 1982, the Central Government, in exercise of the powers conferred by sub rule (1) of rule 8 of the Central Excise Rules, 1944, exempted articles of paper or paper board falling under sub item (4) of item 17 of the old Tariff from the whole of the duty of excise leviable thereon. The said exemption was, however, not applicable to printed boxes and printed cartons (including flattened or folded printed boxes and flattened or folded printed cartons) whether in assembled or unassembled condition. With effect from March 1, 1983, Item 17 was substituted and during the period March 1, 1983 to February 28, 1986, it read as under: c "Paper and Paper board, all sorts (including pasteboard, mill board, strawboard, cardboard and corrugated board), and articles thereof specified below, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power (1) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing), not elsewhere specified. (2) Carbon and other copying papers (including duplicator stencils) and transfer papers, whether or not put up in boxes. (3) Boxes, cartons, bags and 'Other packing containers (including flattened or folded boxes and flattened or folded cartons), whether or not printed and whether in assembled or unassembled conditions. " In the new Tariff, the relevant entry under Heading 48.18 in Chapter 48 is as follows: G "48.18 OTHER ARTICLES OF PAPER PULP, PAPER. PAPERBOARD, CELLULOSE WADDING OR WEES OF CELLULOSE FIBRES: Cartons, boxes, containers and cases (including flattened or folded boxes and flattened or folded cartons), whether in assembled or unassembled condition: 322 4818.11 Intended for packing of match sticks 4818.12 Printed cartons, boxes, containers and cases, made wholly out of paper or paper board of heading No. or sub heading No. 48.04, 4805.11, 4806.19, 4807.91, 4807.92, 48.08 or 4811.10, as the case may be 4818.13 Other printed cartons, boxes and cases 4818.19 Other" 4818.20 Toilet tissues, handkerchiefs and cleansing tissues of paper 4818.90 Other." On products falling under sub Heading 4818.19, the excise duty was nill whereas on products falling under sub Heading 4818.90, the excise duty was payable at the rate of 12%. M/s. G. Claridge & Company Ltd. the appellant herein manufactures (i) egg filler flats, (ii) egg cartons, (iii) tube light packing trays, (iv) duck egg trays and (v) apple trays. It filed a classification list for the above goods effective from April 1, 1981 classifying the products under Item 68 of the old Tariff and it was paying duty at the prevailing rate under Item 68. After the introduction of the revised Item 17 with effect from February 28, 1982/March 1, 1982, the said appellant filed a revised classification list effective from March 1, 1982 for the aforesaid five products seeking classification under Item 17(4) and claiming full exemption from central excise duty under notification dated February 28, 1982. This classification list was approved by the Assistant Collector of Central Excise, Pune Division on March 11, 1982, but on re examination Department felt that the said products did not merit classification under Item 17(4) but under Item 68 of the old Tariff and a show cause notice dated May 4, 1984 was issued. After considering the reply of the appellant to the said show cause notice, the Assistant Collector of Central Excise, Pune Division passed an order dated January 28, 1985 whereby he held that 'egg trays ' manufactured by the appellant were correctly classifiable under Item 68 of the old Tariff and not under Item 17(4) and the appellant was required to pay central excise duty at the appropriate rate leviable on all types of egg trays manufactured and cleared from its unit during the period of six months prior to the notice dated May 4, 1984. The Assistant Collector was of the view that the articles manufactured by the appellant were articles manufactured directly from the pulp and were, therefore, classifiable as 'articles of pulp ' under Item 68. The said order of the Assistant Collector was reversed in appeal by the Collector of Central Excise 323 (Appeals) by his order dated April 30, 1985 on the view that the products manufactured by the appellant were made out of waste paper and they were classifiable under Item 17(4) as 'articles of paper and paper board '. Feeling aggrieved by the said order of the Collector (Appeals), the Department filed appeals Nos. E/1883/85 C and E/2031/85 C before the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Appellate Tribunal '). After the introduction of the new Tariff with effect from March 1, 1986, the appellants filed a classification list classifying their products as 'containers ' falling under sub heading 4818.19 of the new Tariff and since no duty was payable under the said sub heading, the appellants claimed exemption from payment of excise duty on their products. The said classification list was approved provisionally but subsequently the Assistant Collector, Central Excise issued a show cause notice dated October 16, 1986 proposing to classify the goods under sub heading 4818.90 chargeable to duty @ 12% ad valorem. After considering the reply to the said show cause notice, the Asstt. Collector, Central Excise, by his orders dated April 15, 1987 and July 1, 1987 held that the products manufactured by the appellant were not 'containers ' but were 'articles of pulp ' falling under sub heading 4818.90. The said orders were set aside by the Collector of Central Excise (Appeals) by his orders dated March 22, t988 and June 6, 1988. The Collector (Appeals) held that the products manufactured by the appellant were 'packing containers ' and classifiable under sub heading orders of the Collector (Appeals), 4818.19. Feeling aggrieved by the Department filed appeals before the Appellate Tribunal which were registered as Appeals Nos. E/1468/88 C and E/1986/88 C. All the above four appeals were disposed by the Appellate Tribunal by a common order whereby the said appeals were allowed. The Appellate Tribunal held that the products manufactured by the appellant cannot come within the sub classification below containers and were not classifiable under sub heading 4818.19 but were classifiable under sub head ing 4818.90 of the new Tariff and similarly they were not classifiable under item 17(4) or 17(3) of the old Tariff. The Appellate Tribunal was also of the view that the products manufactured by the appellant are articles of paper because starting raw materials is waste paper. The Appellate Tribunal has held that the duty demanded by the Assistant Collector for six months prior to the issue of show cause notice dated May 4, 1984, i.e., from November 4, 1983 is legally sustainable and with regard to recovery of the duty for the earlier period from March 1, 1982 by invoking the proviso to Section 11 A(l) of the , the Appellate Tribunal remanded the matter to the Collector (Appeals) for considering the said question. 324 The question which arises for consideration in these appeals is whether the egg trays and other similar products manufactured by the appellants are 'containers ' falling under Item 17(4) of 17(3) of the old Tariff and sub heading 4818.19 of the new Tariff. The learned counsel for the appellant has urged that the products manufactured by it are 'containers ' and in support of this submission the learned counsel has invited our attention to the meaning of the term 'container ' as contained in the Dictionaries and the Indian Standard Glossary of Terms relating to paper or paper board, packaging materials, Glossary of Packaging Terms (USA) and Glossary of Packaging Terms (Australia). The submission of the learned counsel is that a 'container ' is a receptacle which holds, restrains or encloses the item to be stored or transported and that the egg tray and other similar products manufactured by the appellant are 'containers ' because they are receptacles for holding, storing and transporting the things kept in them. It has been urged that a 'tray ' is a shallow lidless container and merely because an egg tray is described as a tray does not mean that it is not a 'container '. It is contended that egg trays are so designed as to protect the eggs from breakage and that egg trays provide the best mode for storage and transport of eggs. The learned counsel has submitted that the Appellate Tribunal was in error in proceeding on the basis that egg tray and other similar products manufactured by the appellant cannot be regarded as 'containers ' because when a single egg tray is reversed or turned upside down or tilted sideways vertically at 90% angle, the contents would fall down. The submission of the learned counsel is that it is not required that a container should be closed from all sides and that a container can also be open. The expression 'container ' has been thus defined in the dictionaries and Glossaries of Packaging Terms: "Container: One that contains; a receptacle or flexible covering for shipment of goods. (Abstract from Webster 's New Collegiate Dictionary, 1975) "Container: that which contains that in which goods are enclosed for transport. (Abstract from Chambers ' 20th Century Dictionary) "Containers Any receptacle which holds, restrains or 325 encloses any article or commodity or articles or commodities to be stored or transported. (Abstract from Indian Standard Glossary of Terms: 1.8. 4261 1967) "Container. (1) In general, any receptacle or enclosure used in packaging and shipping. (2) Relatively large, reusable enclosures to be filled with smaller packages and discrete objects, to consolidate shipments and allow transport on railway flat cars, flatbed trailers, aircraft, in ships ' holds or as deckloads, etc. (See CARGO TRANSPORTER; CONTAINERIZATION). (3) Any receptacle for holding a product." [Abstract from Glossary of Packaging Terms (USA)] "Container. A large box for intermodal transport, containing many smaller boxes of different shapes and sizes as well as individual articles. [Abstract from Glossary of Packaging Terms (Australia)] The above definitions would show that the expression 'container ' is used in three different senses: in a broad sense, it means a receptacle which contains; in a narrower sense, it means a receptacle in which articles are covered or enclosed and transported; and in a more limited sense, it means enclosure used in shipping or railway for transport of goods. If used in a broad sense, 'container ' would include a tray because it is a receptacle which contains articles and, therefore, an egg tray would be a 'container '. But an egg tray would not be a 'container ' in a narrower sense because articles placed in it are not covered or enclosed and they cannot be transported as such. It is,therefore, necessary to ascertain whether the expression 'container ' in Item 17 of the old Tariff and Heading 48.18 of the new Tariff has been used in the broad sense to include all receptacles or in a narrower sense to mean those receptacles in which the articles are covered or enclosed and transported. For this purpose, the context in which the word 'container ' has been used in these entries has to be examined. In Item 17 of the old Tariff, the word 'containers ' is preceded by the words 'boxes, cartons, bags and other packing ' and in Heading 48.18 of the new Tariff, the word 'containers ' is preceded by the words cartons, boxes ' and is followed by the words 'and cases '. It is a well accepted canon of statutory construction that when two or more words which are susceptible of analogous meaning are coupled together they 326 are understood to be used in their cognate sense. It is based on the principle that words take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. [See: Dr. Davendra M Surti vs State of Gujarat, ; at p. 240]. Considering the expression 'containers ' in the context in which it is used in the relevant tariff items, we are of the opinion that the said expression has to be construed to mean 'packing containers ' which are analogous to boxes and cartons, that is, an enclosed receptacle which can be used for storage and transportation of articles. Egg trays being receptacles which are not covered or enclosed cannot be used for transportation of articles and, therefore, they cannot be regarded as 'containers ' under the abovementioned entries in the Excise Tariff. According to the New Encyclopaedia Britannica, the practice followed in the various countries for the packaging of eggs for transport is as follows: "Packaging. For retail use in the United States, eggs are repackaged in dozen and half dozen paperboard cartons. In some other countries they are packed with straw or excelsior in long wooden boxes. In many parts of the world, they are marketed in baskets or boxes and the individual eggs are sold by weight. Several European countries stamp each egg with a date and number to meet the import restrictions of other nations." [p. 444, Vol. 6, 1974 edition] The Glossary of Packaging Terms (USA) also shows that moulded pulp egg trays are put in a standard case which indicates that the egg trays containing the eggs are put in a case for the purpose of transport. In other words, the case in which the egg trays are put are `containers ' and not the 'egg tray ' itself. For the reasons aforesaid, we are of the opinion that the Appellate Tribunal was right in taking the view that the egg trays and other similar products manufactured by the appellant cannot be regarded as `containers ' under the relevant items of the Excise Tariff. The appeals, therefore, fail and are accordingly dismissed. There will be no orders as to costs. R. P. Appeals dismissed.

The appellant was a manufacturer of egg trays and other similar items. Before the introduction of (new Tariff) effective from 1.3.1986, Central Excise and Salt Act, 1944 (old Tariff) was applicable to the relevant products. The appellant, classifying its product under Item 68 of the old Tariff, was paying duty accordingly. By Notification dated February 28, 1982, issued under Rule 8(1) of the Central Excise Rules, 1944, the Central Government exempted articles of paper and paper board falling under Item 17(4) of the old Tariff. The appellant filed a revised classification list for its products seeking classification under item 17(4). The Asstt. Collector, Central Excise held the products classifiable as 'articles of pulp ' under Item 68 of the old Tariff, and the appellant was required to pay excise duty accordingly. On appeal, the Collector (Appeals) reversed the order of the Asstt. Collector, and held that the products were made out of waste paper and were classifiable under Item 17(4) as 'articles of paper and paper board '. The Revenue filed appeals before the Customs, Excise and Gold (Control) Appellate Tribunal. On introduction of the new Tariff, the appellant classified the relevant products as 'containers ' under sub heading 4818.19 and claimed exemption. The Asstt. Collector held that the products were not 'containers ' but were 'articles of pulp ' falling under sub heading 4819.90 and accordingly chargeable to duty. Setting aside the order in 318 appeal, the Collector held that the products were 'packing containers ' and classifiable under sub heading 4818.19. The Revenue appealed before the Appellate Tribunal, which allowed all the appeals by a common judgment, but remanded the matter to the Collector (Appeals) with regard to the recovery for a certain period. In the assessee 's appeal to this Court it was contended that the `egg trays ' manufactured by the appellant were 'containers ' under Item 17 and Heading 48.18 of the respective Tariffs; that merely because the egg tray was described as a tray does not mean that it was not a container; and that it was not required that a container should be closed from all sides. On the question whether: egg trays and other similar products manufactured by the appellant are 'containers ' falling under Item No. 17(4) or 17(3) of the First Schedule to the and Heading 48.18 of the . Dismissing the appeals, this Court, HELD: 1. 1 'Egg trays ' being receptacles which are not covered or enclosed cannot be used for transportation of articles and cannot be regarded as 'containers ' under Item 17 of the First Schedule to Central Excise and Salt Act, 1944 and Heading 48.18 of the Schedule to . [326B] 1.2 Moulded pulp egg trays containing the eggs are put in a standard case for the purpose of transport. The case in which the egg trays are put, are 'containers ' and not the 'egg trays ' itself. [326E F] 1.3 The expression 'container ' is used in three different senses: in a broad sense, it means a receptacle which contains; in a narrower sense, it means a receptacle in which articles are covered or enclosed and transported; and in a more limited sense, it means enclosures used in shipping or railway for transport of goods. If used in a broad sense, `container ' would include a tray because it is a receptacle which contains articles and, therefore, an egg tray would be a 'container '. But an egg tray would not be a 'container ' in a narrower sense because articles placed in it are not covered or enclosed and they cannot be transported as such. [325D F] 319 1.4 In item 17 of the First Schedule to the word 'containers ' is preceded by the words 'boxes, cartons, bags and other packing ' and in Heading 48.18 of the Schedule to , the word 'containers ' is preceded by the words 'cartons, boxes ' and is followed by the words 'and cases '. Considering the expression 'containers ' in the context in which it is used in the relevant tariff items, the said expression has to be construed to mean 'packing containers ' which are analogous to boxes and cartons, that is, an enclosed receptacle which can be used for storage and transportation of articles. [325G, 326A B] Webster 's New Collegiate Dictionary, 1975 Chambers ' 20th Century Dictionary Indian Standard Glossary of Terms Glossary of Packaging Terms (USA) Glossary of Packaging Terms (Australia) New Encyclopedia Britannica, referred to. 2. It is a well accepted canon of statutory construction that when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. It is based on the principle that words take as it were their colour from each other, that is, more general is restricted to a sense analogous to a less general. [325G H, 326A) Dr. Devendra M. Surti vs State of Gujarat, ; , relied on.

n No. 3 61 of 1968. Petition under article 32 of the Constitution of India for writ in the nature of habeas corpus. M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the petitioner. R. Gopalakrishnan and R. N, Sachthey, for the respondent. The Judgment of the Court was delivered by Shah, J. On March 16, 1968 the petitioner was arrested and ordered to be detained under section 3(1) (,a) (i) of the Jammu and Kashmir Preventive Detention Act 13 of 1964. On March 26, 1968, he was served with the grounds of detention. On May 3, 1968, the petitioner moved a petition for a writ of habeas corpus in this Court. The petition was rejected by this Court on October 10, 1968. In the meanwhile the order dated March 16 1968, was revoked on September 16, 1968, and another order was served upon the petitioner on the same day. On September 24, 1.968, he was served with the grounds of detention for the fresh order, and his case was referred to the Advisory. Board on October 26, 1968. On October 30, 1968, the Advisory Board recommended that the petitioner. be detained. The petitioner then moved this petition on November 11, 1968 a writ of habeas corpus. Two contentions in the nature of preliminary objections were raised in support of the petition. It was urged that (1) the petitioner was, in spite of a specific request, denied a personal hearing before the Advisory Board, and (2) that the Chief Minister who was in charge of the portfolio relating to preventive detention did not apply his mind to the case of the petitioner before making the order of detention. An affidavit is filed by the Secretary to the Government of Jammu & Kashmir affirming that the petitioner made no request for production before the Board for a personal hearing. He has also affirmed that the Chief Minister did consider the case of the petitioner and directed that the petitioner be detained in custody under the Preventive Detention Act. In view of this affidavit, counsel for the petitioner did not press he two preliminary contentions. 576 Counsel urged that the order of detention was invalid because (1) that the case of the petitioner was not referred to the Advisory board till September 24, 1968 and on that account his detention was invalid, and he could not be continued in detention thereafter;(2) that in making the detention order the authorities acted mala fide; and (3) the grounds in support of the order were vague and indefinite By article 22 of the Constitution certain protection is conferred upon persons who are detained under orders of preventive detention But article 35 (c) in its application to the State of Jammu & Kashmir provides "no law with respect to preventive detention made by the Legislature of the State of Jammu and Kashmir, whether before or after the commencement of the Constitution (Application to Jammu and Kashmir) Order, 1954, shall be void on the ground that it is inconsistent with any of the provisions of this (Part III) Part, but any such law shall, to the extent of such in consistency, cease to have effect on the expiration of fifteen years from the commencement of the said Order, except as respects things done or omitted to be done before the expiration thereof. " The protection of cls. (5), (7) of article 22 insofar the, provision are inconsistent therewith does not avail the petitioner. By s.3 the Government of Jammu and Kashmir is entitled, if satisfied with respect to any person that with a view to Preventing him from acting in any manner prejudicial to the security of the State or the maintenance of public order, to make an order direct that such person be detained. By section 8 it is provided : "(1) When a person is detained in pursuance of a detention order, the authority making the order shall, as soon as may be, but not later than five days from the date of detention, communicate to him the on which the order has been made and shall afford him the earliest opportunity of making a representation against the order to the Government. (2) Nothing in sub section (1) shall require the authority to disclose facts which it considers to be against the public interest to disclose. " Section 9 provides for the constitution of Advisory Board and section 10 deals with references to the Advisory Board.that section the Government is required within thirty days from the date of detention under the order to place before the Advisory Board the grounds on which the order has been made and the 577 representation, it any, made by the person affected by the order. By section 12 it is provided: "(1) In any case where the Advisory Board has reported that there is in its opinion sufficient cause for the detention of a person, the Government may confirm the detention order and continue the detention of the person concerned for such period as it thinks fit. (2) In any case where the Advisory Board has rePorted that there is in its opinion no sufficient cause for the detention of the person concerned, the Government shall revoke the detention order and cause the person to be released forthwith. ,, Section 13 prescribes the maximum, period of detention for which any person may be detained in pursuance of any detention order. Section 13A which was added by Act 8 of 1967 enables the State to detain a person for a period of two years. Section 13A provides: "(1) Notwithstanding anything contained in this Act, any person detained under a detention order made in any of the following classes of cases or under any of the following circumstances may be detained for a period longer than three months, but not longer than six months, from the date of detention, without obtaining the opinion of any Advisory Board, namely, when such person has been detained with a view to preventing him from acting in any manner prejudicial to (i) the 'security of the State; (ii) the maintenance of public order; Provided that where any such person has been detained with a view to Preventing him from acting in any manner prejudicial to the security of the State grounds on which the detention order has been made are not communicated to him under the proviso to section 8 (1), such person may be detained for a period of two years from the date of detention without obtaining the opinion of the Advisory Board. (2) In the case of every person detained with a view to preventing him from acting in any manner prejudicial to the security of the State or the maintenance of public order, the provisions of this Act shall have effect subject to the following modifications, namely: (a) in sub section (3) of section 3, for the words 'twelve days ', the words 'twenty four days ' shall be substituted. 578 (b) in sub section (1) of section 8, (i) for the words 'five days ' the words 'ten day 's shall be substituted; (ii) the following proviso shall be inserted at the end, namely Provided that nothing in this sub section shall apply to the case of any person detained with a view to preventing him from acting in any manner prejudicial to the security of the State, if the authority making the order, by the same or a subsequent order directs that the person detained may be informed that it would be against public interest to communicate to him. the grounds on which the detention order has been made. ' (c) in section 10, (i) after the words, 'In every case where a detention order has been made under this Act ' occurring in the beginning, the brackets and words '[other than a case to which the proviso to section 8(1) applies] ' shall be inserted; and (ii) for the words 'thirty days ' the words 'sixty days ' shall be substituted, (b) in section 1 1, for the words 'ten weeks ' the words five months shall be substituted." The effect of section 13A insofar as it is relevant to this case is to authorise the State in the cases specified to detain a person without obtaining the opinion of the Advisory Board, if he is to be detained for a period longer than three months but not longer than six months from the date of detention. By sub section (2) the periods prescribed for the various steps under the Act are doubled; for making report to the District Magistrate when he exercises the power of detention the period is extended to twenty four days : for the Government to serve the grounds of the order under section 8(1) the period is extended to ten days; and for the Advisory Board to make its report in cases covered by section 13A the period is extended to sixty days. Again by the proviso to section 8(1) the Government is entitled to withhold in serving grounds upon the detenu that it would be against public interest to communicate to him the grounds on which the detention order has been made, Relying upon the terms of section 10(1) as amended by section 13A it was urged that the Government was bound to refer the case of the petitioner within sixty days from the date of detention and ' since no reference was made the detention of the petitioner under the order dated March 16, 1968, was unauthorised. This argu 579 ment is plainly unsustainable. Section 13A opens with words "Notwithstanding anything contained in this Act", and provides that a person may be detained for a period not longer than six months without obtaining the opinion of the Advisory Board. It is plainly contemplated thereby that the Government may decide not to refer the case of the detenu to the Advisory Board, because the period for which he is to. be detained is not to exceed six months. Section 13A is an exception to section 10 as well as to all other relevant provisions of the Act, and in case of conflicts. 13A prevails. The, petitioner was detained for six months from March 16,.1968 to September 16, 1968 without obtaining the opinion of the Advisory Board. We will be justified in accepting the contention of the State that it was intended, when the order was pass detaining the petitioner that he was not to be kept in detention for a period longer than six months and his case fell within the terms of section 13A (1) and on that account it was not necessary to obtain the opinion of the Advisory Board. It was said by counsel for the petitioner that the plea of the State was inconsistent with the course of events, and the State Government had taken shelter under the provisions of section 13A (1) even though they had at no stage any desire to release the petitioner from jail at the expiry of or 'within six months. The Court will not be justified in assuming from the circumstance that a fresh order has been issued that the Government acted mala fide in making the original order or the fresh order. The only plea raised by the petitioner in support of that plea is in paragraph 1 5 of the p etition, that the cancellation of the earlier order of detention and the service of the fresh order of detention on the petitioner was "a part and parcel of the scheme of the State to suppress the peaceful trade union movement, and that the fresh order of detention was passed mala fide. No particulars are furnished which justify an inference that in resorting to the provisions of the Act the Government 's action was actuated by ill will or taken for some collateral purpose. Reliance was also placed upon the recitals 'in the grounds supplied to the petitioner on March 16, 1968 and under the fresh detention order dated September, 16, 1968, and it was contended that the grounds being identical an inference followed that the previous detention order was continued on the same grounds on which the original order was passed. On comparing the grounds it cannot be said that they are identical. It is stated in the last part of the Annexure to the grounds of detention under order dated September 16, 1968, that from the middle of January to March 1968 the petitioner went underground and during that period he used to attend secret meetings in which he used to stress upon the Government employees that their demands cannot be 580 conceded by the, Government unless they resort to violence that the petitioner was violent by nature and was a perpetual threat to the maintenance of public order. It cannot also be said that merely because the previous order had been passed under which the 'Petitioner was intended to be detained for a period of six months and thereafter In consequence of further information the Government was required to issue a fresh order, the original order ,or the fresh order was illegal. The plea that the grounds were vague and indefinite cannot also be accepted. It is recited in the order that the Petitioner was informed that his detention was ordered on grounds specified in the Annexure appended thereto, which also contained facts relevant thereto except those which the Government considered to be against public interest to disclose. By virtue of sub section (2) of section 8, it is open to the Government not to disclose,, facts which it considers to be ag ainst the public interest to disclose. In the present case the order clearly states that ' the Government were of the view that facts relevant to the grounds except those which the Government considered to be against public interest to disclose were intimated to the petitioner. The Annexure may appear somewhat indefinite and vague. But, that is obviously because facts which in the view of the Government, were against public interest to disclose, were withheld from the petitioner. The Government have power to withhold information about those facts, and they did so. The grounds cannot in the circumstances be said to be vague and indefinite. One more question needs to be dealt with. The petitioner who was present in the Court at the time 'of hearing of this petition complained that he is subjected to solitary confinement while in detention. It must be emphasized that a, detenu is not a convict. Our Constitution, notwithstanding the broad principles of the rule of law, equality and liberty of the individual enshrined therein, tolerates, on account of peculiar conditions prevailing, legislation which is a negation of the rule of law, equality and liberty. But it is implicit in the Constitutional scheme that the power to detain is not a power to punish for offences which an executive authority in his subjective satisfaction believes a citizen to have committed. Power to detain is primarily intended to be exercised in those rare cases when the larger interest of the State demand that restrictions shall be placed upon 'the liberty of a citizen curbing his future activities The restrictions so placed must, consistently with the effectiveness of detention, be minimal. The petition fails and is dismissed. V.P.S. Petition dismissed.

The respondent held a licence for the supply of Electricity under the ' in the Godhra area of undivided BombaY. On the creation of the State of Gujarat the area went to that State. The Electricity (Supply) Act came into force in 1948 and under it the condi tions in Schedule VI thereof were deemed to be incorporated in the licence of every licensee. Under section 57 (2) (c) of the ' Act the Government could fix the rates for supply of electricity and under cl. 1 of the Schedule VI a licensee could reduce the rates for keeping the profit at a reasonable level. A licensee had no, power to enhance the rates except by requesting the Government to fix new rates on the recommendation of a fresh rating committee. In 1952 the Covernment fixed certain rates on the recommendations of a rating committee. In 1956 the Supply Act of 1948 was amended. By section 57A(1) (e) of the amended Act the rates fixed by the Government under section 57(A)(1)(d) on the recommendation of a rating committee were to enure for a maximum of three years. Under of the amended Schedule VI the licensee shall so adjust his charges Cl. the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not as far as possible exceed the amount of reasonable return. In 1963 the respondent enhanced the rates of supply without having them fixed by the Government on the recommendations of a rating committee. The appellants who were consumers of electricity in the Godhra area filed suits seeking, to restrain the respondent from enforcing the enhanced charges. The suits were decreed by the trial court and the decrees were 'confirmed by the first appellate court and in second appeal by a single Judge. In Letters Patent appeal however the High Court held that under the Supply Act as amended in 1956 the respondent had a unilateral right to enhance the charges subject to the conditions prescribed in, Schedule VI of the Act. The appellants Came to this Court contending that they had a vested right in. the rates fixed by Government in 1952, that under the amended Act the respondent did not have a unilateral right to enhance those rates, and that the amended provisions not being retrospective nor inconsistent with the old provisions the charges fixed by the Government in 1952 must in view of section 6 of the continue to be in operation. HELD : The law declared by the Amending Act does not affect any right or privilege, accrued under the repealed provision. It merely Prescribes as to what can or should be done in the future. Therefore there is no basis for saying that it affects vested rights. [847 F] For finding out the power of the licensee to alter the charges one has to look at the terms of the license in the light of the law as it stands, the 837 past history of that law being wholly irrelevant. If the terms of the licence, including the deemed terms permit him to unilaterally alter the charges then he has that right. In the present case looking at those terms, the respondent was certainly within its rights in enhancing the charges as admittedly it had followed the procedure prescribed by law. [847 F G] The contention that there was no inconsistency between the present scheme relating to the enhancement of charges vis a vis the scheme provided under the Supply Act prior to its amendment in 1956 could not be accepted. The two schemes are substantially different. Under the former scheme once the Government fixed the charges the licensee could not en hance them but at present at the end of the period fixed in the Government order the licensee has a unilateral right to enhance the charges in accordance with the conditions prescribed in Schedule VI. Therefore in, view of section 57 the provisions contained in that Schedule have an overriding effect. [847 H 848 A] The intention of the legislature being clear and unambiguous there was no need to call into aid any rule of statutory construction or any legal presumption. Further, there was no reason why those who obtained licences prior to the amendment of the Supply Act in 1956 'should be in a more disadvantageous position than those who got their licences thereafter. Correspondingly there was no reason why those who are served by licencees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licences thereafter. [847 C] Section 57(A)(1)(e) was intended to meet the changing economic circumstances. The purpose behind the new provisions appears to be to, permit the licencees to adjust their charges to get reasonable profits. But at the same time a machinery has been provided to see whether any excess charges have been levied and if levied 'get the same refunded to the consumers.[847 E] In view of the above considerations and findings the appeals must fail. State of Punjab V. Mohar Singh, ; and Deep Chand, vs State of U.P. & Ors. [1959] 2 Supp. S.C.R. 8, distinguished. Amalgamated Electricity Co. Ltd. vs N. section Bhathena & Anr. ; , applied.

N: Review Petition (Criminal) Nos. 24 1 242 of 1989. IN Criminal Appeal Nos. 544 545 of 1986. Mahabir Singh for the Petitioner. A.N. Mulla, S.B. Upadhyay for the Respondents. The Order of the Court was delivered by RAY, J.It is very unfortunate that a controversy has arisen following the judgment sought to be reviewed in Criminal Appeal Nos. 544 45 of 1986 rendered by this Bench on 31st January 1989 whereby this Court while confirming the conviction of both the respondents/accused reduced the sentence of imprisonment in respect of each of the respond ents from 10 years to 5 years by invoking the proviso to Section 376(2) of the Indian Penal Code observing "the peculiar facts and 498 circumstances of this case coupled with the conduct of the victim girl, in our view, do not call for the minimum sen tence as prescribed under Section 376(2). " The State of Haryana has filed the above petitions seeking review of the judgment and to "pass such other or further order(s) as may be necessary in the circumstances of the case. " At the outset, we may examine the scope of review of a judgment in a criminal case already pronounced by this Court. Article 137 of the Constitution of India gives the power to the Supreme Court to review its judgment but such special power is exercisable in accordance with, and subject to, the rules of this Court made under Article 145 of the Constitution of India. Order XL, Rule 1 of the Supreme Court Rules provides: "The Court may review its judgment or order but no application for review will be enter tained in a civil proceeding except on the ground mentioned in Order XLVII, Rule 1 of the Code and in a criminal proceeding except on the ground of an error on the face of the record." This Court in a series of decisions has examined the scope of review in criminal cases after the judgment pro nounced or order made. Though we are not citing all those decisions, we may refer to a In the case of P.N. Eswara Iyer and Ors vs Registrar, Supreme Court of India, ; the Constitution Bench of this Court while considering the rule observed thus: "The rule (Order XL, Rule 1), on its face affords a wider set of grounds for review for orders in civil proceedings, but limits the ground vis a vis criminal proceedings to 'errors apparent on the face of the record. '. " See also Sow Chandra Kanta & Anr. vs Sheik Habib, ; and Sheonandan Paswan vs State of Bihar and Or ders, In our considered view, when the present matter is examined in the light of the decisions referred to above, we find no error apparent on the face of the record necessitat ing review of the judgment and as such these review peti tions are liable to be dismissed. 499 We have heard the arguments of the learned senior coun sel, Mr. Rajinder Sachar who though initially started his arguments on behalf of the People 's Union for Civil Liber ties ultimately advanced his arguments on behalf of the State in these review petitions on the representation made by Mr. Mahabir Singh, the learned counsel for the State. Mr. R.K.P. Shankar Dass who advanced his arguments on behalf of Mahila Sanyukt Morcha stated that his arguments may also be treated as supplemental to the arguments of Mr. Rajinder Sachar. Mr. Mulla, the learned senior counsel appeared on behalf of the respondents. Although we have found that the Review Petitions are liable to be dismissed on the ground that there is no error apparent on the face of the record, we, however, in view of the elaborate submissions made by the various learned coun sel appearing before us, would like to make the following observations. The facts of the case are briefly stated in the Criminal Appeals and, therefore, it is not necessary to restate the same. Suffice to say that during the course of the ' hearing on the appeals on behalf of the respondents/accused, it has been urged by the learned defence counsel that the victim Suman Rani was a woman of questionable character and easy virtue with lewd and lascivious behaviour and as such her version is not worthy of acceptance. After considerable debate on the merits of the case, the argument was confined only with regard to the quantum of sentence. after meticu lously examining the entire matter, this Court came to the conclusion that the proviso to Section 376(2) I.P.C. could be invoked having regard to the peculiar facts and circum stances of the case coupled with the conduct of the victim and the mandatory sentence provided under the penal provi sion is not called for. At this juncture, we would like to point put that the very confirmation of the conviction accepting the sole testimony of the victim Suman Rani rejecting the arguments of the defence counsel is itself a clear indication that this Court was of the view that the character or reputation of the victim has no bearing or relevance either in the matter of adjudging the guilt of the accused or imposing punishment under Section 376 I.P.C. We would like to state with all emphasis that such factors are wholly alien to the very scope and object of Section 376 and can never serve either as mitigating or extenuating circumstances for impos ing the sub minimum sentence with the aid of the proviso to Section 376(2) of the I.P.C. In fact, we have expressed our 500 views in the judgment itself ' stating "No doubt an offence of this nature has to be viewed very seriously and has to be dealt with condign punishment. " We have neither characterised the victim, Suman Rani as a woman of questionable character and easy virtue nor made any reference to her character or reputation in any part of our judgment but used the expression "conduct" in the lexi graphical meaning for the limited purpose of showing as to how Suman Rani had behaved or conducted herself in not telling any one for about 5 days about the sexual assault perpetrated on her till she was examined on 28.3.1984 by the Sub Inspector of Police (PW 20) in connection with the complaint given by Ram Lal (PW 14) on 22.3.1984 against Ravi Shanker. In this connection, we make it further clear that we have not used the word 'conduct ' with reference to the character or reputation of the victim Suman Rani. Before parting with this matter, we would like to ex press that this Court is second to none in upholding the decency and dignity of woman hood and we have not expressed any view in our judgment that character, reputation or status of a raped victim is a relevant factor for considera tion by the Court while awarding the sentence to a rapist. With the above observations, we dismiss the Review Peti tions. G.N. Petitions dismissed.

Mohd. Zainulabdeen and Yasin By filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syeed Moosa Shah Khadiri Dargah in Madras for 27 days and to restrain the defendants from interfering with tile plaintiffs ' aforesaid right and management in the Dargah. In reply the defendant No. 1 alleged that in the manage ment of the Dargah, female members had no right nor could they claim the right of Mujawar. It was also alleged that Fathima Bee through whom the Plaintiffs were claiming never enjoyed the right to Hundial collection of the Dargah and share in the Mujawarship and even if she had any right the same was lost as she did not claim any right till her death and therefore the Plaintiffs were also not entitled to any relief. Defendants 7, 8 and 10 however in their written statements admitted family members to be sharer in the income and management of the Dargah and they also admitted that they were paying such share to their sister Ahamadun nissa (10th defendant) in the Hundial collections and that the City Civil Court in suit No. 7518 of 1971 had also recognised the right of 7th defendant Anser Bi to management of the Dargah for 9 days in a year. Thus it was false to contend that the females were not entitled to claim manage ment. The trial court decreed the suit of the Plaintiffs and held that they were entitled to manage the Dargah 1or 27 days in a year. Defendants 3 to 6 and 12 to 19 filed appeals against the judgment of the trial court. The City Civil Judge, however, affirmed the judgment of the Trial Court with some modifications in the relief. Different sets of defendant filed two second appeals before the High Court and both were disposed of by the High Court by its judgment and Order dated 17th November, 1981 whereby it reversed the 520 judgments and decrees of the courts below and dismissed the suit filed by the Plaintiffs. This Court came to the conclusion that there is no controversy as regards the period of 27 days falling to the share of the Plaintiffs and the right of the females to the management of the Dargah according to Muslim law. As regards the question of right of Fathima Bee having become barred by limitation by ouster and that as such the Plaintiffs too had lost that right, this Court, while setting aside the Judg ment and Decree of the High Court and restoring that of the Trial Court as modified by the First Appellate Court, HELD: It iS well settled that where one co heir pleads adverse possession against another co heir it is not enough to show that one out of them was in sole possession and enjoyment of the profits of the properties. The possession of one co heir is considered in law as possession of all the co heirs. The co heir in possession cannot render his pos session adverse to the other co heirs not in possession merely by any secret hostile animus on his own part in derogation of the other co heirs title. [526G H; 527A] It is a settled rule of law as between co heirs that there must be evidence of open assertion of hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster. [527A] The High Court in the instant case committed a serious error in reversing the finding of the lower Appellate Court and in taking a wrong approach in holding ouster on the basis of the judgment and decree given in Suit No. 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957. [527G] P. Lakshmi vs L. Lakshmi Reddy; , , referred to.

Criminal Appeal No. 829 of 1985. From the Judgment and order dated 28.11.1983 of the Andhra Pradesh High Court in Crl. Case/Petn. No. 290 of 1983. R. Venkataramani and R. Ayyam Perumal for the Appellant. A. Subba Rao for the Respondents. The Judgment of the Court was delivered by, OZA, J. This appeal has been filed by the appellant after obtaining leave from this Court against an order passed by the High Court of Andhra Pradesh dated 28.11.1983 wherein the High Court rejected a Revision Petition filed by the appellant. Against the appellant a complaint was filed in the Court of Metropolitan Magistrate, Hyderabad under Section 120(b) read with Sections 467 and 471 of the Indian Penal Code. After summons were issued the appellant raised objection about the maintainability of this prosecution for want of sanction under Section 197 of the Criminal Procedure Code. The objection was rejected by the Metropolitan Magistrate, Hyderabad and against the order of the Metropolitan Magis trate a Revision Petition was filed in the High Court which has been rejected by the impugned order passed by the Andhra Pradesh High Court. The learned Metropolitan Magistrate held that Section 197 is attracted only when a public servant is not removable from his office save by or with the sanction of the Govern ment. The appellant is an officer who is removable from his office by a competent authority and no sanction of the Government is necessary. Consequently Section 197 in terms does not apply. This view was affirmed by the High Court of Andhra Pradesh. It was contended by the learned counsel that after nationa lisa 218 tion as the banks are nationalised the appellant will fall within the definition of public servant and therefore Sec tion 197 will be attracted. It was also contended that although the appellant is removable by an authority which is not Government but the authority has been empowered under the regulations and these regulations have been framed with the sanction of the Government and under these circumstances therefore the view taken by the Courts below is not correct. Section 197 of the Code of Criminal Procedure reads: "When any person who is or was a Judge or Magistrate or a Public servant not removable from his office save by or with the sanction of the Government 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, no Court shall take cognizance of such offence except with the previous sanction (a) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government; (b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, or the State Government. (2) No Court shall take cognizance of any offence alleged to have been committed by any member of the Armed Forces of the Union while acting or purporting to act in the discharge of his official duty, except with the previous sanction of the Central Government. (3) The State Government may, by notification, direct that the provisions of sub section (2) shall apply to such class or category of the members of the Forces charged with the mainte nance of public order as may be specified therein, wherever they may be serving, and thereupon the provisions of that sub scction will apply as if for the expression "Central Government ' occurring therein the expression "State Government" were substituted. (4) The Central Government or the State Gov ernment as the case may be, may determine the person by whom, the manner in 219 which, and the offence or offences for which, the prosecution of such Judge, Magistrate or public servant is to be conducted, and may specify the Court before which the trial is to be held. " It is very clear from this provision that this Section is attracted only in cases where the public servant is such who is not removable from his office save by or with the sanction of the Government. It is not disputed that the appellant is not holding a post where he could not be re moved from service except by or with the sanction of the Government. In this view of the matter even if it is held that appellant is a public servant still provisions of Section 197 are not attracted at all. It was contended by the learned counsel that the compe tent authority who can remove the appellant from service derives his power under regulations and these regulations ultimately derive their authority from the Act of Parliament and therefore it was contended that the regulations are flamed with the approval of the Central Government but it does not mean that the appellant cannot be removed from his service by anyone except the Government or with the sanction of the Government. Under these circumstances on plain read ing of Section 197 the view taken by the Courts below could not be said to be erroneous. We therefore see no reason to entertain this appeal. It is therefore dismissed. A.P.J. Appeal dismissed.

On a complaint being filed under section 120(b) read with ss.467 and 471 of the Indian Penal Code, the Metropolitan Magistrate summoned the appellant and thereafter rejected his objection about the maintainability of his prosecution for want of sanction under section 197 of the Criminal Procedure Code, holding that section 197 does not apply because the appel lant is an officer who is removable from his office by a competent authority and no sanction of the Government is necessary. This view was affirmed by the High Court. In the appeal to this Court, on behalf of the appellant it was contended: (i) that after the nationalisation of the Department of the appellant he will fall within the defini tion of public servant and, therefore, section 197 will be at tracted and (ii) that although the competent authority who can remove the appellant from service is not the Government, but it has been empowered under the regulations framed under the Act of Parliament with the approval and sanction of the Central Government and, therefore, the view taken by the Courts below is not correct. Dismissing the Appeal, HELD: It is clear that section 197 of the Criminal Procedure Code is attracted only in cases where the public servant is such who is not removable from his office save by or with the sanction of the Government. [219B] In the instant case, it is not disputed that the appellant is not 217 holding a post where he could not be removed from service except by or with the sanction of the Government. In this view of the matter even if it is held that appellant is a public servant still provisions of section 197 are not attracted at all. Therefore, the view taken by the Courts below could not be said to be erroneous. [219D]

Civil Appeal No. 724 of 1975. (Appeal by Special Leave from the judgment and order dated the 12th September, 1974 of the Andhra Pradesh High Court at Hyderabad in Writ Appeal No. 626. of 1974) A. Subba Rao for the appellant. G. C. Sharma and S.P. Nayar for the respondents. The Judgment of the Court was delivered by GOSWAMI, J. The appellant No. 1 is a registered firm and appellants 2 and 3 are the only two partners of that firm. They are assessees under the Income tax Act. Their assessments have been made for a number of years in Nellare District in the usual course. On January 23, 1973, the Central Board) sent a notice to the appellants under section 127 of the Income tax Act, 1961 brietly the Act) proposing to transfer their case files "for facility of investigation" from the respective Income tax Officer at Nellore to the Income tax Officer, B Ward Special Circle Ii, Hyaderabad, By this notice they were also asked to submit in writing if they had any objection to the proposed transfer within 15 days of receipt of the notice. The appellants made their representation objecting to the transfer and on July 26, 1973, the Central Board passed the impugned order transferring the cases from Nellore to Hyderabad. There is no provison of appeal or revision under the Act against such orders of transfer. The appellants, therefore, preferred an application under article 226 of the Constitution before the High Court of 886 Andhra Pradesh questioning the validity of the order chiefly on the ground of violation of the principles of natural justice inasmuch as no reasons were given nor communicated in the said order. The learned single Judge after having called for the relevant file found that certain reasons were recorded by the Central Board prior to the passing of the impugned order and held that mere failure to communicate the reasons to the appellants was not fatal to the order. The writ petition was, therefore, dismissed. The appellants ' Letters Patent Appeal before the Division Bench of the High Court also met with the same fate. Hence this appeal by special leave. The short question that arises for consideration is whether failure to record the reasons in the order which was communicated to the appellants is violative of the principles of natural justice for which the order should be held to be invalid. Section 5(7A) was the corresponding section in the Income tax Act, 1922 (briefly the old Act). The section may be set out: "The Commissioner of Income tax may transfer any case from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the re issue of any notice already issued by the Income tax Officer from whom the case is transferred". The successor section under the Income tax Act, 1961 is section 127 and the same may be set out: "Transfer of cases from one Income tax Officer to another: (1) The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one In come tax Officer subordinate to him to another also subordinate to him, and the Board may similarly transfer any case from one Income tax Officer to another. Provided that nothing in this sub section shall be deemed to require any such opportunity to be given where the transfer is from one Income tax Officer to another whose offices are situated in the same city, locality or place. (2) The transfer of a case under sub section (1) may be made at any stage of the proceedings, and shall not render necessary the re issue of any notice already issue by the Income tax Officer from whom the case is transferred. 887 Explanation: In this section and in sections 121 and 125, the word 'case ' in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year". The section was amended by section 27 of Finance (No. , and section 127 since then stands as under: (1) "The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, where ever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Income tax Officer or officers also subordinate to him and the Board may similarly transfer any case from any Income tax Officer or Income tax Officers to any other Income tax Officer or Income tax Officers. Provided that nothing in this subsection shall be deemed to require any such opportunity to be given where the transfer is from any Income tax Officer or Income tax Officers to any other Income tax Officer or Income tax Officers and the offices of all such Income tax Officers are situated in the same city, locality or place: Provided further that where any case has been transferred from any Income tax officer or Income tax Officers to two or more Income tax Officers, the Income taxers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions in relation to the said case as the Board or the Com missioner (or any Inspecting Assistant Commissioner authorised by the Commissioner in this behalf) may, by general or special order in writing, specify for the distribution and allocation of the work to be performed". (2) The transfer of a case under subsection (1) may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Income tax Officer or Income tax Officers from whom the case is transferred. Explanation: In this section and in sections 121, 123, 124 and 125, the word 'case ' in relation to any person whose name is specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this 888 Act which may be commenced, after the date of such order or direction in respect of any year. " Unlike section 5(7A) section 127(1) requires reasons to be recorded prior to the passing of an order of transfer. The impugned order does not state any reasons whatsoever for making the order of transfer. It is submitted on behalf of the Revenue by Mr. Sharma that reasons were communicated to the assessees in the notice calling for objection against the proposed transfer. It is, therefore, manifest that the reasons given in that show cause notice, namely, "facility of investigation" can be read as a part of the impugned order although there is no mention of any reasons therein as such. We are unable to accede to this submission. It appears section 5(7A) of the old Act came for consideration in Pannalal Binjraj and Another vs The Union of India and others and this Court observed at page 589 as follows: ". it would be prudent if the principles of natural justice are followed, where circumstances permit, before any order of transfer under section 5(7A) of the Act is made by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing. There is no presumption against the bona fide or the honesty of an assessee and normally the Income tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in Section 64(1) and (2) of the Act is sought to be made against him, be it a transfer from one Income tax Officer to another within their State or from an Income tax officer with in the State to an Income tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. If the reasons for making the order reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to transfer his case under section 5(7A) of the Act and it will also help the Court in deter mining the bona fides of the order as passed if and when the same is challenged in Court as mala fide or discriminatory. It is to be hoped that the Income tax authorities will observe the above procedure wherever feasible". This judgment was rendered by this Court on December 21, 1956, and we find that in the 1961 Act section 127 replaced section 5(7A) 889 where the legislature has introduced, inter alia, the requirement of recording reasons in making the order of transfer. It is manifest that once an order is passed transferring the case file of an assessee to another area the order has to be communicated. Communication of the order is an absolutely essential requirement since the assessee is then immediately made are of the reasons which impelled the authorities to pass the order transfer. It is apparent that if a case file is transferred from the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved, That is the reason why before making an order of transfer the legislature has ordinarily imposed the requirement of a show cause notice and also recording of reasons. The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement section 127(1). We are unable to accept this submission. The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is based on irrelevant and extraneous condonations Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee. Mr. Sharma drew our attention to a decision of the Delhi High Court in Sunanda Rani Jain vs Union of India and others, where the learned single Judge has taken a contrary view. For the reasons, which we have given above, we have to hold that the said decision is not correct. The appellant drew our attention to a decision of this Court in Shri Pragdas Umar Vaishya vs Union of India and Other where rule 55 of the Mineral Concession Rules, 1960, providing for exercise of reversional power by the Central Government was noticed. It was held that under rule 55 the Central Government in disposing of the revision application must record its reasons and communicate these reasons to the parties affected thereby. It was further held that the reasons could not be gathered from the nothings in the files of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. 890 Mr. Sharma drew our attention to a decision of this Court in Kashiran Aggarwalalla vs Union of India and other. It is submitted that this Court took the view that orders under section 127(1) are held in that decision to be purely administrative in nature" passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to section 127(1) it was not necessary to give the appellant an opportunity to be heard and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the Revenue in the present case since that was a transfer from one Income tax Officer to another Income tax Officer in the same city, or, as stated in the judgment itself, in the same locality" and the proviso to section 127(1), therefore, applied. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated Mr. Sharma also drew our attention to a decision of this Court in S Narayanappa and Others vs Commissioner of Income tax, Bangalore where this Court was dealing with section 34 of the old Act. It is clear that there is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under section 34 must also be communicated to the assessee. The Income tax Officer need not communicate to the assessee the reasons which led him to initiate the proceedings under section 34. The case under section 34 is clearly distinguishable from that of a transfer order under section 127(1) of the Act. When an order under section 34 is made the aggrieved assessee can agitate the matter in appeal against the assessment order, but an assessee against whom an order of transfer is made has no such remedy under the Act to question the order of transfer. Besides, the aggrieved assessee on receipt of the notice under section 34 may even satisfy the Income tax Officer that there were no reasons for reopening the assessment. Such an opportunity is not available to an assesse under section 127(1) of the Act. The above decision is, therefore, clearly distinguishable. We are, therefore, clearly of opinion that non communication of the reasons in the order passed under section 127(1) is a serious infirmity in the order for which the same is invalid. The judgment of the High Court is set aside. The appeal is allowed and the orders of transfer are quashed. No costs. S.R. Appeal allowed.

While holding the post of Agricultural Inspector in the Agricultural Department, the appellant was appointed against a temporary post of Block development and Panchayat officer in the Development Department of the State, and was confirmed in that post with effect from April 1, 1964. As a result of the partition of Punjab, the appellant and the respondents (who were also Agricultural Inspectors) were allocated to the State of Haryana. On February 26, 1969 at the request of the appellant, the Governor of Haryana deconfirmed the appellant from the post of Block Development and Panchayat officer with effect from that date. On March. 20, 1969, the Governor passed an order promoting the appellant temporarily as District Agricultural officer describing him as "Agricultural Inspector, now working as Block Development and Panchayat officer". The respondents challenged the order, and the High Court allowed their writ petition holding that the appellant 's lien on the post of Agricultural Inspector from which post alone he could have been promoted to the post of District Agricultural officer automatically stood terminated under r. 3.12 Punjab. Civil Service Rules, on his confirmation as Block Development officer. Allowing the appeal to this Court, ^ HELD: Under r. 3. 12 normally, a Government servant, on substantive appointment to any permanent post, acquires a lien on that post and ceases to hold any lien previously acquired on any other post. But, the opening words of the rule show that it would apply unless it is otherwise provided in the Rules. Rule 3.14 (a) (2) provides otherwise by carving out an exception. It provides that a competent authority shall suspend the lien of a Government servant on a permanent post which he holds substantively, if he is appointed in d substantive capacity to a permanent post outside the cadre on which he is borne. When the appellant was appointed as Block Development and Panchayat officer in a substantive permanent capacity, his case fell squarely within the ambit of r. `3 14(a) (2) as, the post of Block Development and Panchayat officer was outside the cadre of Agricultural Inspectors to which the appellant belonged. The use of the word "shall" in cl. (a) against the use of the word "may" in cl. (b) of the rule shows that it was imperative for the competent authority to suspend the lien of the appellant on the permanent post of Agricultural Inspector which he held substantively. He should not suffer because of the competent authority 's failure to do so. [720 E, H, 721 A] Further, under r. 3.15, in a case covered by r. 3.14 (a) (2) the suspended lien of a Government servant may not, except on the written request of the Government servant,`be terminated while he remains in Government service; but no written request was made by the appellant in the presnt case for terminating his suspended lien on the post of Agricultural Inspector. [712 B, C] Therefore, when the Governor deconfirmed the appellant from the post of Block Development and Panchayat officer, the suspended lien of the appellant on the post of Agriculture Inspector stood revived with effect from February 26, 1969, and his promotion in his parent Agricultural Department from the post of Agricultural Inspector to that of District Agricultural officer by the impugned order, does not suffer from any legal infirmity. [721 D E] 717

125 of 1959. Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights. G.S. Pathak, A. P. Sen and J. B. Dadachanji, for the Petitioners. H. J. Umrigar and T. M. Sen, for the Respondents. September 20. The Judgment of the Court was delivered by DAs GUPTA J. In this petition under article 32 of the Constitution the petitioner, a partnership firm carrying on the business of manufacture of bidis and having its head office at Jabalpur within the State of Madhya Pradesh complain that its fundamental rights under article 19(1)(f) and (g) of the Constitution have been violated by the illegal imposition of a purchase tax on certain purchases of tobacco made by it in the State of Bombay. It appears that the Sales Tax Officer, Baroda, made an order assessing the petitioner to a purchase tax under section 14, sub section (6), of the Bombay Sales Tax Act, 1953 (Bom. Act III of 1953) for the period April 1, 1954 to September 29, 1955. The petitioner contends that this assessment was illegal inasmuch as these transactions are purchases " outside the State of Bombay " within the meaning of article 286(1)(a) of the Constitution read with the Explanation and also because these transactions took place in the course of inter State trade and commerce within the meaning of article 286(2) of the Cons titution. It was also urged that the provisions of the Bombay Sales Tax Act, 1953, do not authorise the imposition, levy or collection of any purchase tax on the transactions in question. In appears that against this assessment order made by the Sales Tax Officer on October 18, 1955, the petitioner preferred an appeal to the Assistant Collector of Sales Tax. This officer set aside the order of the Sales Tax Officer imposing a penalty under section 16(4) but dismissed the appeal against the order of assessment to tax. The order in appeal was made on 91 712 November 26, 1957. The present petition was. filed on August 4, 1958, praying for a writ in the nature of mandamus or any other appropriate direction or order against the respondents The State of Bombay, The Collector of Sales Tax, State of Bombay The Sales Tax Officer, Baroda and the Assistant Collector of Sales Tax, Northern Division, Range III, Baroda preventing them from enforcing the provisions of the Bombay Sales Tax Act against the petitioner on the transactions in question, for a writ in the nature of certiorari for quashing the proceedings taken against the petitioner and the orders of assessment made by the Sales Tax Officer and the order in appeal by the Assistant Collector of Sales Tax and for a declaration that the Act does not authorise the imposition, levy or collection of tax on the transactions in question. It will be convenient to consider first the petitioner 's contention that the Bombay Sales Tax Act, 1953, does not authorise the imposition of a tax on the purchase of bidi tobacco. The relevant portion of section 10(1) which provides for the levy of a purchase tax is in these words : "there shall be levied a purchase tax on the turnover of purchase of goods specified in column 1 of Schedule B at the rates, if any specified against such goods in column 4 of the said schedule. ." The petitioner 's contention is that bidi tobacco which was purchased by it is not one of the goods specified in Column 4 of the said schedule. Turing to Schedule B we find there are 80 entries in the first column. Against each of these entries the second column of the schedule mentions the rates of sales tax leviable under section 8 of the Act: the third column mentions the rate of general sales tax leviable under section 9, while the fourth column which is the last, column men tions the rate of purchase tax. While the entries from 1 to 79 mention specific articles, entry 80 as it stood before its amendment in 1957 was in these words: " All goods other than those specified from time to time in Schedule A and in the preceding entries." (An amendment by the Bombay Act, 71 of 713 1958, added the words " and sec. 7A " after the words " Schedule A "). The question is whether these words "all goods other than those specified from time to time in Schedule A and in the preceding entries " amount to a specification of goods for the purpose of section 10. On behalf of the petitioner Mr. Pathak contends that only the mention of specific goods can amount to specification and mention of goods in such general language as " all goods other than those specified from time to time in Schedule A and in the preceding entries " cannot be said to be a specification of goods. We are unable to accept this argument. While it is true that mention of specific goods is specification for the purpose of section 10 as also for the purpose of sections 8 and 9 of the Act, we see no reason to think that mention of goods in a general way as " all goods other than those specified from time to time in Schedule A and in the preceding entries " of Schedule B itself is not a specification. We are of opinion that the entry 80 in Schedule B is a specification of goods within the meaning of section 10 and as bidi tobacco which the petitioner purchased is not within either Schedule A or any of the earlier entries in Schedule B, purchase tax under section 10 is leviable on these purchases, at the rate mentioned against Entry 80. This brings us to the petitioner 's main contention that the purchases took place outside the State of Bombay. The contention as stated in para. 11 of the petition is that the purchases would be. deemed to have taken place in the State of Madhya Pradesh, where the tobacco was delivered for consumption. At the hearing, however, it was not disputed that the tobacco was delivered to the Company 's Ranoli Branch within the State of Bombay which made the purchase. The despatch by the Ranoli Branch to the company 's head office at Jabalpur is not a delivery as a direct result of the sale. It has been urged however that even though there was delivery in Bombay State, that delivery was not for the purpose of consumption within Bombay State; and so, the Explanation to article 286 (1)(a) does not come into operation. 714 The sales tax authorities have proceeded on the basis that as a direct result of the purchase goods were delivered in the State of Bombay for the purpose of consumption in the State of Bombay. Unless that view is shown to be wrong, the purchase must be held to have taken place within the State of Bombay and it will be unnecessary to consider the larger question whether even if the Explanation be not applicable, Bombay State is entitled to tax. The definite case of the petitioner is that the purchased tobacco is delivered to it within the State of Bombay as a direct result of the purchase. The further question that has been raised is whether such delivery was for the purpose of consumption in the State of Bombay. On behalf of the petitioner it was contended that after its delivery, the tobacco was intended to be sent to the State of Madhya Pradesh to be manufactured into bidis at that place. All that used to be done to the purchased tobacco in the State of Bombay was to have the stems and dust removed from the tobacco. Such removal of the waste material, like stems and earth, it is urged, does not amount to consumption of tobacco. It is further stated that the tobacco which is despatched to the head office after removal of the waste material is not an article Cc commercially different " from the tobacco purchased from the cultivators. In the respondents ' counter affidavit it is stated that " the petitioners after purchasing raw tobacco from the cultivators in the State of Bombay, subject the raw tobacco so purchased to process leading to its conversion into bidi pattis for immediate use in the manufacture of bidis. . . that marketable value of raw tobacco and bidi pattis differs and that both these are commercially different articles. . . There was no further affidavit filed on behalf of the petitioner to traverse the averments of the respondents that the raw tobacco is con verted into bidi patti before it is despatched outside Bombay State and that the market value of raw tobacco and bidi patti differs. Mr. Pathak also con. ceded at the hearing the correctness of the statement that anybody could go to the market to purchase the 715 article known as raw tobacco or Akho Bhuko and that he could also go and purchase from the market the article known as " bidi Patti ". That itself is sufficient proof that raw tobacco and bidi Patti are distinct and different commercial articles. It is in the background of these facts that we have to consider the question whether tobacco was delivered in the State of Bombay for consumption in that State. In answering that question it is unnecessary and indeed inexpedient to attempt an exhaustive definition of the word " consumption " as used in the explanation to article 286 of the Constitution. The act, of consumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak of people consuming bread, or fish or meat or vegetables, when they eat these articles of food; we speak of people Consuming tea or coffee or water or wine, when they drink these articles; we speak of people consuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, consists in the creation of " utilities ". Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the " utilization " thereof. For each commo dity, there is ordinarily what is generally considered to be the final act of consumption. For some commodities, there may be even more than one kind of final consumption. Thus grapes may be " finally consumed " by eating them as fruits; they may also be consumed by drinking the wine prepared from " grapes ". Again, the final act of consumption may in some cases be spread over a considerable period of time. Books, articles of furniture, paintings may be mentioned as examples. It may even happen in such cases, that after one consumer has performed part of the final act of consumption, another portion of ' the final act of consumption may be performed by his heir or successor in interest, a transferee, or even one who has obtained possession by wrongful means. But the fact that there is for each commodity what may be Considered ordinarily to be the final act of consumption, should not make us forget that in reaching 716 the stage at which this final act of consumption takes place the commodity may pass through different stages of production and for such different stages, there would exist one or more intermediate acts of consumption. Thus, the final act of consumption of cotton may be considered to be the use as wearing apparel of the cloth produced from it. But before cotton has become a wearing apparel, it passes, through the hands of different producers, each of whom adds some utility to the commodity received by him. There 'is first the act of ginning ; ginned cotton is spun into yarn by the spinner; the spun yarn is woven into cloth by the weaver; the woven cloth is made into wearing apparel by the tailor. At each of these stages distinct utilities are produced and what is produced is at the next stage consumed. It is usual, and correct to speak of raw cotton being con sumed in ginning; of ginned cotton being consumed in spinning; of spun yarn being consumed in weaving; of woven cloth being consumed in the making of wearing apparel. The final product the wearing apparel is ultimately consumed by men, women and children in using it a; dress. In the absence of any words to limit the connotation of the word " consumption " to the final act of Consumption, it will be proper to think that the Constitution makers used the word to connote any kind of user which is ordinarily spoken of as consumption of the particular commodity. Reverting to the instance of cotton, mentioned above, it will be proper to hold that when raw cotton is delivered in State A for being ginned in that State. , it is delivered for consumption in State A ; when ginned cotton is delivered in State B for being spun into yarn, it is delivered for consumption in State B ; when yarn is delivered in State C for being woven into cloth in that State, it is delivered for consumption in State C; when woven cloth is delivered in State D for being made by tailor in that State into wearing apparel, there is delivery of cloth for consumption in State D; and finally when, wearing apparel is delivered in State E for being sold as dress 717 in that State, it is delivery of wearing apparel for con sumption in State E. Except at the final stage of consumption which consists in using the finished commodity as an article of clothing, there will be noticed at each stage of production the bringing into existence of a commercial commodity different from what was received by the producers. This conversion of a commodity into a different commercial commodity by subjecting it to some processing, is consumption with. in the meaning of the Explanation to article 286 no less than the final act of user when no distinct commodity is being brought into existence but what was brought into existence is being used up. At one stage of the argument what Mr. Pathak appeared to insist was that there must be destruction of the substance of the thing before the thing can be said to be consumed. That takes us nowhere, because we have still to find out what is meant by destruction of the substance. It may well be said that when a commodity is converted into a commercially different commodity its former identity is destroyed and so there is destruction of the substance, to satisfy the test suggested by the learned counsel. We think it unnecessary however to enter into a discussion of what amounts to " destruction " as even without deciding, whether there was destruction or not, we think it proper and reasonable to say that whenever a commodity is so dealt with as to change it into another commercial commodity there is consumption of the first commodity within the meaning of the Explanation to article 286. This aspect of consumption was pointed out by Das, J. (as he then was), in State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory (1) at p. 113 of the Report. The purchase there was of raw cashew nuts. Discussing the question whether the delivery of these nuts in Travancore was for the purpose of consumption in that State, Das, J., observed: " The raw cashew nuts, after they reach the respondents, are put through a process and new articles of commerce, namely, cashew nut oil and edible cashew nut kernels, are obtained. It follows, (1) [1954) S.C.R. 53. 718 therefore, that the raw cashew nut is consumed by the respondents in the sense I have mentioned". Das, J., here proceeded on the view that using a commodity so as to turn it into a different commercial article amounts to consumption, within the meaning of the Explanation to article 286(1) (a) a view which he had earlier indicated at p. 110 of the Report. We are not aware of any case where such use of a commodity has been held not to amount to consumption. It must therefore be held on the facts of this case that when tobacco was delivered in the State of Bombay for the purpose of changing it into a commercially different article, viz., bidi patti the delivery was for the purpose of consumption. The purchases in this case therefore fall within the meaning of Explanation to article 286(1)(a) and must be held to have taken place inside the State of Bombay. There remains for consideration the objection that the transactions took place in the course of inter State trade or commerce within the. meaning of article 286(2) of the Constitution and the levy of tax was therefore prohibited by the provisions thereof. Even if these transactions were in the course of inter State trade, the bar of article 286(2) of the Constitution stands removed by the Sales Tax Laws Validation Act, for the entire period upto September 6, 1955. The levy of tax for the period September 7, 1955, to September 29, 1955, would be illegal if these transactions are in the course of inter State trade. The petitioner 's counsel however informed us that he did not want a decision on his question and would not, in this case, press his objection under article 286(2). It is unnecessary for us therefore to decide whether the transactions in question took place in the course of interState trade or commerce within the meaning of article 286(2) of the Constitution. As the petitioner has failed to establish any, violation of its fundamental right, the petition is dismissed with costs. Petition dismissed.

The petitioner Company carrying on the business of manu facturing bidis and having its head office at Jabalpur in the State of Madhya Pradesh made certain purchases of tobacco in the State of Bombay. The Sales Tax Officer assessed the petitioner to a purchase tax under the provisions of the Bombay Sales Tax Act, 1953. The petitioner contested the assessment of 710 purchase tax on the grounds that those transactions and pur chases were " Outside the State of Bombay " within the meaning of article 286(1)(a) of the Constitution read with the Explanation, that the provisions of the Bombay Sales Tax Act, 1953, did not authorise the imposition, levy or collection of any purchase tax on the transactions in question and that the transactions took place in the course of inter State trade and commerce. The petitioner 's appeal to the Assistant Collector of Sales Tax was dismissed and then the present petition for writs of mandamus and certiorari was filed in the Supreme Court. The petitioner contended that the Bombay Sales Tax Act, 1953, did not authorise the imposition of a tax on the purchase of bidi tobacco which was not one of the goods specified in column 4 of Schedule B of the said Act. The petitioner further contended that the purchased tobacco was delivered to it within the State of Bombay as a direct result of the purchase but it was intended to be sent to the State of Madhya Pradesh to be manufactured into bidis at that place. The only thing which was done in the Bombay State was to remove the stem and dust from the tobacco which process did neither amount to " consumption " of tobacco as contemplated under the Explanation to article 286 of the Constitution nor did it convert the tobacco which was sent to the Head Office into an article " commercially different " from the tobacco purchased from the cultivators. In their counter affidavit the respondents averred that the raw tobacco was converted into bidi pattis before it was sent outside Bombay State both of which were commercially different articles and the market value of which was also different. These averments were not controverted by the petitioner. Held, that the words " all goods other than those specified from time to time in Schedule A and in the preceding entries " in entry 8o of Schedule B of the Bombay Sales Tax Act, 1953, amounted to a specification of goods for the purposes of section lo of the Act and as bidi tobacco purchased by the petitioner was not within Schedule A or any of the earlier entries in Schedule B purchase tax at the rate mentioned against entry 8o was leviable under section 1o of the Act. Whenever a commodity was so dealt with as to change it into another commercial commodity there was consumption of the first commodity within the meaning of the Explanation to article 286 of the Constitution. State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory, ; , followed. The delivery of tobacco in Bombay State for changing it into bidi patti which is a commercially different article amount ed to delivery for the purpose of consumption and the purchase fell within the meaning of article 286(i)(a) of the Constitution and took place inside tile Bombay State.

Civil Appeal No. 2987 of 1986 From the Judgment and order dated 31.7.1986 of the Allahabad High Court in C. Misc. Writ Petn. No. 83 l0 of 1986. G Shanti Bhushan. S.P. Gupta. H.K. Puri and Sunil Gupta for the Appellants. B.D. Agarwala, M. Mudgal and Sunil Ambwani for the Respondents. H 690 V.M. Tarkundeand R.B. Mehrotraforthe Intervencr. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Special Leave granted. This appeal by special leave is directed against a judgment of the Allahabad High Court quashing a resolution dated May 6, 1986 by which it was proposed to hold an Entrance Test for admission to the Degree Courses in Arts, Science and Commerce of the Allahabad University, while at the same time recording a finding that 'the entrance test for admission to Degree Courses of Arts, Science and Com merce of the University cannot be characterised as arbitrary, illegal orirrational in view of the fact that the standard of students passing Intermediate Examination or equivalent examinations thereto is deteriorating now a days. ' The principal ground on which the High Court struck down the resolution was that there was no emergency to justify the Vice Chancellor having recourse to the provisions of s.13(6) of the Uttar Pradesh State Universities Act for the action taken by him; the legitimate thing to do was to constitute an Admissions Committee as contemplated by section 28 of the Act to consider the matter and to give an opportunity to the Academic Council to approve or disapprove the new policy. It is now practically conceded that the resolution dated May 6, 1986 was that of the Admissions Committee, whether properly constituted or not, and not that of the Vice Chancellor and there was therefore, no question of the Vice Chancellor taking recourse to the provisions of section 13(6) of the Act. However Shri Srivastava, learned Counsel for the Student Federation of India and Shri Tarkunde, learned Counsel for some of the members of the Academic Council supported the conclusion of the High. Court on several grounds which we shall presently consider. Shri Shanti Bhushan and Shri Gupta, learned Counsel for the University assailed the judgment of the High Court. We may now state a few relevant facts. The Uttar Pradesh State Universities Act was enacted in 1973. Section 12 of the Act prescribes the mode of appointment and the conditions of service of the ViceChancellor and section 13 prescribes his powers and duties. In particular s.13(6) enables the Vice Chancellor to take such action as he may deem fit if any matter is of an urgent nature requiring immediate action and the same cannot immediately be dealt with by any officer or authority or other body of the University empowered by or under the Act to deal MANOHAR 691 with it. The Vice Chancellor, however, is required to forthwith report A the action taken by him to the Chancellor and also to the officer, authority or other body who would have dealt with the matter in the ordinary course, Section 19 designates the authorities of the University among whom are the Executive Council, the Academic Council and the Admissions Committee. Section 20 provides for the constitution of the Executive Council and section 21 prescribes the powers and duties of the Executive Council. Section 21(1)(iii) enables the Executive Council to make, amend or repeal Statutes and ordinances. Section 25 provides for the constitution and the powers and duties of the Academic Council, who is to be the principal academic body of the University. It is expressly provided that it shall have the control and general regulation of, and be responsible for the maintenance of standard of instruction, education and research carried on or imparted in the University and that it may advise the Executive Council on all academic matters including matters relating to examinations conducted by the University. Section 28 provides for the constitution of the Admissions Committee and its powers and duties. The Constitution of the Admissions Committee is to be such as may be provided for in the ordinances. Subject to the Superintendence of the Academic Council, the Admissions Committee is required by section 28(3) "to lay down the principles or norms governing the policy of admission to various courses of studies in the University". Section 28(4) also enables the Committee to issue directions "as respects criteria or methods of admission (including the number of students to be admitted) to constituent colleges maintained by the State Government and affiliated or associated colleges" and prescribes that such directions shall be binding on such colleges. 45 deals with 'admission of students ' and prescribes "No students shall be eligible for admission to the course of study for a degree unless (a) he has passed (i) the Intermediate Examination of the Board of High School and Intermediate Education, Uttar Pradesh, or of any University or Board incorporated by any law for the time being in force; or (ii) any examination, or any degree conferred by any other University, being an examination or degree rec 692 ognized by the University as equivalent to the Inter mediate Examination or to a degree of the University; and (b) he possesses such further qualifications, if any, as may R be specified in the ordinances: Provided that the University may prescribe by ordinance any lower qualifications for admission to a degree in Fine articles" Section 51(2) stipulates that an ordinance shall provide for, among other things, 'the admission of students of the University and their enrolment and continuance as such '. Section 52 enables the Executive Council to make, from time to time, 'new or additional ordinances ' or 'amend or repeal ' the first ordinances of existing Universities. Proviso(a) to sec. 52(2) prescribes that no ordinance shall be made. "affecting the admission of students, or prescribing examinations to be recognized as equivalent to the University examinations or the further qualifications mentioned in sub section(1) of section 45 for admission to the degree courses of the University, unless a draft of the same has been proposed by the Academic Council. " Section 72(1) requires the authorities of the Universities to be constituted as soon as may be after the commencement of the Act and prescribes that every person holding office as member of such authority immediately before the commencement of the Act shall cease to be such member on the commencement of the Act. Section 72(2) enables the State Government to direct who may discharge what powers, duties and functions under the Act until the Constitution of new authorities. For sometime after the enactment of the Uttar Pradesh State Universities Act most of the University Bodies were not constituted though an Administrative Committee had been appointed by the Government under section 67 of the ordinance which preceded the Act. As there was no Executive Council and since, it was not possible to call a meeting of the Administrative Committee, the Vice Chancellor proceeded to act under section 13(6) of the Act to constitute an Admissions Committee consisting of the Vice Chancellor, all the Heads of the 693 Departments, the Dean, Students Welfare, the University Proctor and A the Registrar. This was done on July 12, 1973. Sometime thereafter, the Executive Council was constituted and on September 3, 1973 the Executive Council by a resolution approved the action of the Vice Chancellor in constituting an Admissions Committee consisting of the Vice Chancellor. the Pro Vice Chancellor. the Deans of the faculties of Arts, Science, Commerce and Law, all the Heads of Departments the Dean, Student Welfare, the University Proctor and the Registrar. It will be seen that the Members of the Admissions Committee are all educationists who hold their membership Ex officio. The Admissions Committee which was constituted in 1973 has been functioning ever since, without question. The Admissions Committee at its meeting held on May 6, 1986 resolved to introduce an Entrance Test for admission to the degree courses in Arts, Science and Commerce and adopted a detailed scheme for that purpose. We are told that pursuant to the Resolution of the Admission Committee, an entrance test has been held and the results have been tabulated but not yet published. Meanwhile the Student Federation of India and some students filed a writ petition challenging the introduction of the Entrance Test on the ground that the Resolution dated May 6, 1986 had no authority in law. The High Court held that the Resolution was without authority of law and therefore, quashed the same. As already mentioned by us at the outset the primary ground on which the Resolution was quashed by the High Court was that there was no emergency such as that contemplated by section 13(6) to justify the Vice Chancellor passing the Resolution dated May 6, 1986. We have already pointed out that the Resolution dated May 6, 1986 was that of the Admissions Committee and not that of the Vice Chancellor. However, the Resolution has been attacked on several other grounds which we shall now proceed to consider It was argued that the Admissions Committee was not legally constituted as there was no emergency such as that contemplated by section 13(6) to enable the Vice Chancellor to constitute the Admissions Committee. The very order constituting the Admissions Committee recites that it had become necessary for the Vice Chancellor to have recourse to section 13(6) as there was no Executive Council in existence and as it was not possible to call the Administrative Committee. Those were good enough reasons for the action of the Vice Chancellor and 694 we do not think that anyone can be permitted to question the Constitution of the Admissions Committee at this stage after the Committee as constituted in 1973 had been functioning for over a dozen years. It was next argued that the Vice Chancellor was competent to invoke the power under section 13(6) if an authority of the University was in existence but was unable to discharge its duties but not if such authority was not m existence at all. It was said that the existence of the authority and its inability to act were the conditions precedent to action by the Vice Chancellor under section 13(6). This argument has only to be stated to be rejected. Under section 13(6) the condition precedent to the Vice Chancellor 's action is the necessity for action and the failure to take such action by the authority competent to take action. It does not mean that if the failure to take action is the result of the non existence of the authority, the Vice Chancellor cannot have recourse to section 13(6). Another submission was that the Admissions Committee which took the present decision was not the same as that constituted originally. This argument was sought to be spelt out from the circumstance that notice of the meeting of the Admissions Committee was given to several persons who were not members of the Committee as originally constituted. The circumstance that many others were invited to be present at the meeting does not mean that they were invited as members of the Admissions Committee. They do not become members of the Admissions Committee by the mere fact of being invited to attend a meeting of the Committee. They appear to have been invited to assist the Committee in its deliberations. It was suggested that they were invited to provide support to the Vice Chancellor in large numbers. We do not attach any importance to this suggestion. It was also commented that only six members of the Admissions Committee attended the meeting on May 6, 1986 and that all the others who attended the meeting were not members. But notice of the meeting was given to all the members and if some of them, for their own reasons, refrained from attending the meeting, their failure to attend the meeting cannot invalidate the deliberations of the Committee. The principal submission on behalf of the respondents was that any proposal for entrance examination should originate from the Academic Council and thereafter take the form of an ordinance by the Executive Council. It was argued that this was the net effect of section 45(1)(b), section 51(2)(a) and proviso(a) to section 52(3). It was said that section 28 did not enable the Admissions Committee to prescribe any Entrance Test for admission to the degree courses. We are unable to agree with the submissions of the learned counsel for the respondents. We do not 695 see why the expression "the principles or norms governing the Policy of admission to various courses of studies in the University" should be interpreted in so narrow a fashion as to exclude the prescription of an Entrance Test. Sub section 4 of section 28 enables the Admissions Committee to issue directions regarding 'the criteria or methods of admissions (including the number of students to be admitted) to constituent colleges maintained by the State Government and affiliated or associated colleges. ' This provision which enables the Admissions Committee to issue directions to constituent colleges, affiliated or associated colleges in the matter of criteria or methods of admission also indicates that the principles or norms governing the policy of admission to various courses of studies in the University must necessarily include the criteria or methods of admission. We are of the view that sec. 28(3) empowers the Admissions Committee to provide for an entrance test for admission to the University degree courses. It was suggested that such an interpretation would bring it in conflict with secs. 45, 51 and 52 of the Act and that there will be duality of authority in the matter of regulating admission to University degree courses. As we shall presently point out there is no conflict between sec. 28 and the other sections nor are there dual authorities under the Act. These provisions have to be construed harmoniously so as to eliminate any conflict and without rendering any provision of the Act or any authority created by the Act, superfluous. 45(1) lays down the rules of eligibility for admission to a course of study in the university. Clause (a) prescribes the passing of the Intermediate or equivalent examination or a degree of a university as the basic qualification for admission and clause (b) enables the prescription of further qualifications by ordinance. Section 51(2)(a) authorises the making of ordinances to provide for "the admission of students to the university and their enrolment and continuance as such". But any ordinance that may be made for the purpose of sec. 45(1)(b) or for that matter any ordinance affecting the admission of students shall not be made unless the draft of the same has been proposed by the Academic Council. It is so provided by the proviso to sec. 52(3). What must be noticed here is that the Executive Council, of its own motion, cannot make an ordinance affecting the admission of students to the university. It can only be done at the instance of the academic council by its proposal. We have already seen that under sec. 28(3), the Academic Council has the power of superintendence over the power of the Admissions Committee to lay down the principles or norms governing the policy of admission to various courses of study in the University. The scheme of the Act in regard to admissions to the degree courses of the university, therefore, 696 appears to be like this: The Admissions Committee prescribes the principles or norms governing the policy of admission to the various courses of study. This is subject to the superintendence of the Academic Council. The Academic Council may exercise its powers of superintendence, among other ways, by proposing an ordinance which may have the effect of reversing or modifying the action of the Admissions Committee. Thereafter the Executive Council may make an ordinance if it so thinks fit. Once an ordinance is made, it will not naturally be open to any of the university bodies, including the Admissions Committee to act contrary to it. This appears to be the scheme of the Act in so far as it relates to admissions. It follows that the Admissions Committee has the power to prescribe an Entrance Test. The Academic Council has the power to overrule the decision of the Admissions Committee in exercise of its power of superintendence. The Executive Council such as has no power to overrule the decision of the Admissions Committee except by making an ordinance on a proposal made by the Academic Council. The learned counsel for the respondents submitted that the scheme for the proposed entrance test ought to have been brought before the Academic Council so as to enable the Academic Council to exercise its power of superintendence by approving or disapproving the scheme. We do not think that there is any statutory requirement that any action taken by the Admissions Committee under sec. 28 is not to be effected until the Academic Council is provided with an opportunity to exercise its power of superintendence. It is up to the Academic Council to exercise its power of superintendence. If as is claimed the Vice Chancellor does not take the initiative to call a meeting of the Academic Council, the members of the Academic Council desiring to call a meeting of the Academic Council are free to take recourse to the provisions of the Act, the ordinances and the Statutes to requisition a meeting. We are, therefore, unable to hold that the Resolution of the Admissions Committee dated May 6, 1986 is tainted by any illegality. We set aside the judgment of the High Court, dismiss the writ petition filed in the High Court, and further direct the University to forthwith announce the names of the candidates selected for admission to the various courses. We leave it upon to the Academic Council to take such action as it may think fit in regard to the future years. We do not also express any opinion regarding the soundness of the scheme of the Entrance Test. There will be no order as tn costs. M.L.A. Appeal allowed.

The respondents purchased certain quantity of palm kernel fatty acid on high seas basis from a firm which had imported it on the strength of an additional licence issued to it pursuant to the order of this Court dated 18th April 1985 in C.A. No. 1423 of 1981 Union of India vs Rajnikant Brothers. The Customs authorities refused to permit clearance of the goods on the ground that they were canalised items and could not be imported even under such additional licences. The respondents filed a petition under article 226 challenging the action of the Customs authorities. A Single Judge of the High Court permitted the clearance of the goods, which order was affirmed by the Division Bench. In the appeal to this Court on behalf of the appellant Union of India it was contended that the direction given by the High Court was contrary to the directions given by this Court in Raj Prakash 's and Indo Afghan Chamber 's cases. On behalf of the respondents it was contended: (1) that the holders of the additional licences would be entitled to import items permissible to export houses under the additional licence category as per para 176 of the Import Policy for 1378 73; (2) that in any event under Item 1 of Appendix 6 (import of items under open General Licence) of the Import Policy 1985 88, raw materials, components and consumables (non iron and steel items) other than those included in the Appendices 2, 3 Part A, 5 and 8 will be permissible by the actual user 772 (industrial); and (3) that the respondents were actual users (industrial) because these were used by them for their production. Allowing the appeal of the Union of India, ^ HELD: 1. A diamond exporter can import the items he was entitled to import under the Import Policy 1978 79 provided they are importable also under the Import Policy ruling at the time of import. They are items which are open to import by an Export House holding an Additional Licence for sale to eligible Actual Users (Industrial). These are items which could be directly imported, for example, the items enumerated in Part 2 of List 8 of Appendix Vl of the Import Policy 1985 88. These are items which are not `canalised '. [776 F H] 2. `Canalised ' items are those items which are ordinarily open to import only through a public sector agency. Now although generally they are importable through a public sector agency only, it is permissible for the Import Policy to provide an exception to that rule, and to declare that an importer may import a canalised item directly. [776 H; 777 A] 3. Paragraph 75(1) of the Import Policy 1985 88 entitles a Trading House holding an Additional Licence to directly import canalised items in Appendix V Part A to the extent laid down in that Policy. There is nothing to prevent an Import Policy from providing in the future that an Export House holding an Additional Licence can directly import certain canalised items also. In that event an Export House holding an Additional Licence will be entitled to import items open ordinarily to direct import (non canalised items) as well as items directly importable although on the canalised list. It is in that sense that the Court could have intended to define the entitlement of a diamond exporter. He would be entitled to import items "whether canalised or not", if the Import Policy prevailing at the time of import permitted him to import items falling under each category. The Court would not know whether in the future certain canalised items could be imported directly by an Export House holding an Additional Licence. The possibility of a policy being framed in the future enabling an Export House holding an Additional Licence to directly import items which are 'non canalised ' and also items which are 'canalised ' cannot be ruled out. It is in this light that the Court can be said to have used the words "whether canalised or otherwise" in its order dated 18th April, 1985. [777 B E] Raj Prakash Chemical 's case, and Indo Afghan Chamber of Commerce 's case; , , followed. 773 4. Only such items could be imported by diamond exporters under the Additional Licences granted to them as could have been imported under the Import Policy 1978 79, the period during which the diamond exporters had applied for Export House Certificates and had been wrongfully refused, and were also importable under the Import Policy prevailing at the time of import which is the present case was the Import Policy 1985 88. These were the items which were not specifically banned under the prevalent Import Policy. That is the construction. The items had to pass through two tests. These should have been importable under the Import Policy 1978 79. These should have been importable under the Import Policy 1985 88 in terms of the order dated 18th April, 1985. [777 G H; 778 A B] 5. In respect of Palm Kernel Fatty Acid which is a canalised item listed as item 9 (v) in Appendix V Part of the Import Policy 1985 88, there is no provision in that Policy which permits the import of such item by an Export House holding an Additional Licence. [779 B C] 6. As importation of canalised items directly by holders of additional licences are banned, it should not be construed to have been permitted by virtue of the order of this Court and the items sought to be imported do not come within List 8 of Part 2 of Appendix 6 of the Import Policy of 1985 88 against additional Licences. The goods in question which were sought for by the respondents fall under item 9 Part of Appendix 5 which is the canalised item and such cannot be allowed to be imported against additional licence granted pursuant to the order of this Court dated 18th April, 1385. [779 D F] 7. The goods were purchased by the respondents only on 27th June, 1986 after they were aware of the judgment of this Court in Raj Prakash 's case as well as Indo Afghan Chambers of Commerce 's case. No question of any restitution of rights arises. [779 F] 8. The acid in question comes within specific prohibition of Item 9 in Part B Appendix 5 being fatty acid and acid oil which were importable only by the State Trading Corporation of India under open General Licence on the basis of foreign exchange released by the Government in its favour. The actual importation was not by the respondents but by somebody else. [780 A B]

Special LeaVe Petition (Civil) No. 6765 of 1985. From the Judgment and Order dated 11.12. 1984 of the Andhra Pradesh High Court in C.M.A. No. 244 of 1981. D .N. Gupta and Vijay Kumar Verma for the Petitioner. The Order of the Court was delivered by VENKATARAMIAH, J. This petition is filed under Arti cle 136 of the Constitution for special leave to appeal against the judgment of the High Court of Andhra Pradesh dated 11.12.84 allowing an appeal filed against the judgment dated 31.12.80 in E.I. case No. 4 of 1980 on the file of the Employees ' Insurance Court at Hyderabad. The petitioner is a limited company carrying on busi ness at Secunderabad and at some other places in India. The petitioner is engaged in the business of importing fertiliz ers. It represents some foreign principals for the sale of their products in India. The petitioner imports fertilizers into India which is an item purchased by the Central Government through the State Trading Corporation/Minerals and Metals Trading 'Corporation of India. In the course of its business the petitioner obtains the tenders from the State Trading Corporation Minerals and Metals Trading Corporation of India and passes them on to its principals abroad. Thereafter negotiations are carried on directly between the State Trading Corporation/Minerals Metals and Trading Corporation of India and the foreign principals. After the deal is completed and the fertilizers arrive at the Indian ports the fertilizers are delivered to the Cen tral Government at the ports. Before delivering the goods to the Central Government the petitioner supervises the 984 unloading of the goods and conducts the survey of the goods imported to ascertain the condition of the goods and to find out whether there are any shortages in the consignments so that there may be no disputes later on about the quality and quantity of the goods delivered. The petitioner company has its branch offices in Bombay, Calcutta and Madras for super vising its work at the ports and to attend to other matters relating to clearing of shipments and in Delhi for securing payments of bills. Its central office is at Secunderabad. The Government of Andhra Pradesh after giving six months notice vide its gazette notification No. 788 Health dated 25.9.74 as required under section 1(5) of the (hereinafter referred to as 'the Act ') extended the provisions of the Act with effect from 30.3.75 among others to the establishments mentioned therein in which 20 or more persons were employed for wages on any day of the preceding 12 months by Notification G.O.M. section No. 297, Health dated 25th March, 1975 published in the Andhra Pradesh Gazette dated March 26, 1975. Item 3(iii) in the list of establishments in that notification to which the Act was so extended by the State Government was "shops". On inspection by the Insurance Inspector of the premises in which the petitioner was carrying on its business at Secun derabad it was found on 28.4.75 that the petitioner had employed persons ranging from 27 to 29 for wages within the relevant period and was carrying on the business of import of fertilizers. On being asked by the Employees ' State Insurance Corporation to comply with the provisions of the Act the petitioner agreed that its business was covered by the Act in view of the notification issued by the State Government as it happened to be a "shop" and submitted contribution forms of its employees to the office of the Employees ' State Insurance Corporation. After complying with the provisions of the Act for a period of four years the petitioner raised a dispute about its liability to pay the contributions payable under the Act and instituted under section 75 of the Act the case out of which this petition arises before the Employees ' Insurance Court at Hyderabad for a declaration that the establishment in which the peti tioner was carrying on its business was not a "shop" and therefore it was not covered by the notification issued by the State Government and that the petitioner was not liable to comply with the provisions of the Act. The above petition was resisted by the Regional Director, Employees ' State Insurance Corporation. It was pleaded on his behalf that the establishment which was being run by the petitioner was a "shop" and therefore it was liable to comply with the provi sions of the Act. The Employees ' Insurance Court upheld the plea of the petitioner and 985 declared that the establishment of the petitioner was not covered by the Act. Aggrieved by the decision of the Employ ees ' Insurance Court, the Regional Director of the Employ ees ' State Insurance Corporation filed an appeal before the High Court under section 82 of the Act. The High Court allowed the appeal, reversed the decision of the Employees ' Insurance Court and dismissed the petition filed by the petitioner under section 75 of the Act. The High Court was of the view that the establishment of the petitioner at Secunderabad was a "shop" to which the Act was applicable by virtue of the notification issued by the State Government. Aggrieved by the decision of the High Court the petitioner has filed this petition under Article 136 of the Constitu tion requesting this Court to grant special leave to appeal against the decision of the High Court. On behalf of the petitioner it is urged before us that since no goods were actually being delivered in the premises in which the petitioner was having its establishment the said establishment could not be treated as a shop which is referred to in item 3(iii) of the Government 's notification. The word "shop" is not defined in the Act or in the notifi cation issued by the State Government. According to the Shorter Oxford English Dictionary the expression "shop" means "a house or building where goods are made Or prepared for sale and sold". It also means a "place of business" or "place where one 's ordinary occupation is carried on". In ordinary parlance a "shop" is a place where the activities connected with the buying and selling of goods are carried on. The evidence produced in the case shows that the peti tioner is carrying on its business at its business premises in Secunderabad. At that place the petitioner carries on the commercial activity facilitating the emergence of contracts of sale of goods between its foreign principals and the State Trading Corporation ' Minerals and Metals Trading Corporation of India. It arranges for the unloading of the goods under its supervision and for the survey of the goods despatched by its foreign principals at the ports on behalf of its foreign principals and on the goods being delivered to the Central Government it collects the price payable by the Government and remits it to its foreign principals. All these activities are directed and controlled from its prem ises at Secunderabad. It is thus clear that the activities carried on by the petitioner constitute trading activities although the goods imported from abroad are not actually brought to the said premises and delivered to the purchaser there. In our opinion it is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a "shop". 986 The delivery 0f the goods sold to the purchaser is only one aspect of trading activities. Negotiation of the terms of sale, carrying on of the survey of the goods imported, arranging for the delivery of the goods sold, collection of the price of the goods sold etc. are all trading activities. The premises where business is carried on by the petitioner is undoubtedly a shop as the activities that are carried on there relate only to the sale of goods which are imported into India. The petitioner acts as the agent of its foreign principals who are the sellers. The petitioner directs and controls all its activities from the premises in question. If orders are received at a place which ultimately fructify into sales and the resulting trading activity is directed from there that place comes to be known as a "shop". In our view the Employees ' Insurance Court placed a very narrow interpretation on the expression "shop" white upholding the contention of the petitioner by confining "shop" to a place where goods are actually stored and delivered pursuant to a sale. We agree with the decision of the High Court that while construing a welfare legislation like the Act and the notification issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legislation may be allowed to be achieved rather than frus trated or stultified. There is no doubt that the establish ment of the petitioner at Secunderabad is a "shop" where selling activity is carried on and by virtue of the notifi cation issued by the State Government the Act became ap plicable to it. The petitioner is bound to comply with the provisions of the Act as admittedly at all relevant times the petitioner had engaged more than 20 persons for wages at its place of business. There is no ground to interfere with the judgment of the High Court. In the result this petition fails and is dismissed. N.P.V. Petition dis missed.

The assessee company, which derived its income from the manufacture and sale of sugar and confectionery, was as sessed for the years 1958 59 by the Income Tax Officer under the Income Tax Act, 1922 by making additions of Rs.48,500 for cane cost, Rs.67,500 for shortage in cane, and Rs.21,700 for salary of outstation staff. The assessee did not chal lenge the said assessment order. Later in the year 1963 the Income Tax Officer issued notice under section 274 read with section 271 of the Income Tax Act, 1961 in respect of the assessment year 1958 59 for imposing penalty. Before the Inspecting Assistant Commissioner the assessee admitted that these amounts, which were not included in the return by the compa ny, represented income. On finding that there was deliberate understatement of income he imposed a penalty of Rs.70,000. On appeal the Tribunal held that the mere fact that the amounts were agreed to be taken into account by the assessee did not ipsofacto indicate any criminality in its action to conceal any portion of the income, and that the assessee could very well have argued against the additions of the two sums, namely, Rs.67,500 and Rs.21,700. As regards the sum of Rs.48,500 it found that the assessee had agreed to similar addition in the earlier years and so the penalty was war ranted in similar amount for this year and taking into consideration that the sum involved was Rs.48,500, it con sidered that a smaller penalty of Rs.5,000 was imposable. The High Court took the view that the onus of proving concealment was on the Revenue because proceedings for penalty were penal in character, and held that so far as the sum of Rs.48,500 was concerned it was not proved that there was any deliberate concealment, that the Tribunal had not set aside the finding of the Assistant Inspecting Com 693 missioner that the assessee surrendered the amount of Rs.67,500 when it was faced with facts which clearly estab lished concealment, that the assessee in fact had surren dered the amount only after the Income Tax Officer had conclusive evidence in his possession that the amount repre sented its income, that acceptance by the assessee was material to give proper weight to judge the criminality of the action which in its opinion was not given, and that the Tribunal omitted to take into account the fact that the assessee had admitted that the amount of Rs.21,700 repre sented its income. In the appeal by special leave on the question as to how far the High Court in a reference could interfere with a finding of fact and transform the same into a question of law on the ground that there has been non consideration of all relevant facts. Allowing the appeal, HELD: 1.1 In an income tax reference a finding on a question of pure fact could be reviewed by the High Court only on the ground that there was no evidence to support it or that it was perverse. If the High Court found that there was no such evidence, those circumstances would give rise to question of law and could be agitated in a reference. [700G 701A, 702H 703A] 1.2 When a conclusion has been reached on an apprecia tion of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. Where an ultimate finding on an issue is an inference to be drawn from the facts found, on the application of any principles of law, there would be a mixed question of law and fact, and the inference from the facts found in such a case would be a question of law. But where the final determination of the issue equally with the finding or ascertainment of the basic facts did not involve the application of any principle of law, an infer ence from the facts could not be regarded as one of law. The proposition that an inference from. facts is one of law is, therefore, correct in its application to mixed questions of law and fact, but not to pure questions of fact. In the case of pure questions of fact an inference from the facts is as much a question of fact as the evidence of the facts. [701A D] In the instant case, it is not said that the Tribunal had acted on material which was irrelevant to the enquiry or considered material 694 which was partly relevant and partly irrelevant or based its decision partly on conjectures, surmises and suspicions. It took into account all the relevant facts in a proper light in rendering a finding of fact. Therefore, no question of law arises. [703BC, 701DE] Sree Meenakshi Mills Limited vs Commissioner of Income tax, Madras, ; Omar Salay Mohamed Sait vs Com missioner of Income tax, Madras, ; Udhavdas Kewalram vs Commissioner of Income tax Bombay City 1, and Remeshwar Prasad Bagla vs Commissioner of Income tax, U.P., , referred to. 2.1 The High Court was wrong in saying that proper weight had not been given to all the evidence and admissions made by the assessee. The Tribunal had taken into considera tion the fact that the assessee had admitted the additions as its income when faced with non disclosure in assessment proceedings. The time when the assessee admitted the addi tions was also considered. But to admit that there has been excess claim or disallowance is not the same thing as delib erate concealment or furnishing inaccurate particulars. There may he hundred and one reasons for such admissions, i.e., when the assessee realises the true position it does not dispute certain disallowances but that does not absolve the Revenue to prove the mens rea of quasi criminal offence. [703BC, 702AB, 701A, 702BC] 2.2 It is for the Income tax authority to prove that a particular receipt is taxable. If however, the receipt is accepted and certain amount is accepted as taxable, it could be added. But in the instant case, it was not accepted by the assessee that it had deliberately furnished inaccurate particulars or concealed any income. [702EF] 3. The High Court observed that the time of admission was not noted by the Tribunal and this fact had not been properly appreciated by the Tribunal. That is not correct. The Tribunal had made additions during the assessment pro ceedings. In any event that would be appreciation of evi dence in a certain way, unless in such misappreciation which amounted to non appreciation no question of law would arise. Nonappreciation may give rise to the question of law but not mere misappreciation even if there he any from certain angle. Change of perspective in viewing a thing does not transform a question of fact into a question of law. [703CD] The High Court in preferring one view to another view of factual 695 appreciation in the instant case, has therefore, trans gressed the limits of its. jurisdiction under the Income Tax Reference in answering the question of law. [703F]

Civil Appeal No. 4650 of 1992. From the Judgment and Order dated 18.2.1991 of the Patna High Court in C.W.J.C 6581 of 1990. Ranjit Kumar for the Petitioners. Ms. Sangeeta Aggarwal for the Respondent. The Judgment of the Court was delivered by SHARMA, J. 1. Heard the learned Counsel for the parties. Special Leave is granted. This appeal by the State of Bihar and its Officers is directed against the order of the High Court dated 18.2.91 passed on a Writ Petition claiming to have been filed as a Public Interest Litigation for certain reliefs to be made available to a doctor who was earlier in the State service and whose services had been terminated in 1987. The beneficiary of the impugned judgment Dr. Ms. Sandhya Das was appointed as a Medical Officer in the Bihar State Health Services in 1961 and worked as such till 1971. She left India for higher studies in 1971 after obtaining leave for a period of two years. After the expiry of the leave period, she neither returned to India nor made any further application for extension of her leave. Nothing was heard from her thereafter. She was not the only one to do so. A large number of doctors employed in the Bihar Health Services were acting in similar manner, causing considerable hardship to the public. As this trend persisted, the State authorities could not ignore the problem and the relevant rules were examined, legal opinion was obtained and it was decided to take appropriate corrective measures. The absentee doctors, presumably placed in more lucrative jobs, did not care to inform the department of their addresses, and personal service of notice on such doctors could not be effected. In the circumstances, acting on the opinion of the Advocate General, general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years (this period is mentioned in the Rules), within the time indicated. Dr. Ms. Sandhya Das was also one of such doctors and was called upon to join her duty in India by such a communique issued in 1982 telling her that on her failing to do so, her services would be terminated in accordance with the Service Code. Nothing was heard from her. The matter of termination of services of such doctors was referred to Bihar Public Service Commission, and the Commission gave its concurrence in 1986. Accordingly, the services of 320 doctors including that of Dr. Das was terminated in 1987. This had the approval of the Bihar Cabinet. The Writ Petition out of which the present appeal arises was filed in 1990 by one Ms. Kamlesh Jain as a Public Interest Litigation, stating that Dr. Das was unwell and was in need of financial help. Some details as to how Dr. Das was taken ill and admitted in a hospital in Glasgow and then came back here for further treatment have been given. She was, it is stated, staying with her brother for sometime on her return to India and eminent doctors of Bihar who were consulted could not get her substantial relief and ultimately she had to be admitted in the P.M.C.H. hospital of Bihar in Patna. In this background the writ application was filed. The High Court 's judgment under appeal is very perfunctory. The entire Order reads thus : "18.2.91. Learned G.P.I. hands over a cheque of Rs. 2000 drawn in the name of Dr. Sandhya Das, to Miss Kamlesh Jain, who had filed this writ application as public interest litigation on behalf of Dr. Sandhya Das. This has been accepted by Miss Kamlesh Jain. The Payment has been made in compliance with the order dated 18.1.91. We dispose of this writ application with a direction to the respondents to pay the post retirement benefits to Dr. Sandhya Das within a period of three months from today. We make it clear that this order will not be construed to mean that Dr. Sandhya Das accepts her date of retirement to be 21.7.1987. If so advised, she may agitate the matter through a fresh writ application. " We have not been able to discover as to how the writ petitioner became so interested in Dr. Das who was being taken care of in the P.M.C.H. hospital of Bihar and receiving attention of eminent doctors and who has atleast a brother with whom she was staying for sometime. The learned Counsel for the writ petitioner, respondent before us, could not tell us about the other family members and relations of Dr. Das, or how and why in this background the writ petitioner Ms. Kamlesh Jain chose Dr. Das for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in Bihar. The impugned judgment also does not indicate any reason. There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after. This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others. Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application. This will ensure equal treatment to all of course in accordance with the individual needs. Unless all relevant materials are placed by an applicant, it will be an onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get. The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost of corresponding disadvantage to others. A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look. Since we do not find any reason in the impugned order or in the writ petition which may justify the relief granted in the present case, we are of the view that the writ petition should have been dismissed. The learned Counsel for the respondent made a grievance before us that the cheque for Rs. 2000 mentioned in the first paragraph of the High Court 's orders has been drawn in the name of Dr. Das whose fingers have become stiff and the money, therefore, could not be encashed. It was suggested that a cheque may be directed to be drawn in the name of the writ petitioner Ms. Kamlesh Jain. We do not see any reason for acceding to this prayer as it is not suggested that Dr. Das has no relation of her own, who can look after her needs. For the reasons indicated above the appeal is allowed, the impugned judgment of the High Court is set aside and the writ petition (C.W.J.C. No. 6581/1990) filed in the High Court is dismissed. There will be no order as to costs. N P V Appeal allowed.

The Imperial Council of Agricultural Research, a Society established under the Societies Registration Act in the year 1929 was redesignated as the Indian Council of Agricultural Research after the advent of Independence. Till 1965, the ICAR was largely functioning as a coordinating agency and apex body for financing research projects, but with effect from 1966 the administrative control over the Indian Agriculture Research Institute (IARI) and other such Institutes were transferred to ICAR, simultaneously placing the staff of such Institutes at the disposal of the ICAR A department of Agricultural Research and Education was set up in the Ministry of Agriculture and the said department came into existence on 15.12.1973. The ICAR was fully financed by the Department of Agricultural Research and Education of the Government of India. ICAR started an Agricultural Research Service with effect from 1.10.1975, and the relevant grades and pay scales as on 31.12.1985 were: Grade of Scientist S in pay scale Rs. 550 900, Scientist S I in Rs. 700 1300, Scientist S 2 in Rs. 1100 1600, and Scientist S 3 in Rs. 1500 2000. The Scientists of the ICAR who were earlier covered by the Third Pay Commission pay scales had been demanding parity in pay scales with the employees of the Agricultural Universities who were also financed by the ICAR After persistent demand, the ICAR agreed to revise the pay scales with effect from 1.1.1986 by notification dated 9th March, 1989. This notification benefited some of the Scientists, but was denying the principles of 'Equal Pay for Equal Work ' in the case of the appellants and the like, and the said notification had further placed persons much junior to many of the appellants in a higher scale of pay, resulting in violation of the fundamental rights of the appellants guaranteed under Articles 14 and 16 of the Constitution. Some of the appellants in this appeal had earlier filed a Writ Petition before this Court under Article 32 challenging the aforesaid notification and for other connected reliefs, which was disposed of on 3rd May, 1990, directing the appellants to approach the Central Administrative Tribunal, and a further declaration was made that the Tribunal shall treat the petition as a Representative Petition. Certain clarifications were issued by the ICAR by its letter dated 31st March, 1989 and by orders dated 14th June, 1989, 6.11.1989 and 6.7.1989. These orders not only revised the pay scales but also gave new designations to the various posts held by the appellants. Existing Grade Existing New Revised Pay scale designation pay scale 1. Scientist,S 2 Rs.1100 50 1600 Scientist Rs. 3000 100 with service (Senior 3500 125 5000 upto eight scale) years. Scientist,S 2 Rs.1100 50 Scientist Rs. 3700 125 with service 1600 (Selection 4950 150 5700 exceeding grade) eight years 3. Scientist,S 3 Rs.1500 60 Scientist Rs. 3700 125 with service 1800 100 2000 (Selection 4950 150.5700. upto 16 years Grade) 4. Scientist,S 3 Rs.1500 50 Principal Rs. 4500 l50 with service 1800 100 2000 Scientist 5700 200 7300 exceeding 16 years The appellants filed an application under Section 19 of the Administrative Tribunal 's Act before the Principal Bench of the Central Administrative Tribunal, Delhi and contended that according to the notification dated 9.3.1989 together with the subsequent clarifications, juniors and less meritorious Scientists and who were drawing lesser basic pay as on 31.12.1985 than the appellants had been placed in higher pay scales causing great resentment amongst a large number of Scientists including the appellants. Not being successful before the Tribunal, the appellants appealed to this Court and contended that Scientists S 3 in pre revised scale of Rs. 1500 2000 having completed total service in the ARS as on 31.12.1985 exceeding 16 years had been placed in the scale of Rs. 4500 7300, whereas Scientists S 3 who were in the same pre revised scale of Rs. 1500 2000 but had put in total service in the ARS as on 31.12.1985 upto 16 years have been placed in the scale of Rs. 3700 5700. Similarly, Scientists S 2 who were in the pre revised scale of Rs. 1100 1600 and had completed total service of more than 8 years in the ARS as on 31.12.1985 had been put in the scale of Rs. 3700 5700, but those having completed total service upto 8 years as on 31.12.1985 had been put in the scale of Rs. 3000 5000. It was further submitted by the appellant that in the ICAR there were two streams for career advancement of the Scientists. The slower stream is the five yearly assessment, and the faster one is the direct selection through advertisement to various posts at All India level, and that in the direct selection, the existing Scientists can also compete with the other Scientists from non lCAR Institutions, that the criterion of eight years of qualifying service for getting the scale of Rs. 3700 5700, and 16 years of qualifying service for getting the scale of Rs. 4500 7300 completed ignores the period of service put in the grades of S 2 or S 3 respectively, and that this clearly shows the utter disregard for merit and competence of the Scientists working on these posts of S 2 or S 3. It was also submitted that the impugned notification was not only unreasonable and discriminatory, but had resulted in grave injustice to the Scientists directly selected as Scientists S 2 and S 3 by taking into consideration the total length of service in the ARS as the only criterion thereby giving a complete go bye to merit and competence. The respondents opposed the appeal by contending that on persistent demand of the appellants and other scientists for giving them better pay scales than those recommended by the Fourth Pay Commission, the Government introduced University Grant Commission pay package for them. The designations of Scientists on various grounds had been suitably amended so as to conform to their respective level of responsibility. Scientist S 2 having less than 8 years of service as on 31.12.1985 were placed in the revised scale of Rs. 3000 5000, whereas those having more than 8 years of prescribed service as on 31.12.1985 were placed in the scale of Rs. 3700 5700. It was further contended that efforts were being made to devise means by which the affected Scientists may be able to take their chance for appointment to higher management positions. Allowing the appeal, this Court, HELD :1. While introducing a new scheme of pay scales and fixing new grades of posts, some of the incumbents may have to be put to less advantageous position than others, but at the same time the granting Of new pay scales cannot be allowed to act arbitrarily and cannot create a situation in which the juniors may become senior or vice versa. [450 B] 2. The appellants are justified in their submission that they were also entitled to the higher pay scale on the post of Scientists S 2 as well as S 3 specially when they were recruited on those posts much earlier to those who have now become entitled to higher pay scales under the impugned notification. They are also right in their submission that it also mars their future chances of promotion on the higher posts. [452 A B] 3. The appellants are Scientists who are rendering great service to the nation and no justification is found as to why the appellants or any other Scientists in ICAR placed in similar position like the appellants should be deprived the benefit of the revised pay scales on the higher post of S 2 or S 3, in case they were appointed by direct recruitment or by selection on merit cum seniority on the post of Scientists S 2 or S 3 prior to those who have now become entitled to higher pay scale under the impugned notification dated 93.1989. [453 B C] 4. The Tribunal itself had found force and justification in grievances made by the appellants and had granted six months time to the respondents to take appropriate action. Opportunities were granted to the respondents to come with a scheme granting appropriate relief to the appellants, but they were unable to come out with any concrete proposal or scheme redressing the grievances of the appellants. [452 H; 453 Al 5. The respondents to issue appropriate orders so that any of the appellants or the like working as Scientist S 2 or S 3 on or before 31.12.1985 earlier to anyone of the Scientists getting benefit of the revised pay scales under the impugned notification dated 9.3.1989 also get a similar benefit of revised pay scale of Rs. 4500 7300 in the case of S 3 and pay scale of Rs. 3700 5700 in the case of S 2. Such revised pay scales shall a be given from 1.1.1986 as given to S 2 and S 3 Scientists under the impugned notification. Suitable action in this regard to be taken and the entire amount to be paid within six months. [453 D E] P.K Iyer & Ors. vs Union of India & Ors. , ; , referred to.

Civil Appeal No. 282 of 1971. Appeal by special Leave from the Judgment and Order dated 22 12 70 of the Gujarat High Court in C.R.A. No. 1353 of 1970 and CIVIL APPEAL NO. 2068/71 Appeal by Special Leave from the Judgment and Order dated the 31 3 71 of the Bombay High Court in Special Civil Application No. 859 of 1967. D. V. Patel, section K. Dholakia and R. C. Bhatia for Appellants in C. A. 282/71. V. section Desai, Makohn F. A. Pereize and H. section Parihar for Appellants in C. A. 2068/71. V. section Desai, H. section Parihar and I. N. Shroff for Respondent in C.A. 282/71. The Judgment of the Court was delivered by RAY, C.J. Civil Appeal No. 282 of 1971 referred to as the Gujarat Appeal is by special leave from the order dated 22 December, 1970 of the High Court of Gujarat rejecting a revision application against the judgment and decree passed by the Extra Assistant Judge on 17 September, 1970. Civil Appeal No. 2068 of 1971 hereinafter referred to as the Bombay Appeal is by special leave from the judgment and order dated 21 March, 1971 of the High Court of Bombay. Both the appeals raise a common question as to whether the provision contained in section 12(3) (a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 hereinafter referred to as the Act applies. The Gujarat High Court took the view that the provisions of section 12 (3) (a) of the Act apply to the suit. The Bombay High Court took the view that the provisions contained in section 12 (3) (a) of the Act do not apply to the suit, but that the suit is governed by the provisions contained in section 12 (3) (b) of the Act. The principal question is whether on receipt of a notice from the landlord terminating the tenancy on the ground of arrears of rent dispute as to standard rent has to be raised before the expiry of the period of one month after the service of the notice. The Gujarat High Court has taken the view that the dispute as to standard rent is to be raised within one month from the service of the notice on the tenant. The Bombay High Court has taken a contrary view and held that the tenant can raise a dispute as to standard rent in his written statement in answer to the suit and in 630 such a case the provisions of section 12 (3) (b) of the Act will apply. In the Gujarat appeal the respondent filed a suit for recovery of possession of a portion of the ground floor of a building on the ground that the appellant was in arrears of rent from 1 September, 1964 and also on the ground that the respondent bonafide required possession of the premises in suit. The Third Joint Civil Judge in the trial court gave a decree in favour of the respondent for possession of the premises. The trial court held that the appellants were in arrears of rent from 1 September, 1964 and that they were not ready and willing to pay the rent. The trial Court further held that the contractual rent in respect of the premises was not unreasonable and excessive. The appellants in the Gujarat appeal filed an appeal in the court of District judge of Surat. The Appellate Court by judgment dated 17 September, 1970 confirmed the judgment and decreed the suit. The appellants thereafter filed a revision application before the Gujarat High Court on the ground that the court should have held that the case fell under section 12 (3) (b) of the Act. The High Court rejected the revision application at sight. The facts found in the Gujarat appeal are as follows: The appellants paid rent to the respondent up to 31 August, 1964. The respondent landlord by notice dated 14 November, 1966 terminated the tenancy of the appellants, inter alia, on the ground that the appellants were in arrears of rent for more than six months. The appellants received the notice on 6 December, 1966. The respondent filed the suit on 2 February, 1967. In the Gujarat appeal appellants contended that they raised the dispute about the standard rent by their letters dated 17 November, 1966; 19 December, 1966 and 11 February, 1967, and therefore, there was a dispute as to standard rent and the provisions contained in section 12 (3) (a) of the Act do not apply. The Appellate Court found that the letters dated 17 November, 1966 and 19 December, 1966 alleged to have been written by the appellants to the respondent were manufactured by the appellants and the certificates of posting were obtained by unscrupulous means. As to the alleged letter of the appellants dated 11 February, 1967 the Appellate Court found that in that letter the appellants referred to the letters dated 17 November, 1966 and 19 December, 1966. The respondent by his reply dated 16 February, 1967 denied that the respondent ever received any letter dated 17 November, 1966 or 19 December, 1966. On this evidence the Appellate Court found that there was no dispute as to rent within one month of the service of the notice terminating the tenancy. In the Bombay Appeal the notice terminating the tenancy was dated 5 April, 1963 to deliver possession on the expiration of 15 May, 1963. The suit was filed on 11 September, 1963. The 631 appellants landlords alleged that the tenants were in arrears from 15 March, 1960 to 15 March, 1963, viz., for over six months. In the Bombay appeal the trial Court gave a decree for possession. The Appellate Court confirmed the judgment of the trial Court. In an application under Article 227 of the Constitution the Bombay High Court held that when the respondent paid all arrears and costs of the suit on 23 December, 1964 it could not be said that the respondent did not comply with the provisions of section 12 (3) (b) of the Act. The Bombay High Court took the view that the Full Bench of the Bombay High Court in Dattu Subhana Panhalkar vs Gajanan Vithoba Bobhate & Anr. held that a tenant could raise a dispute as to standard rent by raising an issue as to standard rent in the written statement. The provisions contained in sections 12 (3) (a) and (b) of the Act are as follows: "(3) (a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent of permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court shall pass a decree for eviction in any such suit for recovery of possession. (b) In any other case no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such date as the Court may fix the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court. " Explanation I to section 12 of the Act is as follows: "In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub section (2) he makes an application to the Court under sub section (3) of section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court. " The following provisions with regard to standard rent are found in section 11 of the Act. The Court may, upon an application made to it for that purpose, or in any suit or proceedings, fix the standard rent, inter alia, where there is any dispute between the landlord and the tenant regarding the amount of standard rent. If any application for fixing the standard rent is made by a tenant who has received a notice from the landlord under sub section (2) of section 12, the Court shall forthwith specify the amount of rent or permitted 632 increases which are to be deposited in Court by the tenant and make an order directing the tenant to deposit such amount in Court or at the option of the tenant make an order to pay to the landlord such amount thereof as the Court may specify, pending the final decision of the application. Out of any amount deposited in Court, the Court may make an order for payment of such reasonable sum to the landlord towards payment of rent or increases due to him as it thinks fit. If the tenant fails to deposit such amount or, as the case may be, to pay such amount thereof to the landlord, his application shall be dismissed. Under section 12 of the Act the landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of the Act. Sub section (2) of section 12 of the Act states that no suit for recovery of possession shall be instituted by a landlord against the tenant on the ground of non payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the Transfer of Property Act. Clause (a) of sub section (3) of section 12 of the Act provides for the passing of a decree for eviction first, where the rent is payable by the month; second, there is no dispute regarding the amount of standard rent or permitted increases; third, the rent or increases are in arrears for a period of six months; and fourth, the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2) of section 12 of the Act. Clause (b) of sub section (3) of section 12 of the Act, states that in any other case, no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may, fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court. Explanation I to section 12 of the Act provides that where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub section (2), he makes an application to the Court under sub section (3) of section and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court. Counsel for the appellant in the Gujarat appeal relied on the Bombay view that there is no limitation of time during which a dispute must be raised and none can be implied from the Explanation. The Bombay High Court has not agreed with the view of the Gujarat 633 High Court in Ambalal vs Badaldas. The Bombay view is that the dispute in section 12(3)(a) is not limited only to a dispute raised within one month of the notice as contemplated in section 12(3) (b) of the Act. The Bombay High Court relied on section 11(4) of the Act the provisions whereof are as follows: "Where at any stage of a suit for recovery of rent whether with or without a claim for possession of the premises, the Court is satisfied that the tenant is withholding the rent on the ground that the rent is excessive and standard rent should be fixed, the Court Shall and in any other case if it appears to the Court that it is just and proper to make such an order the Court may make an order directing the tenant to deposit in Court forthwith such amount of the rent as the Court considers to be reasonably due to the landlord, or at the option of the tenant an order directing him to pay to the landlord such amount thereof as the Court may specify. The Court may further make an order directing the tenant to deposit in Court periodically, such amount as it considers proper as interim standard rent, or at the option of the tenant an order to pay to the landlord such amount thereof, as the Court may specify, during the pendency of the suit. The Court may also direct if the tenant fails to comply with any order made as aforesaid, within such time as may be allowed by it, he shall not be entitled to appear in or defend the suit except with leave of the Court, which leave may be granted subject to such terms and conditions as the Court may specify. " The Bombay High Court held that to limit raising a dispute within one month from the service of notice would render the provisions of section 11(4) nugatory. The Bombay High Court held that the effect of sections 11 and 12 of the Act is to give the tenant a right to dispute the standard rent in the event of a suit and if the tenant raises a dispute in answer to a suit for recovery of rent it would be a dispute within the meaning of section 12(3) (a) of the Act and would take the suit out of the provisions of that sub section. The Gujarat High Court in the decision in Ambalal 's case (supra) and in Chunilal Shivlal vs Chimanlal Nagindas took the view that in order to avoid the operation of section 12(3) (a) of the Act the dispute in regard to standard rent or permitted increases must be raised at the latest before the expiry of one month from the date of service of notice under section 12(2) of the Act and it is not enough to raise a dispute for the first time in the written statement. In Ambalal 's case (supra) the question was as to what should be stage at which the dispute in regard to standard rent or permitted increases must be raised in order to take the case out of section 12(3) (a) of the Act. The Gujarat High Court held that the dispute is one which is in existence at the date of the notice or at any rate before the ex 634 piry of one month from the date of its service and not the one raised subsequently in a written statement with a view to avoiding the operation of section 12(3) (a) of the Act. Counsel for the appellants in the Gujarat appeal contended that the decision in Vora Abbasbhai vs Haji Gulamnabi has overruled Amblal 's case (supra). In Vora Abbasbhai 's case the notice terminating the tenancy was dated 1 December, 1956. The tenant by reply dated 7 December, 1956 contended that the contractual rent was excessive. The tenant made an application on 5 January 1957 for fixation of standard rent under section 11(1) of the Act. While the application was pending the landlord filed the suit on 27 January, 1957 for ejectment. The tenant in the written statement reiterated the contention that the contractual rent was excessive and that the standard rent should be fixed by the Court. On these facts the question in Vora Abbasbhai 's case (supra) was whether the case fall within section 12(3) (a) or section 12(3) (b) of the Act. The only point in controversy in Vora Abbasbhai 's case (supra) was whether the second condition in section 12(3) (a) of the Act, viz., that there was no dispute regarding the amount of standard rent was fulfilled. The landlord 's contention was that the dispute concerning standard rent is one which must have been raised before service of the notice and since there was admittedly no dispute in regard to standard rent or permitted increases at the date of service of the notice under section 12 (2) of the Act the second condition in section 12(3) (a) that there was no dispute was satisfied. This Court did not accept the landlord 's contention there and held that the defendant in that case raised the contention by reply dated 7 December, 1956 that the contractual rent was excessive and raised the same contention in the application filed for fixation of standard rent. The Gujarat High Court in Ambalal 's case (supra) held that in order to attract the applicability of section 12 (3) (a) of the Act there must be non existence of the dispute at the date of the notice and such non existence must continue right up to the expiration of one month from the date of service of the notice so that if the dispute is raised at any time prior to the expiration of the said period on one month, the operation of section 12(3) (a) would be excluded. The latest point of time when according to Ambalal 's case (supra) the dispute in regard to the standard rent must be raised in order to avoid the operation of section 12(3) (a) of the Act is the expiry of one month from the date of service of the notice. Ambalal 's case (supra) did not say that the dispute concerning standard rent must be raised before service of the notice in order to repel the applicability of section 12(3) (a) of the Act. If the dispute is in existence prior to the expiry of one month after service of the notice though subsequent to the date of the notice that would be sufficient to oust the operation of section 12(3) (a) of the Act. The decision of this Court in Vora Abbasbhai 's case (supra) has not overruled the decision in Ambalal 's case (supra). In Ambalal 's case (supra) the conclusion is a single 635 one and it is that in order to exclude the operation of section 12(3) (a) of the Act the dispute must be in existence latest within one month after service of the notice. The question as to when a dispute is to be raised came up for consideration in Shah Dhansukhlal Chhanganlal vs Dalichand Virchand Shroff & Ors. The appellant fell into arrears of rent in that case. The landlord gave a notice to the tenant on 18 April, 1955 demanding the arrears of rent and also terminating the tenancy of the defendant with effect from 31 May, 1955. The notice was received by the defendant on 21 April, 1955, The suit for ejectment was filed on 15 March, 1956 on the ground that the defendant was in arrears of payment of rent and permitted increases and as such not entitled to the protection of the Act. This Court held that section 12 (1) of the Act must be read with Explanation and so read it means that the tenant can only be considered to be ready and willing to pay if, before the expiry of the period of one month after notice referred to in sub section (2), he makes an application to the Court under sub section (3) of section 11 and thereafter pays or tenders the amount of rent or permitted increases specified by the Court. This Court found in Chhaganlal 's case (supra) that the tenant made no payment within the period of one month of the notice of ejectment and further that although in his written statement he raised a dispute about the standard rent he made no application in terms of section 11(3) of the Act. The tenant can claim protection from the operation of section 12(3) (a) of the Act only if the tenant makes an application within one month of the service of the notice terminating the tenancy by raising a dispute as to standard rent. The view of the Bombay High Court overlooks the limitation of time within which a dispute is to be raised as to standard rent. The view of the Bombay High Court is that disputing within one month of the service of the notice terminating the tenancy is one mode of raising a dispute and there is another mode of raising the dispute at any stage of the suit. The view of the Bombay High Court nullifies the provisions contained in section 12 and Explanation thereto and confers a right on the tenant where the legislation does not contemplate such a right. The provisions in section 11(3) of the Act deal with orders which may be passed by the Court during the pendency of the application disputing the rent. Provisions in section 11(4) of the Act deal with orders which may be passed consequent upon dispute as to rent. It is 636 only when an application disputing rent is made within the time contemplated by Explanation I to section 12 of the Act that the provisions in sub section (3) and (4) of section 11 are attracted. For the foregoing reasons we uphold the view of the Gujarat High Court and we do not accept the view of the Bombay High Court. We dismiss Civil Appeal No. 282 of 1971 with costs. We accept Civil Appeal No. 2068 of 1971 and the judgment of the Bombay High Court is set aside. The decree passed by the Civil Judge on 31 October, 1964 and affirmed by the Assistant Judge on 27 September, 1966 is restored. The appellants will be entitled to costs. P.H.P. C. A. No. 282 of 1971 dismissed. C. A. No. 2068 of 1971 allowed.

Both the appeals raise a common question as to whether a tenant in order to resist passing of a decree of eviction under the provisions contained in section 12(3)(a) of the Bombay Rent Act 1947 must dispute the standard rent within one month from the date of receipt of the notice from the landlord terminating the tenancy on the ground of arrears of rent or whether a tenant can raise such a dispute in the written statement. The Gujarat High Court took a view that the dispute as to standard rent has to be raised within one month from the service of the notice on the tenant. The Bombay High Court has taken a contrary view and held that the tenant can raise a dispute as to standard rent in his written statement in answer to the suit and in such a case the provisions of section 12(3)(a) of the Act will apply. In the Gujarat case, the High Court found that the tenant did not raise the dispute within one month of the service of the notice terminating the tenancy inter alia, on the ground of arrears of rent for more than 6 months. In the Bombay appeal the dispute was not raised within one month from the date of the receipt of the notice. It was, however, raised in the written statement. Under section 11 of the Act, the court has power to determine standard rent when there is a dispute between the landlord and tenant regarding the amount of standard rent. ^ HELD: (1) Under section 12 of the Act the landlord is not entitled to recover possession of the premises so long as the tenant pays or is ready and willing to pay the amount of standard rent and permitted increases. Section 12(2) provides that no suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non payment of the standard rent until the expiration of one month next after notice in writing of the payment of the standard rent. Section 12(3)(a) provides for passing a decree for eviction of the tenant is in arrears for a period of 6 months and neglects to make the payment after the expiration of the notice period provided there is no dispute regarding the amount of standard rent. Clause 12(3)(a) provides that in any other case no decree for eviction should be passed if the tenant pays or tenders in the court the standard rent and permitted increases which is due and thereafter continues to pay or tender in court regularly such rent till the suit is finally decided. Explanation I to section 12 provides that where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if before the expiry of the period of one month from the receipt of the notice he makes an application under section 11 for the fixation of the standard rent and thereafter pays the rent fixed by the Court. [632 B, G] (2) The Bombay High Court view overlooks the limitation of time within which a dispute is to be raised as to standard rent. The view of the Bombay High Court that dispute within one month of the service of the notice terminating the tenancy is one mode of raising a dispute and there is another mode of raising the dispute at any stage of the suit, nullifies the provisions contained in section 12 and explanation thereto and confers a right on the tenant where the legislation does not contemplate such right. The provisions in section 11(3) of the Act deal with orders which may be passed by the court during the pendency of the application disputing the rent. Provisions of section 11(4) of the Act deal with orders which may be passed consequent upon dispute as to rent. It is 629 only when an application disputing the rent is made within the time contemplated by Explanation I to section 12 of the Act that the provisions on sub sections (3) and (4) of section 11 are attracted. [635F H, 636A]

ence No. 1 of 1958. Reference by the President of India under Article 143(1) of the Constitution of India on the Kerala Education Bill, 1957. The circumstances which led to this Reference by the President and the questions referred appear from the full text of the Reference dated March 15, 1958, which is reproduced below: WHEREAS the Legislative Assembly of the state of Kerala has passed a Bill to provide for the better Organisation and development of educational institutions in the State of Kerala (hereinafter referred to as the Kerala Educational Bill); AND WHEREAS the said Bill, a copy whereof is annexed hereto, has been reserved by the Governor of Kerala, under article 200 of the Constitution, for my consideration ; AND WHEREAS sub clause 3 of clause (3) of the said Bill enables the Government of Kerala, inter alia, to recognise any school established and maintained by any person or body of persons for the purpose of providing the facilities set out in sub clause (2) of the said clause to wit, facilities for general education, special education and for the training of teachers ; AND WHEREAS sub clause (5) of clause 3 of the said Bill provides, inter alia, that any new school established or any higher class opened in any private school, after the Bill has become an Act and the Act has come into force, otherwise than in accordance with the provisions of the Act and the rules made under section 36 thereof, shall not be entitled to be recognised by the Government of Kerala; AND WHEREAS a doubt has arisen whether the provisions of the said sub clause (5) of clause 3 of the said Bill confer upon the Government an unguided 1002 power in regard to the recognition of new schools and the opening of higher classes in any private school which is capable of being exercised in an arbitrary and discriminatory manner; AND WHEREAS a doubt has further arisen whether such power of recognition of new schools and of higher classes in private schools is not capable of being exercised in a manner affecting the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to establish and administer educational institutions of their choice; AND WHEREAS sub clause (3) of clause 8 of the said Bill requires all fees and other dues, other than special fees, collected from the students in an aided school to be made over to the Government of Kerala in such manner as may be prescribed, notwithstanding anything contained in any agreement, scheme or arrangement ; AND WHEREAS a doubt has arisen whether such requirement would not affect the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to administer educational institutions established by them; AND WHEREAS clauses 9 to 13 confer upon the Government certain powers in regard to the administration of aided schools;, AND WHEREAS a doubt has arisen whether the exercise of such powers in regard to educational institutions established by the minorities would not affect the right to administer them guaranteed by clause (1) of article 30 of the Constitution; AND WHEREAS clause 15 of the said Bill empowers the Government of Kerala to take over, by notification in the Gazette, any category of aided schools in any specified area or areas, if they are satisfied that for standardising general education in the State of Kerala or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in an area or for bringing education of any category under their direct control it is necessary to do so in the public interest, on 1003 payment of compensation on the basis of market value of the schools so taken over after deducting therefrom the amounts of aids or grants given by that Government for requisition, construction or improvement of the property of the schools; AND WHEREAS a doubt has arisen whether such power is not capable of being exercised in any arbitrary and discriminatory manner; AND WHEREAS clause 33 of the said Bill provides that, notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force, no courts can grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under the Act; AND WHEREAS a doubt has arisen whether the provisions of the said clause 33, in so far as they relate to the jurisdiction of the High Courts, would offend article 226 of the Constitution ; AND WHEREAS there is likelihood of the constitutional validity of the provisions of the Bill herein before referred to being questioned in courts of law, involving considerable litigation ; AND WHEREAS, in view of what has been here in before stated, it appears to me that the questions of law hereinafter set out have arisen and are of such nature and of such importance that it is expedient that the opinion of the Supreme Court of India should be obtained thereon; NOW, THEREFORE, in exercise of the powers conferred upon me by clause (1) of article 143 of the Constitution, 1, Rajendra Prasad, President of India, hereby refer the following questions to the Supreme Court of India for consideration and report thereon, namely : " (1) Does sub clause (5) of clause 3 of the Kerala Education Bill, read with clause 36 thereof, or any of the provisions of the said sub clause, offend article 14 of the Constitution in any particulars or to any extent ? (2) Do sub clause (5) of clause 3, sub clause (3) of 1004 clause 8 and clauses 9 to 13 of Kerala Education Bill or any provisions thereof, offend clause (1) of article 30 of the Constitution in any particulars or to any extent? (3) Does clause 15 of the Kerala Education Bill, or any provisions thereof, offend article 14 of the Constitution in any particulars or to any extent ? (4) Does clause 33 of the Kerala Education Bill, or any provisions thereof, offend article 226 of the Constitution in any particulars or to any extent ? " 1958. April 29, 30. May 1, 2, 5, 6, 7, 8, 9 and 12. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India, H. N. Sanyal, Additional Solicitor General of India, G. N. Joshi and R. H. Dhebar, for the President of India. The preamble to the Constitution of India lays emphasis on liberty of thought, expression, belief, faith and worship and assures the dignity of the individual. To give effect to these ideals the Constitution provides fundamental rights for the individuals in articles 19, 25 and 28 and for groups in articles 26, 29 and 30. The fundamental rights in articles 29 and 30 are absolute and no restrictions can be placed on them, though restrictions can be placed on other fundamental rights. These rights may be compared with the rights under article 44 (2) of the Irish Constitution and section 93 of the British North America Act. The freedoms conferred by articles 26, 29 and 30 were considered by this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mulutt, ( ; at 1028 1029) and The State of Bombay vs Bombay Education Society, ( ; at 578, 580, 586). Article 30 (1) gives absolute right to the minorities to establish and administer educational institutions of their choice. The Constitution having ensured religious freedom under article 26 and cultural freedom in article 29, left the means to promote and conserve these freedoms to the minorities themselves to work out under article 30 (1). Clause 3 (5) of the Kerala Education Bill which provides that the establishment of new schools and opening of higher classes shall be according to the Rules to 1005 be framed under cl. 36 to entitle them to be recognised by the Government, confers upon the executive unguided and uncontrolled powers and offends article 14. The ' legislature does not lay down any policy, but leaves it to the executive tinder the rule making powers. A. Thangal Kunju Musaliar vs M. Venkitachalam Potti, ([1955] 2 S.C.R. 1196 at 1239, 1241); The State of West Bengal vs Anwar Ali Sarkar, ([1952] S.C.R. 284 at 345, 346). It is incorrect to say that Christians and Muslims are not minorities in Kerala. When the Constitution speaks of minorities it speaks on an all India basis. The fact that a certain community formed a very high percentage of the population in a particular State did not detract from its status as a minority. The provisions of the Bill make illusory the rights granted by article 30 (1) to minorities. By using the instrument of Government aid the Bill seeks to deprive the minorities of their right to administer their own schools. Shirur Mutt Case, ( ; at 1028, 1029). The right of the minorities under article 30(1) to establish and administer their institutions is an absolute and unfettered right and is consistent with their getting aid from the Government. Article 337 makes special pro vision for educational grants for the benefit of the Anglo Indian community. Article 30 (1) is infringed whether the schools go in for aid or not. Clause 8 (3) of the Bill under which in all aided schools all fees, etc., collected from the students will have to be made over to the Government deprives the management of the right of administration. Pierce vs Society of Holy Sisters Names, ; at 1077); Maher vs Nebraska, ; at 1044). Clause 15 of the Bill empowers the Government to acquire any category of aided schools in any specified area. This clause is wholly subversive of article 30 (1). It also offends article 14 as it empowers the Government to pick and choose any schools, by suitably selecting the category and area, for acquisition, no criteria having been laid down for making the choice. Clause 33 of the Bill prohibits all Courts from 1006 granting any temporary injunction or interim order regarding any proceedings taken under the Act. To the extent that this clause infringes article 226 or article 32, it is void. Interim orders are also passed under articles 226 and 32 as ancillary to the main relief. The State of Orissa vs Madan Gopal Rungta, ( [1952] S.C.R. 28 at 34). Halsbury 's Laws of England, 3rd Edn., Vol. 11, p. 110, para. Kaslival, Advocate General of Rajasthan, R.H. Dhebar and T. M. Sen, for the State of Rajasthan adopted the arguments of the Attorney General for India. G. section Pathak, with M. R. Krishna Pillai for the Kerala Christian Education Action Committee, with J. B. Dadachanji for the Kerala School Managers Association and with V. O. Abraham and J. B. Dadachanji for the Aided School Managers ' Association in Badogara and Quilandy, Catholic Union of India and Catholic Association of Bombay. The preamble to the Constitution speaks of securing to the citizens of India fraternity assuring the dignity of the individual and the unity of the Nation. Articles 25 to 30 have been framed to secure this unity. article 30 is in absolute terms and does not permit regulation or restriction of the rights conferred by it. " Their choice " in article 30 cannot be controlled by the State. It has been the normal method of running the minority institutions with aid and recognition. Implict in article 30(1) is the right of a parent or guardian to impart such education this children as he likes. Bombay Education Society vs The State of Bombay, at 653). It is the right of every person of the minority community to educate his children in school administered by that community. The State of Bombay vs Bombay Education Society, ; at 586). The word " administer should be interpreted as in ; at 1076, 67 L. Ed. 1042 at 1045 and ; at 647. The ordinary dictionary meaning of administer is ' to manage ' or 'carry on '. The legislature cannot even indirectly infringe the fundamental rights. Dwarkadas Shrinivas vs The Sholapur Spinning and Weaving Co. Ltd., ( ; at 683); 1007 Punjab Province vs Daulat Singh, ( 73 1. A. 59) ; The State of Bombay vs Bombay Education Society, ( [1955] 1 section C. R. 568 at 583). American Jurisprudence, Vol. 11, p. 724, See. The whole scheme of the Bill is to secularise education and, thus it infringes the fundamental rights guaranteed under article 30. Clause 3 of the Bill which requires permission to be obtained to establish a school, cl. 10 which empowers the Government to prescribe qualifications of teachers in minority community schools and cl. 26 which makes it obligatory on parents to send their children to Government or aided schools where compulsory education is in force, all offend article 30. Similarly cls. 6, 7, 8, 11, 12, 14, 15 and 28 are destructive of this fundamental right. Frank Anthony and P. C. Aggarwala, for the All India Anglo Indian Association and for the Apostolic Carmel Education Society and Roman Catholic Diocese. Under article 143 this Court has the discretion to refuse to answer the reference. In Re Allocation of Lands and Buildings, ( [1943] F. C. R. 20 at 22). The present reference is most incomplete and wholly unsatisfactory and the Court should, following Zafrullah Khan J. in In re Levy of Estate Duty, ( at 334, 335), decline to answer it. The reference is incomplete as this Court has been asked to examine whether certain provisions of the Bill offend certain specified fundamental rights though actually those provisions offend other fundamental rights also. There are several important provisions in the Bill, which have not specifically been referred, which also offend fundamental rights. Such a reference is unfair to the Court and deadly to my clients. If this Court is in favour of giving its opinion on the reference, the scope thereof should be extended to include all objections to the validity of the provisions of the Bill, and this Court has inherent jurisdiction to do so. Anglo Indian schools occupy a special position. Article 30(1) gives to the Anglo Indian community the fundamental right to establish educational institutions of their choice. These fundamental rights were not subject to any social control. The object of the 128 1008 Kerala Education Bill was to strike at the Christian Church, especially the Catholics, to eliminate their religion, to take away their property, to eliminate all education agencies other than those of the State so that the State may regiment education and indoctrinate children. The Bill which sought to implement directive principles of State policy in article 45 by providing for free and compulsory education infringed article 30(1). Directive principles must yield to fundamental rights. The State of Madras vs Sm. Champakam Dorairajan, ([1951] section C. R. 521 at 531). The State cannot compel minority educational institutions not to charge fees for primary classes. This compulsion coupled with the embargo imposed by the Bill on children going to schools not recognised by the Government would extinguish the choice of the minorities guaranteed by article 30. Recognition was part of the right of the minorities under article 30. Article 337 provides for special grants or aids to educational institutions run by Anglo Indians and the State cannot take that away or place conditions or restrictions on it. Clause 3(5) of the Bill infringes both article 30(1) and article 14. It discriminates between existing schools which could continue to charge fees and primary classes and new schools which cannot charge such fees if they want to be recognised. The conditions imposed on the opening of new schools by the minorities are such that they deprive them of the right under article 30(1). Nur ud Din Ahmed, section section Shukla and P. C. Aggarwala, for the All India Jamiat ul ulema e Hind. The Bill seeks to achieve nationalisation of educational institutions and thus to deprive the minorities of their right to establish and administer schools of their own choice under article 30. This right includes the right of the minorities to receive aid and also get Government recognition of their schools without any restrictions. The provisions of the Bill gives powers to the State without laying down the basis and standards for the exercise of that power. 1009 G. C. Mathur and C. P. Lal for the state of U. P. adopted the arguments of the Attorney General for India. B. K. B. Naidu, for the Kerala State Muslim League adopted the arguments of G. section Pathak and Frank Anthony. D.N. Pritt, Sardar Bahadur and C. M. Kuruvilla, for the State of Kerala. The questions referred to the Court by the President arose out of certain doubts entertained by the President in respect of certain provisions of the Bill. If the President did not entertain certain other doubts, the parties cannot insist that the President must have had those other doubts also. The Court has no power to go beyond those questions which are raised in the reference. The State of Kerala wants the Court to reply to all the four questions referred and it would abide by the view which the Court will express on these questions. The Kerala Education Bill is a progressive piece of legislation which seeks to provide a better organisation and development of educational institutions in the State, and a varied and comprehensive educational service throughout the State. It seeks to provide employment to about 70,000 teachers and to give security to the teachers. The Bill also seeks to implement the directive principles of State policy in article 45 by providing for free and compulsory primary education for all. The Bill lays down a clear principle and policy, as stated in its objects, to provide for the better organisation and development of education. This is further made clear by the preamble which seeks to provide for a varied and comprehensive educational service throughout the State. Nationalisation which could have been easily and lawfully achieved was not the policy adopted by the State. Its policy was to maintain the three different categories of schools, the Government run schools, the private aided schools and the private schools recognised by the Govern ment. The Court could not get a complete picture until the rules were framed. The framing of the 1010 rules had necessarily to be left to the Government. 'a Such I delegated legislation ' is an integral and inevitable part of a modern State power. Clause 3(5) of the Bill read with cl. 36 does not violate article 14. Jadunandan Yadav vs R. P. Singh (A. I. R. 1958 Pat. 43 at 47); Biswambhar Singh vs The State of Orissa ([1954] section C. R. 842); Pannalal Binjraj vs Union of India, ( ; at 248, 256, 262); Sardar Inder Singh vs The State of Rajasthan ( [1957] section C. R. 605). The rules to be framed by the Government would go for scrutiny before the same legislature which passed the Bill and when passed by the legislature the rules will become part of the Act. This was not really delegated legislation but legislation in two stages. In order to protect certain privileges of minorities the State cannot discard the glorious principles of free and compulsory education. The rights of minorities cannot destroy the rights of citizens to universal free education. If the minorities want Government aid and recognition for their schools, they could be granted on the general terms and conditions applicable to others. The words I of their choice ' cannot be interpreted to mean the establishment of schools with the aid of the tax payer 's money and also with the assurance of enough pupils to attend those schools. Christians and Muslims are not minorities in Kerala. Christians, forming the second largest community, constituted one fourth of the population, while Muslims, forming the third largest community, constituted one seventh of the total population. Minorities in the context of the educational rights guaranteed under the Constitution mean only those sections of the population in particular areas of a State who are in a minority, and not those who can be regarded as minorities in the country as a whole. The only minority community in Kerala which can claim the benefit of article 30(1) are the Jews, who do not choose to have their own educational institutions. Schools run by minorities in Kerala were not strictly minority schools as envisaged by article 30(1) as they were not run mainly for the children of the 1011 minority community. In most of these schools at least 75 per cent. of the students were from non minorities. Article 30(1) contemplates schools for the education of members of the minority communities only. Right of the minority communities to establish and administer institutions of their choice does not include the right to receive aid and recognition on their own terms. Article 30(2) only prohibited the State from discriminating against any educational institution on the ground of religion or language. In order to attract the operation of article 30(1) it should be established that there is a minority community, that it has established an educational institution and that the educational institution is run for the education of the members of that community. Ramani Kanta Bose vs The Gauhati University (I. L. R. [1951] Ass. 348 at 352). Not one of these conditions is fulfilled in any of the educational institutions in the State. The choice in article 30(1) lies in the establishment of a school and not in its management. The provisions of the Bill relating to the establishment and recognition of schools, restrictions on alienation of school property, appointment of managers, selection of teachers by the State Public Service Commission and the taking over the management of the schools in public interest are all reasonable conditions imposed to ensure better Organisation of education and security of service conditions to the teachers. The category of schools in respect of which the power of acquisition can be exercised under cl. 15 of the Bill comes under a classification which differentiates it from those other categories which are excluded from classification being such as is calculated to further the purposes and the policy underlying the legislation. Clause 15 does not infringe article 14 at all. In enacting cl. 33 of the Bill the State Legislature did not intend, and must be presumed not to have intended, to affect the operation of article 226 in any way. section Easwara Iyer and K. R. Chaudhury, for the Kerala Private Secondary School Office Staff 1012 Association and Kerala Private Teachers ' Federation, adopted the arguments of D. N. Pritt. May 22. The opinion of Das C. J., Bhagwati, B. P. Sinha, Jafer Imam, section K. Das and J. L. Kapur, JJ. was delivered by Das C. J. Venkatarama Aiyar J. delivered a separate opinion. DAS C. J. This reference has been made by the President under article 143 (1) of the Constitution of India for the opinion of this Court on certain questions of law of considerable public importance that have arisen out of or touching certain provisions of the Kerala Education Bill, 1957, hereinafter referred to as "the said Bill", which was passed by the Legislative Assembly of the State of Kerala on September 2, 1957, and was, under article 200, reserved by the Governor of Kerala for the consideration of the President. After reciting the fact of the passing of the said Bill by the Legislative Assembly of Kerala and of the reservation thereof by its Governor for the consideration of the President and after setting out some of the clauses of the said Bill and specifying the doubts that may be said to have arisen out of or touching the said clauses, the President has referred to this Court certain questions hereinafter mentioned for consideration and report. It is to be noted that the said Bill not having yet received the assent of the President the doubts, leading up to this reference, cannot obviously be said to have arisen out of the actual application of any specified section of an Act on the facts of any particular case and accordingly the questions that have been referred to this Court for its consideration are necessarily of an abstract or hypothetical nature and are not like specific issues raised in a particular case brought before a court by a party aggrieved by the operation of a particular law which he impugns. Further, this reference has been characterised as incomplete and unsatisfactory in that, according to learned counsel appearing for some of the institutions it does not clearly bring out all the constitutional 1013 defects attaching to the provisions of the Bill and serious apprehension has been expressed by learned counsel before us that our opinion on these isolated ' abstract or hypothetical questions may very positively prejudice the interests, if not completely destroy the very existence, of the institutions they represent and, in the circumstances, we have been asked not to entertain this reference or give any advisory opinion on the questions put to us. It may be of advantage to advert, at the outset, to the ambit and, scope of the jurisdiction to be exercised by this Court under article 143 of the Constitution. There is no provision similar to this in the Constitution of the United States of America or in the Commonwealth of Australia Constitution Act, 1900 (63 and 64 Vic. 12) and, accord ingly, the American Supreme Court as well as the High Court of Australia, holding that the jurisdiction and powers of the court extend only to the decision of concrete cases coming before it, have declined to give advisory opinions to the executive or legislative branches of the State. Under section 60 of the Canadian Supreme Court Act, 1906, the Governor General in Council may refer important questions of law concerning certain matters to the Supreme Court and the Supreme Court appears to have been held bound to entertain the reference and answer the questions put to it. Nevertheless, the Privy Council has pointed out the dangers of such advisory opinion and has, upon general principles deprecated such references. Said the Earl of Halsbury L. C. in Attorney General for Ontario vs Hamilton Street Railway (1): " They would be worthless as being speculative opinions on hypothetical questions. It would be contrary to principle, inconvenient, and inexpedient that opinions should be given up on such questions at all. When they arise, they must arise in concrete cases, involving private rights; and it would be extremely unwise for any judicial Tribunal to attempt beforehand to exhaust all possible cases and facts (1) , 529. 1014 which might occur to qualify, cut down, and override the operation of the particular words when the concrete case is not before it. " To the like effect are the observations of Lord Haldane in Attorney General for British Columbia vs Attorney General for Canada (1) : ". . Under this procedure questions may be put of a kind which it is impossible to answer satisfactorily. Not only may the question of future litigants be prejudiced by the court laying down principles in an abstract form without any reference or relation to actual facts, but it may turn out to be practically impossible to define a principle adequately and safely without previous ascertainment of the exact facts to which it is to be applied. " Reference may, with advantage, be also made to the following observations of Lord Sankey I,. C. in In Re The Regulation and Control of Aeronautics In Canada (2) : ". It is undesirable that the Court should be called upon to express opinions which may affect the rights of persons not represented before it or touching matters of such a nature that its answers must be wholly ineffectual with regard to parties who are not and who cannot be brought before it for example, foreign Government. " Section 4 of the Judicial Committee Act, 1833 (3 and 4 William IV, Ch. 41) provides that " It shall be lawful for His Majesty to refer to the said Judicial Committee for hearing and consideration any such other matters whatsoever as His Majesty shall think fit and such Committee shall thereupon hear and consider the same and shall advise His Majesty thereon in manner aforesaid. " It is to be noted that it is made obligatory for the Judicial Committee to hear and consider the matter and advise His Majesty thereon. The Government of India Act, 1935, by section 213(1), authorised the Governor General to consult the Federal Court, if at any time it appeared to the Governor General that there had arisen or was likely to arise a question of (1) , 162. (2) , 66. 1015 law which was of such a nature and of such public importance that it was expedient to obtain the opinion of the Federal Court upon it and empowered that court, after such hearing as they thought fit, to report to the Governor General thereon. This provision has since been reproduced word for word, except as to the name of the court, in cl. (1) of Art 143 of our Constitution. That Article has a new clause, being cl. (2) which empowers the President, notwithstanding anything in the proviso to article 131, to refer a dispute of the kind mentioned in the said clause to the Supreme Court for opinion and the Supreme Court shall, after such hearing as it thinks fit, report to the President its opinion thereon. It is worthy of note that, while under cl. (2) it is obligatory on this Court to entertain a reference and to report to the President its opinion thereon, this Court has, under cl. (1), a discretion in the matter and may in a proper case and for good reasons decline to express any opinion on the questions submitted to it. In view of the language used in section 213(1), on which article 143(1) of our Constitution is based, and having regard to the difference in the language employed in cls. (1) and (2) of our article 143 just alluded to, the scope of a reference made under article 143(1) is obviously different from that of a reference under section 4 of the Judicial Committee Act, 1833 and section 60 of the Canadian Supreme Court Act, 1906, and this Court, under article 143(1), has a discretion in the matter and consequently the observations of their Lordships of the Privy Council quoted above are quite apposite and have to be borne in mind. There have been all told four references by the Governor General under section 213(1) of the Government of India Act, 1935, and in two of them some of the Judges of the Federal Court have made observations on the ambit and scope of such a reference. Thus in In re Allocation of Lands and Buildings (1), Gwyer C. J. said : " On considering the papers submitted with the case we felt some doubt whether any useful purpose (I) , 22, 129 1016 would be served by the giving of an opinion under section 213 of the Act. The terms of that section do not 'impose an obligation on the Court, though we should always be unwilling to decline to accept a Reference, except for good reason; and two difficulties presented themselves. First, it seemed that questions of title might sooner or later be involved, if the Government whose contentions found favour with the Court desired, as the papers show might be the case, to dispose of some of the lands in question to private individuals, and plainly no advisory Opinion under section 213 would furnish a good root of title such as might spring from a declaration of this Court in proceedings taken under section 204(1) of the Act by one Government against the other. " In In re Levy of Estate Duty (1) Spens C. J. said at p.320 of the authorised report : " It may be stated at the outset that when Parliament has thought fit to enact section 213 of the Constitution Act it is not in our judgment for the Court to insist on the inexpediency (according to a certain school of thought) of the advisory jurisdiction. Nor does it assist to say that the opinions expressed by the Court on the questions referred " will have no more effect than the opinions of the law officers ": Attorney General for Ontario vs Attorney General for Canada (2). That is the necessary result of the jurisdiction being advisory. " Referring to the objection that the questions related to contemplated legislation and not to the validity or operation of a measure already passed, the learned Chief Justice observed at p. 321 : " The fact that the questions referred relate to future legislation cannot by itself be regarded as a valid objection. Section 213 empowers the Governor General to make a reference when questions of law are " likely to arise. . . . . . . . . In this class of cases, the reference should, in the very nature of things, be made before the legislation has been (1) , 320, 321, 350). (2) , 589. 1017 introduced and the objection based upon the hypothetical character of the questions can have no force. may, however, add that instances were brought to our ' notice in which references had been made under the corresponding provision in the Canadian Supreme Court Act when the matter was at the stage of a Bill. " Zafrulla Khan J. declined to entertain the reference and to answer the questions on high authority quoted and discussed elaborately in his separate opinion. The learned Judge, after pointing out in the earlier part of his opinion that it was " a jurisdiction the exercise of which on all occasions must be a matter of delicacy and caution ", concluded his opinion with the following observations at page 350: " In the state of the material made available to us I do not think any useful purpose would be served by my attempting to frame answers to the questions referred. Indeed, I apprehend, that any such attempt might result in the opinion delivered being made the foundation of endless litigation hereafter, apart altogether from any question relating to the vires of the proposed law, and operating to the serious prejudice of persons whom it might be attempted to bring within the mischief of that law. It is bound to raise ghosts far more troublesome than any that it might serve to lay. For these reasons I am compelled respectfully to decline to express any opinion on the questions referred. " The present reference is the second of its kind under article 143(1) of the Constitution, the first one being concerned with the In Re (1). The nature and scope of the reference under article 143(1) was not discussed in the In Re case (1), but, we conceive, that the principles laid down by the Judicial Committee and the Federal Court quoted above will serve as a valuable guide indicating the line of approach to be adopted by this Court in dealing with and disposing of the reference now before us. The principles established by judicial (1) ; 1018 decisions clearly indicate that the complaint that the questions referred to us relate to the validity, not of a statute brought into force but, of a Bill which has yet to be passed into law by being accorded the assent of the President is not a good ground for not entertaining the reference for, as said by Spens C. J. article 143(1) does contemplate the reference of a question of law that is " likely to arise ". It is contended that several other constitutional objections also arise out of some of the provisions of the Bill considered in the light of other provisions of the Constitution, e.g., article 19(1)(g) and article 337 and that as those objections have not been included in the reference this Court should not entertain an incomplete reference, for answers given to the questions put may be misleading in the absence of answers to other questions that arise. In the first place it is for the President to determine what questions should be referred and if he does not entertain any serious doubt on the other provisions it is not for any party to say that doubts arise also out of them and we cannot go beyond the reference and discuss those problems. The circumstance that the President has not thought fit to refer other questions as to the constitutional validity of some of the clauses of the said Bill on the ground that they infringe other provisions of the Constitution cannot be a good or cogent reason for declining to entertain this reference and answer the questions touching matters over or in respect of which the President does entertain some doubt. In order to appreciate the true meaning, import and implications of the provisions of the Bill which are said to have given rise to doubts, it will be necessary to refer first to certain provisions of the Constitution which may have a bearing upon the questions under consideration and then to the actual provisions of the Bill. The inspiring and nobly expressed preamble to our Constitution records the solemn resolve of the people of India to constitute India into a SOVEREIGN DEMOCRATIC REPUBLIC and, amongst other things, to secure to all its citizens JUSTICE, LIBERTY, and EQUALITY and to promote among 1019 them all FRATERNIT Y assuring the dignity of the individual and the unity of the Nation. One of the most cherished objects of our Constitution is, thus, to ' secure to all its citizens the liberty of thought, expression, belief, faith and worship. Nothing provokes and stimulates thought and expression in people more than education. It is education that clarifies our belief and faith and helps to strengthen our spirit of worship. To implement and fortify these supreme purposes set forth in the preamble, Part III of our Constitution has provided for us certain fundamental rights. Article 14, which is one of the articles referred to in two of the questions, guarantees to every person, citizen or otherwise, equal protection of the laws within the territory of India. Article 16 ensures equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. In order to avail themselves of the benefit of this Article all citizens will presumably have to have equal opportunity for acquiring the qualifications, educational or otherwise, necessary for such employment or appointment. Article 19(1) guarantees to citizens the right, amongst others, to freedom of speech and expression (sub cl. (a)) and to practise any profession, or to carry on any occupation, trade or business (sub cl. These rights are, however, subject to social control permitted by cls. (2) and (6) of article 19. Under article 25 all persons are equally entitled, subject to public order, morality and health and to the other provisions of Part III, to freedom of conscience and the right freely to profess, practise and propagate religion. Article 26 confers the fundamental right to every religious denomination or any section thereof, subject to public order, morality and health, to establish and maintain institutions for religious and charitable purposes, to manage its own affairs in matters of religion, to acquire property and to administer such property in accordance with law. The ideal being to constitute India, into a secular State, no religious instruction is, under article 28(1), to be provided in any educational institution wholly maintained out of State funds and under cl. (3) of the 1020 same Article no person attending any educational institution recognised by the State or receiving aid out of State funds is to be required to take part in any religious instruction that may be imparted in such institution or to attend any religious worship that may be conducted in such institution or in any premises attached thereto unless such person or, if such person is a minor, his guardian has given his consent thereto. Article 29(1) confers on any section of the citizens having a distinct language, script or culture of its own to have the right of conserving the same. Clause (2) of that Article provides that no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. Article 30, cl. (1) of which is the subject matter of question 2 of this reference, runs as follows: " 30(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. (2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language. " While our fundamental rights are guaranteed by Part III of the Constitution, Part IV of it, on the other hand, lays down certain directive principles of State policy. The provisions contained in that Part are not enforceable by any court, but the principles therein laid down are, nevertheless, fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Article 39 enjoins the State to direct its policy towards securing, amongst other things, that the citizens, men and women, equally, have the right to an adequate means of livelihood. Article 41 requires the State, within the limits of its economic capacity and deve lopment, to make effective provision for securing the right, inter alia, to education. Under article 45 the State 1021 must endeavour to provide, within a period of ten years from the commencement of the Constitution, for free and compulsory education for all children until they complete the age of fourteen years. Article 46 requires the State to promote with special care the education and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and to protect them from social injustice and all forms of exploitation. Part XVI of our Constitution also makes certain special provisions relating to certain classes. Thus article 330 provides for the reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People. Article 331 provides for the representation of the Anglo Indian community in the House of the People. Reservations are made, by articles 332 and 333, for the representation for the Scheduled Castes and Scheduled Tribes and the Anglo Indians in the Legislative Assembly of every State for ten years after which, according to article 334, these special provisions are to cease. Special provision is also made by article 336 for the Anglo Indian community in the matter of appointment to certain services. Article 337 has an important bearing on the question before us. It provides that during the first three financial years after the commencement of this Constitution, the same grants, if any, shall be made by the Union and by each State for the benefit of the Anglo Indian community in respect of education as were made in the, financial year ending on the thirty first day of March, 1948 and that during every succeeding period of three years this grant may be less by ten per cent. than those for the immediately preceding period of three years, provided that at the end of ten years from the commencement of the Constitution such grants, to the extent to which they are a special concessions shall cease. The second proviso to that Article, however, provides that no educational institution shall be entitled to receive any grant under this Article unless at least forty per cent. of the annual admissions therein are made available to members of communities other than the Anglo Indian community. This is 1022 clearly a condition imposed by the Constitution itself on the right of the Anglo Indian community to receive the grant provided under this Article. Article 366(2) defines an " Anglo Indian ". Presumably to implement the directive principles alluded to above the Kerala Legislative Assembly has passed the said Bill in exercise of the legislative power conferred upon it by articles 245 and 246 of the Constitution read with entry II of List 11 in the Seventh Schedule to the Constitution. This legislative power is, however, to be exercised under article 245 " subject to the provisons of this Constitution ". Therefore, although this legislation may have been undertaken by the State of Kerala in discharge of the obligation imposed on it by the directive principles enshrined in Part IV of the Constitution, it must, nevertheless, subserve and not over ride the fundamental rights conferred by the provisions of the Articles contained in Part III of the Constitution and referred to above. As explained by this Court in the State of Madras vs Smt. Champakam Dorairajan (1) and reiterated recently in Mohd. Hanif Quareshi vs The State of Bihar (2) " The directive principles of State policy have to conform to and run as subsidiary to the Chapter on Fundamental Rights ". Neverthe less, in determining the scope and ambit of the fundamental rights relied on by or on behalf of any person or body the court may not entirely ignore these directive principles of State policy laid down in Part IV of the Constitution but should adopt the principle of harmonious construction and should attempt to give effect to both as much as possible. Keeping in view the principles of construction above referred to we now proceed to examine the provisions of the said Bill in order to get a clear conspectus of it. The long title of the said Bill describes it as " A Bill to provide for the better Organisation and 'development of educational institutions in the State. " Its preamble recites thus: " Whereas it is deemed necessary to pro (1) ; , 53I. (2) ; 1023 vide for the better Organisation and development of educational institutions in the State providing a varied and comprehensive educational service throughout the State. " We must, therefore, approach the substantive provisions of the said Bill in the light of the policy and purpose deducible from the terms of the aforesaid long title and the preamble and so construe the clauses of the said Bill as will subserve the said policy and purpose. Sub clause (3) of cl. I provides that the Bill shall come into force on such date as the Government may, by notification in the Gazette, appoint and different dates may be appointed for different provisions of this Bill a fact which is said to indicate that Government will study the situation and bring into force such of the provisions of the said Bill which will best subserve the real needs of its people. Clause 2 contains definitions of certain terms used in the said Bill of which the following sub clauses may be noted: " (1) " aided school " means a private school which is recognised by and is receiving aid from the Government; (3) " existing school " means any aided, recognised or Government school established before the commencement of this Act and continuing as such at such commencement; (6) " private school " means an aided or recognised school; (7) " recognised " means a private school recognised by the Government under this Act Clause 3 deals with " Establishment and recognition of schools. " Sub clause (1) empowers the Government to " regulate the primary and other stages of education and courses of instructions in Government and private schools. " Sub clause (2) requires the Government to " take, from time to time, such steps as they may consider necessary or expedient, for the purpose of providing facilities for general education, special education 130 1024 and for the training of teachers. " Sub clause (3) provides that "the Government may, for the purpose of providing such facilities: (a) establish and maintain schools; or (b) permit any person or body of persons to establish and maintain aided schools; or (c) to recognise any school established and maintained by any person or body of persons. " All existing schools, which by the definition mean any aided, recognised or Government schools established before and continuing at the commencement of the Bill are, by sub cl. (4) to be deemed to have been established in accordance with this Bill. The proviso to sub clause (4) gives an option to the educational agency of an aided school existing at the commencement of that clause, at any time within one month of such commencement after giving notice to the Government of its intention so to do, to opt to run the school as a recognised school subject to certain conditions therein mentioned. Sub clause (5) of cl. 3, which forms, in part, the subject matter of two of the questions referred to runs as follows: " 3 (5) After the commencement of this Act, the establishment of a new school or the opening of a higher class in any private school shall be subject to the provisions of this Act and the rules made thereunder and any school or higher class established or opened otherwise than in accordance with such provisions shall not be entitled to be recognised by the Government. " Clause 4 of the Bill provides for the constitution of a State Education Advisory Board consisting of officials and non officials as therein mentioned, their term of office and their duties. The purpose of the setting up of such a Board is that it should advise the Government on matters pertaining to educational policy and administration of the Department of Education. Clause 5 requires the manager of every aided school on the first day of April of each year to furnish to the authorised officer of the Government a list of properties, moveable and immoveable, of the school. A default in furnishing such list entails, under sub cl. (2) of that clause, the withholding of the maintenance grant. Clause 6 imposes restrictions on the alienation of any 1025 property of an aided school, except with the previous permission ill writing of the authorised officer of the Government. An appeal is provided against the order of the authorised officer refusing or granting such permission under sub cl. Sub clause (3) renders any transaction in contravention of sub cl. (1) or sub el. (2) null and void and on such contravention the Government, under sub cl. (4), is authorised to withhold any grant to the school. Clause 7 deals with managers of aided schools. Sub clause (1) authorises any Education agency to appoint any person to be a manager of an aided school, subject to the approval of the authorised officer, all the existing managers of aided schools being deemed to have been appointed under the said Bill. The manager is made responsible for the conduct of the school in accordance with the provisions of this Bill and the rules thereunder. Subclause (4) makes it the duty of the manager to maintain such record and accounts of the school and in such manner as may be prescribed by the rules. The manager is, by sub cl. (5), required to afford all necessary and reasonable assistance and facilities for the inspection of the school and its records and accounts by the authorised officer. Sub clause (6) forbids the manager to close down any school without giving to the authorised officer one year 's notice expiring with the 31st May of any year of his intention so to do. Sub clause (7) provides that, in the event of the school being closed or discontinued or its recognition being withdrawn, the manager shall make over to the authorised officer all the records and accounts of the school. Sub clause (8) provides for penalty for the contravention of the provisions of sub cls. (6) and (7). Clause 8 provides for the recovery of amounts due from the manager of an aided school as an arrear of land revenue. Sub clause (3) of cl. 8, which is also referred to in one of the questions, runs as follows: " 8 (3) All fees and other dues, other than special fees, collected from the students in an aided school after the commencement of this section shall, notwithstanding anything contained in any agreement, scheme 1026 or arrangement, be made over to the Government in such manner as may be prescribed. " Clause 9 makes it obligatory on the Government to pay the salary of all teachers in aided schools direct or through the headmaster of the school and also to pay the salary of the non teaching staff of the aided schools. It gives power to the Government to prescribe the number of persons to be appointed in the non teaching establishment of aided schools, their salaries, qualifications and other conditions of service. The Government is authorised, under sub cl. (3), to pay to the manager a maintenance grant at such rates as may be prescribed and under sub cl. (4) to make grants in aid for the purchase, improvement and repairs of any land, building or equipment of an aided school. Clause 10 requires Government to prescribe the qualifications to be possessed by persons for appointment as teachers in Government schools and in private schools which, by the definition, means aided or recognised schools. The State Public Service Commission is empowered to select candidates for appointment as teachers in Government and aided schools according to the procedure laid down in cl. 11. Shortly put, the procedure is that before the 31st May of each year the Public Service Commission shall select for each district separately candidates with due regard to the probable number of vacancies of teachers that may arise in the course of the year, that the list of candidates so selected shall be published in the Gazette and that the manager shall appoint teachers of aided schools only from the candidates so ,selected for the district in which the school is located subject to the proviso that the manager may, for sufficient reason, with the permission of the Commission, appoint teachers selected for any other district. Appointment of teachers in Government schools are also to be made from the list of candidates so published. In selecting candidates the Commission is to have regard to the provisions made by the Government under cl. (4) of article 16 of the Constitution, that is to say, give representation in the educational service to persons belonging to the Scheduled Castes or Tribes 1027 a provision which has been severely criticised by learned counsel appearing for the Anglo Indian and Muslim communities. Clause 12 prescribes the conditions of service of the teachers of aided schools obviously intended to afford some security of tenure to the teachers of aided schools. It provides that the scales of pay applicable to the teachers of Government schools shall apply to all the teachers of aided schools whether appointed before or after the commencement of this clause. Rules applicable to the teachers of the Government schools are also to apply to certain teachers of aided schools as mentioned in sub cl. Sub clause (4) provides that no teacher of ail aided school shall be dismissed, removed, reduced in rank or suspended by the manager without the previous sanction of the authorised officer. Other conditions of service of the teacher of aided schools are to be as prescribed by rules. Clause 14 is of considerable importance in that it provides, by sub clause (1), that the Government, whenever it appears to it that the manager of any aided school has neglected to perform any of the duties imposed by or under the Bill or the rules made thereunder, and that in the public interest it is necessary so to do, may, after giving a reasonable opportunity to the manager of the Educational agency for showing cause against the proposed action, take over the management for a period not exceeding five years. In cases of emergency the Government may, under sub el. (2), take over the management after the publication of notification to that effect in the Gazette without giving any notice to the Educational agency or the manager. Where any school is thus taken over without any notice the Educational agency or the manager may, within three months of the publication of the notification, apply to the Government for the restoration of the school showing the cause therefor. The Government is authorised to make orders which may be necessary or expedient in connection with the taking over of the management of an aided school. Under sub el. (5) the Government is to pay such rent as maybe fixed by the Collector in respect of the properties taken possession of, On taking over any 1028 school the Government is authorised to run it affording any special educational facilities which the school was doing immediately before such taking over. Right of appeal to the District Court is provided against the order of the Collector fixing the rent. Sub cl. (8) makes it lawful for the Government to acquire the school taken over under this clause if the Government is satisfied that it is necessary so to do in the public interest, in which case compensation shall be payable in accordance with the principles laid down in cl. 15 for payment of compensation. Clause 15 gives power to the Government to acquire any category of schools. This power can be exercised only if the Government is satisfied that for standardising general education in the State or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in any area or for bringing education of any category under their direct control and if in the public interest it is necessary so to do. No notification for taking over any school is to be issued unless the proposal for the taking over is supported by a resolution of the Legislative Assembly. Provision is made for the assessment and apportionment of compensation and an appeal is provided to the District Court from the order passed by the Collector determining the amount of compensation and its apportionment amongst the persons entitled thereto. Thus the Bill contemplates and provides for two methods of acquisition of aided schools, namely, under sub cl. (8) of el. 14 the Government may acquire a school after having taken possession of it under the preceding sub clauses or the Government may, under el. 15, acquire any category of aided schools in any specified area for any of the several specific purposes mentioned in that clause. Clause 16 gives power to the Government to exempt immoveable properties from being taken over or acquired. Clause 17 provides for the establishment of Local Education Authorities, their constitution and term of office and clause 18 specifies the functions of the Local Education Authorities. Clauses 19 and 20 are important and read as follows: 1029 " 19. Recognised schools: The provisions of subsections (2), (4), (5), (6), (7), (8) and (9) of section 7 shall apply to recognised schools to the same extent ' and in the same manner as they apply to aided schools." " 20. No fee to be charged from pupils of primary classes: No fee shall be payable by any pupil for any tuition in the primary classes in any Government or private school." Part II of the Bill deals with the topic of compulsory education. That part applies to the areas specified in el. Clause 23 provides for free and compulsory education of children throughout the State within a period of ten years and is intended obviously to discharge the obligation laid on the State by article 45 of the directive principles of State policy. Clauses 24 and 25 deal with the constitution of Local Education Committees and the functions thereof Clause 26, which has figured largely in the discussion before us runs as follows : " 26. Obligation on guardian to send children to school: In any area of compulsion, the guardian of every child shall, if such guardian ordinarily resides in such area, cause such child to attend a Government, or private school and once a child has been so caused to attend school under this Act the child shall be compelled to complete the full course of primary education or the child shall be compelled to attend school till it reaches the age of fourteen. " We may skip over a few clauses, not material for our purpose, until we come to el. 33 which is referred to in one of the questions we have to consider. That clause provides " 33. Courts not to grant injunction Notwithstanding anything contained in the Code of Civil Procedure, 1908, or in any other law for the time being in force, no court shall grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under this Act. " Clause 36 confers power on the Government to make 1030 rules for the purpose of carrying into effect the provisions of the Bill and in particular for the purpose of the establishment and maintenance of schools, the giving of grants and aid to private schools, the grant of recognition to private schools, the levy and collection of fees in aided schools, regulating the rates of fees in recognised schools, the manner in which the accounts, registers and records shall be maintained, submission of returns, reports and accounts by managers, the standards of education and course of study and other matters specified in sub cl. (2) of that clause. Clause 37 is as follows: " 37. Rules to be laid before the Legislative Assembly: All rules made under this Act shall be laid for not less than fourteen days before the Legislative Assembly as soon as possible after they are made and shall be subject to such modifications as the Legislative Assembly may make during the session in which they are so laid. " Under cl. 38 none of the provisions of the Bill applies to a school which is not a Government or a private school, i. e., aided or recognized school. The above summary will, it is hoped, clearly bring out the purpose and scope of the provisions of the said Bill. It is intended to serve as showing that the said Bill contains many provisions imposing considerable State control over the management of the educational institutions in the State, aided or recognised. The provisions, in so far as they affect the aided institutions, are much more stringent than those which apply only to recognised institutions. The width of the power of control thus sought to be assumed by the State evidently appeared to the President to be calculated to raise doubts as to the constitutional validity of some of the clauses of the said Bill on the ground of apprehended infringement of some of the fundamental rights guaranteed to the minority communities by the Constitution, and accordingly in exercise of the powers vested in him by article 143(1) the President has referred to this Court, for consideration and report the following questions: 1031 " (1) Does sub clause (5) of clause 3 of the Kerala Education Bill, read with clause 36 thereof or any of the provisions of the said sub clause, offend article 14 of the Constitution in any particulars or to any extent? (2) Do sub clause (5) of clause 3, sub clause (3) of clause 8 and clauses 9 to 13 of the Kerala Education Bill, or any provisions thereof, offend clause (1) of article 30 of the Constitution in any particulars or to any extent ? (3) Does clause 15 of the Kerala Education Bill, or any provisions thereof, offend article 14 of the Constitution in any particulars or to any extent ? (4) Does clause 33 of the Kerala Education Bill, or any provisions thereof, offend article 226 of the Constitution in any particulars or to any extent ?" On receipt of the reference this Court issued notices to persons and institutions who appeared to it to be interested in the matter calling upon them to file their respective statements of case concerning the above mentioned questions. Three more institutions were subsequently, on their own applications, granted leave to appear at the hearing. The Union of India, the State of Kerala and all the said persons and institutions have filed their respective statements of case and have appeared before us by counsel and taken part in the debate. A body called the Crusaders ' League his by post sent its views but has not appeared at the hearing. We have had the advantage of hearing very full arguments on the points arising out of the questions and we are deeply indebted to learned counsel appearing for the parties for the very great assistance they have rendered to us. It will be necessary, at this stage, to clear the ground by disposing of a point as to the scope and ambit of questions I and 2. It will be noticed that both these questions challenge the constitutional validity, inter alia, of clause 3 (5) of the said Bill which has already been quoted in extensor The argument advanced by the learned Attorney General and other learned counsel appearing for bodies or institutions challeng 131 1032 ing the validity of the said Bill is that the provision of cl. 3(5), namely, that the establishment of a new school "shall be subject to the provisions of this Act and the rules made thereunder " attracts all other clauses of the said Bill as if they are set out seriatim in sub el. (5) itself. Therefore, when questions I and 2 challenge the constitutional validity of el. 3(5) they, in effect, call in question the validity of all other clauses of the said Bill. Learned counsel appearing for the State of Kerala, however, opposes this line of argument on several grounds. In ' the first place, he contends that cl. 3(5) attracts only those provisions of this Bill which relate Lo the establishment of a new school. When asked to specify what provisions of the said Bill relate to I he establishment of a new school which, according to him, are attracted by cl. 3(5), the only provision that he refers to is sub cl. (3) of cl. 3. Learned counsel for the State of Kerala maintains that el. 3(5) attracts only el. 3(3) and the rules that may be made under el. 36(2)(a) and no other clause of the said Bill and, therefore, no other clause is included within the scope of the questions unless, of course, they are specifically mentioned in the questions, as some of the clauses are, in fact, specifically mentioned in question 2. If the mention of cl. 3(5) in those questions, ipso facto, attracted all other clauses of the said Bill, why, asks learned counsel, were other clauses specifically mentioned in, say, question 2 ? Learned counsel also contends that after a school is established the other clauses will proprio vigore apply to that school and there was no necessity for an express provision that a newly established school would be subject to the other provisions of the Bill. As the other clauses of the Bill will apply to all schools established after the Bill becomes an Act without the aid of cl. 3(5), a reference to that clause in the questions cannot bring within their ambit any clause of the Bill which is not separately and specifically mentioned in the questions. Finally learned counsel contends that even if cl. 3(5) attracts the other provisions of the Bill, it does not necessarily follow that the other provisions also form the subject matter of the questions. In our judgement, 1033 neither of the two extreme, positions can be seriously maintained. The contentions advanced by learned counsel for the State of Kerala appear to us to be open to several criticisms. If the intention of sub cl. (5) of cl. 3 was to attract only those provisions of the Bill which related only to the establishment of a new school and if sub cl. (3) of cl. 3 was the only provision in that be half, apart from the rules to be framed under el. 36(2)(a), then as a matter of intelligible drafting it would have been more appropriate to say, in siib cl. (3) of el. 3, that the establishment of new schools ",,;hall be subject to the provisions of this clause and the rules to be made under el. 36(2)(a) ". Clause 3(5) is quite clearly concerned with the establishment of new schools Government, aided or recognised schools, and says that after the Bill becomes law all new schools will be subject to the other provisions of the Bill. So far as new Government schools are concerned, el. 3(5) certainly attracts el. 3(3)(a), for that provision authorises the Government to establish new schools; but to say that el. 3(5) only attracts el. 3(3) appears to be untenable, for that sub clause does not in terms provide for the establishment of new aided or recognised schools. As already observed, el. 3(3)(a) specifically provides for the establishment and maintenance of new schools by the Government only. Clause 3(3)(b) provides only for the giving of permission by the Government to a person or body of persons to establish and maintain aided schools. Likewise el. 3(3)(c) authorises the Government only to recognise any school established, and maintained by any person or body of persons. Clause 3(4) introduces a fiction whereby all existing schools, which mean all existing Government, aided or recognised schools, shall be deemed to have been established in accordance with this Bill. Then comes cl. 3(5) which is couched in very wide terms. It says, inter alia, that after the commencement of the operation of the said Bill the establishment of new schools should be subject to the other provisions of the Bill and the rules made thereunder. The rules to be framed under cl. 36(2)(a), (b) & 1034 (c) appear to be respectively correlated to cl. 3(3)(a), (b) & (c). Bearing in mind the provisions of cl. 38 which places all schools other than Government and private, i. e., aided or recognised schools, outside the purview of the Bill, the establishment of what sort of new schools, we ask, does sub cl. (5) contemplate and authorise ? Obviously aided or recognised schools established after the Bill becomes law. Clause 3(5), like cl. 3(3), has apparently been very inartistically drawn, but reading the clause as a whole and particularly the concluding part of it, namely, that any school 'established otherwise than in accordance with such provisions shall not be entitled to be recognised by the Government, there can be no doubt that cl. 3(5) itself contemplates and authorises the establishment of new schools as aided or recognised schools. The opening of new schools and the securing of aid or recognition from the Government constitute the establishment of new schools contemplated by el. 3(5) read with cl. Reading el. 3(5) in the context of its setting, we have no doubt that its purpose is not merely to authorise the establishment of new schools but to subject the new schools to all the provisions of the said Bill and the rules made thereunder. To accept the restrictive argument that el. 3(5) attracts only el. 3(3) will be putting a too narrow construction on sub cl. (5) not warranted by the wide language thereof or by the language of cl. We do not think that there is much force in the argument that it was not necessary to expressly provide for the application of the other provisions to new schools to be established after the Bill became law and that the other clauses of the said Bill would by their own force and without the aid of sub cl. (5) apply to such newly established schools, for having, in terms, expressly made the new schools subject to the other provisions it is not open to the State of Kerala now to say that sub el. (5) need not have made the other provisions of the said Bill applicable to new schools established after the said Bill comes into operation or that it does not attract the other. clauses although it expressly purports to do or that it is not open to those who oppose the Bill to refer 1035 to any other clause in support of their case. If el. 3(5) did not expressly attract the other provisions, the President would perhaps have framed the questions differently. If, therefore, it be held, as we are inclined to do, that cl. 3(5) makes the new schools subject to the other provisions of the said Bill, what will be the position ? If, as submitted by the learned AttorneyGeneral and other counsel supporting him, some of the clauses of the said Bill impinge upon the fundamental rights of the members of the minority community or educational institutions established or to be established by them and if el. 3(5) makes those clauses applicable to the new schools they may establish after the Bill becomes law, then not only do those other clauses violate their rights but el. 3(5) which openly and expressly makes those other clauses apply to such new schools must also encounter the challenge of unconstitutionality. In other words, the vice of unconstitutionality, if any, of those other clauses must attach to cl. 3(5) because it is the latter which in terms makes the new schools subject to those objectionable clauses. Therefore, in a discussion on the validity of el. 3(5) it becomes germane to discuss the validity of the other clauses. In short, though the validity of the other clauses is not by itself and independently, the subject matter of either of those questions, yet their validity or otherwise has to be taken into consideration in determining the constitutional validity of el. 3(5) which makes those clauses applicable to the newly established schools. It is in this sense that, we think, a discussion of the validity of the other clauses comes within the purview of questions I and 2. We do not, in the circumstances, consider it right, in view of the language employed in this el. 3(5), to exclude the consideration of the constitutional validity of the other clauses of the Bill from the discussion on questions I and 2 which challenge the constitutional validity of el. 3(5) of the said Bill. Indeed, in the argument before us frequent references have been made to the other clauses of the said Bill in discussing questions I and 2 and we have heard the respective contentions of learned 1036 counsel on the validity or otherwise of those clauses in so far as they have a bearing on the questions put co us which we now proceed to consider and answer. Questions 1 and 3. Question I challenges the constitutional validity of sub cl. (5) of el. 3 of the said Bill read with el. 36 thereof on the ground that, the same violates the equal protection of the laws guaranted to all persons by article 14 of the Constitution. Question 3 attacks el. 15 of the said Bill on the same ground, namely, that it is violative of article 14 of the Constitution. As the ground of attack tinder both the questions is the same, it will be convenient to deal with them together. The true meaning, scope and effect of article 14 of our Constitution have been the subject matter of discussion and decision by this Court in a number of cases beginning with the case of Chiranjit Lal Chowdhuri vs The Union of India and others (1). In Budhan Choudhry vs The State of Bihar (2) a Constitution Bench of seven Judges of this Court explained the true meaning and scope of that Article. Recently in the case of Ram Krishna Dalmia and others Sri Justice section R. Tendolkar (3), the position was at length by this Court, by its judgment on March 28, 1958, and the several principles firmly established by the decisions of this Court were set out seriatim in that judgment. The position ",as again summarised in the still more recent case of land. Hanif Quaeshi vs The State of Bihar (1) in the following words: " The meaning, scope and effect of article 14, which is the equal protection clause in our Constitution, has been explained by this Court in a series of decisions in cases begining with Chiranjit Lal Chowdhury vs The Union Of India (1) and ending with the recent case of Ram Krishna Dalmia vs Sri Justice section R. Tendolkar (1). It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation (1) [1950] section C. E. 869. (2) (3) ; (4) ,g. 1037 and that in order to pass the test of permissible classi fication two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that, are grouped together from others left out of the group and (ii) such differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification, it has been held, may be founded on different bases, namely, geographical or according to objects or the occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act tinder consideration . The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that, there has been a clear violation of the constitutional principles. The courts, it is accepted, must presume that, the legislature understands and correctly the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation. " In the judgment of this Court in Ram Krishna Dalmia 's case (1) the statutes that came up for consideration before this Court were classified into five several categories as enumerated therein. No useful purpose will be served by re opening the discussion and, indeed, no attempt has been made in, that behalf by learned counsel. We, therefore, proceed to examine the impugned provisions in the light of the aforesaid principles enunciated by this Court. Coming now to the main argument founded on (1) ; 1038 article 14, the Bill, it is said, represents a deliberate attempt on the part of the party now in power in Kerala to strike at the Christian Church and especially that of the Catholic persuasion, to eliminate religion, to expropriate the minority communities of the properties of their schools established for the purpose of conserving their distinct language, script and culture, and in short, to eliminate all educational agencies other than the State so as to bring about a regimentation of education and by and through the educational institutions to propagate the tenets of their political philosophy and indoctrinate the impressionable minds of the rising generation. It is unfortunate that a certain amount of heat and passion was introduced in the discussion of what should be viewed as a purely legal and constitutional problem raised by the questions ; but perhaps it is understandable in the context of the bitter agitation and excitement provoked by the said Bill in the minds of certain sections of the people of the State. We desire, however, to emphasise that this Court is not concerned with the merit or otherwise of the policy of the Government which has sponsored this measure and that all that we are called upon to do is to examine the constitutional questions referred to us and to pronounce our opinion on the validity or otherwise of those provisions of the Bill which may properly come within the purview of those questions. The doubts which led to the formulation of question 1 are thus recited in the order of reference which had better be stated in its own terms: " AND WHEREAS sub clause (3) of clause 3 of the said Bill enables the Government of Kerala, inter alia, to recognise any school established and maintained by any person or body of persons for the purpose of providing the facilities set out in subclause (2) of the said clause, to wit, facilities for general education, special education and for the train ing of teachers; AND WHEREAS sub clause (5) of clause 3 of the said Bill provides, inter alia, that any new school established or any higher class opened in any private 1039 school, after the Bill has become an Act and the Act has come into force, otherwise than in accordance with the provisions of the Act and the rules made under section 36 thereof, shall not be entitled to be recognised by the Government of Kerala; AND WHEREAS a doubt has arisen whether the provisions of the said sub clause (5) of clause 3 of the said Bill confer upon the Government an unguided power in regard to the recognition of new schools and the opening of higher classes in any private school which is capable of being exercised in an arbitrary and discriminatory manner; AND WHEREAS a doubt has further arisen whether such power of recognition of new schools and of higher classes in private schools is not capable of being exercised in a manner affecting the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to establish and administer educational institutions of their choice; Likewise the doubts concerning cl. 15 are formulated in the following recitals in the order of reference : " AND WHEREAS clause 15 of the said Bill empowers the Government of Kerala to take over, by notification in the Gazette, any category of aided schools in any specified area or areas, if they are satisfied that for standardising general education in the State of Kerala or for improving the level of literacy in any area or for more effectively managing the aid Id educational institutions in any area or for bringing education of any category under their direct control it is necessary to do so in the public interest, on payment of compensation on the basis of market value of the schools so taken over after deducting therefrom the amounts of aids or grants given by that Government for requisition, construction or improvement of the property of the schools; AND WHEREAS a doubt has arisen whether such power is not capable of being exercised in an arbitrary and discriminatory manner. " 132 1040 The legal aspect of the matter arising out of the two questions is further elaborated thus by learned counsel appearing for the persons or institutions contesting the validity of the Bill: Clause 3 (5) makes all the provisions of the Bill applicable to new schools that may be established after the Bill becomes law. Clause 3 (5) gives the Government an unguided, uncontrolled and uncanalised power which is capable of being exercised "with an evil eye and an unequal hand" and the Government may, at its whim or pleasure, single out any person or institution and subject him or it to hostile and discriminatory treatment. The Bill does not lay down any policy or principle for the guidance of the Government in the matter of the exercise of the wide powers so conferred on it by the different clauses of the Bill. It is pointed out that cl. 3 does not lay down any policy or principle upon which the Government may or may not permit any person or body of persons to establish and maintain an aided school or grant recognition to a school established by any person. The Government may grant such permission or recognition to persons who support its policy but not to others who oppose the same. Clause 6 does riot say in what circumstances the authorised officer of the Government may or may not give permission to the alienation of the property of an aided school. He may give permission in one case but arbitrarily withhold it in another similar case. Likewise the authorised officer may not, under el. 7, approve of the appointment of a particular person as manager of in aided school for no better reason than the prejudice or dislike of his Government for that particular person 's political views or affiliations. The Government may, under cl. 9, pay the maintenance grant to the manager of one aided school but not to that of another. Particular schools or categories of schools in particular areas may be singled out for discriminatory treatment under cls. 14 and 15 of the Bill. It is next pointed out that if cl. 3 (5) is read with cls. 21, 26 and 28 of the Bill the result will be palpably discriminatory because in an area which is not an area of compulsion a new school which may be established after the Bill 1041 comes into operation and which may not seek recognition or aid can charge fees and yet attract scholars but a new school similarly established in an area of compulsion will be hit directly by cl. 26 and will have no scholars, for no guardian will be able lawfully to send his ward to a school which is neither a Government school nor a private school and such a new school will not be able to function at all, for it will have no scholar and the question of its charging fees in any class will not arise. There is no force in this last mentioned point, for the Legislature, it must be re membered, knows the needs of its people and is entitled to confine its restriction 'to those places where the needs are deemed to be the clearest and, therefore, the restrictions imposed in areas of compulsion are quite permissible on the ground of classification on geographical basis. Whatever other provisions of the Constitution, such restriction may or may not violate, which will be discussed later, it certainly does not infringe article 14. A further possibility of discrimination is said to arise as a result of the application of the same provisions of the Bill to all schools which are not similarly situate. The argument is thus developed: The Constitution, it is pointed out, deals with the schools established by minority communities in a way different from the way it deals with other schools. Thus Anglo Indian schools are given grants under article 337 of the Constitution and educational institu tions started by all minority communities including the Anglo Indians are protected by articles 29 and 30. The educational institutions of the minorities are thus different from the educational institutions established by the majority communities who require no special privilege or protection and yet the Bill purports to put in the same class all educational institutions although they have not the same characteristics and place equal burdens on unequals. This indiscriminate application of the same provisions to different institutions having different characteristics and being unequal brings about a serious discrimination violative of the equal protection clause of the Constitution. In 1042 support of this argument reliance is placed on the decision of the American Supreme Court in Cumber 'land Coal Co. vs Board of Revision (1). That decision, in our judgment, has no application to the facts of the case before us. There the taxing authorities assessed the owners of coal lands in the city of Cumberland by applying a flat rate of 50 per cent. not on the actual value of the properties but on an artificial valuation of $ 260 per acre arbitrarily assigned to all coal lands in the city irrespective of their location. It was not disputed that the value of properties which were near the river banks or close to the railways was very much more than that of properties situate far away from the river banks or the railways. The artificial valuation of $ 260 per acre was much below the actual value of the properties which were near the river banks or the railways, whereas the value of the properties situate far away, from the riverbank or the railways was about the same as tile assigned value. 'The result of applying the equal rate of tax, namely, 50 per cent. on the assigned value was that the owners of more valuable properties had to pay much less than what they would have been liable to pay upon the real value of those properties. Therefore, the method of assessment worked out clearly to the disadvantage of the owners of properties situate in the remoter parts of the city and was obviously discriminatory. There the discrimination was an integral part of that mode of taxing. That is not the position here, for there is no discrimination in the provisions of the said Bill and consequently the principle of that decision can have no application to this case. This does not, however, conclude the matter and we have yet to deal with the main argument that the Bill does not lay down any policy or principle for the guidance of the Government in the exercise of the wide powers vested in it by the Bill. Reference has already been made to the long title and the preamble of the Bill. That the policy and purpose of a given measure may be deduced from the long title and the preamble thereof has been recognised (1) ; ; ,150. 1043 in many decisions of this Court and as and by way of ' ready reference we may mention our decision in Biswambar Singh vs The State of Orissa (1) as an instances in point. The general policy of the Bill as laid down in its title and elaborated in the preamble is " to provide for the better Organisation and development of educational institutions providing a varied and comprehensive educational service throughout the State. " Each and every one of the clauses in the Bill has to be interpreted and read in the light of this policy. When, therefore, any particular clause leaves any discretion to the Government to take any action it must be understood that such discretion is to be exercised for the purpose of advancing and in aid of implementing and not impeding this policy. It is, therefore, not correct to say that no policy or principle has at all been laid down by the Bill to guide the exercise of the discretion left to the Government by the clauses in this Bill. The matter does not, however, rest there. The general policy deducible from the long title and preamble of the Bill is further reinforced by more definite. statements of policy in different clauses thereof. Thus the power vested in the Government under cl. 3(2) can be exercised only " for the purpose of providing facilities for general education, special education and for the training of teachers ". It is " for the purpose of providing such facilities " that the three several powers under heads (a), (b) and (c) of that sub clause have been conferred on the Government. The clear implication of these provisions read in the light of the policy deducible from the long title and the preamble is that in the matter of granting permission or recognition the Government must be guided by the consideration whether the giving of such permission or recognition will enure for the better Organisation and development of educational institutions in the State, whether it will facilitate the imparting of general or special education or the training of teachers and if it does then permission or recognition must be granted but it must be refused if it impedes that purpose. It is true that the (1) ; , 855. 1044 word " may " has been used in sub el. (3), but, according to the well known rule of construction of statutes, 'if the existence of the purpose is established and the conditions of the exercise of the discretion are fulfilled, the Government will be under an obligation to exercise its discretion in furtherance of such purpose and no question of the arbitrary exercise of discretion can arise. [Compare Julius vs Lord Bishop of Oxford (1) ]. If in actual fact any discrimination is made by the Government then such discrimination will be in violation of the policy and principle deducible from the said Bill itself and the court will then strike down not the provisions of the Bill but the discriminatory act of the Government. Passing on to cl. 14, we find that the power conferred thereby on the Government is to be exercised only if it appears to the Government that the manager of any aided school has neglected to perform the duties imposed on him and that the exercise of the power is necessary in public interest. Here again the principle is indicated and no arbitrary or unguided power has been delegated to the Government. Likewise the power, under el. 15(1) can be exercised only if the Government is satisfied that it is necessary to exercise it for " standardising general education in the State or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in any area or for bringing the education of any category under their direct control " and above all the exercise of the power is necessary " in the public interest ". Whether the purposes are good or bad is a question of State policy with the merit of which we are not concerned in the present discussion. All that we are now endeavouring to point out is that the clause under consideration does lay down a policy for the guidance of the Government in the matter of the exercise of the very wide power conferred on it by that clause. The exercise of the power is also controlled by the proviso that no notification under that sub clause shall be issued unless the proposal for the taking over is supported by a resolution of the Legislative Assembly a proviso (1) 1045 which clearly indicates that the power cannot be exercised by the Government at its whim or pleasure. Skipping over a few clauses, we come to cl. 36. The ' power given to the Government by cl. 36 to make rules is expressly stated to be exercised " for the purpose of carrying into effect the provisions of this Act ". In other words, the rules to be framed must implement the policy and purpose laid down in its long title and the preamble and the provisions of the other clauses of the said Bill. Further, under el. 37 the rules have to be laid for not less than 14 days before the Legislative Assembly as soon as possible after they are made and are to be subject to such modifications as the Legislative Assembly may make during the session in which they are so laid. After the rules are laid before the Legislative Assembly they may be altered or amended and it is then that the rules, as amended become effective. If no amendments are made the rules come into operation after the period of 14 days expires. Even in this latter event the rules owe their efficacy to the tacit assent of the Legislative Assembly itself. Learned counsel appearing for the State of Kerala submitted in picturesque language that here was what could be properly said to be legislation at two stages and the measure that will finally emerge consisting of the Bill and the rules with or without amendment will represent the voice of the Legislative Assembly itself and, therefore, it cannot be said that an unguided and uncontrolled power of legislation has been improperly delegated to the Government. Whether in approving the rules laid before it the Legislative Assembly acts as the Legislature of Kerala or acts as the delegatee of the Legislature which consists of the Legislative Assembly and the Governor is, in the absence of the standing orders and rules of business of the Kerala Legislative Assembly, more than we can determine. But all that we need say is that apart from laying down a policy for the guidance of the Government in the matter of the exercise of powers conferred on it under the different provisions of the Bill including cl. 36, the Kerala Legislature has, by cl. 15 and el. 37 provided further safeguards. In this 1046 connection we must bear in mind what has been laid down by this Court in more decisions than one, namely, that discretionary power is not necessarily a discriminatory power and the abuse of power by the Government will not be lightly assumed. For reasons stated above it appears to us that the charge of unconstitutionality of the several clauses which come within the two questions now under consideration founded on article 14 cannot be sustained. The position is made even clearer whether we consider the question of the validity of el. 15(1) for, apart from the policy and principle deducible from the long title and the preamble of the Bill and from that sub clause itself, the proviso thereto clearly indicates that the Legislature has not abdicated its function and that while it has conferred on the Government a very wide power for the acquisition of categories of schools it has not only provided that such power can only be exercised for the specific purposes mentioned in the clause itself but has also kept a further and more effective control over the exercise of the power, by requiring that it is to be exercised only if a resolution is passed by the Legislative Assembly authorising the Government to do so. The Bill, in our opinion, comes not within category (iii) mentioned in Ram Krishna Dalmia 's case (1) as contended by Shri G. section Pathak but within category (iv) and if the Government applies the provisions in violation of the policy and principle laid down in the Bill the executive action will come under category (v) but not the Bill and that action will have to be struck down. The result, therefore, is that the charge of invalidity of the several clauses of the Bill which fall within the ambit of questions I and 3 on the ground of the infraction of article 14 must stand repelled and our answers to both the questions I and 3 must, therefore, be in the negative. Question 2 : Articles 29 and 30 are set out in Part III of our Constitution which guarantees our fundamental rights. They are grouped together under the sub head " Cultural and Educational Rights ". The text and the marginal notes of both the Articles show that their purpose is to confer those fundamental (1) ; 1047 rights on certain sections of the, community which constitute minority communities. Under cl. (1) of article 29 any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own has the right to conserve the same. It is obvious that a minority community can effectively conserve its language, script or culture by and through educational institutions and, therefore, the right to establish and maintain educational institutions of its choice is a necessary concomitant to the right to conserve its distinctive language, script or culture and that is what is conferred on all minorities by article 30(1) which has here in before been quoted in full. This right, however, is subject, to el. 2 of article 29 which provides that no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. As soon as we reach article 30 (1) learned counsel for the State of Kerala at once poses the question: what is a minority ? That is a term which is not defined in the Constitution. It is easy to say that a minority community means a community which is numerically less than 50 per cent, but then the question is not fully answered, for part of the question has yet to be answered, namely,50 per cent. of what ? Is it 50 percent of the entire population of India or 50 per cent. of the population of a State forming a part of the Union ? The position taken up by the State of Kerala in its statement of case filed herein is as follows: "There is yet another aspect of the question that falls for consideration, namely as to what is a minority under article 30(1) The state contends that Christians, a certain section of whom is vociferous in its objection to the Bill on the allegation that it offends article 30(1), are not in a minority in the State. It is no doubt true that Christians are not a mathematical majority in the whole State. They constitute about one fourth of the population; but it does not follow therefrom that they form a minority within the meaning of article 30 (1). 133 1048 The argument that they do, if pushed to its logical conclusion, would mean that any section of the people forming under fifty per cent. of the population should be classified as a minority and be dealt with as such. Christians form the second largest community in Kerala State; they form, however, a majority community in certain area of the State. Muslims form the third largest community in the State, about one seventh of the total population. They also, however, form the majority community in certain other areas of the State. (In , it was held that persons who are alleged to be a minority must be a minority in the particular region in which the institution involved is situated). " The State of Kerala, therefore, contends that in order to constitute a minority which may claim the fundamental rights guaranteed to minorities by article 29 (1) and 30 (1) persons must numerically be a minority in the particular region in which the educational institution in question is or is intended to be situate. A little reflection will at once show that this is not a satisfactory test. Where is the line to be drawn and which is the unit which will have to be taken ? Are we to take as our unit a district, or a sub division or a taluk or a town or its suburbs or a municipality or its wards ? It is well known that in many towns persons belonging to a particular community flock together in a suburb of the town or a ward of the municipality. Thus Anglo Indians or Christians or Muslims may congregate in one particular suburb of a town or one particular ward of a municipality and they may be in a majority there. According to the argument of learned counsel for the State of Kerala the Anglo Indians or Christians or Muslims of that locality, taken as a unit, will not be a " minority " within the meaning of the Articles under consideration and will not, therefore, be entitled to establish and maintain educational institutions of their choice in that locality, but if some of the members belonging to the Anglo Indian or Christian community happen to reside in another suburb of the same town or another ward of the same municipality 1049 and their number be less than that of the members of other communities residing there, then those members of the Anglo Indian or Christian community will be a minority within the meaning of articles 29 and 30 and will be entitled to establish and maintain educational institutions of their choice in that locality. Likewise the Tamilians residing in Karolbagh, if they happen to be larger in number than the members of other communities residing in Karolbagh, will not be entitled to establish and maintain a Tamilian school in Karolbagh, whereas the Tamilians residing in, say, Daryaganj where they may be le ,is numerous than the members of other communities residing in Daryaganj will be a minority or section within the meaning of articles 29 and 30. Again Bihari labourers residing in the industrial areas in or near Calcutta where they may be the majority in that locality will not be entitled to have the minority rights and those Biharis will have no educational institution of their choice imparting education in Hindi, although they are numerically a minority if we take the entire city of Calcutta or the State of West Bengal as a unit. Likewise Bengolis residing in a particular ward in a town in Bihar where they may form the majority will not be entitled to conserve their language, script or culture by imparting education in Bengali. These are, no doubt, extreme illustrations, but they serve to bring out the fallacy inherent in the argument on this part of the case advanced by learned counsel for the State of Kerala. Reference has been made to article 350 A in support of the argument that a local authority may be taken as a unit. The illustrations given above will apply to that case also. Further such a construction will necessitate the addition of the words " within their jurisdiction " after the words " minority groups ". The last sentence, of that Article also appears to run counter to such argument. We need not, however, on this occasion go further into the matter and enter upon a discussion and express a final opinion as to whether education being a State subject being item 11 of List 11 of the Seventh Schedule to the Constitution subject only to the provisions of entries 62, 63, 64 and 66 of List I and 1050 entry 25 of List III, the existence of a minority community should in all circumstances and for purposes of all laws of that State be determined on the basis of the population of the whole State or whether it should be determined on the State basis only when the validity of a law extending to the whole State is in question or whether it should be determined on the basis of the population of a particular locality when the law under attack applies only to that locality, for the Bill before us extends to the whole of the State of Kerala and consequently the minority must be determined by reference to the entire population of that State. By this test Christians, Muslims and Anglo Indians will certainly be minorities in the State of Kerala. It is admitted that out of the total population of 1,42,00,000 in Kerala there are only 34,00,000 Christians and 25,00,000 Muslims. The Anglo Indians in the State of Travancore Cochin before the re Organisation of the States numbered only 11,990 according to the 1951 Census. We may also emphasise that question 2 itself proceeds on the footing that there are minorities in Kerala who are entitled to the rights conferred by article 30 (1) and, strictly speaking, for answering question 2 we need not enquire as to what a minority community means or how it is to be ascertained. We now pass on to the main point canvassed before us, namely, what are the scope and ambit of the right conferred by article 30 (1). Before coming to grips with the main argument on this part of the case, we may (teal with a minor point raised by learned counsel for the State of Kerala. He contends that there are three conditions which must be fulfilled before the protection and privileges of article 30 (1) may be claimed, namely, (1) there must be a minority community, (2) one or more of the members of that community should, after the commencement of the Constitution, seek to exercise the right to establish an educational institution of his or their choice, and (3) the educational institution must be established for the members of his or their own community. We have already determined, according to the test referred to above, that the Anglo Indians, Christians and Muslims are minority communities in the 1051 State of Kerala. We do not think that the protection and privilege of article 30 (1) extend only to the educational institutions established after the date our Constitution came into operation or which may hereafter be established. On this hypothesis the educational institutions established by one or I more members of any of these communities prior to the commencement of the Constitution would not be entitled to the benefits of article 30 (1). The fallacy of this argument becomes discernible as soon as we direct our attention to article 19(1)(g) which, clearly enough, applies alike to a business, occupation or profession already started and carried on as to those that may be started and carried on after the commencement of the Constitution. There is no reason why the benefit of article 30(1) should be limited only to educational institutions established after the commencement of the Constitution. The language employed in article 30(1) is wide enough to cover both pre Constitution and post Constitution institutions. It must not be overlooked that article 30(1) gives the minorities two rights, namely, (a) to establish, and (b) to administer, educational institutions of their choice. The second right clearly covers pre Constitution schools just as article 26 covers the right to maintain pre Constitution religious institutions. As to the third condition mentioned above, the argument carried to its logical conclusion comes to this that if a single member of any other community is admitted into a school established for the members of a particular minority community, then the educational institution ceases to be an educational institution established by the particular minority community. The argument is sought to be reinforced by a reference to article 29(2). It is said that an educational institution established by a minority community which does not seek any aid from the funds of the State need not admit a single scholar belonging to a community other than that for whose benefit it was established but that as soon as such an educational institution seeks and gets aid from the State coffers article 29(2) will preclude it from denying admission to members of the other communities on grounds only of religion, race, caste, 1052 language or any of them and consequently it will cease to be an educational institution of the choice of the minority community which established it. This argument does not appear to us to be warranted by the language of the Article itself. There is no such limitation in article 30(1) and to accept this limitation will necessarily involve the addition of the words " for their own community " in the Article which is ordinarily not permissible according to well established rules of interpretation. Nor is it reasonable to assume that the purpose of article 29(2) was to deprive minority educational institutions of the aid they receive from the State. To say that an institution which receives aid on account of its being a minority educational institution must not refuse to admit any member of any other community only on the grounds therein mentioned and then to say that as soon as such institution admits such an outsider it will cease to be a minority institution is tantamount to saying that minority institutions will not, as minority institutions, be entitled to any aid. The real import Of article 29(2) and article 30(1) seen is to us to be that they clearly contemplate a, minority institution with a sprinkling of outsiders admitted into it. admitting a non member into it the minority institution does not shed its character and cease to be a minority institution. Indeed the object of conservation of ' the distinct language, script and Culture of a minority may be better served by propagating the same amongst non members of the particular minority community. In our opinion, it is not possible to read this condition into Art ' 30(1) of the Constitution. Having disposed of the minor point, referred to above, we now take up the main argument advanced before us as to the content of article 30(1). The first point to note is that the Article gives certain rights not only to religious minorities but also to linguistic minorities. In the next place, the right conferred on such minorities is to establish educational institutions of their choice. It does not say that, minorities based on religion should establish educational institutions for teaching religion only, or that linguistie minorities 1053 should have the right to establish educational institutions for teaching their language only. What the article says and means is that the religious and the linguistic minorities should have the right to establish educational institutions of their choice. There is no limitation placed on the subjects to be taught in such educational institutions. As such minorities will ordinarily desire that their children should be brought up properly and efficiently and be eligible for higher university education and go out in the world fully equipped with such intellectual attainments as will make them fit for entering the public services, educa tional institutions of their choice will necessarily include institutions imparting general secular education also. In other words, the Article leaves it to their choice to establish such educational institutions as will serve both purposes, namely, the purpose of conserving their religion, language or culture, and also the purpose of giving a thorough, good general education to their children. The next thing to note is that the Article, in terms, gives all minorities, whether based on religion or language, two rights, namely, the right to establish and the right to ad minister educational institutions of their The key to the understanding of the true meaning and implication of the Article under consideration are the words " of their own choice ". It is said that the dominant word is " choice " and the content of that Article is as wide as the choice of the particular minority community may make it. The ambit of the rights conferred by Art:30(1) has, therefore, to be determined on a consideration of the matter from the points of view of the educational institutions themselves. The educational institutions established or administered by the minorities or to be so established or administered by them in exercise of the rights conferred by that, Article, may be classified into three categories, namely, (1) those which do not seek either aid or recognition from the State, (2) those which want aid, and (3) those which want only recognition but not aid. As regards the institutions which come within the first category, they are, by cl. 38 of the Bill, outside 1054 the purview of the Bill and, according to learned counsel for the State of Kerala, nothing can be done for or against them under the Bill. They have their right under article 30(1) and they can, says learned counsel, exercise that right to their heart 's content unhampered by the Bill. Learned counsel appearing for the institutions challenging the validity of the Bill, on the other hand, point to cl. 26 of the Bill to which reference has already been made. They say that if the educational institutions, present or future, which come within the first category happen to be located within an area of compulsion they will have to close down for want of scholars, for all guardians residing within such area are, by cl. 26, enjoined, on pain of penalty provided by el. 28, to send their wards only to Government schools or private schools which, according to the definition, means aided or recognised schools. Clause 26, it is urged, abridges and indeed takes away the fundamental right conferred on the minorities by article 30(1) and is, therefore, unconstitutional. The educational institutions coming within the first category, not being aided or recognised are, by el. 38, prima facie outside the purview of the Bill. None of the provisions of the Bill including those mentioned in the Question apply to them and accordingly the point sought to be raised by them, namely, the infraction of their right under article 30(1) by el. 26 of the Bill does not come within the scope of question 2 and we cannot, on the present reference, express any opinion on that point. As regards the second category, we shall have to sub divide it into two classes, namely, (a) those which are by the Constitutional itself expressly made eligible for receiving grants, and (b) those which are not entitled to any grant by virtue of any express provision of the Constitution but, nevertheless, seek to get aid. Anglo Indian educational institutions come within sub category (a). An Anglo Indian is defined in article 366(2). The Anglo Indian community is a wellknown minority community in India based on religion as well as language and has been recognised 1055 as such by this Court in The State of Bombay vs Bombay Education Society (1). According to the figures set out in the statement of case filed by the" two Anglo Indian institutions represented before us by Shri Frank Anthony, about which figures there is no dispute, there are 268 recognised Anglo Indian schools in India out of which ten are in the State of Kerala. Anglo Indian educational institutions established prior to 1948 used to receive grants from the Government of those days. Article 337, presumably in view of the special circumstances concerning the Anglo Indian community and to allay their natural fears for their future well being, preserved this bounty for a period of ten years. According to that Article all Anglo Indian educational institutions which were, receiving grants up to the financial year ending on March 31, 1948, will continue to receive the same grant subject to triennial diminution of ten per cent. until the expiry of ten years when the grant, to the extent it is a special concession to the Anglo Indian community, should cease. The second proviso imposes the condition that at least 40 per cent. of the annual admissions must be made available to the members of comnunities other than the Anglo Indian community. Likewise article 29 (2) provides, inter alia, that no citizen shall be denied admission into any educational institution receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. These are the only constitutional limitations to the right of the Anglo Indian educational institutions to receive aid. Learned counsel appearing for two Anglo Indian schools contends that the State of Kerala is bound to implement the provisions of article 337. lndeed it is stated in the statement of case filed by the State of Kerala that all Christian schools are aided by that State and, therefore, the Anglo Indian schools, being also Christian schools, have been so far getting from the State of Kerala the grant that they are entitled to under Art,. 337. Their grievance is that by introducing (1) ; , 583. 134 1056 this Bill the State of Kerala is now seeking to impose, besides the constitutional limitations mentioned in the second proviso to article 337 and article 29 (2), further and more onerous conditions on this grant to the Anglo Indian educational institutions although their constitutional right to such grant still subsists. The State of Cls. 8(3),and 9 to13 besides other clauses attracted by cl. 3(5) of the Bill curtailing and, according to them completly takeing away, their constitutional right to manageown affairs as a price for the grant to which under article 337, they are entitled unconditionally except to the extent mentioned in the second proviso to that article and in article 29 (2). Learned counsel for the State of Kerala does not seriously dispute, as indeed he cannot fairly do, that so far as the grant under article 337 is concerned the Anglo Indian educational institutions are entitled to receive the same without any fresh strings being attached to such grant, although he faintly suggests that the grant received by the Anglo Indian educational institutions under article 337 is not strictly speaking " aid " within the meaning of that word as used in the Bill. We are unable to accept I that part of his argument as sound. The word " aid" has not been defined in the Bill. Accordingly we must give this simple English word its ordinary and natural meaning. It may, in passing, be noted that although the word " grant " is used in article 337 the word " aid " is used in article 29 (2) and article 30 (2), but there can be no question that the word " aid " in these two Articles will cover the " grant " under article 337. Before the passing of the said Bill the Anglo Indian educational institutions were receiving the bounty formerly from the State of Madras or Travancore Cochin and after its formation from the present new State of Kerala. In the circumstances, the amount received by the AngloIndian institutions as grant under article 337 must be construed as " aid " within the meaning of the said Bill and these Anglo Indian educational institutions in receipt of this grant payable under article 337 must accordingly be regarded as aided schools " within 1057 the meaning of the definitions in cl. 2, sub cls. (1) and (6). The imposition of stringent terms as fresh or additional conditions precedent to this grant to the Anglo Indian educational institutions will, therefore, infringe their rights not only under article 337 but also under article 30 (1). If the Anglo Indian educational institutions cannot get the grant to which they are entitled except upon terms laid down by the provisions of the Bill then, if they insist on the right of administration guaranteed to them by article 30 (1) they will have to exercise their option tinder the proviso to el. 3 (4) and remain content with mere recognisation, subject to certain terms therein mentioned which may also be an irksome and intolerable encroachment on their right of administration. But the real point is that no educational institution can in modern times, afford to subsist and efficiently function without some State aid and, therefore, to continue their institutions they will have to seek aid and will virtually have to surrender their constitutional right of administering educational institutions of their choice. the premises, they may, in our opinion, legitimately complain that so far as the grants under article 337 are concerned, the provisions of the clauses of the I ')ill mentioned in question 2 do in substance and effect infringe their fundamental rights under article 30 (1) and are to that extent void. It is urged by learned counsel for the State of Kerala that this Court should decline to answer this question until rules are framed but if the provisions of the Bill are obnoxious on the face of them, no rule can cure that defect. No or do we think that there is any substance in the argument advanced by learned counsel for Kerala that this Bill has ]lot introduced anything now and the Anglo Indian schools are not being subjected to anything beyond what they have been submitting to under the Education Acts and Codes of Travancore or Cochin or Madras. In 1945 or 1947 when those Acts and codes came into operation there were no fundamental rights and there can be no loss of fundamental right merely on the ground of non exercise of it. There is no case of estoppel here, assuming that there can be an estoppel against the 1058 Constitution. There can be no question, therefore, that the Anglo Indian educational institutions which are entitled to their (,rants under article 337 are being subjected to onerous conditions and the provisions of the said Bill which legitimately come within question 2 as construed by us infringe their rights not only under article 337 but also violate their rights under article 30 (1) in that they are prevented from effectively exercising those rights. it should be borne in mind that in determining the constitutional validity of a measure or a provision therein regard must be had to the real effect and impact thereof on the fundamental right. See the decisions of this Court in Rashid Ahmad vs Muunicipal Board Kairana 's case (1), Mohd. Yasin vs The Town Area Committee, Jalalabad 's case (2) and The State of Bombay vs Bombay Education Society 's case (3). Learned counsel for the State of Kerala next urges that each and every one of the Anglo Indian educational institutions are getting much more than what they are entitled to under article 337 and that consequently, in so far as , these Anglo Indian educational institutions are getting more than what is due to them under article 337, they are, as regards the excess, in the same position as other Anglo Indian educational institutions started after 1948 and the educational institutions established by other minorities who have no right to aid under any express provision of the Constitution but are in receipt of aid or seek to get it. This takes us to the consideration of the cases of the educational institutions which fall within sub category (b) mentioned above, namely, the institutions which are not entitled to any grant of aid by virtue of any express provision of the Constitution but, nevertheless, seek to get aid from the State. We have already seen that article 337 of the Constitution makes special provision for granting aid to Anglo Indian educational institutions established prior to 1948. There is no constitutional provision for such grant of aid to educational institutions established by (1) ; , 571. (2) ; , 577. (3) ; , 583. 1059 the Anglo Indian community after 1948 or to those established by other minority communities at any time. The other minority communities or even the Anglo Indian community in respect of post 1948 educational institutions have no constitutional right, fundamental or otherwise, to receive any grant from the State. It is, however, well known that in modern times the demands and necessities of modern educational institutions to be properly and efficiently run require considerable expense which cannot be met fully by fees collected from the scholars and private endowments which are not adequate and, therefore, no educational institution can be maintained in a state of efficiency and usefulness without substantial aid from the State. Articles 28(3), 29(2) and 30(2) postulate educational institutions receiving aid out of State funds. By the bill now under consideration the State of Kerala also contemplates the granting of aid to educational institutions. The said Pill, however, imposes stringent terms as conditions precedent to the grant of aid to educational institutions. The provisions of the Bill have already been summarised in detail in an earlier part of this opinion and need not be recapitulated. Suffice it to say that if the said Bill becomes law then, in order to obtain aid from State funds, an educational institution will have to submit to the conditions laid down in cls. 3. 5, 6, 7, 8, 9, 10, 11, 12, 14, 15 and 20. Clause 36 empowers the Government to make rules providing for the giving of aids to private schools. Learned counsel appearing for the educational institutions opposing the Bill complain that those clauses virtually deprive their clients of their rights under article 30(1). Their grievances are thus stated: The gist of the right of administration of a school is the power of appointment, control and dismissal of teachers and other staff. But under the said Bill such power of management is practically taken away. Thus the manager must submit annual statements (el. 5). The fixed assets of the aided schools are frozen and cannot be dealt with except with the permission of the authorised officer (cl. 6). No educational agency of an aided 1060 school can appoint a manager of its choice and the manager is completely under the control of the authorised officer, for he must keep accounts in the manner he is told to do and to give periodical inspection of them, and on the closure of the school the accounts must be made over to the authorised officer (el. 7). All fees etc. collected will have to be made over to the Government (el. 8 (3)). Government will take up the task of paying the teachers and the non teaching staff (cl. 9). Government will prescribe the qualification of teachers (cl. 10). The school authorities cannot appoint a single teacher of their choice, but must appoint persons out of the panel settled by the Public Service Commission (cl. 11). The school authorities must provide amenities to teachers and cannot dismiss, remove, reduce or even suspend a teacher without the previous sanction of the authorised officer (cl. 12). Government may take over the management on being satisfied as to certain matters and can then acquire it outright (el. 14) and it can also acquire the aided school, against on its satisfaction is to certain matters on which it is easily possible to entertain different views (cl. 15). Clause 20 peremptorily prevents a private school, which means an aided or recognised school, from charging any fees for tuition in the primary classes where the number of scholars are the highest, Accordingly they contend that those provisions do offend the fundamental rights conferred on them by article 30(1). Learned counsel appearing for the State of Kerala advances the extreme contention that article 30 (1) Confers on the minorities the fundamental right to establish and administer educational institutions of their choice and nothing more. They are free to exercise such rights as much as they like and as long as they care to do so on their own resources. But this fundamental right goes no further and cannot possibly extend to their getting financial assistance from the coffers of the State. If they desire or seek to obtain aid from the State they must submit to the terms on which the State offers aid to all other educational institutions established by other people just as a person 1061 will have to pay 15 naye paise if he wants to buy a stamp for an inland letter. Learned counsel appearing for the two Anglo Indian schools as well. as learned counsel appearing for the Jamait ul ulemia iHind, on the other hand, insist in their turn, on an equally extreme proposition, namely, that their clients ' fundamental rights under article 30 (1) are, in terms, absolute and not only can it not be taken away but cannot even be abridged to any extent. They draw our attention first to article 19 (1) (g) which confers on the citizens the fundamental right to carry on any business and then to cl. 6 of that article which permits reasonable restrictions being imposed on that fundamental right and they contend that, as there is no such provision in article 30 (1) conferring on the State any police power authorising the imposition of social control, the fundamental rights tinder article 30 (1) must be held to be absolute and cannot be subjected to any restriction whatever. They reinforce their arguments by relying on articles 28 (3), 29 (2) and 30 (2) which, they rightly submit, do contemplate the grant of aid to educational institutions established by minority com munities. Learned counsel also strongly rely on articles 41 and 46 of the Constitution which, as directive principles of State policy, make it the duty of the State to aid educational institutions and to promote the educational interests of the minorities and the weaker sections of the people. Granting of aid to educational institutions is, according to learned counsel, the normal function of the Government. The Constitution contemplates institutions wholly maintained by the State, as also institutions receiving aid from the State. If, therefore, the granting of aid is a governmental function, it must, they say, be discharged in a reasonable way and without infringing the fundamental rights of the minorities. There may be no fundamental right given to any person or body administering an educational institution to get aid from the State and indeed if the State has not sufficient funds it cannot distribute any. Nevertheless if the State does distribute aid it cannot, they contend, attach such conditions to it as will deprive the 1062 minorities of their fundamental rights under article 30(1). Attaching stringent conditions, such as those provided by the said Bill and summarised above, is violative of the rights guaranteed to the minorities by article 30(1). Surrender of fundamental rights cannot, they conclude, be exacted as the price of aid doled out by the State. We are thus faced will a problem of considerable complexity apparently difficult of solution. There is, on the one hand the minority rights under article 30(1) to establish and administer educational institutions of their choice and the duty of the Government to promote education, there is, on the other side the obligation of the State under article 45 to endeavour to introduce free and compulsory education. We have to reconcile between these two conflicting interests arid to give effect to both if that is possible and bring about a synthesis between the two. The directive principles cannot ignore or override the fundamental rights but must, as we have said, subserve the fundamental rights. We have already observed that article 30(1) gives two rights to the minorities, (1) to establish and (2) to administer, educational institutions of their choice. The right to administer cannot obviously include the right to maladminister. The minority cannot surely ask for aid or recognition for an educational institution run by them in unhealthy surroundings, without any competent teachers, possessing any semblance of Qualification, and which does not maintain even a fair standard of teaching or which teaches matters subversive of the welfare of the scholars. It stands to reason, then, that the constitutional right to administer an educational institution of their choice does not necessarily militate against the claim of the State to insist that in order to In grant aid the State may prescribe reasonable regulations to ensure the excellence of the institutions to be aided. Learned Attorney General concedes that reasonable regulations may certainly be imposed by the state as a condition for aid or even for recognition. There is no right in any minority, other than Anglo Indians, to get aid, but, he contends, that if the State chooses to 1063 grant aid then it must not say " I have money and I shall distribute aid but I shall not give you any aid unless you surrender to me your right of administra . " The State must not grant aid in such manner as will take away the fundamental right of the minority community under article 30(1). Shri ( 'X. section Pathak appearing for some of the institutions opposing the Bill agrees that it is open to the State to lay down conditions for recognition, namely, that an institution must have a particular amount of funds or properties or number of students or standard of education and so forth and it is open to the State to make a law prescribing conditions for such recognition or aid provided, however, that such law is constitutional and does not infringe any fundamental right of the minorities. Recognition and grant of aid, says Shri G. section Pathak, is the governmental function and, therefore, the State cannot impose terms as condition precedent to the grant of recognition or aid which will be violative of article 30(1). According to the statement of case filed by the State of Kerala, every Christian school in the State is aided by the State. Therefore, the conditions imposed by the said Bill on aided institutions established and administered by minority communities, like the Christians, including the Anglo Indian community, will lead to the closing down of all these aided schools unless they are agreeable to surrender their fundamental right of management. No educational institutions can in actual practice be carried on without aid from the State and if they will not get it unless they surrender their rights they will, by compulsion of financial necessities, be compelled to give up their rights under article 30(1). The legislative powers conferred on the legislatures of the States by articles 245 and 246 are subject to the other provisions of the Constitution and certainly to the provisions of Part III which confers fundamental rights which are, therefore, binding on the State legislatures. The State legislatures cannot, it is clear, disregard or override those provisions merely by employing indirect methods of achieving exactly the 135 1064 same result. Even the legislature cannot do indirectly what it certainly cannot do directly. Yet that will be the effect of the application of these provisions of the Bill and according to the decisions of this Court already referred to it is the real effect to which regard is to be had in determining the constitutional validity of any measure. Clauses 6, 7, 9, 10, 11, 12, 14, 15 and 20 relate to the management of aided schools. Some of these provisions, e.g., 7, 10, 11(1), 12(1)(2)(3) and (5) may easily be regarded as reasonable regulations or conditions for the grant of aid. Clauses 9, 11(2) and 12(4) are, however, objected to as going much beyond the permissible limit. It is said that by taking over the collections of fees, etc., and by undertaking to pay the salaries of the teachers and other staff the Government is in reality confiscating the school fund and taking away the prestige of the school, for none will care for the school authority. Likewise cl. II takes away an obvious item of management, for the manager cannot appoint any teacher at all except out of the panel to be prepared by the Public Service Commission, which, apart from the question of its power of taking up such duties, may not be qualified at all to select teachers who will be acceptable to religious denominations and in particular sub el. (2) of that clause is objectionable for it thrusts upon educational institutions of religious minorities teachers of Scheduled Castes who may have no knowledge of the tenets of their religion and may be otherwise weak educationally. Power of dismissal, removal, reduction in rank or suspension is an index of the right of management and that is taken away by cl. 12(4). These are, no doubt, serious inroads on the right of administration and appear perilously near violating that right. But considering that those provisions are applicable to all educational institutions and that the impugned parts of cls. 9, 11 and 12 are designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes, we are pre pared, as at present advised, to treat these clauses 9, 11(2) and 12(4) as permissible regulations which the 1065 State may impose on the minorities as a condition for granting aid to their educational institutions. We,, however, find it impossible to support cls. 14 and 15 of the said Bill as mere regulations. The provisions of those clauses may be totally destructive of the rights under article 30(1). It is true that the right to aid is not implicit in article 30(1) but the provisions of those clauses, if submitted to on account of their factual compulsion as condition of aid, may easily be violative of article 30(1) of the Constitution. Learned counsel for the State of Kerala recognises that cls. 14 and 15 of the Bill may annihilate the minority communities ' right to manage educational institutions of their choice but submits that the validity of those clauses is not the subject matter of question 2. But, as already explained, all newly established schools seeking aid or recognition are, by el. 3(5), made subject to all the provisions of the Act. Therefore, in a discussion as to the constitutional validity of cl. 3(5) a discussion of the validity of the other clauses of the Bill becomes relevant, not as and by way of a separate item but in determining the validity of the provisions of el. In our opinion, sub el. 3 of el. 8 and cls. 9, 10, 11, 12 and 13 being merely regulatory do not offend. article 30(1), but the provisions of sub cl. (5) of cl. 3 by making the aided educational institutions subject to cls. 14 and 15 as conditions for the. grant of aid do offend against article 30(1) of the Constitution. We now come to the, last category of educational institutions established and administered by minority communities which seek only recognition but not aid from the State. The extreme arguments advanced with regard to recognition by learned counsel for the State of Kerala and learned counsel for the two Anglo Indian schools and learned counsel for the Muslim institutions proceed on the same lines as those advanced respectivly by them on the question as to granting of aid, namely, that the State of Kerala maintains that the minority communities may exercise their fundamental right under article 30(1) by establishing educational institutions of their choice wherever they like and administer the same in their own way 1066 and need not seek recognition from the Government, but that if the minority communities desire to have 'State recognition hey must submit to the terms imposed, as conditions precedent to recognition, on every educational institution. The claim of the educational institutions of the minority communities, on the other hand, is that their fundamental right under article 30(1) is absolute and cannot be subjected to any restriction whatever. Learned counsel for the two Anglo Indian schools appearing on this reference, relying on some decisions of the American Supreme Court, maintains that a child is not the creature of the State and the parents have the right to get their child educated in educational institutions of their choice. Those American decisions proceed on the language of the due process clauses of the Fifth and the Fourteenth Amendments and have no application to a situation arising under our Constitution and we need not, therefore, discuss them in detail here. Adverting to the two conflicting views propounded before us we repeat that neither of the two extreme propositions can be sustained and we have to reconcile the two, if possible. Article 26 gives freedom to religious denominations or any section thereof, subject to public order, morality and health, to establish and maintain institutions for religious and charitable purposes. Article 29(1) gives protection to any section of citizens residing in the territory of India having a distinct language, script or culture of its own the right to conserve the same. As we have already stated, the distinct language, script or culture of a minority community can best be conserved by and through educational institu tions, for it is by education that their culture can be inculcated into the impressionable minds of the children of their community. It is through educational institutions that the language and script of the minority community can be preserved, improved and strengthened. It is, therefore, that article 3O(1) confers on all minorities, whether based on religion or language, the right to establish and administer educational institutions of their choice. The minorities, quite understandably, regard it as essential that the education 1067 of their children should be in accordance with the teachings of their religion and they hold, quite honestly, that such an education cannot be obtained in ordinary schools designed for all the members of the public but can only be secured in schools conducted under the influence and guidance of people well versed in the tenets of their religion and in the traditions of their culture. The minorities evidently desire that education should be imparted to the children of their community in an atmosphere congenial to the growth of their culture. Our Constitution makers recognised the validity of their claim and to allay their fears conferred on them the fundamental rights referred to above. But the conservation of the distinct language, script or culture is not the only object of choice of the minority communities. They also desire that scholars of their educational institutions should go out in the world well and sufficiently equipped with the qualifications necessary for a useful career in life. But according to the Education Code now in operation to which it is permissible to refer for ascertaining the effect of the impunged provision on existing state of affairs, the scholars of unrecognised schools are not permitted to avail themselves of the opportunities for higher education in the University and are not eligible for entering the public services. Without recognition, therefore, the educational institutions established or to be established by the minority communities cannot fulfil the real objects of their choice and the rights under article 30(1) cannot be effectively exercised. The right to establish educational institutions of their choice must, therefore, mean the right to establish real institutions which will effectively serve the needs of their community and the scholars who resort to their educational institutions. There is, no doubt, no such thing as fundamental right to recognition by the State but to deny recognition to the educational institutions except upon terms tantamount to the surrender of their constitutional right of administration of the educational institutions of their choice is in truth and in effect to deprive them of their rights under article 30(1). We repeat that the legislative power is subject to the 1068 fundamental rights and the legislature cannot indirectly take away or abridge the fundamental rights which it could not do directly and yet that will be the result if the said Bill containing any offending clause becomes law. According to the decisions of this Court referred to above, in judging the validity of any law regard must be had to its real intendment and effect on the rights of the aggrieved parties, rather than to its form. According to the Education Codes certain conditions are prescribed whether as legislative or as executive measures we do not stop to enquire as conditions for the grant of recognition and it is said, as it was said during the discussion on the question of aid, that the said Bill imposes no more burden than what these minority educational institutions along with those of other communities are already subjected to. As we have observed there can be no question of the loss of a fundamental right merely by the non exercise of it. There is no case here of any estoppel, assuming that there can be any estoppel against the Constitution. Therefore, the impugned provisions of the said Bill must be considered on its merits. By cl. 19 the following clauses, namely, 7 (except sub cls. I and 3 which apply only to aided schools), 10 and 20 were made applicable to recognised schools. We are prepared to accept the provisions of sub cls. 2, 4 to 9 of cl. 7 and the provisions of cl. 10 as permissible regulations but it is difficult to treat el. 20 as merely regulatory. That clause peremptorily requires that no fees should be charged for tuition in the primary classes. There is no dispute that the number of pupils in the primary classes is more than that in the other classes. The 1955 1956 figures of school going children, as to which there is no dispute, show that of the age group) of 6 to II cent per cent. of boys attend classes, while 91 per cent. of girls of that age group do the same. There is a drop in attendance when we come to age group 11 to 14. In that age group 36.2 per cent. of boys and 29 per cent. of girls go to school. It is clear, therefore, that although the rate of fees charged in primary classes is lower than those charged in higher classes, the total amount collected from scholars 1069 attending primary classes is quite considerable and forms an appreciable part of the total income of the school. If this Bill becomes law, all these schools will have to forego this fruitful source of income. There is, however, no provision for counterbalancing the loss of fees which will be brought about by el. 20 when it comes into force. There is no provision, such as there is in el. 9 which applies to aided schools only, that the State should make good that loss. Therefore, the ,imposition of such restriction against the collection of fees from any pupil in the primary classes as a condition for recognition will in effect make it impos sible for an educational institution established by a minority community being carried on. It is true that el. 36(2)(c) empowers the Government to make rules providing for the grant of recognition to private schools and we are asked to suspend our opinion until the said Bill comes into force and rules are actually made. But no rule to be framed under el. 36(2)(c) can nullify the constitutional infirmity of cl. 3(5) read with cl. 20 which is calculated to infringe the fundamental rights of minority communities in respect of recognised schools to be established after the commencement of the said Bill. Learned counsel for the State of Kerala referred us to the directive principles contained in article 45 which requires the State to endeavour to provide, within a period of ten years from the commencement of the Constitution, for free and compulsory education for all children until they complete the age of fourteen years and with considerable warmth of feeling and indignation maintained that no minorities should be permitted to stand in the way of the implementation of the sacred duty cast upon the State of giving free and compulsory primary education to the children of the country so as to bring them up properly and to make them fit for discharging the duties and responsibilities of good citizens. To pamper to the selfish claims of these minorities is, according to ].earned counsel, to set back the hands of the clock of progress. Should these minorities, asks learned counsel, be permitted to perpetuate the sectarian fragmentation of the people 1070 and to keep them perpetually segregated in separate and isolated cultural enclaves and thereby retard the unity of the nation ? Learned counsel for the minority institutions were equally cloquent as to the sacred. obligation of the State towards the minority communities. It is not for this Court to question the wisdom of the supreme, law of the land. We the people of India have given unto ourselves the Constitution which is not for any particular community or section but for all. Its provisions are intended to protect all, minority as well as the majority communities. There can be no manner of doubt that our Constitution has guaranteed certain cherished rights of the minorities concerning their language, culture and religion. These concessions must have been made to them for good and valid reasons. Article 45, no doubt, requires the State to provide for free and compulsory education for all children, but there is nothing to prevent the State from discharging that solemn obligation through Government and aided schools and article 45 does not require that obligation to be discharged at the expense of the minority communities. So long as the Constitution stands as it is and is not altered, it is, we conceive, the duty of this Court to uphold the fundamental rights and thereby honour our sacred obligation to the minority communities who are of our own. Throughout the ages endless inundations of men of diverse creeds, cultures and races Aryans and non Aryans, Dravidians and Chinese, Scythians, Huns, Pathans and Mughalshave come to this ancient land from distant regions and climes. India has welcomed them all. They have met and gathered. given and taken and got mingled, merged and lost in one body India 's tradition has thus been epitomised in the following noble lines: " None shall be turned away From the shore of this vast sea of humanity That is India ". Indeed India has sent out to the world her message of goodwill enshrined and proclaimed in our National Anthem: Poems by Rabindranath Tagore. 1071 Day and night ,the voice goes out from land to land, calling Hindus, Buddhists, Sikhs and Jains round thy throne and Parsees, Mussalmans and Christians. Offerings are brought to thy shrine by the East and the West to be woven in a garland of love. Thou bringest the hearts of all peoples into the harmony of one life, Thou Dispenser of India 's destiny, Victory, Victory, Victory to thee. "* It is thus that the genius of India has been able to find unity in diversity by assimilating the best of all creeds and cultures. Our Constitution accordingly recognises our sacred obligations to the minorities. Looking at the rights guaranteed to the minorities by our Constitution from the angle of vision indicated above, we are of opinion that el. 7 (except sub cls. I and 3 which apply only to aided schools) and cl. 10 may well be regarded as permissible regulation which the State is entitled to impose as a condition for according its recognition to any educational institution but that el. 20 which has been extended by el. 3 (5) to newly established recognised schools, in so far as it affects educational institutions established and administered by minority communities, is violative of article 30 (1). Question 4 : This question raises the constitutional validity of cl. 33 of the said Bill. That clause, which has hereinbefore been set out in full, provides that notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force no Court shall grant any temporary injunction or make any interim order restraining any proceeding which is being or about to be taken under the provisions of the Bill when it becomes an Act. Article 226 of the Constitution confers extensive jurisdiction and power on the High Courts in the States. This jurisdiction and power extend throughout the territories in relation to which the High Court exercises *Rabindranath Tagore. 136 1072 jurisdiction. It can issue to any person or authority, including in appropriate cases any Government, within those territories, directions, orders or writs of the nature mentioned therein for the enforcement of the fundamental rights or for any other purpose. No enactment of a State Legislature can, as long as that Article stands, take away or abridge the jurisdiction and power conferred on the High Court by that Article. The question is whether cl. 33 does so. The doubts which have arisen with regard to cl. 33 are thus formulated in the order of reference : " AND WHEREAS clause 33 of the said Bill provides that, notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force, no courts can grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under the Act; AND WHEREAS a doubt has arisen whether the provisions of the said clause 33, in so far as they relate to the jurisdiction of the High Courts, would offend Article 226 of the Constitution, The State of Kerala in their statement of case disowns in the following words all intentions in that behalf : " 52. Kerala State asks this Honourable Court to answer the fourth question in the negative, on the ground that the power given to High Courts by article 226remains unaffected by the said cl. 33. Kerala State contends that the argument that cl.33 affects article 226 is without foundation. The Constitution is the paramount law of the land, and nothing short of a constitutional amendment as provided for under the Constitution can affect any of the provisions of the Constitution, including article 226. The power conferred upon High Courts under article 226 of the Constitution is an Over riding power entitling them, under certain conditions and circumstances, to issue writs, orders and directions to subordinate courts, tribunals and authorities notwithstanding any rule or law to the contrary Learned counsel for the State of Kerala submits that el. 33 must be read subject to articles 226 and 32 of the 1073 Constitution. He relies on the well known principle of construction that if a provision in a statute is capable of two interpretations then that interpretation should be adopted which will make the provision valid rather than the one which will make it invalid. He relies on the words " other law for the time being in force " as positively indicating that the clause has not the constitution in contemplation, for it will be inapt to speak of the Constitution as a " law for the time being in force ". He relies on the meaning of the word "Law " appearing in articles 2, 4, 32 (3) and 367(1) of the Constitution where it must mean law enacted by a legislature. He also relies on the definition of " Indian Law " in section 3(29) of the General Clauses Act and submits that the word " Law " in cl. 33 must mean a law of the same kind as the Civil Procedure Code of 1908, that is to say, a law made by an appropriate Legislature in exercise of its legislative function and cannot refer to the Constitution. We find ourselves in agreement with this contention of learned counsel for the State of Kerala. We are not aware of any difficulty and none has been shown to us in construing cl. 33 as a provision subject to the overriding provisions of article 226 of the Constitution and our answer to question No. 4 must be in the negative. In accordance with the foregoing opinion we report on the questions as follows: Question No. 1 : No. QuestionNo. 2: (i) Yes, so far as Anglo Indian educational institutions entitled to grant under article 337 are concerned. (ii) As regards other minorities not entitled to grant as of right under any express provision of the Constitution, but are in receipt of aid or desire such aid and also as regards AngloIndian educational institutions in so far as they are receiving aid in excess of what are due to them under article 337, clauses 8(3), and 9 to 13 do not offend article 30(1) but clause 3(5) in so far as it makes such educational institutions subject to clauses 14 and 15 do offend article 30(1). (iii) Clause 7 (except sub cls. (1) and (3) which applies only to aided schools), cl. 10 in 1074 so far as they apply to recognised schools to be established after the said Bill comes into force do not offend article 30(1) but cl. 3(5) in so far as it makes the new schools established after the commencement of the Bill subject to el. 20 does offend article 30(1). Question No. 3: No. Question No. 4: No ; clause 33 is subject to article 226 of the Constitution. VENKATARAMA AIYAR J. I agree that the answer to Questions Nos 1, 3 and 4 should be as stated in the judgment of My Lord, the Chief Justice. But as regards Question No. 2, 1 am unable to concur in the view expressed therein that Cl. (20) of the Bill is, in its application to educational institutions of minorities, religious or linguistic, repugnant to article 30(1) of the Constitution , and is, in consequence, to that extent void. Clause (20) provides that: " No fee shall be payable by any pupil for any tuition in the primary classes in any Government or private school. " Now, the question is whether this Clause is violative of the right which article 30(1) confers on all minorities based on religion or language, to establish and administer educational institutions of their choice. Ex facie, Cl. (20) does not prohibit the establishment or administration of such institutions by the minorities; it only provides that in private schools no fee shall be payable by students in the primary classes. On the terms of this Clause, therefore, it is difficult to see how it offends article 30(1). But it is contended by learned counsel who appeared for the minorities that in practice no school could be run unless fees are collected from the students, that therefore Cl. (20) must, if operative, result in the extinction of the educational institutions of minorities, and that was a direct invasion of their right to establish and maintain those institutions. It is no doubt the law that in deciding on the constitutionality of an enactment, regard must be had not merely to its language but also to its effect on the rights of the parties, not merely to what it says but to what it does. Even so, it is difficult to see how 1075 Cl. (20) can be said to infringe article 30(1). It applies only to Government and private schools, and a private school is defined in Cl. 2(6) as " meaning an aided or recognised school ". Clause (38) provides that : " Nothing in this Act shall apply to any school which is not a Government or a private school. " The result is that there is no prohibition against minorities, religious or linguistic, establishing their own educational institutions and charging fees, so long as they do not seek aid or recognition from the State. It is only when they make a demand on the State for aid or recognition that the provisions of the Bill will become applicable to them. But it is argued that the right of the minorities to establish their own educational institutions will be Tendered illusory, if the students who pass out of them cannot sit for public examinations held by the State or be eligible for recruitment to State services, and that, it is said, is the effect of the non recognition of the institutions. It is accordingly contended that for the effective exercise of the rights under article 30(1), it is necessary to imply therein a right in the minorities to have those institutions recognised by the State. That is the crucial question that has to be determined. If there is no right in the minorities to have their institutions recognised by the State, then the question whether Cl. (20) is ail invasion of that right would not arise for decision. It is only if we hold that such right is to be implied in article 30(1) that the further question will have to be considered whether Cl. (20) infringes that right. Now, whether minorities, religious or linguistic, have a right to get recognition for their institutions under article 30(1) must depend on the interpretation to be put on that Article. There is nothing in it about recognition by the State of ' educational institutions established by minorities, and if we are to accept the contention of learned counsel appearing for them, we must read into the statute words such as " and it shall be the duty of the State to recognise such institutions. " It is a rule of construction well established that words are not to be 1076 added to a statute unless they are required to give effect to its intention otherwise manifest therein, and that rule must apply with all the greater force here, seeing that what we are interpreting is a Constitution. Now, a reference to the relevant provisions of the Constitution shows that such a right is not implicit in article 30(1). Article 28(1) provides that no religious instruction shall be provided in any educational institution maintained wholly out of State funds. Article 28(3) enacts that no person attending any educational institution recognised by the State or receiving aid out of State funds shall be required to take part in religious instruction. Under article 29(2), no person is to be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. In article 30(2), there is express provision that in granting aid no discrimination should be made against any educational institution on the ground that it is under the management of a minority based on religion or language. It is clear from the above catena of provisions that the Constitution makes a clear distinction between State maintained, State aided and State recognised educational institutions, and provides for different rights and obligations in relation to them. If it intended that the minorities mentioned in article 30(1) should have a fundamental right in the matter of the recognition of their educational institutions by the State, nothing would have been easier than to have said so. On the other hand, there is good reason to infer that it has deliberately abstained from imposing on the State such an obligation. The educational institutions protected by article 30(1) might impart purely religious instruction. Indeed, it seems likely that it is such institutions that are primarily intended to be protected by article 30(1). Now, to compel the State to recognise those institutions would conflict with the fundamental concept on which the Constitution is framed that the State should be secular in character. If institutions which give only religious education can have no right to compel recognition by the State 1077 under article 30(1), how could educational institutions established by minorities and imparting secular education be held to possess that right? The contents of article 30(1) must be the same as regards all institutions falling within its ambit. Construing, therefore, Art.30(1) on its language, it is difficult to support the conclusion that it implies any right in the minorities to have their educational institutions recognised by the State. The matter does not rest there. There is in the Constitution a provision which seems clearly to negative the right, which is claimed on behalf of the minorities. Article 45 provides that: " The State shall endeavour to provide, within. a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years. " It is precisely this obligation laid on the State by the Constitution that is sought to be carried out in cl. (20) of the Bill. Now, it should be clear that if the right of the minorities to establish and maintain educational institutions under article 30(1) carries with it an implied right to be recognised by the State, then no law of the State can compel them to admit students free and therefore article 45 can never become operative, since what it provides is free education for all children and not merely for children other than those who attend institutions falling within article 30(1). It is contended that the directive principles laid down in Part IV cannot override the fundamental rights guaranteed by the Constitution, and that article 45 cannot be applied so as to defeat the rights conferred on minorities under article 30(1). This is quite correct. But the question here is, not whether a directive principle can prevail over a fundamental right, but whether there is a fundamental right in the minorities to have their educational institutions recognised by the State, and when there is nothing express about it in article 30(1) and it is only by implication that such a right is sought to be raised, it is pertinent to ask, can we by implication infer a right which is inconsistent 1078 with the express provisions of the Constitution? Considering the question, therefore, both on the language of article 30(1) and on the principle laid down in article 45, 1 find myself unable to accept the contention that the right of the minorities is not merely to establish educational institutions of their choice but to have them recognised by the State. That must be sufficient to conclude this question. But then it was argued that the policy behind article 30(1) was to enable minorities to establish and maintain their own institutions, and that that policy would be defeated if the State is not laid under an obligation to accord recognition to them. Let us assume that the question of policy can be gone into, apart from the language of the enactment. But what is the policy behind article 30(1) ? As I conceive it, it is that it should not be in the power of the majority in a State to destroy or to impair the rights of the minorities, religious or linguistic. That is a policy which permeates all modern Constitutions, and its purpose is to encourage individuals to preserve and develop their own distinct culture. It is well known that during the Middle Ages the accepted notion was that Sovereigns were entitled to impose their own religion on their subjects, and those who did not conform to it could be dealt with as traitors. It was this notion that was responsible during the 16th and 17th Centuries for numerous wars between nations and for civil wars in the Continent of Europe, and it was only latterly that it came to be recognised that freedom of religion is not incompatible with good citizenship and loyalty to the State, and that all progressive societies must respect the religious beliefs of their minorities. It is this concept that is embodied in articles 25, 26, 29 and 30. Article 25 guarantees to persons the right to freely profess, practice and propagate religion. Article 26 recognises the right of religious denominations to establish and maintain religious and charitable institutions. Article 29(1) protects the rights of sections of citizens to have their own distinct language, script or culture. Article 30(1) belongs to the same category as articles 25, 26 and 29, 1079 and confers on minorities, religious or linguistic, the right to establish and maintain their own educational institutions without any interference or hindrance from the State. In other words, the minorities should have the right to live, and should be allowed by the State to live, their own cultural life as regards religion or language. That is the true scope of the right conferred under article 30(1), and the obligation of the State in relation thereto is purely negative. It cannot prohibit the establishment of such institutions, and it should not interfere with the administration of such institutions by the minorities. That right is not, as I have already pointed out, infringed by Cl. The right which the minorities now claim is something more. They want not merely freedom to manage their own affairs, but they demand that the State should actively intervene and give to their educational institutions the imprimatur of State recognition. That, in my opinion, is not within article 30(1). The true intention of that Article is to equip minorities with a shield whereby they could defend themselves against attacks by majorities, religious or linguistic, and not to arm them with a sword whereby they could compel the majorities to grant concessions. It should be noted in this connection that the Constitution has laid on the State various obligations in relation to the minorities apart from what is involved in article 30(1). Thus, article 30(2) provides that a State shall not, when it chooses to grant aid to educational institutions, discriminate against institutions of minorities based on language or religion. Likewise, if the State frames regulations for recognition of educational institutions, it has to treat all of them alike, without discriminating against any institution on the ground of language or religion. The result of the constitutional provisions bearing on the question may thus be summed up: (1)The State is under a positive obligation to give equal treatment in the matter of aid or recognition to all educational institutions, including those of the minorities, religious or linguistic. 137 1080 (2)The State is under a negative obligation as regards those institutions, not to prohibit their establishment or to interfere with their administration. Clause 20 of the Bill violates neither of these two obligations. On the other hand, it is the contention of the minorities that must, if accepted, result in discrimination by the State. While recognised institutions of the majority communities will be subject to el. (20), similar institutions of minority communities falling within article 30(1) will not be subject to it. The form cannot collect fees, while the latter can. This surely is discrimination. It may be stated that learned counsel for the minorities, when pressed with the question that on their contention article 45 must become a dead letter, answered that the situation could be met by the State paying compensation to the minority institutions to make up for the loss of fees. That serves clearly to reveal that what the minorities fight for is what has not been granted to them under article 30(2) of the Constitution, viz., aid to them on the ground of religion or language. In my opinion, there is no justification for putting on article 30(1) a construction which would put the minorities in a more favoured position than the majority communities. I have so far discussed the scope of article 30(1) on its language and on the principle underlying it. Coming next to the authorities, cited before us, the observations in City of Winnipeg vs Barrett: City of Winnipeg vs Logan (1) would appear to support the contention of the State of Kerala that Cl. (20) does not offend article 30(1). That was a decision on section 22 of the Manitoba Act, 1870, which is as follows: " In and for the province, the said legislature may exclusively make laws in relation to education, subject and according to the following provisions: (1)Nothing in any such law shall prejudicially affect any right or privilege with respect to denominational schools which any class of persons have by law or practice in the province at the Union. " Now, the facts are that there were in Manitoba deno minational schools run by Roman Catholics which (1) 457 1081 were maintained with fees paid by students and donation,,; from the Church. In 1890, the Provincial Legislature passed the Public Schools Act, and it enacted that all Protestant and Roman Catholic school districts should be subject to the provisions of this Act, and that all public schools should be free schools. A portion of the legislative grant for education was to be allotted to public schools, and it was provided that any school not conducted according to all the provisions of the Act or the regulations of the Department of Education should not be deemed to be a public school within the meaning of the Act and was not to be entitled to participate in the grant. The validity of these provisions was challenged by the Roman Catholic institutions on the ground that they contravened section 22 of the Manitoba Act, and infringed the rights and privileges guaranteed therein. The Supreme Court of Canada upheld this contention; but this judgment was reversed by the Privy Council, and it was held that the provisions of the Act did not offend section 22 of the Manitoba Act. Lord Macnagliten delivering the judgment of the Board observed: " Notwithstanding the Public Schools Act, 1890, Roman Catholics and members of every other religious body in Manitoba are free to establish schools throughout the province ; they are free to maintain their schools by school fees or voluntary subscriptions; they are free to conduct their schools according to their own religious tenets without molestation or interference ". In the result, it was held that the Act did not infringe the rights of the denominational institutions under section 22. These observations appear to be very apposite to the present contention. The position occupied by the minority institutions under article 30(1) is not dissimilar to that of the Roman Catholic schools of Manitoba under section 22 of the Act of 1870, and the position created by Cl. (20) is precisely that which the 1890 Act created in that Province. It remains to notice the contention advanced by Mr. Pritt that the basis on which the arguments of the counsel for the minorities proceeded that students 1082 who pass out of unrecognised institutions were at a ,disadvantage in the matter of eligibility to sit at public examinations or to be admitted in the services to the State, was itself without foundation, and that even if there was any substantial discrimination in treatment between students who pass out of unrecognised schools and those who pass out of Government or recognised schools, that was the result of provisions of the Education Codes in force in the State, that it might be that those provisions are bad as infringing article 30(1) of the Constitution, but that did not affect the validity of cl. (20) as that was inapplicable to unrecognised institutions by virtue of cl. (38), and that, in consequence, there was nothing in the Bill which could be said to offend article 30(1). The rules of the Education Code are not really before us, and they are not the subject matter of the present reference. In my view, there is much to be said in favour of the contention that if article 30(1) is at all infringed, it is by the rules of the Education Code and not by el. But it is unnecessary to pursue this aspect further, as I consider that even otherwise, the vires of Cl. (20) is not open to question. In my view, that Clause does not offend article 30(1) and is intra vires. I agree that Cls. (14) and (15) must be held to be bad, and the ground of my decision is this: It may be taken and indeed it is not disputed that if the State grants aid to an educational institution, it must have the power to see that the institution is properly and efficiently run, that the education imparted therein is of the right standard, that the teachers possess the requisite qualifications, that the funds are duly applied for the purpose of the institution and the like. In other words, the State must have large powers of regulation and of control over State aided educational institutions. These powers must be liberally construed, and the decision of the Legislature as to what they should be is not to be lightly interfered with, as it is presumed to know best the needs of the State, the nature and extent of the evils rampant therein and the steps that should be taken to remedy them. But the power to regulate does not, in general, comprehend 1083 the power to prohibit, and the right to control the affairs of an institution cannot be exercised so as to extinguish it. Now, Cls. (14) and (15) operate to put an end to the right of private agencies to establish and maintain educational institutions and cannot be upheld as within the power of the State to regulate or control. The State is undoubtedly free to stop aid or recognition to a school if it is mismanaged. It can, even as an interim measure, arrange in the interests of the students to run that school, pending its making other arrangements to provide other educational facilities. It can also resume properties which had been acquired by the institutions with the aid. of State grant. But it cannot itself compulsorily take over the school and run it as its own, either on the terms set out in Cl. (14) or Cl. That is not a power which springs directly from the grant of aid. To aid is not to destroy. Those clauses would, in my opinion, infringe the right to establish and maintain institutions, whether such right is to be founded on article 19(1)(g) or article 30(1). I should add that in Question No. 2, the question of the validity of Cl. (20) or Cls. (14) and (15) is not expressly referred for our opinion. But it is said that the reference to Cl. 3(5) attracts all the provisions of the Bill, because the establishment of new institutions or schools is under that Clause subject to the provisions of the Bill and the rules made thereunder. I have grave doubts whether on the terms of the reference, we are called upon to express our opinion on the validity of all the provisions of the Bill. The reference is not generally on the vires of the provisions of the Bill. It is limited to the validity of specified provisions, Cls. 3(5), 8(3) and 9 to 13. There has been no satisfactory answer to the question as to why if it was intended that we should pronounce on the validity of all the provisions of the Bill, Cls. 8(3) and (9) to (13) should have been specifically mentioned. Moreover, the reference is preceded by detailed recitals as to the doubts which had been raised in the mind of the President as to the validity of certain provisions, and there is no hint therein that there was any doubt 138 1084 concerning the vires of provisions other than those expressly mentioned. If the maxim "Expressum facit cessare tacitum " can properly be invoked in the construction of instruments, it must a fortiori be so, in interpreting a document drawn up by the Union Government with great care and deliberation. And having regard to the nature of the advisory jurisdiction under article 143, the reference should be construed narrowly rather than broadly. But this discussion is academic, as there have been full arguments on the validity of all the provisions, and we are expressing our opinion thereon. In the result, my answer to Question No. 2 is that, excepting Cls. (14) and (15), the other provisions of the Bill do not offend article 30(1) of the Constitution. As regards schools of the Anglo Indian Communities, article 337 provides for aid being given to them on the conditions and to the extent specified therein. That is outside article 30(1) and independent of it, and I agree with My Lord, the Chief Justice, that the provisions of the Bill are, to the extent they affect or interfere with the rights conferred by that Article, bad. Reference answered accordingly.

The appellant was convicted under section 302 read with section 201 IPC for having committed the murder of his father and son. It was alleged, as motive for offence, that the appellant used to quarrel with his father as the latter wanted to transfer his land in the name of his grandson, who used to live with him. PW. 2 had deposed that a day prior to Amawasya of Chet 1985 at about 5 p.m. he had seen the two deceased persons at the Gurdwara when appellant went there and told them that he had arranged for their visit to Amritsar, through the car seva truck coming that evening, to take the holy bath. He had met the appellant that very night at about 10 p.m. On his way to the fields and enquired of him why he too did not go to Amritsar. And, that when he did not see the deceased for sometime he felt suspicious and lodged a report with the police on 8th August, 1985, which became the FIR. On 13th August, 1985 the appellant is alleged to have made an extrajudicial confession to PW. 3, his sister 's husband, who is said to have produced him before the police. On 15th August, 1985 a memorandum under section 27 of the Evidence Act was recorded by the investigating officer at the instance of the appellant and later dead bodies were recovered from field and identified. The belongings of the deceased were recovered from the Kotha in the fields, where the deceased used to reside, at the instance of the appellant. Based on this evidence the appellant was convicted and sentenced to death by the Sessions Court. That order was upheld by the High Court. 614 Allowing the appeal by special leave, ^ HELD: The charge against the appellant cannot be said to have been proved beyond doubt. His conviction, therefore, cannot be sustained. [620] Extra judicial confession is a very weak piece of evidence and is hardly of any consequence. 3 says that the appellant told him that as the police was after him he had come and confessed the fact so that he might not be unnecessarily harassed. There is nothing to indicate that this witness was a person having influence with the police or a person or some status to protect the appellant from harassment. There is no other corroborative evidence about the extra judicial confession. [618D E] As regards the motive, the will was executed on 31st December, 1984 and it is a figment of imagination that the murder was committed apprehending that the will was likely to be changed. There is also no evidence to indicate that appellant was not having good relations with his father or that there was ever any trouble between father and the son. [618F G] The evidence as to last seen also cannot be considered as a piece of circumstantial evidence against the appellant. The case of the appellant was that his brother in law, Manjit Singh, had taken the deceased to his place on the pretext that appellant 's sister was not well. There is no evidence led by the prosecution to negative this stand. May be, PW. 2 saw them with the appellant at the Gurdwara on the Amawasaya day in Chet but it is significant that no other person connected with the deceased has been produced to suggest that he was not seen there after. [619B C] As regards the recovery of dead bodies, the investigation officer himself admitted that after recording the statement of PW. 3 he knew that the bodies were buried in the field but he felt that information was not sufficient. The said field is an open place surrounded by other fields. It cannot be said that any one else could not have known about the bodies being buried there. Since exclusive knowledge to the appellant cannot be attributed, the evidence under section 27 of the Evidence Act also cannot be said to be a circumstance against the appellant. [619E G] According to the medical opinion, bodies were recovered about three months after the death. The bodies were found disintegrated. It was difficult to identify. The disintegration had gone to such an extent 615 that the bodies could not be removed and sent for postmortem and therefore medical expert was called to the spot to perform the postmortem. The prosecution did not examine any one of the relatives or the daughter of deceased or his son in law to identify the dead bodies although it has appeared in evidence that during the trial the said son in law was present in the Court. [617E F] As regards recovery made from the Kotha where the deceased used to reside, there is nothing significant. Their belonging were found to be there and on that basis no inference could be drawn against the appellant. [61G H]

Civil Appeal No. 1115 of 1979. 856 From the Judgment and Order dated 26.10.1978 of the Jammu & Kashmir High Court in W.P.No.41 of 1978. A.K. Sen, Harish Salve, K.J. John and C.S.S. Rao for the Appellants. Altaf Ahmed, Advocate General and S.K. Bhattacharya for the Respondents. The Judgment of the Court was delivered by RAY, J. This is an appeal by special leave against the judgment and order passed in Writ Petition No. 41 of 1978 dismissing the writ petition and upholding the order of the District Judge, Srinagar dated 26th July, 1978 as well as the order of the Estate Officer dated 20th March, 1978. The petitioners purchased the premises in dispute which were originally leased out to Dewan Bishen Dass, exhibit Prime Minister of the Jammu and Kashmir, from his successor in interest Purnesh Chandra and others by two sale deeds dated 12.7.1967 and 8.12.1967. Dewan Bishen Dass who took lease of the said property was in possession of the same for more than 75 years. The suit property consists of residential houses, buildings, shed and open lands. The appellants purchased the land under Khasra Nos. 885(min) 890 and 891 measuring about 10 Kanals. In 1957 the respondents State Government tried to resume the lands for setting up a Tonga and Lorry stand; but thereafter no action was taken in this regard. In 1961 another order was made by which the land in question was sought to be resumed under the previous order and the said land was sought to be transferred to the Roads and Building Department. Under this order compensation was fixed at Rs.1,39,260 in respect of building and structures standing on the said lands; however no compensation was paid nor any action was taken subsequently in this regard. In 1963 another Government order was issued under sec. 4(1) of the Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act, 1959 seeking to resume the land for purpose of the development of the city. An appeal preferred by the lessee was rejected. But no further action was taken thereafter. On 5th of June 1968 an order of eviction under the provisions of Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act, 1959 was issued seeking to evict the petitioners as being unauthorised occupants. On January 11, 1978 a large number of police personnel and municipal employees came upon the land and 857 demolished the buildings of the petitioners on the said land. The Administrator took illegal possession of the suit property whereon the appellants filed a writ petition before the High Court of Jammu and Kashmir praying for a writ or direction prohibiting the Administrator of the Municipality from interfering with the physical possession of the Petitioners and directing him to forbear from taking possession of the property without the authority of law. The High Court by judgment and order of 19th of July 1979 allowed the writ petition and directed the respondents to restore possession of the premises immediately to the petitioners. By allowing the writ petition High Court held: (1) Section 6 of the Land Grants Act, shows that the provisions of the Act would apply to the lease created after the passing of the Act. (2) Possession of the Lessees can be taken only on payment of compensation. Since no compensation was paid, the lessee is validly in possession and cannot be evicted. (3) Petitioners not being unauthorised occupants the Act is not applicable and therefore any notice under section 4 or 5.5 of the Act is without jurisdiction. (4) Section 5 of the Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act is ultra vires Article 14 of the Constitution since discretion is on State Officer to evict one occupant and refuse to evict another. Amendment of 1962 does not revive section 5 of the 1959 Act. (5) Action of the State was held malafide. Against the said judgment and order the respondents filed appeals before this Court being Civil Appeal Nos. 144 147 of 1979. On August 8, 1972 this Court dismissed those appeals and confirmed the judgment and order made by the High Court holding that as the Administrator of the Municipality had not complied with the provisions of sections 238 and 239 of the Municipal Act the action taken by the Municipality in the matter of demolition must be held to be entirely illegal and contrary to law. It was further held "that the conclusions and observations of the High Court on all the points which have not 858 been decided by us become unnecessary in the view we have taken with regard to the illegality and invalidity of the demolition carried out pursuant to the notices issued under section 129 of the Municipal Act . " This decision was reported in State of Jammu and Kashmir & Ors. vs Haji Wali Mohammed and Ors.v. ; Thereafter the Estate Officer issued a notice under section 4(1) of the Amended Jammu and Kashmir Public Premises (Unauthorised Occupants) Act intimating the appellants that they were in unauthorised occupation of the public premises mentioned in the schedule below by encroaching upon Government land measuring 10 Kanals 8 Marlas and 208 fts. comprising Khasra No. 890 situated at Bagh Magermal, Srinagar, and calling upon the appellants to show cause why the order of eviction should not be made. The appellants filed an objection to the said notice stating inter alia that they are not in unauthorised occupation of the said land nor they have encroached upon the same. The notice is wholly misconceived and it is illegal. The land in question in fact was taken lease of by late Dewan Bishen Dass who has been in continuance possession of the same for about 75 years and thereafter the appellants purchased the said land in 1967 from the legal heirs of the lessee Dewan Bishen Dass. The appellants made various improvements on the land and built houses thereon at a cost of about Rs.50,000. The appellants are not unauthorised occupiers but are fulfledged owners of the said land. These facts are wholly confirmed by the judgment of the High Court of Jammu and Kashmir while accepting the Writ Petition of the appellants. The appellants had stepped into the shoes of the original owner who was lawfully inducted in the lawful possession of the land as lessee. It has been stated that the Estate Officer cannot declare the person in possession as unauthorised occupants after lapse of more than 80 years. Their objection however was rejected by the Estate Officer and the appellants were directed to hand over possession of the premises including structures to the Administrator of the Municipality within 14 days. Against the said order the appellants preferred an appeal before the District Judge, Srinagar. The appellants also challenged the said order by a writ petition before the High Court of Jammu and Kashmir and this was registered as writ petition No. 49 of 1978. The appeal was however dismissed and the order of the Estate Officer was confirmed holding inter alia that the appellants purchased the land from the legal heirs of Dewan Bishen Dass who was the lessee of the land, that all the sale deeds were executed without obtaining requisite prior permission from the Government and as such the Sub Registrar was not em 859 powered to accept those documents for registration under proviso to section 4 of the Jammu and Kashmir Lands Grants Act, 1960, that the lease shall be deemed to have been determined because of contravention of the provisions of section 12(A) of the Jammu and Kashmir Lands Grants Act, 1960, that the possession of the appellant was not regular and as such they were in authorised occupation, within the meaning of the said Act, that the Government had a right to re enter on the land and the notice in question was rightly issued against the appellants directing them to vacate the land. The writ petition was amended and this judgment was also challenged. The writ petition was, however, dismissed by the High Court by Order dated 26th October, 1978 holding that the land being transferred by the legal heirs of the Dewan Bishen Dass without obtaining previous permission of the Government or by the competent authority in that behalf the lease stood determined and the impugned notice under the Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act, 1959 was quite in accordance with law. Against this judgment and order the instant appeal on special leave has been filed by the appellants. It has been urged on behalf of the appellants that the lands taken lease of by Dewan Bishen Dass who was the exhibit Prime Minister of the State cannot be deemed to have been taken under the provisions of Ailan No. 10 dated 7 Bhadon 1976 and as such Section 12(A) and Section 6 of the Land Grants Act 1960 are not applicable. The lease cannot be determined on the ground that the transfer was made in favour of the appellants by the legal heirs of the original lessee without previous permission in writing from the Government or any competent authority. It has been submitted in this connection that the provisions of the said ailan refers to the lease of land to a "Wasidar", but as the lease was granted free of rent it does not come under the said ailan as the said ailan provides for payment of ground rent for the land used. Under rule 6 of the said ailan the land belongs to the Government and permission is granted for building purposes only in respect of an area of land not exceeding 3 acres. In the present case the lease granted in favour of Dewan Bishen Dass is in respect of 20 Kanals of land free of rent whereas under the proviso of the said rule no lease could be granted for a period exceeding 40 years. It has also been submitted that even if for argument 's sake without admitting it is accepted that the appellant 's predecessor in interest was a Wasidar and lease was granted under the aforesaid Ailan No. 10 yet the lands could not be acquired without providing for adequate compensation to be paid to the Wasidar for the buildings and appurte 860 nances and other improvements effected by him on the land and the amount of compensation shall have to be determined by the State Engineer. No compensation was either awarded in respect of valuable buildings, structures and other improvements made by the appellant on the land nor any valuation has been made of the buildings and structures existing on the land as well as all the improvements made in respect of such land. It was, therefore, submitted that the impugned notice under section 4(1) of the said Act was liable to be cancelled and quashed being not in accordance with law. The learned counsel appearing on behalf of the State has on the other hand submitted that the petitioner 's predecessor, that is, the original lessee was a Wasidar and the lease was granted under Ailan No. 10 dated 7 Bhadon 1976. It was also contended that section 12(A) of the Jammu and Kashmir Lands Grants Act is applicable to this case. The transfer of the land by sale in favour of the appellants have been made by the legal heirs of the original lessee Dewan Bishen Dass without the prior permission of the Government or any authority empowered in that behalf. The lease stood determined from the date of the transfer and the Government has the right of re entry on the land in accordance with the provision 6 of the said Act. The appellants are unauthorised occupants and as such notice under section 4(1) of the Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act 1959 is not illegal but is in accordance with the provisions of the said Act. After considering the submissions advanced by learned counsels for the parties we are constrained to hold that Dewan Bishen Dass predecessor of the appellants was a Wasidar and the lands in question were wasidari land leased out to him for the purpose of constructing buildings. This lease is governed by Ailan No. 10 as well as by the Lands Grants Act 1960. We affirm the findings of the High Court which held the land as Wasidari land. The land was transferred by Purnesh Chandra and others, legal representatives of the original lessee Dewan Bishen Dass, in favour of the appellants in contravention of the provisions of section 12(A) of the Jammu and Kashmir Land Grants Act, 1960. The impugned notice under section 4(1) of the Jammu and Kashmir (Public Premises Eviction of Unauthorised Occupants) Act is in accordance with law and as such it is valid. Under the said Act as well as the rule the appellants are entitled to get compensation of the buildings and structures as well as of the improvements made on the land even though they are not entitled to get compensation in respect of value of the land. The compensation in the 861 instant case has not been determined nor the same has been paid. We, therefore, allow the appeal and set aside the judgment and order of the High Court and remit the matter to the District Judge, Srinagar who will either himself or by any Additional District Judge allotted by him hear the parties and determine the market value of the buildings, structures and all other improvements effected on the land in question after hearing the parties and also considering the papers that will be filed in Court and to make an award accordingly. Since the matter is pending for a long time the District Judge or Additional District Judge allotted by him will expedite the determination of the compensation as directed hereinbefore. The order of Stay granted by this Court will continue till the compensation is determined and paid to the appellants. In the facts and circumstances of the case there will be no order as to costs. N.V.K. Appeal allowed.

% The facts and issues involved in all these appeals were similar. Criminal Appeals Nos. 644 45.87 and Criminal Appeals Nos. 642 45 /87 were against the judgment and order of the High Court of Bombay, dismissing the Criminal Appeal filed by masters of two trawlers against their conviction and sentence and allowing the appeal filed by Commander S.D. Baijal against the acquittal of accused Nos. 3 and 4, i.e. the Charterer Company and its Managing Director and also releasing the trawlers. The High Court convicted the accused Nos. 3 and 4 for contravention of sub section 6 of section 5 of the Maritime Zones of India Act, 1981 (M.Z.I. Act) read with section 7 thereof and rule 16 of the Maritime Zones of India Rules 1981, (M.Z.I. Rules). The High Court also ordered confiscation of the two trawlers, vesting the same in favour of the Central Government under section 13 of the M.Z.I. Act. The two trawlers involved foreign vessels were chartered by the respondents Nos. 4 & 5 herein for fishing in Maritime Zone of India after obtaining permit under section 5 of the M.Z.I. Act. The trawlers along with three other pairs of trawlers were apprehended and seized by the Coast Guard ship commanded by Commander S.D. Baijal for fishing operations in the exclusive economic zone of India, in violation of the terms and conditions of the permit and the letter of intent granted to that company by the Government of India under section 5(4) of the M.Z.I. Act and in violation of the M.Z.I. Rules. They were prosecuted by the Additional Chief Metropolitan Magistrate on the complaint filed by Commander S.D. Baijal as authorised officer under section 19 of the M.Z.I. Act. The masters of the trawlers, respondents Nos. 2 and 3, were convicted and sentenced to pay fines and the other accused respondents Nos. 4 and 5 were acquitted and the trawlers and the fishes thereon were ordered to be released on payment of the detention 642 charges. Of the other three pairs of foreign trawlers chartered by Indian Company for fishing in the Maritime Zone of India under the permit granted under the M.Z.I. Act, which were seized and prosecuted, two pairs of trawlers with fishes thereon were ordered to be confiscated while one pair of these trawlers were directed to be released. The masters of each pair of trawlers were similarly convicted and sentenced to pay fine for violation of the provisions of the said Act and the Rules thereunder. The Masters of the pair of trawlers filed a criminal appeal against their conviction and sentence while the complaining Commander S.D. Baijal filed a criminal appeal against the acquittal of respondent Nos. 4 and 5 i.e. the Managing Director of the company and the company and also against the release of the trawlers in spite of conviction of the masters under section 12(b) of the M.Z.I. Act. The High Court disposed of these appeals by a common judgment, allowing the appeal of the masters in part and modifying their sentence and convicting. in the appeal filed by S.D. Baijal, the Managing Director and the Company, accused respondents Nos. 3 and 4 and sentencing them to pay fines, and ordering the trawlers to be confiscated with fishes thereon or the proceeds thereof in case of sale of the same. The High Court also held the masters of the trawlers guilty under Rule 8(1)(g) and convicted them under section 12(a) instead of section 12(b) of the M.Z.I. Act, but maintained the sentence of penalty. Criminal Appeals Nos. 645 47;87 and Criminal Appeals Nos. 65051 of 1987 arose out of a common judgment of the High Court in two criminal appeals, modifying in part the judgment and order of the Additional Chief Metropolitan Magistrate, whereby the Magistrate had convicted the masters of the trawlers, i.e. accused Nos. 1 and 2 for contravening Rule 8(1)(g) read with Rule 16 and section 20(b) of the M.Z.I. Act and sentenced them to pay fines, in default of payment of fine, to suffer rigorous imprisonment. The Magistrate also had made an order, confiscating the two trawlers alongwith the fishing gear, equipments, stores, cargo and fish and vesting the same together with the proceeds of the sale of the fish, if any, with the Central Government. The Magistrate had acquitted the accused Nos. 3 and 4 i.e. the Charterer Company and its Managing Director. The criminal appeal filed by Cdr. S.D. Baijal against the order acquitting the accused Nos. 3 and 4 above said was allowed by the High Court and they were convicted and sentenced to pay fines etc. The order of confiscation of the two trawlers was maintained. The criminal appeal filed by the masters of the trawlers was dismissed with the modification that the conviction 643 made under section 12(b) was altered to one under section 12(a) of the M.Z.I. Act and the sentence of vigorous imprisonment was modified. Criminal Appeals Nos. 648 49.87 and Criminal Appeals Nos. 65253187 arose out of a common judgment of the High Court, dismissing the appeals of the masters of the vessels and allowing the appeals filed on behalf of the prosecution. All these appeals were filed against the judgment and order of the Additional Chief Metropolitan Magistrate in the Criminal case wherein the Magistrate had convicted and sentenced the masters of the trawlers with the imposition of fines on accused Nos. 1 and 2 for contravening Rules 8(1)(g) and 16 of the M.Z.I. Rules and also of the offence under section 5 of the Act and imposing penalty section 12(b) of the M.Z.I. Act. The Magistrate had acquitted the accused Nos. 3 and 4 i.e. the Charterer Company and its Managing Director and directed the release of the trawlers in favour of the masters of the trawlers. The criminal appeal filed by the masters of the vessels was dismissed by the High Court and the conviction and sentence u/s 12(b) of the M.Z.I. Act was altered to one under section 12(a) of the Act. The criminal appeal filed on behalf of the prosecution was allowed and the accused Nos. 3 and 4 i.e. the Charterer Company and its Managing Director, were convicted and sentenced to pay fine. The vessel and the fishing equipment were confiscated and directed to vest in favour of the Central Government. Criminal Appeal Nos. 654 55/87 and Criminal Appeal No. 656 of 1987 arose out of a common judgment and order of the High Court in the Criminal Appeals filed by the Charterers and the masters of the trawlers, respectively. These appeals were filed against the judgment and order of the Additional Chief Metropolitan Magistrate in a criminal case against the masters of vessel. The Magistrate had convicted and sentenced the accused Nos. 1 and 2, i.e. the masters of the vessel to pay fines; in default to undergo rigorous imprisonment, and had confiscated the trawlers together with fishing gear, equipment, stores, cargo and fish therein. The criminal appeal of the masters of the trawlers had been dismissed with a modification of the conviction and sentence passed under section 12(c) of the M.Z.I. Act was altered to one u/s 12(a) of the Act and the criminal appeal of the Charterers was dismissed with a modification of the imprisonment awarded in default of payment of fine imposed on the appellant to simple imprisonment instead of rigorous imprisonment. The order of confiscation of trawlers passed by the Magistrate was confirmed. Dismissing all the appeals, the Court, 644 ^ HELD: The appellants contended that at the time of the apprehension of the trawlers no fish had been found on board and there was no evidence that fish on board was seized or that what had happened to fish or who had put the fish in the hold of the trawlers, and that, therefore, no presumption under section 22 of the Act could be drawn that the trawlers were engaged in fishing within the exclusive economic zone of India in contravention of the provision of the Act and the Rules framed thereunder. This contention could not be considered in appeal by special leave as there had been concurrent findings by the Chief Metropolitan Magistrate and the High Court that there was fish on board. [649F H; 650A] The main argument on behalf of the appellants was focussed on the vital question as to whether the words used in section 13 of the M.Z.I. Act "shall also be liable to confiscation" mandated that the foreign vessel used in the commission of the offence would be con fiscated as soon as the masters were convicted under section 10 or 11 or 12 of the Act, or it was the discretion of the Court to order either release of the vessel or confiscation of the vessel with the fish and the other equipment, cargo and fishing gear, considering the graveness of the offence. On an examination of the objects and Reasons and the various provisions of the Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act, 1981, it was crystal clear that the M.Z.I. Act had been enacted with the object of preventing illegal poaching of fishes by foreign vessels, including foreign vessels chartered by Indian citizens in the exclusive economic zone of India at a depth less than 40 fathoms, by providing deterrent punishment for contravention of the provisions of the Act to protect Indian fishermen. The objects and reasons were to be taken into consideration in interpreting the provisions of the statute. In interpreting a statute, the Court has to ascertain the will and policy of F. the legislature as discernible from the object and scheme of the enactment and the language used therein. Viewed in this context, it was apparent that the said Act had been made with the sole purpose of preventing poaching of fishes by foreign vessels chartered by Indian citizens within the exclusive economic zone of India as specified in Rule 8(1)(g) of Maritime Zone of India Rules as amended in 1982 as well as in breach of the provisions of the said Act and the terms and conditions of the permit issued under section 5 of the said Act. [650E G; 651D; 654F] Section 13 of the Act expressly says that besides the conviction and sentence of the masters of the vessels, and charterers, the vessel is liable to be confiscated with fishes therein. The appellants ' contention was that the words "shall also be liable to confiscation" used in section 13 of 645 the Act did not mean that it was mandatory to confiscate the vessel as the masters of the vessel had been convicted and sentenced to pay penalty under section 12 of the Act, and as various punishments had been provided for different types of offences, it was left to the discretion of the court to order confiscation of the vessel or to release the vessel. [655A C] Section 13 in clear and unimbiguous terms says that on the conviction of the master and the charterer of an offence under section 10 or 11 or 12, the vessel used in connection with the offence together with the fish on board such ship or the sale proceeds of such fish, and stores, cargo shall also be liable to confiscation. Viewed in the context, the words "shall also be liable to be confiscation" do not leave any discretion to the Magistrate or the court to make no order of confiscation of the vessel as soon as the masters of the vessel were convicted u/s 10 or 11 or 12 of the Act. The Legislative intent in making this provision was to provide deterrent punishment to prohibit fishing in the exclusive economic zone of India by foreign vessels in infringement of the Act and the rules framed thereunder and the conditions of the permit or licence. Viewed in this context, section 13 mandates that on conviction of the master and the charterer of an offence under section 12, not only penalty of fine would be imposed, the vessel used in or in connection with the commission of such offence has to be confiscated. It is not open to the court to consider the graveness of the offence and other extenuating circumstances and to make no order for confiscation of the offending vessel concerned. Confiscation of the vessel is the immediate statutory consequence of the finding that an offence either under section 10 or 11 or 12 has been proved and the master of the vessel has been convicted. Section 13 is thus mandatory and it is not open to the court to refrain from making an order, confiscating the offending vessel as soon as the masters of the vessel are convicted of an offence under section 12 and awarded penalty. [660BF] The judgments and orders of the High Court were affirmed. The vessels had been detained in Bombay Port after apprehending them on July 26, 1984 and a huge amount had to be paid as port charges. Considering the facts and circumstances of the case, the Port Authorities at Bombay might consider if an application was made by the parties for exemption or partial exemption of the same favourably in view of the order of confiscation of the trawlers. [660G H] State of Madhya Pradesh vs Asad Bharat Finance Co. Anr., [1966] Supp. SCR 473; Indo China Steam Navigation Co. Ltd. vs Jasjit Singh, Addl. Collector of Customs & Ors., ; ; 646 Superintendent and Legal Remembrancer of Legal Affairs to the Govt. Of West Bengal vs Abani Maity, ; ; K.P. Verghese vs The Income tax officer, Ernakulam and another, [19821 I SCR 629 and F.N. Roy vs Collector of Customs, Calcutta; , , referred to.

iminal Appeal No. 42 of 1955. On Appeal by Special leave from the Judgment and Order dated the 8th October 1954 of the Bombay High Court in Criminal Appeal No. 315 of 1954 arising out of the Judgment and Order dated the 6th January 1954 of the Court of the 4th Presidency Magistrate, Bombay in Cases Nos. 639 40/P 1955. H. J. Umrigar, J. B. Dadachanji and Rajinder Narain for the appellant. Porus A. Mehta and P. G. Gokhale for the respondent. October 14. The Judgment of the Court was delivered by BHAGWATI J. The accused No. 1, the Appellant before us, and accused Nos. 2, 3 and 4 were charged that they, at Bombay, between about June 1950 and November 1950, were parties to a criminal conspiracy by agreeing to do certain illegal acts, to wit: Firstly, 882 that they used as genuine forged bills of entry which included bills of entry Exhibit Z; Secondly, that they ,heated the Deputy Chief Controller of Imports, Bombay, by fraudulently I and dishonestly inducing him to deliver to the firm of J. Sobhraj & Co., an import licence bearing No. 248189/48 to import cycles from United Kingdom of the value of Rs. 1,98,960; Thirdly, that they cheated the Deputy Chief Controller of Imports, Bombay, by falsely and dishonestly inducing him to deliver to the firm of J. Sobhraj & Co., an import licence bearing No. 203056/48 to import watches from Switzerland of the value of Rs. 3,45,325; and Fourthly, that they cheated the Deputy Chief Controller of Imports, Bombay, by fraudulently and dishonestly inducing him to deliver to the firm of J. Sobhraj & Co., an import licence bearing No. 250288/48 to import artificial silk piece goods from Switzerland of the value of Rs. 12,11,829; and the above said illegal acts were done in pursuance of the said agreement and that they thereby committed an offence punishable under section 120 B of the Indian Penal Code. There were also charges against all the accused under section 471 read with section 465 and section 34 and also under section 420 read with section 34 of the Indian Penal Code in respect of each of the three illegal acts aforesaid. The learned Presidency Magistrate, 23rd Court, Esplanade, Bombay, tried all the accused for the said offences and acquitted all of them. The State of Bombay thereupon took an appeal to the High Court of Judicature at Bombay, and the High Court reversed the acquittal of accused No. I and held him guilty of all the offences with which he had been charged including the offence under section 120 B of the Indian Penal Code. The acquittal of accused 2, 3 and 4 was confirmed. The High Court, even though it acquitted accused 2) 3 and 4 of the charge under section 120 B of the Indian Penal Code, was of the opinion that the deed of assignment put forward by the accused No. I in his defence was a false and fabricated document and the ,said document along with its accompaniments was 883 forged or was got forged by or with the knowledge or connivance of the accused No. 1 and his co conspirators and it was impossible to believe that this conspiracy carried out with such meticulous care could be the work of only accused No. 1. There was no evidence on the record to warrant any inference that the accused No. I was acting in the matter in collaboration with any other 'co conspirators and the only evidence was in regard to the various acts alleged to have been done by accused 2, 3 and 4 in the matter of the conspiracy and the furtherance of the objects thereof While considering the question of sentence to be passed on the accused No. 1 who, in spite of the circumstances aforesaid, was convicted of the offence under section 120 B of the Indian Penal Code, the High Court observed that "the conspirators, whoever they were, had shown considerable ingenuity and daring in carrying out the object of the conspiracy and that it felt no hesitation in Coming to the conclusion that it was not straitened circumstances or financial difficulties which were the basis of the conspiracy but it was the greed for money on such a large scale as could never be regarded as an extenuating circumstance". It, therefore, directed that the accused No. I should undergo rigorous imprisonment for 18 months for the offence under section 120 B of the Indian Penal Code. The application for leave to appeal to this Court filed by accused No. 1 was rejected by the High Court. The accused No. 1 thereupon applied for and obtained special leave to appeal against the decision of the High Court. The special leave was, however, limited to the question of law, whether the conviction under section 120 B is maintainable in view of the fact that the other alleged conspirators had been acquitted. The charge as framed under section 120 B of the Indian Penal Code was levelled against 4 named individuals, the accused Nos. 1) 2, 3 and 4. It was not a charge against them and other persons unknown with the result that if accused 2, 3 and 4 were acquitted of that charge, there remained only accused No. 1 and 112 884 the question, therefore, arises for our consideration whether, under the circumstances, the accused No. I could be convicted of the offence under section 120 B of the Indian Penal Code. Criminal conspiracy has been defined in section 120 A of the Indian Penal Code: "When two or more persons agree to do or cause to be done (i) an illegal act, or (ii) an act which is, not illegal by illegal means, such an agreement is designated a criminal conspiracy". By the terms of the definition itself there ought to be two or more persons who must be parties to such an agreement and it is trite to say that one person alone can never be held guilty of criminal conspiracy for the simple reason that one cannot conspire with oneself. If, therefore, 4 named individuals were charged with having committed the offence under section 120 B of the Indian Penal Code, and if three out of these 4 were acquitted of the charge, the remaining accused, who was the accused No. 1 in the case before us, could never be held guilty of the offence of criminal conspiracy. If authority for the above proposition were needed, it is to be found in Archbold 's Criminal Pleading, Evidence and Practice, 33rd edition, page 201, paragraph 361: "Where several prisoners are included in the same indictment, the jury may find one guilty and acquit the others, and vice versa. But if several are indicted for a riot, and the jury acquit all but two, they must acquit those two also, unless it is charged in the indictment, and proved, that they committed the riot together with some other person not tried upon that indictment. 2 Hawk. c. 47. section 8. And, if upon an indictment for a conspiracy, the jury acquit all the prisoners but one, they must acquit that one also, unless it is charged in the indictment, and proved, that he conspired with some other person not tried upon that indictment. 2 Hawk. c. 47. section 8; 3 Chit. Cr. L., (2nd ed.) 1141; R. vs Thompson, ; R. vs Manning, 12. Q.B.D. 241; R. vs Plummer The King vs Plummer ([1902] 2 K.B. 339) which is 885 cited in support of this proposition was a case in which, on a trial of indictment charging three persona jointly with conspiring together, one person had pleaded guilty and a judgment passed against him, and the other two were acquitted. It was held that the judgment passed against one who had pleaded guilty was bad and could not stand. Lord Justice Wright observed at page 343: "There is much authority to the effect that, if the appellant had pleaded not guilty to the charge of conspiracy, and the trial of all three defendants together had proceeded on that charge, and had resulted in the conviction of the appellant and the acquittal of the only alleged co conspirators, no judgment could have been passed on the appellant, because the verdict must have been regarded as repugnant in finding that there was a criminal agreement. between the appellant and the others and none between them and him: see Harrison vs Errington (Popham, 202), where upon an indictment of three for riot two were found not guilty and one guilty, and upon error brought it was held a "void verdict", and said to be "like to the case in 11 Hen. 4, c. 2, conspiracy against two, and only one of them is found guilty, it is void, for one alone cannot conspire". " Lord Justice Bruce at page 347 quoted with approval the statement in the Chitty 's Criminal Law, 2nd ed., Vol. III, page 1141: "And it is holden that if all the defendants mentioned in the indictment, except one, are acquitted, and it is not stated as a conspiracy with certain persons unknown, the conviction of the single defendant will be invalid, and no judgment can be passed upon him". The following observations made by Lord Justice Bruce are apposite in the context before us: "The point of the passage turns upon the circumstance that the defendants are included in the same indictment, and I think it logically follows from the nature of the offence of conspiracy that, where two or more persons are charged in the same indictment with conspiracy with another, and the indictment 886 contains no charge of their conspiring with other persons not named in the indictment, then, if all but one of the persons named in the indictment are acquitted, no valid judgment can be passed upon the one remaining person, whether he has been convicted by the verdict of a jury or upon his own confession, because, as the record of conviction can only be made up in the terms of the indictment, it would be inconsistent and contradictory and so bad on its face. The gist of the crime of conspiracy is that two or more persons did combine, confederate, and agree together to carry out the object of the conspiracy". This position has also been accepted in India. In Gulab Singh vs The Emperor (A.I.R. 1916 All. 141) Justice Knox followed the case of The King vs Plummer, supra, and held that "it is necessary in a prosecution for conspiracy to prove that there were two or more persons agreeing for the purpose of conspiracy" and that "there could not be a conspiracy of one". To similar effect was the judgment in King Emperor vs Osman Sardar (A.I.R. where Chief Justice Sanderson observed that "the gist of an offence under section 120 B was an alleged agreement between the two accused and when the jury found that one of them was not a party to the agreement and acquitted him of that charge, it followed as a matter of course that the other accused could not be convicted of that charge. The assent of both of them was necessary to constitute the agreement which was the basis of the charge". Ratanlal in his Law of Crimes, 18th ed., page 270, has summarised the position as it emerges from the above two cases in the manner following: "Where, therefore, three persons were charged with having entered into a conspiracy, and two of them were acquitted, the third person could not be convicted of conspiracy whether the conviction be upon the verdict of a jury or upon his own confession". The position in law is, therefore, clear that on the charge as it was framed against the accused Nos. 1, 2 3 and 4 in this case, the accused No. I could not 887 be convicted of the offence under section 120 B of the Indian Penal Code when his alleged co conspirators accused 2, 3 and 4 were acquitted of that offence. In our opinion, therefore, the conviction of the accused No. I of the charge under section 120 B of the Indian Penal Code was clearly illegal. The appeal of the accused No. 1 will, therefore, be allowed to the extent that his conviction under section 120 B of the Indian Penal Code and the sentence of rigorous imprisonment of 18 months awarded to him as the result thereof would be quashed. We are not concerned here with the conviction of the accused No I of the offences under section 471 read with section 465 and also his conviction for each of the three offences under section 420 of the Indian Penal Code and the concurrent sentences of rigorous imprisonment for one year in respect of each of them passed by the lower Courts upon him in regard to the same. These convictions and sentences will of course stand.

The Government of India, in 1950, framed a rule for promotion of an Income Tax Officer as Assistant Commis sioner and it was published as rule 18 in Vol. I1 of the Office Manual published in 1955. The rule provided that promotion shall be strictly on merit and that no one should ordinarily be considered for promotion unless he has com pleted at least ten years service as Income Tax Officer. In 1957, a memorandum was issued by the Central Board of Reve nue containing the following principles for proration of Income Tax Officers Class I as Assistant Commissioners. Greater emphasis should be laid on merit as a criterion. The Departmental Promotion Committee should first decide the field of choice, namely, the number of eligible officers awaiting promotion who should be considered for inclusion in the selection list. An officer of outstanding merit may be included in the list even if he is outside the normal field of choice. The field of choice wherever possible should extend to 5 to 6 times the number of vacancies expected. From among such officers those who are considered unfit for promotion should be excluded and the remaining should be classified as 'outstanding ' very good ' and 'good ' on the basis of merit as determined by their respective records" of service. The selection list should then be prepared by placing the games in the order of these three categories without disturbing the seniority inter se within each category. Promotions should strictly be made from such selection list in the order in which the names are finally arranged. The selection list should be periodically reviewed removing from the list names of persons who have been promoted and including fresh names. On 16th August 1972 this Court set aside the seniority list in the first Bishan Sarup Gupta case [1975] Supp. SCR 491 and gave directions for preparing a fresh list. On 21 December 1972, the Government applied to this Court for making ad hoc promotions and the court permitted them to do so. Accordingly, in March 1973 and November 1973 the Board promoted 59 and 48 Income Tax Officers respectively as Assistant Commissioners. It was distinctly stated in those two orders that the ad hoc appointments made against those posts were provisional and that the appointments eventually be made on the basis of the revised seniority list of Income Tax Officers Class I as finally approved by this Court, and on selection by a duly constituted Depart mental Promotion Committee in accordance with the prescribed procedure. In February 1973, the Income Tax Officers (Class I) Service (Regulation of Seniority) Rules, 1973, were made and a revised seniority list of Income Tax Officers Class I was made on the basis of those rules. The list as well as the Rules were approved in the second Bishan Sarup Gupta Case ; From such seniority list the Depart mental Promotion Committee made a selection list in July 1974, for proration of Income .Tax Officers, Class I, as Assistant Commissioners. There were 112 vacancies and the Government sent 336 names in the running order of seniority for consideration of the field of 29 choice. The Committee followed the instructions in the 1957 Memorandum an.d found 276 to be fit for the field of choice, assessed the merits of 145 persons in order of seniority, found one officer outstanding, 114 very good, and 7 Sched uled Castes/Tribes officers good, according to the instruc tions. The Selection list was challenged in various High Courts. Two of the High Courts held in favour of the peti tioners and the other High Courts gave interim orders stay ing the operation of the Selection List. In appeals by the Union of India to this Court, the respondents sought to support the judgments in their favour on the following contentions : (1) The requirement in the rule regarding 10 years experience was not abrogated as contended by the Government and the affidavits field in the various proceedings on behalf of the Union as well as the petitioners show that the 10 year rule was in force and was followed (2) Rule 18 has the force of law under the Government of India Act, 1935, and hence is existing law within the mean ing of article 366(10) of the Constitution and also because it was incorporated in the Office Manual issued by the Govern ment of India in exercise of its executive power under article 53. (3) The rule constitutes one of the conditions of serv ice and, therefore, should be followed. (4) The rule imposes an obligation on the Union Govern ment to Consider 'ordinarily ' only Officers of ten years service, but the selection list was prepared in violation of the rule in that officers of 8 years experience were considered. (5) The selection has been made in complete violation of the principles set out in the 1957 memorandum and was entirely arbitrary. (6) The promotion should be considered as on 21 December 1972 when the Government applied to this Court for permis sion to make ad hoc appointments, and on the two dates when the Government actually made 107 (59 1 48) ad hoc promotions and it Was the duty of the Committee to regularise the 107 promotions as from the dates of the original promotion and to consider the eligibility of an officer for promotion as on those dates, and this not having been done. the selection list was illegal being contrary to the observations in the first Bishan Sarup Gupta 's case. Rejecting these contentions of the respondents, allowing the appeals, and upholding the Selection List, HELD: (1)(a) The requirement Of 10 years experience in r. 18 was modified to 8 years experience. The correspond ence between the Finance Ministry and Home Ministry and the U.P.S.C. shows that there was concurrence with the change. The High Court was in err, or when it said that the require ment of 8 years experience must first be included in the appropriate recruitment rules and that until that was done 10 years experience held the field. 8 years experience as a working rule for promotion was publicly announced by the Minister in Parliament. Administrative instructions are followed as a guide line on the basis of executive policy. The requirement of 8 years was followed as a guide line in practice in 1968, 1970 and 1972. The requirement was thus not only modified but was given effect to. [39F] (b) The High Court was in error in treating the affida vit evidence of an officer of the Government, in other proceedings, as a statement of fact that the 8 years rule had not been introduced. This affidavit evidence is torn out of context and is misread by the High Court without going into the question as to whether such evidence is admissible. The entire affidavit evidence as well as the submissions made on behalf of the 'Union Government is that the requirement of 10 years experience is replaced by one of 8 years. It is a question of construction of. the correspondence as to whether the 10 years rule was replaced by 8 years rule. The fact that no rules under article 309 were 30 framed does not detract from the position that previous administrative instruction of 10 years experience was modi fied to 8 years experience. The various affidavits and documents show that the consistent position on behalf of the Union has always been that the requirement of 10 years experience was modified to one of 8 years. [41H; 42A B] (2) The rule is not a statutory rule. [42D] (a) The contention that because Government of India has authority to frame rules the letter of 16th January 1950 in which the rule was framed should, therefore, be treated as a formal ' rule is erroneous since there is a distinction between statutory orders and administrative instructions of the Government. The change was recorded by means of correspondence as an administrative instruction. 'In the absence of statutory rules, executive orders or administra tive instruction may be made. [42E F] Commissioner of Income Tax Gujarat vs A. Raman & Compa ny. , referred to. (b) The letter of 16th January 1950 written by an Under Secretary in the Ministry of Finance does not prove that it is a rule made by the Governor General or any person autho rised by him under section 241(2), Government of India Act, 1935. Furthermore, there is no basis for any authentication under section 17 of the 1935 Act in the letter. [42G] (c) In the preface to the Office Manual published in 1955 it is specifically stated that Vol. I contains statuto ry rules and Vol. II, in which r. 18 occurs, contains only administrative instructions. [42G] S.C. Jaisinghani vs Union of India & ors. [1967] 2 S.C.R. 70, referred to. (d) Article 313 refers to laws in force which mean statutory laws. An administrative instruction or order is not a statutory rule or law. The administrative instruc tions can be changed by the Government by reason of article 63(1). Article 313 does not change the legal character of a document. [43B] (3) The High Court erred in holding that the 10 year rule is a condition of service. The word "ordinarily" in the rule does not impose an obligation on the Government not to consider any Income Tax Officer with less than 10 years experience, for promotion. The rule on the face of it, confers a discretion on the authorities to consider Income Tax Officers of lesser years experience if the circumstances so require, and whether such circumstances exist should be left to the decision of the authorities. Even the Central Board of Revenue, in a letter written a few months after the rule was framed, stated that the insistence of a minimum period of experience cannot be regarded as affecting the conditions of service. In that letter. it was stated that the requirement of 10 years experience is sufficiently elastic and all Income Tax Officers with more than 9 years experience could also be considered for promotion. This letter was referred to by this Court in Union of India vs Vasant Jayarama Karnik [43C F] (4) It cannot be said that there is a deviation from the requirement of 10 years experience in preparing the Selec tion list. That requirement was modified to one of 8 years experience. The expression 'ordinarily ' in the rule shows that there can be deviation and such deviation can be justi fied by reasons. Administrative instructions if not carried into effect for good reasons, cannot confer a right. [43G] P.C. Sethi & ors. vs Union of India & Ors. [1975] 3 S.C.R. 201, referred to. (5) The facts and circumstances in the present case merited the exercise of discretion which was bona fide exercised by determining the field of choice and from 1963, the field of choice has always been in a running order of seniority. 31 (a) There were, in the present case,112 vacancies and 10 anticipated vacancies and the Departmental Promotion Commit tee was to make a panel of 122 officers. If the field of choice has to be prepared on the basis of running seniority and if 10 years experience had been adhered to, there would not have been more than 95 officers in the field of choice although the number of vacancies was 122. This fact alone entitled the authorities to deviate from the rule of 10 years experience. [44E F] (b) The requirement of 10 years experience could not be given effect to also because in the second Bishan Sarup Gupta case, this Court had directed that the two classes of Income Tax Officers, direct recruits and promotees, should first be fully integrated before determining inter se sen iority. The expression 'ordinarily ' would hardly apply to such a changed situation without destroying the integration. If the respondents ' contention that the field of choice shall be restricted to 10 years experience only and the field of choice should have been at least 5 times the number of vacancies the result would have been that out of 560 persons in the field of choice 474 persons would have been promotees and only 86 persons would have been direct recruits and 429 senior officers, who were direct recruits, would have been ignored. That obviously would be unjust and unfair and also contrary to the decision of this Court in the second Bishan Sarup Gupta 's case. [47BC] (c) As a result of administrative instructions issued, at least since 1963, for promotion of Income Tax Officers as Assistant Commissioners, the administrative practice is to take the field of choice generally of 3 times the number of vacancies. The evidence shows that in the circumstances of this case, it was not possible to have 5 or 6 times the number of vacancies in the field of choice. [46E] (d) The High Court was wrong in holding that in the field of choice, the evaluation o{ merit of persons was not properly done. The 1957 Memorandum requires that the field of choice is based on running seniority and evaluation of merit does not come into picture for deciding the field of choice. The question of merit comes in only in the preparation of the selection list. Seniority is the sole criterion for determining the field of choice and merit is the sole crite rion for putting the officers in the Selection list. [46G] In present case, the instructions in the 1957 memoran dum were strictly followed. (e) The 7 Scheduled Caste/Tribes officers were not entitled to a grade higher than the grade assessed by the Committee, because, the Home Ministry instructions, regard ing concessions to Scheduled Castes and Tribes applied in the case of promotions from Class III to Class II and within Class II and from Class II to the lowest rank of Class I, but had no application in respect of promotion within Class I. [47E] (f) After 122 senior officers were assessed and 114 were found to be 'very good ', they could not be supplanted by other who were also 'very good '. Only 'outstanding ' persons who would be junior to the 122 could surpass them. There fore, the Committee rightly considered the cases of the officers remaining out of the 276 only to find out whether there was any one 'outstanding" as it would be a fruitless exercise to find out who among them was 'very good '. [48B] (g) The contention of the respondents that the officers remaining out of the 336 sent up, were not at all considered by the Committee is not also acceptable. When the Committee found, according to running seniority, that certain persons beyond a certain number could not be in the field of choice, the Committee did not put the names in the field of choice. The question of the evaluation of their merits did not, therefore, arise. It is wrong to hold that because the Government sent the names of 336 persons the field of choice consisted of all 336 persons. The field is to be determined by the Committee and the Committee rightly con sidered 276 names as fit to be included. [48F] 32 (h) There is no substance in the contention that 4 of the officers had less than 8 years experience, because, they were ex military officers recruited by virtue of a notifi cation of the Ministry of Home Affairs. [49B C] (i) The contention that after putting the officers in the three categories they should further be evaluated on merit inter se within each category is contrary to the specific provision of the 1957 memorandum, and further, there could not be any further intra specific assessment of those who are already considered to be "very good". [49D] (6) The date for determining the eligibility of officers has nothing to do with the dates on which ad hoc appoint ments were permitted and ad hoe appointments were, in fact, made. The observations Of this Court in the first Bishan Sarup Gupta case, are that if as a result of the fresh seniority list, it is found that any officer was eligible for promotion on account of his place in the new seniority list, the Committee might have to consider his case as on the date when he ought to have been considered and his position adjusted in the seniority list of Assistant Commis sioners. The observations did not mean that although the Committee can meet only after the seniority list is approved by this Court, the selection would be deemed to be made at the time when a vacancy in the post occurred and the eligi bility of officers for seleCtiOn should be determined by such deemed date of selection. No employee has any right to a vacancy in the higher post as soon as the vacancy occurs. The Government has a right to keep it unfilled as long as it chooses. The seniority list which is a basis for the field of choice for promotion was approved by this Court on 16th April 1964 in the second Bishan Sarup Gupta case. Promo tions to the post of Assistant Commissioners are on the basis of the Selection List prepared by the Committee and are to be made prospectively and not retrospectively. [51 C D]

vil Appeal No. 195556 of 1980. From the Judgment and Order dated 3/4th July, 1979 of the Bombay High Court in Spl. C.A. Nos. 2052 of 1973 and 132 of 1974. F.S. Nariman, Anil B. Diwan, P.H. Parekh, Ms. Lata Krishnamurthy and section Dutt with for the Appellants. V.M. Tarkunde and H.G. Advani, Hira Advani Kailash Vasudev, Joel Peres and D.N. Misra for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals, by special leave, by the landlords are directed against the judgment and order of the High Court of Bombay dated 3/4th July, 1979. Two questions arise for consideration in these appeals (i) whether the structure constructed by the tenant in the premises in question amounted to permanent structure leading to the forfeiture of the tenancy of the tenant; (ii) what is the scope and extent of the jurisdiction of the High Court under Article 227 of the Constitution on questions of facts found by the appellate bench of Small Causes Court. In order to appreciate these questions, it is necessary to reiterate the relevant facts. The second appellant being plaintiff No. 2 in the Original Suit leased out the premises involved herein being a godown measuring 11,500 sq. at 156 A, Tardeo, Bombay 7. The said pre 596 mises was given by the landlord to the tenant, the respond ent herein M/s Bright Brothers (Pvt.) Ltd. on lease vide the registered lease dated 14th April, 1947 for a period of ten years commencing from 1st September, 1946. By 1953, the respondent company began to fall into arrears in payment of rent. The respondent tenant filed an application before the appropriate Rent Court for fixing the standard rent. On 14th June, 1958, the advocate of the second appellant sent a notice to the respondent tenant calling upon them to pay up the arrears for the period from September, 1956 to May, 1958 (both months inclusive), as well as for earlier arrears of rent of Rs.20,850. On 1st December, 1958 a second notice was issued on behalf of the original plaintiff No. 1 calling upon the respondent to quit and vacate the premises in question on the grounds, inter alia, (a) unauthorised construction of permanent nature; (b) obstructing roadways; and (c) the damage to walls and floor, and further called upon them to remove the unauthorised construction and re store the suit premises to its original condition. Inasmuch as the main factual controversy in those appeals relate to the nature of the construction alleged to have been made by the tenant, it is relevant to set out what was stated in that letter. It was, inter alia, stated that the tenant had unauthorisedly committed several breaches of the terms and conditions of the lease inasmuch as the tenant had erected unauthorised construction of a permanent nature and carried out additions to the demised premises without the consent of the lessor or the receiver. It was further alleged that in breach of the terms and conditions of the agreement of tenancy and without the consent of the lessor or the receiv er, the tenant had occupied portion of the land not let out to him by obstructing the lessor and the person entitled to use the same and had made construction on the roadway by obstructing and restricting the passage. It was further alleged that the tenant had unauthorisedly and without permission dug up and mutilated the floors of the premises let out to the tenant and had constructed contrary to the provisions of section 108(0) of the . The tenant was called upon to remove the said unauthorised structures and restore the property, and it was further notified that failing which the landlord would be compelled to take proceedings. A reply to the said notice issued by the Court Receiver was sent on 8th December, 1958 from the respondent company 's advocate saying that the construction complained of had taken place with the consent and full knowledge of the appellant and the respondent company had spent thousands of rupees towards the improvement of the suit 597 premises. Further in reply to the allegation of damage to the property, the respondent company had alleged that it had in fact improved the property of the appellant. On or about 20th December, 1958, the advocate for the appellant replied to the above letter once again calling upon the respondent company to vacate the demised premises. In 1959, the standard rent application being R.A. No. 2214 of 1954 mentioned hereinbefore was dismissed. There upon, the respondent tenant filed a civil revision applica tion. The appellant filed a suit being suit No. 1450/83 18 of 1959 on or about 31st July, 1959. On or about 8th Decem ber, 1965, the appellant made an application for amendment of the plaint to include change of user as an additional ground of eviction. The respondent also made an application for amendment to the effect that permanent structure had been made with the knowledge and consent of the appellant. The said amendments were allowed in December, 1965. On or about 31st March, 1967, the trial court in suit No. 1450/ 8318 of 1959, ordered eviction of the tenant on the ground of permanent construction. Mesne profit from the date of the decree was also ordered. There was an appeal to the appellate bench before the CoUrt of Small Causes and cross appeal being appeal nos. 323 and 629 of 1967. By the judgment delivered on 14th June, 1973, the division bench of the Court of Small Causes confirmed the decree for eviction on the ground of permanent construction and granted eviction on change of user as well in the cross objection filed by the appellant. It also ordered mesne profit from the date of the suit and the monetary claims to the extent of arrears. The High Court on or about 3/4th July, 1979, by judgment and order of the High Court in SCA 2052 and 174 of 1974 under Articles 226 and 227 of the Constitution reversed the concurrent findings of the courts below and allowed the respondent company 's application. Being aggrieved therefrom, the appellants, the landlords have come up in appeal to this Court. It is, first necessary therefore to consider the nature of the structures made and whether these were permanent or not. As stated hereinbefore that permanent structures were constructed was held by the two courts concurrently, namely the Judge of the Court of Small Causes as well as the Appel late Bench of the Small Causes Court; whether by such con struction there has been change of user is another question. On the nature of the construction, it is necessary to refer to the decision of the trial court. 598 The main question, however, in these appeals is the jurisdiction of the High Court to interfere with the find ings of this nature under Article 227 of the Constitution. The principles are well settled. Their application, however, in particular cases sometimes present difficulties. But the quest for certain amount of certitude must continue in this field of uncertain minds and imperfect language. To the facts, therefore, we must now refer to appreciate the application of law involved in this case. The premises in question was let out for use exclusively for business of manufacture of plastic articles, wood work and paints only and not for any other purpose. it is alleged that it is no longer used for that purpose but used as an office and storage. The trial court in this case was the Court of Small Causes, Bombay. One of the grounds of ejectment was the erection of permanent structure and it was the case of the appellant No. 2 that such erection was against the provi sions of section 13(1)(b) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1974 (hereinafter called the 'Rent Act '). Under clause (p) of section 108 of the , a lessee may not without the lessor 's consent erect on the property and permanent structure except for agricultural purposes. If he does, then this becomes a ground for ejectment. In this case the permanent structures alleged were constructions of lofts, construction of several rooms and construction of and laying of a new and permanent flooring as appears from the plaint filed in the proceedings. It further appears that the tenant had sunk in pillars and stanchions into the flooring. it was stated in the deposi tion that these pillars and stanchions mentioned in the plaint were only those which were the posts supporting the cabins and lofts complained of and none else. These pillars and stanchions went along with the construction of lofts and construction of several rooms, that is cabins. The learned trial court discussed the details and found those cabins marked A, B, C, D, E, F, G, H, I, J, K, L etc. There were lofts marked cabins A, B, C, D, E, F, J, K, other lofts marked as F, G, H and I. The third loft over the cabin at L and the lofts over the portions M & N. These were, according to the engineer, an architect, Shri Divecha, who was exam ined on behalf of the plaintiff, permanent structures. The learned judge examined the plan prepared by the said archi tect and his deposition. The learned judge was of the view that it was clear from the 599 architect 's evidence that lofts A, B, C, D, E, J, K. as well as the lofts over F, G, H and I were meant to carry weight of over 100 Ibs. per sq. and this statement according to the learned judge was not challenged in the cross examina tion. The structures over A, B, C, D, E, J. and F.C.H.I cannot therefore be called only roofs or tops of cabins. They were nothing but lofts. The structures A, B, C, D, E, K, J. so also F, G, H, I, L & M were admitted to have been constructed by the tenant after it had taken the premises from the landlord. The learned judge in his judgment has also noted these various facts as to their length and dimen sions. He referred extensively to the evidence in the plan which was marked exhibit MI and the deposition of Shri Divecha. The learned Judge taking these factors into consideration came to the conclusion that the cabin lofts and posts sup porting the same were attached to the flooring as well as the walls and columns of the main structures. Under these circumstances, the learned judge of the Court of Small Causes was of the opinion that the structures were permanent in nature. The learned judge, however, held that the land lord had failed to prove that the tenant had put up any permanent flooring at some part of the suit premises as alleged. The next allegation was that the tenants had demol ished a portion of the wall in between the two rooms and prepared a door at that opening. After discussing the facts and the evidence, the learned judge was of the view that there was no question of any waste of the plaintiff 's property on account of any demolition. He, however, had held that so far as cabins, lofts and posts supporting the same by pillars, these were nothing but permanent structures. So far as the digging of the flooring was concerned, after discussing the evidence the learned judge held that the plaintiffs had failed to prove digging which led to waste of the property of the landlord. So far as the creation of the permanent structure is concerned, the same breached the terms of tenancy. The learned judge noted that on 1st Janu ary, 1948 the defendant No. 1 wrote to the plaintiff that the height of the wooden partition they were erecting, was specified within the plan sent along with the aforesaid letter which had already been lying ready for erection. It was contended by the defendants in their written statements that they had obtained consent in respect of the wooden cabins and partitions in the year 1948. So far as section 13(1)(b) of the Bombay Rent Act is concerned, there cannot be any waiver operating against the plaintiffs. It was the case that some of the permanent structures were there before 1947. On examination of the evidence, the learned judge observed that Mr. D 'silva had stated that the tenant had requested Mahindra & Mahindra for a design of a slotted angle cabin with a loft, that the same was supplied and Mr. D 'silva was the designer who did the work. Analysing all these evidence, the 600 learned trial judge came to the conclusion that permanent structures were carried out without the consent in writing of the landlords or either of them. Such permanent structure was outside the tenancy and the landlord had not given any consent. The matter on this issue went up before the appellate court and the appellate court dealt with this again and discussed these allegations. It was pointed out by the appellate court that the allegations were that the appel lants had (a) made an opening by demolishing a part of the wall dividing the two portions of the demised premises; (b) constructed lofts in the suit premises, (c) dug upon the flooring of the premises at various places, (d) sunk in pillars and stanchions into the flooring, (e) constructed several rooms and laid new and permanent floorings in parts of the demised premises at different levels. So far con structing lofts, it was held that these lofts had been constructed after 1st September, 1946. And in this context the construction of cabins and putting up of pillars were considered and the evidence in this respect was taken into consideration. It was contended that the demised premises in the lease was described as godown but it was taken in the nature of several office premises and the change in the improvement done to the same was merely for the better enjoyment of demised premises. In the first place the cabins were made of wooden poles and planks fixed in the floor, and side walls of the building with nails, screws, nuts and bolts. The appellate court came to the conclusion that applying the proper test, the cabins were substantial struc tures and substantial improvement to the premises. These were durable for long and intended to be used permanently. The appellate court also took the question of digging and other relevant allegations. As a result of analysis of these evidence and materials, the appellate court confirmed the findings of the trial court that the tenant had erected permanent structure on the demised premises without the landlord 's consent and that was a breach of the terms of tenancy. They also confirmed the finding of the trial court that the respondents did not waive their rights arising out of these acts. They also upheld the finding that there was no renewal of the lease of the landlords and the tenants were not statutory tenants whose contractual tenancy had come to an end by efflux of time by the end of the period of ten years from 1st September, 1946. They upheld the decree for possession passed by the trial court. The High Court dealing with this matter under Article 227 of the Constitution had occasion to refer to this as pect. The High Court 601 referred to the different authorities on this point. We may briefly take note of some of these. In this connection reference may be made to a decision of the Special Bench of the Calcutta High Court in the case of Surya Properties Private Ltd. and others vs Bimalendu Nath Sarkar and others. A.I.R. 1964 Calcutta p. 1 which dealt with clause (p) of section 108 of the and held that this question was dependent on the facts of each case and no hard and fast rule can be laid down with regard to this matter. In the absence of any relevant materials, therefore, the Full Bench found that no answer could be given. in a slightly different context, before Calcutta High Court in the case of M/s Suraya Proper ties Private Ltd. vs Bimalendu Nath Sarkar. A.I.R. 1965 Calcutta page 408, Chatterjee, J., one of the judges of the Division Bench observed that the phrase 'permanent struc ture ' for purposes of clause (p) of section 108 of the meant a structure which was capable of lasting till the term of the lease and which was con structed in the view of being built up as was a building. In that context the learned judge observed that a reservoir was not, however, a permanent structure for purposes of clause (p) of section 108 of the . Sen, J. of the same Bench was of the view that no hard and fast tests could be laid down for determining the question wheth er a particular structure by the tenant was a permanent structure for the purpose of clause (p) of section 108 of the . The answer to the question depended on the facts of each case. Chatterjee, J., however, took the view that where the tenant created a permanent structure in the premises leased to him, as the lease con tinued in spite of the disputed structure and the landlord continued to receive rent till the determining of the lease by notice to quit or thereafter till the passing of the decree for eviction and the fact that he accepted rent with full knowledge of the disputed structure did not disentitle him to a decree for eviction. In Khureshi Ibrahim Ahmed vs Ahmed Haji Khanmahomad. A.I.R. 1.965 Gujarat, 152, in connection with section 13(1)(b) of the Rent Act, Gujarat High Court held that the permanent structure must be one which was a lasting struc ture and that would depend upon the nature of structure. The permanent or temporary character of the structure would have to be determined having regard to the nature of the struc ture and the nature of the materials used in the making of the structure and the manner in which the structure was erected and not on the basis of how long the tenant intended to make use of the structure. As a matter of fact, the Court observed, the nature of the structure 602 itself would reflect whether the tenant intended that it should exist and be available for use for a temporary period or for an indefinite period of time. The test provided by the Legislature was thus an objective test and not a subjec tive one and once it was shown that the structure erected by the tenant was of such a nature as to be lasting in dura tion lasting of course according to ordinary notions of mankind the tenant cannot come forward and say that it was erected for temporary purpose. The question was again considered in the case of Ramji Virji and others vs Kadarbhai Esufali, A.I.R. 1973 Gujarat 110. It was observed that whether the structure was a perma nent structure was a mixed question of law and fact. It was held in that case that alterations made by a tenant like constructing loft, wooden bathroom, frame and putting up a new drain being minor alterations which were easily remova ble without causing any serious damage to the premises would not amount to permanent structure leading to the forfeiture. There are numerous authorities dealing with the question how the structure is a permanent structure or not should be judged. It is not necessary to deal with all these. One must look to the nature of the structure, the purpose for which it was intended and take a whole perspective as to how it affects the enjoyment, the durability of the building etc. and other relevant factors and come to a conclusion. Judged in the aforesaid light on an analysis of the evidence the trial court as well as the appellate court had held that the structures were permanent. The High Court observed that in judging whether the structures were perma nent or not, the following factors should be taken into consideration referring to an unreported decision of Malvan kar J. in special civil application No. 121 of 1968. These were (1) intention of the party who put up the structure; (2) this intention was to be gathered from the mode and degree of annexation; (3) if the structure cannot be removed without doing irrepairable damage to the demised premises then that would be certainly one of the circumstances to be considered while deciding the question of intention. Like wise, dimensions of the structure and (4) its removability had to be taken into consideration. But these were not the sole tests. (5) the purpose of erecting the structure is another relevant factor. (6) the nature of the materials used for the structure and (7) lastly the durability of the structure. These were the broad tests. The High Court ap plied these tests. So had the Trial Court as well as the appellate bench of Court of Small causes. 603 All the relevant factors had been borne in mind by the learned trial judge as well as appellate bench of the Court of Small Causes. Therefore, simply because another view is possible and on that view a different view is taken, will be interfering under jurisdiction under Article 227 of the Constitution which is unwarranted. The High Court was im pressed by the fact that having regard to the facts and circumstances of the case and further more for efficient and complete enjoyment of the demised premises and for carrying out the business of manufacturing plastic goods, these structures had been constructed by the tenant temporarily. According to the High Court, the nature of the materials used and the intention of the tenant were relevant and according to the High Court, these structures could be removed without doing appreciable damage to the demised premises and these indicated that these were intended to be part and parcel of the normal part of the building. The High Court proceeded on the basis that the trial court as well as the appellate bench of the Small Causes Court had relied wholly on the basis of evidence of the admission of one Mr. Pittie who had admitted that the landlord had knowledge of these factors. The other evidence, according to the High Court,. of the Divecha, D 'Silva, Kirtikar and Bhansali were not at all given proper and due weight. According to the High Court, the High Court had in such circumstances juris diction to deal with this matter and in exercise of the jurisdiction, as the High Court felt that relevant and material facts had been ignored, the High Court set aside the order of the court of Small Causes, and set aside the landlord 's decree and restored the tenant in possession. As mentioned hereinbefore it is not necessary for our present purpose to decide whether plaintiffs ' witnesses were properly appreciated. We find all the relevant evidence had been examined by the trial judge as well as by the appellate bench of the court of Small causes. We find relevant refer ence to the evidence of Divecha, and others. We find refer ence to the relevant evidence in the deposition at pages 56, 69, 71, 83, 93, to 95 by the trial court as well as in pages 133 36, 152, 167, we find reference to the deposition at p. 56 of the trial court and pages 62 to 63, as well as 65 to 71 and the Appellate Court at pages 134 and 147. Similarly the evidence of D 'silva who was an employee of Mahindra and Mahindra as also of Shri Kirtikar, were discussed. It is not necessary to refer in detail to these evidence. So far as to what extent the factors are structures have been exhaustively referred to in Surya Properties Private Ltd. and others vs Bimalendu Nath Barkar and others (supra) and M/s Surya Properties 604 Private Ltd. vs Bimalendu Nath Sarkar (supra) and in our opinion these lay down correct position in law. As a matter of fact the tenant is no longer carrying on any business there but one Messrs Quality Plastics is carrying on the business. Therefore the original purpose is gone. In this connection reference may be made to Annexure IV appearing at page 428 of the Paper Book which is a letter dated both July, 1964 written by the Concord of India Insurance Company Limited to the Secretary. The Insurance Association of India where it was stated clearly that Bright Brothers Pvt. had shifted to Bhandup as from 29th April, 1963 and at the relevant time, they had only their Administrative Officer there and they were stocking finished goods in the premises in question. Further, they have recently installed their Associate Company 's factory in the said block working under the name of M/,s. Quality Plastics in the premises in ques tion. Therefore, in view of the fact that large sum had been spent and considering the standard and the nature of the construction and lack of easy removability and the degree of an annexation to the enjoyment for the original purpose, we are of the opinion that the learned judge as well as appel late bench of the court of Small Causes had applied the correct principles and came to a plausible conclusion. About the removability of the structure, the High Court was bound by the finding of the appellate authority which appears at page 341 to 344 of the Paper Book. In a case of this nature, the High Court found that they had to enter into this ques tion to find the real position whether the proper principles had been correctly borne in mind. It is indisputable that the finding that has to be arrived at by the court in this case is a mixed question of law and fact. Therefore, if the basic factors, for example, there was not proper apprecia tion of the evidence, if the assumption that lofts per se were not permanent structures then the courts below might be said to have committed error apparent on record and no court instructed in law could take such a view. But if all the relevant factors have been borne in mind and correct legal principles applied then, right or wrong, if a view has been taken by the appellate court, in our opinion, interference under Article 227 of the Constitution was unwarranted. Interference by the High Court under Article 227 of the Constitution must be within limits. This question has been considered by this Court from time to time and principles laid down. This Court in Ganpat Ladha vs Sashikant Vishnu Shinde, ; expressed the view that the High Court commits a gross error in interfering with what was a just and proper exercise of discretion by the Court of 605 Small Causes, in exercise of its power under Article 227 of the Constitution. This was unwarranted. The High Court under Article 227 has a limited jurisdiction. It was held in that case that a finding as to whether circumstances justified the exercise of discretion or not, unless clearly perverse and patently unreasonale, was, after all a finding of fact and it could not be interfered with either under Article 226 or 227 of the Constitution. If a proper court has come to the conclusion on the examination of the nature of the structure, the nature of the duration of structure, the annexation and other relevant factors that the structures were permanent in nature which were violative of section 13(1)(b) of the Rent Act as well as section 108 clause (p) of and such a finding, is possible, it cannot be considered to be perverse. In such a situation, the High Court could not have and should not have inter fered. In India Pipe Fitting Co. vs Fakruddin M.A. Bakar and Anr., ; , this Court reiterated that the limitation of the Court while exercising power under Article 227 of the Constitution is well settled. Power under Article 227 is one of judicial superintendence and cannot be exer cised to upset the conclusions of facts, however., erroneous these may be. It is possible that another Court may be able to take a different view of the matter by appreciating the evidence in a different manner, if it determinedly chooses to do so. That will not be justice administered according to law to which Courts are committed notwithstanding disserta tion in season and out of season, about philosophies. In that case, the Court found that the High Court had arrogated to itself the powers of the appellate court. As early in 1959, in Satyanarayan Laxminarayan Hegde and Others vs Millikarjun Bhavanappa Tirumale, [1960] 1 SCR 890, this Court found that in that case on the materials avail able before it that the High Court was wrong in thinking that the alleged error in the judgment of the Bombay Revenue Tribunal was one apparent on the face of the record so as to be capable of being corrected by a writ of certiorari and an error which had to be established by a long drawn process of reasoning on points where there may conveivably be two opinions cannot be said to be an error apparent on the face of the record. There might have been error in the judgment of the appellate bench of the Court of Small Causes but it is not an error palpable and apparent, right or wrong they had come to that conclusion. That was possible or plausible conclusion. In Mrs. Labhkuwar Bhagwani Shah and Others vs Janardhan 606 Mahadeo Kalan and Another, 14, this Court reiterated that concurrent finding of facts whether relating to jurisdictional issue or otherwise were not open to inter ference by the High Court under Article 227 of the Constitu tion. This Court in Chandavarkar Sita Ratna Rao vs Ashalata section Guram, [1986] 4 SCC p. 447 held that in exercise of juris diction under Article 227 of the Constitution, the High Court can go into the questions of facts or look into the evidence if justice so requires it. But the High Court should decline to exercise its jurisdiction under Article 226 and 227 of the Constitution to look into the facts in the absence of clear cut down reasons where the question depends upon the appreciation of evidence. The High Court should not interfere with a finding within the jurisdiction of the inferior tribunal or court except where the finding is perverse in law in the sense that no reasonable person properly instructed in law could have come to such a finding or there is misdirection in law or view of fact has been taken in the teeth of preponderance of evidence or the finding is not based on any material evidence or it resulted in manifest injustice. Except to the limited extent indicat ed above, the High Court has no jurisdiction. In this instant case the tests laid down have not been transgressed by the court of Small Causes both trial court as well as the appellate bench. The view it took was a possible view. A different view might have been taken out that is no ground which would justify the High Court to interfere with the findings. In that view of the matter, we allow the appeals, set aside the judgment and order of the High Court and restore the order of the appellate bench of Court of Small Causes dated 4th June, 1973. There will be an order for possession and mesne profits as directed by the Court of Small Causes. The respondents will pay the cost of these appeals. H.L.C. Appeals allowed.

The Appellant was ordered to be evicted under section 14(1)(e) of the Delhi Rent Control Act, 1958 on the ground of bona fide requirement of the landlord. Dismissing the Appeal, to this Court, HELD: 1. Sections 14A, 14(e), 25A, 25B and 25C of the Delhi Rent Control Act, 1958, are special provisions so far as the landlord and tenant are concerned and further in view of the non obstante clause in the section these provisions over ride the existing law so far as the new procedure is concerned. Therefore, the Slum Areas (Improvement and Clear ance) Act, 1956, would have no application in cases covered by sections 14A and 14(1)(e) of the Rent Act especially in view of the provisions which were added by the Amending Act of 1976. [690D F] 2. There is no difference either on principle or in law between section 14(1)(e) and 14A of the Rent Act even though these two provisions relate to eviction of tenants under different situations. [690F] 3. In view of the procedure in Chapter III A of the Rent Act, the Slum Act is rendered inapplicable to the extent of inconsistency and it is not necessary for the landlord to obtain permission of the Competent Authority under section 19(1)(a) of the Slum Act before instituting a suit for eviction and coming within section 14(1)(e) or 14A of the Rent Act. [690G H]

ivil Appeal No. 1548 of 1974. From the Judgment and Order dated 12.12. 1972 of the Bombay High Court in F.A. No. 152 of 1972. V.A. Bobde, B.R. Agarwala and R.B. Hathikhanwala for the Appellants. M.S. Gupta for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an appeal by special leave granted under Article 136 of the Constitution of India against the judgment of a Division Bench of the Bombay High Court (Nagpur Bench) in First Appeal No. 152 of 1972, the judgment having been delivered on December 12, 1972. The appellants are a firm registered under the Partner ship Act, 1932 and inter alia carry on the business of hire purchase of automobile vehicles. The appellants were the owners of a diesel truck complete with tools and other accessories. On January 24, 1962 respondent No. 1 hired the said truck from the appellants under a Hire Purchase Agree ment in writing of the same date. Under the said agreement, respondent No. 1 agreed to pay to the appellants a sum of Rs. 10,000 as initial hire charges and certain monthly hire charges. It was provided under the said agreement that on the payment of all the monthly hire charges and other amounts payable under the agreement 486 on the respective due dates and fulfilment of the other terms and conditions of the agreement, respondent No. 1 would have the option to purchase the said truck. However, if any of the monthly hire charges were not paid or there was a breach of any of the terms and conditions of the agreement, the appellants were entitled to take possession of the truck. Until respondent No. 1 validly exercised the option to purchase the said truck, the said truck was to remain the property of the appellants. Respondent No. 2 is the guarantor. Respondent No. 1 failed to pay the monthly hire charges to the appellants as provided under the agree ment. In fact, he paid only the initial hire of Rs. 10,000 and hire charges for one month only. Giving up certain claims for damages and other items the appellants filed a suit in the Court of Civil Judge (Senior Division) at Nagpur for recovery of a sum of Rs. 13,422.23 p against the re spondents. Several issues were framed by the learned Trial Judge and they were all decided in favour of the appellants. However, the learned Trial Judge dismissed the suit on the ground that it was not maintainable in view of the provi sions of section 69(2) of the Partnership Act, 1932. The appellants preferred an appeal against this decision to the Bombay High Court (Nagpur Bench). The said appeal was, however, dismissed by the High Court upholding the view of the learned Trial Judge regarding the non maintainability of the suit. It is against this decision, that the present appeal is directed. In order to appreciate the controversy before us, it is necessary to take note of a few further facts none of which is disputed. The appellant firm was registered under the Partnership Act, 1932 on November 2, 1960. There was a change in the consti tution of the firm on July 1, 1962 but we are not concerned with that change. What is material is that, on July 1, 1967, there was another change in the constitution of the firm whereby two of the then partners retired and one new part ner, namely, Smt. Sarita Agrawal joined as a partner of the said firm; and two minors, namely, Ashish Kumar and Rohit Kumar were admitted to the benefits of the said partnership firm. On the said date, namely, July 1, 1967 two of the then partners, namely, Smt. Sheela R. Agrawal and Shri Ramkishan retired as aforestated from the said partnership firm. The suit was instituted on July 22, 1968. The notice regarding the change in the constitution of the said firm as aforesaid was given to the Registrar of Firms on August 28, 1968 and a note was taken of the said change in the Register of Firms subsequently. Thus, as pointed out by the learned Trial Judge, on the date when the suit was filed, two partners shown as partners in the appellant firm in the relevant entries in the Register of Firms had 487 already retired, one new partner had joined the said firm and two minors had been admitted to the benefit of the said partnership firm and no notice had been given to the Regis trar of Firms in respect of these changes. The notice re garding these changes was given to the Registrar of Firms subsequently and noted on November 19, 1968. Section 69 of the said Partnership Act deals with the effect of non registration of firms. Sub section (2) of the said section, which is material for the purposes of this appeal, runs as thus: "(2). No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. " In the present case the suit filed by the appellants is clearly hit by the provisions of sub section (2) of section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of Firms were not, in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regard ing which no notice was given to the Registrar of Firms. Thus, the persons suing, namely, the current partners as on the date of the suit were not shown as partners in the Register of Firms. The result is that the suit was not maintainable in view of the provisions of sub section (2) of section 69 of the said Partnership Act and the view taken by the Trial Court and confirmed by the High Court in this connection is correct. Although the plaint was amended on a later date that cannot save the suit. Reference has been made to some decisions in the judgment of the Trial Court; however, we do not find it necessary to refer to any of them as the position in law, in our opinion, is clear on a plain reading of sub section (2) of section 69 of the said Part nership Act. In the result, the appeal fails and is dismissed with costs. N.P.V. Appeal dismissed.

Under a Hire Purchase agreement entered into with the appellant, a firm registered under the Partnership Act, 1932, carrying on the business of hire purchase of automo bile vehicles, Respondent No. 1 hired the truck owned by the appellant, under the agreement Respondent No. 1 agreed to pay initial hire charge of Rs. I0,000 and certain monthly hire charges on due dates. On the failure of Respondent No. 1 to pay the monthly hire charges, after paying the initial hire charges and charges for one month, the appellant filed a suit against Respondent No. 1 and his guarantor on July 22, 1968, for the recovery of a sum of Rs. 13,422.23 for breach of terms and conditions of the agreement. There was a change in the constitution of the firm on July 1, 1967 with the retirement of two of the then part ners, and addition of one new partner as also admission of two minors to the benefits of the Partnership. This change was notified to the Registrar of Firms on August 28, 1968 and was duly taken note of in the Register of Firms subse quently. Thus, no notice of the change had been given to the Registrar of firms. The Trial Judge dismissed the suit as not maintainable in view of Section 69(2) of the Partnership Act, 1932. Upholding this decision, the High Court dismissed the appeal of the firm. Hence, the appeal, by special leave, by the appellant firm. Dismissing the appeal, the Court. HELD: Sub section (2) of Section 69 of the Partnership Act lays down that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing were or had been shown in the Register of Firms as partners in the firm. [487C] In the present case, the suit tided by the appellant firm is clearly 485 hit by the provisions of sub section (2) of Section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of Firms were not, in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regard ing which change no notice was given to the Registrar of Firms. Thus, the persons suing, namely, the current partners as on the date of the suit were not shown as partners in the Register of Firms. Therefore, the suit was not maintainable in view of the provisions of sub section (2) of section 69 of the Partnership Act, 1932. [487D E] Although the plaint was amended on a later date, that cannot save the suit.

ivil Appeal No. 2245 to 2249 of 1985. 212 From the Judgment and Order dated 8.11. 1984 of the Patna High Court in C.W.J. Case No. 2812 of 1982. V.M. Tarkunde and M.P. Jha for the Appellants. S.N. Kacker and L.R. Singh for the Respondents. Vijay Hansaria for Respondent in C.A. No. 2248/85. The Judgment of the Court was delivered by KHALID, J. In these appeals, by special leave, the short question that falls for decision is as to how Explanation to Section 2(P)(i) inserted by the Bihar Agricultural Produce Markets (Amendment) Act, 1982, should be read with the Explanation to Section 27 also inserted by the same Act. Before the High Court, the vires of Explanation to Section 2(P)(i) was challenged on the ground that it encroached upon Entry 42 of list I of the Seventh Schedule. The Division Bench of the High Court after considering the various au thorities dealing with the concept of sale, refrained from declaring the Explanation bad but read it down and held that it should be read in harmony with the Explanation to Section 27 and directed the marketing committee concerned to make assessment of fees after giving the petitioners an opportu nity as provided in the Explanation to Section 27. In this Judgment, we do not propose to go into the question whether sale as explained in the Explanation to Section 2(P)(i)) would include interstate trade etc. and on that reasoning strike down the Explanation. We propose to consider the scope of the two Explanations to see whether they can co exist. The Original Act was called the Bihar Agricultural Produce Markets Act, 1960, (for short the Act). This Act was enacted to regulate the buying and selling of crops by providing suitable and regulated markets, to eliminate middlemen and to help the cultivators and the buyers in the disposal of the commodities. The Act enabled the marketing committee to levy a fee for transactions talking place in the market area. To get at persons who manage to escape the levy of market fee by ingenious transactions, the Act was amended by inserting a new definition Section 2(P)(i) along with an Explanation and also adding an Explanation to Sec tion 27. What we have to decide in this case is as to how these two Explanations have to be construed. In other words whether one Explanation excludes the other or whether one is the compliment of the other. 213 It is necessary first to quote the two provisions under consideration. Section 2(P)(i) along with the Explanation reads as follows: "2(P)(i) 'Sale ' means any transfer of proper ty in goods for cash or deferred payment or other valuable consideration and shall include transfer or acquisition of goods on hire purchase or under any other system in which payment of valuable consideration is made by installment notwithstanding the fact that the seller retains title in goods as valuable security of payment of consideration or for any other person. Explanation Notwithstanding any thing contained in any law for the time being in force sale shall be deemed to have taken place for the purpose of this Act within a market area when the goods are transferred from the Principal to his selling agent or to the Arhatia within the market area or outside the market area. " Section 27 is the charging section. It reads as follows along with the Explanation: "Section 27 Power to levy fees (1) The market committee shall levy and collect market fees on the agricultural produce brought or sold in the market area, at the rate of rupee one per Rs. 100 worth of agricultural produce. Explanation: All notified agricultural produce leaving a market area, shall unless the con trary is proved be presumed to have been bought or sold in such area. " In fiscal laws due importance has to be given to the phraseology used in the charging section. Section 27 gives to the market committee the power to levy and collect market fees on the agricultural produce bought or sold in the market area at the rate given therein. The Explanation raises a presumption and that is that all notified agricul tural produce leaving a market area shall be presumed to have been bought or sold in such an area. But this presump tion is rebuttable because the Explanation gives the affect ed party an opportunity to satisfy the assessing authorities that there was neither buying nor selling in a given case. This Section with its Explanation thus creates no difficul ty. It is 214 when we come to the definition section, extracted above, that the difficulty arises. 'Sale ' is defined in Section 2(P)(i). If the definition had stopped there, there would have been no difficulty in construing Section 27 and its Explanation. In all transactions the parties get an opportu nity to satisfy the assessing authorities whether such transactions are sales or not. But the Explanation to Sec tion 2(P)(i) introduces complications. This Explanation states by a deeming fiction, that when goods are transferred from the principal to his selling agent or Arhatia within a market area or outside the market area a sale takes place. This Explanation encompasses within its sweep, sales of all kinds within the market area or outside or within the State or outside. That is the reason why its validity was chal lenged by the respondents before the High Court. The learned counsel for the appellants contended that the Explanation to Section 2(P)(i) could stand independent of the Explanation to Section 27 since they have different fields of operation. According to him, if this Explanation is made subject to the Explanation to Section 27, this Explanation would be rendered redundant and futile. The learned counsel for the respondents, on the other hand pleaded that since both the Explanations were brought on the Statute Book by the same amendment, they must be read harmo niously and the Explanation to the definition section should be read subject to the Explanation to the charging section. We have considered the rival contentions carefully. We feel that the Explanation to Section 2(P)(i) has not been well worded nor properly placed. We are steering clear of the contention that the Explanation is in excess of the powers of the State Legislature since we feel that the dispute can be resolved better by allowing the two Explana tions to co exist by reading them harmoniously. In doing so, it is necessary to read down the Explanation to Section 2(P)(i) and give full effect to the Explanation to the charging section. The Explanation to Section 27 gives an opportunity to the affected persons to satisfy the assessing authorities that the transaction in question is not a sale. This Explanation should be deemed to take in all sales including those mentioned in the Explanation to Section 2(P)(i). In other words, even transactions coming within the ambit of Explanation to Section 2(P)(i) have to be governed by the Explanation to Section 27. In construing the two Explanations we have give preference to the Explanation to the charging section over the Explanations to the definition section consistent with the rules of interpretation of such provisions. If that be so, the Judgment of the High Court has to be upheld and these 215 appeals have to be dismissed. We do so. As directed by the High Court the marketing committee concerned can make as sessment of fees only after giving the respondents an oppor tunity to show cause as laid down in the Explanation to Section 27. If the Government wants a stricter control over the transactions in the market area it is for them to suit ably amend the Explanation in question by excluding its operation from the Explanation to Section 27. In the circumstances of the case, there will be no order as to costs. M.L.A. Appeal dis missed.

Section 2(P)(i) of the Bihar Agricultural Produce Mar kets Act, 1960 defines 'sale ' to mean any transfer of property in goods for cash or deferred payment or other valuable consideration. The Explanation to section 2(P)(i) inserted by the Bihar Agricultural Produce (Markets) amend ment Act, 1982 provides that notwithstanding anything con tained in any law for the time being in force, 'sale ' shall be deemed to have taken place for the purpose of this Act within a market area when the goods are transferred form the Principal to his selling agent or to the Arhatia within the market area or outside. The amending Act also added an Explanation to the charging section, section 27 providing that all notified agricultural produce leaving a market area shall, unless the contrary is proved, be presumed to have been bought or sold in such area. The respondents challenged before the High Court the vires of the Explanation to section 2(P)(i) on the ground that it encroached upon Entry 42 of List I Seventh Schedule to the Constitution. The High Court refrained from declaring the Explanation bad but read it down and held that it should be read in harmony with the Explanation to Section 27 and directed the marketing committee concerned to make assess ment of fees after giving the petitioners an opportunity as provided in the Explanation to Section 27. Dismissing the Appeal, this Court, HELD: 1. In construing the two Explanations preference has to 211 be given to the Explanation to the charging section over the Explanation to the definition section consistent with the rules of interpretations of such provisions. [214G H] 2.1 In fiscal laws due importance has to be given to the phraseology used in the charging section. Section 27 gives to the market committee the power to levy and collect market fees on the agricultural produce bought or sold in the market area at the rate given therein. The Explanation raises a presumption that all notified agricultural produce leaving a market area shall be presumed to have been bought or sold in such an area. But this presumption is rebuttable because the Explanation gives the affected party an opportu nity to satisfy the assessing authorities that there was neither buying nor selling in a given case. [213F H] 2.2 In all transactions, the parties get an opportunity to satisfy the assessing authorities whether such transac tions are sales or not. But the Explanation to Section 2(P)(i) introduces complications. This Explanation states by a deeming fiction that when goods are transferred from the principal to his selling agent or Arhatia within a market area or outside the market area, a sale takes place. This Explanation encompasses within its sweep, sales of all kinds within the market area or outside or within the State or outside. [214A C] 2.3 The Explanation to Section 2(P)(i) has not been well worded nor properly placed. The Explanation is in excess of the powers of the State Legislature since the dispute can be resolved better by allowing the two Explanations to co exist by reading them harmoniously. In doing so, it is necessary to read down the Explanation to Section 2(P)(i) and give full effect to the Explanation to the charging section. The Explanation to Section 27 gives an opportunity to the af fected persons to satisfy the assessing authorities that the transaction in question is not a sale. This Explanation should be deemed to take in all sales including those men tioned in the Explanation in Section 4(P)(i). In other words, even transactions coming within the ambit of Explana tion to Section 2(P)(i) have to be governed by the Explana tions to Section 27. [214E G] 3. If the Government wants a stricter control over the transactions in the market area it is for them to suitably amend the Explanation in question by excluding its operation from the Explanation to Section 27. [215B]

Appeals Nos. 660 and 811 of 1966. Appeals by special leave from the award dated January 14, 1965 of the Industrial Tribunal, West Bengal in Case No. VIII260 of 1963. H.R. Gokhale, B.P. Maheshwari and N.M. Shetye, for the appellant (in C.A. No. 660 of 1966) and respondent No. 1 (in C.A. No. 811 of 1966). D.L. Sen Gupta, Janardan Sharma and S.K. Nandy, for the appellants in (C.A. No. 811 of 1966) and respondent No. 1 (in C.A. No. 660 of 1966). A. S.R. Chari and D.N. Mukherjee, for respondent No. 2 (in both the appeals). The Judgment of the Court was delivered by Vaidialingam, J. In these two appeals, by special leave, the company and the workmen 's Union attack the award of the Industrial Tribunal, West Bengal, dated January 14, 1965, in so far as it is against each of them. The Government of West Bengal, by its order dated November 5, 1963, referred for adjudication six issues, viz.: "1. Revision of dearness allowance. Revision of the scheme of gratuity. Age of superannuation. Leave and holidays. Canteen facilities; and 6. Shift allowance for supervisors. In both these appeals we are concerned only with issues nos. 1 to 3. With regard to dearness allowance, the Tribunal had directed that it should stand revised from November 1963. It provided a sliding scale for an increase or decrease of Re. 1/ for rise or fall of five points in the cost of living index, with retrospective operation from November 1963. It further directed that the dearness allowance payable for each month from November 1963 shall be recalculated on that basis and additional amounts due to workmen should be paid in two monthly instalments after the date of publication of the award. There was a further direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of living index for three immediately preceding months. Regarding gratuity, the Tribunal effected certain modifications to the then existing scheme of gratuity, under rules 1, 2 and 3. The Tribunal increased the maximum gratuity payable to 15 months 116 salary, but deleted the provision contained in the scheme that the maximum should not exceed Rs. 4,000/ . In rule 2, it further directed the deletion of the qualifying period of 10 years continuous and approved service. It also modified the provisions of r. 3 by providing for payment of gratuity less any financial loss that has been caused to the employer as a result of misconduct which necessitated the termination of service. It further provided that in case of a workman leaving service without notice or terminating his employment without the permission of the company, in order to enable him to get gratuity he should have put in service of ten completed years or more. The Tribunal increased the existing age of superannuation from 55 years to 58 years. The Union, in its appeal C.A. No. 811 of 1966, attacks the award in respect of all the above matters; but so, far as the company 's appeal C.A. No. 660 of 1966 is concerned, though it has challenged the award, again, in respect of all the above matters to the extent to which they are against it, this Court has granted special leave, by its order dated April 28, 1965, only on the question of dearness allowance. Before we proceed to deal with the contentions of the parties regarding the award in question, we can straight away dispose of two applications filed by the company. C.M.P. No. 329 of 1967 has been filed by the company for leave to. urge additional grounds in the appeal. By this application the appellant seeks permission to raise contentions regarding certain modifications effected by the Tribunal in the gratuity scheme. That is, substantially, the company attempts to reopen the limited leave given by this Court on April 28, 1965. The company has also filed C.M.P. 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance. Both these applications are opposed by the Union and we see no reason to grant the requests contained in each of them. These two applications are accordingly dismissed. We shall first take up the question of dearness allowance. While, on the one hand, the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal, the Union, in its appeal, seeks a substantial increase in the dearness allowance granted by the award. We have already indicated the decision of the Tribunal in this regard. Before we actually deal with the contentions of Mr. Gokhale, learned counsel for the company, and Mr. Chari and Mr. Sen Gupta, who followed him, for the Union, it is necessary to refer to certain previous awards, as well as agreements, with reference 117 to dearness allowance. Though there have been certain awards prior to 1954, it is enough if we state the history, beginning from the agreement between the company and the Union, entered into on September 15, 1954. Under clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail, unless there was a substantial change in the working class cost of living index, in which case the rate would be suitably adjusted. There is no controversy that the rate of dearness allowance, which was continued under this agreement, was Rs. 30/ .per month. The issue relating to dearness allowance was referred, by the State of West Bengal, to Shri G. Palit, the Fifth Industrial Tribunal, West Bengal. It is necessary to refer in some detail to the award of Shri Palit, dated August 26, 1957, because the Industrial Tribunal, in the present case, has not chosen to go behind the said award. Shri Palit found that after the agreement of September 15, 1954, there had been a substantial increase in the cost of living index justifying the grant of an increased dearness allowance, as contemplated under cl. 11 of the agreement. According to him, in August 1954 the working class cost of living index stood at 344.1 and in August 1955 it came down to 338.4; it again went up to 391.4 in August 1956. Shri Palit has also stated that in May 1957 the cost of living index reached 400.6 points. Accordingly he has noted that there has been a rise of 56 points, from 344.1 in August 1954 to 400.6 in May 1957 and that the said increase justifies a revision of the original rate of dearness allowance. In considering the quantum of increase in dearness allowance that should be awarded, Shri Palit has again taken note of the fact that at 344 points in September 1954, at the time when the agreement was entered into, the dearness allowance was Rs. 30 per month, and that there is no dearness allowance up to 180 points of the cost of living index. According to him, the dearness allowance of Rs. 30 per month, in September 1954, represented the dearness allowance for the points in excess of 180 points, viz., for 164 points and that this roughly worked out at Re. 1/ dearness allowance for every 51/2 points. On this basis Shri Palit held that to cover 56 points ' rise (400 minus 344), the dearness allowance, which could be legitimately claimed by the Union, would be Rs. 10/ odd, as it in fact appears to have been claimed. But, as normally only 75% neutralisation is granted and in view of the fact that the company, which was a chemical industry, was also in a tight corner, he held that full neutralisation should not be granted. On this reasoning Shri Palit allowed Rs. 7/ as increase in dearness allowance on the pay scale up to Rs. 50/ and increased dearness allowance of Rs. 5/ , thereafter, for the next Rs. 50/in the pay scale. In view of the fact that the company had 118 already allowed an increase of dearness allowance of Rs. 2/ , Shri Palit directed that the increase of dearness allowance, as ordered by him, should be adjusted against the amount already paid by the company. Both the company and the Union appealed to this Court against this award of Shri Palit. The decision of this Court is reported as Bengal Chemical & Pharmaceutical Works Ltd., Calcutta vs Their Workmen(1). Referring to the agreement dated September 15, 1954, this Court. observed that the rate of dearness allowance., continued under that agreement, was accepted by the parties as reasonable on the date of the agreement till there was a substantial change in the working class cost of living index. This Court further stated that the findings given by Shri Palit were on facts and no permissible ground had been shown for interference with it in an appeal by special leave. The award of Shri Palit was confirmed by this Court and the company 's appeal was dismissed with costs. The Union did not press its appeal and that too. was dismissed with costs. On January 6, 1962 there was again a memorandum of settlement between the company and the Union, and under cl. 6 it was provided that the then existing slab of dearness allowance in relation to. the basic pay of the employees would be increased by Rs. 3/ and that the increase was to have effect from November 1, 1961. The Union made a demand, on May 21, 1962, for revision of the dearness allowance, scheme of gratuity and the age of superannuation. It also. presented its demands, on September 3, 1962, to the Assistant Labour Commissioner, West Bengal. With reference to the revision of dearness allowance, the. demand of the Union was that there should be hundred percent neutralisation. As conciliation failed, a reference was made, by the State Government, on November 5, 1963. We have already indicated the nature of the directions given in the award, in respect of dearness allowance. The Tribunal, in the award in question, has, after elaborately referring to the agreement of September 15, 1954 as well as the award of Shri Palit and the settlement dated January 6, 1962, rejected the contention of the company that no, case had been made out for a revision of the dearness allowance. In this connection the: Tribunal referred to. the chart, filed by the Union, regarding the cost of living index during the years 1961 to 1964 and has noted that the correctness of the chart had not been disputed by the company. It is of opinion that in January 1962, when the settlement was arrived at on January 6, 1962, the index number was 402 and, after referring to the index numbers in the various months between 1962 and 1964, it concluded that there (1) [1959] Supp. 2 S.C.R. 136. 119 had been a substantial increase in the cost of living index and hence a revision of the dearness allowance was necessary. The Tribunal no doubt took the view that the financial ability of the company to bear the additional burden, did not come in for consideration because by cl. 10 of the settlement dated January 6, 1962, the company had agreed to. a modification of the dearness allowance if there was a substantial change in the working class cost of living index. Regarding the rate of variation that had to. be fixed, the company appears to have pressed for the acceptance of the principle laid down by this. Court in The Hindustan Times Ltd., New Delhi vs Their Workmen(1) providing for the linking of the dearness allowance with the cost of living index. It also appears to have urged that the provision made in the said decision regarding dearness allowance that it should be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by 10 points should be adopted; that is, the appellant pressed that the variation should be linked to a variation of 10 points. On the other hand, the Union appears to. have pressed for the acceptance of the method adopted by this Court in a case from West Bengal in Workmen of Hindusthan Motors vs Hindusthan Motors(") viz. o.f providing a sliding scale of an increase or decrease of Re. 1/ for a rise or fall of every five points in the cost of living index. The Tribunal has, after holding that it cannot go behind the award of Shri PaIit as the said award had been confirmed by this Court, accepted the Union 's contention that there should be an increase or decrease of dearness allowance by Re. 1/ for an increase or decrease of every 5 points in the cost of living index. It has also held that the cost of living index at the time when the agreement of January 6, 1962 was entered into was 402 and the dearness allowance of Rs. 3/ fixed under the said settlement could be referred only to the said figure of 402. The Tribunal then considered the question as to from what date the revision of dearness allowance should be given effect to. Though the company contended that the award should become operative only from the date when it was given and the Union, on the. other hand, contended that it should be given effect to from the date when the demand for revision was made by it, the Tribunal ultimately held that the increased dearness allowance granted by it should take effect from the month when the reference was made by Government, viz., November 1963. Mr. Gokhale, learned counsel for the company, has urged that the linking of dearness allowance at the rate provided in the [1964] 1 S.C.R. 234. (2) [1962] II L.L.J. 352. 120 award is not justified as it departs from the past practice evidenced by the various awards, as well as the agreements and settlements, entered into by the parties. The Tribunal, counsel urges, has given no special reason to depart from the method adopted on previous occasions According to the learned counsel, the dearness allowance, if any, should have been given on an adhoc or lump sum basis as had been done on prior occasions. Mr. Gokhale also urges that the financial position, or capacity to bear the additional burden, that will be cast on the company by the grant of increased dearness allowance, which has been held by decisions of this Court to be a relevant factor to. be taken into account, has not been considered at all by the Tribunal. In the alternative, counsel urges that even assuming that the method of linking, adopted by the Tribunal, was correct, a very serious mistake has been committed by the Tribunal when it has proceeded on the basis that the increase should be granted on the basis that there has been a rise over the cost of living index of 402. According to Mr. Gokhale, the evidence clearly shows that on the date of the settlement, viz. January 6, 1962, the cost of living index for January 1962 could not have been available and the parties had before them only the cost of living index for the month of November 1961, which was 421 points and it is on that basis that an increase of Rs. 3/ was fixed in the settlement of January 6, 1962. Therefore any dearness allowance that is granted must have reference to a rise of the cost of living index above 421 points. Counsel also attacks the direction regarding effect being given to the award from November 1963. While contesting the appeal of the company, Mr. Chaff, and Mr. Sen Gupta, learned counsel for the Unions concerned, have urged that at no stage has the dearness allowance been fixed, in this ,company, on any scientific basis. According to the learned counsel, the agreement, entered into between the parties, should not be taken as indicative of the fact that complete neutralisation has been effected in the matter of fixing dearness allowance. According to them, Shri Palit has committed a fundamental error in assuming that in the 1954 agreement full neutralisation has been given. Counsel also point out that the extent or degree of neutralisation to be granted is not rigid and that though hundred per cent neutralisation is not normally given, nevertheless in the case of the lowest paid employees such neutralisation is permissible. Counsel also urged that the Tribunal has committed a mistake in not accepting the claim of the Union that the question of dearness allowance will have to be considered entirely on the materials placed before it. without in any manner being influenced by the award of Shri Palit. It is also, pointed out that even the appellant wanted a sliding scale to be attached to the dearness allowance and provision made for the rate of dear 121 ness allowance being liable to be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by every 10 points, as will be seen from the fact that it pressed for the acceptance of the 'principle laid down by this Court in the Hindustan Times Case(1). It is further urged that the Tribunal was justified in granting dearness allowance for an increase over the cost of living index of 402, as that was the price .index in the month of January 1962 when the settlement between the parties was effected. In the appeal, by the Union, regarding dearness allowance, Mr. Sen Gupta, learned counsel, urges that there should have been cent per cent neutralisation in the award of dearness allowance and that there should have been a complete de novo examination of the claim made by the Union for revision of dearness allowance, without being influenced by the award of Shri Palit. In this connection counsel refers to the decision of this Court in Remington Rand of India vs Its Workmen(2) where it has been held that when a rise. in the cost of living index has been established, the claim for a revision of dearness allowance cannot be rejected without examining its merits solely on the ground that because a provision has been made for adjustment from time to time, by agreement of parties in a scheme, that scheme ought to remain in force for all time and cannot be reopened or re examined. Counsel further urges that in any event, the Tribunal should have given effect to its award from May 1962, when the Union had made the. demand for revision of dearness allowance. Before we deal with the contentions of the learned counsel, it will be desirable to refer to a few decisions of this Court laying down the principles that have to be borne in mind when a claim for dearness allowance or revision of dearness allowance is considered. In Clerks of Calcutta Tramways vs Calcutta Tramways Co. Ltd.(3) it is observed: " 'We can now take it as settled that in matters of the grant of dearness allowance except to the very lowest class of manual labourers whose income is just sufficient to keep body and soul together, it is impolitic and unwise to neutralise the entire rise in the cost of living by dearness allowance. More so in the case of the middle classes. " (1) [1964] 1 S.C.R. 234. (2) [1962] 1 L.L.J. 287. (3) ; , 779. C.I./69 9 122 In the Hindustan Times Case(1) it is stated at p. 247: "As was pointed out in Workmen of Hindusthan Motors vs Hindusthan Motors (2), the whole purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on rise in the cost of living and a decrease on a fall in the cost of living." In Greaves Cotton & Co. vs Their Workmen(a), after referring to the Hindusthan Motors Case(2) and French Motor Car Co. 's Case(4), this Court laid down that the basis of fixation of wages and dearness allowance is industry cum region and observed, at p. 368: "The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind. But where the number of industries of the same kind in a particular region iS small it is the region part of the industry cum region formula which assumes importance particularly in the case of clerical and subordinate staff, for, as pointed out in the French Motor Car Co 's Case(4), there is not much difference in the work of this class of employees in different industries. ' ' Again, at p. 374, it is stated: "Time has now come when employees getting same wages should get the same dearness allowance irrespective of whether they are working as clerks, or members of subordinate staff or factory workmen. " In Ahmedabad Mill owners Association vs The Textile Labour Association(5) it has been emphasised that in trying to recognize and give effect to the demand for a fair wage, including the payment of dearness allowance to provide for adequate neutralisation, industrial adjudication must always take into account the problem of the additional burden which such wage structure would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden. (1) [1964] 1 S.C.R. 234. (2) [1962] II L.L.J. 352. (3) ; (4) [1963] Supp. (5) [1966] I S.C.R. 382. 123 In Kamani Metals & Alloys Ltd. vs 'Their Workmen(1) it has been noted that one hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance is often a little less than one hundred per cent neutralisation. The following principles broadly emerge from the above decisions: 1. Full neutralisation .is not normally given, except to the very lowest class of employees. The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living. The basis of fixation of wages and dearness allowance is industry cum region. ' 4. Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workman. The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account. Having due regard to the above principles, we are satisfied, in the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance. We are not impressed with the contention of either the company or the Union that the Tribunal has committed an error in the matter of revising the dearness allowance. The company appears to have been more intent upon pressing that there has been no substantial increase in the cost of living since the settlement, dated January 6, 1962 and that, m any event, the Union, n view of cl. 10 of the settlement, was not entitled to ask for a division of dearness allowance before the expiry of three years. The Tribunal has referred to the rise in the cost of living index after the date of the settlement of January 6, 1962, and it has also, in our opinion, quite rightly held that cl. 10 of the settlement is no bar for entertaining the claim; therefore, its decision hat a revision of the dearness allowance should be made iS perfectly correct. (1) ; 124 The Tribunal is also. justified in rejecting the contention of the Union that the revision of the dearness allowance must be made de novo, ignoring the previous award of Shri Palit. Though, normally, when a claim for revision of dearness allowance is made and a rise in the cost of living index has been established, such a claim has to be considered on its merits, as held by this Court in the Remington Rand Case(1), it cannot be lost sight of, in this case, that the decision of Shri Palit was affirmed by this Court and the appeals, filed by the company and the Union, were dismissed on the ground that the agreement of 1954 was reasonable ,and the findings of Shri Palit were all on facts. In view of this, the Tribunal, in our view, was perfectly justified in proceeding on the basis that the award of Shri Palit should form the basis for considering the nature of the revision of dearness allowance that would be permissible. We have already referred to the various matters, adverted to by Shri Palit in his award. If really the case of the Union was, as is now sought to be put before us, that the dearness allowance on prior occasions had not been fixed on any scientific basis and that Shri Palit erred in proceeding on such an assumption with reference to previous agreements, the proper stage when these questions should have been canvassed was in the Union 's appeal, before this Court, against the award of Shri Palit. Having allowed that appeal to be dismissed as not pressed, it is no longer open to the Union to raise those contentions now. We are therefore satisfied that the Tribunal 's view that Shri Palit 's award should form the basis for further reconsideration of the claim for revision of dearness allowance is correct. The Tribunal has no doubt stated that the financial ability of the company does not come in for consideration, as the company agreed, by the settlement of January 6, 1962, to pay increased dearness allowance if there was a substantial change in the cost of living index. It is true that the additional financial burden that will be thrown on the company by reason of the revision of dearness allowance is a very material and relevant factor to be taken into account in such circumstances; but, in this case, we do. not find in the written statement, filed by the company, am plea taken that if the claim of the Union, as made in its charte of demands in respect of dearness allowance is accepted, it will cast a very. heavy financial burden on the resources. of the corn pany. In the absence of any such plea having been taken, w consider it unnecessary to pursue this contention of the appellan any further. There is the additional circumstance of the provision for modification, as contained in the settlement of January 1962 (1) [1962] II.L.J. 287. 125 The appellant, so far as we can see, has not placed any material before the Tribunal regarding the comparable industries in the region. As pointed out by the Union, the company seems to have pressed for the grant of dearness allowance being liable to be increased or decreased by Re. 1/ , as was done by this. Court in the Hindusthan Times Case ( 1 ). The Union appears to have pressed for an increase or decrease of Re. 1/ in dearness allowance with a rise or fall of every 5 points in the cost of living index. It is therefore obvious that the appellant also wanted linking of Re. 1/ for every 10 points. It must also be borne in mind that the alternative way, propounded by the Union, for grant of dearness 'allowance has been rejected by the Tribunal. Under these circumstances, it cannot be stated that the Tribunal has committed any error in accepting the claim of the Union, supported as it was by the decision of this Court in the Hindusthan Motors Case(2). Mr. Gokhale next urged that the view of the Tribunal that the increase of Rs. 3/ as. dearness allowance, given in the settlement dated January 6, 1962, must have been on the basis that the index number was 402, was erroneous. The settlement was made on January 6, 1962, on which date the index number for January 1962 could not have been available to the parties. The last month for which the index number was available was for the month of November 1961 and it was 421. The index number at the time when the award was given by Shri Palit was about 400 and it was really for an increase of 21 points that Rs. 3/ as increment was provided in the settlement. Though when the Tribunal gave the present award the index number for January 1962 was already available, that figure could not have formed the basis of the settlement, and it is inconceivable that for a rise of only 2 points, i.e., from 400 in 1957 to 402 in 1962, a rise of Rs. 3/ in the dearness allowance would have been provided for. Therefore the increase or decrease provided for by the Tribunal must really relate to the cost of living index of 421 points, and not to 402 points. Mr. Sen Gupta, learned counsel for the Union, found considerable difficulty in supporting that reasoning in the award on this matter. We are in agreement with the contentions of Mr. Gokhale in this regard. Chart, Exhibit 4, furnished by the Union, clearly shows that the index number in November 1961 was 421 points. It also shows that the index for January 1962 was 402 points, but the index for that month was not available till the end of January 1962 and it could not have been before the parties when the settlement was made on January 6, 1962. Therefore, the index number of 421 must have been taken into (1) [1964] I S.C.R. 234. (2) [1962] II I.L.J. 352. 126 account on the date of the settlement and it must have been really for the increase of 21 points, after the date of Shri Palit 'section award, that the additional sum of Rs. 3/ was fixed as dearness allowance. If on the other hand, the Tribunal 's view is correct, there would have been only an 'increase of 2 points, from 400 to 402, and for that increase of 2 points, the sum, of Rs. 3/ was fixed, as dearness allowance. In our opinion, that reasoning of the Tribunal cannot be accepted. Therefore the award of the Tribunal will have to be modified, in this regard, by directing that the sliding scale providing for an increase or decrease of Re. l/for a rise or fall of every 5 points, must be related to the cost of living index of the base of 421 (that being the cost of living index for November 1961 ) and not of the base of 402, as. directed by the Tribunal. The last contention of Mr. Gokhale, bearing upon dearness allowance, is that the direction that the award will have retrospective effect from November 1963 is erroneous. In this connection: Mr. Gokhale referred us to el. 10 of the settlement of January 6, 1962 stating that the settlement was to remain operative for three years. According to learned counsel, any rise in dearness allowance should have effect only after the expiry of three years from January 6, 1962, or, at any rate, from the expiry of three years from November 1, 1961, the date on which the increase in the settlement had been given effect to. Mr. Sen Gupta, in the Unions appeal, pressed for the award being given effect to from May 1962 when the Union had made a demand on the company for revision of dearness allowance, especially when the Tribunal had itself found that there had been a substantial rise in the price index after the date of the settlemeat. It will be seen that both the parties have a grievance regarding the date from which the revision of dearness allowance should be given effect to, We are not impressed with the contentions of both the parties, in this regard. The Tribunal has taken note of the rise in the cost of living index, as well as the demand having been made by the workmen, as early as May 21,. It has also adverted to the fact that the reference, by the State Government, was made on November 5, 1963. It has further adverted to. the fact that though ' the cost of living index had increased considerably, the company did not choose to adjust the dearness allowance suitably. It was, after having regard to all the circumstances that the Tribunal felt that the workmen should get dearness allowance commensurate with the cost of living index, at least from the month of reference, viz., November 1963. As laid down by this Court in the Hindusthan Times Case(1), no general formula can be laid down as to the date from which a (1) [1964] 1 S.C.R. 234. 127 Tribunal should make its award effective and that that question has to be decided by the Tribunal On a consideration of the circumstances of each case. In the said decision this Court declined to interfere with the Tribunal 's direction that reliefs given by it would become effective from the date of reference. In Kamani Metals Ltd. Case(1) the workmen had made demands on July 1, 1961. The Conciliation Board was moved on September 8, 1962 and, when conciliation failed, a reference was made on December 14, 1962. The Tribunal made an award, retrospective from October 1, 1962, a date between the reference to conciliation and the reference to the Tribunal. That decision of the Tribunal was accepted by this Court. Recently, in Hydro (Engineers) Pvt. Ltd. vs The Workmen(2) this Court declined to interfere with the direction given by a Tribunal that its award should take effect from the date of demand made by the workmen. It has also been pointed out, in the said decision, that it is a matter of discretion for the Tribunal to decide, from the circumstances of each case, from which date its award should come into operation, and no general rule can be laid down as to the date from ' which a Tribunal should bring its award into force. Therefore it will be seen that when a Tribunal gives a direction regarding the date from which it has to become effective, no question of principle, as such, is involved. From the above decisions of this Court, it will also be seen that this Court has declined to interfere with an award having effect from either the date of demand, or the date. of reference, or even a date earlier than the date of reference but after the date of demand. In fact, the direction given by the Tribunal, in the case before us, giving effect to its award from the date of reference, squarely comes within the decision of this Court in the Hindusthan Times Case(3) and, as such, that direction is correct. To conclude, on this aspect of dearness allowance, excepting for the direction that the rate of increase or decrease awarded by the Tribunal should be related to the cost of living index of 421 and not 402 (as directed by the Tribunal), in all other respects the decision of the Tribunal on this point will stand. This closes ' the discussion on the appeal of the company and the appeal of the Union, in so far as they relate to dearness allowance. There are two further points, taken by the Union, in its appeal, one relating to the modifications effected to the gratuity scheme, and the other relating to the age of superannuation. The provisions in the gratuity scheme, which came up for consideration before the Tribunal, were as follows: (1) ; (2) [1969] 1 S C.R. 156. (3) [1964] 1 S.C.R. 234. 128 "1. On the death of an employee while in the service of the company, one month 's salary for each completed year of service subject to a maximum of 12 months salary not exceeding Rs. 4,000 on the average of the last three years salary to be paid to his heirs or dependants as the Board may in their discretion decide. On voluntary retirement due to illness or termination of service by the company after 10 years continuous and approved service one month 's pay for each year of service subject to a maximum of 12 months pay not exceeding Rs. 4,000. No employee shall be entitled to claim any gratuity if he is dismissed for dishonesty or misconduct or if he will have left service without notice or terminated his employment without the permission of the Company. " The Tribunal has effected certain modifications. to r. 3 which, in our opinion, are quite consistent with the decision of this Court in Management of Wenger & Co. vs Workmen(1). Therefore the Union cannot have any grievance regarding the Tribunal 's directions, in this 'regard. So far as rr. 1 and 2 are concerned, the Tribunal modified them by increasing the ceiling from 12 months ' salary to 15 months ' salary and deleted the pecuniary limit of Rs. 4,000. In r. 2, the Tribunal further directed the deletion of 10 years ' continuous and approved service, to enable a workman to get gratuity in the circumstances mentioned therein. Mr. Sen Gupta, learned counsel for the Union, urged that the Tribunal committed an error in prescribing the ceiling of 15 months ' basic wages and that the Tribunal should have modified r. 1 by providing that the average last one year 's salary should be taken into account for the purpose of calculating gratuity, instead of the three years ' period provided in the rule. Mr. Gokhale, learned counsel for the company, pointed out that his client has been prejudiced by the modifications effected by the Tribunal, but the company had now been precluded from raising these objections because of the limited leave given by this Court. Nevertheless, the counsel pointed out, inasmuch as the Tribunal was increasing the ceiling from 12 months to. 15 months and deleting the further pecuniary limit of Rs. 4,000/ , as well as the qualifying period to enable a worker to earn gratuity, the Tribunal must have felt that no further modifications were necessary. In our opinion no case has been made out by the Union for interfering with the directions given by the Tribunal and we are also satisfied that there has been no improper exercise of discretion by the Tribunal in this regard. It has effected certain modifications in favour of the (1) [1953] supp. 2 S.C.R. 862. 129 workmen and obviously it did not think it necessary to make any further .modifications as pressed by the Union. Therefore, the objections to the: modifications, raised on behalf of the Union have to be rejected. The last point that has been agitated by the Union, in its appeal, is regarding the age of. superannuation. The provision regarding age of superannuation, as obtaining then in the company, was as follows : "The age of retirement as mentioned in the Company 's Standing Orders under r. 9 will henceforth be strictly followed in case of all employees. The employees. henceforth shall retire at the age of 55. Extension, if any, will depend on Company 's discretion. " The Tribunal increased the age of superannuation to 58 years from 55 years. It has relied upon two circumstances in coming to this conclusion: (a) that this Court has raised the age of retirement from 55 to 58 years in Jessop 's Case(1) which was a case from West Bengal, with regard to clerical and subordinate staff, other than those who. were workers under the Factories Act. The appellant 's industry, which is of a different nature, being a chemical and pharmaceutical industry, all the workmen of such a company factory workers or non factory workers should have the same age of superannuation. (b) The fixation of the age of retirement for its employees, by the Government of West Bengal, at 58 years. Mr. Sen Gupta urged that the age of superannuation should have been raised to 60 years. It is not necessary to refer to the earlier decisions of this Court, on this point. Recently, in The Management of Messrs. Burmah Shell Oil Storage and Distributing Co. Ltd. vs Its Workmen(2), this Court, after a review of the prior decisions, held that in fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular area. Applying this test, we are satisfied that the Tribunal 's fixing of the age of retirement at 58 years is justified. As already noted, it has relied upon Jessop 's Case(1) which related to West Bengal and the age of retirement fixed by the State Government. Therefore the Tribunal has taken note of the trend in the particular area, viz., West Bengal, when it increased the age of superannuation from 55 to 58 years. Therefore the Union 's claim that it should be further increased to 60 years cannot be sustained. (1) [1964] I L.L.J. 451. (2) Civil Appeal No. 44 of 1968, decided on May 1, 1968. 130 In the result, excepting for the modification indicated by us with regard to the cost of living index in respect of dearness allowance, in all other respects we confirm the award. The appeal, by the company, is therefore partly allowed to the extent of the modification noted above. The appeal of the Union is dismissed. Parties will bear their own costs. G.C. C.A. No. 660/66 partly allowed. No. 811 / 66 dismissed.

The appellant who was a dealer in textiles in Bombay entered into an agreement with a registered cooperative society for weaving yarn supplied by him into cotton fabrics on powerlooms owned by its members. The Society had obtained L 4 licence as required by the . Under Rule 8 of the Rules made under the Act. the Central Government was empowered to exempt any excisable goods from the whole or any part of duty payable on such goods. In exercise of the power under Rule 8, the Central Government by a notification dated July 31, 1959 ' granted exemption to "cotton fabrics produced by any Cooperative Society/formed of owners of cotton powerlooms which is .registered or which may be registered on or before March 31, 1961" subject to certain conditions set out in the notification. A subsequent notification dated April 30, 1960 granted exemption to "cotton fabrics produced on powerlooms owned by any Cooperative Society or owned by or allotted to the members of the Society which is registered on or before March 31, 1961". On the strength of these notifications the appellant sought exemption from excise duty in respect of ' the cotton fabrics which were manufactured for it on powerlooms by the Cooperative Society. The excise authorities did not accept the claim for exemption and in a writ petition filed by the appellant, the High Court gave only partial relief. In appeal before this Court the question was whether the exemption granted under the; notifications in question could be claimed only when the cotton fabrics were manufactured by a Cooperative Society 'for itself. HELD: On a true construction of the language of the notifications dated July 31, 1959 and April 30, 1960, it is clear that all that is required for claiming exemption is that the cotton fabrics must be produced on powerlooms owned by the Cooperative Society. There is no further requirement under the two notifications that the cotton fabrics must be produced by the cooperative society on powerlooms "for itself '. The appellant was therefore entitled to the exemption claimed. [259 D E] It is well established that in a taxing statute there is no room for any intendment but regard must be had to the dear meaning of words. A statutory notification may not be extended so as to meet a casus omissus. It could be that the object behind the two notifications in question was to encourage the actual manufacturers of handloom cloth to switch over, to powerlooms by constituting themselves into Cooperative Societies. But, the. operation of the notifications had to be judged not by the object which 254 the rule, making authority had in mind but by the words which it had employed to effectuate the legislative intent. Applying this principle, the case of the appellant was covered by the language of the: two notifications and the appellant was entitled to exemption from excise duty for the cotton fabrics. [259 E; 260 A D)] Salomon vs Salomon & Co. ; , 38 and Crawford vs Spooner, , referred to.

ition Nos. 829/79, 1104, 200 2655 of 1980. (Under article 32 of the Constitution of India). G. N. Dikshit, section Markendeya, P. Sinha, M. M. Temai, J. K Nayyar and section K Bisaria with him for the Petitioners. section R Gambhir for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The petitioners are nomad graziers of Gujarat and Rajasthan, who wander from place to place with their sheep, goats and cattle in search of pasture and foliage. Boundaries of States present no barriers to them. After all, to them and to their livestock, it is a question of survival. In their wanderings they often pass through the State of Madhya Pradesh en route some times to Uttar Pradesh and some times to Maharashtra. This happens particularly in times of drought in Gujarat and Rajasthan The powers that be in the State of Madhya Pradesh became apprehensive that uninhibited passage of large herds of these animals through Madhya Pradesh may lead to large scale devastation of their forest wealth. So they hit upon a plan to prevent foreign cattle ' from browsing in Madhya Pradesh forests. For the moment, it was forgotten that India is one country and no Indian is a foreigner in any of the constituent States of India. The plan was this: The enabled the State Government to make rules to regulate the cutting of grass and pasturing of cattle in protected forests (Sec. 32(i) and, generally, to carry out the provisions of the Act (Sec. 76). We may note here 'cattle ' as defined by section 2(i) includes buffaloes, sheep, goats and many other specie of browsing animals. We may also note that we are concerned in this case with protected forests only and not reserved forests. Rules had been made earlier by the Madhya Pradesh Government in 1974 called the Madhya 126 Pradesh Grazing Rates Rules, 1974 by which provision was made A for grazing licences, transit grazing licences, grazing rates and other subjects. Rule 4 prohibited grazing in closed coupes, plantation area and such other areas as were declared as closed for grazing by the Divisional Forest officer. Rule 3 provided for the issuance of licences for grazing in particular grazing units, each forest range being treated as a grazing unit till the constitution of such grazing units. Rule S provided for the issuance of transit licences for transit of cattle through Government forests in the State of Madhya Pradesh, so that cattle in transit may not graze continuously for more than a month in a particular grazing unit. Rule 6 prescribed grazing rates, commercial and transit. For buffaloes it was Rs. 6 per head per year while for goats and sheep, it was Re. 1 per head per year whether it was for commercial or transit purposes. Rule 7 prescribed grazing rates for 'foreign cattle of adjoining States '. Whether the cattle grazed in the forest or passed through the forest, Grazing was permitted at the rate of Rs. 10 per head per year in the case of buffaloes and Rs. 2 per head per year in the case of goats and sheep. In 1979, the rules made in 1974 were superseded and fresh rules were made. They are the rules now in force. Rule 2(5) bans grazing in reserved forests. Rule 3 provides for the issue of grazing licences in grazing units so constituted. Until grazing units are constituted, each forest range is to be treated as a separate grazing unit. Rule 3(2) provides for the levy of grazing charges at rates to be notified from time to time. Rule 4 prohibits grazing in closed coupes, plantation areas and other areas which are declared as closed for grazing by the Divisional Forest officer. Rule 5 provides for transit grazing licences, on payment of grazing charges, for the transit of cattle through Government forests where the owners of the cattle are residents of Madhya Pradesh. Cattle in transit, however, are not allowed to graze continuously in the same grazing unit for more than 30 days. Rule 6 enables the Government to notify from time to time the rates of grazing charges and transit grazing charges payable by residents of Madhya Pradesh. Rule 7 provides for the levy of grazing rates for 'foreign cattle of adjoining States '. The rule enables the State Government to prohibit, restrict, or in their discretion to grant owners of cattle residing outside the State of Madhya Pradesh grazing or transit grazing facilities for their cattle on payment of charges to be notified from time to time. Rule 7(2) further empowers the Government to specify the specific grazing areas, the points of entry and exit of the route to be followed by the cattle, 127 the period during which grazing or transit grazing should be completed, etc. On June 28, 1979, two notifications one, under rule 6 and the other, under rule 7 were issued notifying the rates of charges for the issue of grazing and transit grazing licences. In respect of cattle belonging to residents of Madhya Pradesh, the grazing rate is Re. 1 per year for each animal in the case of goats and sheep. Nothing is to be charged in the case of buffaloes. The notification issued under rule 7 prescribes the routes to be followed by the cattle of Rajasthan and Gujarat while in transit through the State of Madhya Pradesh. It also stipulates that the owners of cattle must take the cattle through the State of Madhya Pradesh within a period of 45 days after the issue of licences. The prescribed grazing rates are Rs. 10 per animal in the case of buffaloes and Rs. 5 per animal in the case of sheep and goats. Apparently the Government of Madhya Pradesh wants to inhibit the influx of cattle of other States (described in the rules as 'foreign cattle ') by the method of charging higher grazing rates in their case than in the case of cattle belonging to the residents of Madhya Pradesh, This levy of higher rates, the prescription of the route to be followed by foreign cattle while in transit through Madhya Pradesh and the stipulation that the cattle must leave Madhya Pradesh in 45 days are questioned in these writ petitions. It is contended that the petitioner 's Fundamental Rights under article 14 and article 19 (e) (f ) and (g) and the right under article 301 are contravened. On the other hand, it is contended on behalf of State of Madhya Pradesh that the rules prescribing grazing rates for 'foreign cattle; the route to be followed by 'foreign cattle ' while in transit through Madhya Pradesh and the period for which 'foreign cattle ' may remain within the boundaries of the State of Madhya Pradesh are made to regulate the influx and passage of 'foreign cattle ' into and through Madhya Pradesh with a view to prevent devastation and to protect the forest wealth of State. We are unable to see any rational basis for the distinction made between owners of cattle belonging to Madhya Pradesh and owners of cattle belonging to other States (described as owners of 'foreign cattle ') and the levy of prohibited grazing rates on owners of the so called 'foreign cattle '. Forests of Madhya Pradesh are not grazing grounds reserved for cattle belonging to residents of Madhya Pradesh only even as the towns and villages of Madhya Pradesh cannot be reserved for the residents of the original residents 128 of Madhya Pradesh only. Accidents of birth and geography cannot A furnish the credentials for such discrimination and authorise prejudicial treatment in matters of this nature. We do not say that geographical classification is never permissible. For example, a preference given by a State to its residents ill the matter of admission to educational institutions maintained by the State from its revenues may be well justified. But we are unable to see any such justification for the levy of virtually penal grazing charges in the case of owners of cattle belonging to other States. The only attempt at justification is that the influx of 'foreign cattle ' is resulting in the destruction of the forest wealth of the State. It is difficult to understand this justification. If cattle belonging to residents of Madhya Pradesh are allowed to graze, will it not lead to the same damage as by the cattle belonging to persons of other States ? Surely, it cannot be that the Madhya Pradesh cattle are less destructive than the cattle belonging to persons of other States. Further if the object was to prevent all cattle from grazing in protected forests, such grazing could have been banned as in the case of reserved forests. Even in the case of the so called foreign cattle, cattle belonging to owners who are rich, may yet have their cattle graze in the Madhya Pradesh forests but not cattle belonging to poorer graziers. Further, subject to reasonable restrictions which may be imposed in the interests of the general public, a citizen has the right under our Constitution to move freely throughout the territory of India, to reside and settle in any part of the territory of India and to practise any profession, or to carry on any occupation trade or business. Graziers, be they of Madhya Pradesh, Gujarat or Rajashthan, therefore, have the right to pass and repass through the State of Madhya Pradesh with their cattle in the pursuit of their occupation. The right is, of course, subject to reasonable restrictions in the interests of the general public. We are enable to discover any reasonable basis for classifying graziers into those belonging to Madhya Pradesh and those belonging to other States; nor are we able to discover any acceptable reason behind the restriction imposed on graziers of other States by the heavier charge made on them. We are convinced that their is no justification whatsoever for charging higher grazing rates for cattle belonging to persons of other States. In regard to the prescription of the route along which the cattle have to be taken while in transit, however we find nothing wrong with it, since the object is obviously to prevent cattle straying and causing indiscriminate damage to forests. We are, however, unable to justify the ceiling of 45 days in which cattle must pass through the State of Madhya Pradesh. In the case of 129 cattle belonging to residents of Madhya Pradesh, the grazing rate is levied for a period of one year. There is no reason why the charge A should be levied for 45 days in the case of persons belonging to other States. The apprehension that cattle, if allowed to graze in the same place for a long time, may destroy the pasture and foliage altogether is taken care of by the other rules which prescribe that the cattle may not graze in the same grazing unit for more than a month. In the circumstances, we quash the levy of higher grazing rates in the case of cattle belonging to persons of States other than Madhya Pradesh and direct the respondents to levy the same rates as they do in the case of cattle belonging to residents of Madhya Pradesh. The limit of stay of 45 days is also declared unconstitutional. The writ petitions are allowed accordingly. The petitioners will get their costs.

The appellant tenant was inducted into the suit premises as for back as 1945. The respondent landlord applied under section 19 (1) (a) of the Slum Areas Improvement and Clearance) Act 1956 before the Competent Authority for permitting him to institute a suit for eviction of the appellant but that application was dismissed, and the order was confirmed in appeal by the Financial Commissioner. Thereafter the respondent field a suit for eviction in April 1979 under section 14 (1) (e) read with section 25B of the Delhi Rent Control Act 1958. The tenant applied for leave to defend the suit but the same was rejected and an order of eviction was passed. A revision filed by the tenant in the High Court was dismissed. In the appeal to this Court as well as in the connected Special Leave Petition it was contended that: (1) under section 19 (1) (a) of the Slum Act it is incumbent on the landlord to obtain permission from the Competent Authority before institution of a suit for evicting a tenant and without such permission the suit was no maintainable, and (2) sections 25A and 25B were ultra vires of Article 14 of the Constitution and were inconsistent with the Slum Act which was an existing statute and, therefore, the procedure substituted under Chapter IIIA, particularly sections 25A and 25B should be invalidated. Dismissing the Appeal and Special Leave Petition: 615 ^ HELD: A.(1) The High Court was correct in rejecting the applications of the tenants for setting aside the order of eviction. [624F]] B.(1) Sections 14A, 25A, 25B and 25C of the Rent Act are special provisions so far as the landlord and tenant are concerned and in view of the non obstante clause these provisions override the existing law so far as the new procedure is concerned; [624A] (2) There is no difference either on principle or in law between sections 14 (1)(e) and 14A of the Rent Act even though these two provisions relate to eviction of tenants under different situations; [624B] (3) The procedure incorporated in Chapter IIIA of the Amending Act into the Rent Act is in public interest and is not violative of Article 14 of the Constitution; [624C] (4) In view of the procedure in Chapter IIIA of the Rent Act, the Slum Act is rendered inapplicable to the extent of inconsistency and it is not, therefore, necessary for the landlord to obtain permission of the Competent Authority under section 19 (1)(a) of the Slum Act before instituting a suit for eviction and coming within s.14 (1)(e) or 14A of the Rent Act. [624D E] C.(1) The dominant object of the Amending Act of 1976 was to provide a speedy, expeditions and effect remedy for a class of landlords contemplated by sections 14(1)(e) and 14A and for avoiding unusual dilatory process provided otherwise by the Rent Act. Suits for eviction under the Act take a long time commencing with the Rent Controller and ending up with the Supreme Court. In many cases by the time the eviction decree became final several years elapsed and either the landlord died or the necessity which provided the cause of action disappeared. It was this mischief which the legislature intended to avoid by incorporating the new procedure in Chapter IIIA. It cannot therefore be said that the classification of such landlords would be an unreasonable one because such a classification has got a clear nexus with the objects of the Amending Act of 1976 and the purposes which it seeks to subserve. [619D F; G] (2) The new sections 14A, 25A, 25B and 25C had been introduced for the purpose of meeting a particular contingency as spelt out in the object and reasons behind the new provisions. Once it is recognised that the newly added sections are in the nature of a special law intended to apply to special classes of landlords, the inevitable conclusion would be that the application of the Slum Act stands withdrawn to that extent and any suit falling within the scope of sections 14(1)(e) and 14A would not be governed or controlled by section 19 (1) (a) of the Slum Act. [621CD ] 616 (3) It is open to the legislature to pick out one class of the landlords out of several covered by section 14(1)(e) of the Rent Act so long as they formed a class by themselves and the legislature was free to provide the benefit of the special procedure to them in the matter of eviction of their tenants as long as the legislation had an object to achieve and the special, procedure had a reasonable nexus with such object to be secured. [621F G] (4) The new provision in the Amending Act were intended to have overriding effect and all procedural laws were to give way to the new procedure. [623D] Kewal Singh vs Lajwanti ; ; Sarwan Singh & Anr. vs Kasturi Lal ; ; Vinod Kumar Chowdhry vs Narain Devi Taneja ; referred to. Krishna Devi Nigam & Ors. vs Shyam Babu Gupta & Ors. approved.

ivil Appeal No. 469 of 1975. From the Order dated 31.5.1974 of the Government of India, Ministry of Finance, Department of Revenue and Insur ance, New Delhi, in Order No. 615 of 1974 on Central Excise Revision Application. Dr. Y.S. Chitale, Ms. M. Ray and H.K. Dutt for the Appel lant. V.C. Mahajan, (N.P.), P. Parmeshwaran and R.P. Srivasta va for the Respondents. K .R. Nambiar for the Intervener. 372 The Order of the Court was delivered by RANGANATHAN J. The appellant assessee manufactures goods known in the market as cushion repair compound, tread repair compound and cover. compound. These materials, ac cording to the assessee, are used to mend injured and defec tive sections of tyres and are not meant to be used either in the resoling or in retreading of tyres. Under the Cen tral Excise & Salt Act, 1944, ( 'the Act '), the above goods were normally dutiable under tariff item No. 15A (2). Howev er, the assessee claimed exemption from duty under notifica tion No. 71 of 1968 dated 1.4.1968. By this notification under section 8 of the Act, the Central Government exempted "all rubber products, in the form of plates, sheets and strips unhardened, whether vulcanised or not, and whether combined with any textile material or otherwise (other than the products which are made either wholly or partly of rubber and which are used for the resoling or retreading of tyres, including the products commonly known as tread rub ber, camel back, cushion compound, cushion gum, tread gum and tread packing strips) falling under sub item (2) of this item, from the whole of the duty of excise leviable thereon". The Superintendant of Central Excise having re jected the claim for exemption and charged the goods in question to duty at 20% (basic) under the tariff item above mentioned, the assessee preferred an appeal to the Collector of Central Excise, West Bengal. The Collector also rejected the claim observing that there was no evidence that the goods in question could not be used for the resoling or retreading of tyres. The assessee thereupon preferred a revision to the Central Government under section 36 of the Act as it then stood. In the revision petition, it was pointed out that tread repair compound and cushion repair compound were primarily meant for and also used as repair material only with reference to the treads and cushions of tyres and that since they were designed to serve the limited purpose of mending small sections of tyres it would be grossly erroneous to hold that these repair materials could be used in place of tread rubber or camel back which only have the necessary physical dimensions and technical proper ties to serve as retreading and resoling material. Similarly cover compound, it was said, was material which was used only for repairing conveyor belting and was also marketed by the assessee solely for the purpose of repairing damaged sections of the conveyor belting. It was not meant for use in retreading and resoling of tyres since their sole intend ed use was to repair conveyor belts. The Central Government, however, dismissed the revision petition by its order dated 21.5.1974. The Government referred to the fact that the 373 notification of exemption specifically excluded cushion compound, cushion gum and tread gum and observed that, in view of this, cushion repair compound and tread repair compound would also be assessable to duty under item No. 16A. So far as cover compound was concerned, it was observed that its composition was such that its use for repair of conveyor belts was indistinguishable from the other use of resoling of tyres. The present appeal has been preferred from the order of the Central Government. On behalf of the appellant it is pointed out that the whole purpose of the exemption notification was to exclude products which were used for the resoling and retreading of tyres. The Government has overlooked that while tread rub ber, cushion compound and tread gum are all items used for resoling or retreading of tyres, that was not the use to which the articles manufactured by the assessee were put. The statement of the assessee that the goods manufactured by it were employed only for repairing tyres and conveyor belts has not been disbelieved. It is therefore submitted that the Government erred in holding that the goods produced by the assessee are not eligible for the exemption in question. In support of his contention, learned counsel for the appellant relied on two important circumstances. One is that by a notification No. 27 of 1973 dated 1.3.1973, notifica tion No. 71 of 1968 was amended and the words "used for resoling, retreading or repairing of tyres" was substituted for the words "used for the resoling or retread~ ing of tyres". This amendment was not effective for the period with which we are concerned and it is therefore argued that the compounds used for repairing as against resoling or retread ing will not be covered by the exclusion in the exemption notification. The second circumstances relied upon by the learned counsel for the appellant is this. Earlier, there was a notification No. 31 of 1964 under which the duty leviable in respect of latex foam sponge as well as products commonly known as tread rubber or camel back including cushion compound, cushion gum, tread gum, and tread packing strips were subjected to a concessional rate of duty while other rubber products falling under item 16A were granted an exemption from the levy of duty. In the context of that notification, a question arose as to whether rubber products which are capable of being used for retreading or resoling of tyres but are only used for repairs would attract duty or not. The position was clarified by the Central Board of Excise and Customs in its circular No. Rubber 1/66 dated 7.2.1966. The relevant part of the circular reads as fol lows: 374 "2. Those rubber products which are not 'latex foam sponge ' may be excisable under the said tariff item No. 16A but would not attract Central Excise duty unless commonly known as per description given in Column 2 against section No. 2 of the table to the above cited notifi cation. While the scope of the levy on the rubber products thus gets very much restrict ed, it may so happen that different brand names are given by different manufactures to the same or similar product giving rise to the question whether or not a particular product can be deemed to be commonly known as 'tread rubber ', 'camel back ', 'cushion compound ', 'cushion gum ' etc., so as to attract duty. Doubts of the above nature should not in fact arise in view of para 6 to the 1962 Budget instructions. It was made quite explic it therein that 'item is . fairly comprehen sive as to wording but the intention . is to subject only 'latex foam sponge ' and the rubber products popularly known as 'tread rubber ' or camel back ' used for the resoling or retreading of tyres to duty. That being the intention a rubber product which is neither 'latex foam sponge ' nor used for the resoling or retreading of tyres is classifiable as 'all other products ' and therefore exempt from whole of the duty leviable thereon under section No. 3 of the Table to the above cited notifi cation. It is possible that some of the rubber products are capable of being used for re treading or resoling of tyres. Mere capacity does not, however, attract duty in the absence of normal usage in that manner being estab lished it would not be appropriate to hold that the products are dutiable. Rubber products used for repair of tubes or tyres also, in view of what has been stated above, does not attract duty. Pending cases regarding assessment of rubber products may be finalised accordingly". Learned counsel submits that the above interpretation is equally applicable in the context of notification No. 71 of 1968. 375 We are of opinion that the appellant 's contention is well founded. The notification of 1978 only reproduces with some modifications the notification of 1964; however, the broad purport of both the notifications is to exempt rubber products other than those which are commonly sold under certain descriptions and are used for the resoling or re treading of tyres. The circular of 1966, which can be con sidered as a contemporaneous exposition of the understanding of the Government while issuing the exemption notification of 1964, makes it clear that, at that time, it was not intended to deny exemption to rubber products used merely for repair purposes. The notification of 1973 was one in which various amendments were carried out to a series of notifications relating to various items and does not contain anything to suggest that it was only a clarification that was intended to be given and not a prospspective amendment of the previous notification. As already mentioned, the fact that the appellant is using or marketing the products for use, only for repairing tyres and conveyor belts is not controverted. In these circumstances, we are of opinion that the appellant assessee was entitled to exemption under the notification. In one sense, any rubber compound has a compo sition which theoretically permits it to be used either for repair purposes or for resoling or retreading of tyres. But the assessee 's contention is that the product marketed by it ' has not the physical dimensions or technical properties to be capable of use for retreading or resoling. Also, the notification talks of products "used for" resoling and retreading of tyres and that is not the case here. The notification thus imports a limitation on the exclusion from the exemption specified in the paranthetical clause of the notification. That exclusion is only in respect of compound used for resoling or retreading. For the reasons mentioned above we allow this appeal and set aside the order of the Central Government under section 36 of the Central Excise Act as well as the orders of the subordinate authorities and hold that the assessee is enti tled to the exemption prayed for. The concerned assessment will be modified accordingly. We however make no order as to costs. G.N. Appeal allowed.

The appellant assessee has been manufacturing cushion repair compoud, tread repair compound and cover compound. According to the assessee, these were not meant either for resoling or retreading of tyres, but for mending injured and defective sections of tyres. Though normally these goods are dutiable under tariff item No. 16A(2), the assessee claimed exemption from duty under Notification No. 71 of 1968 dated 1.4.68. The Superintendent rejected the claim. On appeal by the assessee, the Collector observed that there was no evidence that the goods in question should not be used for the resoling or retreading of tyres and rejected the claim. The assessee preferred a revision to the Central Govt. The Central Govt. while rejecting the Revision Peti tion, referred to the fact that the notification specifical ly excluded cushion compound, cushion gum and tread gum. As regards cover cushion compound, it observed that the compo sition was such that its use for repair of conveyor belts was indistinguishable from the other use of resoling of tyres. This appeal has been filed against the order of the Central Govt. The appellant contended that the Government had overlooked the fact that while tread repair, cushion compound and tread gum are items used for resoling or re treading of tyres, that was not the use to which the arti cles manufactured by the assessee were put. Since the fact that the goods manufactured by it were employed only for repairing tyres and conveyor belts was not disbelieved, it was argued, the assessee was eligible for the exemption claimed by it. Allowing the appeal, this court, HELD: 1. The notification of 1978 only reproduces with some 371 modifications the notification of 1964. The broad purport of both the notifications is to exempt rubber products other than those which are commonly sold under certain descrip tions and are used for the resoling or retreading of tyres. The circular of 1966, which can be considered as a contempo raneous exposition of the understanding of the Government while issuing the exemption notification of 1964, makes it clear that at that time, it was not intended to deny exemp tion to rubber products used merely for repair purposes. The notification of 1973 was one in which various amendments were carried out to a series of notifications relating to various items and does not contain anything to suggest that it was only a clarification that was intended to be given and not a prospective amendment of the previous notifica tion. [375A C] 2.1 The fact that the appellant is using or marketing the products for use, only for repearing tyres and conveyor belts is not controverted. Hence the appellant assessee was entitled to exemption under the notification. In one sense, any rubber compound has a composition which theoretically permits it to be used either for repair purposes or for resoling or retreading of tyres. But the assessee 's claim is that the product marketed by it has not the physical dimen sions or technical properties to be capable of use for retreading or resoling. Also, the notification talks of products "used for" resoling and retreading of tyres; and it is not so in the instant case. [375C E] 2.2 The notification imports a limitation on the exclu sion from the exemption specified in the paranthetical clause of the notification. That exclusion is only in re spect of compounds used for resoling or retreading. [375E]

Civil Appeal No. 345 of 1985. Appeal by Special leave from the Judgment and Order dated the 5th October, 1983 of the Calcutta High Court at Calcutta in Civil Order No. 971 of 1983. D. N. Mukherjee for the Appellants. Mahabir Singh for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. Special leave granted. The short question which falls for decision in this appeal is whether gratuity payable to a workman employed under the Calcutta Dock Labour Board (hereinafter referred to as 'Board ') is attachable for satisfaction of a decree of the Court. Md. Safiur Rehman was a dock worker and gratuity was payable to him under one of the three prevailing schemes of the Board. Respondent l filed a suit before the Court of Small Causes at Calcutta asking for recovery of a sum of money against the widow and son of the said Md. Safiur Rehman after his death and prayed for attachment of the gratuity payable to the said workman. The Court made an order and called upon the 828 Board to withhold payment of the amount whereupon the Board pointed out to the Court that gratuity was not liable to attachment On receipt of such intimation, the Court, made an order requiring the Board to show cause as to why it may not be proceeded against for disobedience of the Court 's direction. The Chief Judge of the Court of small Causes examined the objection against attachment and overruled the same. Against the rejection of the Objection the appellants moved the High Court at Calcutta and contended that the gratuity payable to the workman was not liable to attachment. A Division Bench of the High Court examined the tenability of the contention and came to the following conclusion: "On a careful consideration of the legal position we, however, find that the learned Chief Judge is right in his conclusion. Plaintiff has a legal right to attach any debt payable to his debtor or legal representative. This right, however, is always subject to exceptions made by any statutory provision. Section 13 of the no doubt bars attachment but that only is in respect of gratuity payable under that Act. The gratuity now under attachment is payable not under the Act. Section 60 of the Code of Civil Procedure as amended may bar attachment of gratuity as now under consideration. But that section as it now stands had not been made applicable to Presidency Small Causes Court. Under Section 8 of the Code, the High Court adopted certain provisions of the Code including section 60 as amended upto 1965 and made them applicable to Presidency Small Causes Court. Section 6, clause (g) so adopted reads as follows ' T (g). Stipends and gratuities allowed to pensioners of the Government or payable out of any service, family pension fund notified in Official Gazette by the Central Government or the State Government in this behalf and political pensioners. This clause does not cover the gratuity payable by the Board to a registered dock worker and the subsequent amendment of this clause not having been adopted and made applicable by the High Court to Presidency Small Causes Court, the learned Chief Judge is right in his conclusion. 829 T Next reliance is placed on Rule 9 of the Gratuity A Rules which no doubt purports to exempt gratuity from attachment. But these rules not having been made by the Central Government on powers delegated by the Parliament under the Dock Workers (Regulation of Employment) Act, but by the Board on sub delegation of powers under the scheme. the same in our view cannot override the legal right of the plaintiff. " Mr. Mukherjee appearing for the appellants maintained that the view taken both by the Chief Judge of the Small Causes Court as also the Division Bench of the High Court is contrary to law and, therefore, cannot be sustained. The respondents had filed an appearance through counsel but no one participated in the hearing. Section I (3) of the (39 of 1972) ( 'Act ' for short), provides that the Act shall extend to ports. 'Port ' has been defined in section 2 (n) of the Act. There can be no dispute that the Calcutta Port is covered by the . It is true that under one of the three schemes framed by the Calcutta Dock Labour Board gratuity was payable to Md. Safiur Rehman, but such gratuity must be taken to be covered by section 4 of the Act, in the absence of any notification contemplated under section 5. Section S authorises the appropriate Government by notification and subject to such conditions as may be specified in that notification to exempt, inter alia any port to which the Act applies, from the operation of the provisions of the Act, if in the opinion of the appropriate Government tile employees in the port are in receipt of gratuity or pensionary benefit not less favourable than the benefits conferred under the Act. Neither the Chief Judge nor the High Court has found that there has been a notification as contemplated under section 5 of the Act in this case. It had also not been contended at any stage by the respondents that such a notification had been made. Reference may now be made to sections 13 and 14 of the Act which ale very relevant. Protection of gratuity : No gratuity payable under this Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court. " 830 14. Act to override other enactments. etc.: The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent there with contained in any having effect by virtue of any enactment other than this Act. " We may point out that by Central Act No. 25 of 1984 section 13 has been amended with effect from July 1, 1984, and the amended section reads thus: "No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court. " In the absence of any notification within the meaning of section 5 of the Act the amendment is not relevant for consideration Section 14 has overriding effect and section 13 gives total immunity to gratuity from attachment. The preamble of the Act clearly indicates the legislative intention that the Act sought to provide a scheme for payment of gratuity to all employees engaged in, inter alia, ports and under this Act gratuity was payable to workers like Md Safiur Rehman. The gratuity which was payable to him squarely came within the purview of the Act and, therefore, become entitled to immunity under section 13 thereof. In section 60 of the Code of Civil Procedure provision for exemption from attachment has been made and a detailed list has been provided in sub section (1) thereof in clauses (a) to (p). Clause (g) there of exempts stipends and gratuities allowed to pensioners of the Government or of a local authority or of any other employer from attachment. It may be pointed out that the words "local authority" or "other employer" were inserted into the statute by the amending Act of 1976 with effect from February 1, 1977. The Chief Judge as also the High Court relying on the provisions of section 8 of Code took the view that unless extended by the High Court of Calcutta, the protection of section 60 was not available in regard to proceedings before the Presidency Small Causes Court at Calcutta. It appears that the Calcutta High Court in exercise of power under section 8 of 831 the Code had extended the provisions of the section 60 of the Code but the High Court seems to have wrongly taken the view that the effect of section 97 of the Amending Act of 1976 was that the notification of the High Court was no more effective unless re made. It is wholly unnecessary for the disposal of this appeal to examine that aspect as in our view the immunity under section 13 of the Act is adequate to accept the appeal and find against the respondent. We, therefore. allow the appeal and hold that the Chief Judge as also the High Court were in error in taking the view that gratuity payable to Md. Safiur Rehman was liable to attachment. Parties are directed to bear their own costs. section R. Appeal allowed.

Under the Indian Tariff Act 1934, there was a levy of customs duty on imported paper. Exemption, however, had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.5% ad valorem but subsequently a specific import duty of Rs. 50 per MT was levied on newsprint imports upto 1966. The Inquiry Committee on Small Newspapers examined the question of customs duty on newsprint and submitted its report in 1965 recommending total exemption of newsprint from customs duty. Pursuant to the said recommendation, the Government abolished customs duty on newsprint altogether in the year 1966. In 1971, a regulatory duty of 2 1/2% was levied on newsprint imports. This 2 1/2% regulatory duty was abolished and was converted into 5% auxiliary duty by the Finance Act of 1973. On the coming into force, the Indian Tariff Act 1934 was repealed. Under section 2 read with Heading No. 48.01/21 of the First Schedule to the 197S Act, a levy of basic customs duty of 40% ad valorem was imposed on newsprint. However, the 5% auxiliary duty levied from April 1, 1973 continued to be in operation which was also totally abolished in July 1977. The total exemption from customs duty on newsprint continued till March 1, 1981 when notification dated July IS, 1977 granting total exemption from customs duty superseded by the issue of a fresh notification under which publishers of newspapers had to pay 10% ad valorem customs duty on imported newsprint. By another notification issued at about the same time the auxiliary duty imposed by the Finance Act of 1981 above 5% ad valorem was exempted in the case of newsprint. The result was that a total duty of 15% ad valorem came to be imposed on newsprint for the year 1981 82, which led to the increase in the price of newspaper resulting in fall in circulation of news papers. In the first set of writ petitions this 15% levy was challenged. During the pendency of these writ petitions while was amended levying 40% ad valorem plus Rs. 1000 pet MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by notification dated February 82. 289 1982 issued under section 25(2) of the the notification A dated March 1, 1981 was superseded and Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper had to be paid as duty. Under the newsprint policy of the Government there were three sources of supply of newsprint (i) high seas sales. (ii) sales from the buffer stock built up by the State Trading Corporation which includes imported newsprint, and (iii) newsprint manufactured in India. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment. The validity of the imposition of import duty on newsprint imported from abroad under section 12 of the (Act 52 of 1962) read with section 2 and Heading No. 48.01/21 Sub heading No. (2) in the First Schedule to the (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the with effect from March 1, 1981 was challenged in the writ petitions. In the writ petitions it was contended (I) that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation; (2) that with the growth of population and literacy in the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly 'impeded by the increase in the price of newspapers; (3) that the method adopted by the and the in determining the rate of import duty has exposed E the newspaper publishers to Executive interference; (4) that there was no need to impose customs duty on newsprint which had enjoyed total exemption from its payment till March 1, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15000 at a price which does not include any . import duty. to medium newspapers with a circulation between 15000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a Circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). This classification of newspapers ' into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes; (5) that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness of the levy, the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. The imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of newspapers which are highly critical of the performance of the adminis 290 tration. The classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution; and (6) that the power of the Government to levy taxes of any kind on the newspaper establishment rings the death knell of the freedom of press and would be totally against the spirit of the Constitution. The Union of India contested the writ petitions alleging (I) that the Government had levied the duty in the public interest to augment the revenue of the Government. When exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, there is no power to exempt but to carry out the mandate of Parliament which has fixed the rate of duty by the ; (2) that the classification of newspapers for purposes of granting exemption is done the public interest having regard to relevant considerations, and that the levy was not Malay fide Since every section of the society has to bear its due share of the economic burden of the state, levy of customs duty on newsprint cannot be considered to be violative of Article 19(1) (a). The plea that the burden of taxation is excessive is an irrelevant factor to the levy of import duty on newsprint; (3) that the fact that the foreign exchange position was comfortable was no bar to the imposition of import duty; and (4) since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioner could not feel aggrieved by it. Allowing the Writ Petitions, ^ HELD: 1. The expression 'freedom of press ' has not been used in Article 19 of the Constitution but, as declared by this Court, it is included in Article 19 (1) (a) which guarantees freedom of speech and expression. Freedom of press means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. [310C; 35I] 2. There could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19 (2) and it is clear that there could not be any interference with that freedom in the name of public interest, Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, these urity of the State, friendly relations with foreign States, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence. Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. [3l2B C] 3. Freedom of press is the heart of social and political. intercourse The press has now assumed the role of the public educator making formal and non formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not 291 still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments. Newspapers being purveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. With a view to checking malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaranteeing the freedom of speech and expression laying down the limits of interference with it. [316B.D; H] It is the primary duty of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate. [317A] Brij Bhushan & Anr. v The State of Delhi [1950] S C.R. 605, Bennett Coleman & Co. & ors vs Union of India & ors. ; , Romesh Thappar vs The State of Madras; ; , Express Newspapers (Private) Ltd. & Anr. vs The Union of lndia & ors. and Sakal Papers (P Ltd. & Ors vs The Union of India [19621 3 S.C.R. 842, followed. 1 Annals of Congress (1789 96) p. 141; D.R. Mankekar: The Press under Pressure (1973) p 25; Article 19 of the Universal Declaration of Human Rights [1948: Article 19 of the International Covenant on Civil and Political Rights 1965; Article 10 of the European Convention on Human Rights: First Amendment to the Constitution of the United States of America; Article by Frank C. Newman and Karel Vasak on 'Civil and political Rights ' in the International Dimensions of Human Rights (Edited by Karel Vasak) Vo. 155 156; "Many Voices one World" a publication of UNESCO containing the Final Report of the International Commission for the Study of Communication Problems Part V dealing with 'Communication Tomorrow ' p. 265; Article entitled 'Toward a General Theory of the First Amendment ' by Thomas 1. Emerson (The Yale Law Journal Vol. 72 .877 at p. 906; Second Press Commission Report (Vol.l. 3435). referred to. (i) Excluding small newspaper establishments having circulation of less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry The Government has to provide many services to them resulting in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer and have to bear the common fiscal burden like all others. 1324C; E] (ii) While examining the constitutionality of a law said to be contravening Article 19 (1) (a) of the Constitution, the decisions of the Supreme Court of the United States of America cannot be solely relied upon for guidance but could be taken into consideration for understanding the basic principles of freedom of speech and expressiyn and the need for that freedom in a democratic country. 1324F G] (iii) The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of the Indian Constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution 292 are to be read alongwith clauses (2) and (6) of Article 19 which carve out areas A in respect of which valid legislation can be made. [324H; 325A] 6. Newspaper industry has not been granted exemption from taxation in express terms. Entry 92 of List I of the Seventh Schedule in the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution. [325B; 326G] 7. The First Amendment to the Constitution of the United States of America is almost in absolute terms and, therefore, no law abridging the freedom of the press can be made by the Congress. Yet the American Courts have recognised the power of the State to levy taxes on newspapers establishments, subject to judicial review by courts by the application of the due process of law principle. [328E F] 8. The police power, taxation and eminent domain are all forms of social control which are essential for peace and good government. In India the power to levy tax on persons carrying on the business or publishing newspapers has got to be recognised as it is inherent in the very concept of government. But the exercise of such power should. however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power. [328G; 329C] 9. It is not necessary for the press to be subservient to the Government. As long as this Court sits ' newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is not acceptable that merely because the Government has the power to levy taxes, the freedom of press would be totally lost. The Court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom. [338G; 339F] 10. Newspaper industry enjoys two of the fundamental rights, namely, the freedom of speech and expression guaranteed under Article 19 (1) (a) and the freedom to engage in any profession, occupation, trade. industry or business guaranteed under Article 19 (1) (g), While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupation, trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. [339G H; 340A B] 11. While levying a tax on newspaper industry it must be kept in mind that it should not be an over burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. Imposition of a tax like the customs duty on newsprint is an imposition on knowledge and would virtually amount to a burden imposed on 293 a man for being literate and for being conscious of his duty as a citizen to inform himself about the would around him. 'The public interest in freedom A of discussion (of which the freedom of the press is one aspect) stems from the requirement that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect 'themselves '. [341H; 342A B] 12. Freedom of expression has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision making, and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle is the people 's right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on matters concerning newspaper industry than while levying taxes on other matters. [342C E] 13. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand. in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. [342G H] Constituent Assembly Debates. IX pp. 1l75 1180 dt. September 9,1949: Corpus Juris Secundum (Vol. 16) p. 1132; American Jurisprudence 2d (Vol. 16) p. 662; Article on the First Amendment by Thomas 1. Emerson (The Yale Law journal Vol. 72 at p. 941); Second Press Commission Report (Vol 1) p. 35; Essay No. 84 by Alexander Hamilton in 'The Federalist; Alice Lee Grosjean supervisor of Public Accounts for the State of Louisiana vs American Press Company ; 80 L. ed. 660; Robert Murdock Jr. vs Commonwealth of Pennsylvania (City of Jeannette). ; 87 Law. 1292 and Attorney General & Anr. vs Antigua Times Ltd. , referred to Bennett Coleman & Co. & ors. vs Union of India & ors, [19731 2 S.C.R. 757 and Sakal Papers (P) Ltd. & Ors. vs The Union of India ; , distinguished. G Attorney General vs rimes Newspapers [1973] 3 All. E.R. 54, followed. 14, In the instant cases, assuming that the power to grant exemption under section 25 of the is a legislative power and a notification issued by the Government there under amounts to a piece of 294 subordinate legislation, even then the notification is liable to be questioned on the ground that it is an unreasonable one. [34SC D] 15. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature Subordinate legislation may be questioned on any of grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the Ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. [345H ;346A B] 16. In India arbitrariness is not a separate ground since it will come within the embargo or Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the ground on which plenary legislation may be questioned to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. Subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned. [347E G] 17. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary power. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant. [ 348A D] 8. In cases where the power vested in the Government is a power which has got lo be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. [348E F] 19. Section 25 of the under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to 295 do it may exempt generally either absolutely or subject to such conditions, A goods of any description, from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable The power exercisable under section 25 of the is no doubt discretionary but it is not unrestricted. [350C E] 20. Any notification issued under a statute also being a 'law ' as defined under Article 13(3)(a) of the Constitution is liable to be struck down if it is contrary of any of the fundamental rights guaranteed under Part III of the Constitution. [350H; 351A] Article entitled 'Judicial Control of Delegated Legislation: The Test of Reasonableness ' by Prof. Alan Wharam, at pp 622 23; H.W.R Wade: Administrative Law (5th Edn.) pp. 747 748; Municipal Corporation of Delhi vs Birla Cotton Spinning and Weaving Mills Delhi & Anr. ; ; Kruse vs Johnson ; Mixnam Properties Ltd. vs Chertsey U.D.C. [1964] I Q.B. 214; The Tulsipur Sugar Co. Ltd vs The Notified Area Committee Tulsipur [1980] 2S.C.R.1111;Ramesh Chandra Kachardas Porwal & Ors. vs State of Maharashtra & ors. etc. ; ; Bates vs Lord Hailsham of St. Marylebone & ors. and Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation ; , referred to. Narinder Chand Hem Raj & ors. vs Lt. Governor Administrator Union Territory. Himachal Pradesh & Ors.[1972] 1 S.C.R. 940, distinguished E State of Madras vs V.G. Rao ; and Breen vs Amalgamated Engineering Union , relied upon. If any duty is levied on newsprint by Government it necessarily has to be passed on to the purchasers of newspapers, unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. [352G] 22. The pattern of the law imposing customs duties and the manner in which it is operated, to a certain exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed duties by enacting the and the Customs Tariff Act, 1962 the Executive Government is given wide power by section 25 of the to grant exemption from the levy of Customs Duty, it is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case, in 1975 when the was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40% ad valorem customs duty on the coming into force of the , 296 1975 Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1000 per tonne was imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. Neither any material justifying the said additional levy was, produced by the Government nor was it made clear why this futile exercise of levying an additional duty of Rs. 1000 per tonne was done when under the notification issued under. section 25 of the on March 1, 1981, which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. While levying tax on an activity which is protected also Article l9(1)(a) a greater degree of care should he exhibited. While it is indisputable that the newspaper industry should also hear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should he capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material. the levy of 40 plus Rs. 1000 per tonne would become vulnerable to attack. [355E H;356A C] 23. The reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or total Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister 's speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended ' to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange. " This ground appears to be not tenable for two reasons. Nobody in Government had ever taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notification levying 15 duty. Secondly, no newspaper owner can import newsprint directly. News print import is canalised through the State Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is. however, no need to impose import duty with a view to curbing excessive import of news print. It is clear that the Government had not considered vital aspects before Withdrawing the total exemption which was being enjoyed by newspaper industry till March 1, 1981 and industry 15 duty on newsprint. [356D H; 357A B] 24. Attention was particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained 'piffles '. A 'piffle ' means foolish nonsense. It appears that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as 'piffles '. Such action is not permissible under the Constitution. [361H; 362A] 25. Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant. They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. [868A] 297 26. It is one thing to say that in view of considerations relevant to A public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain ' 'piffles ' '. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the customs duty is wholly irrelevant. [363B D] 27 The argument on behalf of the Government that the effect of the impugned levy i minimal cannot be accepted. [365C] 28. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. There appears to be a good ground to direct the Central Government to reconsider the matter afresh. [366C ;D] Final Report of the International Commission for the Study of Communication Problems pp. 100 add 141; Encyclopaedia Britannica [1962] Vol. 16; p. 339; Second Press Commission Report(Vol. 11)pp. 182 183; Bennett Coleman 757; Sakal Papers(P) Ltd & Ors. vs The Union of India ; ; William B. Cammarane vs United States of America ; ; ; Jeffery Sole Bigelow Commonwealth of Virginia 421 us 809: L ed 2d60O at 610 and Robert E. Hannegan vs Esquire Inc. 90 L ed. 586, referred to. Hamdard Dawakhana (WakS) Lal Kuan Delhi & Anr. vs Union of India & Ors. , ; ; Lews J. Yelentine vs F. J. Chrestensen 86 Law ed. 1292 and in re Sea ; , distinguished. Romesh Thapper vs The State of Madras [1950] S.C.R. 564; Honourable Dr. Paul Borg olivier & Anr. vs Honourable Dr. Anton Buttigieg ; Thomas vs Collins ; Martin vs City of Struthers 11943] ; , followed. The classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is not violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duly on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. There is nothing sinister in the 298 object nor can it be said that the classification has no nexus with the object to be achieved. [366F G] Bennett Coleman & Co. & Ors vs Union of India & Ors. ; referred to. Quashing of the impugned notification dated March 1, 1981, which had repealed the notification dated July 15, 1977 under which total exemption had been granted would not revive the notification dated July IS, 1977. Once an old rule has been substituted by a new rule, it cases to exist and it does not get revived when the new rule is held invalid. Since the competence of the Central Government to repealer annul or supersede the notification dated July 15 1977 is not questioned, its revival on the impugned notifications being held to be void would not arise and, therefore, on the quashing of the impugned notification the petitioners would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28 1982 and 40% ad valorem plus Rs 1000 per MT from March 1, 1982 onwards In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1982 83 and auxiliary duty of 50% ad valorem during the fiscal year 1983 8 i. They would straightaway be liable lo pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to ensue. The challenge to the validity of the levy prescribed by the customs Tariffs Act, 1975 itself cannot be allowed to succeed. [370F H] 31. The Government has failed to discharge its statutory obligations While issuing the impugned notifications. the Government is directed to reexamine the whole issue after taking into account all relevant considerations for the period subsequent to March 1, 1981. The Government cannot be deprived of the legitimate duty payable on imported newsprint. [371D E] 32. Having regard to the peculiar features of these cases and Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter the following order was made: [371D E] 1. The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc. with effect from March 1,1981. The petitioners and others who are engaged in newspapers business shall make available to the Government all information necessary to decide the question. [37G H] 2. If on such reconsideration the Government decides that there should be any modification in the levy of customs duty or auxiliary duty with effect from March 1,1981, it shall take necessary steps to implement its decision. [372A] 3. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auxiliary duty and shall not 299 insist upon payment of duty in accordance wish the impugned notifications. The concessions extended to medium and small newspapers may, however, A remain in force. [372C] 4. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts. [372D] 5. If, after such redetermination, it is found that any of the petitioners is entitled to any refund, such refund shall be made by the Government within four months from the date of such redetermination. A writ shall issue to the respondents. [372F] C B.N. Tiwari vs Union of India & ors, [1965] 2 S.C.R. 421, T. Devadasan vs Union of India & Anr. ; and Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr. [1963] Supp 2 S.C.R, 435 at 446. relied on. Mohd. Shaukat Hussain Khan vs State of Andhra Pradesh [975] I S.C.R. 429, Shri Mulchand Odhavji. Rajkot Borough Municipality A.I.R. 1970 S.C. 685, Koteswar Vittal Kamath vs K. Rangappa Baliga & Co. ; and The case of State of Maharashtra etc. vs The Central Provinces Manganese Ors Co. Ltd. [1977] I S.C.R. 1000, distinguished.

ivil Appeal Nos. 1725 26 of 1973. From the judgment and order dated 27th October, 1972 of the Allahabad High Court in Special Appeals Nos. 424 and 425 of 1971. P. N. Lekhi, M.K. Garg and V. K. Jain for the Appellants. A. P. section Chauhan and C.K. Ratnaparkhi for the Respondents. The Judgment of the Court was delivered by TULZAPURKAR, J. These appeals by certificate granted by the Allahabad High Court raise the following substantial question of law of general importance which needs to be decided by this Court: "Whether the view taken by the Full Bench in Smt. Maya vs Raja Dulaji and others (1) that the lessor/landlord should not only be disabled person on the relevant dates, but that he should continue to live on the date immediately preceding the date of vesting, within the meaning of clauses (h) of section 21 (1) of the U.P. Zamindari Abolition and Land Reforms Act, represents a correct construction of clause (h) of section 21(1) of the Act ?" The facts giving rise to the aforesaid question may be stated. One Smt Ram Kali, widow of Tikam Singh, was the land holder of the plots (agricultural land) in dispute situated in villages Agaota 371 and Khaiya Khera in District Bulandshahr (U.P.). On June 14, 1945 Smt. Ram Kali who was a Sirdar and a 'disabled person ' falling within section 157 (1) of the U.P. Zamindari Abolition and Land Reforms Act, 1950 (hereinafter called "the Act") executed a registered deed of lease for a period of S years in favour of Uttam Singh (the predecessors in title of the respondents) but before the expiry of the period of S years she died in August, 1945 and Dan Sahai (her husband 's real brother and predecessors in title of the appellants) inherited her interest. Dan Sahai was also a 'disabled person ' within the meaning of section 157(1) of the Act. It seems that after the expiry of the period of the registered lease Uttam Singh and Murli Singh continued to hold the land as tenants from year to year under Dan Sahai. In consolidation proceedings a question arose whether Uttam Singh and Murli Singh, who were lessees under Smt. Ram Kali and Dan Sahai acquired the status of Sirdars or they remained Asamis of the plots in dispute. The case of Dan Sahai was that they were Asamis and not adhivasis entitled to be treated as Sirdars under section 240 of the Act and that depended upon whether as tenants or occupants of the plots in dispute their case fell within the provisions of section 21(1) (h) of the Act. The contention of Dan Sahai was that since Smt. Ram Kali was a disabled person on the date of letting and since he who succeeded her was also a disabled person on April 2, 1946, the lease in favour of Uttam Singh and Murli Singh would fall within section 21(1) (h) and as such Uttam Singh and Murli Singh shall be deemed to be Asamis. On the other hand the contention on behalf of Uttam Singh and Murli Singh was that the land holder should not only be a disabled person on both the dates mentioned in sub cl. (a) of cl. (h) of section 21(1? (being the date of letting as also April 9, 1946) but the same landlord should continue to live on the date immediately preceding the date of vesting (which is 1 7 1952 under the Act) and since in the instant case the same landlord who had let out the plots and who was disabled person on the date of letting had not continued to live on the date immediately preceding the date of vesting section 21(1) (b) was totally inapplicable and, therefore, they were entitled to be treated as Sirdars. The Division Bench of the Allahabad High Court in Special Appeals Nos. 424 425 of 1971 accepted the contention raised by counsel on behalf of Uttam Singh and Murli Singh (the respondents ' predecessors) relying on the view taken by the Full Bench in Smt. Maya vs Raja Dulaji and others (1) and decided the appeals in their favour by holding that they were not Asamis but had become Sirdars. 372 At the outset it may be stated that it was not disputed either in the lower courts or before us that both Smt. Ram Kali as well as Shri Dan Sahai who succeeded to her interest in the plots after her death were disabled persons under section 157((1) of the Act. In fact it was accepted by both the sides that on the date of letting (being 14th June, 1945) Smt. Ram Kali, the then land holder was a disabled person and on 9th April, 1946 (being the other relevant date under sub clause (a) of clause (h) of section 21(1) Dan Sahai, the then land holder, was a disabled person who continued to be the land holder upto the date of vesting, and the question is whether in such 8 case the occupation of the plots by Uttam Singh and Murli Singh under the lease from both of them would fall within the provisions of section 21(1) (h) of the Act. The relevant provision runs thus: "21(1) Notwithstanding anything contained in this Act, every person who, on the date immediately preceding the date of vesting, occupied or held land as . . (h) a tenant of sir of land referred to in sub clause (a) of clause (i) of the explanation under section 16, a sub tenant referred to in sub clause (ii) of clause (a) of section 20 or an occupant referred to in sub clause (i) of the said section where the land holder or if there are more than one land holders, all of them were person or persons belonging (a) if the land was let out or occupied prior to the ninth day of April, 1946, both on the date of letting or occupation, as the case may be, and on the ninth day of April, 1946, and (b) if the land was let out or occupied on or after the ninth day of April, 1946, on the date of letting or occupation, to any one or more of the classes mentioned in sub section (I) of Section 157. shall be deemed to be an asami thereof " 373 In other words, section 21 (1) (h) provides that every person occupying or A holding land in any one of the capacities mentioned in cl. (h) on the date immediately preceding 1 7 1952 shall be deemed to be an Asami thereof notwithstanding anything contained in the Act, if the landholder or if there are more than one all of them were disabled persons within the meaning of section 157(1), both on the date of letting as well as on April 9, 1946 where the letting has taken place prior to April, 9, 1946, or were disabled persons on the date of letting if the letting has occurred after April 9, 1946. In the instant case it is not disputed that Uttam Singh and Murli Singh were on the date immediately preceding the date of vesting holding or occupying the plots in question in one or the other capacity mentioned in cl. (h); secondly, since the letting was prior to April 9, 1946 sub cl. (a) of cl. (h) is attracted and it is also not disputed that on the date of letting the then land holder (Smt. Ram Kali) was a disabled person and on April 9, 1946 the then land holder Dan Sahai, who succeeded her, was also a disabled person under section 157(1) of the Act. Incidentally Dan Sahai continued to be the land holder on the date immediately preceding 1.7 1952. On these facts it seems to us clear that all the requirements of section 21(1) (h) could be said to have been satisfied but the Division Bench relying upon the Full Bench decision in Smt. Maya vs Raja Dulaji and others (supra) held that Uttam Singh and Murli Singh were not Asamis and had become Sirdars because section 21(1) (h) was not attracted inasmuch as in their view it was a requirement of that provision that not merely should the land holder be a disabled person on both the dates mentioned in sub cl. (a) of cl. (h) but the same land holder should continue to be landholder on the date immediately preceding the date of vesting (i.e. the identity of the disabled land holder or landholders on both the dates and the land holder or land holders seeking the benefit or protection of the provision on the date immediately preceding 1.7.1952 must, remain unchanged) and this requirement was not satisfied in this case. The question is whether on true construction of the provision such a requirement can be read into the said provision ? In Smt. Maya vs Raja Dulaji and others (supra) the facts were that the disputed plots belonged to one Bijain and were inherited on his death by his widow Smt. Lakshmi and when Smt. Lakshmi died her minor unmarried daughter Kumari Maya became the land holder. Her elder sister Saheb Kunwar acting as her guardian executed a registered lease of the plots in favour of the plaintiffs (Ram Charan and others) on 15.10.1947 for a period of five years (a case falling under sub cl. (b) of cl. Later on Maya was also married to her 374 sister 's husband Thakurdas who was admitted to the holding as co tenant with Maya, with the consent of the Zamindar in the year 1948. Thus on the date of vesting (1.7.1952) both Maya (who was still minor and disabled person) as well as her husband Thakurdas were the land holders of the plots in question. The lessee plaintiffs filed a suit in the year 1954 for a declaration that they had become Adhivasis of the land on the coming into force of the U.P.Z.A. and L.R. Act and had subsequently acquired Sirdari rights on the passing of the U.P. Act XX of 1954 The suit was decreed by both the Courts below and hence Maya defendant preferred a second appeal to the High Court. The question raised for determination was whether for the purposes of section 21 ( 1) (h) the disability of the landholders who were in existence on the date of vesting was material or the disability of the land holders who let out the land was a deciding factor? The Court noticed that section 21(1) (h) had been introduced in the Act for the first time by U.P. Act XVI of 1953 with retrospective effect from July 1, 1952 and was later on amended by U.P. Act XX of 1954 and has thereafter continued in its present form. Section 21(1) (h), as originally enacted, in express terms required that "the land holder or if there are more than one landholder all of them were person or persons belonging, both on the date of letting and on the date immediately preceding the date of vesting, to any one or more of the classes mentioned in sub section (2) of section 10 or cl. (viii) of sub section (I) of section 157". As a result of the amendment made by Act XX of 1954 the words "both on the date of letting and on the date immediately preceding the date of vesting" were omitted. In other words, by the amendment the requirement that disability of the land holder should subsist on the date immediately preceding the date of vesting was deleted. The Full Bench accepted the position that for purposes of section 21(1) (h), in its present form, the disability of the land holder need not continue or subsist on the date immediately preceding the date of vesting and might cease on or before the date of vesting but took the view that in the case before it there were two land holders on the date immediately preceding the date of vesting, namely, Smt. Maya and her husband Thakurdas, that a new body of 'land holders ' had come into existence subsequent to the date of letting and that all of them were not land holders who had let out the land as disabled person and, therefore, the plaintiffs became Adhivasis and the defendants were not entitled to the benefit of section 21(1) (h) of the Act. In other words, the Full Bench has been of the view that for purposes of section 21(1) (h) it is necessary that the land holders on the date immediately preceding the date of vesting must be the same persons as those who let out the 375 land and suffered from disability on the date of letting, and also on A April 9, 1946 in case the letting was before that date. In other words, the identity of the land holder or land holders must remain unchanged up to the date of vesting. For reading such a requirement into the provision the Full Bench has given two reasons: (a) that such a requirement arises on construction of certain words used in cl. (h) (vide: para 17 of the Judgment) and (b) that the protection given to a disabled landholder was intended to be a personal protection granted to the very individual who let out the land as a disabled person and this was warranted by a historical survey of parallel provisions contained in the preceding Tenancy Laws in U.P. (vide: Para 19). According to the Full Bench the crucial words used in cl. (h) are "where the landholder or if there are more than one land holder all of them were person or persons belonging" to any one or more of the classes of disabled persons under section 157(1) and the Full Bench has reasoned "the word 'are ' and the word 'them ' together with the word 'were ' in the aforementioned phrase clearly show that the intention of the Legislature was that on the date of vesting the 'land holder ' should be the very person who was the land holder on the relevant dates, to earn the benefit of cl. (h) of section 21(1)". The Court observed that section 21(1) (b) could bear the interpretation suggested by counsel for Smt. Maya only if the words 'or their predecessor in interest ' were added before the words "all of them". The Court has further stated that historical survey of the parallel provisions contained in the preceding Tenancy Laws showed that the protection given to a disabled person had always been in the nature of a personal protection granted to the very individual who let out the land as a disabled land holder and the protection ceased to be available when the identity or personality of that land holder is changed and in that behalf reliance was placed on certain provisions of the Agra Tenancy Act, 1926 and U.P. Tenancy Act, 1939. In our view neither reason holds good for sustaining the literal construction placed upon the provision by the Full Bench. It is true that cl. (h) contains the phrase "where the land holder or if there are more than one landholder, all of them were persons belonging" to any one or more of the classes mentioned in section 157(1), but for arriving at the correct interpretation of this crucial phrase it is necessary to have regard to the definition of 'landholder ' and the provisions of section 157 of the Act with which section 21(1) (h) is inter connected. 376 Under section 3(26) of the Act, the definition of 'landholder ' as given in the U.P. Tenancy Act 1939 has been adopted since the expression is not defined in the Act. That expression has been defined in section 3(11) of the U.P. Tenancy Act 1939 thus: "Landholder" means the person to whom rent is or, but for a contract express or implied would be, payable. " This definition must be read in light of section 3(1) of that Act which runs thus: "All words and expressions used to denote the possessor of any right, title or interest in land, whether the same be proprietary or otherwise, shall be deemed to include the predecessors and successors in right, title or interest of such Person." In other words, the expression 'landholder ' who obviously is a possessor of interest in land under section 3(11) means a person to whom rent is payable, and under section 3(1) by legal fiction it shall include his predecessor in interest as also successor in interest to whom the rent was or is payable. It is such definition that will have to be read in the U.P.Z.A. and L.R. Act wherever that expression occurs. It is thus obvious that the expression 'landholder ' occurring in section 21(1) (h) must mean a person to whom rent is payable and by fiction would include his predecessor in interest. Read in this light there would be no question of adding the word predecessor in interest of the land holder in section 21(1) (h) as that would be implicit in the term 'landholder ' on account of the deeming provision of section 3(1) read with section 3(11) of the Tenancy Act, 1939. It does appear that this aspect of the matter was not brought to the notice of the Full Bench when it construed the concerned crucial phrase. Moreover after the amendment effected by Act XX of 1954 the thrust of cl. (h) is on the landholder or landholders being disabled persons on the material dates only. Further section 157(1) permits leases by disabled persons and says that a Bhumidhar or an Asami holding land in lieu of maintenance allowance under section 11, who is a disabled person falling under any of the clauses (a) to (g), may let the whole or any part of his holding; and the proviso thereto is very important which runs thus: "Provided that in the case of a holding held jointly by more persons than one, but one or more of them but not 377 all are subject to the disabilities mentioned in clause (a) to (g), the person or persons may let out his or their share in the holding." And sub section (2) provides that where any share of a holding has been let out under the aforesaid proviso the Court may on an application of the Asami or the tenure holder determine the share of the lessor in the holding and partition the same. Having regard to the aforesaid proviso under which even in the case of a joint holding a lease of his share by a disabled land holder is permissible and the same is liable to be separated by a partition it is obvious that the expression "all of them" must refer to all such land holders who were disabled land holders on the material dates. When under the proviso to s 157(1) a lease of his share by a disabled land holder in joint holding (held alongwith a non disabled person) is expressly permitted and under section 157(2) the Court has to determine such share of the disabled lessor and partition the same on an application being made in that behalf, it is difficult to accept that the Legislature intended to deprive the protection of section 21(1) (h) to such disabled land holder simply because on the date immediately preceding the date of vesting such land holder comes to hold the land jointly with some other non disabled land holder. In other words on the facts found in the Full Bench case when on the date of letting the entire holding belonged to Smt. Maya who was a disabled person and on the date of vesting she alongwith her husband Thakurdas (a non disabled person) became joint holder, could Smt. Maya at any rate to the extent of her share in the joint holding be denied the benefit of section 21(1) (h) notwithstanding the proviso to section 157(1) and section 157(2) being in the Statute ? The answer is obviously in the negative. In fact in view of the fact that on the material date (being the date of letting) the entire holding belonged to Smt Maya the disabled person, and having regard to the deeming provision which has to be read in the definition of 'landholder ' and having regard to the thrust of amended cl. (h) which does not require that the successor in interest be a disabled person on the date of vesting, the benefit of section 21 (1) (h) should have been extended or made available in respect of the entire holding. In other words, on true construction of the crucial phrase occurring in cl. (h) it is not possible to read into the provision the additional requirement, namely, that the identity of the land holder or land holders must remain unchanged up to the date of vesting. 378 Coming to the second reason the Full Bench has observed that a historical survey of parallel provisions of the Agra Tenancy Act 1926 and U.P. Tenancy Act, 1939 supported the conclusion that protection was granted only to the very individual who let out the land as a disabled land holder and the protection ceased when the identity of the personality of that land holder changed and in that behalf reference was made to section 29(6) and (7) of the former Act and section 41 (2) of the latter Act. Now apart from the fact that the scheme of the U.P.Z.A. and L.R. Act is different from these two earlier enactments, a careful analysis of the two provisions in the earlier enactments will clearly show that in each of the provisions express words had been used conferring personal rights on the individuals concerned which is not the case with section 21(1) (h) of the Act. Having regard to the above discussion we are of the opinion that the view taken by the Full Bench of Allahabad High Court in Smt. Maya vs Raja Dulaji and others (supra) does not represent the correct construction of section 21(1) (h) of the Act. On true construction of the said provision in our view, the benefit thereof would be available to the land holder on the date of vesting, if the same landholder or his predecessor existing on the material dates was a person or persons belonging to one or more of the classes mentioned in section 157(1) of the Act. Since in the instant case, which falls under sub cl. (a) of cl. (h), on the date of actual letting Smt. Ram Kali was disabled person and since on the next material date, namely, April, 9 1946 Dan Sahai (successor in interest of Smt. Ram Kali) was also a disabled person, the land holder on the date of vesting, who incidentally happened to be Dan Sahai, would be entitled to the benefit of section 21(1) (h) and the respondents (successors of Uttam Singh and Murli Singh) would remain Asamis and cannot be said to have become Sirdars. We might mention that after the arguments in these appeals were concluded and our Judgment was ready for pronouncement we were informed that in a later case Dwarika Singh vs Dy. Director of Consolidation (l) a larger Bench of S Judges of the Allahabad High Court has, by majority, overruled the view taken in Smt. Maya 's case. 379 In the result the appeals are allowed, the orders of the Division Bench in Special Appeals Nos. 424 425 of 1971 are set aside and for reasons given by us above, the decision of the learned Single Judge dated May 10, 1971 is restored. We direct that each party will bear its own costs. section R. Appeals allowed.

The Special Bearer Bonds (Immunities and Exemptions) ordinance, 1981 was promulgated on January 12,1981. It was repealed and replaced by the . The Act received the Presidential assent on March 27,1981. Section 1(3) of the Act stated that the Act was deemed to have come into force on January 12, 1981. The provisions of the ordinance and the Act were similar except section 4(2) of the Act which was worded slightly differently from the corresponding provision of The ordinance. The Act provided for certain immunities to holders of Special Bearer Bonds, 1981, and for certain exemptions from direct taxes in relation to such Bonds and for matters connected therewith. The object and purpose for which the Act was passed was to canalise for productive purposes black money, which had become a serious threat to the national economy and to provide for certain immunities and exemptions to render it possible for persons in possession of black money to invest the same in the said Bonds. Section 3 of the Act provided for certain immunities to a person who had subscribed to or otherwise acquired Special Bearer Bonds. Clause (a) protected such a person from being required to disclose for any purpose whatsoever the I nature and source of acquisition of the Special Bearer Bonds. Clause (b) prohibited the commencement of any inquiry or investigate on against a person on the 948 ground of his having subscribed to or otherwise acquired the Special Bearer Bonds. Clause (c) provided that the fact of subscription to or acquisition of Special Bearer Bonds shall not be taken into account and shall be inadmissible in evidence in any proceedings relating to any offence or the imposition of any penalty. Sub section (2) of section (3) provided that the immunity granted under sub section (1) shall not be available in relation to prosecution for any offence punishable under Chapter 9 or Chapter 17 of the Indian Penal Code or the Prevention of Corruption Act, 1957 or other similar law. Section 4 provided that without prejudice to the provisions of section 3 subscription to, or acquisition of Special Bearer Bonds by any person shall not be taken into account for the purpose of any proceedings under the Income tax Act, 1961, the or the and that no person who has subscribed to or has otherwise acquired the said Bonds shall be entitled to (a) claim any set off under the Income tax Act or to reopen any assessment or reassessment made under that Act on the ground that he has subscribed to or has otherwise acquired the said Bonds; (b) that any asset which is includible in his net wealth for any assessment year under the has been converted into such bonds, and (c) that any asset held by him represents the consideration received for the transfer of such Bonds. In their writ petitions to this Court assailing the constitutional validity of the ordinance and the Act it was contended on behalf of the petitioners that: (I) since the ordinance had the effect of amending the tax laws it was outside the competence of the President under Article 123, that the subject matter of the ordinance was in the nature of a Money Bill which could be introduced only in the House of the People and passed according to the procedure provided in Articles 109 and 110, the President had no power under Article 123 to issue the ordinance by passing the special procedure provided in Articles 109 and 110 for the passing of a Money Bill and (2) that the provisions of the Act were violative of Article 14 of the Constitution. It was also contended: (a) that Special Bearer Bonds would fetch a much higher value in the black market than that originally subscribed and this would enable a larger amount of black money to be legalised into white than what was originally invested in subscription to special bearer bonds, (b) an abuse which special bearer bonds might lend themselves to was that if special bearer bonds are sold and the sale proceeds are utilised in meeting expenditure, the assessee would not be precluded by section 4 clause (c) from explaining the source of the expenditure to be the sale consideration of special bearer bonds and by resorting to this strategy, white money can be accumulated as capital while expenditure is met out of black money received by way of consideration for sale of special bearer bonds, (c) Section 4 clause (c) operates only in relation to a period before the date of maturity of special bearer bonds and after the date of maturity the holder of special bearer bonds can sell such bonds, and, without running any risk disclose the consideration received by him as his white money, because section 4 clause (c) being out of the way, he can account for the possession of such money by showing that he has received it as consideration for sale of special bearer bonds and so far as the purchaser is concerned. if he has Paid the consideration out of his black money, he can claim 949 the immunity granted under section 3 sub section (1) and his black money would be converted into white, (d) the Act is unconstitutional as it offends against morality by according to dishonest assessees who have evaded payment of tax. immunities and exemptions which are denied to honest tax payers. Those who have broken the law and deprived the State of its legitimate dues are given benefits and concessions placing Them at an advantage over those who have observed the law and paid the taxes due from them and this is clearly immoral and unwarranted by the Constitution. Dismissing the petitions, ^ HELD : [Per majority Chandrachud, C. J., Bhagwati, Fazal Ali & Amarendra Nath Sen, J.J.] [Gupta, J, dissenting] None of the provisions of The Special Bearer Bonds (Immunities and Exemption) Act, 1981 is violative of Article 14 and its constitutional validity must be upheld. [989 B] l(i). There is no substance in The contention that the President has no power under Article 123 to issue an ordinance amending or altering the tax laws and that the ordinance was outside the legislative power of the President under that Article. [967 E] l(ii). Under Article 123 legislative power is conferred on the President exercisable when both Houses of Parliament are not in session. It is possible that when neither House of Parliament is in session, a situation may arise which needs to be dealt with immediately and for which there is no adequate provision in the existing law and emergent legislation may be necessary to enable the executive to cope with the situation. Article 123, therefore, confers powers on the President to promulgate a law by issuing an ordinance to enable the executive to deal with the emergent situation which might well include a situation created by a law being declared void by a Court of law. The legislative power conferred on the President under the Article is not a parallel power of legislation. This power is the clearest indication that the President is invested with this legislative power only in order to enable the executive to tide over an emergent situation which may arise whilst The Houses of Parliament are not in session. The conferment of such power may appear to be undemocratic but it is not so, because The executive is clearly answerable to the legislature and if the President, on the aid and advice of the executive, promulgates an ordinance in misuse or abuse of this power, the legislature can not only pass a resolution disapproving the ordinance but can also pass a vote of no confidence in the executive There is in the theory of Constitutional Law complete control of the legislature over the executive, because if the executive misbehaves or forfeits the confidence of the legislature, it can be thrown out by the legislature. [954 E G, 965 G 966 B] 1(iii). If parliament can by enacting legislation after or amend tax laws, equally can the President do so by issuing an ordinance under Article 123. There have been numerous instances where the President has issued an ordinance replacing with retrospective effect a tax law declared void by the High Court or 950 this Court. Even offences have been created by ordinance issued by the President under Article 123 and such offences committed during the life of the ordinance have been held to be punishable despite the expiry of the ordinance. [967 B C] State of Punjab vs Mohar Singh ; , referred to. Certain well established principles have been evolved by Courts as rules of guidance in discharge of their constitutional function of judicial review. The first rule is that there is always a presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. The presumption of constitutionality is indeed so strong that in order to sustain it, the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of Legislation. Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. [969 A G] Morey vs Dond, ; , referred to. 2(ii). The court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry" that exact wisdom and nice adoption of remedy are not f; always possible and that "judgment is largely a prophecy based on meagre and uninterpreted experience". Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. [970 C.D] Secretary of Agriculture vs Central Reig Refining Company, 94 Lawyers ' Edition 381. referred to. 2(iii). The court must adjudge the constitutionality of legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provision. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. [970 G H] 3(i). It is clear that Article 14 does not forbid reasonable classification of persons, objects and transactions by the legislature for the purpose of attaining specific ends. What is necessary in order to pass the test of permissible classification under Article 14 is that the classification must not be arbitrary, artificial or evasive but must be based on some real and substantial distinction bearing 951 a just and reasonable relation to the object sought to be achieved by the legislature. 3(ii). The validity of a classification has to be judged with reference to the object of the legislation and if that is done, there can be no doubt that the classification made by the Act is rational and intelligible and the operation of the provisions of the Act is rightly confined to persons in possession of black money. The Preamble of the Act makes it clear that the Act is intended to canalise for productive purposes black money which has become a serious threat to the national economy. It is an undisputed fact that there is considerable amount of black money in circulation which is unaccounted or concealed and therefore outside the disclosed trading channels. It is largely the product of black market transactions and evasion of tax. The abundance of black money has in fact given rise to a parallel economy operating simultaneously and competing with the official economy. This parallel economy has over the years grown in size and dimension and even on a conservative estimate, the amount of black money in circulation runs into some thousand crores. The menace of black money has reached such staggering proportions that it is causing havoc to the economy of the country and poses a serious challenge to the fulfillment of objectives of distributive justice and setting up of an egalitarian society. 4(ii). The first casualty of the evil of black money is the Revenue because it loses the tax which should otherwise have come to the exchequer. The generation of black money through tax evasion throws a greater burden on the honest tax payer and leads to economic inequality and concentration of wealth in the hands of the unscrupulous few in the country. It also leads to leakage of foreign exchange, making balance of payments rather distorted and unreal and tends to defeat the economic policies of the Government by making their implementation ineffective, particularly in the field of credit and investment. Urgent measures were required to be adopted for preventing further generation of black money as also for unearthing existing black money so that it can be canalised for productive purposes with a view to effective economic and social planning. 4(iii). The Government introduced several changes in the administrative set up of the tax department from time to time with a view to strengthening the administrative machinery for checking tax evasion. The Government also amended section 37 of the Indian Income Tax Act, 1922 with a view to conferring power on the tax authorities to carry out searches and seizures and this power was elaborated and made more effectual under the Income Tax Act, 1961. The Voluntary Disclosure Scheme of 1951 was made to facilitate the disclosure of suppressed income by affording certain immunities from penal provisions, Nearly a decade and a half later a second scheme of voluntary disclosure was introduced by section 68 of the Finance Act, 1965, popularly known as the sixty forty scheme which was a little more successful. Closely following on the heels of this scheme came another under section 24 of the Finance (No. Scheme ' according to which tax was payable at rates applicable to the block of concealed income disclosed and not at a flat rate as under the sixty forty scheme. Then came the Taxation Laws (Amendment and Miscellaneous Provisions) ordinance 1965 followed by an Act which provided for exemption from 952 tax in certain cases of undisclosed income invested in National Defence Gold Bonds 1980. Later on, the Voluntary Disclosure of Income and Wealth ordinance 1975 which was followed by an Act introduced a scheme of voluntary disclosure of income and wealth and provided certain immunities and exemptions. All these legal and administrative measures were introduced by the Government and did not have any appreciable effect with regard to the problem of black money which continued unabated 4 (iv). All efforts to detect black money and to uncover it having failed and the problem of black money being an obstinate economic issue which was defying solution, the impugned legislation providing for issue of Special Bearer Bonds was enacted with a view to mopping up black money and bringing it out in the open, so that, instead of remaining concealed such money may become available for augmenting the resources of the State and being utilised for productive purposes so as to promote effective social and economic planning. This was the object for which the Act was enacted and it is with reference to this object that it is to be determined whether any impermissible differentiation is made in the Act. 4 (v). The whole object of the impugned Act is to induce those having black money to convert it into white money by making it available to the State for productive purposes, without granting in return any immunity in respect of such black money if it could be detected through the ordinary processes of taxation laws without taking into account the fact of purchase of Special Bearer Bonds. 4 (vi). The acquisition or possession of Special Bearer Bonds would not therefore afford any protection to a public servant against a charge of corruption or to a person committing any offence against property. Equally this immunity would not be available where what is sought to be enforced is a civil liability other than liability by way of tax. The immunity granted in respect of subscription to or acquisition of Special Bearer Bonds is a severely restricted immunity and this is the bare minimum immunity necessary in order to induce holders of black money to bring it out in the open and invest it in Special Bearer Bonds 5. Section 4(c) is calculated to act as a strong deterrent against negotiability of Special Bearer Bonds for disclosed or 'white ' money. The immunily granted under the provisions of the Act, limited as it is, extends only to the person who is for the time being the holder of Special Bearer Bonds and the person who has transferred the Special Bearer Bonds for black money has no immunity at all and all the provisions of tax laws are available against him for determining his true income or wealth and therefore no one who has purchased Special Bearer Bonds with a view to earning security against discovery of unaccounted money in his hands would ordinarily barter away that security by again receiving black money for the Special Bearer Bonds. Even if special bearer bonds are transferred against receipt of black money it will not have the effect of legalising more black money into white because the black money of the seller which had become white on his subscribing to or acquiring special bearer bonds would again be converted into black money and the black money paid by the 953 purchaser by way of consideration would become white by reason of being converted into special bearer bonds. No assessee would ever admit that he incurred expenditure out of black money received as consideration for sale of special bearer bonds because it would be impossible for him to establish receipt of black money from the purchaser and if he is unable to do so, the amount of the expenditure, would by reason of section 69C of the Income tax Act, 1961 be deemed to be his concealed income liable to tax. Even if it is assumed that in some rare and exceptional cases the assessee may be able to establish that he sold special bearer bonds against receipt of black money the purchaser would straight away run into difficulties because the evidence furnished by the assessee would in such a case clearly establish that the purchaser had black money and he paid it to the assessee by way of consideration and he would in that event be rendered liable to tax and penalty in respect of such black money. Howsoever special bearer bonds may be transferred and for whatever consideration only a limited amount of black money namely The amount originally subscribed for the special bearer bonds or at the most the amount representing the face value of the special bearer bonds would be legalised into white money and the supposedly free negotiability of special bearer bonds would not have the effect of legalising more black money into while or encouraging further generation of black money. When experience shows that the legislation as framed has proved inadequate to achieve its purpose of mitigating an evil or there are cracks and loopholes in it which are being taken advantage of by the resourcefulness and ingenuity of those minded to benefit themselves at the cost of the State or the others, the legislature can and most certainly would intervene and change The law. But the law cannot be condemned as invalid on the ground That after a period of ten years it may lend itself to some possible abuse. It is obvious that the Act makes a classification between holders of black money and the rest and provides for issue of special bearer bonds with a view to inducing persons belonging to the former class to invest their unaccounted money in purchase of special bearer bonds, so that such money which is today Lying idle outside the regular economy of the country is canalised into productive purposes. The object of the Act being to unearth black money for being utilised for productive purposes with a view to effective social and economic planning, there has necessarily to be a classification between persons possessing black money and others and such classification cannot be regarded as arbitrary or irrational. The validity of a classification has to be judged with reference to The object of the legislation and if that is done, there can be no doubt that the classification made by the Act is rational and intelligible and the operation of the provisions of the Act is rightly confined to persons in possession of black money. The legislature had obviously only two alternatives: either to allow the black money to remain idle and unproductive or to induce those in possession 954 of it to bring it out in the open for being utilised for productive purposes. The first alternative would have left no choice to the government but to resort to deficit financing or lo impose a heavy dose of taxation. The former would have resulted in inflationary pressures affecting the vulnerable sections of the society while the latter would have increased the burden on the honest tax payer and perhaps led to greater tax evasion. The legislature therefore decided to adopt the second alternative of coaxing persons in possession of black money to disclose it and make it available to the government for augmenting its resources for productive purposes and with that end in view enacted the Act providing for issue of special bearer bonds. It would be outside the province of the court to consider if any particular immunity or exemption is necessary or not for the purpose of inducing disclosure of black money. That would depend upon diverse Fiscal and economic considerations based on practical necessity and administrative expediency and would also involve a certain amount of experimentation on which the Court would be least fitted to pronounce. The Court would not have the necessary competence and expertise to adjudicate upon such an economic issue. The Court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not. There are so many imponderables that would enter into the determination that it would be wise for the court not to hazard an opinion where even economists may differ. The court must while examining the constitutional validity of a legislation "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the court must always bear in mind the constitutional proposition "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies". The court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary. [ Per A.C. Gupta, J. dissenting ] 1. The Special Bearer Bonds (Immunities and Exemptions) ordinance, 1981 and the are invalid on the ground that they infringe Article 14 of the Constitution. [1002 A] 2 The Act puts a premium on dishonesty without even a justification of necessity that the situation in the country left no option. [1000 H 1001 A] 3. The basis on which the holders of Special Bearer Bonds have been classified to give certain advantage to one class and deny them to the other, has no rational nexus with the object of the Act. [996 A] 4 (i). Article 14 forbids class legislation but permits classification Permissible classification, it is well established, must satisfy two conditions viz. (i) li that The classification must be founded on an intelligible differential which distinguishes those that are grouped together from others and: (2) that the 955 differential must have a rational relation to the object sought to be achieved by A the Act. [993 G 994 A] 4 (ii). The differential that is the basis of classification and the object of the Act are distinct things, it is not enough that the differential should have a nexus with the object, but it should also be intelligible. The presence of some characteristics in one class which are not found in another is the difference between the two classes, but a further requirement is that this differential must be intelligible. If the basis of classification is on the face of it arbitrary in the sense that it is palpably unreasonable it is not possible to call the differential intelligible. [997 B C] The State of West Bengal vs Anwar Ali Sarkar, ; ; E. P. Royappa vs State of Tamil Nadu and another; , and Maneka Gandhi vs Union of India, [1978] 2 SCR 621, referred to. The preamble of the Act takes note of the fact that black money has become a serious threat to national economy and says that to make economic and social planning effective it is necessary to canalise this black money for productive purposes. The Act however does not define black money. [990 F] 6. The immunities provided by the impugned Act are clearly for the benefit of those who have acquired the Bonds with black money. Clauses (a), (b) and (c) of section 3(1) provide for these immunities "notwithstanding anything contained in any other law for the time being in force". None of These immunities is required by a person who has paid 'white ' money, that is, money that has been accounted for to acquire the Bonds. To a person who has disclosed the source of acquisition of the Bonds, These immunities are of no use. Section 4 makes it clear that the immunities conferred by the Act are of use only to those who have acquired the Bonds with unaccounted money. [994 B D] 7. The impugned Act denies to those who have acquired the bonds not with black money any relief under the Income tax Act or the or any benefit in any other way claimed on the ground that they are holders of Special Bearer Bonds, and the relief and the benefit denied to them have been made available to those who have acquired the Bonds with black money by ignoring the source of acquisition in their case. [995 C D] 8. The Act distinguishes between two classes of holders of Special Bearer Bonds; tax evaders and honest tax payers. The object is to canalise black money for productive purposes to make economic and social planning effective. If the exemptions and immunities conferred by the Act are sufficiently attractive to induce tax evader to acquire Special Bearer Bonds, they will remain as attractive even if all these benefits were granted to those who will pay white money for the Bonds. Denial of these benefits to those who have acquired the Bonds with money which has been accounted for does not in any way further the object of canalisation of black money for productive purposes. The discrimination in favour of black money therefore seems to be obvious. [995 E F] 9. Terms like 'reasonable ', 'just ' or 'fair ' derive their significance from the existing social conditions. Expressions like a 'reasonable and fair price ' or 'fair 956 and equitable restitution ' means nothing, except in conjunction with the social conditions of the time. That action is called 'reasonable ' which an informed, intelligent, just minded civilised Man could rationally favour. [998 F G] Quaker City Cab Co. vs Commonwealth of Pennsylvania ; , referred to. What is arbitrary and offends Article 14 cannot be called intelligible. It is clear from the provisions of the Act that the advantage which the tax evaders derive from the immunities provided by the Act are not available to those who have acquired the Bonds with 'white money ' The Act promises anonymity and security for tax evaders. No question can be asked as to the nature and source of acquisition or possession of the Bonds. The Bonds can be transferred freely and passing of the Bonds from hand to hand is likely to operate as parallel currency and be used for any kind of transaction. [999 F G] 11. The Act discloses a scheme which enables tax evaders to convert black money into white after 10 years and in the meantime use the Bonds as parallel currency initiating a chain of black money investments. There is no provision in the Act requiring that on maturity of the Bonds their holders would have to disclose their identity, which means that if after 10 years black money which had taken the shape of Special Bearer Bonds goes underground again and retain its colour, there is nothing to prevent it. There is nothing in the scheme to halt generation of black money which threatens the national economy. Some people by successful evasion manoeuvres are able to throw the burden of taxation off their own shoulders which means a greater burden on the honest tax payers and this leads to economic imbalance. [1000 B D] 12. Any law that rewards law breakers and tax dodgers is bound to invite criticism. No law can be struck down only on the ground that it is unethical. However, there cannot be and there never has been a complete separation of law and morality. Historical and ideological differences concern the extent to which the norms of the social order are absorbed into the legal order. The principle of reasonableness is an essential element of equality. The concept of reasonableness does not exclude notions of morality and ethics. It cannot be disputed that in the circumstances of a given case considerations of morality and ethics may have a bearing on the reasonableness of the law in question. [1001 B D]

Civil Appeal No. 98 of 1962. Appeal from the judgment and decree dated March 7, 1957, of the Bombay High Court in First Appeals Nos. 897 of 1951 and 66 of 1952. section section Shukla for the appellant. G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondents Nos. 1, 3 and 7. A.V. Viswanatha Sastri and Sardar Baliadur, for respondent No. 2. 522 1963. May 2. The judgment of the Court was delivered by WANCHOO J. This is an appeal on a certificate granted by the Bombay High Court and arises out of a suit filed by the appellant as a Hindu reversioner to recover possession of properties alienated by a Hindu widow. The property in suit was the self acquired property of one Ganpatrao jairam who died in 1894 leaving behind two widows, Annapurnabai and Sarswatibai. Ganpatrao had executed a will by which property in village Dahisar was given to Annapurnabai and property in village Nagaon was given to Sarswatibai. The will further provided that a dwelling house together with structures and open land situate at Thana would remain with his two wives who would enjoy the same. There were other dispositions in the will with which we are however not concerned now. Annapurnabai was also authorised to make an adoption on the advice of the executors appointed under the will; but the adopted son was to have no right or connection with the movable and immovable property devised to Annapurnabai during her life time and was to take the property devised to her only after her death. The adopted son was also to take the immovable property bequeathed to Saraswatibai after her death. It may be added that no son was adopted by Annapurnabai and this aspect of the matter therefore need not be considered further. Annapurnabai died on September 17, 1915, and she had executed a will before her death. After Annapurnabai 's death, Saraswatibai began to manage the property. It may be added that Sarswatibai had adopted a son, but this was saidto beagainst the provision in the will of herhusband which specifically directed that she could only adopt if Annapumabai died without making an adoption from amongst the family on the advice of the executors. There was therefore 523 litigation in connection with the adoption between Saraswatibai and Balkrishna Waman, one of the legatees under the will of Ganpatrao, which ended in favour of Balkrishna Waman. Saraswatibai died in 1943. The case of the appellant was that the will of Ganpatrao merely gave widow 's estate to Annapurnabai and Saraswatibai. Consequently Annapurnabai could not dispose of the property given to her by will and the bequests made by her were not binding on the appellant as the next reversioner. It was also alleged that the will made by Annapurnabai was vitiated by the exercise of undue influence brought to bear on her by Balkrishna Waman, who was the husband of her niece. Saraswatibai also made certain alienations and the appellant contended that the sale by Saraswatibai was due to the undue influence exercised on her by Balkrishna Waman, and in any case there was no legal necessity for transfer and therefore the transfer was not binding on the appellant. The main defendant in the suit was Ganesh, a son of Balkrishna Waman. In addition there were twelve other defendants who were alienees in possession of the property and were joined in the suit as the appellant prayed for recovery of possession from them also. The suit was resisted by the main defendant Ganesh for two main reasons. It was first contended that the appellant was an undischarged insolvent at the time succession opened in 1943 and therefore whatever property might come to him as a reversioner vested in the official receiver. Therefore, the appellant had no right to bring a suit to recover possession even after his absolute discharge because the property never vested in him. Secondly, it was contended that by his will Ganpatrao had granted an absolute estate to the two widows and therefore 524 Annapurnabai had full right to make a will with respect to the property given to her and Sarswatibai had the right to make alienations if she thought fit. Besides these two main defences, it was also contended that the appellant was not the nearest reversioner and the alienations made by Sarswatibai were for legal necessity. The same defence was raised by the other defendants. In addition the alienees from Sarswatibai contended that they were bona fide pur chasers for value without notice of the defect in their vendor 's title and therefore the alienations made in their favour could not be set aside. They further pleaded that they had made substantial improvements on the properties purchased by them. On these pleadings as many as eighteen issues were framed by the trial court. Two of these issues covered the two main defences which were raised, namely, (1) Is the plaintiff entitled to maintain the suit due to his insolvency as alleged by the defendants? (3) Had Annapurnabai no authority to will away the properties in her possession? The trial court held that the plaintiff was entitled to maintain the suit. The third issue obviously raised the question whether the bequest to Annapurnabai was that of widow 's estate or an absolute bequest, and the trial court held in that connection that the bequest to Annapurnabai was that of widow 's estate and therefore she had no right to will away the properties in her possession. The trial court also gave findings on the remaining issues and finally declared that the alienations made by Saraswatibai on March 29, 1930 and April 16, 1935 were not for legal necesssity and therefore were not binding on the appellant and the defendants of the suit were directed to deliver 525 possession of the suit properties to the appellant. Inquiry as to mesne profits was also directed and Rd finally the trial court ordered that notice be given to the receiver in the insolvency application No. 48 of 1939 to consider if he wanted the property to be made available for distribution amongst creditors in the aforementioned application. The defendants then went in appeal to the High Court and two separate appeals were filed one by original defendant No. 3 and the other by original defendant No. I and some others. The two appeals were heard together by the High Court and the two principal questions which arose, according to the High Court, were as to (i) the effect of the dispositions made by Ganpatrao under his will, and (ii) the right of the plaintiff to maintain the suit when he was, at the date when the succession opened, an undischarged insolvent, These two questions, it will be seen, correspond to the two issues raised by the trial court, which we have set out above. The High Court first considered the right of the plaintiff to maintain the suit and held that the plaintiff had no right to maintain the suit, as he was an undischarged insolvent at the time the succession opened and he could not maintain the suit even after his absolute discharge. The High Court further held that the disposition in favour of Annapurnabai of the property in Dahisar amounted to conferment of absolute estate on her and further that the disposition in favour of Saraswatibai of the property in Nagaon amounted to conferment of absolute estate on her. On these findings the High Court dismissed the suit. Thereupon the appellant applied for a. certificate which was granted; and that is how the matter has come up before us. 526 The first question that falls for consideration is whether the appellant can maintain the suit. It is necessary in that connection to see what the facts are with respect to the insolvency of the appellant. The appellant had filed an insolvency application in 1939 and was adjudged insolvent on March 11, 1940 and two years time was granted to him to apply for discharge. The appellant applied for discharge on July 6, 1942 and he was granted an absolute discharge in January, 1944. The succession to the estate of Ganpatrao had however opened on May 4, 1943 when the appellant was still an undischarged insolvent. Consequently, the case of the defendants respondents was that under section 28 (4) of the Provincial Insolvency Act, No. 5 of 1920, (hereinafter referred to as the Act), the property which devolved on the insolvent after the date of the order of adjudication and before his discharge forthwith vested in the court or receiver. It is further urged that the property having vested in the court or receiver it must remain so vested even after the absolute discharge of the appellant for the order of absolute discharge merely absolved the insolvent from liability from payment of debts other than those mentioned in section 44 of the Act. Therefore when the suit was brought in 1947 after the discharge the appellant had no title in the property as the title still vested in the court or receiver, and consequently the appellant could not maintain the suit for ejectment against those in possession of the property as he had no title on which he could base his right to sue for ejectment. The question therefore that arises for determination is whether an insolvent on whom property devolves when he is an undischarged insolvent can maintain a suit for the recovery of the property after his absolute discharge. The decision of that depends on what effect the order of absolute discharge has on the insolvent 's title to the property 527 which develoved on him when he was still an undischarged insolvent. It is to this narrow question, (namely, whether a suit brought by an insolvent after his absolute discharge with respect to property which devolved on him when he was an undischarged insolvent can be maintained by him), that we address ourselves hereafter. In view of this narrow question it is in our opinion unnecessary to consider those cases on some of which the High Court has relied which deal with the, right of the insolvent to maintain a suit while he is still an insolvent. What we say hereafter will only apply to a case where the suit is brought by an insolvent after his absolute discharge, though the right to property which is in suit devolved on him when he was an undischarged insolvent. It will be necessary in this connection to consider briefly the scheme of the Act, to decide exactly what the consequences are when an absolute discharge is granted to an insolvent. Section 6 of the Act defines what are acts of insolvency. Section 7 gives power to a debtor or a creditor to make an application for insolvency, if the debtor has committed an act of insolvency. Section 9 deals with applications made by creditors and section 10 by debtors. Section 19 provides for the procedure for hearing an insolvency petition. Sections 20 and 21 provide for interim proceedings against the debtor and appointment of an interim receiver. Section 25 provides for dismissal of the petition on grounds mentioned therein Section 27 gives power to the court to make an order of adjudication and the Court also has to fix a time therein within which the debtor shall apply for his discharge. Section 28 with which we are mainly concerned lays down the effect of an order of adjudication. Sub section (2) thereof provides that on the making of an order of adjudication, the whole of the property 528 of the insolvent shall vest in the court or in a receiver and shall become divisible among the creditors Under sub section (7) this vesting will relate back to and take effect from the date of the presentation of the petition on which the order of adjudication is made. Sub section (4) which is also material lays down that "all property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receiver, and the provisions of sub section (2) shall apply in respect thereof." This sub section undoubtedly vests in) the court or receiver any property which the insolvent acquires after the order of adjudication and before his discharge or which devolves on him in any manner, and such vesting takes place forthwith Section 33 provides for the making of a schedule of creditors after the order of adjudication and section 34 lays down what debts are provable under the Act. Section 56 provides for the appointment of a receiver and section 59 lays down the duties and powers of the receiver Scction 61 provides for priority of debts and section 62 for calculation of dividends. Section 64 lays down that when the receiver has realised all the property of the insolvent or so much thereof as can, in the opinion of the court, be realised without needlessly protracting the receivership, he shall declare a final dividend. But before doing so, the receiver has to give notice to persons whose claims as creditors have been notified but not proved, that if they do not prove their claims within the time limited by the notice, he will proceed to make a final dividend without regard to their claims. After the expiration of such time, the property of the insolvent shall be divided amongst the creditors entered in the schedule without regard to the claims of any other persons. Then comes section 67 which lays down that " 'the insol vent shall be entitled to any surplus remaining after payment in full of his creditors with interest as 529 provided by this Act, and of the expenses of the proceedings taken thereunder. " It is clear from this scheme of the Act that the entire property of the insolvent belonging to him on the date the petition for insolvency is made vests in the receiver under section 28 (2). Further under section 28 (4) if any property is acquired by the insolvent or devolves on him after the order of adjudication and before he is discharged, that property also vests in the court or receiver forthwith. The receiver has to administer the property so vested in him and he has the power to sell the property and do various other acts provided in section 59 for the purpose of the administration of the property. Generally speaking the receiver sells the property which vests in him and then distributes the money amongst the creditors who have proved their debts. But before the receiver declares the final dividend he has to give one more opportunity under section 64 to creditors who might not have proved their debts at the earlier stage, to come and prove their debts. This will generally happen when all the property of the insolvent has been disposed of by the receiver, though section 64 contemplates that the final dividend may be declared even if some property has not been disposed of when in the opinion of the court it will needlessly protract the receivership. Section 67 then finally provides that if any surplus is left in the hands of the receiver after payment in full to the creditors with interest and of the expenses of the proceedings under the Act, the surplus is to be paid to the insolvent. As we have said already, the final dividend is generally declared after all the property of the insolvent is disposed of but there may be cases when a final dividend may be declared without the disposition of all the property of the insolvent if in the opinion of the court that would result in needlessly protracting the receivership. But it is clear that under section 67 if there is 530 any surplus remaining in the hands of the receiver that surplus has to go to the insolvent. Though this is the general scheme of the Act with reference to administration of property which vests in the receiver after an order of adjudication, there are two exceptions which may be noticed. Section 35 provides that where, in the opinion of the court, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the court that the debts of the insolvent have been paid in full, the court shall, on the application of the debtor, or of any other person interested, by order in writing, annul the adjudication. Section 37 then provides that "where an adjudication is annulled, all sales and dispositions of property and payments duly made, and all acts therefore done, by the court or receiver, shall be valid ; but, subject as aforesaid, the property of the debtor who was adjudged insolvent shall vest in such person as the court may appoint, or, in default 'of such appoint ment, shall revert to the debtor to the extent of his right or interest therein on such conditions (if any) as the court may, by order in writing, declare. " Special stress has been laid on behalf of the respondents on the provision in section 37 which specifically lays down that the property of the debtor in case of annulment shall vest in such person as the court may appoint or in default of such appointment shall revert to the debtor, thus divesting the court or the receiver of the property which had vested in them under section 28 (2) or section 28 (4). The second exception is to be found in section 38 which allows compositions and schemes of arrangement. Section 39 then provides that if the court approves the composition or the scheme of arrangement, the terms shall be embodied in the order of the court and the order of adjudication shall be annulled and the provisions of section 37 shall apply to such annulment. 531 Lastly, we come to what happens where the estate of the insolvent has been administered in the usual way which we have set out already. Section 41 authorises the debtor to apply for an order of discharge. On such an application the court has to consider the objection, if any, made by any creditor and also the report of the receiver in case a receiver has been appointed and thereafter the court may (a) grant or refuse an absolute order of discharge ; or (b) suspend the operation of the order for a specified time ; or (c) grant an order of discharge subject.to any conditions with respect to any earnings or income which may afterwards become due to the insolvent, or with respect to his after acquired property. Section 42 then lays down in what circumstances the court, shall refuse to grant an absolute order of discharge ; and we may refer to only cl. (a) of section 42 (1) in that connection which gives power to the court to refuse to grant an absolute order of discharge if it finds that the insolvent 's assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, unless the in solvent satisfies the court that the fact that the assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities has arisen from circumstances for which he cannot justly be held responsible. Section 43 provides that if the debtor does not apply for discharge within the period fixed by the court, or does not appear on the day fixed for hearing his application for discharge, the court may annul the order of adjudication or make such other order as it may think fit, and if the adjudication is so annulled, the provisions 532 of section 37 shall apply. Section 44 then provides for the effect of the order of discharge. Sub section (1) thereof mentions the debts from which the insolvent will not be released on an order of discharge. Subsection (2) then provides that "save as otherwise provided by sub section (I.), an order of discharge shall release the insolvent from all debts provable under this Act. " Stress is laid on behalf of the respondents on this provision and it is urged that though sub section (2) provides that the insolvent shall be released from all debts provable under the Act, it does not provide for revesting any property in the insolvent on an order of discharge. It is thus clear from the above analysis of the provisions of the Act that if there is no annulment of the adjudication and no sanction of a composition or scheme of arrangement resulting in an order of annulment, insolvency proceedings terminate generally after the administration of the properties is complete and a discharge is granted. The discharge may be absolute in which case the consequences mentioned in section 44 (2) apply. On the other hand discharge may be conditional in which case also the consequences of section 44 (2) apply subject to the conditions attached to the discharge in accordance with sub section 41 (2) (c). Further in considering whether an absolute order of discharge should be granted or not. the court has to consider whether the in solvent 's assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. Further before granting a discharge the court has to consider the report of the receiver if one is appointed. It is therefore reasonable to think that generally speaking an order of discharge will only be made after the court has considered the report of the receiver and has also considered that the assets of the insolvent ; are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. It is also not unreasonable 533 to think in view of all the provisions that no order of discharge will generally be made till all the assets of the insolvent are realised, (see section 64), though, as we have already pointed out, it is possible to declare a final dividend even though all the property of the insolvent has not been realised if in the opinion of the court such realisation would needlessly protract the receivership. In such a case however the court would generally pass an order protecting the interests of the creditors with respect to the property which has not been realised before the order of discharge. Finally there is section 67, which provides that if there is any surplus remaining after payment in full of his creditors with interest and of the expenses of the proceedings taken under the Act, it shall go to the insolvent. The key to the solution of the narrow question posed before us is in our opinion to be found in section 67. It is true that section 44 when it provides for the consequences of an order of discharge does not lay down that any property of the insolvent remaining undisposed of will revest in him and to that extent it is in contrast to section 37, which provides for the effect of an order of annulment and in effect lays down that all sales and dispositions of property made by the receiver shall be valid, but if any property remains undisposed of it shall vest in such person as the court may appoint or in default of any appointment shall revert to the debtor insolvent. The reason why section 44 has not provided specifically for the reversion of undisposed property to the insolvent obviously is that the scheme of the Act does not contemplate where there is no annulment that any property which vested in the receiver would remain undisposed of. It as section 74 shows the final dividend is generally declared when he receiver has realised all the property of the insolvent there would be no property left unadministered usually when an order of discharge comes to be passed. It is however urged on behalf of the respondents 534 that there is nothing in sections 41 and 42 to suggest that a discharge can only be granted after a final dividend is declared and therefore there may be cases where administration by the receiver may still go on after discharge has been ordered. This argument, in our opinion, is not quite correct, for cl. (a) to section 42 (1) definitely requires the court to consider whether the assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, and this the Court generally speaking can only find out after all the property has been realised and final dividend has been declared. But, as we have pointed out, it is possible to declare a final dividend and thereafter to get an order of discharge even though some property may not have been disposed of where in the opinion of the court the realisation of such property would needlessly protract the receivership. Therefore it may be possible in some cases that all the property of the insolvent may not be disposed of before an order of discharge is made. But in such a case the court will generally pass orders with respect to the property not disposed of when granting ' an order of discharge. It is true that the Act does not contemplate that an insolvent might get an order of discharge and yet retain part of his property free from the liability to pay debts provable under the Act, in case all the debts have not been paid off But it is here that we have to look to the effect of section 67 of the Act. That section lays down that the insolvent shall be entitled to any surplus remaining after payment in full of his creditors with interest as provided ' by the Act and of the expenses of the proceedings taken thereunder. Now, often this surplus would be in the form of money. But take a case where an insolvent has come into property by devolution after he became insolvent and before his discharge; and suppose that the property which was devolved on him is worth a few lacs while his debts are only a few thousands. In such a case the receiver would not proceed to sell all the property; he would only sell so much of the 535 property as would satisfy the debts in full and meet the expenses of the proceedings in insolvency; the rest of the property whether movable or immovable would not be converted into money. It seems to us that it would not be wrong in such a case to call such property whether movable or immovable which remains after payment in full to the creditors with interest and of the expenses of the proceedings in insolvency as "surplus". To this surplus the insolvent is entitled. In such a case therefore it would be proper to hold that if any property remains undisposed of in the shape of surplus that vests back in the insolvent, just as surplus in the shape of money would. It is true that cases may arise where what devolves on the insolvent after the order of adjudication and before his discharge may not be easily realisable or may be a matter of dispute which may lead to litigation lasting for many years. In such a case the receiver would be entitled to declare a final dividend if the court is of opinion that the property which has de ' volved on the insolvent is subject of protracted litigation and it cannot be realised without needlessly protracting the receivership. Such property would also in our opinion be surplus to which the insolvent would be entitled under section 67 subject to his complying in full with the provisions of that section i.e. paying his creditors in full with interest and meeting the expenses of the proceedings taken under the Act. A third class of cases may arise where the court may not come to know of the property which devolves on the insolvent and grants a discharge in ignorance of such devolution, may be because the insolvent did not bring it to the notice of the court. In such a case also in principle we see no difficulty in holding that the property which vested in the receiver under section 28 (4) and which remained undisposed of by him before the discharge of the insolvent would still be surplus to which the insolvent would be entitled, though he may not be permitted to make full use of 536 it until he complies with the conditions in section 67, namely, until payment in full is made to his creditors and the expenses of the proceedings in insolvency are met by him out of the property so remaining undisposed of. Though therefore there is no specific provision in terms in section 44 (2) with respect to property that may remain undisposed of by the receiver or by the court like the provision in section 37 on an order of annulment, it seems to us that section 67 by necessary implication provides the answer to a case like the present. All the property which remains undisposed of at the time of discharge must be treated as surplus to which the insolvent is entitled. The insolvent will thus get title to all such property and the vesting in the receiver whether under section 28 (2) or section 28(4) would come to an end on an order of discharge subject always to the insolvent complying in full with the conditions of section 67 in case they have not been complied with before his discharge, for he is entitled only to the surplus after the creditors have been paid in full and the expenses of all proceedings in insol vency have been met Any other view of the effect of discharge would result in this startling position that though the insolvent is freed from his debts under section 44 (2) and is a freeman for all purposes the property which was his and which vested in the receiver under section 28 (4) will never come back to him and will always remain vested either in the court or the receiver. We have no doubt that the Act did not contemplate such a situation. We have already indicated the reason why section 44 does not provide for revesting of property in the insolvent in contrast to the provision therefor in section 37. Generally speaking it is not expected that there would be any property left to revest in the insolvent after the administration in insolvency is over. We have therefore to look to section 67 which provides that the insolvent is entitled to any surplus remaining after payment in full of his creditors and after meeting the expenses of the proceedings taken under the Act; and it is that 537 section which gives title to the insolvent in the property which remains undisposed of for any reason before his discharge subject to the conditions of that section being fulfilled even after the discharge. just as the Act does not contemplate that an insolvent would get an order of discharge and yet retain part of his property without meeting the debts provable under the Act in full, it is to our mind equally clear that the Act does not contemplate that after an insolvent has been discharged his undisposed of property, if any, should for ever remain in the possession of the court or receiver, even though in a particular case the creditors may have been paid in full out of the property disposed of ' and all the expenses of the proceedings under the Act have been met. In such a case it seems to us that it is section 67 which must come to the aid of the insolvent and the property which remains undisposed of must be treated as surplus and he gets title to it. Where however the insolvent has been discharged without fully meeting the conditions of section 67, he would in our opinion be still entitled to the surplus, even if it be in the shape of undisposed property, subject to his fulfilling the conditions of section 67. It may be added that there is nothing in the Act which takes away the right of the insolvent to sue in courts after he has been granted a discharge, for he then becomes a free man. In such a situation we are of opinion that he would certainly be entitled to sue in court for recovery of his undisposed of property, if it is in the possession of a third party, after his discharge and such property cannot for ever remain vested in the court or receiver. All that justice requires is that in case the conditions of section 67 have not been fulfilled such property should be subject to those conditions, namely, that he should be liable to discharge his creditors in full. with interest and to meet the expenses of all proceedings taken under the Act. Subject to these conditions the insolvent in our opinion would be entitled to undisposed of property on discharge and would be 538 free to deal with it as any other person and, if necessary, to file a suit to recover it. It remains now to consider some of the cases which were cited at the bar. We have already pointed out that it is unnecessary to consider those cases which deal with the right of the insolvent to file a suit while he is still undischarged, though even on this point there seems to be difference of opinion in various High Courts as to the power of the insolvent; nor is it necessary to refer to the rule in Cohen vs Mitchel (1), which has found statutory expression in section 47 of the Bankruptcy Act, 1914, (4 & 5 Geo.5, ch. 59). Section 47 of the English Bank ruptcy Act deals with transactions by a bankrupt with any person dealing with him bona fide and for value, in respect of property, whether real or personal, acquired by the bankrupt after the adjudication, and provides that all such transactions shall be valid if completed before intervention by the trustee (i. e. the receiver). In England, therefore intervention by the trustee (i.e. the receiver) is required before completion of the transaction and if the trustee does not intervene the transactions arc generally speaking good. That position of law however does not apply in India because of section 28 (4), which specifically lays down that all the property which is acquired by or devolves on an insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receivers Learned counsel for the parties have not been able to cite any case which deals exactly with a case like the one before us. We may however refer to certain observations of learned judges which may be helpful to show how the position has been understood by some High Courts with respect to surplus and also with respect to what happens to undisposed of property after a (1) , 539 discharge, though there is no discussion on the subject in the cases cited. In Sayad Daud Sayad Mohd. vs Mulna Mohd. Sayad (1), the Bombay High Court was dealing with a case where an insolvent had filed a suit to recover property four days after he had been adjudicated insolvent '. Later the official assignee wanted to join as a new plaintiff when he came to know of the suit; but by that time it appears that limitation had expired, and the question arose whether the suit would be said to have been filed afresh on the date the official assignee intervened. It was held that that was so, for the insolvent could not maintain a suit after he had been adjudicated insolvent and so far as the official assignee was concerned the suit must be held to have been filed on the date he asked for intervention and would therefore be barred by time. It will be seen that the case deals with a suit brought by an undischarged insolvent and not with a suit as in the present case brought by a discharged insolvent. But the learned judges observed that the vesting order for the time being was paramount, even though an insolvent might eventually be entitled to what might remain as surplus after satisfying his creditors, thus showing that what remains as surplus becomes the property of the insolvent. Yellavajjhula Surayya vs Tummalapalli Mangayya (2) is a case more directly in point. In that case the plaintiff was declared an insolvent in 1919. He was still an insolvent in 1929 when certain property devolved on him as reversioner. He was granted an absolute discharge in August 1931. No creditors had come to prove their debts or to take steps between 1919 and 1929; nor did the official receiver take any step prior to 1929 or between 1929 to 1931. After his absolute discharge, the plaintiff instituted a suit for recovering the property. , In that (1) (2) A.I.R. (1941) Mad. 345 540 suit, Varadachariar J. observed and, if we may say so with respect, rightly that the construction of cl. (4) of section 28 was not free from difficulty; but went on to add that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers, and in the circumstances the plain ' tiff could maintain the suit, though the learned judge added that nothing that was said in the judge ment would prejudice the right, if any, of the official receiver or of the creditors of the plaintiff to assert such rights and remedies as they might have in law in respect of the suit properties. It will be seen that this case was almost similar to the case before us and the court held that in such circumstances the discharged insolvent could maintain the suit, though the reasoning was only in one sentence, namely, that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers. In Rup Narain Singh vs Har Gopal Tewari an insolvent acquired some property after the order of adjudication. It was apparently not brought to the notice of the receiver and was mortgaged by the insolvent while he was still undischarged. Later after his discharge the mortgagee brought a suit to enforce the mortgage. The insolvent mortgagor had transferred part of the property to other persons who were also made parties. These persons raised the defence that as the mortgagor was an undischarged insolvent when he executed the mortgage, it was void. The High Court negatived this contention and relying on section 43 of the Transfer of property Act decreed the suit. In the course of the judgment the High Court however observed that after the order of discharge was passed, the property had been divested from the receiver and revested in the insol vent, though no reason was given for this view. In Dewan Chand vs Manak Chand (2) the facts were that a certain property devolved on an insolvent, (1) I.L.R. (1933) 55 All. (2) A.I.R. (1934) Lab. 809 541 who made a mortgage of it, apparently without bringing it to the notice of the receiver. After the insolvent was discharged, a suit was brought to enforce the mortgage and a question arose whether section 43 of the Transfer of property Act would apply. In that connection the High Court observed that after the insolvent was discharged the property in question must be considered to have revested in the mortgagor on his discharge in the absence of any order to the contrary by the court. We may now notice some cases on which reliance is placed to suggest that undisposed of property can never vest in the insolvent, even after he gets a discharge. In Arjun Das Kundu vs Marchhiya Telinee (1), it was held that "an absolute order of discharge of an insolvent does not release any property acquired by him before such order from the liability to meet his debts provable in insolvency. " That case, however, was only dealing with the effect of section 44 (2) of the Act and it was held that if there was any property which vested in the official receiver either under section 28 (2) or under section 28(4) and that property was not disposed of before the order of discharge, the creditors would still have a right to get their debts discharged by the sale of that property even though they might not have proved the debts at an earlier stage. This case does not in our opinion support the proposition contended for by the respon dents. It only lays down that the property which remains undisposed of would still be subject to the debts provable under the Act, and this is what in our opinion is the effect of section 67 where only the surplus revests in the insolvent. The next case is Kanshi Ram vs Hari Ram (2) there the facts were that a discharge was granted on the re port of the official receiver to the effect that the insolvent 's assets had been completely disposed of. Thereafter it was discovered that some property had (1) I.L.R. (2) A.I.R. (1937) Lah. 542 devolved on the insolvent before his discharge and was not within the knowledge of the receiver. The High Court held that such property was liable to meet the debts which had not been paid in full before the discharge. This case also in our opinion only lays down that any surplus in the hands of the insolvent after his discharge is liable to the debts provable under the Act if they have not been paid in full, and this is in accordance with the provisions of section 67, for the insolvent is only entitled to that property or money as surplus which remains after payment of his debts in full and after meeting all expenses of the proceedings under the Act. The last case to which reference may be made is Parsu vs Balaji (1). In that case also the insolvent had been discharged but his debts had not been paid in full. It was held in those circumstances that any undisposed of property would still be liable to meet the debts provable under the Act. This again in our opinion is in accord with section 67 where the insolvent is only entitled to that surplus which remains after his debts have been paid in full and all the expenses of the proceedings taken under the Act have been met. Therefore, on a careful consideration of the scheme of the Act and on a review of the authorities which have been cited at the bar, we are of opinion that an insolvent is entitled to get back any undisposed of property as surplus when an absolute order of discharge is made in his favour, subject always to the condition that if any of the debts provable under the Act have not been discharged before the order of discharge, the property would remain liable to dis charge those debts and also meet the expenses of all proceedings taken under the Act till they arc fully met. The view of the High Court that the suit is not maintainable is therefore not correct. The order of the trial court by which it held that the suit was maintainable and provided that notice should be (1) I.L.R. 543 given to the receiver in insolvency application No. 48 of 1939 to consider if be wanted the property to be made available for distribution amongst creditors, is correct. Now we come to the second point raised before the High Court, namely, the effect of the will of Ganpatrao. By the first clause of the will, Ganpatrao appointed three executors. The bequest in favour of Annapumabai was in these terms : "The entire immovable property situate at the village of Dahisar, Taluka Kalyan, consisting of lands and tenements etc. is given to my senior wife, Annapoorna. During her life time she shall enjoy, as owner, the income therefrom, in any manner she may like. No one shall have (any) right, title or interest therein. " The bequest in favour of Sarswatibai was in these terms : "The entire immovable property situate at the village of Nagaon, Taluka Kalyan, consisting of lands and tenements etc. is given to my junior wife, Sarswati. During her life time, she shall enjoy, as owner, only the income therefrom in any manner she may like." Then there was another clause which gave them some property jointly, which was in these terms : "The property consisting of a dwelling house and other structures and open space etc. situate at Thana shall remain with my two wives. Hence, they should live amicably and enjoy the same. " The High Court has held that the estate given to Annapurnabai in the lands at village Dahisar and 544 to Sarswatibai in the lands at village Nagaon and the estate given to them, in the house at Thana was an absolute estate subject to defeasance of the estate on their deaths in case a son was adopted by Annapurnabai. It is true that the two clauses with respect to the demise of properties in villages Dahisar and Nagaon to the two widows use the word "owner" ; but we have to read the clauses as a whole together with the surrounding circumstances then prevailing as also in contrast to the other clauses in the will to determine the intention of the testator. Now the clause with respect to village Dahisar is that the property in Dahisar was given to Annapurnabai. and then goes on to say that during her life time she would enjoy as owner the income there from in any manner she liked and no one else would have any right, title or interest therein Reading the clause as a whole it seems to us fairly clear that the intention of the testator was that the property given to Annapurnabai was for her life and she was entitled to enjoy the income therefrom in any manner she liked without any interference by any one. If the testator 's intention had been to give an absolute estate to Annapurnabai, there was no reason why he should have gone on to say in that clause, "during her life time she shall enjoy as owner the income therefrom, in any manner she may like", for that would have been unnecessary in the case of a person who was given an absolute estate. Therefore these words appearing in the second clause are clearly words of, limitation and show on the reading of the whole clause that the intention of the testator was to confer a life estate on Annapurnabai. In the case of the property in village Nagaon, the matter is clearer still, for the testator said that Sarswatibai shall enjoy as owner, only the income during her life time. These are clear words of limitation and show on reading the clause as a whole that the 545 intention of the testator was to confer only life estate on Sarswatibai. As to the clause relating to the dwelling house etc. in Thana, it is remarkable that that clause does not even use the word "given" ; it only says that the dwelling house etc. " 'shall remain with my two wives" i.e. that they will be in possession so long as they live. The further sentence that they should live amicably and enjoy the same, makes in our opinion no difference to the intention of the testator, which is clear from the fact that he wanted these properties to remain with his two wives, i.e. he was only giving them the possession of the property for enjoyment for their lives. In this connection it may be well to contrast the language of some other clauses in the will where the bequest was obviously of an absolute estate. Take the bequest relating to Sirdhon village in favour of Balkrishna Waman Kharkar. It is in these terms : "The entire immovable property situate , 'at Sirdhon village, taluka Panvel, consisting of lands and tenements etc. is given to Chiranjiv Balkrishan Waman Kharkar. He shall en 'JOY the same as owner. Neither my two wives nor others whosoever shall have any right, title or interest etc. whatever therein. " This is a clear bequest of an absolute estate. There is no mention of any income in this clause and also no mention of the life time of the legatee. Obviously, therefore, where the testator was intending to bequeath an absolute estate he used entirely different language from that used in the three clauses with respect to his wives. Contrast again the language relating to the bequest of movable property in favour of the two wives. That clause is in these terms : " Movable property such as ornaments and trinkets and clothes and raiments etc. which 546 may have been given to any party shall remain with the said party and my two wives shall be fully entitled thereto. They shall deal with the same in any manner they like. " The use of the words "fully entitled" clearly indicates the bequest of absolute estate so far as movable property is concerned ; but we find no similar words in the clauses relating to bequests of property in villages Dahisar, Nagaon and Thana. This conclusion as to the nature of the interest bequeathed to the two wives is strengthened by another provision in the will. Under that provision Annapurnabai was authorised to adopt a fit boy from amongst the family, on the advice of the executors. It was also provided that the adopted son shall have no right of any kind whatever to the movable and immovable properties so long as Annapumabai remained alive. But on her death he was to be entitled to these. properties. It was further provided that on the death of Sarswatibai the adopted son would become entitled to the immovable property bequeathed of her. Now if the estate bequeathed to Annapurnabai and Sarswatibai was anabsolute estate it is difficult to see how the testator could provide that on the death of Annapurnabai and saraswatibai the properties bequeathed to them would go to the adopted son. The holder of an absolute estate would be entitled to sell it if she so desired, and therefore there could be no provision in the will that on the deaths of Annapumabai and Sarswatibai, the property bequeathed to them would go to the adopted son. This provision therefore read with the provisions in the three clauses relating to the bequests of properties in Dahisar; Nagaon and Thana clearly shows that the bequest of those properties in favour of the two wives was only a life estate. We cannot therefore agree with the 547 High Court that the estate given to Annapumabai and Sarswatibai whether in Dahisar, Nagaon or Thana was an absolute estate. In our opinion it was life estate only. It may also be added that Ganpatrao died,, in 1894 when it was more usual to give life estate to widows and the terms in the various clauses on the will are in our opinion in consonance with the prevailing practice in those times. In the view that we have taken it follows that the judgment of the High Court must be set aside. However as the High Court has only considered these two questions, the case will have to be remanded so that the High Court may go into the other issues raised and decided by the trial court. Lastly we may refer to another contention on behalf of the respondents. It appears that Shamdas Narayandas and jaigopal Narayandas purchased property in village Dhokali Manpada in Taluka and sub division of Thana, described as lot No. 8 in the first schedule to the 'plaint. It appears that there was one sale deed in favour of these two defendants. Of these defendants, jaigopal_Narayandas died on April 19, 1960, after the decree of the High Court which was given on March 7, 1957, and also after the grant of the certificate by the High Court in May, 1958, and the order admitting the appeal by the High Court in April, 1959. The record was despatched to this Court in 1962. No application was however made to the High Court till August 13, 1962, for substitution of the heirs of jaigopal Narayandas. When the application was made in August 1962, for substitution, the High Court dismissed it on Jannary 9. 1963, on the ground of limitation. There was then a review application filed before the High Court, which was also dismissed on February 12, 1963. Thereafter the petition of appeal was filed in this Court on March 13, 1963. Then on April 3, 1963, an application was made to this 548 Court for substitution of the heirs of Jaigopal Nara a as. The respondents contend that as the heirs of jaigopal Narayandas were not brought on the recordwithin the time allowed by law, the entire appeal abates. We are of opinion that the interests of the various defendants who are in possession of various properties are independent and therefore the whole of the appeal cannot abate because the heirs of certain deceased defendants in possession of one property have not been brought on the record. So far as lot. No. 8 is concerned it was the common progerty of Shamdas Narayandas and jaigopal Narayan as, which they apparently acquired by one sale decd. We are not prepared to condone the delay in bringing the heirs of jaigopal Narayandas on the record and therefore dismiss the application dated April 3, 1963. The effect of this will be that the suit will abate in so far as the property in lot No. 8 is concerned. It is not shown that the interest of the two purchasers who are presumably members of an undivided family were separate and distinct and so there cannot be partial abatement only in regard to the share of the deceased purchaser; but that cannot affect the appeal in so far as the property in other lots is concerned. The High Court on remand will therefore go into the other issues with respect to properties in lots other than lot No. 8. We therefore allow the appeal and remand the case to the High Court for decision on other issues so far as lots (other than lot No. 8) in the first schedule to the plaint are concerned. So far as lot No. 8 is concerned, the appeal abates and is dismissed. In the circumstances we pass no order as to the costs of the appeal with respect to lot No. 8, so far as the costs of the appeal with respect to other lots are concerned, the respondents will pay the costs of the appellant including advocate 's fee of this court & the Court fees also. Appeal allowed. Case remanded.

The appellant, a Hindu reversioner, brought the suit out of which the appeal arose for recovery of certain properties alienated by two widows having widow 's estates under the will of their husband. The respondents resisted the suit mainly on the grounds that the appellant, who was an undischarged insolvent at the time the succession opened, could not maintain the suit even after his absolute discharge as the properties must be taken to have vested in the official receiver and that under the will of their husband the widows got not a widow 's estate but an absolute estate and had the right to alienate the properties which they did. The trial court found in favour of the appellant and directed delivery of possession of the properties to him. On appeal the High Court took the contrary view on both the points and dismissed the suit. The appellant came up to this Court on the certificate granted by the High Court. Held that the High Court was in error in holding that the appellant could not maintain the suit. There is nothing in the Provincial Insolvency Act that takes away the right of the insolvent to sue in courts after he is granted a discharge for he then becomes a free man. Though there is no specific provision in the Act with respect to the property that may remain undisposed of by the court or by the receiver, the provisions in section 67 by necessary implication read in the light of the general scheme of the Act provides an answer to this and all such property must be treated as surplus to which an insolvent is entitled, after an absolute order of discharge is made in his favour, subject always to the condition that if any debts provable under the Act have not been discharged before such order, 521 the property will remain liable for such discharge as also the expenses of all proceedings under the Act till they are fully met. Cohen vs Mitchel, (I 890) ; Sayad Daud Sayed Mahomed vs Mulna Mahomed Sayad, (1926) 28 Bom. L. R. 334; Yellavajjhula Suraya vs Tummalapali Mangayya, A.I.R. , Rup Narain Singh vs Har Gopal Tewari, 'I. L. R. (1933), 53 All. 503; Diwan Chand vs Manak Chand, A.I.R. (1934) Lah. 809; Arjun Das Kundu vs Marchhiya Tolinee, I.L.R. ; Kanshi Ram vs Hari Ram, A. I .R. and Parsu vs Balaji, I.L.R. (I , discussed. In order to determine the true intention of a testator, the clauses of the will should be read as a whole in the light of the surrounding circumstances as also in contrast to the other clauses and where the testator, as in the instant case, having used the word owner ' in the previous clause, follows up by using the words "during her lifetime enjoy as owner the income in any manner she likes" the latter words clearly limit the bequest and indicate that what is given is no more than a life estate. Where the interests of the various defendants in possession of various properties are independent, the appeal cannot abate as a whole by reason of the heirs of a deceased defendant in possession of a property not having been brought on the record within the prescribed time.

Civil Appeal No. 707 of 1988. From the Judgment and Order dated 13.10.87 of the Bombay High Court in A. No. 969 of 1984. S.B. Bhasme and A.S. Bhasme for the Appellant. Dr. Y.S. Chitale and R.S. Nariman for the Respondent No. 16. Mrs. Karanjawala and Ms. Meenakshi Arora for the Caveator. The following order of the Court was delivered: O R D E R Special leave granted against Respondent No. 16 in so far as relief claimed against Respondent No. 16. The Charity Commissioner of State of Maharashtra has approached this Court by way of Special leave in order to seek redress in respect of the observations made by the Division Bench of the High Court casting reflections on the conduct of the officials of the organization and in regard to their competence to decide matters in their quasi judicial capacity. He has also sought a direction against Respondent No. 16 who is present by caveat. We are constrained to observe that the High Court might well have avoided casting reflections against the Deputy Charity Commissioner who was merely discharging his quasi judicial functions under the Bombay Public Trusts Act. He should have been permitted to discharge his functions in regard to the issues arising before him in the light of his own independent perspective. The 951 observations made by learned Single Judge, by the very nature of things, were of a tentative nature as the learned Single Judge was deciding the matter arising out of an interlocutary proceeding. In fact, the observations made by the learned Single Judge on merits in regard to the interpretation of the clauses of the Will could not have influenced even the trial court. Besides, an appeal to the Division Bench was pending. Under the circumstances, taking a view which was different from the view reflected in the judgment of the learned Single Judge on the part of the Deputy Charity Commissioner could by no stretch of imagination be said to have been made in scant regard of the judgment of the High Court. Nor could it ever have been construed as exhibiting disrespect for the High Court. The Division Bench went far too far in observing to the effect that what the Deputy Charity Commissioner had done in discharging his quasi judicial functions would constitute contempt of Court. Learned Deputy Charity Commissioner was entitled to take his own view subject to his decision being questioned in accordance with law before the High Court. The observations made against the Deputy Charity Commissioner were therefore altogether uncalled for and unfair. We, therefore, direct that these observations be treated as non existent. We wish to make it clear that the Deputy Charity Commissioner has not been amiss or at fault in the smallest respect in taking the view which commended itself to him and which he was at full liberty to take under the law. We wish to place on record that nothing said in the judgment of the Division Bench in Appeal No. 969 of 1974 should be construed as a reflection on the learned Deputy Charity Commissioner. We are also of the view that the observations made in regard to the mode of recruitment to the office in question were also uncalled for and should be treated as non existent. In the facts and circumstances of the case the Division Bench might will have permitted the Charity Commissioner to be substituted for the appellant before the Court for he was merely making sincere endeavour in the discharge of his official duties to protect the interest of the charity as he was duty bound to do, so as to be true to his office. We have heard the learned counsel for the Respondent No. 16 in regard to the relief claimed against him. Both counsel are agreeable to the directions which follow. The status quo in regard to the property in question shall be maintained and Respondent No. 16 shall not get executed or obtain a sale deed in respect of the property in his favour or in favour of his nominees or assignees till the question is finally disposed of by the 952 Assistant Charity Commissioner or by the Appellate Authority, if any appeal is carried. The Assistant Charity Commissioner before whom the matter is pending will have full liberty to decide the matter in accordance with law in the light of his own perception of the matter without being influenced one way or the other by any observation made in the judgment of the learned Single Judge or in the judgment of the Division Bench of the High Court which have given rise to the present Special Leave Petition. We express no opinion on merits in regard to the effect of the relevant clauses of the Will as indeed we cannot do. The Assistant Charity Commissioner will dispose of the matter pending before him with expedition preferably within the outside limit of six months. The matter shall stand disposed of accordingly. G.N. Appeal disposed of.

% What fell for consideration in all these matters, viz., (i) SLPs. (civil) Nos. 4826 and 7045 of 1987, (ii) SLP (civil) No. 5240 of 1987, (iii) C.M.Ps. Nos. 12029 31/87 (in CAs Nos. 577 79 of 1987), (iv) C.M.Ps. 16635 and 16918/87 (in S.L.P. (c) No. 4826/87) and (v) Transferred Cases Nos. 13 and 14 of 1987 (with CMPs. 16887 89 and 17018/87), was a common question of law whether equity shares in two companies, i.e. 10,00,000 shares in Swadeshi Polytex Ltd. and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Ltd., held by the Swadeshi Cotton Mills, vested in the Central Government under section 3 of the Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. The other subsidiary question was whether the immovable properties, namely, bungalow No. 1 and Administrative Block, Civil Lines, Kanpur, had also vested in the government. There were six original proceedings initiated by various parties which gave rise to these civil appeals, special leave petitions and transferred cases before this Court. These were: On 18th February, 1987, a suit was filed before the Delhi High Court by one Naresh Kumar Barti against Dr. Raja Ram Jaipuria, Swadeshi Polytex and others, for an injunction restraining the company from holding the 17th annual general meeting on the ground that 34% shares in the Swadeshi Polytex vested in the National Textile Corporation (N.T.C.) in view of sections 3 and 4 of the Act. In the suit, an application was also filed praying that in the event of the annual general meeting of the company being allowed to be held, an independent Chairman should be appointed to conduct the meeting. The High Court 963 refused to pass any order (in view of an order already passed by the Allahabad High Court). Against this order of the Delhi High Court, two special leave petitions were filed in this Court one by Doypack Systems Pvt. Ltd. (defendant No. 10 in the Delhi Suit), which came to registered as Civil Appeal No. 577 of 1987 after the grant of special leave, and the other, by Naresh Kumar Barti, the plaintiff in the Delhi Suit, which came to be registered as Civil Appeal No. 578 of 1987 after the grant of special leave. On 24th February, 1987, one Bari Prasad Aggarwal filed a suit in the court of the Third Additional Civil Judge, Kanpur praying inter alia that Shri Raja Ram Jaipuria should not preside over the 17th annual general meeting of the company. The application for an interim injunction filed in the suit was dismissed. In the appeal preferred by the plaintiff before the Allahabad High Court, an order was passed by the High Court on 2nd March, 1987, appointing Shri M.P. Wadhawan as the Chairman of the said annual general meeting. Against this order dated 2nd March, 1987, passed by the Allahabad High Court M/s. Doypack System Pvt. Ltd., preferred a special leave petition in this Court, which after the grant of leave, was registered as Civil Appeal No. 577 of 1987. The three special leave petitions were heard together as Civil Appeals Nos. 577, 578 and 579 of 1987 and disposed of by this Court by a common order on 6th March, 1987, appointing Shri Jaswant Singh as the Chairman of the said annual general meeting. On 26th February, 1987, another suit Suit No. 506 of 1987 was filed in the Delhi High Court by Mukesh Bhasin for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of the share holdings in Swadeshi Polytex and that the said shares were vested in the N.T.C. by virtue of the said Act. By order dated 9th March, 1987, the High Court disposed of that application and granted injunction restraining defendants Nos. 3 and 4 in that suit from exercising any right whatsoever attached to the 34% shares of defendant No. 2 held by them and particularly any voting right in the annual general meeting scheduled to be held on the 9th March, 1987, till the decision of the suit. This order was brought to the notice of this Court by C.M.P. forming part of the Civil Appeals Nos. 577 579 of 1987. On 9th March, 1987, on that C.M.P. this Court passed an order directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall be entitled to vote at the annual general meeting and the question as to who were the rightful voters would be decided by the Chairman of the meeting, etc. This was the Transferred Case No. 14 of 1987. 964 One Mukesh Jasmani, a shareholder in Swadeshi Polytex filed a writ petition in the Allahabad High Court. The High Court by its order dt. 7th March, 1987, dismissed that writ petition, observing that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect of their shares which, according to N.T.C., had vested in them. Against this order, Doypack Systems preferred the Special Leave Petition (civil) No. 3112 of 1987. This Court passed orders on this petition, directing that the meeting would be held under the chairmanship of Shri Jaswant Singh notwithstanding any order made by any Court. This Court also vacated the operative portion of the directions contained in the order dated 7th March, 1987 of the Allahabad High Court. On 6th April, 1987, M/s. Swadeshi Mining and Manufacturing Company filed a civil writ petition Writ Petition No. 2214 of 1987 in the Allahabad High Court (Lucknow Bench) for stay of the operation of the letters dated 24/30 March, 1987, addressed by NTC to Swadeshi Mining and Manufacturing Company and Swadeshi Cotton Mills Company Limited, calling for an Extraordinary General Meeting of the Shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Ltd. The High Court passed an order on the 6th April, 1987, staying the operation of the said letters. Against that order, M/s. Doypack Systems Pvt. Ltd. filed Special Leave Petition No. 4826 of 1987 and NTC also filed a Special Leave Petition No. 5240 of 1987 in this Court. By an order dated 5th May, 1987, this Court directed that Suit No. 506 of 1987 in the Delhi High Court and the Writ Petition No. 2214 of 1987 in the Allahabad High Court be transferred to this Court, which were registered in this Court as Transferred cases Nos. 14 and 13 of 1987 respectively. NTC filed a civil suit in the District Court Kanpur seeking declaration of its title in respect of the shrubbery property in Kanpur. The court refused any interlocutory injunction in the suit against which an appeal was preferred before the High Court of Allahabad and the same was dismissed. Consequently, NTC filed a Special Leave Petition No. 7045 of 1987 in this Court. Disposing of the matters, the Court, ^ HELD: Swadeshi Mining and Manufacturing Co. Ltd. and Others submitted that the shares in question did not vest in the Central Government. [976B] 965 By the Act Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986 on the appointed day "every textile undertaking" and the "right, title and interest of the company in relation to every textile mill of such textile undertakings" were transferred to and vested in the Central Government and such textile undertakings would be deemed to include "all assets". In the context of this provision, the reliance on the decision of this Court in Balkrishnan Gupta and Others vs Swadeshi Polytex Ltd. and Others, ; , was not appropriate. [978D E] It appears from the written statement filed by NTC on 8th February, 1987, in the suit filed by one G.G. Bakshi in Ghaziabad Court, it was claimed that NTC was entitled to take over company 's shares and investments. On 24/30th March, 1987, NTC issued notice to the petitioners 1 and 2 stating that they were entitled to shares. It was urged by Shri Nariman, counsel for Swadeshi Mining and Manufacturing Co. Ltd. & Ors., that this belated assertion indicated that the shares were not intended to be taken over. The Court was unable to accept this suggestion or to draw that inference. It did not logically follow. [979G H; 980A] Before dealing with the main question, the Court considered an application made by Shri Nariman for the production of certain documents. The petitioner in Transferred Case No. 13 of 1987 had sought production of the documents. It was contended inter alia that the production of those documents was necessary to establish that the shares were never intended to be taken over and these were never considered as part of the textile undertaking, and that the documents were definitely relevant as they would throw light on the merits of the case. The production of the documents was resisted by the Attorney General on behalf of the Union of India on the ground that the documents were not relevant and in any event most of them were privileged being part of the documents leading to the tendering of the advice by the Cabinet to the President, as contemplated by Article 74(2) of the Constitution. [989B, C; 990A] Having considered the facts and circumstances of the case as well as the decisions of this Court in a number of cases, the Court was of the opinion that the documents in question were not relevant, and also that the Cabinet papers are protected from disclosure not by reason of their contents but because of the class to which they belong; the Cabinet papers also include papers brought into existence for the purpose of preparing submission to the Cabinet, and it is the duty of this Court to 966 prevent disclosure where Article 74(2) is applicable. The Court was unable to accept the prayer of the petitioner to direct disclosures and production of the documents sought for. [993F G; 994H] Coming to the main question involved, reading the provisions of section 3(1), section 4(1) and section 2(k) of the Act, each throwing light on the other, it follows that (a) under the first limb of section 3(1) of the Act, every textile undertaking; (b) under the second limb of section 3(2), every right, title and interest of the company in relation to every such undertaking, is transferred and vested, (c) the deeming provision of section 4(1) amplifies and enlarges both the limbs of the vesting section, being section 3(1), (d) the definition of the section is read into these provisions, to give a wider meaning and scope to the vesting provision and to what is transferred or vested. [997G H; 998A] Sections 7 and 8 of the Act relied upon by the petitioners, being provisions for payment of amounts and for the issue of shares by NTC respectively, will have no bearing on the scope of the vesting provision. As to what properties have vested cannot proceed on the hypothesis that there is a clear numerical or mathematical link between the quantum of compensation and the items of property vested. This correlation with regard to such legislation is not available. [998B] Section 8 refers to the payments of the amounts by Union of India to the company. It has no bearing either on the vesting section or on section 7 except that the figure of Rs.24 crores 32 lakhs was introduced into section 7. [998C D] In this case, a nationalisation statute is concerned. Even with other independent management statutes, in respect of textile undertakings a series of decisions have upheld the view that the shares vest in the Government. See National Textile Corporation Ltd. vs Sitaram Mills, [1986] Supp. S.C.C. 117, Minerva Mills vs Union of India, ; , Goverdhan Das Narasingh Das Daga vs Union of India, , Vidharba Mills Berar Ltd. vs Union of India, and Fine Knitting Co. Ltd. vs Union of India, The above provide the informed basis on which the Court makes construction of sections 3 and 4 of the Act. [998G H; 999A B] The expressions "and all other rights and interest in or arising out of such property, as were immediately before the appointed day, in the ownership, possession, power or control of the company in relation to the said undertakings", appearing in sub section (1) of section 4 of the 967 Act indicates that the shares which have been purchased out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings, would come within the scope of section 4 of the Act and thus would also vest in the Central Government under section 3. The origin of these shares and their connection with the textile undertakings had been fully corroborated. The textile business was the only business of the Swadeshi Cotton Mills. There was inter connection and inter relation between all the six undertakings. Investments in Swadeshi Polytex Limited from the funds of Kanpur undertaking were always made. Investments in Swadeshi Mining and Manufacturing Company Ltd. were always made from the funds of the Kanpur undertaking. Assets/investments held and used for the benefit of the textile business of SCM were carried on in its textile undertakings. [999B E] The words in the statute must Prima facie be given their ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing was shown to warrant that literal construction should not be given effect to. See Chandavarkar S.R. Rao vs Asha Lata, ; at 476, approving 44 Halsbury 's Laws of England, 4th ed. paragraph 856, p. 552, Nokes vs Doncaster Amalgamated Colliery Ltd., [1940] Appeal Cases 1014 at 1022. It must be emphasised that interpretation must be in consonance with the Directive Principles of the State Policy in Articles 39(b) and (c) of the Constitution.[999E G] The object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in constructing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention and, therefore the meaning of the statute are particularly to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand. In the present case, the words used represented the real intention of the Parliament as the Court found not only from the clear words used but also from the very purpose of the vesting of the shares. If the fact is borne in mind that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution, no doubt was left that the shares vested in the Central Government by operation of sections 3 and 4 of the 968 Act. See in this connection, the observations of Halsbury 's Laws of England, 4th Edition, Volume 44, paragraph 856, p. 522 and the cases noted therein. [999G H; 1000A C] There is no exact correlation between the figure of capital reserve and the figure of investments. That could not be. These could never be equal. The submission of the petitioners failed to take into account the fact the undertakings, other than the Kanpur undertaking, also had capital reserve, even though there was no obligation that these were excluded assets in respect of other undertakings and there were no figures of investments therein. [1000D E] Contemporanea Expositio is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes. Reliance might be placed in this connection on Maxwell, 13th Ed. page 269. It is not applicable to modern statutes. Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Ed. pages 238,239. The leading case on Contemporanea expositio is Comppell College Belfast vs Commissioner of Valuation for Northern Ireland, , in which House of Lords made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes. Lord Watson said in Clyde Navigation Trustees vs Laird, [1983] 8 A.C. 658 that Contemporanea expositio could have no application to a modern Act. The Court, therefore, rejected the attempt of the petitioners to lead the Court to this forbidden track by referring to various extraneous matters. Furthermore, those external aids sought before the Court did not support the petitioners ' approach to this question at all. [1000F H; 1001A] Sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented. The Court could not find that there was any special intention to exclude the shares in this case, as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and the other sections as well Aluminium Corporation of India Ltd. (Acquisition and Transfer of Aluminium Undertakings) Act, 1984, Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, Britannia Engineering Company (Mohmeh Unit) and the Arthur Butler and Company (Muzaffarpore) Ltd. (Acquisition and Transfer of Undertakings) Act, 1978, and the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984. [1001E F] 969 It appeared to the Court that the expression "forming part of" appearing in section 27 could not be so read with section 4(1) as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 3(1). The expression "pertaining to" did not mean "forming part of". Even assuming that the expression "pertaining to" appearing in the first limb of section 4(1) means "forming part of", it would mean that only such assets as had a direct nexus with the textile mills, would fall under the first limb of section 4(1). The shares in question would still vest in the Central Government under the second limb of section 4(1) of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills. The shares would also fall in the second limb of section 3(1) being right and title of the company in relation to the textile mills.[1002C E] On the construction of sections 3 and 4, the Court came to the conclusion that the shares vested in the Central Government even if sections 3 and 4 were read in conjunction with sections 7 and 8 of the Act on the well settled principles. The expression 'in relation to ' has been interpreted to be words of the widest amplitude. See National Textile Corporation Ltd. and Ors. vs Sitaram Mills Ltd. (supra). Section 4 appears to be an expanding section. It introduces a deeming provision, which is intended to enlarge the meaning of a particular word or include matters which otherwise may or may not fall within the main provisions. It is well settled that the word 'includes ' is an inclusive definition and expands the meaning. [1002F G] To leave a company, the net wealth of which was negative at the time of take over of the management, with the shares held by it as investment in the other company, was, in the Court 's opinion, not only to defeat the principles of Articles 39(b) and (c) of the Constitution, but it would permit the company to reap the fruits of its mismanagement. That would be an absurd situation. It had to be borne in mind that the net wealth of the company at the time of take over was negative; hence sections 3 and 4 could be meaningfully read if all the assets including the shares were considered to be taken over by the acquisition. That was the only irresistible conclusion that followed from the construction of the documents and the history of the Act, which expressly recites that it was to ensure the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution. The Act must be so read that it further ensures such meaning and secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of the economic system does not result in injustice. [1003F H; 1004A] 970 The shares vested in the Central Government. Accordingly, the shares in question were vested in the N.T.C. and it had right over the said 34 per cent of the share holdings. [1004B] The 10,00,000 shares in the Swadeshi Polytex Ltd. and 17,18,344 in the Swadeshi Mining and Manufacturing Company Ltd. held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act. [1004B C] In view of the amplitude of the language used, the immovable properties, namely, the Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur, also vested in the NTC. [1004C D] In that view of the matter, in Transferred Case No. 13 of 1987, the Writ Petition No. 2214 of 1987 was dismissed. All interim orders were vacated. This would dispose of the various other SLPs and CMPs connected with the Lucknow writ petition, being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., SLP (Civil) No. 5240 of 1987 filed by NTC. CMPs 16918 and 16919 of 1987 in SLP No. 4826 of 1987 would stand disposed of in the above light. [1004D F] In the Transferred Case No. 14 of 1987 (in Suit No. 506 of 1987), the Court held that 10 lakhs and 17 lakhs equity shares and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith, related to the textile undertaking of defendant No. 3 and they vested in NTC with effect from 1st April, 1985, and defendants Nos. 3 and 4 were restrained by a decree of permanent injunction from dealing with them in any manner whatsoever. Defendant No. 2 was restrained by permanent injunction from recognising defendants Nos. 3 and 4 as owners of the aforesaid shares and the Swadeshi House. [1004F G] Defendant No. 2 was directed to enter the name of defendant No. 1, namely, NTC in its register of members and to treat the said defendant No. 1 as its share holder instead of defendants Nos. 3 and 4 in respect of the shares of defendant No. 2 held by them. In view of the provisions of law under section 108 of the Companies Act, as there was transmission of shares by operation of law, rectification was not necessary.[1004H; 1005A B] Civil Appeals Nos. 577 to 579 of 1987 were disposed of in the above terms and it was directed that the 17th annual general meeting be held in accordance with law after giving proper notice under the 971 Chairmanship of Shri Jaswant Singh. [1005C] CMPs Nos. 12760 of 1987 in Civil Appeal No. 577 of 1987 would stand disposed of in terms of the orders in the Transferred Case No. 14 of 1987 and it was directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to vote. CMP 16887 of 1987 was rejected. [1005D] CMP 16888 of 1987 was an application by Doypack Systems Ltd. to be impleaded as a party respondent in the Transferred Case No. 13 of 1987. Doypack Systems was permitted to argue and was heard as a party. No further order was necessary. [1005E] CMPs Nos. 16889 and 17018 of 1987 were allowed. CMP No. 18268 of 1987 was disposed of with the direction that no further documents needed to be inspected. In view of the orders, the other CMPs were no longer necessary to be disposed of. [1005F] Irrespective of any order passed by any court, the 17th annual general meeting should be held in accordance with law, to be presided over by Shri Jaswant Singh, recognising NTC as the rightful owner of the disputed shares. [1005G] Balkrishan Gupta & Ors. vs Swadeshi Polytex Ltd. and Ors., ; ; Swadeshi Cotton Mills vs Union of India, ; ; National Textile Corporation vs Sita Ram Mills; , ; Minerva Mills. vs Union of India; , ; Goverdhan Das Narasingh Das Daga vs Union of India, ; ; Vidharba Mills Berar Ltd. vs Union of India, ; Kumari Sunita Ramachandra vs State of Maharashtra and another; , at 704, c to e; Doctor (Mrs.) Sushma Sharma vs State of Rajasthan, ; at 263; Fine Knitting Co. Ltd. vs Union of India, ; State of West Bengal vs Union of India, [1964] 1 SCR 371 at 379, 380, 381 and 382; The Central Bank of India vs Their Workmen, ; at 217; Babaji Kondaji Garad vs Nasik Merchants Co_operative Bank Ltd., Nasik and Others, ; , Paragraphs 14 and 15; Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. & another; , at 1029; K.P. Verghese vs The Income tax Officer, Ernakulam and another; , ; Chern Taong Shang & Another, etc. etc. vs Commander S.D. Baijal & Ors., J.T. ; Auckland Jute Co. Ltd. vs Tulsi Chandra Goswami, at 244; RM AR.AR.R.M.AR. Umayhal Achi vs Lakshmi Achi and Others, ; Black_Clawson International Ltd. vs Papierwerke Waldhof Achaffenburg A.G.; , at 613; S.P. Gupta vs Union of India and others, [1982] 2 S.C.R. 365 at 594; State of U.P. vs Raj Narain, ; ; The Elphinstone Spinning and Weaving Mills Company Ltd. vs Union of India and others, writ petition No. 2401 of 1983; State of Bihar vs Kripalu Shankar, ; at 1559; Bachittar Singh vs State of Punjab, [1962] Suppl. 3 SCR 713; Air Canada and others vs Secretary of State and another, at 180; State Wakf Board vs Abdul Aziz, A.I.R. 1968 Madras 79, 81; Nitai Charan Bagchi vs Suresh Chandra Paul, ; Shyam Lal vs M. Shyamlal A.I.R. 1933 All. 649, 76 Corpus Juris Secundum 621; R.C. Cooper vs Union of India, ; at 567, 568, 635; Khajamian Wakf Estates, etc. vs State of Madras & another; , , at 796 B E; Harakchand Ratanchand Banthia and others, etc. vs Union of India and others; , at 496 P & G; Chandavarkar S.R. Rao vs Asha Lata, ; , 476; 44 Halsbury 's Laws of England 4th Ed. paragraph 856 at page 552; Nokes vs Doncaster Amalgamated Colliery Limited, [1940] Appeal Cases 1014, 1022; Campbell College Belfast vs Commissioner of Valuation for Northern Ireland, ; Clyde Navigation Trustees vs Laird, ; The Corporation of the City of Nagpur vs Its Employees, ; ; Vasudev Ramchandra Shelat vs Pranlal Javanand Thakar and others, [1975] 1 SCR 534, Palmer 's Company Law 24th Ed. ; Mahadeo Lal Agarwala and another vs The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952 Cal. 58 and Unity Company Pvt. Ltd. vs Diamond Sugar Mills and others A.I.R.

Civil Appeal No. 577 of 1961. Appeal by special leave from the judgment and decree dated January 7, 1959, of the Allahabad High Court in Second Appeal No. 448 of 1952. Sarjoo Prasad, Vithal Bhai Patel and S.S. Shukla, for the appellants. C. B. Agarwala, and J. P. Goyal, for the respondent No. I. 1963. May 3: The judgement of the Court was delivered by RAGHBAR DAYAL J. The facts leading to this appeal, by special leave, are these. Nine 551 persons, including Kedar Nath, instituted a suit for ejectment and recovery of rent against two defendants on the allegation that defendant No. I was the tenant inchief who had sub let the premises to defendant No. 2. The suit for ejectment was decreed against both the defendants and for arrears of rent against defendant No. 1. On appeal by defendant No. 2 the District judge set aside the decree for ejectment against defendant No. 2 and confirmed the rest of the decree against defendant No. 1. It is against this decree that the nine original plaintiffs filed the second appeal in the High Court on February 29, 1952. Kedar Nath, appellant No. 3, died on September 8, 1955. In view of rr. 3 and 11 of O. XXII of the Code of Civil Procedure, hereinafter called the Code, the appeal abated so far as Kedar Nath was concerned as no application for bringing his legal representatives on the record was made within the prescribed time. On October 1, 1956, two applications were filed in the High Court One was an application under section 5 of the Limitation Act for the condonation of the delay in filing the application for substitution of the heirs in placec of Kedar Nath. The other was the application for substitution in which it was prayed that Bithal Das and Banarsi Das, the sons of Kedar Nath, deceased, be substituted in place of the deceased appellant as they were his heirs and representatives. These two applications were dismissed on May 1, 1957, with the result that the appeal stood abated as against Kedar Nath. Bhagwati Prasad, appellant No. 9 also died on July 2,1956. His widow, Remeshwari Devi, was brought on the record in his place. When the appeals of the appellants other than Kedar Nath came up for hearing on September 1, 1958, a preliminary objection was taken for the, 552 respondent that the entire appeal had abated. Mr. jagdish Swarup, learned counsel appearing for the appellants, contended that the deceased belonged to a joint Hindu family and other members of the family were already on the record and that it was not necessary to bring on record any other person. He further stated that the appeal could not be said to have abated in the particular circumstances. The Court allowed the appellants time for filing an affidavit stating that the deceased was a member of the joint Hindu family and other relevant facts. On September 8, 1958, an affidavit was filed by Suraj Prasad Misra pairokar of the appellants. Para 9 of the Affidavit stated that Lala Ram Chandra Prasad, appellant No. 8, managed the family properties including the one in dispute which was joint and looked after the affairs of the properties and acted for and on behalf of the family and was 'already on the record. A counter affidavit was filed stating that the allegations in para 9 of the affidavit were misleading, that there was no allegation in the affidavit that the family was a joint Hindu family and that the true facts were that the family of the plaintiffsappellants was not a joint family, that the members were separated, that Lala Ram Chandra Prasad was not karta of the joint Hindu family, that the plaintiffs were assessed to income tax separately and that the property in dispute was not joint family property or even joint property. A rejoinder affidavit was then filed by Sri Narain, general agent of the appellants stating that the aforesaid statements in the counteraffidavit were misleading and irrelevant and re affirming that Ram Chandra Prasad managed the house property of the family including the one in dispute and that he looked after the affairs of the house property and acted for and on behalf of the family just as other members of the family looked after other affairs including the business belonging to the family. 553 At the hearing of the appeal of the surviving appellants, the only point which was urged for consideration seems to have been that the surviving appellants were competent to continue the appeal in view of O.XLI, r. 4, C. P. C. This contention was repelled in view of the full Bench decision of the Allahabad High Court reported in Baij Nath vs Ram Bharose (1), as the interests of the surviving appellants and the deceased appellant were joint and indivisible and as in the event of the success of the appeal there would be two inconsistent and contradictory decrees. It accordingly dismissed the appeal. It is against this decree that this appeal has been filed after obtaining special leave. Mr. Sarjoo Prasad, learned counsel for the appellants, has raised two points. One is that the provision of r. 2 of O. XXII and not of r. 3 of that Order apply to the facts of this case as the nine appellants constitute a joint Hindu family and the surviving plaintiffs could continue the appeal. The second point is that if the provisions of r. 3 of O.XXII applied and the appeal of Kedar Nath had abated, the provisions of r. 4 of O.XLI have not been correctly construed in Baij Nath vs Ram Bharose (1) and Ramphal Sahu vs Babu Satdeo Jha (2). We see no force in the first contention. We have already referred to the contents of the various affidavits filed by the parties subsequent to the point being raised that Kedar Nath, the deceased appellant and the surviving appellants constituted a joint Hindu family. They clearly indicate that the affidavits filed on behalf of the appellants made no averment that Kedar Nath and the surviving appellants formed a joint Hindu family, even though time had been given to them for filing an affidavit stating such a fact. The inference is obvious, and (1) I.L.R. [1953) All, Pat, 870, 554 is that these people did not form a joint Hindu family as alleged by the respondents. It is further of significance that the application made on October 1, 1956, for substituting the sons of Kedar Nath in his place stated that they were his heirs and legal representatives. The application was on the basis that Kedar Nath was not a member of the joint Hindu family. We are, therefore, of opinion that it is not proved that Kedar Nath, deceased, and the other appellants constituted a joint Hindu family that the right to appeal survived to the surviving appellants alone and that they could have continued their appeal in view of r. 2 of of XXII of the Code. The second contention really is that the surviving appellants could have instituted the appeal against the entire decree in view of the provisions of O. XLI, r. 4 of the Code, that they were, therefore, competent to continue the appeal even after the death of Kedar Nath and the abatement of the appeal so far as he was concerned, that the Court could have reversed or varied the whole decree in favour of all the original plaintiffs and could have granted relief 'with respect to the rights and interests of Kedar Nath as well. We do not agree with this contention Rule 4 of O.XLI reads: "Where there are more plaintiffs or more defendants than one in a suit, and the decree appealed from proceeds on any ground common to all the plaintiffs or to all the defendants, any one of the plaintiffs or of the defendants may appeal from the whole decree, and there upon the appellate Court may reverse or vary the decree in the favour of all the plaintiffs,or defendants, as the case may be." These provisions enable one of the plaintiffs or one of the defendants to file an appeal against the entire 555 decree. The second appeal filed in the High Court was not filed by any one or by even some of the plaintiffs as an appeal against the whole decree, but was filed by all the plaintiffs jointly, and, therefore, was not an appeal to which the provisions of r. 4 O.XLI could apply. The appeal could not have been taken to be an appeal filed by some of the plaintiffs against the whole decree in pursuance of the provisions of r. 4 of O.XLI from the date when the appeal abated so far as Kedar Nath was concerned. If the appeal could be treated to have been so filed, then, it would have been filed beyond the period prescribed for the appeal. At that time, the decree stood against the surviving plaintiffs and the legal representatives of Kedar Nath. The legal representatives could not have taken advantage of r. 4 of O. XLI. It follows that r. 4 of O. XLI would not be available to the surviving plaintiffs at that time. Further, the principle behind the provisions of r. 4 seems to be that any one of the plaintiffs or defendants, in filing such an. appeal, represents all the other non appealing plaintiffs or defendants as he wants the reversal or modification of the decree in favour of them as well, in view of the fact that the original decree proceeded on a ground common to all of them. Kedar Nath was alive when the appeal was filed and was actually one of the appellants. The surviving appellants cannot be said to have filed the appeal as representing Kedar Nath. Kedar Nath 's appeal has abated and the decree in favour of the respondents has become final against his legal representatives. His legal representatives cannot eject the defendants from the premises in suit. It will be against the scheme of the Code to hold that r. 4 of O. XLI empowered the Court to pass a decree in favour of the legal representatives of the 556 deceased Kedar Nath on hearing an appeal by the surviving appellants even though the decree against him has become final. This Court said in State ' of Punjab vs Nathu Ram(1). "The abatement of an appeal means not only that the decree between the appellant and the deceased respondent had become final, but also, as a necessary corollary, that the appellate Court cannot, in any way, modify that decree directly or indirectly. The reason is plain. It is that in the absence of the legal representatives of the deceased respondent, the appellate Court cannot determine anything between the appellant and the legal representatives which may affect the rights of the legal representatives under the decree. It is immaterial that the modification which the Court will do is one to which exception can or cannot be taken." No question of the Provisions of r. 4 of O.XLI overriding the provisions of r. 9 of O. XXII arises. The two deal with different stages of the appeal and provide for different contingencies. Rule 4 of 0 XLI applies to the stage when an appeal is filed and empowers one of the plaintiffs or defendants to file an appeal against the entire decree in certain circumstances. He can take advantage of this provision, but he may not. Once an appeal has been filed by all the plaintiffs the provisions of 0 XLI, r. 4 became unavailable. Order XXII operates during the pendency of an appeal and not at its institution. If some party dies during the ' pendency of the appeal, his legal representatives have to be brought on the record within the period of limitation. If that is not done, the appeal by the deceased appellant abates and does not proceed any further. There is thus no inconsistency between the previsions of r. 9 of O. XXII and those of r. 4 of O~. XLI, C.P.C. They operate at different stages and provide for (1) [1962] 2 S.C. R. 636 557 different contingencies. There is nothing common in their provisions which make the provisions of one interfere in any way with those of the other. We do not consider it necessary to discuss the cases referred to at the hearing. Suffice it to say that the majority of the High Courts have taken the correct view viz., that the appellate Court has no power to proceed with the appeal and to reverse and vary the decree in favour of all the plaintiffs or defendants under O. XLI, r. 4 when the decree proceeds on a ground common to all the plaintiffs or defendants, if all the plaintiffs or the defendants appeal from the decree and any of them dies and the appeal abates so far as he is concerned under O.XXII, r. 3. See : Ramphal Sahu vs Babu Satdeo Jha (1); Amin Chand vs Baldeo Sahai Ganga Sahai(2), Baij Nath vs Ram Bharose (3); Nanak vs Ahmad Ali (4); Pyarelal vs Sikhar Chand (5); Raghu Sutar vs Nrusingha Nath (6); Venkata Ram Rao vs Narayana (7); Sonahar Ali vs Mukbul Ali (8). The Bombay,, Calcutta and Madras High Courts have taken a differentview : see Shripad Balwant vs Nagu KushebaSatulal Bhattachariya vs Asiruddin ShaikhSomasundaram Chettiar vs Vaithilinga Mudaliar OrderXLI, r. 33 is of no greater help to the contention of the appellants that their appeal could continue even though the appeal by Kedar Nath had abated, as the Court could have passed a decree in favour of the rights and interests of Kedar Nath, deceased, as well. This rule reads : "The Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, an( this power may be exer cised by the Court notwithstanding that the (1) I.L.R. [1953] 2 All. Lah.667 (3) I.L.R. [1953] 2 All. (6) A.I.R. 1959 Orissa 148. (7) A.I.R. 1963 A.P. 168 (8) A I.R. (9) I.R.R. (10) I.L.R. (11) I.L.R. 558 appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection : Provided that the Appellate Court shall not make any order under section 35A, in pursuance of any objection on which the Court from whose decree the appeal is preferred has omitted or refused to make such order. " This rule is under the sub heading 'judgment in appeal '. Rule 31 provides that the judgment of the Appellate Court shall be in writing and shall state inter alia the relief to which the appellant is entitled in case the decree appealed from is reversed or varied. Rule 32 provides as to what the judgment may direct and states that the judgment may be for confirming, varying or reversing the decree from which the appeal is preferred, or, if the parties to the appeal agree as to the form which the decree in appeal shall take, or as to the order to be made in appeal, the Appellate Court may pass a decree or make an order accordingly. The reversal or variation in the decree would, therefore, be in accordance with what the appellant had been found to be entitled. The decree therefore, is not to be reversed or varied with respect to such rights to which the appellant is not found entitled. Rule 33 really provides as to what the Appellate Court can find the appellant entitled to. It empowers the Appellate Court to pass any decree and make any order which ought to have been passed or made in the proceedings before it and thus could have reference only to the nature of the decree or Order in so far as it affects the rights of the appellant. It further empowers the Appellate Court to pass or make such further or other decree or Order as the case may require. The Court is thus given wide discretion to pass such decrees and Orders as 559 the interests of justice demand. Such a power is to be exercised in exceptional cases when its non exercise will lead to difficulties in the adjustment of rights of the various parties. A case like the present is not a case of such a kind. When the legal representatives of the deceased appellant and the surviving appellants were negligent in not taking steps for substitution, the Court is not to exercise its discretion in favour of such a party. The discretionary power cannot be exercised to nullify the effect of the abatement of the appeal so far as Kedar Nath is concerned. In fact such an exercise of power will lead to the existence of two contradictory decrees between the heirs of Kedar Nath and the respondents, one passed by the appellate Court and another to the contrary effect by the Court below which has attained finality consequent on the abatement of the appeal in so far as they are concerned. This is always avoided. Rule 33 deals with a matter different from the matter dealt with by r. 9 of O. XXII and no question of its provisions overriding those of r. 9 of O. XXII or vice versa arises. In Mahomed Khaleel Shirazi & Sons vs Los Panneries Lyonnaises (1) it was held that O. XLI, r. 33 was not intended to apply to an appeal which was not a competent appeal against a party under the Code or under the Letters Patent 'of the High Court. This principle applies with equal force in the present case. The appeal by the surviving appellants is not competent in the circumstances of the case and, therefore, the provisions of 0. XLI, r. 33 are not applicable to it. We are, therefore, of opinion that the High Court could not have heard the appeal of the surviving appellants when the appeal by kedar Nath had (1) 53 I.A 84 560 abated as all the appellants had a common right and interest in getting a decree of ejectment against defendant No. 2 and such decree could have been on a ground common to all of them. The defendant cannot be ejected from the premises when he has a right to remain in occupation of the premises on the basis of the decree holding that Kedar Nath, one of the persons having a joint interest in letting out the property could not have ejected him. It is not possible for the defendant to continue as tenant of one of the landlords and not as a tenant of the others when all of them had a joint right to eject him or to have him as their tenant. We, therefore, dismiss the appeal with costs. Appeal dismissed.

The validity of the election of the appellant to the House of the People at the third general elections held in the month of February, 1962, was challenged by two of the electors of the constituency from which the appellant was elected, by filing election petitions for setting aside the election. The nomination paper of B, one of the two electors aforesaid, had been rejected by the returning officer. The appellant who was one of the respondents to the two election petitions raised preliminary objections to the maintainability of the petitions and pleaded that they should be dismissed on the grounds, inter alia, (1) that B whose nomination paper was rejected and who was not a contesting candidate was improperly impleaded as a respondent to the election petition in contravention of the provisions of section 82 of the Representation of the People Act, 1951, (2) that there was non compliance with the provisions of section 81 (3) of the Act because the copy of the election petition served on the appellant was not a true copy of the original filed before the Election Commission, and (3) that there was non compliance with the provisions of section 83 of the Act inasmuch as (a) the election petition was not verified in the manner laid down in section 83, and (b) the affidavit in respect of corrupt practices which accompanied the petition was neither properly made nor in the prescribed from. Held (1) that where all the parties whom it was neces sary to join under the provisions of section 82 of the Representation of the People Act, 1951, were joined as respondents to the 574 petition, the circumstance that a person who was not a necesary party had also been impleaded did not amount to a contravention of section 82 of the Act; (2) the word "copy" in section 81 (3) of the Act did 'not mean an absolutely exact copy but a copy so true that nobody could by any possibility misunderstand it, and that the test whether a copy was a true one was whether any variation from the original was calculated to mislead an ordinary person; In re Hewer, Ex parte Kahan, (I 882) 1, relied on. (3)that a defect in the verification of an election petition as required by section 83 (1) (c) of the Act did not attract section 90 (3) and so was not fatal to the mintainability of the petition; and, (4)that a defect in the affidavit was not a sufficient around for dismissal of the petition.

Appeal '. No.75 of 1956. Appeal by special leave from judgment and order dated March 17, 1955, of the Small Causes Court, Bombay, in Appeal No. 1 of 1955. M.C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant. K. B. Choudhuri, for the respondents. 702 1960. January 12. The Judgment of the Court was delivered by GAJENDRAGADKAR J. When does an employer get a right to prefer an appeal against a direction made under sub section (3) of section 15 of the (4 of 1936) (hereinafter called the Act)? That is the short question which arises for our decision in the present group of four appeals. The decision of this question depends on the construction of section 17 (1)(a) of the Act. In dealing with the question thus posed by the present group of appeals we will refer to the facts in Civil Appeal No. 75 of 1956, and our decision in it would govern the three remaining appeals. Civil Appeal No.75 of 1956 which has been brought to this Court by special leave arises from a dispute between the General Manager of the Times of India Press. , Bombay, owned by Benett Coleman & Co, Ltd., (hereinafter called the appellant) and some of the employees in his service (hereinafter called the respondents). In November 1953, 1,066 applications were made by the Vice President of the Times of India Indian Employees Union on behalf of some of the respondents before Mr. C. P. Fernandes, the authority appointed under the Act in which a claim was made for arrears of increments alleged to have been withheld by the appellant from July 1, 1951, to September 30, 1953, as also for increased dearness allowance from January 1, 1953, to August 31, 1953. The authority dealt with the whole group of the said applications as a single application under section 16(3) of the Act, and held that the claim made by the respondents for increased dearness allowance was not justified. In regard to the claim of arrears of increments alleged to have been withheld the authority rejected the claim made by 761 employees and allowed the same in respect of 305 employees. In the result the order passed by the authority on 31 12 1954 directed the appellant to deposit Rs. 22,698 for payment to the said 305 employees. The direction thus issued by the authority gave rise to two appeals before the Small Causes Court at Bombay, which is the appellate authority appointed 703 under the Act. Appeal No. 11 of 1955 was filed by the appellant while Appeal No. 187 of 1954 was filed by the respondents. Meanwhile the question about the extent of the right conferred on the employer to prefer an appeal by section 17(1)(a) of the Act had been considered by the Bombay High Court in Laxman Pandu & Ors. vs Chief Mechanical Engineer, Western Railway (B.B. & C.I. Railway), Lower Parel, Bombay (1); and it had been held that under the said section the employer gets a right of appeal only if the order of the authority under the Act awards payment of an amount of Rs. 300 or more in respect of a single individual worker; the right does not exist if the order awards a sum exceeding Rs. 300 collectively to an unpaid group of workers every one of whom gets an amount under Rs. 300. Following this decision the appellate authority held that the appeal preferred by the appellant was incompetent and so dismissed it. The appellant then applied for and obtained special leave from this Court to prefer an appeal against the said appellate decision; and so the main point raised by the appeal is about the construction of section 17(1)(a) of the Act. The Act has been passed in 1936 with a view to regulate the payment of wages to certain classes of persons employed in industry. Section 15(1) of the Act authorises the State Government by notification in the official Gazette to appoint any Commissioner for Workmen 's Compensation or other officer with experience as a Judge of a Civil Court or as a stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of wages of persons employed or paid in that area. Section 7 has provided for deductions which may be made from wages. Any deductions made not in accordance with the said section and contrary to the provisions of the Act as well as wages the payment of which has been delayed can be brought before the authority under sub s (2) of section 15. Sub section (3) of section 15 empowers the authority to deal with the applications made under sub section (2) and to direct a refund to (1) , 704 the employed person of the amount deducted or the payment of delayed wages together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding Rs. 10 in the latter. Sub section (4) provides that in cases where the authority is satisfied that the application made by the employee was either malicious or vexatious it may direct that a penalty not exceeding Rs. 50 be paid to the employer or other persons responsible for the payment of wages by the applicant. It would thus be seen that section 15 provides for the making of applications by the employees and for their decision in accordance with the provisions of the Act. It is necessary to refer to section 16 as well before dealing with the question of the construction of section 17(1)(a). Section 16 provides for the making of a single application in respect of claims from unpaid group. Section 16(1) provides that employed persons are said to belong to the same unpaid group if they are borne on the same establishment and if their wages for the same period or periods have remained unpaid after the day fixed by section 5. Sub section (2) provides for the making of a single application under section 15 on behalf of or in respect of any number of employed persons belonging to the same unpaid group, and prescribes that in such a case the maximum compensation that may be awarded under sub section (3) of section 15 shall be Rs. 10 per head. Subsection (3) then provides that the authority may deal with any number of separate pending applications presented under section 15 in respect of persons belonging to the same unpaid group as a single application presented under sub section (2) of the said section, and the provisions of that sub section shall apply accordingly. Thus the effect of section 16 is that a single application may be made on behalf of any number of employed persons belonging to the same unpaid group, or if separate applications are made by employed persons belonging to the same unpaid group they may be consolidated and tried as a single application. Let us now read section 17 which provides for appeals. Section 17(1) provides that an appeal against a 705 direction made under sub section (3) or sub section (4) of s 15 may be preferred within thirty days of the date on which the direction was made, in a Presidency town before the Court of Small Causes and elsewhere before the District Court (a) by the employer or other person responsible for the payment of wages under section 3, if the total sum directed to be paid by way of wages and compensation exceeds Rs. 300, or (b) by an employed person, if the total amount of wages claimed to have been withheld from him or from the unpaid group to which he belonged exceeds Rs. 50, or (c) by any person directed to pay a penalty under sub.s. (4) of section 15. Sub section (2) of section 17 makes the directions made under sub section (3) and sub section (4) of section 15 final save as provided in sub section (1). On a plain reading of section 17(1)(a) it seems fairly clear that the only test which has to be satisfied by the appellant before preferring an appeal against a direction issued under section 15(3) is that the total sum directed to be paid by him should exceed Rs. 300. Where a single application has been made on behalf of a number of employed persons belonging to the same unpaid group under section 16, sub section (2), and a direction has been issued for the payment of the specified amount, it is the said specified amount that must be considered in deciding whether the test prescribed by section 17(1)(a) is satisfied or not. The view taken by the Bombay High Court, however, is that section 17(1)(a) is applicable only where the amount directed to be paid to each single applicant exceeds Rs. 300. In other words, on this view the expression " the total sum directed to be paid " used in section 17(1)(a) is construed to mean the total sum directed to be paid to each individual applicant, and that clearly involves the addition of certain words in the section. If the application is made by a single employee an appeal can be preferred by the employer against the direction issued in such an application if the total sum directed to be paid to the applicant exceeds Rs. 300; but if a single application is made on behalf of several employees belonging to the same unpaid group the test to be applied is not whether a direction has been issued that the employer 99 706 should pay Rs. 300 or more to each one of the applicants; the test clearly is whether a direction has been issued on the said single application calling upon the employer to pay to the applicants Rs. 300 or more. Reading section 17(1)(a) by itself we feel no difficulty in reaching this conclusion. It is, however, urged that in construing section 17(1)(a) it would be relevant and material to compare and contrast its provisions with those of cl. (b) of section 17, sub section Providing for the right of an employee to make an appeal this clause requires that the total amount of wages claimed to have been withheld from him or from the unpaid group to which he belonged should exceed Rs. 50. It is emphasised that this clause refers expressly to the case of an individual employee as well as the cases of employees belonging to an unpaid group; and the argument is that since cl. (a) does not use the words " unpaid group " it indicates that the direction about the payment of the amount prescribed by the said clause has reference to each individual employee. We are not impressed by this argument. Since the Act has provided for the making of a single application on behalf of a number of employed persons belonging to the same unpaid group as well as separate applications made by individual workmen it was unnecessary to refer to the persons employed in the unpaid group while providing for appeals against directions made under section 15(3). On the other hand, if the Legislature had intended that the right to prefer an appeal should accrue to the employer only if Rs. 300 or more are directed to be paid to each individual employee it would have used appropriate additional words in cl. Therefore the argument based upon the use of the words " unpaid group " in cl. (b) is not of any assistance in construing cl. We are also inclined to think that it could not have been the intention of the Legislature to confer on the employer the right to prefer an appeal only if Rs. 300 or more are ordered to be paid to each one of the applicants. It is true that the policy of the Act is to provide for speedy remedy to the employees in respect of unauthorised deductions made by the employer or 707 in respect of delayed wages; and with that object the Act provides for the appointment of the authority and prescribes the summary procedure for the decision of the claims;butitseemsveryunlikelythatwhereas an appeal by the employee has been permitted by cl. (b) whenever the amount in dispute happens to be Rs. 50 or more in respect of an individual applicant or in respect of the unpaid group the Legislature could have intended that the employer should have no right of appeal against a direction made on a; single consolidated application, even though the total liability flowing from the said direction may exceed the specified amount of Rs. 300 by several thousands. In the present case the amount directed to be paid is more than Rs. 22,000 but it has been held that since each one of the employees is not ordered to be paid Rs. 300 or more there is no right of appeal. On general considerations, therefore, the conclusion which we have reached on a fair and reasonable construction of cl. (a) appears to be well founded. There is another point to which reference must be made. Section 16(3) empowers the authority to consolidate several applications made by individual employees and bear them as a single application as though it was presented under section 16, sub section (2); and it is urged that this procedural provision cannot and should not have a decisive effect on the employer 's right to prefer an appeal under section 17(1)(a). If several applications made by individual employees are not consolidated and heard as a single application under section 16(3) and separate directions are issued, then the employer would have the right to prefer an appeal only where the total amount directed to be paid exceeds Rs. 300. On the other hand, if the authority consolidates the said applications and makes a direction in respect of the total amount to be paid to the employees belonging to the unpaid group the employer may be entitled to make an appeal even though each one of the employees receives less than Rs. 300. It would be anomalous, it is said, that the right to appeal should depend upon the exercise of discretion vested in the authority under section 16(3). We are unable to see the force of this argument. We apprehend that 708 ordinarily when several applications are made by the employees belonging to the same unpaid group the authority would prefer to treat the said applications as a single application under section 16(3); but apart from this practical aspect of the matter, if section 16(3) permits the consolidation of the several applications and in consequence of consolidation they are assimilated to the position of a single application contemplated by section 16(2), the only question which has to be considered in dealing with the competence of the appeal is to see whether the direction appealed against satisfies the test of section 17(1)(a), and on that point we feel no hesitation in holding that the test prescribed by section 17(1)(a) is that the direction should be for the payment of an amount exceeding Rs. 300. Besides, we think it would not be right to assume that it is anomalous if different consequences follow from the adoption of different procedures in trying employees ' claims and an appeal does not lie where several applications are tried separately while it lies where similar applications are heard as a single application under section 16(3). This difference is clearly intended by the Legislature. A similar different consequence is prescribed in the matter of the award of compensation by section 15, sub section (3) and section 16,sub section (2) respectively. Therefore, the argument based on the alleged anomaly cannot have any validity inconstruing section 17(1)(a). Incidentally, if one or more employees in the same unpaid group are paid an amount exceeding Rs. 300 and the rest are paid less than Rs. 300, on the alternative construction, the employer would be entitled to make an appeal only in respect of a workman to whom more than Rs. 300 is ordered to be paid and not against the others though the total amount directed to be paid to them may exceed by far the amount of Rs. 300. In such a case, if the appeal preferred by the employer in respect of the amount ordered to be paid to some of the workmen succeeds that would leave outstanding two conflicting decisions, with the result that a large number of employees in the same unpaid group may get the amount under the direction of the authority while those who were awarded more 709 than Rs. 300 by the authority would get a smaller amount under the decision of the appellate authority. We are referring to this anomalous aspect of the matter only for the purpose of showing that where the words used in the relevant clause are clear and unambiguous considerations of a possible hypothetical anomaly cannot affect its plain meaning. That is why we prefer to leave anomalies on both sides out of account and confine ourselves to the construction of the words used in section 17(1)(a). If the said words had been reasonably capable of two constructions it would have been relevant to consider which of the two constructions would avoid any possible anomalies. We would, therefore, hold that the appellate authority was in error in dismissing the appeal preferred before it by the appellant on the ground that it was incompetent under section 17(1)(a). We would like to add that the question about the construction of section 17(1)(a) has been considered by the Madras High Court (Union of India, owning the South Indian Railway by the General Manager vs section P. Nataraja Sastrigal & Ors. (1) and A. C. Arumugam & Ors. vs Manager, Jawahar Mills Ltd., Salem Junction (2), the Calcutta High Court (Promod Ranjan Sarkar vs R.N. Munllick (3) and Assam High Court (Cachar Cha Sramik Union vs Manager, Martycherra Tea Estate & Anr. (4) and they have all differed from the view taken by the Bombay High Court and have construed section 17(1)(a) in the same manner as we have done. The result is the appeal is allowed, the order of dismissal passed by the appellate authority is set aside and the appeal sent back to it for disposal in accordance with law. Since the hearing of the appeal has been thus delayed we would direct that the appellate authority should dispose of the appeal as expeditiously as possible. Under the circumstances of this case we would direct that the parties should bear their own costs. Appeal allowed. (1) A.I.R. 1952 Mad. 808. (3) A.I.R. 1959 Cal. 318 S.C.; (2) A.I.R. 1956 Mad. 79. (4) A.I.R. 1959 Assam 13.

In ascertaining the surplus available for the payment of bonus according to the Full Bench formula the Industrial Court allowed the statutory depreciation but did not give any credit for the rehabilitation amount claimed. The Industrial Court estimated the amount required for rehabilitation at Rs. 60 lakhs; out of this amount it deducted Rs. 51 lakhs representing the reserves and the balance of Rs. 9 lakhs spread over a period Of 15 years gave the figure of Rs. 6o,000 as the amount that should be set apart for the year in question for rehabilitation. This amount being less than the statutory depreciation the Industrial Court held that the appellant was not entitled to any deduction on account of rehabilitation as a prior charge. The appellant contended that the balance sheet disclosed that the entire reserves had been used as working capital and consequently the said reserves should not be excluded from the amount claimed towards rehabilitation. Held, that the appellant had failed to prove that the reserves had in fact been used as working capital and as such the amount was rightly deducted by the Industrial Court from the amount fixed for rehabilitation. The Associated Cement Companies Ltd. vs Its Workmen. , referred to. In view of the importance of the item of rehabilitation in the calculation of the available surplus it was necessary for tribunals to weigh with great care the evidence of both parties to ascertain every sub item that went into or was subtracted from the item of rehabilitation. If parties agreed, agreed figures could be accepted. If they agreed to a decision on affidavits, that course could be adopted. But in the absence of agreement the procedure prescribed by 0. XIX, Code of Civil Procedure had to be followed. The accounts, the balance sheet and profit and loss accounts were prepared by the management and the labour had no hand in it. When so much depended on this item it was necessary that the Industrial Court insisted upon a clear proof of the item of rehabilitation and also gave a real and adequate opportunity to labour to canvass the correctness of the particulars furnished by the employers. Indian Hume Pipe Company, Ltd. vs Their Workmen. [196o] 2 S.C.R. 32, Tata Oil Mills Company Ltd. vs Its Workmen ; and Anil Starch Products Ltd. vs Ahmedabad Chemical Workers ' Union. C.A. No. 684 Of I957 (not reported), referred to, 842

Civil Appeals Nos. 1912 1914 of 1976. (Appeal by special Leave from the Judgment and order dated 7 2 1975 of the Madhya Pradesh High Court in Misc. Petition No. 231/74 and 685 and 732/73 respectively.) I.N. Shroff and H.S. Parihar, for the appellants. S.K. Gambhir, for respondents Nos. 1 and 2. The Judgment of the Court was delivered by FAZAL ALI, J. In this appeal by special leave, on an application filed by the respondents before the High Court of Madhya Pradesh, the High Court struck down the constitu tional validity of sub section (5) (a) of section 37 of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 hereinafter referred to as 'the Act ' (No. 24 of 1973). The impugned sub section runs as follows: "(5) Every commission agent shall be liable (a) to keep the goods of his principal in safe custody without any charge other than the commission payable to him; and" 620 The High Court thought that this statutory provision places unreasonable restriction on the commission agent and puts great burden on him for storing the goods given to him by the principal without charging the commission for its safe custody. The Act is a social piece Of legislation and should have been liberally construed so as to advance the object of the Act and fulfil the aims to be achieved there by. The main purpose of the Act is to secure a scientific method of storage, sale, distribution and marketing of agricultural produce and cut out as far as possible middle man 's profit. The Act, therefore, contains provisions of a beneficial nature preventing profiteering tendencies. It is not, however, the hardship that can be termed unreasonable so as to make a statute unconstitutional. Moreover, the High Court does not appear to have looked to. the scheme of the Act and has in fact completely overlooked the provisions of section 37(4) which runs as follows: "(4) The commission agent shall recover his commission only from his principal trader at such rates as may be specified in the bye laws including all such expenses as may be incurred by him in storage of the produce and other services rendered by him." This section clearly empowers the commission agent to charge such rates as may be specified by the bye laws even for the storage of the Produce and other services rendered by him. This provision also does not prevent the commission agent from levying reasonable charges for the storage over and above his commission. All that the Act prevents is that the commission agent is prohibited from levying any charges for safe custody from the farmer or the principal. This is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges for safe custody. Section 37 (4), however, compen sates the commission agent by authorising him to charge his commission and all expenses which may be incurred by the commission agent in connection with the storage of the produce and the services rendered by him. This section, therefore, clearly authorises the commission agent not only to charge his commission from the principal trader but also expenses incurred by him for the purpose of the storage. That apart section 2(e) of the Act whiCh defines a "Commission agent" empowers him to charge any commission o.r percentage upon the amount involved in such transaction. For these reasons, therefore, we do not see any hardship or unreasonableness in the provisions Of section 37(5)(a) of the Act. The High Court, therefore, committed an error of law in striking down this provision as unconstitutional. In our opinion, therefore, section 37 (5) (a) of the Act is constitu tionally valid. In the view we take, it is not necessary to go into the question whether the law violates article 19 of the Constitution which stands suspended during the emergen cy. The appeal is accordingly allowed. The order of the High Court is quashed. In the circumstances, there will be no order as to. costs. M.R. Appeal al lowed.

Rule 23 of the Assam Agricultural Income tax Rules, 1939 provides that where an order apportioning the liability to the tax on the basis of partition has not been passed in respect of a Hindu undivided family hitherto. assessed as undivided or joint, such family shall be deemed, to continue to be a Hindu undivided or joint family. The assessee was the Karta of a Hindu undivided family, which was assessed to agricultural income tax in respect of income derived from the manufacture and sale of tea. The assessee contended before the Agricultural Income tax Officer that, since there was disruption of the Hindu undi vided family, no agricultural income tax was payable exen though agricultural income had arisen from tea estates. This plea was rejected. His petition under article 226 of the Constitution impugning the validity of r. 23 had been dis missed by the High Court. In appeal to this Court it was contended that (i) after the dissolution of the family no assessment order could be made under r. 23 in respect of such disrupted Hindu Undi vided family (ii) the State Government had no power to make a rule for the assessment of a Hindu undivided family after a partition took place in the family. Dismissing the appeals, HELD: (1) The language of r. 23 clearly warrants the conclusion that in the absence of an order apportioning the liability to tax on the basis of partition in respect of a Hindu undivided family hitherto assessed as undivided or joint, such family shall ,be deemed, for the purpose of the Act to continue to be a Hindu Undivided family. No order apportioning the liability to, tax on ' the basis of the alleged partition having been passed, the family shall continue be treated as a Hindu undivided family. [651 C F] 2(a) The liability for tax having been created by the charging section, the rule deals with the question as to who should be the person that should be assessed to tax. This is a matter of detail to carry out the purposes of the and the State Government was well within its competence to make the rule in exercise of its rule making power. [652 C D] (b) The fact that. unlike the Income tax Act, there is no statutory provision in the Act and the matter is dealt with by the rules, would not make any material difference. The rules would be as much binding as would be statutory provision in t,his respect. [652 E F] (c) It is well settled that it is not unconstitutional for the legislature to leave it to the executive to deter mine the details relating to the working of taxation laws. such as selection of persons on whom the tax is to be levied. the rate at which it is to be charged in respect of different classes of goods and the like. [652 G H] Pt. Banarsi Das vs State of Madhya Pradesh [1959] S.C.R. 427, followed. Powell vs Appollo Candle Company Limited [1885] 10 A.C. 282 and Syed Mobgreed & Co. vs The State of Madras 3 S.T.C. 367, referred to. 646

N: Criminal Appeals Nos. 45 to 49 of 1951. Appeals from the judgments and orders dated 20th August, 1951, of the High Court of Judicature at Simla (Bhandari and Soni 33.) in Criminal Writ 'Cases Nos. 46 to 50 of 1951. Jai Gopal Sethi (R. L. Kohli and Sri Ramkumar, with him) for the appellants in Cr. Appeals Nos. 45 and 49. 20 N.C. Chatterjoe (Hardyal Hardy and R.L. Kohli with him) for the appellant in Cr. Appeal No. 46. Hardyal Hardy for the appellant in Cr. Appeal No. 48. S.M. S.M. Sikri, Advocate General of the Punjab (N. section Doabia. with him) for the respondent in all the appeals. M.C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the Intervener in Cr. Appeal No. 45. October 4. The Judgment of the Court was delivered by KANIA C.J. These are five companion appeals from the judgments of the High Court of East Punjab and the principal point argued before us is as to the legality of the deten tion of the appellants under the Preventive Detention Act on the ground that they are engaged in black marketing in cotton piecegoods. The Jullundur Wholesale Cloth Syndicate was formed to work out the distribution of cloth under the Government of Punjab Control (Cloth) Order passed under the Essential Supplies Act. Certain persons who held licences as whole sale dealers in cloth formed themselves into a corporation and all cloth controlled by the Government was distributed in the district to the retail quota holders through them. The Government allotted quotas to the retailers and orders were issued by the Government for giving each retailer certain bales under the distribution control. If some of the retail licence holders did not take delivery of the quotas allotted to them under the Notification of the 4th of October, 1950, issued by the Government of India, Department of Industries and Supplies, it was, inter alia, provided that the wholesale syndicate may give the bales not so lifted to another retail dealer. It may be noted that all along the price for the cloth to be sold wholesale and retail had been fixed under Government orders. The Syndi cate was suspected to be dealing in black market and had been warned against its activities by the District Magis trate of Jullundur several times. On the 7th of June, 1951, 21 an order was issued by the District Organiser, Civil Sup plies and Rationing, Jullundur, to the managing agents of the wholesale cloth corporation, Jullundur City, intimating that they were strictly forbidden to dispose of any uplifted stock against unexpired terms without his prior permission in writing. They were further directed that thenceforth no such stock would be allowed to be sold to an individual retailer, but permission would be granted to sell the same to associations of retailers only. It was stated that this letter was not in accordance with clause 5 of the Notifica tion of the Government of India dated the 4th October, 1950, which authorized the wholesale syndicate to be at liberty to sell uplifted cloth to any other retailer or an association of retail dealers of the same district. It may be further noted that the Cotton Cloth Control Order was in operation even prior to 1950. For some time control on the distribu tion of cloth was lifted but the price remained under the control of the Government. During that time it has been alleged that the appellants and several others sold cloth at rates higher than those fixed by the Government. Even when the distribution and price were both controlled, the manu facturing mills were allowed to sell at prices fixed by the Government a certain percentage of cloth which was not taken by the Government under its control. This was described as free sale cloth and it was alleged that the appellants and several others were doing black marketing in this free sale cloth. By an order passed by the District Magistrate on 19th June, 1951, he directed that the appellants be detained under section 3 (2) of the Preventive Detention Act to prevent them from acting in a manner prejudicial to the maintenance of supplies of cloth, essential to the communi ty. On the 2nd July, 1951, the District Magistrate, Jullun dur, directed that the appellants be committed to District Jail, Jullundur, from the 2nd July until the 1st October, 1951. The appellants were detained accordingly. The grounds for their detention were given to them on the morn ing of the 6th July. The grounds set out the activities of 22 the appellants as managing agents or partners in different firms or employees of the said firms or corporations. It was stated ,that they had been disposing of most of the stocks of cloth received for the Jullundur District in the black market at exhorbitant rates from June, 1949, to Octo ber, 1950, during the period when control on distribution was removed and that even after the reimposition of that control in October, 1950, they disposed of cloth which has been frozen under the directions of Director of Civil Sup plies in the short interval between the passing of the order and its service on them. The second ground was in respect of their individual activities as members of the firm in which they were partners in disposing of stocks of cloth in black market at rates higher than the controlled ones, to various dealers, through agents. The particulars were speci fied in Appendix 'A '. They refer to the free sale cloth. In the third ground it was alleged that ' by illegal means they deprived the rightful claimants of the various stocks of cloth with a view to pass the same into black market at exorbitant rates. We do not think it necessary to go into greater details of these grounds or refer to the other grounds. On the 9th of July, 1951, petitions under article 226 of the Constitution of India were filed in the East Punjab High Court asking for writs of habeas corpus against the State on the ground that the detention of the appellants under the Preventive Detention Act was illegal. The District Magis trate filed his affidavit in reply challenging the allega tion of mala fides and setting out in some detail instances of the activities of the appellants and contended that on the reports received by him he was satisfied that the deten tion of the appellants was necessary. Early in August, 1951, the executive authorities cancelled the licence of the appellants as cloth dealers. The High Court dismissed the petitions and the petitioners have come on appeal to us. Section 3 of the , pro vides that the Central Government or the State Government may, if satisfied with respect to any person that 23 with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies and services essential to the community it is necessary so to do, make an order directing that such person be detained. The power to act in accordance with the terms of this provision was given by section 3 (2) to a District Magistrate. Such Magistrate however was required to make a report to the State Govern ment to which he was subordinate about the order and also to send the grounds on which the order had been made and such other particulars as, in his opinion, had a bearing on the necessity of the order. It is not disputed that an order under section 3 (2) of the to prevent black marketing can be passed by the District Magistrate. On behalf of the appellants it is contended that in the grounds for their detention reference is made to their activities prior to June, 1951, only. This cannot be considered objectionable because having regard to those activities it is alleged that the satisfaction required under the section had arisen. It was next argued that such loophole as existed in the total control of distribution and ' sale and price of piecegoods in the district was sealed by the order of the District Orga niser dated the 7th June, 1951. By virtue of that order the syndicate or corporation could not sell any cloth without an express order in writing from the District Organiser, and therefore there could be no black marketing after that date by any of the appellants and the order was therefore unjus tified. It was next contended that in any event now as their licences are cancelled they cannot deal in cloth and the order of detention now maintained against them is more in the nature of punishment than prevention. It was argued that orders under the were for the purpose of preventing a person from acting in future in the objectionable way contemplated by the Act and it was beyond the scope of the Act to pass orders in respect of their alleged activities anterior to June, 1951. In our opinion the High Court approached the matter quite correctly. Instances of past activities are relevant 24 to be considered in giving rise to the subjective mental conviction of the District Magistrate that the appellants were likely to indulge in objectionable activities. The grounds which were given for the detention are relevant and the question whether they are sufficient or not is not for the decision of the Court. The Legislature has made only the subjective satisfaction of the authority making the order essential for passing the order. The contention that because in the Amending Act of 1951 an Advisory Board is constitut ed, which can supervise and override the decision taken by the executive authority, and therefore the question whether the grounds are sufficient to give rise to the satisfaction has become a justifiable issue in Court, is clearly unsound. The satisfaction for making the initial order is and has always been under the , that of the authority making the order. Because the Amending Act of 1951 establishes a supervisory authority, that discretion and subjective test is not taken away and by the establish ment of the Advisory Board, in our opinion, the Court is not given the jurisdiction to decide whether the subjective decision of the authority making the order was right or not. Proceeding on the footing, therefore, that the jurisdiction to decide whether the appellants should be detained under the on the grounds conveyed to the appellants is of the District Magistrate. In the present cases, two arguments were advanced on behalf of the appel lants. It was strenuously urged that by reason of the order of the District Organiser of the 7th June, 1951, the only loophole which remained in the scheme of distribution and sale of cloth under control of the Government was sealed and it was impossible after that order to do any blackmarketing by any of the appellants. We are unable to accept this contention. In the first place, this order appears to be an administrative order and is in the nature of a warning. It is at variance with the provisions of clause 5 of the Order of the Central Government of the 4th October, 1950. Moreover this order does not bring about the result claimed for it. A lot 25 of cloth which the manufacturers are permitted to distribute through persons outside the Government agencies can still be secured and sold at exhorbitant rates, i.e., at rates higher than those fixed by the Government. The second argument was that as the licences of the appellants are now cancelled they cannot deal in textile cloth at all and therefore there can be no apprehension of their indulging in black market activities. We are unable to accept this argument also because it is common knowledge that licences can be obtained in the name of nominees. Again while these people may not have their licences in Jullundur District they may have or may obtain licences in other districts. From the fact that their licences have been cancelled a month after the order of detention was passed we are unable to hold that it is impossible on that ground for the appellants to indulge in black market activities. In this connection an extract from the further affidavit of the District Magistrate of Jullun dur dated 1st August, 1951, may be usefully noticed. He stated: "There have been orders for the release of certain stocks of cloth in respect of other mills, as free sale cloth after the 9th June, 1951. Any quantity of cloth not paid for and lifted by the owners ' nominees will revert to the Mills for free sale: vide letter No. CYC 2/ SLM, dated the 31st May, 1951, from the Textile Commissioner, Bombay, to all selected Mills in Bombay and Ahmedabad. This cloth can be purchased by any wholesale dealer of cloth of India, without any restriction. Not only this, free sale cloth can be transported from one district to another without a per mit: vide Memo No. 28894 CS (C) 50/48791, dated 2nd January, 1951, from the Joint Director, Civil Supplies, and Under Secretary to Government Punjab to the District Organiser, Civil Supplies and Rationing, Ludhiana. Again free sale cloth is also procurable from individual firms who conspired to make profit by black marketing. The only information which is supplied by a purchaser of wholesale cloth to the District Magistrate is as to what quantity of such cloth has been imported 4 26 into the district. According to the report of the District Organiser no such cloth was imported into Jullundur by the corporation but there are reasons to believe that the Corpo ration had been making their purchases in free sale cloth from the Mills and using those bales to make up the defi ciency in the bales of quota cloth of superior quality which they used to dispose of in the black market in collusion with the Mills. Besides, the firm Rattan Chand Mathra Dass, as would be evident from the attached lists signed by the District Organiser, had been dealing in free sale cloth and had also been importing cloth as Reserve of Kangra and also Provincial Reserve. Most of this quota also found its way into the black market. Similarly the firm Madan Gopal Nand Lall and Company had been dealing in free sale cloth on a large scale. It would be evident from the attached list. Santi Sarup, the Secretary of the Corporation, is believed to be a partner in the firm Hari Chand Bindra Ban and this firm also had been dealing in free sale cloth. The free sale cloth acquired by them used to be invariably sold in the black market as reported by the District Organiser in his Memo No. 6306/6734 M/CT/Do. 7 dated 1st August, 1950, in reply to my Memo. No. nil dated 30th July, 1951. There is absolutely no bar for the wholesale cloth corporation, Jullundur, to its getting free sale cloth from the Mills or other wholesale dealers nor is there any bar for the firms Rattan Chand Mathra Dass and Madan Gopal Nand Lal and Co. to the acquiring of free sale cloth. " It was next argued on behalf of the appellants that the only order of detention made against them was the order of the 2nd July and that did not refer to any section of the and did not suggest that there was any satisfaction of the detaining authority. It was argued that no order of the 19th of June was ever shown to any of the appellants or served on them and therefore their deten tion was illegal. It should be pointed out that these con tentionsare raised in the affidavits not of the detained persons, but of their relations. Their affidavits do not show that they have any personal knowledge. The affidavits 27 on this point are based only on their belief and information and the source of the information is not even disclosed. As against this, there is the affidavit of the District Magis trate which expressly states that the terms of the Order of the 19th of June were fully explained to each of the dete nus. The petitions for the writs of habeas corpus were filed within a week after the service of the detention order and we do not think there is any reason to doubt the cor rectness of the statements of the District Magistrate. In our opinion this ground of attack on the order of detention has no substance and the detention cannot be held illegal on that ground. The judgment of the High Court was attacked on these grounds and as we are unable to accept any of these contentions the appeals must fail. One of the appellants is the secretary of one corpora tion and another is a salesman and clerk in one of the firms. On their behalf it was urged that they could not indulge in black market activities. We are unable to accept this contention in view of what is stated in the affidavits of the District Magistrate. It is there pointed out that in addition to being a secretary or a clerk and in those capac ities actively participating in the black market activities of their principals, they were themselves indulging in black market activities in cloth. If these and other facts in respect of the appellants are disputed the matter will be considered by the Advisory Board. The question of the truth of those statements however is not within the jurisdiction of this Court to decide. As all the grounds urged against the judgment of the High Court fail, all the five appeals are dismissed. Appeals dismissed. Agent for the appellants in all the appeals: R.S. Naru la. Agent for the respondent and Intervener: P.A. Mehta.

The petitioners were convicted under section 302 read with section 34 I.P.C. and were sentenced to death on November 26, 1977. The High Court upheld the conviction and sentence on July 18, 1978. The petitioners ' Special Leave Petition against the judgment of the High Court was dismissed on March 5, 1979 and the Review Petition against the dismissal of the Special Leave Petition was also dismissed on March 27, 1981. The petitioners ' successive writ petitions challenging the validity of sections 302 and 34 I.P.C. were dismissed on January 20, 1981 and August 24, 1981 respectively. The present writ petitions were filed on March 2, 1983 on the basis of the decision in T.V. Vatheeswaran vs State of Tamil Nadu which was rendered on February 16, 1983. The contention on behalf of the petitioners was that more than two years had elapsed since they were sentenced to death by the trial court and therefore they were entitled in terms of the ruling in vatheeswaran to demand that the said sentence should be quashed and substituted by the sentence of life imprisonment. ^ HELD : Prolonged delay in the execution of a death sentence is unquestionably an important consideration for determining whether the sentence should be allowed to be executed. But no hard and fast rule that "delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke article 21 and demand the quashing of the sentence of death" can be laid down as has been done in Vatheeswaran. [594 E F] (i) No absolute or unqualified rule can be laid down that in every case in which there is a long delay in the execution of a death sentence, the 583 sentence must be substituted by the sentence of life imprisonment. There are several other factors which must be taken into account while considering the question as to whether the death sentence should be vacated. A convict is entitled to pursue all remedies lawfully open to him and get rid of the sentence of death imposed upon him and his taking recourse to them to ask for the commutation of his sentence even after it is finally confirmed by this Court is understandable. But, it is, at least, relevant to consider whether the delay in the execution of the death sentence is attributable to the fact that he has resorted to a series of untenable proceedings which have the effect of defeating the ends of justice. It is not uncommon that a series of review petitions and writ petitions are filed in this Court to challenge judgments and orders which have assumed finality, without any seeming justification. Stay orders are obtained in those proceedings and then, at the end of it all, comes the argument that there has been prolonged delay in implementing the judgment or order. The Court called upon to vacate a death sentence on the ground of delay caused in executing that sentence must find why the delay was caused and who is responsible for it. If this is not done, the law laid down by this Court will become an object of ridicule by permitting a person to defeat it by resorting to frivolous proceedings in order to delay its implementation. Further, the nature of the offence, the diverse circumstances attendant upon it, its impact upon the contemporary society and the question whether the motivation and pattern of the crime are such as are likely to lead to its repetition if the death sentence is vacated, re matters which must enter into the verdict as to whether the sentence should be vacated for the reason that its execution is delayed. The substitution of the death sentence by a sentence of life imprisonment cannot follow by the application of the two years ' formula as a matter of "quod erat demonstrandum." [595 D H; 596 AE] T.V. Vatheeswaran vs State of Tamil Nadu. overruled. (ii) The period of two years purports to have been fixed in Vatheeswaran after making "all reasonable allowance for the time necessary for appeal and consideration of reprieve. " It is not possible to agree with this part of the judgment in that case. The fixation of the time limit of two years does not accord with the common experience of the time normally consumed by the litigative process and the proceedings before the executive. A period far exceeding two years is generally taken by the High Court and this Court together for the disposal of matters involving even the death sentence. Very often four or five years elapse between the imposition of death sentence by the Sessions Court and the disposal of the Special Leave Petition or an Appeal by this Court in that matter. This is apart from the time which the President or the Governor, as the case may be, takes to consider petitions filed under article 72 or article 161 of the Constitution or the time which the Government takes to dispose of application filed under sections 432 and 433 of the Code of Criminal Procedure. [594 F H; 595 AC] (iii) Piare Dusadh is not an authority for the proposition that if a certain number of years have passed since the imposition of a death sentence, 584 that sentence must necessarily be commuted to life imprisonment. In that case the Federal Court commuted the sentence of death to sentence of transportation for life for reasons other than that a long delay had intervened after the death sentence was imposed. In Ediga Anamma, Piare Dusadh was regarded as a leading case on the point. In the other judgments of this Court referred to in Vatheeswaran, this Court was hearing appeals against judgments of High Courts confirming the sentence of death. However, the Court has not taken the narrow view that the jurisdiction to interfere with a death sentence can be exercised only in an appeal against the judgment of conviction and sentence. In very recent times, the sentence of death has been commuted to life imprisonment by this Court in quite a few cases for the reason, inter alia, that the prisoner was under the spectre of the sentence of death for an unduly long time after the final confirmation of that sentence. [589 B D H; 590 A D] Piare Dusadh, [1944] F.C.R. Vol.6 61; Ediga Anamma; , ; Sunil Batra vs Delhi Administration, ; ; Maneka Gandhi [1978] 2 S.C.R. 621; Bachan Singh, , Hussainara Khatoon; , ; Hoskot; , ; Bhuvan Mohan Patnaik; , ; and Prabhakar Pandurang Sangzgiri; , referred to. (iv) Article 21 is as much relevant at the stage of execution of the death sentence as it is in the interregnum between the imposition of that sentence and its execution. The essence of the matter is that all procedure, no matter what the stage, must be fair, just and reasonable. It is well established that a prisoner cannot be tortured or subjected to unfair or inhuman treatment. It is a logical extension of the self same principle that the death sentence, even if justifiably imposed, cannot be executed if supervening events make its execution harsh, unjust or unfair. A prisoner who has experienced living death for years on end is entitled to invoke the jurisdiction of this Court for examining the question whether, after all the agony and torment he has been subjected to, it is just and fair to allow the sentence of death to be executed. That is the true implication of article 21 of the Constitution. [593 B G] Bhuvan Mohan Patnaik; , ; Prabhakar Pandurang Sangzgiri; , ; and Sunil Batra vs Delhi Administration; , referred to. (v) Traditionally, subsequent events are taken into account in the area of civil law. There is no reason why they should not receive due consideration in other jurisdictions, particularly when their relevance on the implementation or execution of judicial verdicts is undeniable. Principles analogous to res judicata govern all judicial proceedings but when new situations emerge, particularly factual, after a verdict has assumed finality in the course of the hierarchical process, advertence to those situations is not barred on the ground that a final decision has been rendered already. That final decision is not a decision on new facts. Courts are never powerless to do justice, that 585 is to say, to ensure that the processes of law do not result in undue misery, suffering or hardship. That is why, even after the final seal of approval is placed upon a sentence of death, this Court has exercised its power to direct, ex debito justiciae, that though the sentence was justified when passed, its execution, in the circumstances of the case, is not justified by reason of the unduly long time which has elapsed since the confirmation of that sentence by this Court. [590 E H] In the instant case, the sentence of death imposed upon the petitioners by the Sessions Court and which was upheld by the High Court and this Court cannot be vacated merely for the reason that there has been a long delay in the execution of that sentence. Counsel for the petitioners have been asked to argue upon the reasons why, apart from the delay caused in executing the death sentence, it would be unjust and unfair to execute that sentence at this point of time. The question will be decided after hearing the parties. [596 G H; 597 A B] 2. Petitions filed under articles 72 and 161 of the Constitution and under sections 432 and 433, Cr. P.C. must be disposed of expeditiously. A self imposed rule should be followed by the executive authorities that every such petition shall be disposed of within a period of three months from the date on which it is received. [597 C]

Appeals Nos. 1458 1459 of 1970. Appeal by special leave from the judgment and order dated the 1st January, 1970 of the Allahabad High Court in S.T.R. No. 344 and S.T.R. No. 347 of 1967. 745 N. D. Karkhanis and 0. P. Rana, for the appellant. No. appearance, for the respondent. The Judgment of the Court was delivered by SARKARIA, J. The common question of law for determination in these appeals by special leave is ': Whether section 14(2) of the Limitation Act, in terms, or, in principle, can be invoked for excluding the time spent in prosecuting an application under Rule 68(6) of the J.P. Sales Tax Rules for setting aside the order of dismissal of appeal in default, under the U.P. Sales Tax Act, 1948 (for short, the Sales= Act), from computation of the period of limitation for filing a revision under that Act? It arises out of these circumstances. The respondent, M/s. Parson Tools and Plants (hereinafter referred to as the assesse) carries on business at Kanpur. The Sales tax Officer assessed tax for the assessment years, 1958 1959 and 1959 60, on the, assessee by two separate orders. The assessee filed appeals against those orders before the Appellate Authority. On May 10, 1963, when the appeals came up for hearing, the assessee was absent. The appeals were, therefore, dismissed in default by virtue of Rule 68(5) of the U.P. Sales tax Rules. Sub rule (6) of Rules 68 provided for setting aside such dismissal and re admission of the appeal. On the same day (May 10, 1963), the assessee made two applications in accordance with Sub rule (6) for setting aside the dismissal. During the pendency of those applications, Sub rule (5) of Rule 68 was declared ultra vires the rule making authority by Manchanda J. of the High Court who further held that the Appellate Authority could not dismiss an appeal in default but was bound to decide it on merits even though the appellant be absent. When these, applications under Rule 68(6) came up for hearing, on 20 10 1964, the Appellate Authority dismissed them outright in view of the ruling of Manchanda J. Against the order of dismissal of his appeals, the assessee on 16 12 1964 filed two revision petitions under section 10 of the Sales tax Act,, before the Revisional Authority (Judge (Revisions) Sales tax). These revision petitions having been filed more than 18 months after the dismissal of the appeals, which was the maximum, period of limitation prescribed by sub . 73) of s 10 were prima facie time barred. They were however, accompanied by two applications in which the assessee prayed for exclusion of the time spent by him in prosecuting the abortive proceedings under Rule 68(6) for setting aside the dismissal of his appeals. The Revisional Authority found that the assessee had been pursuing his remedy under Rule 68(6) with due diligence and in good faith. It therefore excluded the time spent in those proceedings from computation of limitation by applying section 14, Limitation Act and in consequence, held that the revision petitions were within time. On the motion of the Commissioner of Sales tax, the Revisional Authority made two references under section 11 (I) of the Sales tax Act to the High Court for answering the following question of law : "Whether under the circumstances of the case, section 14 of the Limitation Act extended the period for filing 746 of the revisions by the time during which the restoration applications remained pending as being prosecuted bona fide. " The references were heard by a Full Bench of three learned Judges, each of whom wrote a separate Judgment. Dwivedi J. with whom Singh J. agreed after reframing the question held "that the time spent in prosecuting the application for setting aside the order of dismissal of appeals in default can be excluded from computing the period of limitation for filing the revision by the application of the principle underlying section 14(2). Limitation Act. " Hari Swarup J. was of the opinion: "The Judge (Revisions) Sales tax while hearing the revisions under section 10 of the U.P. Sales Tax Act does not act as a Court but only as a revenue tribunal and hence the provisions of the Indian Limitation Act cannot apply to proceedings before him. If the Limitation Act does not apply then neither section 29(2) nor section 14(2) of the Limitation Act will apply to proceedings before him. ," The learned Judge was further of the view that the principle of section 14(2) also, could not be invoked to extend the time beyond the maximum fixed by the Legislature in sub section (3 B) of section 10 of the Sales tax Act. Sub section (2) of section 14, Limitation Act, runs thus "In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceedings, whether in a Court of first instance or of. appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it." (emphasis added). If will be seen that this sub section will apply only if (1) both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) the proceedings had been prosecuted with due diligence and in good faith; (3) the failure of the prior proceedings was due to a defect of jurisdiction or other cause of a like nature; (4) both the proceedings are proceedings in a Court. Mr. Karkhanis, learned Counsel appearing for the appellant does not dispute the view taken by the High Court that the Proceedings in question under the Sales tax Act could be deemed as civil proceeding. Learned Counsel, however, contends that the authorities, irrespective of whether they exercise, original, appellate or revisional 747 jurisdiction under the Sales tax Act are not 'Courts ' within the ' contemplation of section 14(2) of the Limitation Act. It is pointed out that his question stands concluded by this Court 's decision in Jagannath Prasad vs State of U.P.(1) Mr. Karkhanis is right that this matter is no longer res Integra. In Shrimti Ujjam Bhai vs State of U.P.(2) Hidayatullah J. (as he hen was) speaking for the Court, observed : "The taxing authorities are instrumentalities of the State,. They are not a part of the legislature, nor are they a part of the judiciary. Their functions are the assessment and collection of taxes and in the process of assessing taxes, they follow a pattern of action which is considered Judicial. They are not thereby converted into Courts of Civil judicature. They will remain the instrumentalities of the State and are within the definition of "State" in Article 12. " The above observations were quoted with approval by this Court Jagannath Prasad 's case (supra), and it was held that a Sales tax officer under U.P. Sales tax Act, 1948 was not a Court within the meaning of section 195 of the Code of Criminal Procedure although he is required to perform certain quasi judicial functions. The decision in jaganath Prasad 's it seems, *as not brought to the notice of he High Court. In view of these pronocements of this Court, here is no room for argument that the Appellent Authority and the judge (Revisions) Sales tax exercising jurisdiction under the Salestax Act, are courts. " They are merely administrative Tribunals and not courts." Section 14, Limitation Act, therefore does not, in terms apply to proceedings before such Tribunals. Further question that remains is : Is the general principle underlying section 14 (2) applicable on grounds of Justice, equity and good conscience for excluding the time spent in prosecuting the abortive applications under Rule 68 (6) before the Appellate Authority., for computing limitation for the purpose of revision applications. Mr. Karkhanis maintains that the answer to this question, also, must be in the negative because definite indications are available in the scheme and language of the Sales tax Act, which exclude the application of section 14(2), Limitation Act even in principle or by or by analogy. Learned Counsel further submits that the ratio of the Privy Council decision in Ramdute Ramkissen Dass vs E. D. Sesson & Co.(s) relied upon by the majority judgment of the High is not applicable for computing limitation prescribed under the Sales tax Act. Reference in this connection has been made to Purshottam Dass Hassaram vs Impex (India) Lid.(4) wherein a Division Bench of the Bombay High Court explained the rule of decision in Ramdutt 's case (supra) and found it to be inapplicable for the purpose of computing limitation for ap plications under the . (1) ; (2) [1963] 1, S.C.R. 778. (3) AlR , (4) A.I.R. 1954 Bom, 309 748 The material pail of s.10 runs thus : "(3) (i). The Revision Authority. . may, for the purpose of satisfying itself as to the legality or propriety of any order made by any appellate or assessing authority under this Act, in its discretion call for and examine, either on its own motion or on the application of the Commissioner of gales tax or the person aggrieved, the record of such order and pass such order as it may think fit. * * * * * * (3A). . (3B) The application under sub section (3) shall be made within one year from the date of service of the order complained of, but the Revising Authority may on proof of sufficient cause entertain an application within a further period of six months. " Three features of the scheme of the above provision are noteworthy. The first is that no limitation has been prescribed for the suo motu exercise of its jurisdiction by the Revising Authority. The second is that the period of one year prescribed as, limitation for filing an application for revision by the aggrieved party is unusually long. The third is that the Revising Authority has no discretion to extend this period beyond a further period of six months, even on sufficient cause shown. As rightly pointed out in the minority judgment of the High Court, pendency of proceedings of the nature contemplated by section 14(2) of the Limitation Act, may amount to a sufficient cause for condoning the delay and extending the limitation for filing a revision application, but section 10 (3 B) of the Sales tax Act, gives no jurisdiction to the Revising Authority to extend the limitation, even in such a case, for a further period of more than six months. The three star features of the scheme and language of the above provision, unmistakably show that the legislature has deliberately excluded the application of the principles underlying sections 5 and. 14 of the Limitation Act, except to the extent and in the truncated form embodied in sub section (3 13) of section 10 of the Sales tax Act. Delay in disposal of revenue matters adversely affects the steady inflow of reve nues and the financial stability of the State. Section 10 is therefore designed to, ensure speedy and final determination of fiscal matters within a reasonably certain time schedule. It cannot be said that by excluding the unrestricted application of the principles of sections 5 and 14 of the Limitation Act, the Legislature has made. the provisions of section 10, unduly oppressive. In most cases, the discretion to extend limitation, on sufficient cause being shown for a further period of six months only, given by sub section ( 3_B) would be enough to afford relief. Cases are no doubt conceivable where an aggrieved party, despite sufficient cause, is unable to make an 749 application for revision within this maximum period of 18 months. Such harsh cases would be rare. Even, in such exceptional cases of extreme hardship, the Revising Authoritly may, on its own motion, entertain revision and grant relief. Be that as it may, from the scheme and language of section 1 0, the intention of the Legislature to exclude the unrestricted application of the principles of sections 5 and 10 of the Limitation Act is manifestly clear. These provisions of the Limitation Act which the Legislature did not, after due application of mind, incorporate in the Sales tax Act, cannot be imported into it by analogy. An enactment being the will of the legislature, the paramount rule of interpretation, which overrides all others, is that a statute is to be expounded "according to the intent of them that made it". "The will of 'the legislature is the supreme law of the land, and demands perfect obdience".(1) "Judicial power is never exercised" said Marshall C. J. of the United States, "for the purpose of giving effect to the will of the Judges; always for the purpose of giving effect to the will of the Legislature; or in other words, to the will of the law". If the legislature wilfully omits to incorporate something of an 'analogous law in a subsequent statute, or even if there is a casus omissus in a statute, the language of which is otherwise plain and unambiguous, the Court is not competent to supply the omission by engrafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be a general principle of justice and equity. To do so would be entrenching upon the preserves of Legislatures, 'The primary function of a court of law being jus dicere and not jus dare. ' In the light of what has been said above, we are of the opinion that the High Court was in error in importing whole hog the principle of section 14(2) of the Limitation Act into section 10 (3 B) of the Sales tax Act. The ratio of the Privy Council decision in Ramdutt Ramkissen Dass vs E. D. Sasson & Co. (Supra) relied upon by the High Court is not on speaking terms with the clear language of section 10 (3 B) of the Sales tax Act. That decision was rendered long before the passage of the Indian . It lost its efficacy after the enactment of the which contained a specific provision in regard to exclusion of time from computation of limitation. The case in point is Purshottam Dass Hussaram vs Index (India) Ltd. (supra). In this Bombay case, the question was, whether the suit was barred by limitation. It was not disputed that Article 115 of the Limitation Act governed the limitation and if no other factor was to be taken into consideration, the suit was filed beyond time. But what was relied upon by the plaintiff for the purpose of saving (i) see Maxwell on interpretation of statutes, 11th Edn.,pp.l, 2 and 25l, 750 limitation was the fact that there were certain infructuous arbitration,, Proceedings and if the time taken in prosecuting those proceedings was eXcluded under section 14, the suit would be within limitation. It was held that if section 14 were to be construed strictly, the plaintiff would not be entitled to exclude the period in question. On the authority of Ramdutt Ramkissen 's case (supra), it was then contended that. the time taken in arbitration proceedings should be excluded on the analogy of section 14. This contention was also negatived on the ground that since the decision of the Privy Council, the legislature had in section 37(5) of the , provided as to what extent the provisions of the Limitation Act would be applicable to the proceedings before the arbitrator. Section 37(5) was as follows : "Where the cow orders that an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Indian Limitation Act, 1908, for the commencement of the proceedings (including arbitration) with respect to the difference referred. " The reasons advanced, the observations made and the rule enunciated by Chagla C.J., who spoke for the Bench in that case, are opposite and may be extracted with advantage ". . we have now a statutory provision for exclusion of time taken up in arbitration Pr when a suit Is filed, and the question arises of computing the period of limitation with regard to that suit, and the time that has got to be excluded is only that time which is taken up as provided in section 37(5). There must be an order of the Court setting aside an award or there must be an order of the Court declaring that the arbitration agreement shall cease to have effect, and the period between the commencement of the arbitration and the date of this order is the period that has got to be excluded. it is therefore no longer open to the Court to rely on section 14 Limitation Act as applying by analogy to arbitration proceedings. If the Legislature intended that section 14 should apply and. that all the time taken up in arbitration proceedings should be excluded, then there was no reason to enact section 37(5). , The very fact that section 37(5) has been enacted clearly shows that the whole period referred to in. a, 49 Limitation Act is not to be excluded but the limited '. indicated in section 37(5). * * * * * * 751 "it may seem rather curious and it may also in certain cases result in hardship as to why the legislature should not have excluded all time taken up in good faith before an arbitrator just as the time taken up in prosecuting a suit or an appeal in good faith is excluded. But obviously the Legislature did no t intend that parties should waste time infructuous proceedings before arbitrators. The Iegisla ture has clearly indicated that limitation having once begun to run, no time could be excluded merely because parties chose to go before an arbitrator without getting an award or without coming to Court to get the necessary order indicated in section 37(5). " What the learned Chief Justice said about the inapplicability of section 14, Limitation Act, in the context of section 37(5) of the , holds good with added force with reference to section 10 (3 B) of the Sales tax Act. Thus the principle that emerges is that if the legislature in a special statute prescribes a certain period of limitation for filing a particular application thereunder and provides in clear terms that such period on sufficient cause being shown, may be extended, in the maximum, only upto a specified time limit and no further, than the tribunal concerned has no jurisdiction to treat within limitation, an application filed before it beyond such maximum time limk specified in the statute, by excluding the time spent in prosecuting in good faith and due diligence any prior proceeding on the analogy of section 14(2) of the Limitation Act. We have said enough and we may say it again that where the legislature clearly declares its intent in the scheme and language of a statute, it is the duty of the court to give full effect to the same without scanning its wisdom or policy, and without engrafting, adding or implying anything which is not congenial to or consistent with such expressed intent of the law giver; more so if the statute is a taxing statute. We will close the discussion by recalling what Lord Hailsham (1) has said recently, in regard to importation of the principles of natural justice into a statute which is a clear and complete Code, by itself : "It is true of course that the courts will lean heavily ,against any construction of a statute which would be manifestly fair. But they have no power to amend or supplement the language of a statute merely because in one view (1)At P. 11 in Pearl Berg vs Varty , 752 of the matter a subject feels himself entitled to a larger degree of say in the making of a decision than a statute accords him. Still less is it the functioning of the courts to form first a judgment on the fairness of an Act of Parliament and theft to amend or supplement it with new provisions so as to make it conform to that judgment. " For all the reasons aforesaid, we are of the opinion that the object, the scheme and language of s.10 of the Sales tax Act do not permit the invocation of s.14(2) of the Limitation Act, either, in terms, or, in principle, for excluding the time spent in prosecuting proceedings for setting aside the dismissal of appeals in default, from com putation of the period of limitation prescribed for filing a revision under the Sales tax. Accordingly, we answer the question referred, in the negative. In the result, we set aside the judgment of the High Court and accept these appeals. Since the appeals have been heard ex parte, there will be no order as to costs.

The Sales Tax Officer assessed tax for the assessment years 1958 1959 and 1959 60, on the respondent assessee by two separate orders. The assessee filed appeals against those orders before the Appellate Authority. On May 10, 1963, when the appeals came up for hearing, the assessee was absent. The appeals were, therefore. dismissed in default by virtue of Rule 68(5) of the U.P. Sates tax Rules. Sub rule (6) of Rule 68. provided for setting aside such dismissal and for re admission of the appeal. On the same day (May 10, 1963), the assessee made two applications in accordance with Sub rule (6) for setting aside the dismissal. During the pendency of those applications, Subrule (5) of Rule 68 was declared ultra vires the rule making authority by Manchanda J. of the High Court who further held that the Appellate Authority could not dismiss an appeal in default but was bound to decide it on merits even though the appellant be absent. When these applications under r. 68(6) came up for hearing. on 20 10 64, the Appellate Authority dismissed them outright in view of the ruling of Manchanda J. Against the order of dismissal of his appeals, the assesees on 16 12 1964 filed two revision petitions under section 10 of the Sales tax Act, before the [Judge (Revisions) Sales tax]. These revisions petitions having been filed more than 18 months after the dismissed of the appeals which was the maximum period of limitation prescribed by sub section (3) of section 10 were prima facie time barred. They were however, accompanied by two application 's in which the assessee prayed for exclusion of the time spent by him in prosecuting the abortive proceedings under r. 68(6) for setting aside the dismissal of his appeals. The Revisional Authority found that the assessee had been pursuing his remedy under r. 68(6) with due diligence and in good faith. It therefore excluded the time spent in those proceedings from computation of limitation by applying section 14, Limitation Act and in consequence, held that the revision petitions were within time. On the motion of the Commissioner of Sales tax. the Judge (Revisions) Sales *ax made two references under section 11(1) of the Sales_tax Act to the High Court for answering the following question of law "Whether under the Circumstances of the case, section 14 of the Limitation Act extended 'the period for filing of the revisions by the time during which the restoration applications remained pending as being prosecuted bona fid. " The references were heard by a Full Bench of three learned Judges each of whom wrote a separate Judgment. Dwivedi J. with whom Singh J. agree utter refraining the question held "that the time spent in prosecuting the application for setting aside the order of dismissal of appeals in default can be 744 excluded from computing the period of limitation for filing the revision by the application of the principle underlying section 14(2), Limitation Act. " Hari Swarup J. was of the opinion : "The Judge (Revisions) Sales tax while hearing the revisions under section 10 of the U.P. Sales Tax Act does not act as a Court but only as a revenue tribunal and hence the provisions of the Indian Limitation Act cannot apply to proceedings before him. If the Limitation Act does not apply then neither section 29(2) nor is 14(2) of the Limitation Act will apply to proceedings before him." The learned Judge was further of the view that the principle of section 14(2) also, could not be invoked to extend the time beyond the maximum fixed by the Legislature in sub section (3 B) of section 10 of the Sales tax Act. These appeals have been preferred on the basis of the special leave granted by this court. Allowing the appeals, HELD : (i) If the legislature wilfully omits to incorporate something of an analogous law in a subsequent statute, or even if there is a casus omissus in a statute, the language of which is otherwise plain and unambiguous, the Court is not competent to supply the omission by engrafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be. a general principle of justice and equity. To do so "would be entrenching upon the preserves of Legislature", the primary function of a court of law being jus dicere and not jus dare. [749D E] (ii) If the ' legislature in a special statute prescribes a certain period of limitation for filing a particular application thereunder and provides in 'clear terms that such period on sufficient cause being shown, may be extended, in the maximum, only upto a specified time limit and no further, then the tribunal concerned has no jurisdiction to treat within limitation, an application filed before it beyond such maximum time limit specified in the statute, by excluding the time spent in prosecuting in good faith and due diligence any prior proceeding on the analogy of section 14(2) of the Limitation Act. [751D E] Ramdutt Ramkissen Dass vs E. D. Sesson & Co. A.I.R. 1929, P.C. 103 and Purshottam Dass Hassaram vs Impex (India) Ltd. A.I.R. 1954 Bom. 309, referred to. (iii) In view of the pronouncements of this Court in Shrimati Ujjani Bhai vs State of U.P., and jagannath Prasad vs State of U.P. ; , there is no room for argument that the Appellate Authority and the Judge (Revisions) exencising jurisdiction under the U.P. Sales Tax Act, 1948, are 'Courts '. They are merely administrative Tribunals and "not courts". Section 14, Limitation Act, therefore, does not, in terms apply to proceedings before such Tribunals. [747E] (iv) Three features of the scheme of provisions of section 10(3)(i) and section 10(3B) are noteworthy. The first is that no limitation has been prescribed for the suo matu exercise of its jurisdiction by the Revising Authority. The second is that the period of one year prescribed as limitation for filing an application for revision by the aggrieved party is unusually long. The third is that the Revising Authority has no discretion to extend this period beyond a further period of six months, even on sufficient cause shown. The three stark features of the scheme and language of these provisions, unmistakably show that the legislature has deliberately excluded the application of the principles of Ss. 5 and 14 of the Limitation Act. except to the extent and in the truncated form embodied in sub section (3 B) of section 10 of the Act. [748D F]

N: Criminal Appeal No. 172 of 1971. Appeal by Special Leave from the Judgment and Order dated the 7 5 70 of the Calcutta High Court in Criminal Revision No. 370 of 1970. M. M. Kshatriaya and G. section Chatterjee for the Appellant. A. K. Sen, Mrs. Leila Seth, Mrs. Anjana Sen and O. P. Khaitan for respondent. The Judgment of the Court was delivered by KHANNA, J. This appeal by special leave is by the State of West Bengal against the judgment of the Calcutta High Court whereby the High Court in a revision petition under section 439 of the Code of Criminal Procedure quashed the charges framed by the Presidency Magistrate against Raj Kumar Agarwalla respondent. The prosecution case is that on November 8, 1967 Shankerlal representing himself to be a broker of foreign machinery parts went to Ram Avtar Prasad complainant and told him that he (Shanker Lal) could arrange for a transaction of sale of foreign goods which would result in good profit to the complainant. The complainant agreed to the proposal and wanted to see the seller of the foreign goods in question. On the following day Shanker Lal came with another man named Pandey and told Ram Avtar complainant that Pandey was an agent of Shri Hanuman Agency and would supply the foreign goods known as washer plates. Pandey showed Ram Avtar the samples of those washer plates. One of those samples was kept by Ram Avtar. A day after that Shanker Lal brought one Saheb Jaman Khan alongwith him to Ram Avtar and introduced Saheb Jaman Khan as agent of M/s. Ashoke Trading Corporation of Indore. Ram Avtar then agreed to purchase 200 pieces of the washer plates at the rate of Rs. 38/ per piece. Formal order, it was then agreed, would be sent through Shanker Lal. 279 On November 15, 1967 Shanker Lal handed over the said formal order to Ram Avtar and stated that the goods would be supplied on the following day. Ram Avtar was also told that this transaction would fetch him a profit of Rs. 3200/ . On November 16, 1967 Ram Avtar lodged a report with the police against Shanker Lal after his suspicion had been aroused. Later on that day Shanker Lal and Raj Kumar Agarwalla came to the shop of Ram Avtar with washer plates in a taxi. Price of the said goods was then demanded from Ram Avtar. Shanker Lal and Raj Kumar Agarwalla were thereupon arrested by the police. It appears that the police did not submit any charge sheet on the basis of the report which had been lodged by Ram Avtar and the accused were discharged. Subsequently, the proceedings were set in motion against Raj Kumar Agarwalla, Shanker Lal and Saheb Jaman Khan. Charge under sections 420, 468 and 471 Indian Penal Code read with section 120B Indian Penal Code was framed against all the three accused. Another charge under section 420 read with section 511 Indian Penal Code was framed against Raj Kumar Agarwalla and Shanker Lal. Raj Kumar Agarwalla thereafter filed a revision petition in the High Court for quashing the charge against him. The revision petition was allowed by the High Court on the ground that so far as Raj Kumar Agawalla was concerned, no case had been made out against him. Charges framed against him were consequently quashed. We have heard Mr. Kshatriya on behalf of the appellant State, and are of the view that there is no cogent ground for interference with the judgment of the High Court. The report which was lodged by Ram Avtar in the very nature of things made no mention of the name of Raj Kumar Agarwalla respondent because it is the case of the prosecution itself that Raj Kumar appeared on the scene only subsequent to the lodging of the report. The part which is attributed to Raj Kumar is that he was present along with Shanker Lal, when the latter brought washer plates in a taxi and demanded the price of the washer plates from Ram Avtar. That circumstance, as pointed out by the High Court, would hardly warrant an inference that Raj Kumar respondent too was a party to any conspiracy to defraud or cheat Ram Avtar. We find no infirmity in the judgment of the High Court as might induce us to interfere. The appeal fails and is dismissed. V.P.S. Appeal dismissed.

The appellant Surjit Lal was the owner of an immovable property called "Kathoke Lodge". He used to derive rent income from the said property in addition to deriving income under other heads. In 1956, he made a declaration throwing the said property into the family hotchpotch. The family consisted of himself his wife and an unmarried daughter. The appellant contended before the Income Tax Officer that the rent income derived from the said property should be assessed in the status of a Hindu Undivided Family. The Income Tax Officer held: 1. In the absence of a nucleus of joint family property there was nothing with which the appellant could mingle his separate property. There could not be a Hindu Undivided family without there being Undivided family property. An appeal filed before the Appellate Assistant Commissioner was dismissed but on the following grounds: (1) After the declaration the appellant was dealing with the income of the property in the same way as before and, therefore, the declaration was not acted upon. (2) Even assuming that the property was thrown into the common stock and was therefore joint family property, the income from that property could still be taxed in the appellant 's hands as he was the sole male member of the family. The matter was further taken to the Income Tax Appellate Tribunal by the appellant. The Tribunal accepted the declaration as genuine and differed from the A.A.C. that it was not acted upon. The Tribunal however, held that though the appellant had invested his separate property with the character of joint family property, he being a sole surviving coparcener continued to have the same absolute and unrestricted interest in the property as before and, therefore, in law, the property had to be treated as his separate property. Thereafter the Tribunal referred the question of law to the High Court. Before the High Court it was contended by the appellant that it is open to a male member of a joint Hindu Family to convert his self acquire property into joint family property by throwing it into the common hotchpotch, and that it was not necessary that there should be an ancestral nucleus or that there should be more than one male in the joint family. On the other hand, the department contended that it was contrary to the basic concept of a Hindu undivided family that a single male alongwith females could form a joint Hindu family and that it was necessary for the formation of a joint Hindu family that there should be more than one male entitled to claim partition of the joint family property. 165 The High Court did not go into the larger question and assumed for the purpose of argument that there need not be more than one male member for forming a joint Hindu family as a taxable unit. The High Court held that since the assessee had no son, there was no undivided family. According to the High Court, the case of the appellant fell within the ratio laid down by the Privy Council in Kalyanji 's case and that since under the personal law, the right to the income remained as it was before the appellant made the declaration, the income from Kathoke Lodge was liable to be assessed as the appellant 's individual income. Dismissing an appeal by Special Leave, ^ HELD: (1) Even in the absence of an antecedent history of jointness, the appellant could constitute a joint Hindu Family with his wife and unmarried daughter. True that the appellant could not constitute a coparcenary with his wife and unmarried daughter but under the Income Tax Act a Hindu undivided family, not a coparcenary is taxable unit. A Hindu coparcenary is a much narrower body than the joint family. [170F, 171B] (2) The joint family with all its incidents, is a creature of law and cannot be created by act of parties except to the extent to which a stranger may be affiliated to the family by adoption. The appellant, however, was not by contract seeking to introduce in his family strangers not bound to the family by the tie of a sapindaship. That it does not take more than one male to form a joint Hindu family with females, is well established. [172A & G] (3) The contention of the Department that since prior to the declaration. the family hotchpotch in the instant case was empty and there was nothing with which the property or its income could be blended and therefore, the declaration is ineffective to convert that property into joint family property was not raised before the Tribunal, and the same was not pressed in the High Court. It was, therefore, not open to the department to take before this Court a contention which in the first place does not arise out of the reference and which the department 's counsel in the High Court raised but did not press. [173G H, 174A C] (4) The cases of Kanji and Sewdas in Kalyanji 's case furnish a near parallel to the present case. Though the property in their hands was assumed to be ancestral, income which Kanji and Sewdas received from it was treated as their separate property, as neither of them had a son who could take interest in the ancestral property by birth. Applying that analogy, even if Kathoke lodge were to be an ancestral asset, its income would still have to be treated as the appellant 's separate property as he had no son who could take interest in that property by birth. The ratio of Kalyanji 's case would, therefore, apply to the instant case. The reason why the case of Kanji and Sewdas furnished a close parallel is the very reason for which their cases were held by this Court to be distinguishable from Lakshmi Narain 's case. In Lakshmi Narain 's case the property was ancestral in the hands of the father, the son had acquired an interest by birth therein there was a subsisting Hindu Undivided family during the lifetime of the father and since that family did not come to an end on the death of the father, the Bombay High Court rightly held that the income continued to be the income of the joint family and was liable to be taxed as such. The property of a joint family does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights which an owner of property may possess. [176 D G, 177A, 178, G H, 179A] (5) There are thus two classes of cases each requiring a different approach. In cases where the property belongs to a subsisting undivided family the property does not cease to have that character merely because the family is represented by a sole surviving coparcener who possesses rights which an owner of property may possess, or for that matter even if the family for the time being consists only of widows of deceased coparceners. In cases where the property did not belong to a subsisting undivided family, whether any property has acquired the 166 character of joint family property has acquired the character of joint family property in the hands of an assessee depends on the composition of the family. A joint Hindu family can consist of a man, his wife and daughter but the mere existence of a wife or daughter will not justify the assessment of income from the joint family property in the status of the head as a manager of the joint family. Once it is realised that there are two distinct classes of cases which require a different approach there would be no difficulty in understanding the implications of the apparently conflicting tests evolved as guides for deciding the two classes of cases. Kathoke Lodge was not an asset of a pre existing joint family. It became an item of joint family property for the first time when the appellant threw what was his separate property into the family hotchpotch. The appellant had no son. His wife and unmarried daughter were entitled to be maintained by him from out of the income of Kathoke Lodge while it was his separate property. Their rights in that property are not enlarged for the reason that the property was thrown into the family hotchpotch. Not being co parceners of the appellant, they have neither a right by birth in the property nor the right to demand partition nor indeed the right to restrain the appellant from alienating the property for any purpose whatsoever. The property which the appellant has put into the common stock may change its legal incidence on the birth of a son but until that event happens, the property in the eyes of Hindu Law is really his. He can deal with it as a full owner, unrestrained by considerations of legal necessity or benefit of the estate. He may sell it mortgage it or make a gift of it. Even a son born or adopted after the alienation shall have to take the family hotchpotch as he finds it. [180 G, H, 181 A D, 182 E H, 183A] (7) Since the personal law of the appellant regards him as the owner of Kathoke lodge and the income therefrom as his income even after the property was thrown into the family hotchpotch, the income would be chargeable to income tax as his individual income and not that of the family. [183B C]

Appeal No. 390 of 1963. Appeal by special leave from the award dated December 11, 1959, of the Industrial Tribunal, Assam at Gauhati in Reference No. 7 of 1959. C.B. Agarwal, J.N. Hazarika and K.P. Gupta, for the appellants. Sankar Bannerjee, P.K. Chatterjee, D.N. Gupta and B.N.Ghosh, for the respondents. November 25, 1963. The judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave arises from an industrial dispute between the respondent, the Management of 11 Tea Estates and the appellants, their workmen. It appears that the appellants raised a dispute against the respondent in regard to the lay off declared by them in the 11 550 estates in question in February, 1959. The said (ay off lasted for 45 days and the appellants ' contention was that the lay off was not justified, and so, they were entitled to their full wages for the period of the lay off. The respondent 's Managing Agents for the nine Companies that run the 11 tea estates in question, resisted this claim on the ground that the lay off was justified and they alleged that the appellants were not entitled to anything more than the compensation prescribed by section 25C of the (hereinafter called 'the Act '). This dispute was referred to the adjudication of the Industrial Tribunal by the Governor of Assam under section 10(1)(d) of the Act. The 11 tea estates which are concerned with this dispute were described in Appendix A to the order of reference. It is common ground that these 11 tea estates ' are run by nine Companies and M/s. Macneill and Barry Ltd. are the Managing Agents of all these companies. The case for the respondent was that the tea estates in question which are all situated in Cachar District had to face a long period of depression in trade by reason of the poor prices generally commanded by the tea produced by them. In 1959, the management faced a very difficult financial position and it took the view that in the interests of the employees and its own business, it would be appropriate to lay off the workmen for a certain period in order to avoid closure of business. The circumstances which caused financial depression were beyond the control of the management and lay off was, therefore, inevitable and fully justified. On the other hand, the appellants urged that there were other tea estates in the district of Cachar which had to face similar problems; the labour costs incurred by the respondent were not higher than the corresponding costs incurred by the other tea estates, the burden of taxes was the same for all the tea estates in the district and the quality of the tea produced was relatively similar. They contended that the difficulty which the respondent had to face 551 was partly the result of its mismanagement and neglect. They pleaded that the workmen employed by the respondent had been promised continuous work throughout the year and the declaration of lay off for such a long period as 45 days exposed them to the risk of semi starvation. The appellants also urged that depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order, and so, they justified their claim for full wages during the period of the lay off. The Tribunal has held that the relevant Standing Order No. 8 justified the lay off. The trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order; it has also held that the last clause in the Standing Order which was general in terms could be relied upon by the respondent in support of its plea that the lay off was justified. In the alternative, the Tribunal thought that even if the lay off was not justified by the relevant clause in the Standing Order, the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the Act. According to the Tribunal, section 25 C recognises this common law right and since it is a statutory provision, it over rides the relevant clause in the standing Order. Having thus found that the lay off was justified, the Tribunal proceeded to examine the question as to whether the trade reasons on which the respondent relied had 'been proved. It then considered the relevant documentary evidence bearing on the point and noticed some general features applicable to all the tea companies before it. "They have suffered losses which are by no means inconsiderable", said the Tribunal, "and some of the companies have not been able to declare dividends in time during the last ten years, though others have declared them from year to year. " The Tribunal rejected the respondent 's contention that the losses were due to high labour charges, but it found that the tea companies were not making adequate profits. It was satisfied that 552 the companies had reserves and large capital assets and would not have found it difficult to raise necessary finances. On the whole, the Tribunal thought it necessary to distinguish between the different tea estates with which it was dealing, and having considered their respective individual cases, it came to the conclusion that out of the nine companies, five companies need not have declared lay off for 45 days. In its opinion, there was justification for lay off in their cases, but its duration should have been 21 days. Acting on this finding, the Tribunal has ordered that for the 24 days in excess of three weeks for which the lay off was justified the said companies should pay their workmen full wages and not merely the compensation prescribed by section 25C of the Act. In regard to the remaining four companies, the Tribunal held that the lay off was fully justified, and so, the workmen were not entitled to full wages for the period of the lay off. In other words, the award made by the Tribunal partially granted relief to the appellants inasmuch as it gave them full wages against five companies for 24 days only. These five companies are: Bhubandhar, Doyapore, Western Cachar, Borak and Koyah. The other four companies in respect of which the Tribunal has given no relief to the workmen are: Doodputlee ' Majagram, Scottpore and Tarrapore. It is this award which has given rise to the present appeal by the appellants. The first question which arises for our decision is whether the Tribunal was justified in holding that section 25C recognises the common law right of the respondent to declare a lay off for reasons other than those specified in the relevant clause of the Standing Order. While dealing with this argument, we must proceed on the assumption that the financial difficulties experienced by the respondent at the relevant time which have been compendiously described by it as constituting trading reasons for the lay off do not fall within the purview of the said relevant clause. The respondent 's argument is that though the trading reasons may not justify the declaration of the lay off 553 under the said clause, as prudent employers who must be given liberty to run their industry in the best manner they choose, they have a common law right to declare a lay off if they feel that the alternative to the lay, off would be closure and acting bonafide they want to avoid closure and adopt the lesser evil,, of declaring the lay off. Does section 25C of the, Act justify this argument? Section 25C(1) which, recognises the right of the workmen who are laid; off, for compensation, provides that whenever a workman therein specified has been laid off, he shall be paid by the employer for whole of the period of the lay off, except for such weekly holidays as may intervene, compensation at the rate prescribed by the section. The proviso to this section lays down that the compensation payable to a workman during any period of twelve months shall not be for more than; 45 days; and this proviso seems to indicate that the legislature thought that normally the period of lay off within 12 months may not exceed 45 days. Section 25C(2), however, contemplates the possibility that the period of lay off may exceed 45 days, and it lays down that if during any period of 12 months, a work , man is laid off for more than 45 days, whether continuously or intermittently, he shall be paid compensation in the manner indicated by it. Thus, the position is that workmen who are laid off are entitled to compensation and the method in which the said compensation has to be calculated has been prescribed by the two clauses of section 25C. It is, however, significant that when section 25C deals with workmen who are laid off and proceeds to prescribe the manner in which compensation should be paid to them, it is inevitably referring to the lay off as defined by section 2(kkk) of the Act. The said section defines a "lay off" (with its grammatical variations and cognate expressions) as meaning: "the failure, refusal, or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason 554 to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrench ed. " It would be legitimate to hold that lay off which primarily gives rise to a claim for compensation under section 25C must be a lay off as defined by section 2(kkk) If the relevant clauses in the Standing Orders of industrial employers make provisions for lay off and also prescribe the manner in which compensation should be paid to them for such lay off, perhaps the matter may be covered by the said relevant clauses; but if the relevant clause merely provides for circumstances under which lay off may be declared by the employer and a question arises as to how compensation has to be paid to the workmen thus laid off, section 25C can be invoked by workmen provided, of course, the lay off permitted by the Standing Order also satisfies the requirements of section 2(kkk). Whether or not section 25C can be invoked by workmen who are laid off for reasons authorised by the relevant clause of the Standing Order applicable to them when such reasons do not fall under section 2(kkk), is a matter with which we are not directly concerned in the present appeal. The question which we are concerned with at this stage is whether it can be said that section 25C recognises a common law right of the industrial employer to lay off his workmen. This question must, in our opinion, be answered in the negative. When the laying off of the workmen is referred to in section 25C, it is the laying off as defined by section 2(kkk), and so, workmen who can claim the benefit of section 25C must be workmen who are laid off and laid off for reasons contemplated by section 2(kkk); that is all that section 25C means. If any case is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present, and for such lay off compensation would be awarded under section 25C. Therefore, we do not think that the Tribunal was right in holding that section 25C recognises the inherent right 555 of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. That takes us to the question whether the lay off in the present case is justified under Rule 8 of the, Standing Orders which have been duly certified under ' the Industrial Employment (Standing Orders) Act, (No. 20 of 1946). The relevant portion of Rule 8 reads thus: "Closing and re opening of sections of the in dustrial establishments, and temporary stoppages of work, and the rights and liabilities of the employer and workmen arising therefrom. (a) (1) The Manager may at any time in the event of fire, catastrophe, break down of machinery, stoppage of power or supply, epidemic, civil commotion, strike, extreme climate conditions or other causes beyond his control, close down either the factory or field work or both without notice. In cases where workmen are laid off for short periods on account of failure of plant or a temporary curtailment of production, the period of unemployment shall be treated as compulsory leave either with or without pay, as the case may be, when, however, workmen have to be laid off for an indefinitely long period, their services may be terminated after giving them due notice or pay in lieu thereof. " It will be seen that the circumstances under which a lay off can be declared have been specifically described by Rule 8(a)(1). Two grounds have been urged before us by Mr. Banerjee in support of the Tribunal 's conclusion that the impugned lay off is justified. He contends that the clause "stoppage of supply" may cover cases of stoppage of financial assistance. The argument is that in 1959 when the lay off was declared. the companies found that they 556 could not raise enough money to carry on the operations in the tea gardens, and so, it was a case of stoppage of supply. If that be so, the lay off would be justified. In our opinion, this argument is wholly misconceived. Stoppage of supply must, in the context, mean stoppage of raw material or other such thing. In regard to the factory, the stoppage of supply may mean the stoppage of tea leaves, or in the case of field work, it may mean the stoppage of supply of other articles necessary for field operations. It is impossible to accept the argument that "supply" in the context can mean money or funds. The other argument urged before us is that the last clause of R. 8(a)(i) which refers to "other causes beyond his control" would take in the financial difficulties of the Cos. We are not inclined to accept this argument also. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise we see no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. In fact, on this point the Tribunal has made a definite finding that though the respondent had produced a letter from the Chartered Bank of the 9th April, 1959 in which the Bank expressed its re luctance to afford financial facilities, it was by no means clear that the Companies acting through their Managing Agents completely failed to raise the necessary finances at the relevant time. As the Tribunal has observed, the letter written by the Bank shows that it had promised to consider the matter and write to the Companies again; no evidence was produced to show what the Bank subsequently stated and whether finances became available or not ' On the other hand, it is clear that at the end of the period of the lay off, all the Cos. started operating their tea gardens and we have been told that the operations have continued uninterrupted ever since. Besides, the letter on which reliance is placed was written in April, 1959, whereas the lay off was declared in February, 1959. Therefore, there is no evidence on the record which can justify 557 the assumption made by Mr. Banerjee when he raised the contention that the financial difficulties faced by the respondent at the relevant time were beyond its control. The fact that some of the Cos. have been incurring losses and have not made profits would not necessarily show that the financial position which they had to face at the relevant time was beyond their control. It is true, as Mr. Banerjee has pointed out, that the three Cos. Scottpore, Tarrapore and Doodputalee have not been able to pay dividends between 1951 to 1958 and it may be that with the exception of the year 1954, the position of all of them is not very satisfactory; but, on the other hand, there are other tea gardens in the same area and it is not suggested or shown that their position was any better than that of the companies before us. It is also true that at the relevant time, all the tea companies in Cachar in general, and the Managing Agents of the nine companies before us in particular M/s. Macneill and Barry Ltd. were trying their best to persuade the Assam Government to give them some relief in the matter of taxation. But the question which we have to decide is whether the financial position disclosed by the evidence on the record can be described as constitu ting a cause beyond the control of the respondent. We are not inclined to answer this question in favour of the respondent. Besides, as we have already indicated, having regard to the factors specified by Rule 8(a)(i) before the clause in regard to other causes beyond his control was introduced, it would not be easy to entertain the argument that a trading reason of the kind suggested by Mr. Banerjee can be included in that clause. Therefore, we are satisfied that the Tribunal was in error in holding that the impugned lay off could be justified by Rule 8(a)(i). Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of R. 8(a)(1) and if the case of the present lay off does not fall under R. 8 (a)(i), R. 8(a) (iii) would not improve the position. Mr. Banerjee has then urged that the present Standing Orders which were duly certified under the 558 Standing Orders Act came into force in 1950, whereas section 2(kkk) which defines a lay off was added to the Act by the Amending Act 43 of 1953 on the 24 th October, 1953. His argument is that the Standing Orders having been certified before the definition of the lay off was introduced in the Act, the respondent is entitled to rely upon the said definition in support r of the plea that the impugned lay off was justified. Basing himself on the definition of the lay off as prescribed by section 2(kkk), Mr. Banerjee urged that this definition was wider than R. 8(a)(1) of the respondent 's Standing Orders and would take in the trading reasons on which he relies. We are not prepared to accept the argument that in the present case, the respondent can rely on the definition of lay off as prescribed by section 2(kkk). It will be recalled that the Standing Orders which have been certified under the Standing Orders Act became part of the statutory terms and conditions of service between the industrial employer and his employees. Section 10(1) of the Standing Orders Act provides that the Standing Orders finally certified under this Act shall not, except on agreement between the employer and the workmen, be liable to modification until the expiry of six months from the date on which the Standing Orders or the last modification thereof came into operation. If the Standing Orders thus become the part of the statutory terms and conditions of service, they will govern the relations between the parties unless, of course, it can be shown that any provision of the Act is inconsistent with the said Standing Orders. In that case, it may be permissible to urge that the statutory provision contained in the Act should over ride the Standing Order which had been certified before the said statutory provision was enacted. Assuming without deciding that section 2(kkk) may include the trading reasons as suggested by Mr. Banerjee, the definition prescribed by section 2(kkk) is not a part of the operative provisions of the Act, and so, the argument that there is inconsistency between the definition and the relevant Rule of the Standing Orders does not assist Mr. Banerjee 's case. If there had been a provision in the Act specifically providing 559 that an employer would be entitled to lay off his workmen for the reasons prescribed by section 2(kkk), it might have been another matter. The only provision on which reliance has been placed is contained in section 25C and that, as we have already seen, merely takes in the definition of lay off inasmuch as it refers to the workmen as laid off and provides the manner in which compensation would be paid to them. An alleged conflict between the definition of lay off and the substantive rule of the Standing Orders would not, therefore, help the respondent to contend that the definition over rides the statutory conditions as to lay off included in the certified Standing Order. Therefore, we do not think Mr. Banerjee would be entitled to contend that section 2(kkk) of the Act is wider than the relevant Rule in the Standing Orders and should apply to the facts of this case. We ought to make it clear that in dealing with this argument, we have not thought it necessary to consider whether the broad and general construction of section 2(kkk) for which Mr. Banerjee contends is justified. In fact, Mr. Agarwala for the appellants has very strongly urged that the words "for any reason" found in section 2(kkk) will not take in the trading considerations. He contends and prima facie with some force that the said words must be construed ejusdem generis with the words that precede them. (vide Management of Kairbetta Estate, Kotagiri vs Rajamanickam & Ors.)(1) According to him, the circumstances specified in section 2(kkk) which justify a lay off must be integrally connected with production, and so, trading reasons cannot be included in that definition. According to this argument, the distinguishing features of the genus of which the several circumstances mentioned in the definition are different species, are: they are beyond the control of the employer, are expected to be of a short duration, and are of compulsive effect. As we have already indicated, we do not think it necessary to decide this interesting point in the present appeal because we are satisfied that the present dis (1) ; 560 pute must be governed by Rule 8(a)(1) of the respondent 's Standing Orders. In the result, we reverse the finding of the Tribunal that the lay off declared by the respondent for 45 days in 1959 was justified. That being so, it is unnecessary to consider the individual cases of the nine respective companies, because whatever may have been their respective financial position, under the relevant Rule they could not validly declare a lay off at all, nor could they have declared the lay off in exercise of their alleged common law right. The questions referred to the Tribunal must, therefore, be answered in favour of the appellants. The appeal is accordingly allowed and the appellants ' claim for full wages for the 45 days of lay off in respect of the 11 tea gardens is awarded to them. The appellants will be entitled to their costs throughout. Appeal allowed.

As a result of the lay off declared by the respondent in the II tea estates, managed by them an industrial dispute arose between the respondent and their workmen, the appellant. The respondent justified the lay off on the ground that its financial position was very difficult and that the lay off was appropriate in the interests of the employees and their own in order to avoid closure of business. The appellants urged, inter alia, that the depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order, and so, they justified their claim for full wages during the period of the lay off. The Tribunal held that the relevant Standing Order No. 8 justified the lay off, and the trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order. Alternatively, the Tribunal thought that even if the lay off was not justified by the relevant clause of the Standing Order, the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the and since it is a statutory provision, it overrides the relevant clause in the Standing Order. In appeal by special leave: Held: (i) The Tribunal was not right in holding that section 25C of the recognises the inherent right of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. When the laying off of the workmen is referred to in section 25C, it is laying off as defined by section 2 (kkk), and so, workmen who can claim the benefit of section 25C must be workmen who are laid off for the reasons contemplated by section 2(kkk); that is all that section 25C means. If in any case the lay off is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present, and for such lay off compensation would be awarded under section 25C. 549 (ii) "Stoppage of supply" must, in the context, mean stoppage ' of raw material or other such thing. In regard to the factory, "stoppage of supply" may mean the stoppage of tea leaves, or in the case of field work, it may mean the stoppage of supply of other articles necessary for field operations. "Supply" in the context cannot mean money or funds. (iii) The last clause of r. 8(a) (i) of the Standing Order which refers to "other causes beyond his control" would not take in the financial difficulties of the companies. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise there is no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of r. 8(a) (i) and if the case of the present lay off does not fall under r. 8(a) (i), r. 8(a)(iii) would not improve the position. (iv) The present dispute must be governed by r. 8(a)(i) of the respondent 's Standing Orders. It cannot be accepted that the Standing Orders having been certified before the definition of the lay off was introduced in the Act, the respondent is entitled to rely upon the said definition in support of the plea that the impugned lay off was justified. Management of Kairbetta Estate, Kotagiri vs Raja manickam & Ors., ; , referred to.

ivil Appeal No. 1312 of 1990. From the Judgment and Order dated 6.7. 1988 of the Rajasthan High Court in D.B. Civil W.P. No. 71/77. section Hegde, Additional Solicitor General, A. Subba Rao for C.V.S. Rao for the Appellants. S.C. Birla for the Respondent. The Judgment of the Court was delivered by 762 K. JAGANNATHA SHETTY, J. Special leave granted. Bakshi Ram respondent was a constable in the Central Reserve Police Force at Devli in Rajasthan. On 17th March 1971 at about 8.45 p.m. he along with another constable forced entry into the room of Garib Das the constable of the CRP Group Centre band platoon. Garib Das was then not present in the room. His wife Savitri Devi who was inside tried to prevent their entry, but in vain. Both the consta bles caught hold of her and misbehaved with her. The respondent was tried for an offence under Section 10(1) of the . Section 10 of the Act sets out less heinous offences and Section 10(1) refers to any act or omission which, though not speci fied in the Act, is prejudiciable to good order and disci pline. On the evidence adduced in the case he was found guilty of the charge and by judgment dated 23rd March 1971 he was sentenced to four months R.I. by the Magistrate 1st Class and Commandant Group Centre, CRPF, Deoli (Rajasthan). He was lodged in the Civil Jail, Jaipur to undergo the sentence. In view of his conviction and sentence. , the Department by way of disciplinary action dismissed him from service. This action was taken when his appeal against the conviction and sentence was pending before the Sessions Judge. The learned Judge by judgment dated 22 September 1971 upheld the conviction but released him under the ("the Act"). Apparently he was released under Section 4 of the Act upon furnishing bonds to keep peace and be of good behaviour for a period of six months. The re spondent complied with those conditions. After expiry of the period of good conduct, he moved the High Court with Writ Petition under Article 226 of the Constitution challenging his dismissal from service. The High Court relying upon Section 12 of the Act has set aside the dismissal and di rected that he should be reinstated into service with all consequential benefits. The High Court has expressed the view that the sole reason for dismissal of the respondent was his conviction under Section 10(1) of the Central Re serve Police Force Act but in view of Section 12 of the Probation of Offenders Act, 1968, there was no disqualifica tion for him to continue in service. This is how the High Court observed: "The clear language of Section 12 of the Probation of Of fenders Act, 1958 which provides that a person dealt with under the provisions of Section 3 or Section 4 of that 763 Act shall not suffer disqualification, if any, attaching to a conviction under any law, notwithstanding anything con tained in any other law. This provision has the effect of removing disqualification attaching to the petitioners ' conviction under Section 10(n) of the C.R.P.F. Act. Section 12 of the Probation of Offenders Act dealing specifically with this situation clearly provides that the provisions therein is 'notwithstanding any thing contained in any other law. ' Hence, effect has to be given to the same. " The judgment of the High Court has been challenged in this appeal. Since the result of the appeal turns on the scope and meaning of Section 12 of the Probation of Offenders Act, it is necessary to set out the Section. Section 12 is in these terms: "12. Removal of disqualification attaching to conviction Notwithstanding anything contained in any other law, a person found guilty of an offence and dealt with under the provisions of Section 3 or Section 4 shall not suffer dis qualification, if any, attaching to a conviction of an offence under such law, Provided that nothing in this section shall apply to a person who, after his release under Section 4, is subse quently sentenced for the original offence. " Section 3 of the pro vides power to the Court to release certain offenders after admonition. Section 4 provides power to the Court to release certain offenders on probation of good conduct. Under the disposition made by the Court under Section 4 the sentence is suspended during the period of probation and the offender is released on his entering into a bond to keep peace and be of good behaviour. Section 9 provides for procedure in case of offender failing to observe conditions of bond. The Court, if satisfied, that the offender has failed to observe any of the conditions of bond for keeping good behaviour could sentence him for the original offence or where the failure is for he first time, then, without prejudice to the continuance in force of the bond, the Court may impose upon him a penalty not exceeding fifty rupees. 764 It will be clear from these provisions that the release of the offender on probation does not obliterate the stigma of conviction. Dealing with the scope of Sections 3, 4 and 9 of the , Fazal Ali, J., in The Divisional Personnel Officer, Southern Railway and Anr. T.R. Challappan etc. , at 596 speaking for the Court observed: "These provisions would clearly show that an order of re lease on probation comes into existence only after the accused is found guilty and is convicted of the offence. Thus the conviction of the accused or the finding of the Court that he is guilty cannot be washed out at all because that is the sine qua non for the order or release on proba tion of the offender. The order of release on probation is merely in substitution of the sentence to be imposed by the Court. This has been made permissible by the Statute with a humanist point of view in order to reform youthful offenders and to prevent them from becoming hardened criminals. The provisions of Section 9(3) of the Act extracted above would clearly show that the control of the offender is retained by the criminal court and where it is satisfied that the condi tions of the bond have been broken by the offender who has been released on probation, the Court can sentence the offender for the original offence. This clearly shows that the factum of guilt on the criminal charge is not swept away merely by passing the order releasing the offender on proba tion. Under sections 3, 4, or 6 of the Act, the stigma continues and the finding of the misconduct resulting in conviction must be treated to be a conclusive proof. In these circumstances, therefore, we are unable to accept the argument of the respondents that the order of the Magistrate releasing the offender on probation obliterates the stigma of conviction. " As to the scope of Section 12, learned Judge went on (at 596): "It was suggested that Section 12 of the Act completely obliterates the effect of any conviction and wipes out the disqualification, attached to a conviction of an offence under such law. This argument, in our opinion, is based on a gross misreading of the provisions of Section 12 of the Act, the words "attaching to a conviction of an offence 765 under such law" refer to two contingencies: (i) that there must be a disqualification resulting from a conviction and (ii) that such disqualification must be provided by some law other than the . The Penal Code does not contain any such disqualification. Therefore, it cannot be said that section 12 of the Act contemplates an automatic disqualification attaching to a conviction and obliteration of the criminal misconduct of the accused. It is also manifest the disqualification is essentially differ ent in its connotation from the word 'misconduct '." In criminal trial the conviction is one thing and sen tence is another. The departmental punishment for misconduct is yet a third one. The Court while invoking the provisions of Section 3 or 4 of the Act does not deal with the convic tion; it only deals with the sentence which the offender has to undergo. Instead of sentencing the offender, the Court releases him on probation of good conduct. The conviction however, remains untouched and the stigma of conviction is not obliterated. In the departmental proceedings the delin quent could be dismissed or removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge; (See Article 311(2)(b) of the Constitution and Tulsiram Patel case: [1985] Supp. 2 SCR 131 at 282). Section 12 of the Act does not preclude the department from taking action for misconduct leading to the offence or to his conviction thereon as per law. The section was not intended to exonerate the person from departmental punish ment. The question of reinstatement into service from which he was removed in view of his conviction does not therefore, arise. That seems obvious from the lerminology of Section 12. On this aspect, the High Court speak with one voice. The Madras High Court in R. Kumaraswami Aiyer vs The Commission er, Municipal Council Tiruvannamalai and Anr., [1957] Crl. L. J. 225 Vol. 58 and Embaru (P) vs Chairman Madras Port Trust, Mad., the Andhra Pradesh High Court in A. Satyanarayana Murthy vs Zonal Manager, L.I.C., AIR 1969 AP 371, the Madhya Pradesh High Court in Prem Kumar vs Union of India and Ors., [1971] Lab & Ind. cases 823, the Punjab & Haryana High Court in Om Prakash vs The Director Postal Services (Post and Telegraphs Deptt.) Punjab Circle, Ambala and Ors., The Delhi High Court in Director of Postal Services and Anr. vs Daya Nand, have expressed the same view. This view of the High Courts in the aforesaid cases has been approved by this Courtin T.R.Challappan 's case 766 In Trikha Ram vs V.K. Seth and Anr., [1987] Supp. SCC 39 this Court after referring to section 12 has altered the punishment of dismissal of the petitioner therein into "removal from service", so that it may help him to secure future employment in other establishment. Section 12 is thus clear and it only directs that the offender "shall not suffer disqualification, if any, attach ing to a conviction of an offence under such law". Such law in the context is other law providing for disqualification on account of conviction. For instance, if a law provides for disqualification of a person for being appointed in any office or for seeking election to any authority or body in view of his conviction, that disqualification by virtue of Section 12 stands removed. That in effect is the scope and effect of Section 12 of the Act. But that is not the same thing to state that the person who has been dismissed from service in view of his conviction is entitled to reinstate ment upon getting the benefit of probation of good conduct. Apparently, such a view has no support by the terms of Section 12 and the order of the High Court cannot, there fore, be sustained. In the result the appeal is allowed. The impugned order of the High Court is set aside. However, we alter the penal ty of dismissal from service into 'removal from service ' as it was done in Trikha Ram 's case. In the circumstances of the case, we make no order as to costs. T.N.A. Appeal al lowed.

The Delhi Electricity Supply Undertaking disconnected the supply of electricity to the respondent company during the pendency of the suit for a prohibitory injunction with out serving notice on the consumer. The trial court dis missed the amended suit for mandatory injunction to restore the supply. The First Appellate Court decreed the suit on the sole ground of non service of notice as required under condition No. 36 in regard to supply of electricity by the appellant. It did not go into the allegation of theft of electricity by the plaintiff. The High Court dismissed the appeal. Dismissing the appeal by special leave, this Court, HELD: 1. The licensee undertaking is performing a public duty and is governed by a special statute. The law also contemplates service of a notice before disconnection of supply of electricity. The appellant cannot also be allowed to go back upon its words and refuse the consumer the bene fit of notice as contemplated by the agreement. The suit was, therefore, rightly decreed by the First Appellate Court. [735B C, A B] 2. The plaintiff is seriously denying the allegation of theft. It is not possible to assume the accusation as cor rect without a full fledged trial on this issue. The courts below have not examined the case on merits. The question whether the allegations are true or not has to be examined and decided in an appropriate proceeding. The appellant will not, therefore, be prejudiced in its claim by dismissal of the appeal. [734G H, 735C] Jagarnath Singh vs B.S. Ramaswamy; , , distinguished.

Appeal No.2402 of 1966. 1 2 L694SupCI/71 850 Appeal by special leave from the judgment and order dated May 4, 1966 of the Patna High Court in Misc. Judicial Case No. 284 of 1962. A. K. Sen and U. P. Singh, for the appellants. N. A. Palkhivala, section B. Mehta, B. Datta, for the respondent. Hegde, J. This is an appeal by special leave. It arises from the judgment of the High Court of Patna in a Reference under section 25(3) of the Bihar Sales Tax Act, 1947. That reference was called for by the High Court at the instance of the assessee company (the respondent herein. The questions referred for the opinion of the High Court by the Board of Revenue were : "(1) With regard to the sales which took place in the period from 1st of April, 1955 to the 6th September 1955, whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales Tax Act because of the provision of Article 286(1) (a) of the Constitution as it stood at the relevant date read with the explanation to that article. (2) With regard to the sales which took place in the period from 7th September, 1955, to 31st March, 1956 whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales tax Act on the ground that the sales took place in the course of inter State trade or commerce under article 286(2) of the Constitution as it stood at the relevant period. " The High Court answered the first question in the negative and against the assessee. It answered the second question in the affirmative and in favour of the assessee. The assessee has not come up in appeal. This appeal has been brought by the State of Bihar contesting the correctness of the opinion given by the High Court on the second of the two questions referred to earlier. The assessee is, a Public Limited Co., incorporated under the Indian Companies Act, 1913. It carries on business of manufacturing and selling inter alia trucks and bus chassis and spare parts thereof to their appointed dealers, State Transport Organizations and individual buyers throughout India. The registered office of 851 the assessee is at Bombay but its factory where manufacturing proCess. is being carried on is at Jamshedpur in Bihar. The assessee has appointed several dealers all over India for the sale of its trucks, bus chassis and spare parts. Those dealers are appointed under agreements entered into between the in and the assessee. The turnover in dispute relates to the sales made by the assessee to its dealers of trucks, bus chassis and spare parts for being sold in the territories assigned to them under the dealership agreements. The agreements between the assessee and its dealers appear to be similar. Under the agreements, each dealer is assigned a territory .in, which alone he can sell the trucks, bus chassis and other spare parts purchased by him from the assessee company. He is forbidden from selling anyone of those articles to any purchaser outside his territory. As per the agreements, dealers will have to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the assessee. In pursuance of those delivery orders, trucks, bus chassis and other spare parts were delivered in Bihar to be taken over to the territories assigned to them. Under the contracts of sale, the dealers, were required to remove the trucks, bus chassis and the spare parts, delivered to them. in the State of Bihar to place outside Bihar. These are facts found by the Board of Revenue and affirmed by the High Court. On the basis of these facts, we have whether the sales with which we are concerned in this appeal are sales that took place in the course of inter State trade and commerce as contemplated by article 286(2) of the Constitution as it stood at, the relevant time. In other words the question for decision is, whether the sales in question were sales for the purpose of inter State trade or commerce or whether they were sales in the course of inter State trade or commerce. As seen earlier, the High Court has held that, those sales took place in the course of interState trade or commerce. The expression "in the course of" appearing in article 286(1)(b) came up for consideration in State of Travancore Cochin and Ors. vs The Bombay Co. Ltd. (1) Therein in this Court held that whether else may or may not fall within article 1286(1)(b) of the Constitution,. sales and purchases which themselves occasion the export or import of the goods as the case may be out of or into, the territory of India come within the exemption. In that case this Court further observed that a sale by export involves, a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from,the export without which it cannot be effectuated and the sale and the resultant export form parts of a single transaction. Of these two integrated activities which to (1) ; 852 gather constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed, within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under article 286(1)(b). The same exposition of the law is true of cl. (2) of article 286 as it stood prior to its amendment on September 11, 1956. The next decision in which article 286(1)(a), 1(b) and (2) came to be considered by this Court is State of Travancore Cochin and Ors. vs Shanmugha Vilas Cashew Nut Factory and Ors. (1) Therein this Court observed that the word "course ' etymologically denoties movement from one point to another and the expression "in the course of" in article 286(1)(b) not only implies a period of time during which the movement is in progress but postulates also a connected relation. Consequently, a sale in the course of export out of the country should be understood in the context of article 286(1) (b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country, but also as part of or connected with such activities. But a purchase of goods for the purpose of export is only an act preparatory :to their export and. not an act done in the course of the export of ,the goods. In The Bangal Immunity Company Ltd. vs The State of Bihar and Ors. (2) Venkatarama Ayyar, J. observed that a sale could be a sale in the course of inter State trade only if two conditions concur : (1) a sale of goods and (2) a transport of those goods from one State to another under the contract of sale. In Endupuri Narasimham and son vs The State of Orissa and Ors. (3), this Court held that in order that a sale or purchase might be inter State, it is essential that there must be a transport of goods from one State to another under the contract of sale or purchase. IA purchase made inside a State for sale outside the State cannot itself be, held to be in the course of inter State and the imposition of tax thereon is not repugnant to article 286(2) of the Constitution. In Tata Iron and Steel Co. Ltd. vs section R. Sarkar and ors. (4) this Court held that within cl. (b) of section 3 of the , are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto and also covers sales in which movement of goods from one State to another is the result of a covenant or incident of the contract of sale and property in (1) ; (2) [1955] 2 S.C.R.603. (3) ; (4) ; 853 the goods passes in either State. Clause (b) of section 3 of the says : "That no law of a State shall impose or authorise the imposition of,. a tax on the sale or purchase of goods where such sale or purchase takes place in the course of the import of goods into, or export of the goods out of,. the territory of India. " In The Cement Marketing Co. of India (private Ltd. and anr. vs The State of Mysore and anr.(1), this Court held that where the goods were transported outside the State as required by the contract of sale, they are inter State sales and hence exempt from sales tax. On the facts of that case it was held that the sales transactions themselves involved movement of goods across the border. In Ben Gorm Nilgiri Plantations Co. Coonoor and ors. vs Sales Tax Officer, Special Circle, Ernakulam and ors.(2) this Court had to consider what sales are sales in the course of export and what sales are for the purpose of export. In the course of the judgment Shah, J. (one of us) observed : "A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be obligation to export,. and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them. , or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions export." In K. G. Khosla and Co. (P) Ltd. vs Deputy Commissioner of Commercial Taxes, Madras(3 ) this Court held that before a sale could be said to have occasioned the import, the movement of goods must have incidental to the contract or in pursuance of the conditions of the contract and there should be no possibility (1) 14, S.T.C. 175 (S.C.) (2) 117 S.T.C. 473. (S.C.) (3) 854 the goods being diverted by the assessee for any other purpose. meaning thereby that there should be no possibility of diversion according to law or contract and not in breach of them. ' In Tata Engineering and Locomotive Co. Ltd. vs The Asstt. Commissioner of Commercial Taxes and anr.(1), this Court after referring to the earlier decisions observed : "It has been laid down that the sale in the course of export, predicated connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising from the nature of the transaction. To occasion export there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it. The principle thus admits of no doubt. according to the decisions of this Court, that the sales to be exigible to tax under the Act (Central Sales Tax Act, 1956) must be shown to have occasioned the movement of the goods or articles from one State to another. The movement must be the result of a covenant or incident of the contract of sale. " If we apply the principles enunciated by this Court in the decisions referred to above to the facts of this case, it is obvious that the sales with which we are concerned in this case are sales in the course of inter State trade. The dealers were required to move the trucks, buses, chassis and other spare parts purchased by them from the State of Bihar to places outside Bihar. They are so required by the terms of the contracts entered into by them with the assessee. They would have committed breach of their contracts and incurred the penalty prescribed in their dealership agreements, if they had failed to abide by the term requiring them to move the goods outside the State of Bihar. The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contract of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other (1) [1970] 1 S.C.C.622. 855 than the State in which the delivery of goods takes place and (3) Where as a necessary incident of the contract of sale goods sold are required to be exported or imported. or transported out of the State in which the delivery of goods takes place. But Mr. A. K. Sen, learned Counsel for the State of Bihar contended that this Court has taken a different view of the law in Coffee Board, Bangalore vs Joint Commercial Tax Officer, Madras and anr.(1). According to him the ratio of that decision is that whenever goods are delivered in a State in pursuance of a contract of sale, the sale in question becomes exigible to tax in the State in which the goods are delivered unless they are taken out of the State for purposes of consumption and not resale, or the same is taken out of the State in pursuance of an already existing agreement to resell in the State to which it is taken. The decision in Coffee Board case (supra) does not, in our opinion, afford any basis for these contentions. We have earlier noticed that this Court in a series of decisions has pronounced in unambiguous terms that where under the terms of a contract of sale, the buyer is required to remove the goods from the State in which he purchased those goods to another State and when the goods are so moved, the sale in question must be considered as a sale in the course of inter State trade or commerce. This is a well established position in law. In the Coffee Board case this Court did not deviate from this position nor could it deviate as the earlier decisions were binding on it. Fur ther in the course of his judgment, the learned Chief Justice who spoke for the Court referred with approval to the earlier decisions of this Court where distinction between the sales in the course of inter State trade or commerce and sales for the purpose of interState trade and commerce were explained. On the basis of the facts in that case, his Lordship came to the conclusion that the export of the coffee in question was, not integrated with the sales with which the Court was concerned and that there was no direct bond between the export and the sales. In the course of his judgment his Lordship observed : "Here there are two independent sales involved in the export programme. The first is a sale between the Coffee Board as seller to the export promoter. Men there is the sale by the export promoter to a foreign buyer. Of the latter sale, the Coffee Board does not have any inkling when the first sale takes place. The Coffee Board 's sale is not in any way related to the second sale. Therefore, the first sale has no connec (1) 25 S.T.C. 528 (S.C.) 856 tion with the second sale which is in the course of export, that is to say, movement of goods between an exporter and an importer. " This finding clearly brings out the distinction between the facts of the Coffee Board 's case (supra) and the facts of the cases wherein this Court held that the sales in question were sales in the course of export or import. In the Coffee Board 's case this Court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of the export must be exported; it was not incumbent for the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India. On that basis, this Court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export; they are only sales for, the purpose of export. The ratio of that decision does not bear on the facts before us. Herein, under the terms of the contracts of sale, the purchasers were required to remove the goods from the State of Bihar to other States. Hence the sales with which we are concerned in this case must be held to be sales in the course of inter State trade or commerce. For the reasons mentioned above, we agree with the findings of the High Court. In the result this appeal fails and the same is dismissed with costs.

The assessee, having its registered office in Bombay and its factory in Bihar, was carrying on the business of manufacturing and selling trucks, bus chassis and spare parts to their appointed dealers and others. Agreements were entered into between the assessee and the appointed dealers, under which, each dealer was assigned a territory in which alone the dealer could shell. The dealers had to place the indents, pay the price of goods to be purchased and obtain delivery orders from the Bombay office. In pursuance of the delivery orders the trucks etc. were delivered in Bihar to be taken to the territories assigned to them for sale there. If the dealers failed to abide by the term requiring them to move the goods outside the State of Bihar they would have committed breach of their contracts, On the question whether the turnover relating to the sales made by the assessee to its dealers for sale by them in their respective territories outside the State of Bihar, during the period 7th September 1955 to 31st March 1956, was exempt from liability to pay sales tax under the Bihar Sales Tax Act, on the ground that the sales took place in the course of inter State trade or commerce, under article 286(2) as it, then stood, HELD : Where under the terms of a contract of sale, the buyer is required, as a necessary incident of the contracts to remove the goods from the State in which he purchased the goods to another State and when the goods are so removed, the sale must be considered as a sale in the course of inter State trade or commerce. [854 G H; 858 A 13] State of Travancore Cochin vs The Bombay Co. Ltd. ; , State of Travancore Cochin vs Shanmugha Visal Cashew Nut Factory, ; , Bengal Immunity Co. Ltd. vs State of Bihar, , Endupuri Narasimham & Son vs State of Orissa, ; , Tata Iron & Steel Co. Ltd. vs section R. Sarkar, [1961] ] S.C.R. 379, The Cement Marketing Co. of India (P) Ltd. vs State of Mysore, 14 S.T.C. 175, Ben Gorm Nilgiri Plantations Co. vs Sales Tax, Officer, Special Circle, Ernakulam; , , K. G. Khosla & Co. (P) Ltd. vs Dy. Commissioner of Commercial Taxes, Madras, 17 S.T.C. 473 and Tata Engineering & Locomotive Co. Ltd. vs Asstt. Commissioner of Commercial Taxes & Anr. ; , applied. Coffee Board, Bangalore vs Joint Commercial Tax Officer, Madras, 25 S.T.C. 528, explained.

Appeal No. 182 of 1956. Appeal by special leave from the judgment and order dated November 23, 1955, of the Labour Appellate Tribunal of India, Bombay, in Appeal No. 224 of 1953 arising out of an award (Part II) dated June 4, 1953, of the Bombay Industrial Tribunal in Reference No. (I.T.A.)No. 18 of 1951. M. C. Setalvad,Attorney General for India,N. C. Chatterji, J. B. Dadachanji, section N. Andley and Rameshwar Nath of Rajinder Narain & Co., for the appellant. Purshottam Tricumdas, H. R. Gokhale, K. R. Choudhury and M. R. Rangaswamy, for the respondents. November 13. The Judgment of the Court was delivered by S.K. DAS J. This is an appeal by special leave from a decision of the Labour Appellate Tribunal at Bombay, dated November 23, 1955. The Baroda Borough Municipality is the appellant, and the respondents are the workmen employed in the electricity department of the said Municipality represented mostly by the Baroda State Electric Workers Union (hereinafter called the respondent Union). The substantial question for determination in this appeal is if the respondents, workers in a municipal department engaged in the generation, supply and sale of electric energy, are entitled to the bonus claimed out of the surplus earnings of the said department (called "profits" by the respondents) after 35 allowing for all outgoings including necessary expenditure of the department and deductions for all prior, charges. The question is, a short one, but has an importance and consequences reaching beyond the limits of the particular case in which it has arisen. We may first state the relevant facts. Before May 1, 1949, on which date the former State of Baroda was merged in and integrated with the then Province of Bombay (now the Bombay State), the Baroda Electric Supply Concern was owned and managed by the State of Baroda. On April 19, 1949, the State Government of Baroda decided to hand over the said Concern as a gift to the Baroda Municipality and communicated an order to that effect in which it was stated inter alia: It is likely that the various types of assistance, financial or otherwise, which the Baroda Municipality has been receiving up to now from the Baroda Government may not be continued to a similar extent after integration. It is therefore very necessary to find out new sources of revenue for the Municipality so that it may continue to maintain a high standard of efficiency as far as possible. . With this object in view the Baroda Government are pleased to hand over to the Municipality as a gift the Baroda Electric Supply Concern which at present is a Government concern including both the generation and distribution of electric power. With the transfer of the electric concern to the Municipality the various funds of the, electric department like the Reserve Fund the Depreciation Fund etc. are also to be transferred to the Municipality with this specific understanding that these funds should not be used for purposes other than those for which they are intended. . The Baroda City Municipality will have to be issued licence for the generation and distribution of electricity as per Barods Electricity Act and the Municipality should immediately apply for such a licence for the supply of electric power not only within the municipal limits but within a twenty miles radius round Baroda. The Municipality should continue the policy of the department. to give 36 electric energy at concessional rates for irrigation pur poses in the villages, although this may not be profitable in the beginning. The entire staff of the Baroda Electric Supply Concern will be taken up by the Municipality without an reservation and the Municipality is directed to bring into operation terms and conditions of services as are prevalent under the Bombay Government and the officers and staff should be given emoluments which they would have got had they joined Bombay Government." On April 29, 1949, a formal order of handing over was made, subject to certain directions reserving the rights of the employees in the matter of pension, gratuity, provident fund, continuity of service etc. In 1951, there was an industrial dispute between the Baroda Borough Municipality and the workmen employed in the electric department with reference to a number of demands made by the latter, and by consent of the appellant Municipality and the respondent Union, the dispute was referred to the Industrial Tribunal, Bombay, for adjudication, by an order of the Government of Bombay dated October22,1951. The dispute related to a large number of items, one of which was "payment of bonus equivalent to three months ' wages (including dearness allowance) for the year 1940 50 to all employee,% of the electric department including daily wage workers and temporary workers. " The dispute was settled by agreement with regard to all other items except the item of bonus; on that item the Industrial Tribunal heard the parties and came to the conclusion that the respondents were not entitled to the bonus claimed because(1) the Municipality was not a profit making concern;(2) the balance of earnings over the outgoings of the electric department of the Municipality was not 'profit ' as that word is understood in the ordinary trading or business sense; (3) the Municipality consisted of both earning and spending departments and it was not per missible to create an invidious distinction between the different employees of the Municipality by granting bonus to the workmen in one department only; and (4) the respondents having been compensated by higher 37 scales of salary on the municipalisation of the undertaking and having got other benefits and amenities appertaining to municipal service were not entitled to claim such bonus as was granted to them during the regime of the former State owned company. Against this decision of the Tribunal, there was an appeal to the Labour Appellate Tribunal of India at Bombay. The Appellate Tribunal came to the conclusion that the respondents were entitled to claim bonus; it expressed the view that on the decision of this Court in D. N. Banerji vs P. R. Mukherjee (1) the expression industrial dispute ' in the , includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business, and if the undertaking resulted in profit during the relevant trading period, the workmen were entitled to claim bonus as of right. On the question whether the excess of earnings over outlay of a municipal undertaking like the one under consideration here was profit or not, the Appellate Tribunal relied on the circumstances stated below for its finding that the excess was really profit: (a) the very nature of the gift to the Baroda Municipality by the State Government of Baroda showed that the concern (or undertaking) made over to the former was a profit making concern; (b) the concern was run separately and as it was a trading concern by its very nature,, the balance of earnings derived from it after allowing for all outgoings was pecuniary gain and it made no material difference to the actual nature of the gain, whether it was called surplus or profit; and (c) no distinction could be made in principle between a municipal undertaking and an undertaking by a private or public concern, if the conditions laid down for the grant of bonus in Muir Mills Co. Ltd. vs Suti Mills Mdzdoor Union, Kanpur (2) were fulfilled. As to the payment of bonus to the employees of one department only, the appellate Tribunal said that if (1) ; (2) ; 38 the profits were not sufficiently large to admit of bonus to all employees, it was permissible to treat the profitmaking department as a separate unit for the purpose of granting bonus, unless there was some essential nexus or connection between the profit making department and other departments or some unity of purpose or parallel or co ordinate activity towards a common goal.in all the departments without which the undertaking could not be carried on to proper advantage. The Appellate Tribunal. pointed out that the accounts of the electricity department. of the Baroda Municipality were separately kept and as the undertaking carried on by the electricity department of the municipality differed. from other normal activities of the Municipality, there being ' no common nexus between them, it was open to the workmen of the electricity department to claim bonus out of the profit made by that department after making deductions for all prior charges. The Appellate Tribunal accordingly allowed the appeal, set aside the decision of the Industrial Tribunal and remanded the case for decision on merits according to law. It is now finally settled by the decision of this Court in D. N. Banerji vs P. R. Mukherjee (supra) that a municipal undertaking of the nature we have under consideration here is an 'industry ' within the meaning of the definition of that word in section 2(j) of the , and that the expression 'industrial dispute ' in that Act includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business. The learned Attorney General who appeared for the appellant made it clear at the very out set that the questions which he wished us to consi der in this case were different from those considered and determined by the aforesaid decision. The first contention which he placed in the forefront of his argument is this: he invited attention to our decision in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (Supra) and contended that having regard to the principles laid down therein for the grant of bonus, the respondents were not entitled to claim any 39 bonus in this case because even though the undertaking in question was an 'industry ' within the meaning, of the Industial Disputes Act, 1947, there was no profit from the undertaking and the principles which govern the grant of bonus out of profits, as explained in that decision, were inapplicable to a municipal undertaking of the nature under consideration before us. In the Muir Mills case (supra) it was observed that two conditions had to be satisfied before a demand for bonus could be justified: one was that the wages of the workmen fell short of the living standard and the other was that the industry made profits to the earning of which the workmen had contributed. The principle for the grant of bonus was stated thus: ', 'It is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges. " The prior or necessary charges were then explained as (1) provision for depreciation, (2) reserves for rehabilitation, (3) a return of six per cent. on the paid up capital and (4) a return on the working capital at a lesser rate than the return on paid up capital. Do those principles apply in the case of a municipal undertaking of the kind in question here ? There can be no doubt that the respondents founded their claim of bonus in this case on the availability of profits after meeting prior or necessary charges. In the statement of their claim they said, "The electric concern was treated as a commercial concern by the former Baroda State Government and it used to yield huge profits to the State. Even after merger the municipality is treating it as a commercial concern and the concern is fielding huge profits to the municipality too. It is submitted that all workers of the electric department should be paid bonus equivalent to three. months wages including D.A. The bonus should be paid to all the employees including daily wage, temporary and semi permanent workmen. The workers are entitled to bonus both as share in profits and also &a deferred wages. " It was decided in the Muir Mills case (supra) that bonus was not deferred wage; so the alternative claim of the respondents on the footing that bonus was deferred wage had no real basis, and their 40 claim of bonus as share in profits was the only claim which merited consideration. In reply to that claim, the appellant said: This demand is not acceptable. Under former Baroda Government Order No. (R) 403/63 dated 19 4 49, after serious consideration into the financial position of the Municipality after the integration of the Baroda State with the Bombay Province and with a view to find out new sources of revenue for the Municipality so that it may continue to maintain its standard of efficiency and to fulfill the obligations incumbent upon the Municipality, the Government was pleased to hand over to the Municipality the Baroda Electric Supply concern. "The Municipality is experiencing great hardships still in meeting all its obligations and covering the lost sources of revenue. Even including the income of the Electric Supply Concern, the municipal budget is a deficit one. Due to want of sufficient funds, the Municipality has to give up certain schemes and works or to postpone the same. "Further, local authorities, like municipalities and local boards, are public utility institutions and the profits derived from the working of the Electric Supply Concern will all go to the Municipal treasury and city 's tax payers in general, unlike other commercial organisations whose profits are distributed only among the investing public. " It is clear to us that having regard to the provisions of the Bombay Municipal Boroughs Act, 1925 (Bombay Act XVIII of 1925), hereinafter called the Municipal Act, under which the appellant Municipality is constituted and functions, the earnings of one department of the Municipality cannot be held to be gross profits in the ordinary commercial or trading sense; nor can, the principles governing the grant of bonus out of such profits after meeting necessary or prior charges be applied to the present case. The relevant sections of the Municipal Act are sections 58, 63, 65, 66, 68 and 71. We shall subsequently advert to section 58 of the Municipal Act in connection with another 41 contention of the learned Attorney General; but it is necessary to refer here to sections 63, 65, 66, 68 and 71 of the Act. Section 63 lays down, inter alia, that all property of the nature specified in clauses (a) to (f) of sub section (2) of the section shall be vested in and belong to the Municipality and shall, together with all other property of whatever nature or kind which may become vested in the municipality, be under its direction, management and control and shall be held and applied by it as trustee, subject to the provisions and for the purposes of the Act. Clauses (a) to (f) of subs. (2) of the section relate to immoveable property and permanent fixtures or works thereon. Section 65, which is more relevant for our purpose, states inter alia that all moneys received by or on behalf of a munici pality, all taxes, fines, penalties etc. , all proceeds of land or other property sold by the municipality and all rents accruing from its land or property and all interest, profits and other moneys accruing by gift or transfer from the Government or private individuals or otherwise, shall constitute the municipal fund and shall be held and dealt with in a manner similar to the property specified in a. 63. Section 66 lays down that the municipal fund and all property vested in the municipality shall be applied for purposes of the Act within the limits of the municipal borough. Section 68 lays down the duties of municipalities, one of which is the lighting of public streets, places and buildings. This is an obligatory duty of the municipality. Section 71 states the discretional functions of the municipality and one of such functions is the construction, maintenance, repairs, purchase of any works for the supply of electrical energy (see el. It is worthy of note that cl. (q1) was inserted by an amending Act in 1951 (Bombay Act 44 of 1951). A similar amendment was made in the same year in section 66 of the Municipal Act and the effect of the amendment was that the municipality could incur expenditure to supply electrical energy not only for the use of the inhabitants of the municipal borough but also for the benefit of any person or buildings or lands in anyplace whether such place was or was not within the limits of the said 42 borough. A scrutiny of these provisions clearly establishes two propoisition: one is that all municipal property, including moneys etc. received by way of gift, is vested in the municipality and shall be held and applied by it as trustee subject to the provisions and for the purposes of the Municipal Act, and it is not open to the municipality to treat some of its property separately from other property and divert it for purposes other than those sanctioned by the Municipal Act; the other proposition is that there are some obligatory functions which a municipality must perform, and one of these is the lighting of public streets, places and buildings; and there are some other functions which the municipality may at it,% discretion perform either wholly or partly out of municipal property and fund, and one of these discretionalfunctions is the supply of electrical energy which is for the use of the inhabitants of the municipal borough or for the benefit of any person, buildings or lands in any place whether such place is or is not within the limits of the municipal borough. The question now is whether, having regard to the aforesaid provisions, it was open to the Municipality to treat its electricity department, the property thereof and the income therefrom, separately from other departments and spend a part of the income for the benefit of the employees of that department only, treating it as profits of the particular department and not as part of the entire municipal fund or property. In our opinion, such a treatment of the income of one department of the Municipality would be clearly against the provisions of the Municipal Act. It is pertinent to refer here to Chapter XI of the Municipal Act dealing with Municipal Accounts. Under section 209 a complete account of all receipts and expenditure of the municipality and a complete account of the actual and expected receipts and expenditure, together with a budget estimate of the income and expenditure of the municipality, have to be prepared for each year and these have to be prepared and laid before the municipality on or before a particular date. These budget estimates have then to be sanctioned at a special 43 general meeting of the municipality. Learned counsel for the respondents stressed two points in this connection. He pointed out that as a matter of fact the ' Baroda Municipality kept separate accounts with regard to its electrical undertaking, including a capital account showing capital expenditure and capital receipts; separate accounts were also kept of the reserve fund, depreciation fund, provident fund etc. It was argued that the maintenance of these separate accounts showed that the Baroda Municipality did treat the income of the electricity department separately from that of other departments, and the maintenance of such accounts did not contravene any of the provisions of the Municipal Act. The second point stressed was that the distinction between the obligatory and discretional functions of the municipality showed that in the exercise of discretional functions the municipality might engage in an undertaking with a profit making motive. Learned counsel for the respondents submitted before us that if there was profit from the 'electricity department was running an undertaking in exercise of the discretional functions of the Baroda Municipality, the workmen in that department would be entitled to bonus as of right. In our opinion, these submissions are based on a misapprehension of the true position in law. With regard to the first point, it is worthy of note that the maintenance of separate accounts of a particular department by the Municipality does not alter the nature or quality of the property or income therefrom. The property or income is still municipal property within the meaning of sections 63 and 65 of the Municipal Act, and it can be utilised only for the purposes of the Act as laid down by section 66. Maintenance of a separate account for a particular department is in the nature of an internal accounting arrangement; it does not really alter the quality or nature of the property or income, and for the purposes of section 209 of the Act the property or income has to be treated like all other property or income of the Munici pality in question. In his book on Public Finance, Mr. Findlay Shirras has pointed out that the classification of public revenue or income, both of the State and 44 of municipalities, has undergone considerable change in recent years and non tax revenue of the State may be sub divided into three main classes (1) developmental revenues from the public domain and from the public undertakings, which include not only revenue from the State domain but also from the municipal domain; (2) administrative and miscellaneous revenues other than loan revenues; and (3) loan revenues (see Science of Public Finance by Findlay Shirras, Vol. I, Book III, Chapter XIII, pages 211 212). At page 717 (Vol. II, Book III, Chapter XXX), the learned author has posed the following question with regard to State or municipal concerns: "An important point in such concerns is the keeping of strictly commercial accounts. Interest should be paid on capital. Provision should also be made for depreciation of machinery and plant, for a pension fund, rents for land, and income tax in order to arrive at the true net profit. State concerns sometimes show a surplus, but the point is how much of this is really profit?" The learned author has posed the question but given no answer. We are of opinion that the answer has been very succinctly put in Dr. Paton 's Accountants ' Handbook (3rd edition, section 24 dealing with Governmental Accounting, page 1277). Says Dr. Paterson: " In private business the proprietary or residual equity usually represents the ownership of individuals in the case of the corporation that of the shareholders. In Government this residual element reflects the equity of the continuing body of citizens as a group, and in no sense belongs to particular members of the group ; it is not represented by capital stock and there are no shares with specific voting rights and dividend expectations. " The legal position under the Municipal Act is the same. The income of one department is the income of the municipality as a whole. and that income is not 'Profit ' in the ordinary commercial or trading sense of being income derived from capital of particular individuals or shareholders; it may even be that the surplus of one department may dwindle into a deficit, when the entire income of the municipality is taken into consideration Vis a Vis its entire expenditure. We have already pointed out that in the 45 present case also, the claim of the Municipality was that, even including the income of its electricity department, the municipal budget for the relevant year was a deficit one. With regard to the second submission of; learned counsel for the respondents, nothing turns upon the distinction between obligatory and discretional functions of the municipality so far as the nature or quality of municipal property or municipal income is concerned. The distinction referred to above does not entitle the municipality to treat the income from one department as though it were not part of the whole income of the Municipality. Moreover, in its true nature or quality, such income is not profit in the sense in which that expression has been held to be the basis for the grant of bonus in the Muir Mills case (supra) though the word " profits " occurs in section 65 of the Municipal Act and has been loosely used in connection with State or municipal undertakings. This brings us to the other question whether the principles laid down in the Muir Mills case (supra) for the grant of bonus can be applied in the present case. Learned counsel for the respondents submitted before us that the gift made by the State Government of Baroda furnished the necessary capital for the municipal undertaking in question and as the reserve fund, depreciation fund etc. had to be kept separate, there was no difficulty in applying the principles laid down in that decision to the facts of the present case. The difficulties however arise in the following way. Whatever was given by the State Government of Baroda to the Baroda Municipality became municipal property or municipal fund under sections 63 and 65 of ' the Act and was not capital in the sense in which a return on paid up or working capital is to be allowed" for in the matter of the grant of bonus in accordance with the decision in the Muir Mills case (supra). Learned counsel referred us to the ordinary dictionary mean ing of the word 'capital ' and referred to Webster 's New International Dictionary (1937 edition, page 397) where one of the meanings of the word is stated to be " the amount of property owned by an individual or corporation which is used for business purposes." 46 He submitted that what was given by the Baroda State Government was capital within that meaning. In Palgrave 's Dictionary of Political Economy, Vol. 1 (1925 edition) page 217, it has been stated that there is probably no term in economics which has given rise to so much controversy as 'capital. ' The word 'capital ' is connected with caput and in medieval Latin meant the principal sum as distinct from the interest. Originally, the term was confined to loans of money. In the natural course of historical development, the term 'capital ' received a wider meaning and capital came to be considered primarily as a source of profit and in ordinary thought capital is considered as wealth which yields a revenue. Later economic theories introduced many refinements in the meaning of the Word We are not concerned with those refinements and it is unnecessary to discuss them here. For our purpose it is sufficient to state that what the Baroda Municipality got from the State Government of Baroda merged in and became municipal property or municipal fund under the provisions of the Municipal Act and was not capital on which a return had to be earned in accordance with the principles laid down in the Muir Mills case (supra). In our opinion, it is impossible to apply these principles in the case of a municipal undertaking of the nature we have under consideration here. The argument of learned counsel for the respondents that once it is found that there was capital and actual profit in the sense of excess of earnings over outgoings from the undertaking in question, no distinction can be ,drawn between private enterprise and municipal enterprise, cannot therefore be accepted. In the case 'before us, there was neither 'capital ' nor 'profit ' on which the principles laid down in Muir Mills case (supra) could operate. We must make it clear that the question is not merely one of terminology; that is, whether the more appropriate word to use in connec tion with a municipal undertaking is surplus or profit; it is the nature or quality of the municipal property or fund which must be determinative of the question at issue, and it is on that basis that we have,come to the conclusion that in the present case there were no 47 profits of one single department of the municipality out of which the respondents could claim a bonus. In the course of arguments before us a reference was made to certain observations contained in a Report of the Committee on Profit sharing set up by the Ministry of Industry and Supply in 1948. With regard to the question how Government undertakings should be treated for purposes of profit sharing, the Committee said: " The answer to this question is only of academic interest, as there are no Government undertakings in the industries we have recommended for an experiment in profit sharing. On the general question, we think that those business undertakings of Government, which aim at making a profit, and which will ordinarily be organised in the form of corporations, would automatically come under any law which governs private undertakings of a similar nature. " We do not take those observations as deciding any question of principle; at best they express an opinion of the members of the Committee an opinion which is expressly confined to undertakings organised in the form of corporations with the aim of making a profit in the ordinary trading or business sense. In our opinion, those observations have no apt application to a municipal undertaking meant for the purpose of augmenting municipal revenues in order to meet the municipal service demands and improve the amenities of the inhabitants of a modern municipal borough. We proceed now to consider the second argument of the learned Attorney General. This argument depends on the provisions of section 58 of the Municipal Act. That section deals with the rule making power of the municipality and proviso (a) lays down that no rule or alteration or rescission of a rule made shall have effect unless and until it has been approved by the State Government. Our attention has been drawn to cls. (c), (f) and (1) of section 58 which enable the municipality to make rules relating, inter alia, to salaries and other allowances of the staff of officers and servants employed by the municipality; their pensions, gratuities or compassionate allowances on retirement, and provident 48 fund etc. It was pointed out that under section 58 the Baroda Municipality had no power to make rules for the payment of bonus to its employees, because the word ' allowances ' did not include bonus; and even if such rules could be made, they required the sanction of the State Government under proviso (a) referred to above. It was further submitted by the learned Attorney General that there were no existing rules with regard to the payment of bonus to a municipal employee. In view of these provisions the learned Attorney General argued that it was not open to a Labour Court or Tribunal to direct the payment of bonus to a municipal employee. We cannot accept this argument as correct. The demand for bonus as an industrial claim is not dealt with by the Municipal Act; it is dealt with by the . Therefore, it is not a relevant consideration whether there are provisions in the Municipal Act with regard to payment of bonus. The provisions of the Municipal Act are relevant only for the purpose of determining the quality or nature of the municipal property or fund; those provisions cannot be stretched beyond that limited purpose for defeating a claim of bonus. We do not therefore think that the absence of provisions in the Municipal Act for the payment of bonus to municipal employees is a consideration which is either determinative or conclusive of the question at issue before us. If we had come to a different conclusion as respects the first contention of the learned Attorney General and his third contention to be referred to presently, the absence of suitable provisions relating to payment of bonus to municipal employees in the Municipal Act would not have stood in the way of our allowing the claim of the respondents for the payment of bonus. We now proceed to consider the third and last contention of the learned Attorney General. This contention centres round the question whether one department of the municipality can be isolated and a distinction made between the employees of that department and other departments in the matter of the 49 payment of bonus. We have already pointed out that under the Municipal Act a municipality may perform various functions, some obligatory and some discretional. The activities may be of a composite nature: ' some of the departments may be mostly earning departments and some mostly spending departments. For example, the department which collects municipal taxes or other municipal revenue, is essentially an earning department whereas the sanitary department or other service department is essentially a spending department. There may indeed be departments where the earning and spending may almost balance each other. In spite of these distinctions in the internal arrangement of departments within a municipality, the property or income of the municipality remains of the same nature or quality, and it will be obviously unfair to draw a distinction between the employees of one department and the employees of another department for the payment of bonus. The result of such a distinction will be that the staff of the spending depart ments will never be entitled to any bonus at all and instead of promoting peace and harmony amongst the employees of the municipality, a distinction like the one suggested by learned counsel for the respondents will create unrest and discontent. Learned counsel for the respondents submitted before us that beyond the fact of single ownership, there was no other connection between the electricity department of the Municipality and its other departments. We do not think that this submission is correct. Under the Municipal Act the total income and expenditure of the municipality form one integrated whole; they are both for the purposes of the Act; and if the workmen of a service or spending department do not work efficiently with the result that the expenses on the obligatory functions of the municipality increase, that inefficiency is bound to affect even to dwindle or wipe out the surplus of an earning department. For a true appreciation of the financial position of a municipality, its total income and expenditure must be considered; we must look at the whole picture, the part which is in shade as well as the part 7 50 which has caught the light for a correct appraisal of the picture. Learned counsel for the respondents referred us to a number of decisions of Labour Tribunals where a distinction was made between a parent concern and subsidiary concerns, or even between different units of the same concern, in the matter of payment of bonus: Rohit Mills Ltd. vs Sri R. section Parmar(1), Mackinnon Mackenzie and Company 's Indian Staff Organisation vs Mackinnon Mackenzie and Company Ltd. (2), Ahmedabad Mfg. & Calico Ptg. Co. Ltd. V. Their Workmen (a), Shaparia Dock and Steel Company vs Their Workers(,) and Minakshi Mills Ltd. vs Their Workmen Recently, we have had occasion to consider this question in Messrs. Burn & Co., Calcutta vs Their Employees (6) where we pointed out the harmful consequences which might arise if an invidious distinction were made amongst employees of the same industry. Considering the question with reference to the facts of the present case, it is clear to us that the different activities of the Baroda Municipality constituted one integrated whole and the activities of the different departments of the Municipality were not distinct or unconnected activities so as to permit the isolation of one department from another or of an earning department from a spending department. From this point of view also, the claim of bonus was not maintainable. Some decisions were brought to our notice in which the question of the payment of bonus to their employees by Electric Supply Companies, not run as a State or municipal undertaking, was considered with reference to the provisions of the , and one of the points which fell for consideration there was the interpretation of clause XVII (2) (b) (xi) of Schedule VI of the . It is not necessary to consider those decisions in the (1) (2) (3) (4) (5) (6) C.A. 325 Of 1955, decided on October 11, 1956. 51 present case, because they have no bearing on the questions which we have to consider in this case. For the reasons given above, we hold that the Industrial Tribunal came to the correct decision that the respondents employed in the electricity department of the Baroda Municipality were not entitled to the bonus claimed, and the Labour Appellate Tribunal came to an erroneous decision on that question in its order dated November 23, 1955. We accordingly allow the appeal and set aside the order of the Labour Appellate Tribunal. In the circumstances of this case, we direct that the parties will bear their own costs throughout. Appeal allowed.

The Baroda Electric Supply Concern was owned and managed by the State of Baroda. Immediately before the merger of the State in the Province of Bombay, the State made a gift of the Concern to the Baroda Municipality to provide it with a new source of revenue as. aid from the State might not be continued after the merger. Later in 1951, the workmen employed in the electricity department demanded bonus and the dispute was referred for adjudication. The bonus was claimed on the basis that the electric Concern was a commerical concern, that it was making 'huge profits and that the workmen were entitled to bonus as a share in the profits. The municipality resisted the demand, inter alia, on the grounds that the earnings of one department could not be treated as profits of the municipality, and that as a whole the muncipal budget for the relevant period was a deficit budget. Held, that the workers employed in the electricity department of the municipality were not entitled to the bonus claimed. According to the provisions of the Bombay Municipal Boroughs Act, 1925, under which the municipality is constituted and functions, the earnings of one department cannot be held to be gross profits in the ordinary commercial or trading sense. The mere fact that separate accounts were kept of the electricity department did not alter the position, as there was one budget for the municipality as a whole and income from and expenses of all departments constituted the income and expenses of the municipality. The different activities of the municipality constituted one integrated whole, 5 34 and the activities of the different departments were not distinct or unconnected activities so as to permit the isolation of one department from another or of an earning department from a spending department. It would be unfair to draw a distinction between the workers of the earning department and the workers of the spending department for the payment of bonus. Such a distinction would, instead of promoting peace and harmony among the employees of the municipality, create unrest and discontent. D. N. Banerji vs P. R. Mukherjee, [19531 S.C.R. 302 and Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; referred to.

Civil Appeals Nos. 2855 56 of 1982. Appeals by special leave from the Judgment and Order dated the 9th April, 1982 of the Patna High Court in C.W.J.C. No. 3503/ 81 & 504 of 1982. WITH Civil Appeals Nos. 2857 58 & 2859 60 of 1982 Appeals by Special leave from the Judgment and Order dated the 9th/10th February, 1982 of the Patna High Court in C.W.J.C. Nos. 1026/82,1855/81,1516/81(R), 1355/81(R). , AND Special Leave Petition (Civil) No. 2904 of 1982. From the Judgment and Order dated the 8th December, 1981 of the Patna High Court in Civil Writ Jurisdiction Case No. 1237 of 1981. Dr. Shankar Ghosh, Parveen Kumar, Padam Khaitan, C.A. Vaidyanathan N.R. Khaitan for the Appellants in C.A. 2855 56/82. 62 A.K. Sen, Padam Khaitan, Parveen Kumar and N.R. Khaitan for the Appellants in C.A. Nos. 2857 58/82. C.S. Vaidyanathan, Anil Kumar Sharma, and Mr. Parveen Kumar for the Appellants in CA. 2859 60/82. K.K. Venugopal, C.S. Vaidyanathan for the Petitioner in SLP Nos. 2904/82. L.N. Sinha, Att. General, Ram Balak Mehto, Pramod Swaru and P.P. Singh for the Respondents in all the appeals & SLP. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. These appeals (by special leave) and the Special Leave Petition involve common questions concerning the validity of the supplementary bills issued to the appellants by the 1st respondent Bihar State Electricity Board for "fuel surcharge" as per the revised tariff dated 1st April, 1979, and hence they were heard together. Having regard to the fact that by reason of interlocutory orders passed by this Court, the realisation of large amounts demanded from the appellants by the respondent by way of charges for electric energy supplied by it stood stayed and the consequent urgency in passing final orders in these cases, as soon as the hearing was completed we passed the following order announcing the conclusion reached by us: "All these Civil Appeals and Special Leave Petition are dismissed with costs in each case. All interim orders made in each of these matters at various stages are vacated. Reasons will follow". We now proceed to state the reasons in support of the said conclusion. The Bihar State Electricity Board hereinafter called 'the Board ') is incorporated under Section 12 of the (hereinafter referred to as 'the Act '). The general powers and duties of the Board are set out in Section 18. Thereunder the Board has the duty, inter alia, to arrange for the supply of electricity that may be required within the State and for the transmission and distribution of the same in the most efficient and economic manner, with particular reference to those areas which are not, for the time being, supplied or adequately supplied with electricity. Section 49 of the Act makes provision for the sale of electricity by the Board to persons other than the licensees and to frame uniform 63 triffs for the purposes of such supply. That section is in the following a terms: "49. (1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs. (2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely : (a) the nature of the supply and the purposes for which it is required; (b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee; (c) the simplification and standardisation of methods and rates of charges for such supplies; (d) the extension and cheapening of supplies of electricity to sparsely developed areas. (3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which such supply is required and any other relevant factors. (4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person. " In exercise of the power conferred by the above section, the Board has been, from time to time, issuing notifications fixing the 64 tariff and the terms and conditions for the supply of electricity to the various classes of consumers. In supersession of the, tariff rates till then obtaining under an earlier notification, the Board by its "tariff notification 1979" published in the Bihar Gazette Extraordinary No.355 dated 6.4.1979, issued a revised tariff for all categories of consumers served by it. The said tariff was to take effect from 1st April, 1979. The appellants are companies having factories in different parts of the State to Bihar and they have entered into agreements with the Board for supply of high tension electric current. The agreements so executed are in a standard form containing substantially identical terms. Annexure I in the Writ Petition C.W.J.C. No. 1855/81 out of which C.A. 28 58/82 arises in a copy of the agreement entered into by M/s Usha Martin Black (Wire Rods) Ltd. with the Board on 18.8.1961. In clause 4 of the agreement, it is stipulated that the consumers shall pay to the supplier (Board for) the energy supplied and registered by the meters "at the rates from time to time in force and paid by similar consumers". It has been further provided in clause 11 that the agreement should be read and construed as subject in all respects to the provisions of the and the rules for the time being in force there under. After the introduction of the revised tariffs, 1979, all the appellants continued to draw and consume high tension electric energy in their factories. Para 16.7 of the Tariff Notification, 1979, provides that the consumers of low tension industrial service, high tension service, extra high tension service, and railway traction service shall be liable to pay 'fuel surcharge ' at a rate to be determined every year In accordance with the formula set out in sub para (2) of the said paragraph (16.7.2). This levy of fuel surcharge was in addition to the other charges specified in the tariff schedule. During the course of the year 1979, fuel surcharge a provisional rate of one paise per unit was initially levied and that was subsequently increased to three paise per unit, again on a provisional basis. In the final bills issued for the financial year 1979 80 the fuel surcharge was levied at 6.242 paise per unit. Along with the final bill of fuel surcharge for the year 1979 80, a provisional bill of fuel surcharge for the year 1980 81 was also issued to the appellant companies demanding payment of surcharge at the rate of eight paise per unit 65 Thereupon the appellants filed Writ Petitions in the High Court of Patna contending that the provision contained in Paragraph 16.7 in the Tariff Notification of 1979 for the levy fuel surcharge is devoid of legal sanction and is arbitrary and void. The charge of arbitrariness levelled against the imposition of fuel surcharge was based on the ground that only consumers of low tension industrial service, high tension service, extra high tension service, and railway traction service had been singled out for being subjected to a levy of surcharge, while consumers of electricity for domestic, commercial and irrigation purposes were left unaffected by any such burden. A further contention was also raised that the bills issued to the petitioners were not even in accordance with the provisions of the tariff notification and the demands made against the appellants were in excess of what was warranted even by the impugned notification. Eight writ petitions, of which C.W.J.C. 1237 of 1981, filed by M/s Shriram Bearings Ltd., Ranchi (Petitioner in SLP No. 2904/1982) was apparently treated by common consent as the main case, and were heard together as one single batch by a Division Bench of the High Court. By a detailed and well considered judgment, the Division Bench rejected all the contentions raised by the petitioners and dismissed the Writ Petitions after recording an undertaking given by the Board that certain small amounts which were found to have been charged in the bills in excess of what was payable by the appellants on a correct computation of the surcharge would be adjusted in the next bills to be issued to them. Writ Petitions subsequently filed in the High Court by the appellants in the other appeals were later dismissed in limine by separate short judgments, following the decision of the Divisional Bench in C.W.J.C. 1237 of 1981. Hence these appeals and special leave petitions by the appellant companies. At the outset, we may dispose of the contention urged on behalf of some of the appellants that the levy of fuel surcharge under the impugned tariff notification (paragraph 16.7) is discriminatory and hence violative of Article 14 of the Constitution. Sub section 3 of Section 49 expressly authorises the Board to fix different tariffs for the supply of electricity to any person not being a licensee, having regard, inter alia, to the nature of the supply, the purpose for which the supply is required and other relevant factors. The power to classify the consumers into different into categories and to fix differen 66 tial tariffs has thus been conferred on the Board by the Section itself. The Constitutional validity of this Section has been upheld by this Court in Maharashtra State Electricity Board vs Kalyan Borough Municipality & Another( '). The expression "licensee" means a person licensed under Part II of the , to supply energy or a person who has obtained licence under Section 28 of that Act to engage in the business of supplying energy through definition in Section 2 (6). Admittedly, the appellants before us are not licensees. They are consumers receiving high tension supply to their factories. For the purpose of tariff fixation, the Board has classified the consumers into 10 categories, viz. "domestic", "commercial (i)", commercial (ii)", "street light", "irrigation", "light tension industrial" (small scale industrial upto 100 h.p.),"11 k.v. h.t.s.", "33 k.v.h.t.s.", "132 k.v. h.t.s." and "railway traction (25 k.v.)". It is seen from the materials on record for us that the industries between themselves consume nearly 65% of the total quantity of energy supplied by the Board. Apparently with a view to encouraging the establishment of industries in the State, the general tariff rate applicable in respect of high tension supply to industries and factories has been fixed at rates which are much lower when compared to those applicable to other types of consumers. While the general rate applicable for supply of high tension electric energy for industries of the class to which the appellants belong was 22 paise per unit, consumers belonging to "commercial" categories were charged at rates ranging between 48 paise to 58 paise per unit, "agricultural" consumers at 29 paise per unit, "low tension" consumers at 34 to 38 paise per unit and "domestic" consumers at rates ranging between 38 to 43 paise per unit. Thus, in the fixation of the general tariff rate, a substantial concession has been shown in favour of industrial low tension and high tension consumers. The appellants have no case that any illegality was involved in treating the industrial consumers, as a separate class and granting them the benefit of a preferential treatment for the purpose of fixing the basic rate of levy for supply of electricity. The stand taken by the Board is that it was found absolutely necessary at the time of the revised tariff fixation effected in 1979 to augment its revenue by levying of the additional fuel surcharge in order to offset the heavy increase in expenditure and after taking into account all relevant facts and circumstances, it was decided to distribute that burden amongst the privileged class of 67 consumers, namely those belonging to categories of low tension industrial service, high tension service, extra high tension service and railway traction service. Even after taking into account the fuel surcharge so levied under 1979 tariff, the rates applicable to high tension consumers like the petitioners range between 40.31 paise and 58.80 paise per unit only, while the commercial (ii) consumer has to pay 71.33 paise per unit and even the domestic consumer has to pay 48 paise per unit. The position that obtains under the 1981 tariff which also has been challenged by some of the appellants is substantially similar. In our opinion, the Board was perfectly within its rights in deciding to restrict the levy of fuel surcharge to those categories of consumers who were enjoying the benefit of a concession in the general rate and in sparing smaller type of consumers such as the agricultural, irrigation and commercial consumers from being subjected to that burden, in view of the fact that they were already being subjected to a basic levy at substantially higher rates. The true consequence of the action so taken by the Board is only to effect a reduction in the quantum of concession that was being enjoyed by the consumers belonging to the industrial and railway traction categories. A classification which is legally valid and permissible for the grant of a concession in the basic rates will equally hold good for the purpose of a subsequent scheme of distribution of the burden in the form of fuel surcharge. In this context, it is also relevant to remember that the levy of surcharge was necessitated by reason of the extra expenditure which the Board had to incur in the generation of electricity in the two power stations run by the Board and in the purchase of power from the two outside sources, namely, the D.V.C. and the U.P. State Electricity Board and 65% of the total quantity of energy supplied by the Board is consumed by the industrial and railway traction consumers. A classification of these bulk consumers has a rational nexus with the object and purposes of the levy of surcharge. Having regard to all these facts and circumstances, we find no substance in the contention advanced by some of the appellants that the imposition of fuel surcharge under paragraph 16.7 of the 1979 tariff is arbitrary and violative of article 14 of the Constitution. The next argument advanced on behalf of the appellants was that even if the Board is legally entitled to levy the fuel surcharge, that can only be for the purpose of recouping the amounts actually paid by the Board by way of 'fuel surcharge ' to the Damodar Valley Corporation and the U.P. State Electricity Board for the quantities of energy purchased by the Board from these sources and the extra cost 68 that the Board had actually to incur on fuel consumed in those two generating stations at Patratu and Barauni. From the counter affidavit filed on behalf of the Board, it is seen that in respect of the increase in the cost of production of electricity in the two generating stations of the Board, the fuel surcharge has taken into account only that part of the increase in cost which is relatable to the increased price of the coal and oil i.e. fuel alone. The increase in expenditure referable to the enhancement in cost of the energy generated on other accounts such as wages, maintenance, etc. has not been taken into account in the fuel surcharge. Such increase in cost of production on account of those other factors has been offset by a revision of the basic general tariff by 16.5 per cent payable not only by the industries but by all classes except the agriculturist class. In respect of the energies purchased by the Board from outside sources, namely, the Damodar Valley Corporation and the U.P. State Electricity Board, the increase in cost per unit incurred by the Board has been included in the computation of the fuel surcharge. We see no substance whatsoever in the contention advanced by the appellants that only such amounts, if any, as might have been paid by the Board to the D.V.C. and the U.P. State Electricity Board as and by way of fuel surcharge can go into the computation of the fuel surcharged levied by the Board under paragraph 16.7 of the 1979 tariff. Though the nomenclature given to the levy is "fuel surcharge" it is really a surcharge levied to meet the increased cost of generation and purchase of electricity and this is made absolutely clear in the formula given in para 16.7.2. The formula for determining the fuel surcharge set out in paragraph 16.7.2 reads: "S = [A1XA3+B1XB3+C1XC3+D1XD3+E1XE3/ [A2+B2+C2+D2+E2]". This is followed by detailed explanation as to what the different alphabets used in the numerator and denominate or signify. The explanation given in respect of C1 is "Increase in the average unit rate of purchase of energy from D.V.C. during the year for which the surcharge is to be calculated. The said increase to be calculated with respect to the base year 1977 78. " C3 stands for "units purchased from D.V.C. during the year". Likewise, E1 and E3 have been explained as "Increase in the average unit rate of 69 purchase of energy from Uttar Pradesh State Electricity Board during the Year for which surcharge is to be calculated, the said increase to be calculated with respect to the base Year 1977 78" and "units purchased from Uttar Pradesh State Electricity Board" respectively. We see no force in the contention put forward on behalf of some of the appellants that the words" increase in the average unit rate of purchase of energy" used in C1 below paragraph 16.7.2 should be interpreted as taking their colour from the contents of paragraph 16.7.3. From a reading of these provisions it is abundantly clear that the entire increase in cost incurred in the purchase of energy from the D.V.C. and the U.P. State Electricity Board has to go into the computation of the surcharge leviable under paragraph 16.7. The contention to the contrary advanced by the appellants is therefore, only to be rejected. There is no ambiguity whatever in the words used in C1 so as to require us to take light from paragraph 16.7.3 for the purpose of understanding their scope and meaning. It was strongly urged on behalf of the appellants that the provision in Cl for increase in the average rate of price of energy from the D.V.C. to be calculated with respect to the base year 1977 78 is arbitrary in as much as in fixing the basic tariff as per the 'impugned notification ' of 1979, the difference in cost between Year 1977 78 and the current Year 1979 80 has already been taken into account. From the counter affidavit and the statements filed in the High Court on behalf of the respondent Board which form part of the record before us in these appeals, it is seen that only the fuel surcharge accrued during the Year 1977 78 had been merged while fixing the revised rates for energy and it was specifically mentioned in paragraph 2.5 of the resolution of the Board containing the proposals for the tariff revision, 1979, which the Board forwarded to the State Government that only the fuel surcharge that had accrued during 1977 78 was being merged in the revised tariff rates and that "the subsequent increase or decrease in the cost of fuel or the cost of imported energy will, therefore, reflect in the fuel surcharge hereafter". Similar is the position with respect to the tariff revision effected in 1981. Hence there is no factual foundation for the argument that there has been a double neutralisation of the increase in the fuel surcharge in respect of the energy purchased by the Board from outside sources. Paragraph 16.7.4 of the tariff notification states that the fuel surcharge for a financial year shall be calculated by the Board after 70 the expiry of the financial year and until such calculation is actually made, fuel surcharge may be levied during each financial year at a rate provisionally calculated on monthly or quarterly or half yearly basis as decided by the Board, and in case of short or excess realisation, the same is to be adjusted in the next bill to be served on the consumer. Based on these provisions, it was faintly argued on behalf of some of the appellants that the Board was under an obligation to issue provisional bills in respect of fuel surcharge during the course of each financial Year and on account of its failure to do so, the appellants were unable to include the said element in their price structure in respect of cement, paper and vanaspati produced in the factories of some of the appellants. This contention has to be rejected for two reasons: firstly, the provision contained in the aforesaid paragraph of the notification is purely an enabling one and it dose not cast any mandatory obligation on the Board to issue any provisional bills for fuel surcharge, monthly, quarterly, or half yearly during the course of each financial year; secondly apart from merely putting forward such a plea in the course of arguments before us the appellants have not furnished any factual data as to how and in what manner they had fixed the price structure for the different products produced in the appellants ' factories. Yet another point urged on behalf of the appellants was that under Section 49 of the Act, while exercising the power of framing uniform tariffs, the Board was under a duty to apply its mind to all relevant factors but there had been an omission to discharge the said mandatory duty inasmuch as the capacity of the concerned industry to pay for the energy at the rate proposed to be fixed, which is a highly relevant factor, had not been taken into account at all. Clauses (a) to (d) of sub section 2 of Section 49 enumerated the various matters which the Board shall have regard to in fixing the uniform tariffs and the capacity of any particular industry to bear the energy charge at the proposed rate of levy is not included in the said enumeration. Under the scheme of the tariff fixation incorporated in the section, the tariff is to be uniform subject to the classification of consumers into different categories Under sub section 3 of the said section, the classification of the consumers into such different categories is to be made only with reference to the nature of the supply, the purpose for which supply is required the geographical position of any area and other like relevant factors. It is not contemplated by the said section or any of the other provisions of the Act that as amongst 71 consumers falling within a specified category different rates are to be charged depending upon the financial capacity of the particular consumer to pay. On the other hand, the very core of the scheme of Section 49 is that the tariff should be uniform in respect of each class or category. Hence the attack levelled against the tariff fixation on the aforesaid ground, that a relevant factor, namely, that the financial capacity of individual industrial consumers had not been taken into account, is devoid of force. The appellants in some of the appeals have challenged the subsequent tariff fixation of 1981 also on grounds that are substantially the same as those which we have dealt with above. For the reasons already indicated by us, none of those grounds can be accepted as correct or tenable. It was urged on behalf of the appellants that the supply of electricity being a monopoly service conducted by an agency of the State, namely, the Board, it must be carried out reasonably and not arbitrarily, that such reasonableness should be reflected in the price fixation and if the prices fixed are arbitrary, they are liable to be called in question before the Courts on the said ground. In support of the above contention, reliance was placed by counsel for the appellants on the decisions of this Court in Akadasi Padhan vs State of Orissa(1), Rashbihari Panda, etc. vs State of Orissa,(2) Vrajlal Manilal & Co. & Ors. vs State of Madhya Pradesh & Ors. ,(3) Ramana Dayaram Shetty vs The international Airport Authority of India and Ors.(4) It is well established that where a corporation is an instrumentality or an agency of Government it would, in the exercise of its powers and function, be subject to the same Constitutional or Public Law limitations as apply to the Government and the principle of law inhibiting arbitrary action by Government would apply equally where such a corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise and it cannot act arbitrarily and enter into relationship with any person in any manner it likes according to its sweet will. The acts of such a corporation must be in conformity with some principle which meets the test of reasonableness and relevance. In the case before us, the appellants have totally failed to establish that the rates specified in the impugned tariff notifications of 1979 and 1981 are arbitrary and unreasonable. 72 Section 59 of the Act as it now stands after the amendment of 1978 is in the following terms: "59. (1) The Board shall, after taking credit for any subvention from the State Government under section 63, carry on its operations under this Act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues including operating, maintenance and management expenses, taxes (if any) on income and profits, depreciation and interest payable on all debentures, bonds and loans, leave such surplus, as the State Government may, from time to time, specify. (2) In specifying the surplus under sub section (1), the State Government shall have due regarding to the availability of amounts accrued by way of depreciation and the liability for loan amortization and leave. (a) reasonable sum to contribute towards the cost of capital works; and (b) where in respect of the Board, a notification has been issued under sub section (1) of section 12A, a reasonable sum by way of return on the capital provided by the State Government under Sub section (3) of that section and the amount of the loans (if any) converted by the State Government into capital under sub section (1) of section 66A." Under the above provision, the Board is under a statutory obligation to carry on its operations and adjust its tariffs in such a way as to ensure that the total revenues earned in any year of account shall, after meeting all expenses properly chargeable to revenue, leave such surplus as the State Government may, from time to time, specify. The tariff fixation has, therefore, to be so made as to raise sufficient revenue which will not merely avoid any net loss being incurred during the financial year but will ensure a profit being earned, the rate of minimum profit to be earned being such as may be specified by the State Government. The learned Attorney General appearing on behalf of the Board has placed before us tabulated statements showing the working results (financial) of the Board in the years subsequent to 1977 78. It is found therefrom that the net 73 result of the Board 's working in each of the year 1978 79 to 1981 82 was a substantial deficit or loss. The deficit in 1978 79 was Rs. 15.31 crores, in 1979 80 Rs. 10.21 crores, in 1980 81 Rs. 32.69 crores and in 1981 82 Rs. 18.60 crores. The statement also shows that the revenue earned per unit of electric energy sold was much lower than the actual cost of production incurred by the Board per unit. The cost of production per unit in the four years aforementioned was 51.10 p., 65.10 p., 73.86 p., and 87.16 p. respectively, whereas the revenue per unit was only 3848 p., 47.17 p., 53.07 p., and 66.39 p. respectively. It is thus found that notwithstanding has the mandatory provision contained in Section 69 the Act, the Board been selling energy at rates which are lower than of the actual cost incurred by it per unit of production. Such being the factual situation, there is absolutely no basis for the contention urged on behalf of the appellants that the tariff fixation effected by the Board suffers from the voice of arbitrariness and is liable to be interfered with by the Court on the ground. As pointed out by this Court in Prag Ice & Oil Mills and another vs Union of India, 1 in the ultimate analysis, the mechanics of price fixation is necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of persons, the processual basis of price fixation is to be accepted in the generality of cases as valid. Some of the appellants have endeavored to persuade us to go into the minutest details of the mechanism of the tariff fixation effected by the Board in an endeavour to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account has been ignored. We have declined to go into those factors which are really in the nature of matters of price fixation policy and the Court will be exceeding its jurisdiction if it to embark upon a scrutiny of matters of this kind which are essentially in the domain of the executive to determine, subject, of course, to the Constitutional limitations. The conclusion that emerges from the foregoing discussion is that the High Court was perfectly right in upholding the validity of the impugned tariff notifications of 1979 and 1981, and these appeals and the S.L.P. have only to be dismissed. H.S.K. Petitions & Appeals Dismissed.

By treaty and by international convention, India allows transit facilities to Nepal, its neighbour and a land locked country. A company based in Kathmandu, Nepal imported a consignment of pre recorded cassettes from Singapore which was awaiting its despatch to Nepal at Calcutta Port. As the 665 appellant company suspected those cassettes to be unauthorised reproductions of its records and cassettes, the import of which into India was prohibited, the appellant company moved the Registrar of Copyrights for action under s.53 of the which enables the Registrar, after making such enquiries as he deemed fit, to order that copies made out of India of a work which if made in India would infringe copyright, shall not be imported. As the Registrar did not take expenditious action, the appellant company moved the High Court by a writ petition. A single Judge made an interim order permitting the appellant company to inspect the consignment and if any of the cassettes were found to have infringed the appellant 's copyright, they were to be kept apart until further orders of the Registrar. The Registrar was directed to deal with the application of the appellant company in accordance with law. The consignee preferred an appeal against this order of the single Judge. A Division Bench of the High Court allowed the appeal and dismissed the writ petition of the appellant company. The Division Bench held that there was no importation when the goods entered India en route to Nepal. The Division Bench was of the view that the word `import ' did not merely mean bringing the goods into India, but comprehended something more, that is, "incorporating and mixing, or mixing up of the goods imported with the mass of the property in the local area". The company obtained special leave to appeal. The questions which arose were : (i) whether international law is, of its own force, drawn into the law of the land without the aid of a municipal statute, (ii) whether, so drawn, it overrides municipal law in case of conflict; (iii) whether there is any well established rule of international law on the question of the right of land locked states to innocent passage of the goods across the soil of another state; and (iv) what is the meaning of the word `import ' used in s.53 of the . Allowing the appeal, ^ HELD : On questions (i) & (ii). There can be no question that nations must march with the international community and the municipal law must respect rules of international law even as nations respect international opinion. The comity of nations requires that rules of international law may be accommodated in the municipal law even without express legislative sanction provided they do not run into conflict with Acts of Parliament. But when they do run into such conflict, the sovereignty and the integrity of the republic and the supremacy of the constituted legislatures in 666 making the laws may not be subjected to external rules except to the extent legitimately accepted by the constituted legislatures themselves. The doctrine of incorporation also recognises the position that the rules of international law are incorporated into national law and considered to be part of the national law, unless they are in conflict with an Act of Parliament. Comity of nations or no, municipal law must prevail in case of conflict. National courts cannot say yes if Parliament has said no to a principle of international law. National courts will endorse international law but not if it conflicts will national law. National courts being organs of the national state and not organs of international law must perforce apply national law if international law conflicts with it. But the courts are under an obligation within legitimate limits, to so interpret the municipal statute as to avoid confrontation with the comity of nations or the well established principles of international law. But if conflict is inevitable, the letter must yield. [673 E H] Per Lord Danning MR in Trend text Trading Corpn. vs Central Bank, [1977] I All E.R. 881; West Rand Central Gold Mining Co. vs The King, [1905] 2KB 391; Lauterpacht in International Law (General Works); Latham CJ in Politics vs The Common wealth 70 Commonwealth Law Reports 60; Tractoro export, Mascow vs M/s. Tarapore & Company and Anr, ; referred to. On question (iii). As the leading authorities on international law expressed divergent views on the question of the transit rights of land locked countries, the result has been that the land locked countries have to rely on bilateral, regional or multi lateral agreements for the recognition of their rights. They very existence of innumerable bilateral treaties, while on the one hand it raises a presumption of the existence of a customary right of transit, on the other it indicates the dependence of the right on agreement. The most recent 1965 Convention on Transit Trade of Land Locked States, to which both Nepal and India are signatories, while providing for freedom of transit for the passage of goods between the land locked state and the sea, across the territory of a transit state emphasize the need for agreement between the land locked country and the transit country. The bilateral Treaty of Trade and Treaty of Transit entered into between India and Nepal in order to expand trade between the two countries in practice mean a guarantee to Nepal to permit free and unhampered flow of goods needed by Nepal from India and a guarantee of freedom of transit for goods originating from outside India across the territory of India to reach Nepal. But the Convention on Transit Trade of Land locked States and the Treaties between the two countries, leave either country free to impose necessary restrictions for the purpose of protecting industrial, 667 iterary or artistic property and preventing false marks, false indications of origin or other methods of unfair competition in order to further other general conventions. It is clear that for this purpose, it is not necessary that the land locked country should be a party to the general conventions along with the transit country. The interpretation placed by John H.B. Fried in the Indian Journal of international law that the provisions of the 1965 Convention permit the States of transit to enforce, say a Copyright or trade mark convention even if, for example, neither the country of origin nor of destination is party to it appears to be a correct interpretation. [675 B H] An artistic, literary or musical work is the brain child of its author, the fruit of his labour, and so, considered to be his property. So highly is it prized by all civilised nations that it is thought worthy of protection by national laws and international Conventions relating to Copyright. The International Convention for the protection of literary or artistic works first signed at Berne on 9th September, 1886 and finally revised at Paris in 1971 provided for protection to the authors of literary and artistic works. The Universal Copyright Convention first signed at Geneva on 6th September 1952 and revised in Paris in 1971 requires the contracting states to provide for the adequate and effective protection of the rights of authors and other copyright proprietors in literary, scientific and artistic works including writings, musical, dramatic and cinematograph works and paintings engraving and sculpture. [684 G H] On question No. (iv) The word `import ' is not defined in the though it is defined in the Customs Act. But the same word may mean different things in different enactments and in different contexts. It may even mean different things at different places in the same statute. It all depends on the sense of the provision where it occurs. Reference to dictionaries is hardly of any avail particularly in the case of words of ordinary parlance with a variety of well know meanings. Such word take colour from the context. Appeal to the Latin root won 't help. The appeal must be to the sense of the statute. [689 C D] The submission that where goods are brought into the country not for commerce, but for onward transmission to another country, there can, in law, be no importation, is not acceptable. In the first place, the language of section 53 does not justify reading the words `imported for commerce ' for the words `imported; Nor is there any reason to assume that such was the object of the legislature. While interpreting the words`import ' in the , one must take note that while the positive requirement of the Copyright Conventions is to protect copyright, negatively 668 also, the Transit Trade Convention and the bilateral Treaty make exceptions enabling the tranait state to take measure to protect Copyright. If this much is borne in mind, it becomes clear that the word `import ' in section 53 of the cannot bear the narrow interpretation sought to be placed upon it to limit it to import for commerce. It must be interpreted in a sense which will fit the into the setting of the International Conventions. [690 B E] The word `import ' in seces. 51 and 53 of the means bringing into India from outside India ', that it is not limited to importation for commerce only, but includes importation for transit across the country. This interpretation, far from being inconsistent with any principle of International Law, is entirely in accord with International Conventions and the Treaties between India and Nepal.[691 H, 692A] The High Court thought that goods may be said to be imported into the country only if there is an incorporation or mixing up of the goods imported with the mass of the property in the local area. In other words the High Court relied on the Original Package Doctrine ' as enunciated by Chief Justice Marshall in Brown vs State of Maryland Reliance was placed by the High Court upon the decision of this Court in the Central India Spinning and Weaving & Manufacturing Co. Ltd. The Empress Mills, Nagpur vs The Municipal Committee, Wardha ; That was a case which arose under the C.P. and Berar Municipalities Act and the question was whether the power to impose "a terminal tax goods or animals imported into or exported from the limits of a municipality" included the right to levy tax on goods which `were neither loaded or unloaded at Wardha but were merely carried across through the municipal area '. We are afraid the case is really not of any guidance to us since in the context of a `terminal tax ' the words `imported and exported ' could be construed in no other manner than was done by the Court. We must however say that the `original package doctrine ' on which reliance was placed was expressly disapproved first by the Federal Court in the Province of Madras vs Boddu Paidanna : and again by the Supreme Court in the State of Bombay vs F.N. Balsara, ; [690 G H, 691 A E] An order made under section 53 of the is quasi judicial. The Registrar is not bound to make an order under section 53 of the so soon as an application is presented to him by the owner of the Copyright. He has naturally to consider the context of the mischief sought to be prevented. He must consider whether the copies would infringe the Copyright if the copies were made in India. He must consider whether the applicant owns the copyright or the duly authorised agent of the Copyright. He must hear those claiming to be affected if an order is made and consider any contention that may be put forward as an excuse for the import. He may consider any other relevant circumstance. Since all legitimate defences are upon and the enquiry is quasi judicial, no one can seriously complain. [692 E G] 669

: Criminal Appeal No. 76 of 1974. Appeal by Special Leave from the Judgment dated 9 11 1973 of the Delhi High Court in, Criminal Appeal No. 174 of 1972. R. L. Kohli (Amicus Curiae) and R. C. Kohli for the Appellant. Hardayal Hardy, Miss A. Subhashini and R. N. Poddar for the Respondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by special leave is filed against the judgment of the High Court of Delhi in Criminal Appeal No. 174 1972 convicting the appellant, Dara Singh, of an offence punishable under section 23F of the Foreign Exchange Regulation Act, 1947 (Act No. 7 of 1947) (hereinafter referred to as 'the Act ') and sentencing him to imprisonment for a term of one year with a direction that the said sentence should be served by him concurrently with the sentence of imprisonment for life imposed on him in another case on a charge of murder. 989 The facts leading to this appeal can be summarised thus: On March 28, 1963 foreign currencies amounting to $ 185 and U.S. $ 13060 besides Indian currency amounting to Rs. 1,300 were seized from the appellant by the Railway Police at the Railway Station at Sangrur. Thereupon proceedings were initiated against the appellant for contravention of sections 4 and 9 of the Act under section 23 (1) (a) read with section 23D of the Act before the Director of Enforcement of Foreign Exchange Regulation appointed by the Central Government for the purpose of enforcing the provisions of the Act. By an ex parte order dated May 12, 1967, the Director of Enforcement held the appellant guilty of contravention of provisions of section 9 of the Act read with the Central Government Notification No. F. 1(67 EC/57, dated 25 9 1958 as amended upto 6 3 1961) and section 4(1) of the Act and imposed on him a penalty of Rs. 6,000 which the appellant was directed to pay to the Directorate of Enforcement within forty five days of the issue of the order. As the penalty was not paid within forty five days from the date of the issue of the order of the Director of Enforcement, a complaint was lodged on November 13, 1969 by the Deputy Director of Enforcement before the Judicial Magistrate, First Class, New Delhi under section 23F of the Act. In the complaint it was specifically stated that a copy of the order of the Director of Enforcement imposing the penalty on the appellant had been served on him on May 4, 1968 and that as the appellant had not deposited the penalty with the 1 Directorate of Enforcement within forty five days from the date of the order, the appellant was liable to be punished under section 23F of the Act. The appellant denied that he had been served with the copy of the order of the Director of Enforcement imposing penalty on him and further stated that he did not Know that he had to pay the penalty in question. The learned Magistrate acquitted the appellant by his order dated July 29, 1972 holding that it had not been established that the order passed by the Director of Enforcement had been served on the appellant on May 4, 1968 as alleged in the complaint and that, therefore, there were no grounds to hold the appellant guilty of contravention of section 23F of the Act which read thus: "23F. If any person fails to pay the penalty imposed by the Director of Enforcement or the Appellate Board or the High Court, or fails to comply with any of their directions or orders, he shall, on conviction before a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. " The Magistrate while acquitting the appellant rejected the plea of the complainant that the appellant was liable to be punished under 990 section 23F since he had in any event come to know of the order of the Director of Enforcement on the date on which he appeared in the Court i.e., on August 7, 1970 and the charge had been framed by the Magistrate on March 4, 1972 after the expiry of a period of forty five days from the date on which the appellant had appeared in the Court by observing that "he could not be convicted in the case on that count because these allegations are not contained even in the charge much less in the complaint". Aggrieved by the decision of acquittal of the Magistrate, the Director of Enforcement filed an appeal before the High Court of Delhi with the special leave of that court granted under section 417(3) of the Code of Criminal Procedure. As the appellant who was undergoing imprisonment for life imposed on him in another case at the Central Jail Ferozepur did not make any arrangement for his defence before the High Court, an advocate was appointed as amicus curiae to assist the court in the appeal. After hearing learned counsel who appeared in the case, the High Court by its judgment dated November 9, 1973 reversed the order of acquittal passed by the Magistrate, found the appellant guilty of The offence punishable under section 23F of the Act and sentenced him to imprisonment for a term of one year. While doing so, the High Court agreed with the finding of the Magistrate that the order of the Director of Enforcement imposing penalty on the appellant had not been served on the appellant on May 4, 1968 as alleged in the complaint but it was of the view that since the appellant had come to know about the order on August 7, 1970 when he appeared before the Magistrate and he had not paid the penalty within a reasonable time thereafter, he was liable to be punished under section 23F of the Act. The relevant part of the judgment of the High Court reads thus: "The order of acquittal made by the learned trial Magistrate proceeds, in our opinion, on an altogether erroneous view of the provisions of section 23F of the Act. For proving the guilt of Dara Singh in the light of the charge framed against him, it had only to be established that he had failed to pay the penalty imposed by the Director of Enforcement. As was ordered by the Director of Enforcement the penalty had to be paid within 45 days from the date of issue of the adjudication order. Obviously, however, no payment could be made unless the person on whom the penalty was imposed had come to know about the order. At the latest Dara Singh came to know about the adjudication order on ' August 7, 1970, if not earlier. He should have, therefore, paid the penalty within a reasonable period from that date and in any case within 45 days from 991 the said date. The penalty not having been paid or deposited by Dara Singh, he was clearly guilty of contravention of the adjudication order made by the Director of Enforcement and should have been, convicted under section 23F of the Act". The question which arises for consideration in this appeal is whether the High Court was right in the circumstances of the case in finding the appellant guilty of the offence in question. It is necessary at this stage to refer briefly to some of the provisions of the Act and the Adjudication Proceedings and Appeal Rules, 1957 (hereinafter referred to as 'the Rules ') framed under section 27 of the Act. Under Clause (a) of sub section (1) of section "3 of the Act, the Director of Enforcement is empowered to levy penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by him in the manner provided in the Act in any person is found to contravene the provisions of section 4, section 9 or any of the other provisions referred to in section 23(1). Section 23D of the Act requires the Director of Enforcement to hold an inquiry in the prescribed manner against any person who is liable to be proceeded against under clause (a) of section 23 (1) after giving him a reasonable opportunity of being heard and if on such inquiry, the Director of Enforcement is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of section 23 of the Act. An appeal lies to the Appellate Board under section 23E of the Act against the order of the Director of Enforcement imposing penalty. Rules 3, 4 and 5 of the Rules set out the procedure to be followed by the Director of Enforcement in holding the enquiry under section 23D of the Act. Rule 3 of the Rules among others provides for the issue of a notice to the person against whom proceedings are initiated for contravention of the provisions referred to in section 23(1) of the Act and for giving an opportunity to him to defend himself in the proceedings before the Director of Enforcement. Sub rule (7) of Rule 3 of the Rules provides that if, upon consideration of the evidence produced before the Director, the Director is satisfied that the person has committed the contravention, he may, by order in writing impose such penalty as he thinks fit in accordance with the provisions of clause (a) of sub section (1) of section 23. There is no rule requiring the person against whom an order is made to appear before the Director of Enforcement on any specified date on which the order would be pronounced in his presence. Rule 4 of the Rules requires the Director of Enforcement to specify in his order the provisions of the Act or of the Rules, 992 directions or orders made thereunder in respect of which contravention has taken place and to give brief reasons for his decision. Rule 5 of the Rules requires that a copy of the order made under sub rule (7) of Rule 3 shall be supplied free of charge to the person against whom the order is made and that every copy of such order shall state that the copy is supplied free of charge for the use of the person to whom it is issued and that an appeal lies against that order to the Appellate Board under section 23E within thirty days of the date of the order. Rule of the Rules states that every appeal presented to the Appellate Board under section 23E of the Act shall be in the form of a memorandum signed by the appellant and the memorandum shall be accompanied by a copy of the order appealed against. Having regard to the aforesaid provisions of the Act and the Rules, it has to be held that the service of a copy of the order made under sub rule (7) of Rule 3 of the Rules on the person against whom the said order is made is not an empty formality. In the absence of a provision of law requiring the Director of Enforcement to pronounce his order in the presence of the person against whom it is made, the only date on which it can be deemed to have been effectively made is the date on which he gets the knowledge of the order either by the supply of a copy of the order or by any other means because first, the statute provides a remedy to the person against whom the order is made by way of an appeal to be preferred within the prescribed period from the date of the order to the Appellate Board under section 23E of the Act and secondly noncompliance with the order would expose him to the punishment that may be imposed on him under section 23F of the Act. It would be wholly unjust to compute the period of limitation to file an appeal from a date earlier than the date on which the party who is entitled to prefer an appeal has the knowledge of the order. In cases where an order which is appealable is not pronounced in the presence of the person against whom it is made, it should be assumed that unless there is any specific provision of law to the contrary the date of his knowledge of the order is the date of the order for the purpose of computing the period of limitation irrespective of the date on which it is actually passed. (Vide Raja Harish Chandra Raj Singh vs The Deputy Land Acquisition Officer & Anr. It is equally so even in the case of an order non compliance of which would lead to prosecution and consequent imposition of penalty. When the law lays down that non compliance with an order would expose the person against whom it is made to 993 criminal liability, it is reasonable to hold that in the absence of proof of his knowledge of the order no penal action can be taken against him for non compliance with it. The information or knowledge which he may gather about such order in the course of the criminal proceedings instituted for non compliance with it cannot be a substitute for the knowledge of the order as mentioned above, which should ordinarily precede the institution of such proceedings. Under section 23F of the Act if any person fails to pay the penalty imposed by the Director of Enforcement, he on conviction is liable to be punished with imprisonment which may extend to two years or with fine or with both. No person can be convicted under section 23F for failure to pay the penalty imposed on him by the (Director of Enforcement when he is not at all informed earlier about the imposition of the penalty. Hence in the absence of proof of his knowledge of the order either by the supply of the copy of the order under Rule 5 of the Rules or in any other manner, it cannot be said that such person has failed to pay the penalty imposed on him under the Act and has become liable to be proceeded against under section 23F. As mentioned earlier, the specific case set out in the complaint was that a copy of the order of the Director of Enforcement had been served on the appellant on May 4, 1968 and that both the Magistrate and the High Court refused to accept it. The finding of the High e Court is that the appellant must have come to know of the order on! August 7, 1970 when he appeared before the Magistrate. It is; therefore, obvious that on the date on which The complaint was filed before the Magistrate i.e. On November 13, 1969 or on the date on which process was issued by the Magistrate on taking cognisance of the case to The appellant to appear before him pursuant to which he appeared before him on August 7, 1970, the appellant had not even the knowledge of the passing of the order imposing penalty on him let alone the specific provision of the Act or the Rules which according to the order he had violated and the reasons in support of the order. The appellant had not, therefore, committed any offence punishable under section 23F of the Act on those dates. The Magistrate could not, therefore, take cognisance of any offence punishable under section 23F of the Act on the date on which he issued process to the appellant to appear before him. Even the charge framed against the appellant did not state that the order imposing penalty on him had been communicated to him on August 7, 1970 and the he was being tried for an offence punishable under section 23F for non compliance with the order so communicated on August 7, 1970. 994 The charge only contained the gist of what was stated in the complaint on November 13, 1969. The High Court was, therefore, in error in the circumstances of the case in setting aside the order of acquittal passed by the Magistrate and in finding the appellant guilty of the offence complained of. In the result, the appeal is allowed and the conviction of the appellant and the sentence imposed on him by the High Court are set aside. The order of acquittal passed by the Magistrate is restored. At the time of grating special leave to appeal in this case, as it was stated that the appellant had been acquitted of the charge of murder, the sentence of imprisonment for life had been cancelled and that he had been undergoing imprisonment awarded by the High Court under section 23F of the Act, this Court granted bail to the appellant to the satisfaction of the trial court and directed that he should be released on bail unless he was required to be in prison in connection with or on account of any other case. It is not known whether the appellant was in fact released on bail pursuant to the above order. If he is on bail, his bail bond stands cancelled. P.B.R. Appeal allowed.

An exparte order holding the appellant guilty of certain offences under the Foreign Exchange Regulation Act and imposing penalty for such contravention was passed by the Director of Enforcement. On completion of 45 days of the issue of the order within which period the penalty was required to be paid, a complaint was lodged with the Judicial Magistrate, 1st class alleging that even though a copy of the impugned order had been served on the appellant, he failed to deposit the penalty and, that, therefore, he was liable to be punished under section 23F of the Act. Accepting the appellant 's plea that no copy of the impugned order having been served on him there was no ground to hold him guilty of contravention of section 23F the Magistrate acquitted him. The Magistrate, at the same time, rejected the complainant 's contention that even assuming that the impugned order had not been received by the appellant he had come to know of it on the date he appeared before the Magistrate and when the charge had been framed against him and his failure to pay the penalty despite this knowledge was enough to attract the provisions of section 23F. He held that these allegations were stated neither in the complaint nor in the charge and, therefore, the appellant could not be convicted. Although the High Court, on appeal, upheld the finding of the Magistrate that the impugned order had not been served on the appellant it was of the view that since the appellant had come to know about the order then he appeared before the Magistrate but still had not paid the penalty within a reasonable time thereafter, he was liable to be punished under section 23F of the Act. Allowing the appeal. ^ HELD: The appellant had not committed any offence punishable under section 23F of the Act. [993G] When the law lays down that non compliance with an order would expose The person against whom it is made to criminal liability, It is reasonable to hold that in the absence of proof of knowledge of the order no penal action H can be taken against him for non compliance with that order. The information or knowledge which he may gather about such order in the course of criminal 988 proceedings instituted for non compliance with it cannot be a substitute for the knowledge of the order, which should ordinarily precede the institution of such proceedings. The High Court was, therefore, in error in the circumstances of the case in setting aside the order of acquittal passed by the Magistrate and in finding the appellant guilty of the offence complained of. [992H] The rules framed under the Act set out the procedure to be followed by the Director in holding an enquiry under section 23D of the Act. Although, there is no rule requiring a person against whom an order is made to appear before the Director on the date of pronouncement of his order, rule 5 of the Rules requires that a copy of the order passed under rule 3(7) should be supplied free of charge to the person against whom the order is made. In the absence of a provision requiring the service of a notice on such a person informing him that the order would be pronounced on a specified future date, the only date on which the order can be deemed to have been effectively made is the date on which he gets knowledge of the order either by supply of a copy of the order or by any other means. The period of limitation to appeal cannot be computed from a date earlier than the date on which the aggrieved party has knowledge of the order. In the absence of proof of knowledge of the order either by supply of its copy or in any other manner the person failing to pay the penalty cannot be proceeded against under section 23F. [991H, 992F] In the instant case the Magistrate and the High Court refused to accept the plea of the Director that a copy of the impugned order had been served on the appellant. Neither on the date of the complaint nor on the date on which process was issued by the Magistrate had the appellant knowledge of the order imposing the penalty; nor did the charge state that the impugned order had been communicated to him and that he was being tried for non compliance with that order.

Civil Appeal No. 1449 of 1987. From the Judgment and Order dated 25.2.1987 of the Bombay High Court in W.P. No. 6028 of 1986. V.M. Tarkunde and S.C. Birla for the Appellant. V.B. Joshi and Janardan for the Respondent. The Judgment of the Court was delivered by 463 KANIA, J. This is an Appeal by a tenant against a decree for eviction passed against him at the instance of the Respondent who is the landlord. The Appeal has been preferred pursuant to Special Leave granted by this Court under Article 136 of the Constitution. In view of the short controversy before us, the relevant facts can be very briefly stated. The Appellant took the tenancy of the premises in question, namely, shop in a house bearing CTS No. 168, Bhavant Peth, Satara City in Maharashtra on an agreed rent of Rs.22 per month. Apart from the rent, a sum of Rs.2.20 per month was payable on account of Education Cess. The Respondent purchased the said house on December 3, 1976 and on the next day the previous owner of the said house informed the Appellant that the property was sold to the Respondent and the tenancy was attorned and further stated that the Appellant was in arrears of rent from 1.6.1976 to 30.11.1976. On January 11, 1977, the Appellant received a notice from the Respondent dated January 10, 1977 demanding the arrears of rent from the Appellant. On January 17, 1977, the Appellant sent a money order to the Respondent for the arrears of rent but the money order stated that the payment was being made to the Respondent as the Muktyar or agent of the previous landlord. This money order was refused by the Respondent. On February 14/15, 1977, the Appellant filed a standard rent application in the Trial Court for fixing the standard rent of the premises under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 which we shall refer to hereinafter as "the Bombay Rent Act". The Respondent filed a suit, being Regular Civil Suit No. 123 of 1977, in the Court of Civil Judge Junior Division, Satara claiming arrears of rent and possession of the suit premises on the ground of non payment of arrears of rent and bona fide requirement as contemplated under Section 12(3) and Section 13(1) respectively of the Bombay Rent Act. The issues in the said suit were framed by the Trial Court on September 12, 1978, and that is accepted as the first day of hearing of the suit. Although the Appellant made applications on 24 12 1977, 15 1 1980, 9 12 1980 and 27 1 1981 for fixation of interim rent, the Trial Court passed an order only on January 27, 1981 fixing the interim rent at Rs.20 per month and gave directions to the Appellant to pay all the arrears of rent on or before February 10, 1981. The Appellant deposited all the arrears of rent at the rate fixed by the Court for the period from 1 6 1976 to 31 1 1981 in the Trial Court on January 29, 1981, that is, within two days from the date of order fixing the rent. The Appellant thereafter deposited the rent in the Trial Court as set out in the following manner: 464 ____________________________________________________________ 'C 'No. Receipt Date Amount Particulars No. ____________________________________________________________ 1269 1094 29 1 81 1158.60 June 1976 to Feb '1981 1416 1208 25 2 81 20.00 March, 1981 13 12 2 4 81 60.00 April, May, June, 1981 409 366 8 7 81 60.00 July,Aug., Sept ', 1981 849 755 5 10 81 60.00 October, November Dec., 1981 1322 1166 11 1 82 60.00 January, February, March, 1982 54 51 8 4 82 60.00 April, May, June,1982 682 630 10 8 82 60.00 July,August Sept, 1982 1153 1055 1 11 82 60.00 October, November, Dec., 1982 1728 1596 7 2 83 40.00 January, February, 1983 107 100 12 4 83 60.00 March,April May 1983 528 484 14 7 83 40.00 June,July, 1983 998 910 28 9 83 40.00 August, Sept., 1983 1213 1203 7 11 83 40.00 October, Nov.1983, 1689 1603 11 1 84 20.00 December, 1983 1635 1551 5 1 84 20.00 January, 1984 2079 1952 15 3 84 100.00 February to June,1984 354 316 26 6 84 120.00 July to Dec,1984 434 256 18 12 84 240.00 January to Dec ', 1985 456 290 17 12 85 240.00 January to Dec ', 1986 The Trial Court held that the Respondent had failed to prove that he was in bona fide need of the suit premises but passed a decree for 465 eviction on the ground that the Appellant had committed default in payment of rent as contemplated under section 12(3)(b) of the Bombay Rent Act. On an appeal by the Appellant, these findings were confirmed by the Additional District Judge, Satare and the appeal was dismissed. Being aggrieved, the Appellant filed a writ petition, being Writ Petition No. 6028 of 1986, in the High Court of Bombay. This writ petition was dismissed by a learned Single Judge of the High Court by a short order taking the view that the Appellant was in arrears and had committed default in payment of rent and there was no reason for the High Court to interfere with the decisions of the courts below. The present Appeal is directed against this decision. It was submitted by Mr. Tarkunde, learned counsel for the Appellant that the Appellant had deposited well within time the entire arrears of rent on the basis of the interim rent fixed by the Trial Court and had thereafter deposited the amount of accruing rent in court with substantial regularity and in view of this, no decree for eviction could be passed against the Appellant under the provisions of Section 12(3)(b) of the Bombay Rent Act read with the other provisions contained in Section 12. It was, on the other hand, contended by Mr. Joshi, learned counsel for the Respondent, that there was irregularity in the deposit of the interim rent after the initial deposit of arrears was made by the Appellant, and he was not entitled to the protection of the Bombay Rent Act and was liable to be evicted on the ground of default in payment of the rent. In order to appreciate these arguments, we have to consider the relevant provisions of Section 12 of the Bombay Rent Act. The material portion of Section 12 runs as follows: "12. (1) A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act. (2) No suit for recovery of possession shall be instituted by a landlord against tenant on the ground of non payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the . 466 (3)(a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court shall pass a decree for eviction in any such suit for recovery of possession. (b) In any other case no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court. x x x x x x" The provision of Section 12(1) has already been set out. In the present case, the provisions of clause (a) of sub section (3) of Section 12 have no application as there was a dispute regarding the amount of standard rent. Hence the provisions which we have to consider are those contained in clause (b) of sub section (3) of Section 12 of the Bombay Rent Act. This clause read in the context makes it clear that no decree for eviction can be passed in a suit for recovery of possession on the ground of non payment of standard rent or permitted increases instituted by the landlord against the tenant, if on the first day of the hearing of the suit or on or before such a date, as the court may fix, the tenant pays or deposits in court the standard rent and permitted increases then due and thereafter continues to pay or deposits in court regularly such rent and permitted increases till the suit is finally decided and also pays the costs of the suit as directed by the court. In the present case, both sides accepted the position that the Appellant had deposited in Court the entire arrears of rent on the basis of interim rent fixed well within time as directed by the court. It is common ground that until the application of standard rent made by the tenant is finally decided, the interim rent fixed by the court must be regarded as the standard rent. The only question, therefore, is whether it can be said that the Appellant, after the first deposit, of the arrears of rent, continued to deposit in court the rent and the permit 467 ted increases "regularly" till the suit was finally decided as contemplated under Section 12(3)(b) of the Act. In Mranalini B. Shah and another vs Bapalal Mohanlal Shah, a Division Bench of this Court was called upon to consider the very provisions of Section 12(3)(b) of the Bombay Rent Act which fall for consideration in the present case before us. In dealing with these provisions, Sarkaria, J., speaking for the Court stated as follows: "The above enunciation, clarifies beyond doubt that the provisions of clause (b) of Section 12(3) are mandatory, and must be strictly complied with by the tenant during the pendency of the suit or appeal if the landlord 's claim for eviction on the ground of default in payment of rent is to be defeated. The word 'regularly ' in clause (b) of Section 12(3) has a significance of its own. It enjoins a payment or tender characterised by reasonable punctuality, that is to say, one made at regular times or intervals. The regularity contemplated may not be a punctuality, of clock like precision and exactitude, but it must reasonably conform with substantial proximity to the sequence of times or intervals at which the rent falls due. Thus, where the rent is payable by the month, the tenant must, if he wants to avail of the benefit of the latter part of clause (b), tender or pay every month as it falls due, or at his discretion in advance. If he persistently defaults during the pendency of the suit or appeal in paying the rent, such as where he pays it at irregular intervals of 2 or 3 or 4 months as is the case before us the Court has no discretion to treat what were manifestly irregular payments, as substantial compliance with the mandate of this clause, irrespective of the fact that by the time the judgment was pronounced all the arrears had been cleared by the tenant. " If we examine the chart of deposits made by the Appellant in the court set out earlier, it shows that during the period 29 1 1981 to 17 12 85 the Appellant has been depositing the rents in court for two or three months at a time. In respect of some months, there are undoubtedly a few defaults in the sense that the deposits have been made a few days later than directed. In this connection, it must be noticed that Trial Court directed that in respect of accruing rent after the order for deposit of arrears was passed, the monthly rent must be deposited on the fifth day of each month which, it is undisputed, must mean the fifth day of each succeeding month. On this basis there are 468 undoubtedly a few defaults committed by the Appellant in the sense that in respect of the first month to which the deposit relates, there is some delay amounting to from two or three days upto a maximum of 23 days. But, on the other hand, the rent for most of the months has been deposited in advance. In these circumstances, applying the principle laid down in the aforesaid decision referred to, we are of the view that the rent has been deposited by the Appellant with reasonable punctuality and hence the Appellant/tenant can be regarded as having deposited the rent 'regularly ' as contemplated in clause (b) of subsection (3) of Section 12 of the Bombay Rent Act. We are of the view that the courts below were in error in taking the view that exact or mathematical punctuality was required in the deposit of rent by a tenant to take advantage of the provisions of Section 12(3)(b) of the Bombay Rent Act. In these circumstances, we set aside the decree for eviction passed by the courts below and order that the suit filed by the Respondent shall stand dismissed. So far as the costs of this Appeal are concerned, however, that is a different question. It has been pointed out to us by the learned counsel for the Respondent that the Appellant has been persisting in his unjustified stand that the Respondent was not his landlord in respect of the premises in question and on that ground he opposed the withdrawal by the Respondent of the amount deposited by the Appellant in the Trial Court. We agree that this stand was unjustified. Mr. Tarkunde, however, made it clear that the Appellant unconditionally accepts the title of the Respondent to the suit building and also accepts that he is the landlord of the Appellant and that the Respondent is entitled to recover the amount of rent from the Appellant. If any rent remains deposited by the Appellant in the Trial Court, the Respondent shall be at liberty to withdraw the same forthwith. In these circumstances, we direct that the entire costs throughout shall be borne and paid by the Appellant. G.N. Appeal disposed of.

% The enquiry officer 's report was not made available to the respondent before the disciplinary authority passed the final order recording the finding of guilt against him. The Central Administrative Tribunal held in favour of the respondent. In the special leave petition it was contended for the Union of India that the only authority which really and actually holds the delinquent guilty need not afford any opportunity to him before finding of guilt is recorded and the material on which the authority acts. Referring the matter to a larger Bench the Court observed: In the event of failure to furnish the report of the Enquiry officer the delinquent is deprived of crucial and critical material which is taken into account by the real authority who holds him guilty namely. the Disciplinary Authority. He is the real authority because the Enquiry officer does no more than act as a delegate and furnishes the relevant material including his own assessment regarding the guilt to assist the Disciplinary Authority who alone records the effective finding in the sense that the findings recorded by the Enquiry officer standing by themselves are lacking in force and effectiveness. Non supply of the report would therefore constitute violation of principles of natural justice and accordingly will be tantamount to denial of reasonable opportunity within the meaning of Article 333 (2) of the Constitution. [214B C] There can be glaring errors and omissions in the report. Or it may 210 have been based on no evidence or rendered in disregard of or by overlooking evidence. if the report is not made available to the delinquent. this crucial material which enters into the consideration of the Disciplinary Authority never comes to be known to the delinquent and he gets no opportunity to point out such errors and omissions and disabuse the mind of the Disciplinary Authority before he is held guilty or condemned. Serving a copy of enquiry report on the delinquent to enable him to point out anomalies, if any, before finding about guilt is recorded by the Disciplinary Authority is altogether a different matter from serving a second show cause notice to enable the delinquent in the context of the measure of the penalty to be imposed, which has been dispensed with by virtue of the amendment to article 311(2) by 42nd Amendment of the Constitution. [211E H] Since the question whether it is the right of the delinquent to pursuade the Authority which makes up its mind as regards the guilt of the delinquent that such a finding is not warranted in the light of the Keport of the Enquiry officer was not directly in issue and has neither been presented nor discussed in all its ramifications in C.A. No. 537 of 1988 (Union of India & Ors. vs M. Sivagnam) decided on February 8, 1988 by a Bench comprising of three Judges? and the Secretary. Central Board of Excise & Customs & Ors. vs K.S. Mahalingam; , decided by a Bench of two Judges, relied on by the petitioners to contend that the point is directly or at any rate by necessary implication covered in their favour, the matter is referred to a larger bench on considerations of propriety. [214D G]

Appeal No. 1690 of 1969. Appeal by special leave from the judgment and order dated July 15, 1968 of the Delhi High Court at New Delhi in Incometax Reference No. 44 of 1964. G.C. Sharma, R. Chawla, section R. Gupta, R. P. Soni and K. B. Rohtagi for the appellant. F. section Nariman, Addl. Solicitor General of India, A. N. Kirpal, section P. Nayar and R.N. Sachthey for the respondent. The Judgment of the Court was delivered by HEGDE, J. This is an appeal by special leave. The appellant is the assesssee. In this case we are concerned with his assessment for the assessment year 1958 59. The relevant previous year ended on March 31, 1958. The assesses firm applied for renewal of its registration under section 26(A) of the Indian Income Tax Act 1922 (in short 'the Act ') before the Income Tax Officer on May 26, 1958. In that application he mentioned that the previous years ' income had been divided among the partners. The Income Tax Officer rejected that application. He did not believe the version of the assessee that the previous years ' income 77 had been divided. In appeal, the Appellate Assistant Commissioner agreed with the conclusion reached by the Income tax Officer. On a further appeal being taken to the Income tax Appellate Tribunal the Tribunal agreed with the conclusions reached by the lower authorities. Before the Tribunal yet another contention appears to have been taken. That contention was that at any rate the partners having divided the income of the previous year as evidenced by the balance sheet before the assessment Was made, the assessee firm was entitled for its registration under section 26(A). The Tribunal did not go into that question. The High Court agreed with the view taken by the Tribunal. The only question that arises for decision in this case is whether it was incumbent on the part of the assessee to have divided the profits of the previous year before it made its application for renewal of the registration certificate. For deciding this question it is necessary to refer to the relevant provisions of the Act as well as the Rules. Section 26 (A) of the Act reads. thus. "26A. Procedure in registration of firms (1) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons, and at such times and small contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the income tax Officer in such manner as may be prescribed. " Turning to the relevant Rules, they are found in Rules 2, 3 and 6. These Rules read thus: "Rule 2 Any firm constituted under an Instrument of Partnership specifying the individual shares of the partners may, under the provisions of section 26A of the Indian Income tax Act, 1922 (hereinafter in these rules referred to as the Act), register with the Incometax Officer, the particulars contained in the said Instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally, or in the case of a dis 78 solved firm by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such partner who is deceased and shall, for any year of assessment UP to and including the, assessment for the year ending on the 31st day of March, 1953, be made before the 28th February, 1953, and for any year of assessment subsequent thereto, be made. (a)Where the firm is not registered under the (TX of 1932), or where the deed of partnership is not registered under the Indian (XVI of 1908), and the application for registration is being made for the first time under the Act. (i) within a period of six months of the constitution of the firm or before the end of the "previous year" of the firm whichever is earlier, if the firm was constituted in that previous year, (ii)before the end of the previous year in any other case. (b) where the firm is registered under the (TX of 1932), or where the deed of partnership is registered under the Indian (XVI of 1908), before the end of the previous year of the firm, and (c)where the application is for renewal of registration under Rule 6 for any year, before the 30th day of June of that year : Provided that the, Income tax Officer may entertain an application made after the expiry of the time limit specified in this rule, if he is satisfied that the firm was prevented by sufficient cause from making the application within the specified time . Rule 3 The application referred to in Rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted, together with a copy thereof : provided that if the Income tax Officer is satisfied that for some sufficient reason the original Instrument cannot conveniently be produced, be may accept a copy of it certified in writing by all the partners (not being minors) or, where the application is made after dissolution of the firm, by all the persons 79 referred to in the said Rule, to be correct copy, and in such a case the application shall be accompanied by a duplicate copy. FORM I FORM OF APPLICATION FOR REGISTRATION OF A FIRM UNDER SECTION 26A OF THE INDIAN INCOME TAX ACT, 1922. TO The Income tax Officer, Dated 19 Income tax year 19 19 1. . . . 2. . . 3.We do hereby certify that the profits (or loss if any ) of the previous year were/will be (period upto the date of dissolution were/will be) divided or credited as shown in section B of the Schedule and that the information given above and in the attached Schedule is correct. (Signatures) (Address) Note : This application must be signed. . . SCHEDULE Name of Address Date of (1) (1) (2) partner admitt Interest Salaryor Share in REMARKS ance to on capital commis the bal partner or loans sion from ance of ship. (if any) firm profits (or loss) etc. 1 2 3 4 5 6 7 (A)Particulars of the firm as constituted at the date of this application. 80 (B) Particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year between the partners who in that previous year were, entitled to share in such income, profits or gains (or loss). Applicable where the application is made after the end of the relevant previous year). Note: (I) If the interest, salary and/or commission . . . . . . . . column with the letter "R". (In other cases the interest, salary and/or commissionmay exceed the total profits so as to leave a balance of net loss divisible in column 6). (2)If any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses this fact should be indicated by putting against his share in column 6 the letter "P". Rule 6 Any firm to whom a certificate of registration has been granted under Rule 4 may apply to the Income tax Officer to have the certificate of registration renewed for a subsequent year. Such application shall be signed personally by all the partners (not being minors) of the firm or, where the application is made after dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased, and accompanied by a certificate in the form set out below. The application shall be made before the 30th day of June of the year for which assessment is to be made provided that the Income tax Officer may entertain an application made after the expiry of the said date, if he is satisfied that the firm was prevented by sufficient cause from making the application before that date. FORM OF APPLICATION FOR THE RENEWAL OF REGISTRATION OF A FIRM LTNDER SECTION 26A OF THE INDIAN INCOME TAX ACT, 1922 TO The Income tax Officer Dated 19 Assessment for the Income tax Year 19 /19 1. . . 2. . . . 81 3.We do hereby further certify that the profits (or loss if any) of the previous year were/period up to the date of dissolution were/will be divided or credited as shown below: Particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year or the period upto the date of dissolution between the partners who were entitled to share in such income, profits or gains (or. loss). Name of Address Date of (1) (1) (2) Partner admitt Interest Salary Share ance of on capital or comm in the REMARKS partner or loans ission balance ship (if any) from of profits firm. (or loss) etc. 1 2 3 4 5 6 7 Note : (1) If the interest, salary and/or. . loss divisible in column 6. (2) If any partner is entitled . . his share in column 6 the letter "P". (Signatures) (Address) Note : This application must be signed personally . of any such person who is deceased". From a reading of these provisions it is clear that in the case of an application for renewal it is incumbent on the part of the assessee to have divided the previous year 's profits. This conclusion appears to be obvious from Section 26(A) read with Rules 2, 3, 6 and the forms set out earlier. The contention ' of Mr. Sharma, the learned counsel for the assessee, that if the relevant provisions are interpreted in the manner that we have done it leads to hardship to the assessee, is not relevant in view of the plain language of the provisions. Our conclusion in this regard receives support from the decision of Madras High Court in Surajmall vs Commissioner of, L63lSuP Cl/73 82 Income tax, Madras(1), and that of the Allahabad High Court in Ganesh Lal Laxmi Narain vs Commissioner of Income tax, U.P.(2). In Khanjan Lal Sewak Ram vs Commissioner of Income tax, U.P.(3) this Court had ruled that para 3 of Rule 6 (supra) is mandatory. We see no merit in this appeal. It is dismissed with costs. V.P.S. Appeal dismissed.

The respondents were landlords of two houses in the Karol Bagh area of Delhi. The houses were built on lands given on long lease by the Delhi Improvement Trust to the rights, liabilities and assets. of which the Delhi Development Authority subsequently succeeded. Under the terms of the leases the buildings erected on the lands were to be used for residential purposes only. If they were used for any other purpose without the approval of the lessor the leases would become void. Portions of the buildings in question were however let out for commercial purposes viz. a barber shop and a scooter repair shop. The Delhi Development Authority gave notice to the landlords that since the buildings had been permitted to be used for commercial pur poses the leases were liable to be determined. They were called upon to discontinue the use of the land for commercial purposes failing which they were asked to show cause why their leases should not be determined and the land together with the buildings thereon be not reentered upon without compensation. Thereupon the landlords issued notice to the tenants asking them to stop the commercial use of the buildings. The landlords later on instituted proceedings against the tenants under the Delhi Rent Control Act, 1958 but the Controller ,dismissed the petitions. Their appeals were dismissed. The Division Bench of the High Court decided in favour of the landlords. In appeal to this Court by special leave the question for consideration was whether the landlords were estopped or otherwise prohibited from getting possession of the property from the tenants because they themselves had let it out for commercial purposes. The Court had to consider the question in the light of the provisions of section 14 of the Act. HELD : (i) If it is a case where the tenant has contrary to the terms of his tenancy used the buildings for a commercial purpose the landlord could take action under clause (c) of the proviso to section 14(1). He need not depend upon clause (k) at all. The only situation in which clause (k) can take effect is when the lease is for a commercial purpose agreed upon both by the landlord ,and the tenant but, that is ,Contrary to the terms of the lease of the land in favour of the landlord. [459E G] (ii)The policy of the legislatures seems to be to put an end to unauthorised use of the leased lands rather than merely to enable the authorities to get back possession of the leased lands. This conclusion is further fortified by a reference to sub section 11 of section 14. The lease is not forfeited merely because the building put upon the leased land is put to unauthorised use. The tenant is given an opportunity 455 to comply with the, condition imposed on the landlord by any of the authorities referred to in clause (k) of the proviso to sub section (1). As long as the condition imposed is complied with there is no forfeiture. It even enables the, controller to direct compensation to be paid to the authority for a breach of the conditions, which must be done in the presence of the authority. [459H; 460A D] (iii)The anxiety of the legislature is to prevent unauthorised user rather than protection of the tenant or strengthening the hands of the Development Authority in effecting forfeiture. The Development authority can always resort to the terms of the least, [460F G] There is no estoppel here because both the landlord and the tenant knew that the tenancy was not one permitted under the terms ofthe lease of the land. In any case there can be no estoppel againstthe statute. It would not benefit the tenant even if it is held thatthe landlord cannot, under the circumstances evict him. The landlordwill lose his property and the tenant will also lose. He cannot after the Development Authority takes over the building use it for a commercial purpose. [460G H] Therefore the conclusion must be that the lease in its inception was not void not is the landlord estopped from claiming possession because he himself was a party to the breach of the conditions under which the land was leased to him. Neither the clear words of the section nor a consideration of the policy of the Act lead us to the conclusion that the lease was void in its inception if it was for an unauthorised user. [461A] Smt. Uma Kumari vs Jaswant Rai Chopra, P.L.R. (1960) 460 and section P. Arora vs Ajit Singh, I.L.R. (1970) 11 Delhi 120, disapproved. Waman Shriniwas Kini vs Rati Lal Bhagwandas, ; , referred to. [The Court found that section 14 of the Delhi Development Act was inapplicable to the case. The matter was sent back to the Controller for deciding the question under sub section (11) of Section 14 whether he should exercise the one or the other of two alternatives mentioned therein.]

Civil Appeals Nos. 2139, 2483 and 2484 of 1978. Appeals by Special Leave from the judgment and order dated the 6th October, 1978 of the Madras High Court in O.S.A. No. 64 of 1978. F.S. Nariman, A.K. Sen, Dr. Y.S. Chitaley, S.N. Kackar, T. Dalip Singh, K.J. John, Ravinder Narain, A.G. Menses and R. Narain for the Appellants. H.M. Seervai, Anil B. Divan, A.R. Wadia, S.N. Talwar, I.N. Shroff and H.S. Parihar for Respondent No. 1. D.N. Gupta for Respondents Nos. 2 7, 10 12, 15, 16, 18 22, 26 and 28 33. The Judgment of the Court was delivered by CHANDRACHUD, C. J. These three appeals by special leave arise out of a judgment of a Division Bench of the High Court of Madras dated October 6, 1978 allowing an appeal against the judgment of a learned Single Judge, dated May 17, 1978 in Company Petition No. 39 of 1977. The main contending parties in these appeals are: (i) the Needle Industries (India) Limited and (ii) the 715 Needle Industries Newey (Indian Holdings) Limited. These two companies have often been referred to in the proceedings as the Indian Company and the English Company respectively, but it would be convenient for us to refer to the former as 'NIIL ' and to the latter as the 'Holding Company '. The Holding Company has been referred to in a part of the proceedings as 'NINIH '. In Civil Appeal 2139 of 1978, which was argued as the main appeal, NIIL is appellant No. 1 while one T.A. Devagnanam is appellant No. 2. The latter figures very prominently in these proceedings and is indeed one of the moving spirits of this acrimonious litigation. He was appointed as a Director of NIIL in 1956 and as its Managing Director in 1961. He is referred to in the correspondence as 'TAD ' or 'Theo ' but we prefer to call him 'Devagnanam '. The Holding Company is Respondent 1 to the main appeal, the other respondents being some of the Directors and shareholders of NIIL. Civil Appeal 2483 of 1978 is filed by some of the shareholders of NIIL while Civil Appeal 2484 of 1978 is filed by some of its directors and officers. The Holding Company is the contesting respondent to these two appeals. We will deal with the main appeal and our judgment therein will dispose of all the three appeals. The NIIL was incorporated as a Private Company under the Indian Companies Act, 1913 on July 20, 1949 with its Registered Office at Madras. Its factory is situated at Ketty, Nilgiris. At the time of its incorporation, NIIL was a wholly owned subsidiary of Needle Industries (India) Ltd., Studley, England (hereinafter called 'NI Studley '). The authorised capital of NIIL was Rs. 50,00,000 divided into 50,000 equity shares of Rs. 100 each. Its issued and paid up capital prior to 1961 was Rs. 6,75,600 divided into 6,756 equity shares of Rs. 100 each. The issued and paid up capital was increased to Rs. 11,09,000/ in 1961. In that year, NI Studley entered into an agreement with NEWEY BROS. LIMITED, Birmingham, England, (hereinafter called NEWEY), under which NEWEY agreed to participate in the equity capital of NIIL to the extent of Rs. 4,33,400/ , consisting of 4,334 equity shares of Rs. 100/ each. Thus, in 1961, the position of the share holding in NIIL was that NI Studley held approximately 60.85% of the issued capital and NEWEY held the balance of 39.14%. In 1963, NIIL increased its share capital by issuing 2,450 additional shares to NI Studley, as a result of which the latter became the holder of about 68% shares in NIIL, the rest of the 716 32% belonging to NEWEY. Later in the same year, NI Studley and NEWEY combined to form the Holding Company, of which the full official name. as stated earlier is the Needle Industries Newey (Indian Holding) Ltd. The Holding Company was incorporated in the United Kingdom under the English Companies Act, 1948 with its Registered Office at Birmingham, England. The entire share capital of NIIL, held by NI Studley and NEWEY, was transferred to the Holding Company in which NI Studley and NEWEY became equal sharers. As a result of this arrangement, the Holding Company came to acquire 99.95% of the issued and paid up capital of NIIL. The balance of 0.05%, which consisted of 6 shares being the original nominal shares, was held by Devagnanam. The NIIL, it shall have been noticed, was incorporated about two years after India attained independence. As a result of an undertaking given by it to the Government of India at the time of its incorporation and pursuant to the subsequent directives given by the said Government for achieving Indianisation of the share capital of foreign companies, three issues of shares were made by NIIL in the years 1968, 1969 and 1971, all at par. There was also an issue of Bonus shares in 1971. As a result of these issues, about 40% of the share Capital of NIIL came to be held by the Indian employees of the Company and their relatives while the balance of about 60% remained in the hands of the Holding Company. In terms of the number of shares, by 1971 72 the Holding Company owned 18, 990 shares and the Indian shareholders owned 13,010 shares. Out of the latter block of shares, Devagnanam and his relatives held 9,140 shares while the remaining 3,870 shares were held by other employees and their relatives, amongst whom were N. Manoharan and his group who held 900 shares and D.P. Kingsley and his group who held 530 shares. The total share capital of NIIL thus came to consist of 32,000 equity shares of Rs. 100 each. In or about 1972, a company called Coats Paton Limited, Glasgow, U.K. (hereinafter called 'Coats ') became an almost 100% owner of NI Studley. The position at the beginning of the year 1973 thus was that 60% (to be exact 59.3%) of the share capital of NIIL came to be owned half and half by Coats and NEWEY, the remaining 40% being in the hands of the Indian group. The bulk of this 40% block of shares was held by Devagnanam 's group, which came to about 28.5% of the total number of shares. 717 Though NIIL was at one time wholly owned by NI Studley and later, by NI Studley and NEWEY, the affairs of NIIL were managed ever since 1956 by an entirely Indian management, with Devagnanam as its Chief Executive and Managing Director with effect from the year 1961. The Holding Company which was formed in 1963, had only one representative on the Board of Directors of NIIL. He was N.T. Sanders. He resided in England and hardly ever attended the Board meetings. The Holding Company reposed great confidence in the Indian management which was under the direction and control of Devagnanam. But the acquisition of NI Studley by Coats in 1972 and their consequent entry in NIIL created in its wake a sense of uneasy quiet between the Coats on one hand, which came to own half of the 60% share capital held by the Holding Company, that is to say, 30% of the total share capital of NIIL, and the Devagnanam group on the other hand, which owned 28.5% of that share capital. By the mere size of their almost equal holding in NIIL, Coats and Devagnanam developed competing interests in the affairs of NIIL. Coats were in the same line of business as NIIL, namely, manufacture and sale of needles for various uses, fish hooks etc., and they had established trading centres far and wide, all over the world. It is plain business, involving no moral turpitude as far as business ethics go, that Coats could not have welcomed competition from NIIL with their world interests. Devagnanam was a man of considerable ability and foresight and in NIIL he saw an opportunity of controlling and dominating as industrial enterprise of enormous potential in a rapidly growing market. The turnover of NIIL had increased from 2.80 lakhs in 1953 to 149.93 lakhs in 1972 and the profits ran as high as 19.4% of the turnover. Implicit confidence in the Indian management which was the order of the day almost till 1974 gradually gave way to an atmosphere of suspicion and distrust between Coats and Devagnanam. NEWEY apparently kept away from the differences which were gradually mounting up between the two but, evidently, they nursed a preference for Devagnanam. Coats are a giant multinational organization. NEWEY, comparatively, are small fish though, they too had their own independent business interests to protect and foster. NEWEY owned a flourishing business in Malaysia, Hong Kong, Taiwan, Japan and Australia and from 1972 onwards they drew Devagnanam increasingly into the orbit of their Far Eastern 718 interests. In July, 1972 he was offered the office of Managing Director of a group of four companies in Hong Kong and Taiwan on a five year contract, with an annual salary of six thousand pounds. He had already been appointed to the Board of the NEWEY joint venture company in Osaka and Japan and acted as the liaison Director for that company. He had also been asked to coordinate sales with NEWEY Brothers, Australia. Willing to accept these manifold responsibilities, Devagnanam became strenuously involved therein. He and his wife began to reside in Hong Kong and he cogitated over resigning from his position in NIIL. Coats, on their part, were clear that Devagnanam should relinquish his responsibilities in NIIL, in view of the time his role in NEWEY 's Far Eastern interests was consuming. The question of appointing his successor as Managing Director in NIIL then began to be discussed, the Holding Company wanting to have Manoharan as a substitute. Devagnanam carried the feeling that he was already persona non grata with Coats, because of certain incidents which had taken place some years ago. The Foreign Exchange Regulation Act, ( 'FERA '), 46 of 1973, which came into force on January 1, 1974 provided to Coats and Devagnanam a legal matrix for fighting out their differences. The provisions of FERA, which was passed, inter alia, for the conservation of foreign exchange resources of the country and the proper utilisation thereof in the interests of the economic development of the country are stringent beyond words. Putting it broadly and briefly, section 29 (1) of FERA prohibits non residents, non citizens and non banking companies not incorporated under any Indian Law or in which the non resident interest is more than 40%, from carrying on any activity in India of a trading, commercial or industrial nature except with the general or special permission of the Reserve Bank of India. By section 29 (2) (a), if such a person or company is engaged in any such activity at the commencement of the Act, he or it has to apply to the Reserve Bank of India, for permission to carry on that activity, within six months of the commencement of the Act or such further period as the Reserve Bank may allow. Since the Holding Company is a non resident and its interest in NIIL exceeded 40%, NIIL had to apply for the permission of the Reserve Bank for continuing to carry on its business. Section 29 (4) (a) imposes a similar restriction on such person or company from holding shares in India of any company referred to in clause (b) of section 29 (1), without the permission of the Reserve Bank. Therefore, the Holding Company also had to apply for the permission of 719 the Reserve Bank for continuing to hold its shares in NIIL. The time for making application for the requisite permission under section 29 was extended by the Reserve Bank by two months generally, that is to say, until August 31, 1974. The need to comply with the provisions of section 29 of FERA is the pivot round which the whole case revolves. NIIL applied to the Reserve Bank for the necessary permission through its Director and Secretary, D.P. Kingsley, on September 3, 1974 By its letter dated May 11, 1976, the Reserve Bank allowed that application on certain conditions. NIIL 's application was late by three days but the delay was evidently ignored or condoned. One of the conditions imposed by the Reserve Bank on NIIL was that it must bring down the non resident interest from 60% to 40% within one year of the receipt of its letter. That letter having been received by NIIL on May 17, 1976, the dead line for reducing the non resident interest to 40% was May 17, 1977. The Holding Company applied to the Reserve Bank for a 'Holding Licence ' under section 29(4)(a) of FERA, on September 18, 1974. That application which was late by 18 days is, we are informed, still pending with the Reserve Bank. Perhaps, it will be disposed of after the non resident interest in NIIL is reduced to 40% in terms of section 29 (1) of FERA. Devagnanam was residing in Hong Kong to fulfil his commitment to NEWEY 's far eastern business interests. FERA had its implications for him too, especially since he could be regarded as a nonresident and did consider himself as such. He obtained a holding licence dated March 4, 1975 from the Reserve Bank in respect of his shares in NIIL. But, his interest in the affairs of NIIL began to flag for one reason or another and he started looking out for a purchaser who would buy his shares on convenient and attractive terms. In a note dated April 29, 1975 which he prepared on "further Indianisation Needle Industries (India) Ltd." he pointed out that Indianisation should be considered on the footing that the non resident interest should be reduced to 40% and that, as between the two feasible methods of Indianisation, namely, (1) Going to public and (2) placement of shares, the latter was preferable. He said: 720 There can be no question of my becoming in any way involved with Ketti and its future as I am committed to NEWEY. There appears to be no possibility of returning to India in what is left of my working life. I therefore have little choice but to sell my shares. ( 'Ketty ' in Nilgiris, is the place where NIIL 's factory is situated and is treated as synonymous with NIIL). Devagnanam referred in his note to an inquiry from a Mr. Khaitan, the head of a powerful group with diverse interests and investment in industry, who was already involved in the manufacture of products allied to NIIL 'section Coats were alarmed that Devagnanam was negotiating the sale of his shares "to a Marwari, one Khaitan of Shalimar, a sewing needle competitor to Ketti". In a letter dated August 6, 1975 addressed to Doraiswamy, a partner in a Madras firm of solicitors called 'King and Partridge ' who was a Director of NIIL, Sanders, a Director of the Holding Company on NIIL 's Board, expressed his grave concern at the proposed deal thus: No doubt Mr. Khaitan would pay the earth to acquire NIIL and judging by what Theo (Devagnanam) had said about him in the past, he may be prepared to arrange or facilitate payment abroad, a most attractive possibility from Theo 's point of view, since he has said clearly that he intends leaving India for good, finally settling in Australia. Sanders added that the deal was so dangerous from the point of view of NIIL that the Holding Company "would feel obliged to prevent it by whatever means were open" to it. By his reply dated August 12, 1975, Doraiswamy said that the news of the proposed sale came as no surprise to him and that he had heard that Silverston, a former Solicitor partner of his, was acting as a "go between" in Devagnanam 's deal with Khaitan. On September 16, 1975 Devagnanam wrote to M.M.C. NEWEY of NEWEY, Birmingham. pointing out the advantages that would accrue by the sale of the shares to Khaitan. Devagnanam reiterated his total identification with NEWEY 's Far Eastern interests and expressed his anxiety to free himself from all commitments to or involvement with NIIL, as early as possible. On October 22, 1975 an important meeting was held in which Alan Machrael, a Director of the Holding Company, made it clear 721 on behalf of Coats that neither Khaitan nor any other single purchaser would be acceptable to the Holding Company if that meant the acquisition of 30% share holding. The notes of the meeting record that Devagnanam had confirmed that the offer which he had received from Khaitan was at Rs. 360 per share, out of which a substantial proportion (perhaps 50%) would be payable outside India. Mackrael stated at the meeting that the price in rupees could be matched but not the method of payment which was illegal and reiterated that the Holding Company would prevent any attempt by Devagnanam to sell his holding to Khaitan. The notes of the meeting were signed by Mackrael on October 30, 1975. On that date, Sanders wrote a letter to Manoharan stating that the Holding Company was not prepared that 30% of the share capital should get into the hands of any one person, bearing in mind the problems that had arisen in allowing Devagnanam to acquire a holding of nearly that proportion. On November 7, 1975 M.M.C. Newey wrote to Devagnanam making it clear beyond the manner of any doubt that Coats, will not accept Khaitan and that according to Bannatyne of Coats, they were put to considerable trouble in finding Indian residents who would match Khaitan 's offer of 3.6 times par. Newey made it clear that in any event, the sale price would have to be paid in India and that they would not be a party to any illicit currency deal. Finding that Coats were determined not to allow him to sell his shares to Khaitan, Devagnanam changed his mind and decided against disposing of his holding in NIIL. On November 13, 1975, he wrote to Newey saying: "I do not think any of us want to see Coats dominate Ketti. Hence there can be no question of selling any part of my shares to their nominee. As they in turn will not approve of anyone we choose, there is no way of solving the problem. The best thing to do, therefore, is for me to revert to the original basis and they should have no cause to complain. This will of course include effectively managing the Indian company. Let me however assure you that it will not be at the expense of Newey." And so did Devagnanam remain in NIIL, with the stage set for a battle between him and Coats for acquisition of control over the affairs of NIIL. Yet another statutory provision which has an important bearing on the issues arising in these appeals is the one contained 722 in section 43 A of the Indian , which was introduced in 1961 by Act 65 of 1960. NIIL was incorporated as a Private Company in 1949 under the Indian Companies Act, 1913. It was a Private Company as defined in section 3 (1) (iii) of that Act since, by its Articles of Association, it restricted the right to transfer its shares, limited the number of its members to fifty and prohibited any invitation to the public to subscribe to any of its shares or debentures. By section 43 A, it became a Public Company, since not less than twenty five per cent of its paid up share capital was held by a body corporate, namely, the Holding Company. But, under the first proviso to section 43A (1), it had the option to retain its Articles relating to matters specified in section 3 (1) (iii) of the Companies Act. NIIL did not alter the relevant provisions of its Articles after it became a Public Company within the meaning of section 43A. One of the points in controversy between the parties is whether, in the absence of any positive step taken by NIIL for exercising the option to retain its Articles relating to matters specified in section 3 (1) (iii) of the Companies Act, it can be held that NIIL had in fact exercised the option, which was available to it under the 1st proviso to section 43A, to include provisions relating to those matters in its Articles. To resume the thread of events, on receipt of the letter of the Reserve Bank dated May 11, 1976 Kingsley, as NIIL 's Secretary, sent a reply on May 18, 1976 to the Bank confirming the acceptance of the various conditions under which permission was granted to NIIL to continue its business. On August 11, 1976 the term of Devagnanam 's appointment as the Managing Director of NIIL came to an end but in the meeting dated October 1, 1976 of NIIL 's Board of Directors, that appointment was renewed for a further period of five years. On being informed of the renewal of Devagnanam 's appointment, NEWEY 's Chairman, C. Raeburn, who used to attend to the affairs of the Holding Company, did not object as such to the Board 's decision ("It may well be that the reappointment in itself is right") but he demurred to the modality by which the decision was taken since, according to him, questions relating to appointments to senior positions in the Company ought to be decided in consultation with the U.K. Shareholders so that they could have an opportunity to express their views. Sanders, it may be mentioned, had received the notice of the meeting duly. On October 20 and 21, 1976, a meeting took place at Ketti between the U.K. shareholders and the Indian shareholders of NIIL. The former were represented by Alan Mackrael, the Managing Director 723 of the Holding Company, and C. Raeburn, the Chairman of NEWEY the latter by Devagnanam and Kingsley. One Martin Henry, the Managing Director of 'Madura Coats ', an Indian Company in which the Holding Company had substantial interest, also attended that meeting and took part in its deliberations. Silverston, an Englishman who was practising in India asa Solicitor, attended the meeting as an advisor to the Indian shareholders. C. Raeburn chaired the meeting. Para 2 of the note prepared by him of the discussions held at the meeting says that it was agreed that Indianisation should be brought about by May 1977, as requested by the Government, so as to achieve 40% U.K. and 60% Indian shareholding. But the meeting virtually ended in a stalemate because whereas the Holding Company wanted a substantial part of the share capital held by it in excess of 40% to be transferred to Madura Coats as an Indian shareholder, Devagnanam insisted that the existing Indian share holders of NIIL alone had the right, under its Articles of Association, to take up the shares which the Holding Company was no longer in a position to hold because of the directives issued by the Reserve Bank pursuant to FERA. Thus, the difference between the two groups who were fast falling out was not, as it could not be, whether the Holding Company had to reduce its share holding in NIIL from 60% to 40%, but as regards the mode by which that reduction was to be brought about. The bone of contention was as to which Indian Party should take up the excess of 20% the existing Indian shareholders of NIIL or an outside Indian Company, the Madura Coats. Raeburn played the role of a mediator but did not succeed. On the conclusion of the Ketty meeting, Silverston wrote a letter to Kingsley conveying his appreciation of the efforts made by Raeburn to bring the parties together and his distress at the attitude of Coats which, according to Silverston, showed that they were trying to circumvent the provisions of FERA. Raeburn too wrote a letter on October 23, 1976 to Devagnanam saying that Coats were not really interested in any independent Indians taking their excess share holding. On December 11, 1976 Devagnanam wrote to Raeburn expressing the resentment of himself and his group at the attempts made by Coats to maintain their control over NIIL by indirect means. On December 14, Devagnanam offered a package deal under which the existing Indian shareholders would augment their holding to 60%, Mackrael and Raeburn would be on the Board of Directors but not Martin Henry, and even B.T. Lee, a Senior Executive of NI Studley, could be appointed as a wholetime Director of NIIL to be in charge of its export programme. On January 20, 1977 the Reserve Bank sent a reminder to NIIL asking 724 it to submit at an early date the progress report regarding dilution non resident interest. By its reply dated February 21, 1977 NIIL confirmed its commitment to achieve the desired Indianisation by the stipulated date, viz., May 17, 1977. On March 9, 1977 Raeburn wrote to Devagnanam, saying that after a discussion with Mackrael and three other high ranking persons of Coats, it was clear that Coats were not agreeable to allowing the present Indian shareholders to acquire 60% of the equity capital of NIIL, since such a course carried in the long run too great a risk to their world trade. Raeburn made certain fresh proposals by his letter in the hope that they would be acceptable to Coats and invited Devagnanam to come to Birmingham for negotiations. On March 18, 1977 a notice was issued by NIIL 's Secretary, D.P. Kingsley, intimating that a meeting of the Board of Directors will be held on April 6, 1977. One of the items on the agenda of the meeting was shown as "Policy Indianisation". Sanders received the notice of the meeting duly but did not attend the meeting. Devagnanam went to Birmingham in the last week of March 1977. Between 29th and 31st March, he held discussions with four out of the six Directors of the Holding Company, namely NEWEY, Jackson, White house and Raeburn. The other two Directors, Mackrael and Sanders, did not take any part in those discussions. During his visit to Birmingham, Devagnanam expended considerable time in discussing various matters with NEWEY, pertaining to their Far Eastern business. On April 4, 1977 NIIL received a reminder letter dated March 30, 1977 from the Reserve Bank which pointed out that the Company had not yet submitted any concrete proposal for reduction of the non resident interest and asked it to submit its proposal in that behalf without any further delay. The letter warned the Company that if it failed to comply with the directive regarding dilution of foreign equity within the stipulated period, the Bank would be constrained to view the matter seriously. Raeburn had written a letter to Devagnanam on 4th April on the question of the compromise formula and Devagnanam too had written a letter to Raeburn on the 5th, saying that he would place the formula before his colleagues. These letters evidently crossed each other. The 6th April was then just at hand. 725 The meeting of NIIL 's Board of Directors was held on April 6, 1977 as scheduled. Seven Directors were present at the meeting, with Devagnanam in the chair at the commencement of the proceedings. C. Doraiswamy, solicitor partner of 'King and Partridge ', was one of the Directors present at the meeting. He had no interest in the proposal of "Indianisation" which the meeting was to discuss and was, therefore, considered to be an independent Director. In order to complete the quorum of two independent Directors, the other Directors apart from C. Doraiswamy being interested in the business of the meeting, Silverston, an ex partner of Doraiswamy 's firm of solicitors, was appointed to the Board as an additional Director under article 97 of the Articles of Association. Silverston chaired the meeting after his appointment as an additional Director. The meeting resolved that the issued capital of NIIL be increased to Rs. 48,00,000/ by a new issue of 16,000 equity shares of Rs. 100/ each, to be offered as rights shares to the existing shareholders in proportion to the shares held by them. The offer was to be made by a notice specifying the number of shares which each shareholder was entitled to, and in case the offer was not accepted within 16 days from the date on which it was made, it was to be deemed to have been declined by the concerned shareholder. The minutes of the meeting recorded that as a matter of abundant caution, the Directors who were holding shares in NIIL did not take part either in the discussions which took place in the meeting or in the voting on the resolution. After the aforesaid meeting of the Board dated April 6, 1977, Devagnanam wrote a letter bearing the date April 12 to Raeburn, explaining that every alternative proposal was discussed in the meeting and setting out the compelling circumstances arising out of the requirements of FERA which led to the passing of the particular resolution. It was stated in the letter that a copy of the Reserve Bank 's letter of March 30, 1977 to NIIL was enclosed therewith, but in fact it was not so enclosed. The letter of offer dated April 14, 1977 was prepared pursuant to the resolution passed in the meeting of 6th April. The envelope containing Devagnanam 's letter dated April 12 (without the copy of the letter of the Reserve Bank dated March 30, 1977) and the letter of offer dated April 14 were received by Raeburn on May 2, 1977 in an envelope bearing the Indian postal mark of April 27, 1977, The letter of offer which was sent to one of the Indian shareholders, Manoharan, was posted in an envelope which also bore the postal mark of 27th April. The next meeting of the Board was due to be 726 held on May 2, 1977 and it is on that date that Raeburn received the letter of offer dated April 14, which evidently, was posted at Madras on April 27, 1977. The Holding Company was thereby denied an opportunity to exercise its option whether or not to accept the offer of rights shares, assuming that any such option was open to it. Whether such an option was open to it and whether, if it could not or did not want to take the rights shares, it could transfer its rights, under NIIL 's letter offering the rights shares, to a person of its choice depends upon the provisions of FERA, the necessity to Comply with the directives of the Reserve Bank the terms of NIIL 's Articles of Association and the provisions of the Indian Companies Act. On April 19, 1977 a notice was issued by NIIL 's Secretary intimating that a meeting of the Board of Directors will be held on May 2, 1977. One of the items of agenda mentioned in the notice was "Policy (a) Indianisation, (b) Allotment of shares". The notice of the meeting was sent to the Holding Company in an envelope which also bore the Indian postal mark of April 27, 1977. The notice was received by Sanders in England on May 2, 1977 i.e. on the date when the meeting was due to be held in India. Even the fastest and the most modern means of transport could not have enabled Sanders to attend the meeting. In between, on April 26, 1977 Raeburn had written a letter to Devagnanam at Malacca, following a telex message which said: HAD HELPFUL DISCUSSIONS COATS YESTERDAY PLEASE MAKE NO DECISIONS RE INDIANISATION PENDING LETTER" By his letter of 26th April, which is said to have been received by Devagnanam on May 4, 1977, Raeburn stated that Coats were still unwilling to grant majority shareholding control to the existing Indian shareholders, but that they were equally not keen to do any thing which would be regarded as circumventing the proposal for Indianisation or the law bearing on the subject, since that would undermine the position of the Indian shareholders. A meeting of the Board of Directors was held on May 2, 1977 as scheduled. The minutes of that meeting show that Kingsley, the Secretary of NIIL, pointed out in the meeting that applications for allotment of the rights shares offered as also the amounts payable 727 along with the acceptance of the offer had been received from all the shareholders except the U.K. shareholders and the Manoharan group. The offer to Manoharan was sent at Virudh Nagar but Silverston pointed out to the meeting that Manoharan was working in Jaipur and that therefore, he should be given further time to participate in the rights issue. The Manoharan group was accordingly allowed twenty days ' time from the date of the allotment letter for payment of the allotment amount. In the meeting of 2nd May, the whole of the new issue consisting of 16,000 rights shares was allotted to the Indian shareholders, including members of the Manoharan group. Out of these, the Devagnanam group was allotted 11, 734 shares. A dividend of 30%, subject to tax, amounting to Rs. 9,60,000/ was recommended by the Board, and it was resolved that the Annual General meeting of the Company be held on 4th June, 1977. Silverstone was appointed as an additional Director of the Company and his election as such at the Annual General meeting was recommended by the Board. Further, it was resolved that deposits be invited from the public. On the same day i.e. 2nd May, Devagnanam wrote a letter to Raeburn intimating to him that in a meeting held that morning the formalities relating to allotment of shares were completed, bringing the Company under the control of the Indian shareholders. Devagnanam reiterated by his letter the hope of a closer association with the NEWEY group. Raeburn reacted sharply to Devagnanam 's letter of April 12 and to the letter of offer dated April 14. As stated earlier, he had received both of these on May 2 in an envelope which bears the postal mark of Madras dated April, 27. Raeburn sent a telex, message to Devagnanam on 2nd May and another to Kingsley on 3rd May. By the first telex, he complained about the inadequacy of the notice of the meeting and by the second, he conveyed that there was considerable doubt on the question whether the necessary disinterested quorum was available at the meeting of the Directors held on April 6. On receipt of the telex message, Devagnanam wrote a letter to Raeburn on May 4 explaining the pressure of circumstances which compelled the Board to take the decision which it did in the meeting of May 2, 1977. Raeburn followed up his telex messages by a letter to Devagnanam on May 3. While expressing his distress and displeasure at the manner in which the decision regarding the issue of rights shares was taken and the allotment of the shares was made, Raeburn stated in his letter that the rights issue at par, which was considerably less than the fair value 728 of the shares, was most unfair to the shareholders who could not take up the rights issue. After making the allotment of shares in the meeting of May 2, NIIL sent a letter to the Reserve Bank reporting compliance with the requirements of FERA by the issue of 16,000 rights shares and the allotment thereof the Indian shareholders which resulted in the reduction of the foreign holding to approximately 40% and increased that of the Indian shareholders to almost 60%. Reference was made in the letter to the fact that the allotment money of Rs. 1,10,700/ had yet to be received, which was obviously in reference to the amount due on the 1,107 rights shares which were allotted to the Manoharan group in the meeting of 2nd May. The Manoharan group did not evidence any interest even later in taking up those shares. Manoharan, it may be stated, who was a Director and General Manager of NIIL had resigned his post in April 1976, after serving the Company for nearly 17 years. Between the 2nd and 9th May, there was an exchange of cables between Mackrael and Doraiswamy which led to the latter writing a letter on the 9th to the former. Doraiswamy stated in that letter that he had thoroughly investigated the position by perusing all available records placed before him by Devagnanam and Kingsley and that he was of the opinion that, in the meeting of the 6th April, there was the required quorum of two disinterested Directors consisting of Silverston and himself and, therefore, there could be no doubt whatsoever about the legality of the resolution passed in that meeting. He admitted that although the time limit fixed by the Reserve Bank had expired on 17th May, 1977, "it may have been possible for the Company to get further time from the Reserve Bank of India". As regards the decision to issue the additional shares at par, he explained that if the issue had been made at a premium, it would have necessitated an approach to the Controller of Capital Issues, a process which was time consuming and complicated. He pointed out that the authorities would not have allowed the Company to issue the rights shares at a premium and that even if they were to allow such a course, the premium permissible would have been only nominal. He asserted that the delay caused in the offer of new shares being received by the U.K. shareholders was of little consequence because they would not have been able to take up the shares in any event. He expressed the hope that Mackrael would agree that the decision regarding the issue of rights shares taken at the Board meeting on April 6, 1977 was bona fide and in the best interests 729 of the Company. He concluded his letter by an assurance that as regards the late despatch of the notice of the Board Meeting of 2nd May, further enquiries were being made. On May 11, Devagnanam wrote to Raeburn apologising for the manner in which the foreign shareholding had been reduced and for good measure, he projected the various advantages which the NEWEY group would enjoy under the new Indian management and control of NIIL. As if to illustrate that it is better late than never, he enclosed with his letter a copy of the Reserve Bank 's letter dated 30th March, 1977 which was to have been sent along with the letter dated April 12 but was in fact not so sent. On May 17, 1977 Mackrael, acting on behalf of the Holding Company, filed a Company Petition in the Madras High Court under sections 397 and 398 of the Indian out of which the present appeals arise. It is alleged in the petition that the Indian Directors abused their fiduciary position in the Company by deciding in the meeting of April 6 to issue the rights shares at par and by allotting them exclusively to the Indian shares holders in the meeting of 2nd May, 1977. In so doing, they acted mala fide and in order to gain an illegal advantage for themselves. The Indian Directors, according to the company petition, either knew or ought to have known that the fair value of the shares of the Company was about Rs. 204 per share. By deciding to issue the rights shares at par, they conferred a tremendous and illegitimate advantage on the Indian shareholders. Devagnanam delayed deliberately the intimation of the proceedings of the 6th April to the Holding Company. By that means and by the late giving of the notice of the meeting of the 2nd May, the Devagnanam group presented a fait accompli to the Holding Company in order to prevent it from exercising its lawful rights. Thus, according to the petition the conduct of the Indian Directors lacked in probity and fair dealing which the Holding Company was entitled to expect. By the Petition, the Holding Company asked for the following reliefs: (a) That the Board of Directors of the Company be superseded and one or more Administrators be appointed to administer the affairs of the Company or, in the alternative, the Board of Directors be reconstituted so as to ensure that the Holding Company had adequate representation on it; 730 (b) That the proceeding of the meeting of the Board of Directors held on April 6 and May 2, 1977 be declared illegal, void and inoperative; (c) That Silverston 's appointment as an Additional Director of the Company be declared as void and inoperative and he be restrained from functioning as a Director of the Company; (d) That the purported allotment of 16,000 shares pursuant to the impugned resolution of the Board of May 2, 1977 be declared void; (e) That the Indian group of shareholders to whom the rights shares were allotted be restrained from exercising any voting rights in regard to any part of those shares; (f) That the Company be restrained from giving effect to the allotment of the 16,000 rights shares and from making any payment of dividend on those shares; (g) That the Articles of Association of the Company be amended so as to permit the transfer of the shares to persons other than the existing members of the Company in order to enable the Holding Company to comply with the requirement of disinvestments without prejudice to its interest as a shareholder; and (h) That a special majority for decisions of the Board be prescribed in regard to all important matters and provision be made for the appointment of Directors by proportional representation. The learned Acting Chief Justice who tried the Company Petition, found several defects and infirmities in the Board 's meeting dated May 2, 1977 and concluded that appropriate relief should be granted to the Holding Company under section 398 of the . The learned Judge was of the view that the average market value of the rights shares was about Rs. 190 per share on the crucial date and that, since the rights shares were issued at par, the Holding Company was deprived unjustly of a sum of Rs, 8,54,550/ at the rate of Rs. 90/ per share on the 9,495 rights shares to which it was 731 entitled. Exercising the power under section 398(2) of the , the learned Judge directed NIIL to make good that loss which, according to him, could have been avoided by it "by adopting a fairer process of communication" with the Holding Company and "a consequential dialogue" with them, in the matter of the issue of rights shares at a premium. The learned Judge directed NIIL to pay to the Holding Company the aforesaid sum of Rs. 8,54,550/ as a "solatium" in order to meet the ends of justice. Being aggrieved by the aforesaid judgment, the Holding Company filed O.S. Appeal No. 64 of 1978 while NIIL filed cross objections to the decree. The appeal and cross objections were argued before the Division Bench of the High Court on the basis of affidavits, the correspondence that had passed between the parties and certain additional documents which were filed before the Appellate Court by consent of parties. Though the Company Petition was filed under section 397 as also under section 398 of the and though the trial court had granted partial relief to the Holding Company under section 398, it was stated in the Appellate Court on its behalf that its entire case was based on section 397 and that it did not want to invoke the provisions of section 398. A similar statement was made before us also. On a consideration of the matters and material before it, the Division Bench formulated its view in the form of 18 conclusions on various aspects of the case. They may be summed up thus: (a) As soon as Devagnanam became involved in the far eastern ventures of NEWEY, he decided to sell his share holding in NIIL to an Indian concern or party from which he expected to receive at least a part of the consideration in a foreign country. (b) Seeing that Coats were opposed to his receiving any part of the consideration for the sale of his shares in a foreign country, Devagnanam decided not to part with his shares but to obtain the control of the Company. (c) The directives of the Reserve Bank of India on the question of Indianisation were exploited by Devagnanam for compelling the Holding Company to part with its shares in favour of the Indian shareholders. 732 (d) Coats were willing to carry out the directives of the Reserve Bank but they did not want to transfer their shares to the existing Indian shareholders because thereby, the latter would have acquired a controlling interest in NIIL which Coats wanted to prevent. Coats were willing to part with their excess shares in favour of other Indian residents. (e) Though Coats originally contemplated the transfer of 15% of their excess 20% shares to Madura Coats, or the incorporation of a company to take over their excess 20% shares, they were ultimately agreeable that the existing Indian shareholders should get 9% out of that 20% so as to have a 49% holding in the share capital of NIIL and that 11% should go to new, independent, Indian Institutional shareholders. The object of Coats was that any one group of shareholders should not have a dominating position in the affairs of NIIL. (f) At the Ketti meeting held on October 20 and 21, 1976, the issue of rights shares was considered as an alternative to disinvestment, but that was subject to two conditions: one, that it should be shown that there was a viable development plan which required additional funds which the existing cash flow of NIIL could not meet, and two, that the value of the U.K. equity interest required to be transferred would be no less favourable than what would be achieved by a direct sale of that interest. (g) Though by his letters of December 11 and 14, 1976 Devagananam had informed Raeburn of the decision of the Indian shareholders to acquire 60% shares for themselves, he did not ever say one word about the issue of rights shares in any of the numerous communications which he sent to Raeburn. No reference was made to the issue of rights shares even in the memorandum of discussions which took place during the visit of Devagnanam to U.K. from March 29 31, 1977. Thus, the issue of rights shares was sprung as a surprise on the U.K. shareholders. 733 (h) The notice dated March 13, 1977 for the meeting of the Board of Directors held on April 6, 1977 referred to the main item on the agenda in ambiguous terms as: "Policy Indianisation". In the context of the discussions which had taken place until then between the parties, N.T. Sanders who represented the Holding Company on the Board had no means or opportunity of knowing that the particular item on the agenda involved the question of the issue of rights shares. (i) Since every major decision was taken by the Board of Directors in consultation with the Holding Company and since there was no agenda for the appointment of an additional Director under article 97 of Articles of Association of NIIL, the decision taken by the Board in its meeting of April 6 on the issue of rights shares and the appointment of Silverston as an Additional Director constituted a departure from established practice and showed want of good faith and lack of fair play on the part of the Board of Directors of NIIL. (j) The letter dated April 12, the letter of offer dated April 14 and the notice for meeting of the Board of Directors to be held on May 2, were all got posted by Devagnanam as late as on April 27, 1977 at Madras, so as to ensure that these important documents should not reach the Holding Company in time to enable it to participate in the all important meeting of the 2nd. Davagnanam wanted to present a fait accompli to the Holding Company so as to prevent it from taking any preemptive action. (k) Whenever NIIL wrote to the Reserve Bank alleging that the Holding Company was not willing to carry out the directives of the Bank or to comply with the provisions of FERA, its object was to prejudice the Bank against the Holding Company by drawing a red herring across the track. (l) The directives of the Reserve Bank of India had the provisions of FERA were not concerned with who should be the Indian shareholders of NIIL. All that they were concerned with was that 60% of the share 734 holding must be with the Indian residents. For the purpose of achieving that result, three courses were available to NIIL: (1) Disinvestment by foreign shareholders in favour of Indian shareholders; (2) Issue of rights shares pursuant to section 81 of the , and (3) Action under section 81 (1 A) of the for issuing additional shares to Indian residents other than the existing Indian shareholders by passing an appropriate special resolution, or if no special resolution was passed, then, by a majority of the shareholders approving such a course with the consent of the Central Government. The first course was ruled out since Coats had taken a definite stand that they will not allow the existing Indian shareholders to obtain the excess shares. As far as the second alternative was concerned, the Holding Company had the right to renounce shares offered to it in favour of any other person under section 81 (1) (c) of the , which right was denied to it because, the letter of offer dated April 14 did not contain a statement regarding renunciation of the right to take shares and also because that letter was not posted in time. As regards the third course, if the Holding Company were given adequate notice of the proposal to issue rights shares, it might have taken appropriate action under section 81 (1 A) of the . (m) The object of the Directors of NIIL in deciding upon the issue of rights shares, and that too in the manner in which they did so, was clearly to obtain control of the Company and to eschew and eliminate the controlling power which the Holding Company had over NIIL. The conversion of the existing minority of Indian shareholders into a majority, far from being a matter of statutory compulsion, was an act of self aggrandizement on the part of the existing Indian shareholders. (n) The action taken by the Indian shareholders was against the interest of the Company itself because the rights shares were issued at par which was far below their market price. (o) The true motivation of the various steps taken by the Devagnanam NEWEY Combination was the furtherance 735 of the interest of NEWEY 's Far Eastern enterprises, coupled with the personal interest of Devagnanam himself. Devagnanam was receiving Rs. 96,000/ per annum in addition to substantial fringe benefits as the Managing Director of NIIL. He was also getting a large salary from NEWEY which was $10,000 in 1075 $11,000 in 1976 and $12,000 for the Year ending July 31, 1977. (p) The fact that NIIL informed the Holding Company on May 21, 1977 which was after the Company Petition was filed, that the Holding Company could not exercise and will not be allowed to exercise any rights in respect of the whole of 18,990 shares held by it since its application under section 29 (4) of FERA was not granted by the Reserve Bank shows that the object of the Board of Directors in taking the impugned decision was to exclude the Holding Company from all control over NIIL. That is why NIIL advised the Reserve Bank of India by its letter dated May 24, 1977 that no application for holding any shares by a non resident should be allowed by the Bank without the knowledge and consent of NIIL. That also is the reason why NIIL conveyed to the Reserve Bank by its letter of September 20, 1977 that until such time as the Company Petition was finally disposed of, no licence should be issued to non resident shareholders and no remittance of dividend out of India should be permitted with out the non resident share holders reducing their holding in NIIL to less than 40%. The two other conclusions are comprehended within the 16 set out above. On the basis of the aforesaid formulations, the Division Bench concluded that the affairs of NIIL were being conducted in a manner oppressive, that is to say, burdensome, harsh and wrongful to the Holding Company. After referring to certain passages from Palmer 's Company Law and Gore Browne on Companies, and the decisions of the House of Lords, this Privy Council, and our own Courts including the Supreme Court, the Division Bench held that since the action of the Board of Directors of NIIL was not in the interest of the Company but was taken merely for the purpose of 736 welding the Company into NEWEY 's Far Eastern complex, it was just and equitable to wind up the Company. NIIL had filed cross objections in the High Court appeal contending that, in any event, the learned Acting Chief Justice was in error in directing it to pay the sum of Rs. 8, 54,550/ to the Holding Company. While dealing with the cross objections, the Division Bench held that the injury suffered by the Holding Company on account of the oppression practised by the Board of Directors of NIIL could not be remedied by the award of compensation and, therefore, the action of the Board of Directors in issuing the rights shares had to be quashed. Having found that the Holding Company was entitled to relief under section 397 of the and the award of solatium made by the trial Court was not the appropriate relief to grant, the Division Bench allowed the appeal filed by the Holding Company, dismissed the cross objections in substance and adjourned the appeal for a fortnight for hearing further arguments on the nature of the relief to be granted in the case. Eventually, by its order dated October 26, 1978 the Division Bench granted the following reliefs: (a) Devagnanam was removed forthwith both as the Managing Director and Director of NIIL and was asked to vacate the bungalow occupied by him, by November 1, 1978. He was paid one Year 's remuneration as compensation for the termination of his appointment as the Managing Director. (b) The Board of Directors was superseded and an interim Board consisting of nine directors proposed by the Holding Company was constituted, with Shri M.M. Sabharwal as an independent Chairman. (c) Harry Bridges, an executive of COATS, was appointed as the Managing Director for a period of four months. (d) The rights issue made on 6th April, 1977 and the allotment of shares made on 2nd May, 1977 at the Board meetings were set aside and the Interim Board was directed to make a fresh issue of shares at a premium to the existing shareholders, including the Holding Company which was to have a right of renunciation. The new Board was directed to apply to the Controller 737 of Capital Issues for determining the amount of premium. (e) The Articles of Association were to be altered by appropriate additions and deletions in order to provide for election of Directors by proportional representation; and (f) Devagnanam was asked to pay to the Holding Company the costs of appeal and cross objections quantified at Rs. 25,000/ . He was also asked personally to reimburse the expenses incurred by NIIL in the appeal and cross objections. These appeals were heard in the first instance by Justice Untwalia and Justice Pathak. In view of the importance of the questions arising therein, on some of which our learned Brothers, it seems, were unable to agree, they desired that the appeals be heard by a larger Bench. That is how the appeals are now before us. The petition of the Holding Company out of which these appeals arise sought relief under sections 397 and 398 of the . The case under section 398 not having been pressed except before the learned trial Judge, we are only concerned with the question whether the Holding Company is entitled to relief under section 397 which reads thus: "397(1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Court for an order under this section: provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub section (1) the Court is of the opinion: (a) that the company 's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that other 738 wise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. " Section 398 provides for relief in cases of mismanagement. Section 399(1) restricts the right to apply under sections 397 and 398 to persons mentioned in clauses (a) and (b) of sub section (1) It is necessary to refer briefly to the relevant part of the pleadings before examining the charge of oppression made by the Holding Company against a group of the minority shareholders of NIIL After tracing the history of formation and composition of NIIL, the company petition states that the management of NIIL was in the hands of the Board of Directors in which the Indian group had a large majority. The Holding Company had implicit trust in them and was content to leave the management in their hands. After referring to the impact of section 43A of the , the company petition says that in the wake of FERA, discussions and negotiations were held between the representatives of the Holding Company and the Management of NIIL amongst themselves as well as with the Reserve Bank of India, in order to enable NIIL to obtain the requisite permission for carrying on its business. Paragraph 13 of the company petition states that the Reserve Bank of India by its letter dated May 11, 1976 granted to NIIL the necessary permission subject to the condition, inter alia, that it reduced non resident shareholding to 40 per cent on or before May 17, 1977. The case of the Holding Company in regard to its own attitude is stated succinctly in paragraph 14 of the company petition which may with advantage be reproduced: "Discussions were thereafter held on a number of occasions between the petitioner and the management of the Company to effectuate the aforesaid condition imposed by the Reserve Bank of India which the petitioner was at all times ready and willing to comply with. The petitioner did not, however, desire to dilute its holding of shares in the company by a further issue of capital and preferred to effectuate the said intention by disinvesting or selling 20% of its holding in the company. The Reserve Bank of India was agreeable to such dilution taking place by the petitioner selling a part of its holding to an Indian resident or Indian residents. The Reserve Bank had indicated that 739 they would be willing for such dilution taking place by a further issue of shares provided that additional capital was required for purposes of expansion. The petitioner was not willing to sell a part of its holding to the Indian group as such a sale would result in the Indian group acquiring an absolute majority interest. Further more under the Articles of Association of the Company the consent of the existing shareholders would be required (apart from the approval of the Reserve Bank) before the petitioner sold any of its shares to an Indian party, other than to a member." According to the Holding Company, the various steps which culminated in the allotment of rights shares to the existing Indian shareholders were vitiated by mala fide, their dominant object being to convert an existing minority into a majority. The decision taken in the meeting of the Board on April 6, 1977 was taken deliberately in haste and hurry in order to pre empt any action by the Holding Company to restrain the Board from taking the desired decision. The Reserve Bank, according to the company petition, would not have been so unreasonable as not to extend the time for complying with its directive, especially since the Holding Company had agreed in principle to dilute its holding and the only difference between the parties was as regards the method by which such dilution was to be effected. In Paragraph 27 of the company petition it is stated that the Devagnanam group decided to issue the rights shares with a view to securing an illegal and unjust advantage for itself, for improving its own position in the Company and in order to deprive the Holding Company of its lawful rights as majority shareholders. In this behalf, reliance is placed on the following facts and circumstances, inter alia: (a) The Holding Company was never informed of any specific proposal to make the rights issue. (b) The notice of the Board meeting of April 6, 1977 did not refer to the said proposal. (c) The notice offering rights shares to the Holding Company was not prepared till April 14 and was not posted till April 27, 1977. By the time the notice was received by the Holding Company, the Board of NIIL had met to allot the rights shares. 740 (d) The time given in the notice was much less than was customary. (e) The notice did not contain a statement relating to the right of the shareholders to renounce the rights shares. (f) The notice of the Board meeting of May 2, although dated 19th April 1977, was posted to Sanders on 27.4.1977, thereby ensuring that it would reach him only after the date of the meeting. (g) By issuing shares at par, though their value was much higher than Rs. 100/ per share, existing Indian share holders were enabled to acquire the shares at a gross undervalue and the Company was put to a heavy loss. (i) The Reserve Bank of India had indicated that dilution of the foreign holding by a rights issue could be considered if the Company required further capital for expansion. At the discussions and negotiations held between the Holding Company and the Indian group it was inter alia agreed that the rights issue would be made only if there was a viable development plan requiring further funds. The rights issue was made even though no such need for expansion or development existed or was referred to. (j) Though the Reserve Bank had inter alia stipulated that the said dilution should be effectuated on or before 17th May, 1977, the time schedule is never strictly insisted upon. There have been numerous instances when the Reserve Bank has granted reasonable extension of time to comply with such conditions. The Board of NIIL never requested the Reserve Bank to grant further time. C. Doraiswamy, the 8th respondent stated in his letter dated 9.5.1977 to Mackrael, a Director of the Holding Company, that it would have been possible for the Company to get further time from the Reserve Bank of India. The Holding Company contends further that M.J. Silverston was not a disinterested person, that his vote on the resolution for the 741 issue of rights shares had therefore to be ignored in which case there was no quorum of two disinterested directors and that his appointment as an Additional Director was not valid since the notice for the meeting of the Board of Directors to be held on 6.4.1977 did not contain in the agenda any subject regarding appointment of an additional Director under Article 97 of the Company 's Articles of Association. In answer to these contentions, Devagnanam filed an elaborate counter affidavit on his behalf as well as on behalf of NIIL. In that counter affidavit, every one of the material contentions put forward by the Holding Company has been denied or disputed. Devagnanam contends that it was the Holding Company which wanted to retain its control over NIIL contrary to the directive of the Reserve Bank of India, the national policy of the Central Government and the provisions of FERA. According to Devagnanam, every action taken in the Board meetings of 6.4.1977 and 2.5.77 was in accordance with law, that Sanders never used to attend the meetings of the Board, being a non resident he was not entitled to have notice of the Board meetings, that there was no violation of section 81 of the at all, that section 81 (c) of the did not apply to the present case and that, in view of the attitude adopted by Coats, NIIL, in order to comply with the restrictions imposed by the Reserve Bank and to carry out its directive, had no option but to decide upon the issue of rights shares to bring about the reduction in the non resident shareholding. Devagnanam repudiates emphatically the charge of mala fides or of conduct in breach of the fiduciary duty of NIIL 's Board of Directors. Having regard to these pleadings, the main question for consideration is whether the decisions taken in the meetings of the Board of Directors of NIIL on April 6 and May 2, 1977 constitute acts of oppression within the meaning of section 397 of . The High Court has answered this question in the affirmative and has issued consequential directions in regard to the management of NIIL 's affairs. The findings recorded by the High Court in appeal have been challenged before us with vehemence and ability in an equal measure, matched equally in both respects on either side. Learned counsel who led the arguments on the rival sides, Shri F.S. Nariman for the appellants and Shri H.M. Seervai for the respondents, have drawn our attention in copious details to 742 the correspondence that transpired between the parties, the correspondence with the Reserve Bank of India, the discussions at Ketty and Birmingham which preceded the impugned decisions, the conduct of Devagnanam as a man and a Managing Director, the attitude of Coats stated to arise out of their world wide business interests and the predicament of NEWEY which was willing to strike but was afraid to wound its partner Coats. We have also been taken through several decisions and texts bearing particularly on: (a) The meaning of 'oppression ' of the members of a Company within the terms of section 397 and the circumstances in which a Company can be wound up under the just and equitable clause under section 433 (f) of the ; (b) The approach which the court should adopt in cases wherein mala fides and abuse of power on the part of Directors are alleged but no oral evidence is led; (c) The fiduciary powers of Directors in issuing shares; (d) The impact of the provisions of the Foreign Exchange Regulation Act, 1973 with particular reference to section 2 (p), (q) and (u) and section 29; (e) The question as to whether it is necessary to issue a prospectus under section 81 (1) (c) of the ; (f) The constraints on public and private companies under the , and their duties and obligations, with particular reference to sections 2 (35), 2(37), 3 (1) (iii) and (iv) and sections 43A and 81 of the ; (g) The relationship of partnership between the Indian shareholders, Coats and NEWEY who owned respectively 40%, 30%, and 30% of the shareholding in NIIL; (h) The question whether Silverston was an 'interested ' Director within the meaning of section 300 of the ; and (i) Whether Silverston 's appointment as an Additional Director in the meeting of the Board held on April 6, 1977 was, in the circumstances, valid. 743 Coming to the law as to the concept of 'oppression ' section 397 of our follows closely the language of section 210 of the English of 1948. Since the decisions on section 210 have been followed by our Court, the English decisions may be considered first. The leading case on 'oppression ' under section 210 is the decision of the House of Lords in Scottish Co op. Wholesale Society Ltd. vs Meyer. (1) Taking the dictionary meaning of the word 'oppression ', Viscount Simonds said at page 342 that the appellant society could justly be described as having behaved towards the minority shareholders in an 'oppressive ' manner, that is to say, in a manner "burdensome, harsh and wrongful". The learned Law Lord adopted, as difficult of being bettered, the words of Lord President Cooper at the first hearing of the case to the effect that section 210 "warrants the court in looking at the business realities of the situation and does not confine them to a narrow legalistic view". Dealing with the true character of the company, Lord Keith said at page 361 that the company was in substance, though not in law, a partnership, consisting of the society, Dr. Meyer and Mr. Lucas and whatever may be the other different legal consequences following on one or other of these forms of combination, one result followed from the method adopted, "which is common to partnership, that there should be the utmost good faith between the constituent members". Finally, it was held that the court ought not to allow technical pleas to defeat the beneficent provisions of section 210 (page 344 per Lord Keith; pages 368 369 per Lord Denning). In Meyer (supra) above referred to, the House of Lords was dealing with a case in which the appellant company was accused of having committed acts of oppression against its subsidiary. In that context it was held that the parent company must, if it is engaged in the same class of business, accept as a result of having formed such a subsidiary an obligation so to conduct, what are in a sense its own affairs, as to deal fairly with its subsidiary. In Re Associated Tool Industries Ltd. (2) of which judgment a photographic copy was supplied to us, Joske J. held that the rule in Meyer (supra) involved the consequence that the subsidiary companies must also exercise good faith to the holding company and not merely that the latter should so act to the former. 744 In an application under section 210 of the English , as under section 397 of our , before granting relief the court has to satisfy that to wind up the company will unfairly prejudice the members complaining of oppression, but that otherwise the facts will justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up. The rule as regards the duty of utmost good faith, on which stress was laid by Lord Keith in Meyer, (supra) received further and closer consideration in Ebrahim vs Westbourne Galleries Ltd.,(1) wherein Lord Wilberforce considered the scope, nature and extent of the 'just and equitable ' principle as a ground for winding up a company. The business of the respondent company was a very profitable one and profits used to be distributed among the directors in the shape of fees, no dividends being declared. On being removed as a director by the votes of two other directors, the appellant petitioned for an order under section 210. Allowing an appeal from the judgment of the Court of Appeal, it was held by the House of Lords that the words 'just and equitable ' which occur in section 222 (f) of the English Act, corresponding to our section 433 (f), were not to be construed ejusdem generis with clauses (a) to (e) of section 222 corresponding to our clauses (a) to (e) of section 433. Lord Wilberforce observed that the 'words ' just and equitable ' are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own; and that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure: "The 'just and equitable ' provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust or inequitable, to insist on legal rights, or to exercise them in a particular way". (p 379) 745 Observing that the description of companies as "quasi partnerships" or "in substance partnerships" is confusing, though convenient, Lord Wilberforce said: "company, however small, however domestic, is a company not a partnership or even a quasi partnership and it is through the just and equitable clause that obligations, common to partnership relations, may come in". (p 380) Finally, it was held that it was wrong to confine the application of the just and equitable clause to proved cases of mala fides, because to do so would be to negative the generality of the words. As observed by the learned Law Lord in the same judgment, though in another context: "Illustrations may be used, but general words should remain general and not be reduced to the sum of particular instances." (pp 374 375) In his judgment in Re Westbourne Galleries (supra) Lord Wilberforce has referred at two places to the decision in Blissett vs Daniel, (1) which is recognised as the leading authority in the Law of Partnership on the duty of utmost good faith which partners owe to one another. Lindley on Partnership (14th Edition, pages 194 95) cites Blissett vs Daniel (1) as an authority for the proposition that: "The utmost good faith is due from every member of a partnership towards every other member; and if any dispute arise between partners touching any transaction by which one seeks to benefit himself at the expense of the firm, he will be required to show, not only that he has the law on his side, but that his conduct will bear to be tried by the highest standard of honour". The fact that the company is prosperous and makes substantial profits is no obstacle to its being wound up if it is just and equitable to do so. This position was accepted in the decision of the Court of Appeal in Re Yenidge Tobacco Co. (2) and of the Privy Council in Loch vs John Blackwood (3). 746 The question sometimes arises as to whether an action in contravention of law is per se oppressive. It is said, as was done by one of us, N.H. Bhagwati J. in a decision of the Gujarat High Court in S.M. Ganpatram vs Sayaji Jubilee Cotton & Jute Mills Co., (1) that "a resolution passed by the directors may be perfectly legal and yet oppressive, and conversely a resolution which is in contravention of the law may be in the interests of the shareholders and the company". On this question, Lord President Cooper observed in Elder vs Elder (2): "The decisions indicate that conduct which is technically legal and correct may nevertheless be such as to justify the application of the 'just and equitable ' jurisdiction, and, conversely, that conduct involving illegality and contravention of the Act may not suffice to warrant the remedy of winding up, especially where alternative remedies are available. Where the 'just and equitable ' jurisdiction has been applied in cases of this type, the circumstances have always, I think, been such as to warrant the inference that there has been, at least, an unfair abuse of powers and an impairment of confidence in the probity with which the company 's affairs are being conducted, as distinguished from mere resentment on the part of a minority at being outvoted on some issue of domestic policy". Neither the judgment of Bhagwati J. nor the observations in Elder are capable of the construction that every illegality is per se oppressive or that the illegality of an action does not bear upon its oppressiveness. In Elder a complaint was made that Elder had not received the notice of the Board meeting. It was held that since it was not shown that any prejudice was occasioned thereby or that Elder could have bought the shares had he been present, no complaint of oppression could be entertained merely on the ground that the failure to give notice of the Board meeting was an act of illegality. The true position is that an isolated act, which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which 747 the object is to cause or commit the oppression of persons against whom those acts are directed. This may usefully be illustrated by reference to a familiar jurisdiction in which a litigant asks for the transfer of his case from one Judge to another. An isolated order passed by a Judge which is contrary to law will not normally support the inference that he is biassed; but a series of wrong or illegal orders to the prejudice of a party are generally accepted as supporting the inference of a reasonable apprehension that the Judge is biassed and that the party complaining of the orders will not get justice at his hands. In England, after the decision of the House of Lords in Meyer, (supra) a restricted interpretation has been given to section 210 by the Court of Appeal in re Jermyn St. Turkish Baths,(1) which has adversely criticised by writers on Company Law (see Palmer 's Company Law, 22nd ed., page 613, paras 57 06, 57 07; Gore Brown on Companies, 43rd ed., para 28 12). In India, this restrictive development has no place, for, in S.P. Jain vs Kalinga Tubes, (2) Wanchoo J. accepted the broad and liberal interpretation given to the Court 's powers in Meyer. In Kalinga Tubes, Wanchoo J. referred to certain decisions under section 210 of the English including Meyer (supra) and observed: "These observations from the four cases referred to above apply to section 397 also which is almost in the same words as section 210 of the English Act, and the question in each is whether the conduct of the affairs of the company, by the majority shareholders was oppressive to the minority shareholders and that depends upon the facts proved in a particular case. As has already been indicated, it is not enough to show that there is just and equitable cause for winding up the company, though that must be shown as preliminary to the application of section 397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this requires that events have to be considered not in isolation but as a part of a consecutive story. There must be continuous acts on the part of the majority shareholders, 748 continuing upto the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of the company 's affairs, and such oppression must involve at least an element of lack of probity of fair dealing to a member in the matter of his proprietary rights as a shareholder. It is in the light of these principles that we have to consider the facts. .with reference to section 397". (page 737) At pages 734 735 of the judgment in Kalinga Tubes, Wanchoo J. has reproduced from the judgment in Meyer, the five points which were stressed in Elder. The fifth point reads thus: "The power conferred on the Court to grant a remedy in an appropriate case appears to envisage a reasonably wide discretion vested in the Court in relation to the order sought by a complainer as the appropriate equitable alternative to a winding up order". It is clear from these various decisions that on a true construction of section 397, an unwise, inefficient or careless conduct of a Director in the performance of his duties cannot give rise to a claim for relief under that section. The person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes prejudice to him in the exercise of his legal and proprietary rights as shareholder. It may be mentioned that the Jenkins Committee on Company Law Reform had suggested the substitution of the word 'Oppression ' in section 210 of the English Act by the words 'unfairly prejudicial ' in order to make it clear that it is not necessary to show that the act complained of is illegal or that it constitutes an invasion of legal rights (see Gower 's Company Law, 4th edn., page 668). But that recommendation was not accepted and the English Law remains the same as in Meyer and in Re H.R. 749 Harmer Ltd., (1) as modified in Re Jermyn St. Turkish Baths. (supra) We have not adopted that modification in India. Having seen the legal position which obtains in cases where a member or members of a company complain under section 397 of the that the affairs of the company are being conducted in a manner oppressive to him or them, we can proceed to consider the catena of facts and circumstances on which reliance is placed by the Holding Company in support of its case that the conduct of the Board of Directors of NIIL constitutes an act of oppression against it. There is, however, one matter which has to be dealt with before adverting to facts, namely, the provisions of FERA their impact on the working of NIIL and on the right of the Holding Company to continue to hold its shares in NIIL. This we consider necessary to discuss before an appraisal of the factual situation since, without a proper understanding of the working of FERA, it would be impossible to appreciate the turn of intertwined events. It is in the setting of FERA that the significance of the various happenings can properly be seen. The Foreign Exchange Regulation Act, 46 of 1973, is "An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency and bullion, for the conservation of the foreign exchange resources of the country and the proper utilisation thereof in the interests of the economic development of the country". It repealed the earlier Act, namely, The Foreign Exchange Regulation Act, 1947, and came into force on January 1, 1974. "Person resident in India" is defined in clause (p) of section 2 to mean: (i) a citizen of India, who has, at any time after the 25th day of March 1947, been staying in India, but does not include a citizen of India who has gone out of, or stays outside, India, in either case (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or 750 (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (ii) a citizen of India, who having ceased by virtue of paragraph (a) or paragraph (b) or paragraph (c) of sub clause (i) to be resident in India, returns to or stays in India, in either case (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period. "Person resident outside India" according to clause (q) means "a person who is not resident in India". Under clause (u) "security" means "shares, stocks, bonds," etc. Section 19 (1) provides: "Notwithstanding anything contained in section 81 of the , no person shall, except with the general or special permission of the Reserve Bank. . (a) take or send any security to any place outside India; (b) transfer any security, or create or transfer any interest in a security, to or in favour of a person resident outside India; (d) issue, whether in India or elsewhere, any security which is registered or to be registered in India, to a person resident outside India;" Section 29 which is directly relevant for our purpose reads thus: 751 "29. (1) Without prejudice to the provisions of section 28 and section 47 and notwithstanding anything contained in any other provision of this Act or the provisions of the , a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or in which the non resident interest is more than forty per cent, or any branch of such company, shall not, except with the general or special permission of the Reserve Bank, (a) carry on in India, or establish in India a branch, office or other or other place of business for carrying on any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the Reserve Bank has been obtained under section 28; or (2) (a) where any person or company (including its branch) referred to in sub section (1) carries on any activity referred to in clause(a) of that sub section at the commencement of this Act or has established a branch, office or other place of business for the carrying on of such activity at such commencement, then, such person or company (including its branch) may make an application to the Reserve Bank within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf for permission to continue to carry on such activity or to continue the establishment of the branch, office or other place of business for the carrying on of such activity, as the case may be. (b) Every application made under clause (a) shall be in such form and contain such particulars as may be specified by the Reserve Bank. (c) Where any application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as 752 the Reserve Bank may think fit to impose or reject the application: . . (4) (a) Where at the commencement of this Act any person or company (including its branch) referred to in sub section (1) holds any shares in India of any company referred to in clause (b) of that sub section, then, such person or company (including its branch) shall not be entitled to continue to hold such shares unless before the expiry of a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf such person or company (including its branch) has made an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank for permission to continue to hold such shares. (b) Where an application has been made under clause (a) the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application :" It is clear from these provisions that NIIL, being a Company in which the non resident interest of the Holding Company was more than 40%, could not carry on its business in India except with the permission of Reserve Bank of India. An application for permission to continue to carry on such business had to be filed within a period of six months from the commencement of the Act or such further period as the Reserve Bank may allow. The time for filing the application was extended in all cases by two months and, therefore, it could be filed by August 31, 1974, NIIL filed its application three days late on September 3, 1974, and the application was granted by the Reserve Bank on certain conditions, by its letter dated May 10, 1976. Under the terms and conditions imposed by the Reserve Bank, the non resident interest of the Holding Company, which came to about 60%, had to be brought down to 40% within one year of the receipt of the letter dated May 10, 1976, that is to say before May 17, 1977. 753 By reason of section 29 (4) of FERA, the Holding Company too had to apply for permission to hold its shares in NIIL. It applied to the Reserve Bank for a Holding licence on September 18, 1974. The application which was filed late by 18 days is still pending with the Reserve Bank and is likely to be disposed of after the non resident interest of the Holding Company in NIIL is reduced to 40%. There is a sharp controversy between the parties on the question as to whether May 17, 1977 was a rigid dead line by which the reduction of the non resident interest had to be achieved or whether NIIL could have applied to the Reserve Bank before that date for extension of time to comply with the Bank 's directive, in which case, it is urged, no penal consequences would have flown. We will deal later with this aspect of the matter, including the question of business prudence involved in applying to the Reserve Bank for such an extension of time. Shri Nariman raised at the outset an objection to a finding of mala fides or abuse of the fiduciary position of Directors being recorded on the basis merely of affidavits and the correspondence, against the NIIL 'S Board of Directors or against Devagnanam and his group. He contends. Under the Company Court Rules framed by this Court, petitions, including petitions under section 397, are to be heard in the open court (Rules 11 (12) and Rule 12 (1), and the practice and procedure of the Court and of the Civil Procedure Code are applicable to such petitions (Rule 6). Under Order XIX Rule 2 of the Code, it is open to a party to request the Court that the deponent of an affidavit should be asked to submit to cross examination. No such request was made in the Trial Court for the cross examination of Devagnanam who, amongst all those who filed their affidavits, was the only person having personal knowledge of everything that happened at every stage. Why he did or did not do certain things and what was his attitude of mind on crucial issues ought to have been elicited in cross examination. It is not permissible to rely argumentively on inferences said to arise from statements made in the correspondence, unless such inferences arise irresistibly from admitted or virtually admitted facts. The verification clause of Mackrael 's affidavit shows that he had no personal knowledge on most of the material points. Raeburn who, according to Mackrael, was the Chief negotiator on behalf of the Holding Company in the Birmingham meeting did not file any affidavit at all. Whitehouse, the Secretary 754 of the Holding Company and N.T. Sanders who was the sole representative of the Holding Company on NIIL 's Board of Directors, did file affidavits but they are restricted to the question of the late receipt of the letter of offer of shares and the notice for the Board meeting of May 2, 1977. Their affidavits being studiously silent on all other important points and the affidavit filed on behalf of the Holding Company being utterly inadequate to support the charge of mala fides or abuse of the Directors ' fiduciary powers, it was absolutely essential for the Holding Company to adduce oral evidence in support of its case or at least to ask that Devagnanam should submit himself for cross examination. This, according to Shri Nariman, is a fundamental infirmity from which the case of the Holding Company suffers and therefore, this Court ought not to record a finding of mala fides or of abuse of powers, especially when such findings are likely to involve grave consequences, moral and material, to Devagnanam and jeopardise the very functioning of NIIL itself. In support of his submission, Shri Nariman has relied upon many a case to show that issues of mala fides and abuse of fiduciary powers are almost always decided not on the basis of affidavits but on oral evidence. Some of the cases relied upon in this connection are: Re. Smith & Fawcett Ltd.,(1) Nanalal Zaver vs Bombay Life Assurance,(2) Plexcy vs Mills,(3) Hogg vs Cramphorn(4) Mills vs Mills,(5) Harlowe 's Nominees(6) and Howard Smith vs Amphol.(7) We appreciate that it is generally unsatisfactory to record a finding involving grave consequences to a person on the basis of affidavits and documents without asking that person to submit to cross examination. It is true that men may lie but documents will not and often, documents speak louder than words. But a total reliance on the written word, when probity and fairness of conduct are in issue, involves the risk that the person accused of wrongful conduct is denied an opportunity to controvert the inferences said to arise from the documents. But then, Shri Nariman 's objection seems to us a belated attempt to avoid an inquiry into the 755 conduct and motives of Devagnanam. The Company Petition was argued both in the Trial Court and in the Appellate Court on the basis of affidavits filed by the parties, the correspondence and the documents. The learned Appellate Judges of the High Court have observed in their judgment that it was admitted, that before the learned trial Judge, both sides had agreed to proceed with the matter on the basis of affidavits and correspondence only and neither party asked for a trial in the sense of examination of witnesses. In these circumstances, the High Court was right in holding that, having taken up the particular attitude, it was not open to Devagnanam and his group to contend that the allegation of mala fides could not be examined, on the basis of affidavits and the correspondence only. There is ample material on the record of this case in the form of affidavits, correspondence and other documents, on the basis of which proper and necessary inferences can safely and legitimately be drawn. Besides, the cases on which counsel relies do not all support his submission that from mere affidavits or correspondence, mala fides or breach of fiduciary power ought not to be inferred. In Re Smith & Fawcett Ltd., (supra) Lord Greene, after stating that he strongly disliked being asked on affidavit evidence alone to draw up inferences as to the bona fides or mala fides of the actors, added that this did not mean that it is illegitimate in a proper case to draw inferences as to bona fides or mala fides in cases, where there is on the face of the affidavits, sufficient justification for doing so. In Nanalal Zaver, (supra) the judgment of Kania C.J. contains a statement at page 394 that 'Considerable evidence was led in the trial Court on the question of hona fides ' but it is not clear what kind of evidence was so led and besides, the fact that oral evidence was led in some cases does not mean that it must be led in all cases or that without it, the matter in issue cannot be found upon. We may mention that in Punt vs Symons,(1) Fraser vs Whalley(2) and Hogg vs Cramphorn, (supra) the breach of fiduciary duty was inferred from affidavit evidence. We have therefore no hesitation in rejecting the submission that we ought not to record a finding of mala fides or abuse of fiduciary power on the basis of the affidavits, correspondence and the 756 other documents which are on the record of the case. May it be said that these are on the record by consent of parties. Not merely that, but more documents were placed on the record, mostly by consent of parties, as the case progressed from stage to stage. A very important document, namely, Devagnanam 's telex to Raeburn dated May 25, 1977 was put on the record for the first time before us since Shri Nariman himself desired it to be produced, waiving the protection of the caveat "without prejudice". That shows that the parties adopted willingly a mode of trial which they found to be most convenient and satisfactory. That takes us to the question as to whether on the basis of the material which is on the record of the case, it can be said that the decision taken by NIIL 's Board of Directors in their meetings of April 6 and May 2, 1977 constitute acts of oppression as against the Holding Company. The case of the Holding Company as put forward by Shri Seervai is like this: (i) Devagnanam kept Raeburn and Coats under the impression that negotiations were still going on and were not to be treated as concluded while, in reality, he had made up his mind to treat the matter as at an end. (ii) He kept the Holding Company in total ignorance of the steps which he was taking in behalf of the issuance and allotment of the rights shares. The copy of the letter of the Reserve Bank dated March 30, 1977 which is said to have spurred the decision taken in the meetings of April 6 was not sent to the Holding Company though Devagnanam had stated in his letters dated April 12 to Raeburn that the said copy was being enclosed along with that letter. Deliberately and designedly, the letter of offer dated April 14, 1977 meant for the Holding Company in England was not posted until April 27. Similarly, the notice calling a meeting of the Board on May 2 was not posted till April 27. The notice to Manoharan too was posted as late as on April 27, since he was believed to be siding with Coats. The letter of offer and the notice of meeting of May 2 which were posted at Madras on April 27 were received by the Holding Company on May 2, after the Board 's meeting for allotment of rights shares was held. 757 (iii) The Reserve Bank of India was not informed of the proposal to issue right shares to the existing shareholders although it was the most obvious thing to do, in response to its letter dated March 30, 1977, calling upon NIIL to submit its proposal for reducing its non resident interest without delay. (iv) No application was made to the Controller of Capital Issues for fixing the premium on rights shares, not withstanding that the Reserve Bank had informed NIIL, that if necessary, an application to that effect may be made to the Controller of Capital Issues. (v) The whole idea was to cut off all sources of information from Raeburn and Coats and to confront them with the fait accompli of the allotment of rights shares to the Indian shareholders, including the shares formally offered to the Holding Company which were not allotted to it on the ground of its non compliance with the letter of offer. (vi) The agenda of the meetings of April 6 and May 2, 1977 was purposely expressed in vague terms: 'Policy Indianisation ', in order that the Holding Company should not know that the reduction of the non resident interest was proposed to be effected by the issue of rights shares. By suppressing from the knowledge of the Holding Company what was its right to know, and what was the duty of the Board 's Secretary to convey to it, Devagnanam succeeded in achieving his purpose on the sly and pre empted any action by the Holding Company to restrain the holding of the meeting, the issue of rights shares and the allotment thereof exclusively to the existing shareholders (barring Manoharan). (vii) Silverston was appointed as an additional Director in the meeting of April 6 to make up the quorum of two "disinterested" directors even though he was in the true sense not a disinterested person in the decision taken in that meeting. The appointment of additional directors was not even an item on the agenda of the meeting. 758 (viii) Devagnanam was emboldened to take this course because he believed that no matter how wrongful his conduct, he could count upon the support of NEWEY to see that he was not brought to book in a court of justice for his wrongful conduct. He even attempted to thwart the Company Petition and render it infructuous by persuading NEWEY to withdraw the power of attorney executed by them, authorizing the filing of the petition. (ix) In these machinations, Devagnanam was actuated by the sole desire to acquire the control of NIIL for his personal benefit, by ousting the Holding Company from its control over the affairs of NIIL. (x) In fact, the rights shares were issued at par, though their market value was far greater, as a measure of personal aggrandisement in the supposition and forethought that such shares will inevitable go to Devagnanam and his group. This was blatantly in breach of the fiduciary obligation of the Directors. (xi) By these means and methods, which totally lacked in probity, Devagnanam succeeded in converting the existing majority into a minority and the minority into a majority, a conduct which is burdensome, harsh and unlawful, qua the existing majority. According to Shri Seervai, the question before the Court is not whether the issue of rights shares to the existing Indian shareholders only, amounted to oppression but whether, the offer of rights shares to all existing shareholders of NIIL but the issue of rights shares to existing Indian shareholders only, constituted oppression of the Holding Company on the facts and circumstances disclosed in the case. This argument raises questions regarding the interpretation of sections 43A and 81 of the . These contentions of the Holding Company have been controverted by Shri Nariman, according to whom, the appellate Court has taken a one sided view of the matter which is against the weight of evidence on the record. Counsel contends that Devagnanam had done all that lay in his power to persuade the Holding Company to disinvest so as to reduce its holding in NIIL to 40%, that the Direc 759 tors of NIIL were left with no option save to decide upon the issue of rights shares, since disinvestment was a matter of the Holding Company 's volition, that the wording of the agenda of the meetings of April 6 and May 2 conveyed all that there was to say on the subject since, in the background of the negotiations which had taken place between the parties, it was clear that what was meant by 'Policy Indianization ' and 'Allotment of Shares ' was the allotment of rights shares in order to effectuate the policy of the Reserve Bank that the Indianization of the Company should be achieved by the reduction of the non resident holding to 40% that Coats refused persistently, both actively and passively, either to disinvest or to consider the only other alternative of the issue of rights shares, and that the impugned decisions were taken by the Board of Directors objectively in the larger interests of the Company. According to Shri Nariman, Coats left no doubt by their attitude that their real interest lay in their worldwide business and they wanted to bring the working of NIIL to a grinding halt with a view to eliminating an established competitor from their business. It is denied by counsel that important facts or circumstances were deliberately suppressed from the Holding Company or that the letter of offer and the notice of the Board 's meeting of May 2 were deliberately posted late on April 27. It is contended that neither by the issue of rights shares nor by the failure to give the right of renunciation to the Holding Company was any injury caused to its proprietary rights as a shareholder in NIIL. As a result of the operation of FERA, the directives issued by the Reserve Bank thereunder and because of the fact that NIIL had retained its old Articles after becoming a public company under section 43A of the , the Holding Company could neither have participated in the issue of rights shares nor could it have renounced the rights shares offered to it in favour of an outsider, not even in favour of a resident Indian Company like Madura Coats. It is denied that Silverston was not a disinterested Director or that his appointment as an additional Director was otherwise invalid. Counsel sums up his argument by saying that the Board of Directors of NIIL had in no manner abused its fiduciary position and that far from their conduct being burdensome, harsh and wrongful, it was the attitude of Coats which was unfair, unjust and obstructive. Coats having come into an equitable jurisdiction with unclean hands, contends Shri Nariman, no relief should be granted to them assuming for the sake of argument that Devagnanam from the position of Managing Director, are characterised by counsel as wholly uncalled for, transcending the exigencies of the situation. 760 It seems to us unquestionable that Devagnanam played a key role in the negotiations with the Holding Company and ultimately master minded the issue of rights shares. He occupied a pivotal position in NIIL, having been its Director for over twenty years and a Managing Director over fifteen years, in which capacity he held an undisputed sway over the affairs of NIIL. The Holding Company had nominated only one Director on the Board of NIIL, namely, N.T. Sanders, who resided in England and hardly ever attended the Board 's meetings. Devagnanam was thus a little monarch of all that he surveyed in Ketty. He had a large personal stake in NIIL 's future since he and his group held nearly 30% shares in it, the other Indian shareholders owning a mere 10%. In the 60% share capital owned by the Holding Company, Coats and NEWEY were equal sharers with the result that Coats, NEWEY and Devagnanam each held an approximately 30% share capital in NIIL. This equal holding created tensions and rivalries between Coats and Devagnanam, NEWEY preferring to side with the latter in a silent, unspoken manner. Eventually. after the filing of the Company Petition, Coats bought over NEWEY 's interest in NIIL sometime in July 1977. The picture which Devagnanam has drawn of himself as a person deeply committed to Ketty, and as having built up the business with scrupulous regard to the observance of Foreign Exchange Regulations and Indian Laws in contradistinction to Coats who, he alleged, wanted to contravene the Foreign Exchange Regulations of our country is not borne out by the correspondence. In fact, the letter which he wrote to Shread of Newey Goodman Ltd. on August 11, 1973 (which was filed by consent in the Appeal Court) shows that he wanted to dispose of his shares at a large premium by officially receiving the par value in Rupees in India and obtaining the balance in foreign currency outside India. Nevertheless, he stated on oath in para 13 of his rejoinder affidavit that "it is not true that in selling my shares, I wanted a part of the consideration in foreign exchange". The said letter discloses that over and above proposing to make a large profit in contravention of the Foreign Exchange Regulations and the tax laws of India by receiving money outside India, Devagnanam proposed to take away from Ketty its "select key personnel and technicians" to Malacca and to manufacture competitively, products which were then manufactured by Needle Industries, U.K. The foot note to the letter to Shread asked him to keep these matters secret from Coats till the shares had been sold, and till the deed had been done. 761 There is another aspect of Devagnanam 's conduct to which reference must be made. The statement made by him in para 15 of his reply affidavit denying that he was a non resident is not entirely true because at least between August 26, 1974 and June 9, 1976 he was a non resident within the meaning of section 2 (p) (i) (a) of FERA. By his letter dated August 26, 1974 to the Reserve Bank, he asked, though out of abundant caution, for permission under section 29 (4) of FERA to hold his shares in NIIL. He referred in that letter to his contract with Newey and Taylor under which he was to be a full time Managing Director of that Company for five years from August 1, 1974 to July 31, 1979 and asked the Reserve Bank to determine his status. On September 3, 1975 he wrote to the Reserve Bank contending that he was a 'resident ', referring this time not to his contract with Newey Taylor but to the agreement between NILL and Newey Goodman Ltd., a Company about to be formed, under which he was to be on deputation with it as an employee of NIIL. Devagnanam 's letter dated August 11, 1973 to Shread of Newey Goodman, the gloss which he put on his status as a resident in his letters to the Reserve Bank dated August 26, 1974 and September 3, 1975 and the clever manner in which he had his status determined as a resident, cast a cloud on his conduct and credibility. And though, as contended by Shri Seervai, we do not propose to apply to Devagnanam 's affidavit evidence the rule of 'corroboration in material particulars ' which is generally applied in criminal law to accomplice evidence, we shall have to submit Devagnanam 's conduct to the closet scrutiny and statements made by him, from time to time, to the most careful examination. We shall have to look to something beyond his own assertion in order to accept his claim or contention. Shri Nariman attacked the conduct of Coats almost as plausibly as Shri Seervai attacked that of Devagnanam, though in terms of a saying in a local language we may say that 'a brick is softer than a stone ', Coats being the brick. Coats, as will presently appear, are not to be outdone by Devagnanam in the matter of lack of business ethics. But that is no wonder because when the dominant motivation is to acquire control of a company, the sparring groups of shareholders try to grab the maximum benefit for themselves. If one decides to stay on in a company, one must capture its control. If one decides to quit, one must obtain the best price for one 's 762 holding, under and over the table, partly in rupees and partly in foreign exchange. Then, the tax laws and the foreign exchange regulations look on helplessly, because law cannot operate in a vacuum and it is notorious that in such cases evidence is not easy to obtain. Alan Mackrael says in paragraph 20 of his reply affidavit in the Company Petition that it was made clear to Devagnanam that neither Coats nor the Needle Industries (U.K.) would ever be a party to any transaction which was illegal under the Indian law. In a letter dated May 24, 1976 to Devagnanam, A.D. Jackson of NEWEY has this to say: "In broad terms the proposition is that Alan Mackrael, Martin Henry and myself should meet with you in Malacca during September to discuss arrangements whereby an Indian gentleman known to Coats would purchase both your shares and our own share of the NINTH holding in the manner which I outlined to you on the telephone. In order to provide a base for the calculations, Kingsley is to be asked to obtain the government approved price but, of course, the basis of our discussions has been that the actual payment will be higher than this". In the same letter Jackson, after warning that Coats/Needle Industries (U.K.) are "certainly not going to relinquish control of Ketty without a major struggle", proceeds to describe the helpless condition of NEWEY by saying that in the financial position in which they found themselves, they were "in no state to do battle with this particular giant". Leaving aside the determination of Coats to engage in a major struggle with NIIL 's Board of Directors, Jackson 's letter leaves no doubt that Coats were willing to be a party to the arrangement whereby the shares of Devagnanam and NEWEY would be sold to an 'Indian gentleman ', under which the actual payment would be higher than the government approved price ascertained by Kingsley, the Secretary of NIIL. This is doubtful ethics which justifies Shri Nariman 's argument that he who comes into equity must come with clean hands; if he does not, he cannot ask for relief on the ground that the other man 's hands are unclean. The "Notes on further Indianization" made by Devagnanam on April 29, 1975, at a time when the relations between the parties were not under a strain, show that N.T. Sanders who was nominated by the Holding Company as a Director of NIIL was "aware of an inquiry from a Mr. Khaitan". This shows that Devagnanam was not trying 763 to dispose of his shares secretly to Khaitan and Coats were aware of that move. In para 20 of his reply affidavit, Alan Mackrael says that none of the proposals put forward by the Holding Company for achieving Indianization to comply with the requirements of FERA would have given the control of NIIL to the Holding Company. This is falsified by Raeburn 's letter dated October 25, 1976 to Devagnanam, in which he says that the idea of an outside independent party holding 15% of the share capital of NIIL was raised, but this did not appear to be acceptable to Coats since "they want to achieve not only that the present Indian shareholders hold a minority but that they (Coats) hold and influence a substantial block, thereby hoping to influence NEWEY to their views". Thus, there is a wide difference between what Coats practised earlier and pleaded later. Towards the end of paragraph 21, Mackrael asserts that the shareholders of the Holding Company, namely, Coats and NEWEY, were unanimous in the filing of the Company Petition and the prosecution of the proceedings following upon it, which is said to be clear from the fact that two powers of attorney were attested by the Directors of the Holding Company, both of whom were Directors of NEWEY also. The fact that Coats and NEWEY were not of one mind is writ large on the face of these proceedings and, in fact, the charge against NEWEY is that because of their Far Eastern interests in which Devananam was a great asset to them, they were supporting Devagnanam. We may in this connection draw attention to a letter dated June 8, 1977 by Raeburn to Mackrael, saying that the insistence of Coats ( 'Glasgow ') to hold on to the 60% shareholding in NIIL or at least to ensure that 60% did not get into the hands of the Indian shareholders will involve a long and costly legal battle. Raeburn proceeds to say: "We, as Neweys, have neither the will nor the means to participate in that battle, nor do we think it right to do so bearing in mind the legal position regarding Indianisation, the provision in the Articles and the fact that substantially the modern business of N.I.I.L. has been built up by the efforts of the present Indian shareholders". In paragraph 5 of the aforesaid letter, Raeburn clarifies the attitude of NEWEY by saying that if Coats were unable to agree to the arrangement suggested by NEWEY, then, NEWEY will be compelled to notify to those concerned in India that they can no longer be parties to the power of attorney granted by the Holding Company 764 to Mackrael or to any other proceedings in the Indian Courts. In spite of this letter of Raeburn (dated June 8, 1977), Mackrael had the temerity in his reply affidavit dated July 8, 1977, to say that Coats and NEWEY were unanimous in the prosecution of the proceedings consequent upon the filing of the Company Petition. There was no agreement between Coats and NEWEY either in regard to Indianisation of NIIL or in regard to the legal proceedings instituted to challenge the issue of rights shares. There are many other contradictions on material points between the actual state of affairs and what Coats represented them to be, but we consider it unnecessary to cover the whole of that field. We will refer to one of these only, in order to show how difficult it is to choose between Coats and Devagnanam. In paragraph 19 of the Company Petition, which is sworn by Mackrael, it is stated that Devagnanam was in U.K. sometime towards the end of March 1977 and that he held several discussions with the representatives of the Holding Company. In paragraph 40 of his reply affidavit, Mackrael says that as to the contents of paragraph 19 of the Company Petition, he himself was not present at such meeting, since it was a meeting between Devagnanam and the officials of NEWEY for the purpose of discussing matters concerning NEWEY 's Far Eastern interests. The verification clause of Mackrael 's affidavit in support of the Company Petition shows that the contents of paragraph 19 are based on information which he believed to be true. A clearer contradiction between the parent petition and the reply affidavit is difficult to imagine. It would appear that it was not until quite late that Coats realised that they had to plead all ignorance of the discussions which were held in U.K. towards the end of March 1977 between Devagnanam and the representatives of the Holding Company. We will now shift our attention to another scene in order to show how unethical the Coats are. Coats ' subsidiary called the Central Agency Ltd., who were sole selling agents of NIIL 's products in various markets in the world, ceased to be so after NIIL put an end to the agreement with them. The Central Agency never applied during the time that they were sole selling agents of NIIL 's products for registration of the Indian Company 's Trade Marks as a protective measure. The learned Trial Judge, Ramaprasada Rao, Acting C.J., delivered the judgment in the Company 's Petition on May 17, 1978. Immediately thereafter, Application No. 34991 of 1978 was filed by the Japanese Trade Marks Agents of Needle Industries, 765 U.K., for registration of the Trade Marks 'Pony ' and 'Rathna ', which were the registered Indian Trade Marks of NIIL. That application was made under the authority of a Power of Attorney signed by Alan Marckrael. In June 1978, Application No. 102987 was filed in Thailand on behalf of the Needle Industries U.K. as owners of the Trade Mark 'Pony ' which is clear from the Trade Mark Attorney 's letter dated January 22, 1979. In October 1978, Coats Patons, Hong Kong, got the Indian Company 's Trade Mark 'Pony ' registered. In November 1978, the Trade Mark Agents and Solicitors of NIIL in Hong Kong had to give a notice to Coats Patons, Hong Kong, that the latter had registered the 'Pony ' Trade Mark in Hong Kong with the full knowledge that NIIL was the legal owner of that Trade Mark and threatening legal action. As a result of that notice, the Indian Company 's Trade Mark 'Pony ' which was registered by Coats Patons in Hong Kong as their own Trade Mark, was assigned to the Indian Company on December 21, 1978 for a nominal sum of 10 dollars. Items 7 and 8 of the minutes dated March 28, 1979 of the meeting of the interim Board of Directors of NIIL refer to the registration in Hong Kong by Coats Patons of the Indian Trade Mark of NIIL and subsequent assignment thereof to NIIL when legal action was threatened. Harry Bridges, who was appointed as a temporary Managing Director by the High Court, has stated in his counter affidavit dated March 27, 1980 that the application for registration of the 'Pony ' Trade Mark was made in Hong Kong and other places in order to protect that Trade Mark from its improper use by other traders. This is a lame explanation of an act of near piracy. Were this explanation true, the application for registration of the Trade Mark would have mentioned that it was being filed on behalf of NIIL, and that 'Pony ' was in fact the Trade Mark of NIIL. It is quite amazing that any one should claim that the registration of the Trade Mark was being sought as a protective measure when a battle royal was raging between the Holding Company and NIIL and after the Trial Court had delivered its judgment. We may mention that by a letter dated June 15, 1977 Mackrael had informed Devagnanam that he was removed from the Board of Directors of the Holding Company and M.D.P. Whiteford was appointed in the vacancy. The fact that Needle Industries, U.K., had surreptitiously made an application for the registration of NIIL s Trade Mark 'Pony ' came to light fortuitously in January 1979 when NIIL applied for the registration of the 'Pony ' Trade Mark in Thailand and Japan. NIIL 's Trade Mark Agents there found, on inspection of the registers, that certain 766 applications made by Needle Industries, U.K., claiming the same mark as their own pending consideration. The decision, in appeal, of the High Court appointing Harry Bridges as a Managing Director for 4 months was pronounced on October 26, 1978. As a Managing Director appointed by the Court, Bridges called a Board meeting of their members of the Board appointed by the Appellate Court, for November 2, 1978. Bridges took away many files, documents and statements from the NIIL 's factory at Ketty on October 28, 1978, his explanation being that he wanted to carry these documents to Madras where the Board meeting was to be held. A little before Bridges left Ketty for Madras, he was informed that this Court had passed an interim order on November 1, 1978. Consequently, the meeting of the 2nd November did not take place. Bridges says that when it became clear that he was no longer required to act as a Managing Director of NIIL, he took the earliest opportunity of returning the documents which he had taken from the office of the factory at Ketty. It is understandable that Bridges wanted to take with him certain documents to help him perform his functions as a Managing Director in the meeting of November 2, 1978. But it is surprising that, in addition to the documents which Bridges returned on November 8, he had taken with him several other documents which he returned when pressed to do so. He took away with him (1) Design drawing (2) Statistical Returns (3) the Master Budget summary, 1978 (4) Cash forecast for 1978 79 (5) Detailed Project Report with cash flow forecast (6) Details of Project Investment (7) Note on activity upto October 1978 and one or two other documents. These were eventually returned by the Holding Company 's Advocate, Shri Raghavan. When NIIL wrote on November 21, 1978 to Shri Raghavan asking him to call upon Bridges to confirm that he had not retained copies of any of the documents which he had removed from Ketty, Bridges replied by his letter dated November 29, 1978 that he had taken copies of such documents which he considered relevant and that he proposed to retain such copies since "as director of the Company, I am entitled to peruse and take copies of whatever records I choose". This is a wee bit high and mighty. The Design drawing is not the drawing of a bungalow (with a swimming pool) which was being built for Devagnanam but it is a 'Ring spring fastener tool design '. The other documents which Bridges had taken away and of which he got copies made in assertion of his Directorial right, contain important matters like details 767 of production, sales and exports of NIIL 's products, orders outstanding and sales, the proposed additional turnover and the working capital requirements, etc. The fact of Harry Bridges 's taking away these documents and making copies thereof for his own use leaves not the slightest doubt that the motivation of Coats at all times was to advance their own world interests at the expense of NIIL. In the background of such conduct, it becomes difficult to appreciate the Holding Company 's contention, so strongly pressed upon us, that Coats, NEWEY and Devagnanam being in the position of partners, the greatest good faith and probity were expected to be displayed by them. The contention, as a bald proposition of law is sound. The snag is: who should harp upon it ? Not Devagnanam, we agree. But, not Coats either, we think. We have said, while discussing the conduct of Devagnanam, that it would be difficult to accept his word unless there is support forthcoming to it from other circumstances on the record. We feel the same about Coats. It would be equally unsafe to accept their word unless it finds support from the other facts and circumstances on the record of the case. It is true that in saying this, we have partly taken into account facts which came into existence after the Company Petition was filed. But those facts do not reflect a new trend or a new thinking on the part of Coats, generated by success in the litigation. Finding that they had succeeded in the High Court, Coats took courage to pursue relentlessly their old attitude with the added vigour which success brings. On the question of oppression, there is a large mass of correspondence and other documentary evidence on the record before us. We shall have to concentrate on the essentials by separating the chaff from the grain. In the earlier part of this judgment we have already referred to the course of events generally, which culminated in the meetings of NIIL 's Board of Directors, held on April 6 and May 2, 1977. We propose now to refer to these events selectively. FERA having come into force on January 1, 1974, D.P. Kingsley, the Secretary Director of NIIL, applied on September 3, 1974 to the Reserve Bank for the necessary permission under section 29 (2) of that Act. The Reserve Bank intimated to NIIL by its letter dated November 5, 1975 that permission would be accorded to NIIL under section 29 (2) (a) read with section 29 (2) (c) of FERA to carry on its activities in India subject to the conditions enumerated 768 in paragraph 2 of the letter. One of the conditions mentioned in the aforesaid paragraph was that the non resident interest in the equity capital must be reduced to a level not exceeding 40%, within a period of one year from the date of receipt of the letter. The Reserve Bank asked NIIL to submit a scheme within a period of three months, showing how it proposed to achieve the required reduction in the non resident interest: "(a) whether by disinvestment by non resident shareholders, or (b) whether by issue of additional equity capital to Indian residents to the extent necessary to finance any scheme of expansion diversification, or (c) by both". Kingsley wrote a letter to Mackrael on November 19, 1975, enclosing therewith a copy of the letter of the Reserve Bank dated November 5. On February 4, 1976 Kingsley wrote to the Reserve Bank that NIIL was prepared to agree to reduce the non resident interest in the equity capital to a level not exceeding 40% and that the Company was proposing to bring this about by disinvestment though, depending upon future developments, the Company reserved its right to reduce the non resident interest by issue of additional equity capital to Indian shareholders. Kingsley requested the Bank to extend the stipulated time one year in case NIIL was not able to comply with the Bank 's directive by reason of circumstances beyond its control. A copy of this letter dated February 4, 1976 was sent by Kingsley to Whitehouse, the Secretary of the Holding Company. It is significant that there was no response as such to this communication, from the Holding Company. On May 11, 1976 the Reserve Bank of India sent a letter to NIIL granting permission to it under FERA to carry on its business on certain conditions, one of them being that the non resident interest in the equity capital had to be reduced to a level not exceeding 40% within a period of one year from the date of receipt of the letter. The Reserve Bank stated in the aforesaid letter that until such time as the non resident interest was not reduced to 40%, the manufacturing activity of the Company shall not exceed such capacity as was validly approved or recognised by the appropriate authority on December 31, 1973 and that the Company shall not expand its manufacturing activities beyond the level so approved or recognised. It is clear from this letter that all developmental activities of NIIL stood frozen as of the date December 31, 1973, until the non resident interest was reduced to 40%. The Reserve Bank stated further in the letter that NIIL should submit quarterly reports to it indicating the progress made in implementing the reduction of the non resident interest and that the transfer of shares from non residents to Indian residents would be required to be confirmed by the Reserve Bank under section 19 (5) of FERA. 769 The letter of the Reserve Bank was received by NIIL on May 17, 1976, which meant that the reduction of the non resident interest had to be achieved by May 17, 1977. It shall have been seen that by the time the permission was granted by the Reserve Bank to NIIL in May 1976, FERA had been in force for a period of about 2 1/2 years. A period of one year and eight months had gone by since the filing by NIIL of the application for dilution of the non resident interest. Over and above that, the Reserve Bank had granted a long period of one year for bringing about the dilution of the non resident interest. It is true that public authorities are not generally averse, in the proper exercise of their discretion, to extending the time limit fixed by them, as and when necessary. But an elementary sense of business prudence would dictate that the time schedule fixed by the Reserve Bank had to be complied with. The firm tone of the Reserve Bank 's letter conveyed that it would not be easy to obtain an extension of time for complying with its directive, while the stringent conditions imposed by it, particularly in regard to future developmental activities, dictated an early compliance with the directive. Kingsley sent a letter to the Reserve Bank on May 18, 1976, confirming the acceptance of the various conditions under which permission was granted to NIIL to carry on its business. Kingsley pointed out a difficulty in implenting one of the conditions regarding the sale of petroleum products, but the Reserve Bank by its letter dated May 29, 1976 informed him that after a careful consideration of the request, the Bank regretted its inability to enhance the ceiling on the turnover from the Company 's trading activity, as stipulated in the letter dated May 11, 1976. In the meeting of the Board held on October 1, 1976, Devagnanam 's appointment as Managing Director was renewed for a further period of five years. Raeburn, Chairman of NEWEY who was looking after the affairs of the Holding Company, wrote to Devagnanam on October 4, 1976, complaining that it was necessary that the Holding Company should be kept informed in ample time of the Board 's meetings on important organisational matters. Raeburn and Mackrael came to India to discuss the question of dilution of the non resident holding in NIIL. A meeting was held at Ketty on October 20 and 21, 1976 in which the U.K. shareholders were represented by Mackrael and Raeburn and the Indian shareholders by Devagnanam and Kingsley. Silverston took part 770 in the meeting as an adviser to the Indian shareholders. Martin Henry, the Managing Director of Madura Coats which is an Indian company in which the Needle Industries (U.K.) and Cotas have substantial interest, attended the meeting and took part in the discussions. A note of the discussions which took place at Ketty on October 20 and 21 was prepared by Raeburn and forwarded along with a letter dated November 10, 1976 to Devagnanam, with copies to Mackrael, Newey, Jackson and Whitehouse. Paragraph 2 of this note, which is important, says: "It was agreed that Indianization should be brought about by May, 1977, as requested by Government, so as to achieve a 40% U.K. and 60% Indian shareholding". The main features of the discussions which took place in the Ketty meeting are these: (1) Mackrael and Martin Henry suggested acceptability of Madura Cotas as holding part of the 60% of the equity to be held by Indian shareholders. The latter "saw no reason to give up the right which the Indianization legislation, combined with the Company 's Articles, conferred upon them and, therefore they insisted on taking up the whole of their entitlement to 60% of the equity". Silverston who was an Englishman by nationality and a Solicitor by profession in India and was acting as an Adviser to the Indian shareholders in the Ketty meeting plainly and rightly pointed out that Government 's approval of a holding by Madura Coats of 15% of NIIL shares would be unlikely, because by that method Coats would indirectly and effectively with NEWEY hold over 40%, approximately 46%, share in NIIL. It is apparent that this would have been a clear violation of FERA. (2) To allay the concern of U.K. shareholders when they became in minority by the Indian shareholders coming to hold 60%, some safeguards were suggested which, amongst others, were, (i) the Articles of the Company could be altered only by a special resolution which requires a 75% majority of the members voting in person or by proxy. Thus, either group of the shareholders could prevent the sale of shares to any one not 771 approved, (ii) the Board could be reconstructed as mentioned in para 4.3 of the note to give U.K. shareholders sufficient safeguards and hand in the management of the Indian Company. (3) The preferred method of transferring 20% of the equity to Indian shareholders was thought to be by sale by U.K. members of the appropriate number of shares at the price to be determined by the Government and the advice to be taken from Price Waterhouse in this regard. As an alternative it was suggested that a rights issue, with the Indian shareholders taking up the U.K. Members ' rights would also be considered, provided it was demonstrated by Ketty that there was a viable development plan requiring funds that the expected NIIL cash flow could not meet. The value of the U.K. equity interest thus transferred was not to be less favourable than by a direct sale of shares. (4) Approval was given in principle to the renewal of contract of Devagnanam as Managing Director of NIIL. Devagnanam agreed to devote adequate time to the affairs of Ketty and was authorised to continue to supervise the NEWEY affairs in Hong Kong and Malacca. At the resumed discussion on October 21, 1976, both sides stuck to their stand. Devagnanam was insistent that he will "not accept on behalf of the Indian shareholders anything less than the full entitlement of 60% of the shares", while Mackrael, equally insistent, "could not accept on behalf of NI/Coats that the full 60% be held by the present Indian shareholders, even with the safeguards and assurances discussed previously". The Ketty meeting thus ended in a stalemate, both sides insisting on what, what they considered to be their right and entitlement. Raeburn attempted to play the role of a mediator but failed. In this situation, the parties decided to give further consideration to the matter and to adhere to the following time table: "Mid December TAD (Devagnanam) to submit to the U.K. shareholders 772 both the decisions reached by the Indian shareholders as regards the 60% and the case, if any, for a Rights Issue. Mid January U.K. shareholders to decide on their reaction to the Indian shareholders ' decision". Silverston conveyed to Kingsley his regret that the Ketty meeting could product no outcome because of the attitude of Coats who wanted to put pressure on the Directors of NIIL by giving 15% of the shareholding to Madura Coats and thereby avoiding the provisions of FERA. This reaction of Silverston finds support in the reaction of Raeburn himself, which he described in his letter dated October 23, 1976 to Devagnanam. Raeburn says in that letter that he had learnt from Martin Henry that Coats were keen to introduce Prym technology in India in their Madura Coats factory. It may be mentioned that the Prym technology when introduced in Madura Coats would have created a direct competition between it and NIIL. It would also appear from Devagnanam 's letter of October 21, 1976 to Jackson that Coats were intending to start an Engineering Division at Bangalore for the manufacture of Dynecast and Prym products with an investment of the tune of Rs. 3,00,00,000 (Rupees three crores). Compared with that, the interest of Coats in NIIL was just about Rs. 10 lakhs, even if the shares of NIIL were to be valued at Rs. 190/ per share. Devagnanam wrote a letter dated December 11, 1976 to Raeburn, informing him that they had just closed the Board 's meeting in which the principal subject of discussion was "Indianization". Devagnanam expressed resentment of himself and his colleagues that after they had faithfully served the Holding Company for almost the whole of their working lives, the Holding Company should be unwilling to accept them as partners, especially when they were legally entitled to be so considered. Devagnanam made it clear in this letter that any attempt by Coats to retain an indirect control in the management of NIIL will not be acceptable to the Indian shareholders. Then comes the important letter of December 14, 1976, which was written by Devagnanam to Raeburn. Devagnanam informed Raeburn by that letter that he had further discussions with his colleagues and was able to persuade them to agree to a kind of Package deal. The terms of the deal so suggested were: "(1) 773 Indianization should take place with the existing Indian shareholders acquiring 60% of the stock; (2) Mackrael and Raeburn should be taken on NIIL 's Board as Directors, but in no event Martin Henry who was connected with Madura Coats which had a powerful plan of development of Prym technology; (3) the Indian shareholders were prepared to take B.T. Lee, a senior executive of Needle Industries/Coats, Studley, as a permanent whole time Director of NIIL to be put specifically in charge of exports". Some other suggestions were made by Devagnanam to show the bona fides of the Indian shareholders and to alleviate the apprehensions in the minds of the U.K. shareholders. Devagnanam asked Raeburn to convey his reactions in the matter. This letter has been gravely commented upon by the Holding Company on the ground that it did not contemplate the issue of rights shares. We are unable to see the validity of this criticism. There is not the slightest doubt that the Indian shareholders were insisting all along that they should become the owners of 60% of the equity capital of NIIL. A simple method of bringing this about was the transfer by the Holding Company of 20% of its shareholding to the existing Indian shareholders. It was only when this plain method of bringing about reduction in the equity holding failed and the deadline fixed by the Reserve Bank was drawing nearer, that the Board of NIIL decided upon the issue of rights shares, which was the only other alternative that could be conceived of for reducing the non resident interest. The issuance of rights shares, after all, was not like a bolt from the blue. In any event, it was mentioned in the Ketty meeting. On December 20, 1976 Silverston wrote a letter to Raeburn saying that he would be proceeding to U.K. early in January in connection with his personal matters and that he would then visit Raeburn also. Silverston stated candidly in the letter that the situation which was developing between the U.K. and the Indian shareholders, if allowed to continue, could do much damage to the British interests and "as one who is still concerned with the interests of British industry, I feel I cannot sit by and allow matters to deteriorate to their detriment, without making some attempt towards bringing the issues between the parties to a fair conclusion. " Raeburn wrote to Kingsley on January 14,1977 stating that he had a discussion with Silverston a couple of days back, during which Silverston had stated clearly the legal position and given his advice upon it. In the last paragraph of this letter, Raeburn said: 774 "We have now put our views quite clearly to Mr. Makrael and we are awaiting the reaction of Needle Industries and Coats. Therefore, I am hoping but I cannot be sure of this, to be able to let you know fairly soon what the formal decision of the U.K. shareholders is. It needs to be emphasised, especially since its importance was not fully appreciated by the Appellate Bench of the High Court, that the Indian point of view was communicated with the greatest clarity to Raeburn in Devagnanam 's letter dated December 14, 1976, which was within the time schedule which was agreed to be adhered to in the Ketty meeting. The views of the U.K. shareholders were most certainly not communicated to the Indian shareholders by the middle of January 1977 as was clearly agreed upon in the Ketty meeting. In fact, they were never communicated. On January 20, 1977, the Reserve Bank sent a reminder to NIIL. After referring to the letter of May 11, 1976, the Reserve Bank asked NIIL to submit at an early date the progress report regarding dilution of the non resident interest. In reply, a letter dated February 21, 1977 was sent by NIIL to the Bank, stating: "We confirm that we are following up the matter regarding dilution of non resident interest and we confirm our commitment to achieve the desired Indianization by the stipulated date, i.e. 17th May, 1977. " It is very important to note that a copy of this letter was forwarded both to Whitehouse and Sanders. They must at least be assumed to know that not only was Indianization to be achieved by May 17, 1977, but that NIIL had committed itself to do so by that date. It is contended by Shri Seervai that the negotiations with Coats had in fact not come to an end and that Coats were never told that the compromise talks will be regarded as having failed. It is urged that Coats were all along labouring under the impression, and rightly, that the compromise proposals which were discussed with Raeburn in the meeting of March 29 31, 1977 in U.K. would be placed by Devagnanam before the Indian shareholders, and the 775 U.K. shareholders apprised whether or not the proposals were acceptable. Shri Seervai relies strongly on a letter dated March 9, 1977 written by Raeburn to Devagnanam. After saying that on the Friday preceding the 9th March, he had discussions with Mackrael and three high ranking personnel of Coats, Raeburn says in that letter that Coats had refused to agree that the Indian shareholders should acquire a 60% shareholding in NIIL that this had created a new situation and that he was appending to the letter an outline of what he believed, but could not be sure, would be agreeable to Coats/Needle Industries. Raeburn stated further in that letter: "I know that all this will be difficult for you and your fellow Indian shareholders, but I urge you to support this view and get their acceptance, and to come here to be able to negotiate. If these or similar principles can be agreed during your visit, I have no doubt that the detailed method can be quickly arranged. " Raeburn stated that the proposal annexed to the letter had not been agreed with Coats but he, on his own part, believed that Coats could be persuaded to agree to it. Stated briefly, the proposal annexed by Raeburn to his letter aforesaid involved (i) the existing Indian shareholders holding 49% of the shares, (ii) new Indian independent institutional shareholders holding 11% of the shares, and (iii) the existing U.K. shareholders, either directly or indirectly, holding 40% of the shares. The proposed Board of Directors was to consist of representatives of the shareholders appointed by them thus: "Existing Indian shareholders 3, New independent Indian shareholders 1, existing U.K. shareholders 2, and an independent Indian Chairman acceptable to all parties. " It is contended by Shri Seervai that these proposals are crucial for more than one reason since, in the first place, the proposal to increase the holding of the existing Indian shareholders to 49% and the offer of 11% to new Indian independent institutional shareholders was inconsistent with the charge that Coats wanted to retain control over NIIL, directly or indirectly. The second reason why it is said that the proposal is crucial is that Raeburn 's letter of 776 March 9 must have been received by Devagnanam before March 14 since it was replied to on the 14th. Therefore, contends Shri Seervai, the negotiations between the parties were still not at an end. Counsel says that it was open to Devagnanam to refuse to negotiate on the terms suggested and insist that the Indian shareholders must have 60% of the shares. Instead of conveying his reactions to the proposal Devagnanam, it is contended, went to the United Kingdom to discuss the question. The minutes of discussions which took place in U.K., Mackrael and Sanders not taking any part therein, show that NEWEY continued to plead that the Indian shareholders and Coats should consider the compromise formula and that Devagnanam undertook to put to the Indian shareholders further proposals for compromise and to consider what other proposals or safeguards they might suggest. Reliance is also placed by counsel on a letter which Devagnanam wrote to Raeburn on April 5, in support of the submission that the negotiations were still not at an end. The last but one paragraph of that letter reads thus: "As undertaken, I shall place the compromise formula, very kindly suggested by you, before my colleagues later today. We shall discuss it fully at the Board Meeting tomorrow and I shall communicate the outcome to you shortly thereafter. " We are unable to agree that the proposal annexed to Raeburn 's letter of March 9 1977 was either a proposal by or on behalf of Coats or one made with their knowledge and approval. Were it so, it is difficult to understand how Raeburn could write to Mackrael on June 8, 1977 that Coats were still insistent on the entire 20% of the excess equity holding not going to the existing Indian shareholders. There is also no explanation as to why, if the proposal annexed to Raeburn 's letter of March 9 was a proposal by or on behalf of Coats, Raeburn said at the U.K. meeting of March 29 31, 1977 that it was better to 'let Coats declare their hand '. It is indeed impossible to understand why Coats, on their own part, did not at time communicate any compromise proposal of theirs to the Indian shareholders directly. They now seem to take shelter behind the proposal made by Raeburn in his letter of March 9 adopting it as their own. Even in the letter which Crawford Bayley & Co., wrote on June 21, 1977 on behalf of Sanders to the Reserve Bank of India, no reference was at all made to any proposal by or on behalf of Coats to the Indian shareholders. The vague statement 777 made in that letter is that 'certain proposals ' were being considered and would be submitted 'shortly ' before the authorities. No such proposals were ever made by the Solicitor or their client to anyone. These letters and events leave no doubt in our mind that the negotiations between the parties were at an end that there were no concrete proposals by or on behalf of Coats which remained outstanding to be discussed by the Indian shareholders. To repeat, Devagnanam declared his hand in his letter of December 14,1976 by reiterating, beyond the manner of doubt, that nothing less than 60% share in the equity capital of NIIL would be acceptable to the Indian shareholders. Coats never replied to that letter nor indeed did they convey their reaction to it in any other form or manner at any time. In fact, it would be more true to say that Coats themselves treated the matter as at an end since, they were wholly opposed to the stand of the Indian shareholders that they must have 60% share in the equity capital of NIIL. What happened in the meeting of April 6, 1977 has to be approached in the light of the finding that the negotiations between the parties had fallen through, that Coats had refused to declare their hand and that all that could be inferred from their attitude with a fair amount of certainty was that they were unwilling to disinvest. On March 18, 1977 NIIL 's Secretary gave a notice of the Board meeting for April 6, 1977. The notice was admittedly received by Sanders in U.K., well in time but did not attend the meeting. The explanation for his failure to attend the meeting is said to be that the item on the agenda of the meeting, 'Policy Indianisation ' was vague and did not convey that any matter of importance was going to be discussed in the meeting, like for example, the issue of rights shares. We find it quite difficult to accept this explanation. Just as a notice to quit in landlord tenant matters cannot be allowed to split on a straw, notices of Board meetings of companies have to be construed reasonably, by considering what they mean to those to whom they are given. To a stranger, 'Policy Indianisation ' may not convey much but to Sanders and the U.K. shareholders it would speak volumes. By the time that Sanders received the notice, the warring camps were clearly drawn on two sides of the battle line, the Indian group insisting that they will have nothing less than a 60% share in the equity capital of NIIL and the U.K. shareholders insisting with equal determination that they will not allow the existing Indian 778 shareholders to have anything more than 49%. In pursuance of a resolution passed by the Board, a letter had already been written to the Reserve Bank confirming the commitment of NIIL to achieve the required Indianisation by May 17, 1977. A copy of NIIL 's letter to the Reserve Bank was sent to Sanders and Whitehouse. In view of the fact that to the common knowledge of the two sides there were only two methods by which the desired Indianisation could be achieved, namely, either disinvestment by the Holding Company in favour of the existing Indian shareholders or a rights issue, the particular item on the agenda should have left no doubt in the mind of the U.K. shareholders as to what the Board was likely to discuss and decide in the meeting of the 6th. Disinvestment stood ruled out of consideration, a fact which was within the special knowledge of the Holding Company, since whether to disinvest or not was a matter of their volition. After the despatch of the notice dated March 18,1977 two important events happend. Firstly, Devagnanam went to Birmingham, where discus ions were held from March 29 31, 1977 in which Indianisation of NIIL was discussed, as shown by the minutes of that discussion. NEWEY were willing to accept Indianisation, by the existing Indian shareholders acquiring a 60% interest in the share capital of NIIL while "COATS were adamantly opposed" to that view. It is surprising that during the time that Devagnanam was in Birmingham, Sanders did not meet him to seek an explanation of what the particular item on the agenda of the meeting of April 6 meant Sanders had received the notice of March 18 before the Birmingham discussions took place, and significantly he has made no affidavit at all on the question as to why he did not meet Devagnanam in Birmingham, or why he did not attend the meeting of April 6 or what the particular item on the agenda meant to him. The second important event which happened after the notice of March 18 was issued was that on April 4, 1977 NIIL received a letter dated March 30, 1977 from the Reserve Bank. The letter which was in the nature of a stern reminder left no option to NIIL 's Board except to honour the commitment which it had made to the Reserve Bank. By the letter the Reserve Bank warned NIIL: "Please note that if you fail to comply with our directive regarding dilution of foreign equity within the stipulated period, we shall be constrained to view the matter seriously." 779 We do not see any substance in the contention of the Holding Company that despite the commitment which NIIL had made to the Reserve Bank, the long time which had elapsed in the meanwhile and the virtual freezing of its developmental activities as of December 31, 1973, NIIL should have asked for an extension of time from the Reserve Bank. In the first place, it could not be assumed or predicated that the Bank would grant extension, and secondly, it was not in the interest of NIIL to ask for such an extension. The Board meeting was held as scheduled on April 6, 1977. The minutes of the meeting show that two directors, Sanders and M.S.P. Rajes, asked for leave of absence which was granted to them. Sanders, as representing the U.K. shareholders on NIIL 's Board, did not make a request for the adjournment of the meeting on the ground that negotiations for a compromise had not yet come to an end or that the Indian shareholders had not yet conveyed their response to the "Coats ' compromise formula". Nor did he communicate to the Board his views on 'Policy Indianisation ', whatever it may have meant to him. Seven Directors were present in the meeting, with Devagnanam in the chair at the commencement of the meeting. C. Doraiswamy, a Solicitor by profession and admittedly an independent Director, was amongst the seven. In order to complete the quorum of two "independent" directors, other directors being interested in the issue of rights shares, Silverston was appointed to the Board as an Additional Director under article 97 of NIIL 's Articles of Association. Silverston then chaired the meeting, which resolved that the issued capital of the Company be increased to Rs. 48,00,000/ by the issue of 16,000 equity shares of Rs. 100/ each to be offered as rights shares to the existing shareholders in proportion to the shares held by them. The offer was decided to be made by a notice specifying the number of shares which each shareholders was entitled to, and in case the offer was not accepted within 16 days from the date of the offer, it was to be deemed to have been declined by the shareholder concerned. The aforesaid resolution of the Board raises three important questions, inter alia, which have been passed upon us by Shri Seervai on behalf of the Holding Company: (1) Whether the Directors of NIIL, in issuing the rights shares, abused the fiduciary power which they possessed as directors to issue shares; (2) Whether Silverston was a 'disinterested Director '; and (3) Whether Silverston 's appointment was otherwise invalid, since there was no item on the agenda 780 of the meeting for the appointment of an Additional Director. If Silverston 's appointment as an Additional Director is bad either because he was not a disinterested director or because there was no item on the agenda under which his appointment could be made, the resolution for the issue of rights shares which was passed in the Board 's meeting of April 6 must fall because then, the necessary quorum of two disinterested directors would be lacking. On the first of these three questions, it is contended by Shri Seervai that notwithstanding that the issues of shares is intra vires the Directors, the Directors ' power is a fiduciary power, and although an exercise of such power may be formally valid, it may be attacked on the ground that it was not exercised for the purpose for which it was granted. It is urged that the issue of shares by Directors which is directed to affect the right of the majority of the shareholders or to defeat that majority and convert it into a minority is unconstitutional, void and in breach of the fiduciary duty of Directors, though in certain situations it may be ratified by the Company in the General Meeting. Any reference by the Company to a general meeting in the present case, it is said, would have been futile since, without the impugned issue of rights shares, the majority was against the issue. It was finally argued that good faith and honest belief that in fact the course proposed by the Directors was for the benefit of the shareholders or was bona fide believed to be for their benefit is irrelevant because, it is for the majority of the shareholders to decide as to what is for their benefit, so long as the majority does not act oppressively or illegally. Counsel relies in support of these and allied contentions on the decision of the Privy Council in Howard Smith Ltd. and of the English Courts in Fraser, Punt, Piercy and Hogg. (supra) In Punt vs Symons, (supra) which applied the principle of Fraser vs Whallcy, (supra) it was held that: Where shares had been issued by the Directors. not for the general benefit of the company, but for the purpose of controlling the holders of the greater number of shares by obtaining a majority of voting power, they ought to be restrained from holding the meeting at which the votes of the new shareholders were to have been used. But Byrne J. stated: 781 There may be occasions when Directors may fairly and properly issue shares in the case of a Company constituted like the present for other reasons. For instance it would not be at all an unreasonable thing to create a sufficient number of shareholders to enable statutory powers to be exercised. In the instant case, the issue of rights shares was made by the Directors for the purpose of complying with the requirements of FERA and the directives issued by the Reserve Bank under that Act. The Reserve Bank had fixed a deadline and NIIL. had committed itself to complying with the Bank 's directive before that deadline. Peterson J. applied the principle enunciated in Fraser and in Punt in the case of Piercy vs section Mills & (Company Ltd. (supra) The learned Judge observed at page 84: "The basis of both cases is, as I understand, that Directors are not entitled to use their powers of issuing shares merely for the purpose of maintaining their control or the control of themselves and their friends over the affairs of the company, or merely for the purpose of defeating the wishes of the existing majority of shareholders. " The fact that by the issue of shares the Directors succeed, also or incidentally, in maintaining their control over the Company or in newly acquiring it, does not amount to an abuse of their fiduciary power. What is considered objectionable is the use of such powers merely for an extraneous purpose like maintenance or acquisition of control over the affairs of the Company. In Hogg vs Cramphorn Ltd., (supra) it was held that if the power to issue shares was exercised from an improper motive, the issue was liable to be set aside and it was immaterial that the issue was made in a bona fide belief that it was in the interest of the Company. Buckley J. reiterated the principle in Punt and in Piercy, (Supra) and observed: "Unless a majority in a company is acting oppressively towards the minority, this Court should not and will not itself interfere with the exercise by the majority of its constitutional rights or embark upon an inquiry into the respective merits of the views held or policies 782 favoured by the majority and the minority. Nor will this Court permit directors to exercise powers, which have been delegated to them by the company in circumstances which put the directors in a fiduciary position when exercising those powers, in such a way as to interfere with the exercise by the majority of its constitutional rights; and in a case of this kind also, in my judgment, the court should not investigate the rival merits of the views or policies of the parties." (p. 268) Applying this principle, it seems to us difficult to hold that by the issue of rights shares the Directors of NIIL interfered in any manner with the legal rights of the majority. The majority had to disinvest or else to submit to the issue of rights shares in order to comply with the statutory requirement of FERA and the Reserve Bank 's directives. Having chosen not to disinvest, an option which was open to them, they did not any longer possess the legal right to insist that the Directors shall not issue the rights shares. What the Directors did was clearly in the larger interests of the Company and in obedience to their duty to comply with the law of the land. The fact that while discharging that duty they incidentally trenched upon the interests of the majority cannot invalidate their action. The conversion of the existing majority into a majority was a consequence of what the Directors were obliged lawfully to do. Such conversion was not the motive force of their action. Before we advert to the decision of the Privy Chuncil in Howard Smith Ltd. vs Ampol Petroleum Ltd., (supra) we would like to refer to the decision of the High Court of Australia in Harlowe 's Nominees Pty. Ltd vs Woodside (Lakes Entrance) oil Company No Liability and another, (supra) and to the Canadian decision of Berger J. of the Supreme Court of British Columbia, in the case of Teck Corporation Ltd. vs Miller et al(1), both of which were considered by Lord Wilberfore in Howard Smith. On a consideration of the English decisions, including those in Punt and Plercy, Barwick C.J. said in Harlowe 's Nominees (supra): "The principle is that although primarily the power is given to enable capital to be raised when required for the purposes of the company, there may be occasions when the directors may fairly and properly issue shares for other reasons, so long as those reasons relate to a 783 purpose of benefiting the company as a whole, as distinguished from a purpose, for example, of maintaining control of the company in the hands of the directors themselves or their friends. An inquiry as to whether additional capital was presently required is often most relevant to the ultimate question upon which the validity or the invalidity of the issue depends; but that ultimate question must always be whether in truth the issue was made honestly in the interests of the company." (p. 493) We agree with the principle so stated by the Australian High Court and, in our opinion, it applies with great force to the situation in the present case. In Teck Corporation, (supra) the Court examined several decisions of the English Courts and of other Courts, including the one in Hogg. (supra) The last headnote of the report at page 289 reads thus: "Where directors of a company seek, by entering into an agreement to issue new shares, to prevent a majority shareholder from exercising control of the company, they will not be held to have failed in their fiduciary duty to the company if they act in good faith in what they believe. on reasonable grounds, to be the interests of the company. If the directors ' primary purpose is to act in the interests of the company, they are acting in good faith even though they also benefit as a result". In Howard Smith, no new principle was evolved by Lord Wilberforce who, distinguishing the decisions in Teck Corporation and Harlowe 's Nominees, (supra) said: "By contrast to the cases of Harlowe and Teck, the present case, on the evidence, does not, on the findings of the trial judge, involve any consideration of management, within the proper sphere of the directors. The purpose found by the judge is simply and solely to dilute the majority voting power held by Ampol and Bulkships so as to enable a then minority of shareholders to sell their shares more advantageously. So far as authority goes, an issue of shares purely for the purpose of creating voting power has repeatedly been condemned". (page 837) 784 The dictum of Byrne J. in Punt (supra) that "there may be reasons other than to raise capital for which shares may be issued" was approved at page 836 and it was observed at page 837 "Just as it is established that directors, within their management powers, may take decisions against the wishes of the majority of shareholders, and indeed that the majority of shareholders cannot control them in the exercise of these powers while they remain in office (Automatic Self Cleansing Filter Syndicate Co. Ltd. vs Cuninghams, , so it must be unconstitutional for directors to use their fiduciary powers over the shares in the company purely for the purpose of destroying an existing majority, or creating a new majority which did not previously exist. To do so is to interfere with that element of the company 's constitution which is separate from and set against their powers. If there is added, moreover, to this immediate purpose, an ulterior purpose to enable an offer for shares to proceed which the existing majority was in a position to block, the departure from the legitimate use of the fiduciary power becomes not less, but all the greater. The right to dispose of shares at a given price is essentially an individual right to be exercised on individual decision and on which a majority, in the absence of oppression or similar impropriety, is entitled to prevail". In our judgment, the decision of the Privy Council in Howard Smith, (supra) instead of helping the Holding Company goes a long way in favour of the appellants. The Directors in the instant case did not exercise their fiduciary powers over the shares merely or solely for the purpose of destroying an existing majority or for creating a new majority which did not previously exist. The expressions 'merely ', 'purely ', 'simply ' and 'solely ' virtually lie strewn all over page 837 of the report in Howard Smith. The Directors here exercised their power for the purpose of preventing the affairs of the Company from being brought to a grinding halt, a consummation devoutly wished for by Coats in the interest of their extensive world wide business. In Nanalala Zaver and another vs Bombay Life Assurnnce Co. Ltd., (supra) Das J., in his separate but concurring judgment deduced the following principle on the basis of the English decisions: 785 "It is well established that directors of a company are in a fiduciary position vis a vis the company and must exercise their power for the benefit of the company. If the power to issue further shares is exercised by the directors not for the benefit of the company but simply and solely for their personal aggrandisement and to the detriment of the company, the Court will interfere and prevent the directors from doing so. The very basis of the Court 's interference in such a case is the existence of the relationship of a trustee and of cestui que trust as between the directors and the company". (pp. 419 420) It is true that Das J. held that Singhanias were complete strangers to the company and consequently the Directors owed no duty, much less a fiduciary duty, to them. But we are unable to agree with the contention that the observations extracted above from the judgment of Das J. are obiter. The learned Judge has set forth the plaintiffs ' contentions under three sub heads at page 415. At the bottom of page 419 he finished discussion of the 2nd sub head and said: "This leads me to a consideration of the third sub head on the assumption that. . the additional motive was a bad motive". The question was thus argued before the Court and was squarely dealt with. Before we leave this topic, we would like to mention that the mere circumstance that the Directors derive benefit as shareholders by reason of the exercise of their fiduciary power to issue shares, will not vitiate the exercise of that power. As observed by Gower in Principles of Modern Company Law, 4th edn. , p. 578: "As it was happily put in an Australian case they are 'not required by the law to live in an unreal region of detached altruism and to act in a vague mood of ideal abstraction from obvious facts which must be present to the mind of any honest and intelligent man when he exercises his power as a director". The Australian case referred to above by the learned author is Mills vs Mills, (supra) which was specifically approved by Lord Wilberforce in Howard Smith. In Manala Zaver (supra) too, Das J. stated at page 425 that the true principle was laid down by the Judicial Committee of the Privy Council in Hirsche vs Sims(1), thus: 786 "If the true effect of the whole evidence is, that the defendants truly and reasonably believed at the time that what they did was for the interest of the company they are not chargeable with dolus malus or breach of trust merely because in promoting the interest of the company they were also promoting their own, or because the afterwards sold shares at prices which gave them large profits". Whether one looks at the matter from the point of view expressed by this Court in Nanala Zaver or from the point of view expressed by the Privy Council in Howard Smith, (supra) the test is the same, namely, whether the issue of shares is simply or solely for the benefit of the Directors. If the shares are issued in the larger interest of the Company, the decision to issue shares cannot be struck down on the ground that it has incidentally benefited the Directors in their capacity as shareholders. We must, therefore, reject Shri Seervai 's argument that in the instant case, the Board of Directors abused its fiduciary power in deciding upon the issue of rights shares. The second of the three questions arising out of the proceedings of the Board 's meeting dated April 6, 1977 concerns the validity of the appointment of Silverston as an Additional Director. Under section 287(2) of the the quorum for the said meeting of Directors was two. There can be no doubt that a quorum of two Directors means a quorum of two directors who are competent to transact and vote on the business before the Board. (see Greymouth vs Greymouth and Palmer 's Company Precedents.(1) 17th Edn.: p. 579, f.n.3). The contention of the Holding Company is that Silverston was a Director "directly or indirectly concerned or interested" in the arrangement or contract arising from the resolutions to offer and allot rights shares and consequently, the resolutions were invalid: firstly on the ground that they were passed by a vote of an interested director without which there would be no quorum and secondly because, Silverston 's appointment as an Additional Director was for the purpose of enabling the said resolution to be passed for the benefit of interested directors. Relying upon a decision of the Bombay High Court in Firestone Tyre & Rubber Co. vs Synthetics & Chemicals Ltd.,(2) Shri Seervai contends that section 300 of the embodies the general rule of equity that no person who has to discharge duties on behalf of a corporate body shall be 787 allowed to enter into engagements in which he has a personal interest conflicting, or which may possibly conflict, with the interests of those whom he is bound to protect. The reason why it is said that Silverston was interested in or concerned with the allotment of the rights shares to the existing shareholders is, firstly because at the Ketty meeting held in October 1976 he had acted as an 'Advisor to the Indian shareholders ' and secondly, because on October 25, 1976 he had written a letter to Kingsley purporting to convey his advice to the Board of Directors. That letter contains allegations against the Needle Industries, U.K. and of Coats. In other words, it is contended, Silverston was hostile to Needle Industries, U.K., and to Coats, and no person in his position could possibly bring to bear an unbiased or disinterested judgment on the question which arose between the Holding Company and the Indian shareholders as regards the issue of rights shares. It is also said that certain other aspects of Silverston 's conduct, including his attitude in the meeting of the 6th April, show that he was an interested director. We are unable to accept the contention that Silverston is an 'interested ' director within the meaning of section 300 of the . In the first place, it is wrong to attribute any bias to Silverston for having acted as an adviser to the Indian shareholders in the Ketty meeting. Silverston is by profession a solicitor and we suppose that legal advisers do not necessarily have a biassed attitude to questions on which their advice is sought or tendered. The fact that Silverston was received cordially in U.K. both by Raeburn and Mackrael when he went there in January 1977 shows that even after he had acted as an adviser to the Indian shareholders it was not thought that he was in any sense biassed in their favour. Silverston 's alleged personal hostility to Coats cannot, within the meaning of section 300(1) of the , make him a person "directly or indirectly, concerned or interested in the contract or arrangement" in the discussion of which he had to participate or upon which he had to vote. Section 300(1) disqualifies a Director from taking part in the discussion of or voting on any contract or arrangement entered into or on behalf of the company, if he is in any way concerned or interested in that contract or arrangement. Under section 299(1) of the , "Every director of a Company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board 788 of Directors. " The concern or interest of the Director which has to be disclosed at the Board meeting must be in relation to the contract or arrangement entered into or to be entered into by or on behalf of the company. The interest or concern spoken of by sections 299(1) and 300(1) cannot be a merely sentimental interest or ideological concern. Therefore, a relationship of friendliness with the Directors who are interested in the contract or arrangement or even the mere fact of a lawyer client relationship with such directors will not disqualify a person from acting as a Director on the ground of his being, under section 300(1), an "interested" Director. Thus, howsoever one may stretch the language of section 300(1) in the interest of purity of company administration, it is next to impossible to bring Silverston 's appointment within the framework of that provision. In the Firestone (supra) the Solicitor Director was held to be concerned or interested in the agreement for the appointment of Kilachands as selling agents, as he had a substantial shareholding in a private limited company of Kilachands. Besides, he was also a shareholder director in various other concerns of Kilachands. We must, accordingly, reject the argument that Silverston was an interested director, therefore his appointment as a Additional Director was invalid and that consequently, the resolution for the issue of rights shares was passed without the necessary quorum of two disinterested directors. We have already held that the resolution was not passed for the benefit of the Directors. There is therefore no question of Silverston 's appointment having been made for the purpose of enabling such a resolution to be passed. The third contention, arising out of the proceedings of the meeting of 6th April, to the effect that Silverston 's appointment as an Additional Director is invalid since there was no item on the agenda of the meeting for the appointment of an Additional Director is equally without substance. Section 260 of the preserves the power of the Board of Directors to appoint additional Directors if such a power is conferred on the Board by the Articles of Association of the Company. We are not concerned with the other conditions laid down in the section, to which the appointment is subject. It is sufficient to state that Article 97 of NIIL 's Articles of Association confers the requisite power on the Board to appoint additional Directors. We do not see how the appointment of an additional Director could have been foreseen before the 6th April, on which date the meeting of the Board was due to be held. The occasion to 789 appoint Silverston as an Additional Director arose when the Board met on 6th April, with Devagnanam in chair. Sanders was absent and no communication was received from or on behalf of the Holding Company that they had decided finally not to disinvest. They always had the right to such a locus penitentia. Were they to intimate that they were ready to disinvest, there would have been no occasion to appoint an additional Director. That occasion arose only when the picture emerged clearly that the Board would have to consider the only other alternative for reduction of the non resident holding, namely, the issue of rights shares. It is for this reason that the subject of appointment of an additional Director could not have, in the then state of facts, formed a part of the Agenda. Silverston 's appointment is, therefore, not open to challenge on the ground of want of agenda on that subject. It is necessary to clear a misunderstanding in regard to the Directors to issue shares. It is not the law that the power to shares can be used only if there is need to raise additional capital. It is true that the power to issue shares is given primarily to enable capital to be raised when it is required for the purposes of the company but that power is not conditioned by such need. That power can be used for other reasons as, for example, to create a sufficient number of share holders to enable the company to exercise statutory powers (Punt vs Symons and Co.), (Supra) or to enable it to comply with legal requirements as in the instant case. In Hogg vs Cramphorn (supra). Buckley J. (p 267) agreed with the law of Byrne J. in Punt And so did Lord Wilberforce (pp 835 836) in Howard Smith (supra) where he said: "It is, in their Lordships ' opinion, too narrow an approach to say that the only valid purpose for which shares may be issued is to raise capital for the company. The discretion is not in terms limited in this way: the law should not impose such a limitation on Directors ' powers. To define in advance exact limits beyond which directors must not pass is, in their Lordships ' view, impossible. This clearly cannot be done by enumeration, since the variety of different types of Company in different situations cannot be anticipated". The Australian decision in Harlowe Nominees (supra) took the same view of the directors ' power to issue shares. It was said therein: "The principle is that although primarily the power is given to enable capital to be raised when required for the 790 purposes of the company, there may be occasions when the directors may fairly and properly issue shares for other reasons, so long as those reasons relate to a purpose of benefiting the company as a whole, as distinguished from a purpose, for example, of maintaining control of the company in the hand of the directors themselves or their friends". We have already expressed our view that the rights share were issued in the instant case in order to comply with the legal requirements, which, apart from being obligatory as the only viable course open to the Directors, was for the benefit of the company since, otherwise, its developmental activities would have stood frozen as of December 31, 1973. The shares were not issued as a part of takeover war between the rival groups of shareholders. The decision to issue rights shares was assailed on the ground also that the company did not, as required by the Reserve Bank 's letter dated May 11, 1975 submit any scheme indicating whether the reduction in the non resident interest was proposed to be brought about by issue of additional equity capital to Indian residents to the extent necessary to finance any scheme of expansion or diversification. It is true that by the aforesaid letter, the Reserve Bank had asked NIIL to report to it as to how the Company proposed to reduce the non resident interest: whether by disinvestment by non resident shareholders, or by issue of additional equity capital to Indian residents to the extent necessary to finance any scheme of expansion/diversification, or by both. We are, however, unable to read the Bank 's letter as requiring or asking the Company not to issue the additional capital unless it was necessary to do so for financing a scheme of expansion or diversification. The Reserve Bank could not have intended to impose any such condition by way of a general direction in face of the legal position, which we have set out above, that the power of the Directors to issue shares is not conditioned by the need for additional capital. We are not suggesting that the Reserve Bank, in the exercise of its statutory functions, cannot ever impose such conditions as it deems appropriate, subject to which alone a new issue may be made. But neither the wording of the Bank 's letter nor the true legal position justifies the stand of the Holding Company. The minutes of the Ketty meeting of October 20 21, 1976 saying that it was agreed that the rights issue, with the Indian share holders taking up the U.K. members ' rights, would be considered provided it was demonstrated by NIIL that "there is a viable development plan requiring funds that the expected NIIL cash flow 791 cannot meet", cannot also justify the argument that the power of the company to issue rights shares was, by agreement, conditioned by the need to raise additional capital for a development plan. In fact, the occasion for consideration by the Holding Company of NIIL 's proposal to issue rights shares did not arise, since the Holding Company virtually boycotted the meeting of April 6. Assuming for the sake of argument that there was any such understanding between the parties, the minutes of the meeting of April 6 show that the Company needed additional capital for its expansion. The minutes say: "As per the final budget for the year 1977, the working capital requirements amounted to nearly Rs. 100 lakhs and even after tapping the facilities that we will be entitled to obtain from the Banking sector, we will be left with a gap of about Rs. 25 lakhs which can be met by only increasing equity capital and attracting deposits from public". There is no reason to believe that this statement does not accord with the economic realities of the situation as assessed by the Directors of the Company. Finally, it is also not true to say, as a statement of law, that Directors have no power to issue shares at par, if their market price is above par. These are primarily matters of policy for the Directors to decide in the exercise of their discretion and no hard and fast rule can be laid down to fetter that discretion. As observed by Lord Davey in Hilder and others vs Dexter(1). "I am not aware of any law which obliges a company to issue its shares above par because they are saleable at a premium in the market. It depends on the circumstances of each case whether it will be prudent or even possible to do so, and it is a question for the directors to decide". What is necessary to bear in mind is that such discretionary powers in company administration are in the nature of fiduciary powers and must, for that reason, be exercised in good faith. Mala fides vitiate the exercise of such discretion. We may mention that in the past, whenever the need for additional capital was felt, or for other reasons, NIIL issued shares to its members at par. 792 We are therefore of the opinion that Devagnanam and his group acted in the best interests of NIIL in the matter of the issue of rights shares and indeed, the Board of Directors followed in the meeting of the 6th April a course which they had no option but to adopt and in doing which, they were solely actuated by the consideration as to what was in the interest of the company. The shareholder Directors who were interested in the issue of rights shares neither participated in the discussion of that question nor voted upon it. The two Directors who, forming the requisite quorum, resolved upon the issue of rights shares were Silverston who, in our opinion, was a disinterested Director and Doraiswamy, who unquestionably was a disinterested Director. The latter has been referred to in the company petition, Mackrael 's reply affidavit and in the Holding Company 's Memorandum of Appeal in the High Court as "uninterested", "disinterested" and "independent". At a crucial time when Devagnanam was proposing to dispose of his shares to Khaitan, Sanders asked for Doraiswamy 's advice by his letter dated August 6, 1975 in which he expressed "complete confidence" in Doraisway in the knowledge that the Holding Company could count on his guidance. Disinvestment by the Holding Company, as one of the two courses which could be adopted for reducing the non resident interest in NIIL to 40% stood ruled out, on account of the rigid attitude of Coats who, during the period between the Ketty meeting of October 20 21, 1976 and the Birmingham discussions of March 29 31, 1977 clung to their self interest, regardless of the pressure of FERA, the directive of the Reserve Bank of India and their transparent impact on the future of NIIL. Devagnanam and the disinterested Directors, having acted out of legal compulsion precipitated by the obstructive attitude of Coats and their action being in the larger interests of the company, it is impossible to hold that the resolution passed in the meeting of April 6 for the issue of rights shares at par to the existing shareholders of NIIL constituted an act of oppression against the Holding Company. That cannot, however, mark the end of the case because 2nd May has still to come and Shri Seervai 's argument is that the true question before the Court is whether the offer of rights shares to all existing shareholders of NIIL but the issue of rights shares to existing Indian shareholders only, constitutes oppression of the Holding Company. That takes us to the significant, and if we may so call them, sordid, happenings between April 6 and May 2, 1977. Devagnanam wrote a letter to Raeburn on April 12, 1977 stating that a copy of 793 the Reserve Bank 's letter dated March 30, 1977 was enclosed therewith. It was in fact not enclosed. Pursuant to the decision taken in the Board 's meeting of April 6, a letter of offer dated April 14 was prepared by NIIL. Devagnanam 's letter to Raeburn dated April 12, (without a copy of the Reserve Bank 's letter dated March 30) and the letter of offer dated April 14 were received by Raeburn on May 2, 1977 in an envelope bearing the postal mark of Madras dated April 27, 1977. The letter of offer which was posted to the Holding Company also bore the postal mark of Madras dated April 27, 1977 and that to was received in Birmingham on May 2, 1977. The letter of offer which was posted to one of the Indian shareholders, Manoharan, who was siding with Coats, was also posted in an envelope which bore the postal mark of Madras dated April 27, 1977. On April 19, 1977, a notice of the Board 's meeting for May 2, 1977 was prepared. One of the items on the Agenda of the meeting was stated in the notice as "Policy (a) Indianisation (b) Allotment of shares". The notice dated April 19 of the Board 's meeting for May 2 was posted to Sanders in an envelope which bore the postal mark of Madras dated April 27, 1977 and was received by him in Birmingham on May 2, 1977, after the Board 's meeting fixed for that date had already taken place. It puts a severe strain on one 's credulity to believe that the letters of offer dated April 14 to the Holding Company, to Raeburn and to Manoharan were posted on the 14thitse If but that somehow they rotted in the post office until the 27th, on which date they took off simultaneously for their respective destinations. The affidavit of Selvaraj, NIIL 's senior clerk in the despatch Department and the relevant entry in the outward register are quite difficult to accept on this point since they do not accord with the ordinary course of human affairs. Not only the three letters of offer above said, but even the notice dated April 19, of the Board meeting for May 2, was received by Sanders at Birmingham in an envelope bearing the Madras postal mark of April 27. Selvaraj 's affidavit, apparently supported by an entry in the outward register, that the envelope addressed to Sanders containing the notice of 19th April was posted on the 22nd is also difficult to accept. It takes all kinds to make the world and we do not know whether the NIIL 's staff was advised astrologically that 27th April was an auspicious date for posting letters. But if only they had sought a little legal advice which, at least from Doraiswamy and Silverston, was readily available to them, they would have seen the folly of indulging in such behaviour. Add to that the circumstance that Devagnanam 's letter to Raeburn dated April 12 was put in the same envelope in which the letter of 794 offer dated April 14 was enclosed and the envelope containing these two important documents bore the postal mark of Madras dated 27th April. These coincidences are too tell tale to admit of any doubt that someone or the other, not necessarily Devagnanam, unduly solicitous of the interest of NIIL and of the Indian shareholders manipulated to delay the posting of the letters of offer and the notice of the Board meeting for 2nd May, until the 27th April. What is naively sought to be explained as a mere coincidence reminds one of the 'Brides in the Bath Tub ' case: The death of the first bride in the bath tub may pass off as an accident and of the second as suicider but when, in identical circumstances, the third bride dies of asphyxia in the bath tub, the conclusion becomes compelling, even applying the rule of circumstantial evidence, that she died a homicidal death. The purpose behind the planned delay in posting the letters of offer to Raeburn and to the Holding Company, and in posting the notice of the Board 's meeting for May 2 to Sanders, was palpably to ensure that no legal proceeding was taken to injunct the holding of the meeting. The object of withholding these important documents, until it was quite late to act upon them, was to present to the Holding Company a fait accompli in the shape of the Board 's decision for allotment of rights shares to the existing Indian shareholders. We are, however, unable to share the view expressed in the '12th Conclusion ' in the appellate judgment of the High Court that Devagnanam and "his colleagues in the Board of Directors" arranged to ensure the late posting of the letters of offer and the notice of the meeting. We do not accept Shri Nariman 's argument that Devagnanam must be exonerated from all responsibility in this behalf because he was away in Malacca from April 13 to 26. In the first place, to be in a place on two dates is not necessarily to be there all along between those dates and therefore we cannot infer that Devagnanam was in Malacca from 13th to 26th since he was there on the 13th and the 26th. Besides, it was easy for a man of Devagnanam 's importance and ability to pull the strings from a distance and his physical presence was not necessary to achieve the desired result. That is how puppets are moved. But there is no evidence, at least not enough, to justify the categorical finding recorded by the appellate Bench of the High Court. The fact that Devagnanam stood to gain by the machination is a relevant factor to be taken into account but even that is not the whole truth: NIIL, not Devangnanam was the real beneficiary, a thesis 795 which we have expounded over the last many pages. And the involvement of the other Directors by calling them Devagnanam 's colleagues is less than just to them. There is not a shred of evidence to justify the grave charge that they were willing tools in Devagnanam 's hands and lent their help to concoct evidence. We clear their conduct, expressly and categorically. In so far as Devagnanam himself is concerned, there is room enough to suspect that he was the part author of the late postings of important documents, especially since he was the prime actor in the play of NIIL 's Indiansation. But even in regard to him, it is difficult to carry the case beyond the realm of suspicion and 'room enough ' is not the same thing as 'reason enough '. Section 15 of the Evidence Act which carries the famous illustration of a person obtaining insurance money on his houses which caught fire successively, the question being whether the fire was accidental or intentional or whether the act was done with a particular knowledge or intention, will not help to fasten the blame on Devagnanam because, it is not shown that he was instrumental or concerned in any of the late postings complained of. Were his complicity shown in any of these, it would have been easy to implicate him in all of them. On the contrary, there is an admitted act, described as a lapse, on Devagnanam 's part which shows that he failed to do what was to his advantage to do. It may be recalled that in his letter dated April 12 to Raeburn, Devagnanam stated that he was enclosing therewith a copy of the Reserve Bank 's letter dated March 30, 1977 but that was not enclosed. Nothing was to be gained by suppressing the Reserve Bank 's letter from Raeburn who was always sympathetic to the Indian shareholders. If anything, there was something to gain by apprising Raeburn of the urgency of the matter in view of the Reserve Bank 's letter. The strongest point in favour of the Indian shareholders was the last para of the Reserve Bank 's letter which they would have liked the U.K. shareholders to know. Raeburn 's response of 2nd May to Devagnanam 's letter of 12 April and the letter of offer was without the knowledge of Reserve Bank 's letter of March 30. When the Bank 's letter was sent to Racburn along with Devagnanam 's letter of May 11, Raeburn categorially supported the stand of the Indian shareholders, as is clear from paragraph 4 of the letter dated June 8, 1977 by Raeburn to Mackrael, a copy of which was sent by Raeburn to Devagnanam along with his letter dated June 17, 1977. 796 The inferences arising from the late posting of the letter of offer to the Holding Company as also of the notice of meeting for May 2 to Sanders and the impact of inferences on the conduct and intentions of Devagnanam are one thing: we have already dealt with that aspect of the matter. Their impact on the legality of the offer and the validity of the meeting of May 2 is quite another matter, which we propose now to examine. In doing this, we will keep out of consideration all questions relating to the personal involvement of Devagnanam and his group in the delay caused in sending the letters of offer and the notice of meeting for May 2. First, as to the letter of offer: The letter of offer dated April 14, 1977 sent to the Holding Company at Birmingham, like all other letters of offer, mentions, inter alia that it was resolved in the meeting of April 6 to increase the issued capital of the company from 32,000 shares of Rs. 100 each to 48,000 shares of Rs. 100 each by issuing Rights Shares to the existing shareholders on the five conditions mentioned in the letter. The second condition reads thus: "If the offer is not accepted within 16 days from the date of offer, it shall be deemed to have been declined by the shareholder". The Holding Company was informed by the last paragraph of the letter of offer that in respect of its holding of 18,990 shares, it was entitled to 9495 rights shares and that its acceptance of the offer together with the application money (at Rs. 50/ per share) should be forwarded so as to reach the registered office of NIIL on or before April 30, 1977. A postal communication by air between U.K. and Madras, which is the normal mode of communication, generally takes five days to reach its destination. If the letter of offer were to be posted on the 14th itself in Mardas, it would have reached the Holding Company in Birimingham, say, on the 19th. Even assuming that the 16 days ' period allowed for communicating the acceptance of offer is to be counted from the 14th and not from the 19th, it would expire on 30th April, To that has to be added the period of five days which the Holding Company 's letter would take to reach Madras. That means that the Holding Company would be within its rights if its acceptance reached NIIL on or before May 5, 1977. The Board of Directors had, however, met in Madras three days before that and had allotted the entire issue of the rights shares to the Indian shareholders, on the ground that Holding Company had not applied for the allotment of the shares due to it. In these circumstances, it is quite clear that the rights shares offered to the Holding Company could not have been allotted to anyone in the meeting of May 2, for the supposed failure of the Holding Company to communicate its acceptance before April 30. The meeting of May 2, of which the 797 main purpose was to consider 'Allotment ' of the rights shares must, therefore, be held to be abortive which could produce no tangible result. The matter would be worse if April 27, and much worse if May 2, were to be taken as the starting point for counting the period of 16 days. Except for circumstances, hereinafter appearing the allotment to Indian shareholders of the rights shares which were offered to the Holding Company would have been difficult to accept and act upon. The objection arising out of the late posting of the notice dated April 19 for the meeting of 2nd May goes to the very root of the matter. That notice is alleged to have been posted to N.T. Sanders, Studley, Warwickshire, U.K. on April 22. But we have already held that in view of the fact that the envelope in which the notice was sent bears the postal mark of Madras dated April 27, 1977, this latter date must be taken to be the date on which the notice was posted. The notice was received by Sanders on May 2, on which date the Board 's meeting for allotment of rights shares was due to be held and was, in fact, held. The utter inadequacy of the notice to Sanders in terms of time stares in the face and needs no further argument to justify the finding that the holding of the meeting was illegal, at least in so far as the Holding Company is concerned. It is self evident that Sanders could not possibly have attended the meeting. There is, therefore, no alternative save to hold that the decision taken in the meeting of May 2 cannot, in the normal circumstances, affect the legal rights of the Holding Company or create any legal obligations against it. The next question, and a very important one at that on which there is a sharp controversy between the parties, is as to what is the consequence of the finding which we have recorded that the objection arising out of the late position of the notice of the meeting for 2nd May goes to the root of the matter. The answer to this question depends upon whether the Holding Company could have accepted the offer of the rights shares and if, either for reasons of volition or of legal compulsion, it could not have accepted the offer, whether it could have at least renounced its right under the offer to a resident Indian, other than the existing Indian shareholders. The decision of this question depends upon the true construction of the provisions of FERA and of sections 43A and 81 of the . We have already reproduced the relevant provisions of FERA, namely, section 2(p), (q) and (u); section 19(1)(a), (b) and (d); 798 section 29(1)(a); section 29(2)(a), (b) and (c); and section 29(4)(a) and (b). Section 29(1) provides that: . notwithstanding anything contained in the provisions of the a company which is not incorporated under any law in force in India or in which the non resident interest is more than forty per cent shall not, except with the general or special permission of the Reserve Bank carry on in India any trading, commercial or industrial activity other than the one for which permission of the Reserve Bank has been obtained under section 28. The other provisions are of ancillary and consequential nature, following upon the main provision summarised above. NIIL had applied for the necessary permission, since the non resident interest therein was more than 40% the Holding Company owing nearly 60% of its share capital. That permission was accorded by the Reserve Bank on certain conditions which, inter alia, stipulated that the reduction in the non resident holding must be brought down to 40% within one year of the receipt of its letter, that is, before May 17, 1977 and that until then, the manufacturing and business activities of the Company shall not be extended beyond the approved level as of December 31, 1973. It is contended by Shri Seervai that non compliance with the condition regarding the dilution of non resident interest within the stipulated period could not have resulted in the RBI directing NIIL to close down its business or not to carry on its business. It is also argued that noncompliance with the conditions imposed for permission to carry on its business would not have exposed the Indian directors to any penalties or liabilities and that, in the absence of a power to revoke the permission already granted (as in other sections like sections 6 and 32), the RBI had no power to revoke the permission granted to NIIL even if the conditions subject to which the permission was granted were breached. According to counsel, closing down a business which the RBI had allowed to be continued by granting permission would have such grave consequences public and private that the power to direct the business to be discontinued was advisably not conferred, even if the conditions are breached. Section 29(4)(c), it is urged, which enables the RBI to direct non residents to sell their shares or cause them to be sold where an application under section 29(4)(a), for permission to continue to 799 hold shares, was rejected is the only power given to the Reserve Bank where a condition imposed under section 29(2) is breached. We are unable to accept these contentions. The Reserve Bank granted permission to NIIL to carry on its business, "subject to the conditions" mentioned in the letter of May 11, 1976. It may be that each of those conditions is not of the same rigour or importance as e.g. the condition regarding the progress made in implementing the other conditions, which could reasonably be relaxed by condonation of the late filing of any particular quarterly report. But the dilution of the non resident interest in the equity capital of the Company to a level not exceeding 40% "within 'a period of 1(one) year from the date of the receipt of" the letter was of the very essence of the matter. A permission granted subject to the condition that such dilution shall be effected would cease automatically on the non compliance with the condition at the end of the stipulated period or the extended period, as the case may be. The argument of the Holding Company would make the granting of a conditional permission an empty ritual since, whether or not the company performs the conditions, it would be free to carry on its business, the only sanction available to the Bank being, as argued, that it can compel or cause the sale of the excess non resident interest in the equity holding of the Company, under section 29(4)(c) of FERA. This particular provision, in our opinion, is not a sanction for the enforcement of conditions imposed on a Company under clause (c) of section 29(2). Section 29(4)(c) provides for a situation in which an application for holding shares in a Company is not made or is rejected. The sanction for enforcement of a conditional permission to carry on business, where conditions are breached, is the cessation, ipso facto, of the permission itself on the non performance of the conditions at the time appointed or agreed. This involves no element of surprise or of unjustness because permission is granted, as was done here, only after the applicant agrees to perform the conditions within the stipulated period. When NIIL wrote to the Bank on February 4, 1976 binding itself to the performance of certain conditions, it could not be heard to say that the permission will remain in force despite its non performance of the conditions. Having regard to the provisions of section 29 read with sections 49, 56(1) and (3) and section 68 of FERA, the continuance of business after May 17, 1977 by NIIL would have been illegal, unless the condition of dilution of non resident equity was duly complied with. It is needless, once again, to dwell upon the impracticability of NIIL applying for extension of the period of one year allowed to it by the 800 Bank. Coats could be optimistic about such an extension being granted especially, since thereby they could postpone the evil day. For NIIL, the wise thing to do, and the only course open to it, was to comply with the obligation imposed upon it by law, without delay or demur. It seems to us quite clear, that by reason of the provisions of section 29(1) and (2) of FERA and the conditional permission granted by the RBI by its letter dated May 11, 1976, the offer of rights shares made by NIIL to the Holding Company could not possibly have been accepted by it. The object of section 29, inter alia, is to ensure that a company (other than a banking company) in which the non resident interest is more than 40% must reduce its to a level not exceeding 40%. The RBI allowed NIIL to carry on its business subject to the express condition that it shall reduce its non resident holding to a level not exceeding 40%. The offer of rights shares was made to the existing shareholders, including the Holding Company, in proportion to the shares held by them. Since the issued capital of the Company which consisted of 32,000 shares was increased by the issue of 16,000 rights shares, the Holding Company which held 18,990 shares was offered 9495 shares. The acceptance of the offer of rights shares by the Holding Company would have resulted in a violation of the provisions of FERA and the directive of the Reserve Bank. Were the Holding Company to accept the offer of rights shares, it would have continued to hold 60% share capital in NIIL and the Indian shareholders would have continued to hold their 40% share capital in the Company. It would indeed be ironical that the measure which was taken by NIIL 's Board of Directors for the purpose of reducing the non resident holding to a level not exceeding 40% should itself become an instrument of perpetuating the ownership by the Holding Company of 60% of the equity capital of NIIL. We are not suggesting that the offer of rights shares need not have been made to the Holding Company at all. But the question is whether the offer when made could have been accepted by it. Since the answer to this question has to be in the negative, no grievance can be made by the Holding Company that, since it did not receive the offer in time, it was deprived of an opportunity to accept it. We see no substance in Shri Nariman 's contention that the letter of offer could not have been sent to the Holding Company without first obtaining the RBI s approval under section 19 of FERA. Counsel contends that under section 19(1)(b), notwithstanding anything contained in section 81 of the , no person can, except with 801 the general or special permission of the Reserve Bank, create `any interest in a security ' in favour of a person resident outside India. The word "security" is defined by section 2(u) to shares, stocks, bonds, etc. We are unable to appreciate how an offer of shares by itself creates any interest in the shares in favour of the person to whom the offer is made. An offer of shares undoubtedly creates "fresh rights" as said by this Court in Mathalone vs Bombay Life Assurance Co.(1) but, the right which it creates is either to accept the offer or to renounce it, it does not create any interest in the shares in respect of which the offer is made. But though it could not have been possible for the Holding Company to accept the offer of rights shares made to it, the question still remains whether it had the right to renounce the offer in favour of any resident Indian person or company of its choice, be it an existing shareholder like Manoharan or an outsider like Madura Coats. The answer to this question depends on the effect of section 43A and 81 of the . We will first notice the relevant parts of sections 3, 43A and 81 of the . Section 3(1)(iii) defines a "private company" thus : "private company" means a company which, by its articles : (a) restricts the right to transfer its shares, if any; (b) limits the number of its members to fifty and (c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company. Clause (iv) of section 3(1) define a "public company" to mean a company which is not a private company. Section 43A of the , which was inserted by Act 65 of 1960, reads thus : 43A. (1) Save as otherwise provided in this section, where not less than twenty five per cent of the paid up share capital of a private company having a share capital, is held by one or more bodies corporate, the private, company shall. 802 become by virtue of this section a public company : Provided that even after the private company has so become a public company, its articles of association may include provisions relating to the matter specified in clause (iii) of sub section (1) of section 3 and the number of its members may be, or may at any time be reduced, below seven : (2) Within three months from the date on which a private company becomes a public company by virtue of this section, the company shall inform the Registrar that it has become a public company as aforesaid, and thereupon the Registrar shall delete the word "Private" before the word "Limited" in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association. . (4) A private company which has become a public company by virtue of this section shall continue to be a public company until it has, with the approval of the Central Government and in accordance with the provisions of this Act, again become a private company. Section 81 of the reads thus : 81. (1) Where . . it is proposed to increase the subscribed capital of the company by allotment of further shares, then, (a) such further shares, shall be offered to the persons who at the date of the offer, are holders of the equity shares of the company in proportion, as nearly as circumstances admit, to the capital paid up on those shares at that date ; 803 (b) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined ; (c) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person, and the notice referred to in clause (b) shall contain a statement of this right ; (d) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of directors may dispose of them in such manner as they think most beneficial to the company. . (1A) Notwithstanding anything contained in sub section (1) the further shares aforesaid may be offered to any persons (whether or not those persons include the persons referred to in clause (a) of sub section (1) ) in any manner whatsoever (a) if a special resolution to that effect is passed by the company in general meeting, or (b) where no such special resolution is passed if the votes cast. . in favour of the proposal . . exceed the votes, if any, cast against the proposal . . and the Central Government is satisfied, on an application made by the Board of directors in this behalf that the proposal is most beneficial to the company. . (3) Nothing in this section shall apply (a) to a private company. . 804 While interpreting these and allied provisions of the , it would be necessary to have regard to the relevant Articles of Association of NIIL, especially since Section 81(1)(c) of that Act, which is extracted above, is subject to the qualification : "Unless the articles of the Company otherwise provide". The relevant Articles are Articles 11, 32, 38 and 50 and they read thus : Article 11: In order that the Company may be a private Company within the meaning of the Indian Companies Act, 1913, the following provisions shall have effect, namely : (i) No invitation shall be issued to the public to subscribe for any shares, debentures, or debenture stock of the Company. (ii) The number of the members of the Company (Exclusive of persons in the employment of the Company) shall be limited to fifty, provided that for the purposes of this Article where two or more persons hold one or more shares in the Company jointly, they shall be treated as a single member. (iii) The right to transfer shares of the Company is restricted in manner hereinafter provided. (iv) If there shall be any inconsistency between the provisions of this Article and the provisions of any other Article the provisions of this Article shall prevail. Article 32 : A share may subject to article 38 be transferred by a member or other person entitled to transfer to any member selected by the transferor; but, save as aforesaid, no share shall be transferred to a person who is not a member so long as any member is willing to purchase the same at the fair value. Such value to be ascertained in manner hereinafter mentioned. Article 38 : The Directors may refuse to register any transfer of a share (a) where the Company has a lien on the share, or (b) in case of shares not fully paid up, where it is not proved to their satisfaction 805 that the proposed transferee is a responsible person, or (c) where the Directors are of opinion that the proposed transferee (not being already a member) is not a desirable person to admit to membership, or (d) where the result of such registration would be to make the number of members exceed the above mentioned limit. But clauses (b) and (c) of this Article shall not apply where the proposed transferee is already a member. Article 50 : When the Directors decide to increase the capital of the Company by the issue of new shares such shares shall be offered to the shareholders in proportion to the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered and limiting a time within which the offer, if not accepted, will be deemed to be declined and after the expiration of such time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of the same in such manner as they think most beneficial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to the shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article. It is contended by Shri Nariman that by reason of the articles of the Company and on a true interpretation of section 81, the right of renunciation of the shares offered by NIIL was not available to the Holding Company since NIIL was not a full fledged public company in the sense of being incorporated as a public company but had become a public company under section 43A(1) and had, under the first proviso to that section, retained its articles relating to matters specified in section 3(1) (iii). According to Shri Nariman, section 81(1A) can have no application to a `section 43A (1) proviso company ' (for short, the `proviso company ') because it contemplates issue of shares to the public and to persons other than members of the company, which cannot be done in the case of a company which falls under the proviso to section 43A(1). 806 Section 81(1A), it is urged, is complementary to section 81 and since the latter cannot apply to the `proviso company ', the former too cannot apply to it. In any event, according to counsel, section 81 (1) (c) cannot apply in the instant case since the articles of NIIL provide, by necessary implication at any rate, that the members of company shall have no right to renounce the shares in favour of "any" other person, because such a right would include the right to renounce in favour of persons who are not members of the company, and NIIL had retained its articles under which, shares could not be transferred or renounced in favour of outsiders. Shri Seervai has refuted these contentions, his main argument being that the definitions of `public company ' and `private company ' are mutually exclusive and, between them, are exhaustive of all categories of companies. There is, according to the learned counsel no third category of companies recognised by the Companies Act, like the `proviso company '. Shri Seervai further contends : (a) The right of renunciation is not a `transfer ' and therefore the directors ' power to refuse to register the shares under the articles does not extend to renunciation ; (b) Before considering Section 43A, which was inserted for the first time in the Act of 1956 by the amending Act of 1960, it should be noted that Section 81 as enacted in the Act of 1956 contained three sub sections (1), 2 and 3, and sub section 3 provided that "nothing in this section shall apply to a private company". The opening words of Section 81, as they now stand, were substituted by the Amending Act of 1960, and sub section (1A) was inserted by the said Amending Act, and sub section (3) was substituted by the Amending Act of 1963. But subsection 3 (a) reproduced sub section (3) of the Act of 1956, namely, "nothing in this section shall apply to a private company". It is clear therefore that the rights conferred by Section 81 (1) and (2) do not apply to a private company, and this provision in the Act of 1956 was not connected with the insertion Section 43A for the first time in 1960. (c) The provisos to Section 43A (1), (1A) and (1B) are very important in connection with Section 81 of the 807 Act of 1956. Just as the crucial words in Section 27(3) are "shall contain", the crucial words in the provisos are "may include" (or may retain). The words "shall contain" are mandatory and go to the constitution of a private company. The words "may include" are permissive and they do not go to the constitution of a company which has become a public company by virtue of Section 43A because whether the articles include (or retain) those requirements or do not include those requirements, the constitution of the company as a public company remains unaffected; (d) No statutory consequence follows, as to the company being a public company, on the retention of the three requirements or one or more of them, or in not complying with those requirements. But in the case of a private company which does not comply with the requirements of Section 3 (1)(iii) serious consequences follow under Section 43, and in the case of a private company altering its articles so as not to include all the matters referred to in Section 3 (1) (iii) serious consequences follow under Section 43, and in the case of a private company altering its articles so as not to include all the matters referred to in Section 3 (1) (iii) serious consequences follow under Section 44. In short, the inclusion, or retention, of all the matters referred to in Section 3(1) (iii) has a radically different part of function in a private company which becomes a public company by virtue of Section 43A from that which it has in a private company. More particularly the non compliance with the three requirements of Section 3 (1)(iii) included, or retained, in the articles of a private company which has become a public company by virtue of Section 43A, involves no statutory consequences or disabilities, since such a company is a public company and Section 43 is not attracted. (e) It is wrong to contend that the whole of Section 81(1) does not apply to a `proviso company ' because it is a private company entitled to the protection of subsection 3 (a). Section 81(3) (a) applies to a private 808 company; a `proviso company ' is one which has become, and continues to remain, a public company; (f) Section 81 (1) (c) applies to all companies other than private companies. The articles of a public company may include all of the matters referred to in Section 3 (1) (iii), or may include one or two of the matters referred to therein without ceasing to be a public company. A public company which has become such by virtue of Section 43A can delete all the matters referred to in Section 3 (1) (iii) or may delete one or two of them or may include (or retains) all the three matters referred to in Section 3 (1) (iii). The retention of the three matters mentioned in Section 3(1) (iii) does not in any way affect the constitution of the company because it has become and continues to be a public company ; (g) Section 81 when enacted in 1956 consisted of 3 subsections. The need to exempt private companies arose from Section 81(c), for the right to renounce in favour of any person might, (not must), conflict with the limitation on the number of members to 50 and since that was one of the matters which went to the constitution of a company as a private company, private companies were expressly exempted. No such exemption was necessary in the case of a `proviso company ' which retains in its articles all the three matters referred to in Section 3(1) (iii), because an increase in the number of its members above 50 will not affect the constitution of the company which remains that of a public company; (h) Section 81 as enacted in 1956 did not contain subsection (1A) which was inserted for the first time by the Amending Act of 1960, which Amending Act also inserted Section 43A. After the insertion of subsection (1A) the effect of the exemption of private companies from the operation of section 81 became even more necessary for the provisions of sub section (1A) (a) and (b) override the whole of Section 81 (1) and shares need not be offered to existing shareholders. Section 81 (1A) also overrides Article 50 of NIIL; 809 (i) The Articles of NIIL provide for the transfer of shares, and Article 38 sets out the circumstances under which the directors may refuse to transfer the shares. However, since renunciation of shares is not a transfer, the restriction in Article 11(iii) is not violated by an existing member of NIIL renouncing his share in favour of any other person; (j) The opening words of Sections 81 (1) (c) are "unless the articles of the company otherwise provide". Section 81 (1) (c) contains no reference to "expressly provide" or "expressly or by necessary implication provide". According to the plain meaning of the words "other wise provide", there must be a provision in the Articles which says that the offer of shares to existing members does not entitle them to renounce the shares in favour of any person. Article 11 of NIIL merely states the matters necessary to constitute a company a private company. Such companies are exempt from Section 81 and so, the questions of its `otherwise providing ' does not arise. Article 50 refers to the rights shares but it makes no other provision with regard to the right of renunciation than is made in Section 81(1)(c). Unless such other provision is made, the opening words of Section 81(1)(c) are not attracted. Secondly, Section 81(1)(c) provides that unless the articles otherwise provide "the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any person". The right conferred by the deeming clause can be taken away only by making a provision in the Articles to prevent the deeming provision from taking effect. The deeming provision cannot be avoided by implications; and (k) The Holding Company could have renounced the rights shares offered to it at least in favour of the Manoharan group and the fact that after the shares were allotted, the Manoharans stated that they were not interested in subscribing to the shares offered does not affect the question of the legal right. Besides, it was one thing to refuse to subscribe to the shares offered; it was another thing to accept the renunciation of merely 6,190 shares 810 which would have given the Manoharans a substantial stake in the affairs of the company. Shri Seervai relies upon many a text and authority in support of the proposition that the classification of companies into private and public is mutually exclusive and collectively exhaustive. He relies upon a decision in Park vs Royalty Syndicates(1) in which Hamilton J. (later Lord Summer) observed that a public company is simply one which is not a private company and that there is no "intermediate state or terbium quid". In support of the proposition that the right to renunciation of shares is not a transfer, counsel relies upon a decision in Re Pool Shipping Co. Ltd.(2). Reliance is also placed in this behalf on the statement of law in Halsbury (Vol. 7, 4th edition, p. 218), Palmer 's Company Law Vol. 1, 22nd edition p. 393), Palmer 's Company Precedents (Part 1, 17th edition, p. 688), Gore Brown on Companies (43rd edition, para 16.3) and Buckley on Companies Act (13th edition, p. 815). While indicating his own reasons as to why the legislature enacted identical provisos to sub sections (1),(1A) and (1B) of section 43A, counsel mentioned that no light is thrown for enacting these provisos, either by the Shastri Committee Report which led to the Companies (Amendment) Act, 1960 or by the Notes on clauses, or by the Report of the Joint Select Committee. In regard to the opening words of section 81 (1)(c); "Unless the articles of the company otherwise provide", counsel cited the Collins English Dictionary, the Random House Dictionary and the Oxford English Dictionary. An interesting instance of the use of the word "provide ' is to be found in the Random House Dictionary, 1967, p. 1157, to this effect : "The Mayor 's wife of the city provided in her will that she would be buried without any pomp or noise". It shall have been noticed that the entire superstructure of Shri Seervai 's argument rests on the foundation that the definitions of `public company ' and `private company ' are mutually exclusive and collectively exhaustive of all categories of companies, that is to say, that there is no third kind of company recognised by the . The argument merits close examinations since it finds support, to an appreciable extent, from the very text of the . The definition of `private company ' and the manner in which a `public company ' is defined ("public company means a company which is not a private company") bear out the argument that these 811 two categories of companies are mutually exclusive. If it is this it cannot be that and if it is that it cannot be this. But, it is not true to say that between them, they exhaust the universe of companies. A private company which has become a public company by reason of section 43A, may include, that is to say, may continue to retain in its articles, matters which are specified in section 3 (1)(ii), and the number of its members may at any time be reduced below 7. This provision itself highlights the basic distinction between, on one hand, a company which is incorporated as a public company or a private company which is converted into a public company under section 44, and on the other hand, a private company which has become a public company by reason of the operation of section 43A. In the first place, a section 43A company may include in its articles, as part of its structure, provisions relating to restrictions on transfer of shares, limiting the number of its members to 50, and prohibiting an invitation to the public to subscribe for shares, which are typical characteristics of a private company. A public company cannot possibly do so because, by the very definition, it is that which is not a private company, that is to say, which is not a company which by its articles contains the restrictions mentioned in section 3 (1)(iii). Therefore, the expression `public company ' in section 3(1) (iv) cannot be equated with a `private company which has become a public company by virtue of section 43A '. Secondly, the number of members of a public company cannot fall below 7 without attracting the serious consequences provided for by section 45 (personal liability of members for the company 's debts) and section 433(d) (winding up in case the number of its members falls below 7). A section 43A company can still maintain its separate corporate identity qua debts even if the number of its members is reduced below seven and is not liable to be wound up for that reason. Thirdly, a section 43A, company can never be incorporated and registered as such under the . It is registered as a private company and becomes, by operation of law, a public company. Fourthly, the three contingencies in which a private company becomes a public company by virtue of section 43A (mentioned in sub sections (1), (1A) and (1B) read with the provisions of subsection (4) of the section) show that it becomes and continues to be a public company so long as the conditions in sub sections (1), (1A) or (1B) are applicable. The provisos to each of these sub sections 812 clarify the legislative intent that companies may retain their registered corporate shell of a private company but will be subjected to the discipline of public companies. When the necessary conditions do not obtain, the legislative device in section 43A is to permit them to go back into their corporate shell and function once again as private companies, with all the privileges and exemptions applicable to private companies. The proviso to each of the subsections of section 43A clearly indicates that although the private company has become a public company by virtue of that section, it is permitted to retain the structural characteristics of its origin, its birth marks, so to say. Any provision of the which would endanger the corporate shell of a `proviso company ' cannot be applied to it because, that would constitute an infraction of one or more of the characteristics of the `proviso company ' which are statutorily allowed to be preserved and retained under each of the three provisos to the three sub sections of section 43A. A right of renunciation in favour of any other person, as a statutory term of an offer of rights shares, would be repugnant to the integrity of the Company and the continued retention by it of the basic characteristics under section 3(1)(iii). Fifthly, section 43A, when introduced by Act 65 of 1960, did not adopt the language either of section 43 or of section 44. Under section 43 where default is made in complying with the provisions of section 3(1)(iii), a private company "shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act, and this Act shall apply to the company as if it were not a private company". Under section 44 of the Act, where a private company alters its Articles in such a manner that they no longer include the provisions which under, section 3(1)(iii) are required to be included in the Articles in order to constitute it a private company, the company "shall as on the date of the alteration cease to be a private company". Neither of the expressions, namely, "This Act shall apply to the company as if it were not a private company" (section 43) or that the company "shall . cease to be a private company (section 44) is used in section 43A. If a section 43A company were to be equated in all respects with a public company, that is a company which does not have the characteristics of private company, Parliament would have used language similar to the one in section 43 or section 44, between which two sections, section 43A was inserted. If the intention was that the rest of the Act was to apply to a section 43A company "as if it were not a private company" nothing would have been easier 813 than to adopt that language in section 43A, and if the intention was that a section 43A company would for all purposes "cease to be a private company", nothing would have been easier than to adopt that language in section 43A. Sixthly, the fact that a private company which becomes a public company by virtue of section 43A does not cease to be for all purposes a "private company" becomes clear when one compares and contrasts the provisions of section 43A with section 44 : when the Articles of a private company no longer include matters under section 3(1)(iii), such a company shall as on the date of the alteration cease to be a private company (section 44(1)(a)). It has then to file with the Registrar a prospectus or a statement in lieu of prospectus under section 44(2). A private company which becomes a public company by virtue of section 43A is not required to file a prospectus or a statement in lieu of a prospectus. These considerations show that, after the Amending Act 65 of 1960, three distinct types of companies occupy a distinct place in the scheme of our : (1) private companies (2) public companies and (3) private companies which have become public companies by virtue of section 43A, but which continue to include or retain the three characteristics of a private company. Sections 174 and 252 of the which deal respectively with quorum for meetings and minimum number of directors, recognise expressly, by their parenthetical clauses, the separate existence of public companies which have become such by virtue of section 43A. We may also mention that while making an amendment in sub clause (ix) of Rule 2 of the Companies (Acceptance of Deposits) Rules, 1975, the Amendment Rules, 1978 added the expression : "Any amount received. . by a private company which has become a public company under section 43A of the Act and continues to include in its Articles of Association provisions relating to the matters specified in clause (iii) of sub section (1) of section 3 of the Act", in order to bring deposits received by such companies within the Rules. The various points discussed above will facilitate a clearer perception of the position that under the , there are three kinds of companies whose rights and obligations fall for consideration, namely, private companies, public companies and companies which have become public companies under section 43(1) but which retain, under the first proviso to that section, the three characteristics of private companies mentioned in section 3(1)(iii) 814 of the Act, private companies enjoy certain exemptions and privileges which are peculiar to their constitution and nature. Public companies are subjected severely to the discipline of the Act. Companies of the third kind like NIIL, which become public companies but which continue to include in their articles the three matters mentioned in clauses (a) to (c) of section 3(1)(iii) are also, broadly and generally, subjected to the rigorous discipline of the Act. They cannot claim the privileges and exemptions to which private companies which are outside section 43A are entitled. And yet, there are certain provisions of the Act which would apply to public companies but not to section 43A companies. Is section 81 of the one such provision ? and if so, does the whole of it not apply to a section 43A company or only some particular part of it ? These are the questions which we have now to consider. On these two questions, both the learned counsel have taken up extreme positions which, if accepted, may create confusion and avoidable inconvenience in the administration of section 43A companies like NIIL. Shri Nariman contends that a section 43A company becomes a public company qua the outside world, as e.g. in matters of remuneration of directors, disclosure, commencement of business, information to be supplied but it remains a private company qua its own shareholders. Therefore, says counsel, no provision of the can apply to such companies, which is inconsistent with or destructive of the retention of the three essential features of private companies as mentioned in section 3(1)(iii). Section 81, it is said, is one such provision and in so far as private companies go, it can apply only to (a) such companies which become public companies under section 43A but which do not retain the three essential features and to (b) private companies which are duly converted into public companies. It is urged that even assuming that the expression "private company" occurring in the various provisions of the (including section 81(3)(a)) does not include a section 43A proviso Company, that does mean that section 81 would be applicable to a 43A Proviso Company, because : (a) The proviso to section 43A(1) and section 81 are both substantive provisions and neither is subordinate to the other ; in fact section 43A was introduced later in 1960; and (b) An offer of rights shares to a member in a section 43A proviso company cannot include a right to renounce the shares in favour of any other person, because such a right would be inconsistent with the article of the company limiting the number of its members to 50 and with the article prohibiting invitation to the public to subscribe for shares in the company. The fact that the statute overrides the 815 articles is not a sufficient ground for rendering the provisions of section 81 applicable to a section 43A(1) proviso company since the right to continue to include provisions in its articles specified in section 3(1)(iii) is itself a statutory right. Counsel says that in these circumstances and this is without taking the assistance of the words "unless the articles of the company otherwise provide" in section 81(1)(c) the provision regarding the right of renunciation cannot apply to section 43A proviso company. The answer of Shri Seervai to this contention flows from what truly is the sheet anchor of his argument, namely, that the definitions of `public company ' and `private company ' are mutually exclusive and between them, they are exhaustive of all categoric of companies. Counsel contends that section 81(1A) overrides section 81(1); that by reason of sub section (3) of section 81, section 81 is not applicable to a "private company" but NIIL is not a "private company ' since it became a public company by virtue of section 43A; and that, therefore, the offer of rights shares made by NIIL can be renounced by the offerees in favour of any other person. Neither of the two extreme positions for which the counsel contend commends itself to us. The acceptance of Shri Nariman 's argument involves tinkering with clause (a) of section 81(3), which shall have to be read as saying that "Nothing in section 81 shall apply to a `private company ' and to a company which becomes a public company by virtue of section 43A and whose Articles of Association include provisions relating to the matters specified in clause (iii) of sub section (1) of section 3". Section 81(1) does not contain a non obstante clause. But, if Shri Nariman is right, there would be no alternative save to exclude the applicability of all of its provisions to a company like NIIL, by reading into it an overriding provision which alone can achieve such result. On the other hand, to accept wholesale the argument of Shri Seervai would render the first proviso to section 43A(1) nugatory. The right to retain in the Articles the provision regarding the restriction on the right to transfer shares, the limitation on the number of members to fifty and the prohibition of any invitation to the public to subscribe for the shares or debentures of the Company will then be washed off. The truth seems to us to lie in between the extreme stands of the learned counsel for the two sides. There is no difficulty in giving full effect to clauses (a) and (b) of section 81 (1) in the case of a company like NIIL, even after it 816 becomes a public company under section 43A. Clause (a) requires that further shares must be offered to the holders of equity shares of the Company in proporation, as nearly as circumstances admit, to the capital paid up on those shares, while clause (b) requires that the offer of further shares must be made by a notice specifying the number of shares offered and limiting the time, not being less than fifteen days from the date of the offer, within which the offer, if not accepted, will be deemed to have been declined. The real difficulty arises when one reaches clause (c) according to which, the offer shall be deemed to include the right of renunciation of shares or any of them in favour of any other person. We will keep aside for the time being the opening words of clause (c) : "unless the articles of the company otherwise provide". Clause (c) further requires that the notice referred to in clause (b) must contain a statement as to the right of renunciation provided for by clause (c). Having given to the matter our most anxious consideration, we are of the opinion that clause (c) of section 81(1) cannot apply to the earth while private companies which have become public companies under section 43A and which include, that is to say which retain or continue to include, in their articles of association the matters specified in section 3(1)(iii) of the Act, as specified in the first proviso to section 43A. If clause (c) were to apply to the section 43A proviso companies, it would be open to the offerees to renounce the shares offered to them in favour of any other person or persons. That may result directly in the infringement of the article relating to the matter specified in section 3(1)(iii) (b) because, under clause (c) of section 81(1), the offeree is entitled to spilt the offer and renounce the shares in favour of as many persons as he chooses, depending partly on the number of shares offered by the company to him. The right to renounce the shares in favour of any other person is also bound to result in the infringement of the article relating to the matter specified in section 3(1)(iii)(c), because an offer which gives to the offeree the right to renounce the shares in favour of a non member is, in truth and substance, an invitation to the public to subscribe for the shares in the company. As stated in Palmer 's Company Law (22nd Ed., Vol. I, para 21 18) : "Where the Company issues renounceable letters of allotment the circle of original allottees can easily be broken by renunciation of those rights and complete strangers may become the allottees; here the offer will normally be held to be made to the public. " There is statement to the same effect in Gower 's Company Law 4th Ed., page 351) : 817 "It is therefore clear that an invitation by or on behalf of a private company to a few of the promoter 's friends and relations will not be deemed to be an offer to the public. Nor, generally, will an offer which can only be accepted by the shareholder of a particular company. On the other hand it is equally clear that an offer of securities in a public company even to a handful people may be an offer to the public if it is calculated (which presumably means "Likely" rather than "intended") to lead to the securities being subscribed (i.e. applied for on original allotment) or purchased (i.e. bought after original allotment) by persons other than those receiving the initial offer. In particular, if securities to be issued under renounceable allotment letter or letter of right the invitation to take them up must be deemed to be made to the public, since these securities are obviously liable to be subscribed or purchased by others. " The learned author says at page 430 that in the case of a private placing an issue by a private company allotment letters will probably be dispensed with, "in any case they cannot be freely renounceable". In foot note (22) the author points out that the real danger is that if renounceable allotment letters are issued, the company may be regarded as having made an offer to the public. We cannot construe the provision contained in clause (c) in a manner which will lead to the negation of the option exercised by the company to retain in its articles the matters referred to in section 3 (1)(iii). Both these are statutory provisions and they are contained in the same statute. We must harmonise them, unless the words of the statute are so plain and unambiguous and the policy of the statute so clear that to harmonise will be doing violence to those words and to that policy. Words of the statute, we have dealt with. Its policy, if anything, points in the direction that the integrity and structure of the section 43A provisio companies should, as far as possible, not be broken up. The exemption in favour of private companies would appear to have been inserted in section 81(3)(a) because of the right of renunciation conferred by section 81(1)(c). Section 105C of the Companies Act 1973 which contained substantially all the provisions that are to be found in section 81(1)(a), (b) and (d) applied to all companies. The right of renunciation in favour of any other person was conferred for the first time by the Act of 1956. That led to the insertion of the exception in favour of private companies since, a right of renunciation in favour of other persons is wholly inconsistent 818 with the structure of a private company, which has to contain the three characteristics mentioned in section 3(1)(iii). When section 43A was introduced by Act 65 of 1960, the legislature apparently overlooked the need to exempt companies falling under it, read with its first proviso, from the operation of clause (c) of section 81(1). That the legislature has overlooked such a need in regard to other matters, in respect of which there can be no controversy, is clear from the provisions of sections 45, and 433 (d) of the Companies Act. Under section 45, if at any time the number of members of a company is reduced, in the case of a public Company below seven, or in the case of a Private Company below two, every member of the company becomes severally liable, under the stated circumstances, for the payment of the whole debt of the company and can be severally sued therefor. No exception has yet been provided for in section 45 in favour of the section 43A proviso companies, with the result that a private company having, say, three members which becomes a public company under section 43A and continues to function with the same number of members, will attract the rigour of section 45. Similarly, under section 433(d), such a company would automatically incur the liability of being wound up for the same reason. If and when these provisions fall for consideration, due regard may have to be given to the principle of harmonious construction, in order to exclude section 43A proviso companies from the application of those provisions. We hope that before such and occasion arises, the Legislature will make appropriate amendments in the relevant provisions of the Companies Act. Such amendments have been made in sections 174(1), clause (iii) of the second proviso to sub section (1) of section 220, and section 252(1) in order to accord separate treatment to private companies which become public companies by virtue of section 43A, as distinguished from public companies of the general kind. In coming to the conclusion that clause (c) of section 81(1) cannot apply to section 43A proviso companies, we have not taken into consideration the impact of the opening words of clause (c) : "Unless the articles of the company otherwise provide". The effect of these words is to subordinate the provisions of clause (c) to the provisions of the articles of association of the company. In other words, the provisions that the offer of further shares shall be deemed to include the right of renunciation in favour of any other person will not apply if the articles of the company "otherwise provide". Similarly the requirement that the notice of offer must contain a statement of the right of renunciation will not apply if the articles of 819 the company otherwise provide. The question which we have to consider under this head is whether the articles of association of NIIL provide otherwise than what is provided by clause (c) of section 81(1). We have already extracted the relevant articles, namely, articles 11, 32, 38 and 50. To recapitulate, article 11, which has an important bearing on the subject now under discussion, provides that in order that the company may be a private company, (i) no invitation shall be issued to the public to subscribe for any shares, debentures, etc; (ii) the number of members of the company shall be limited to 50; and (iii) the right to transfer shares of the company will be restricted in the manner provided in the articles. By article 32, a share may be transferred, subject to article 38, by a member to any member selected by the transferor but no share shall otherwise be transferred to a person who is not a member so long as any member is willing to purchase the same at a fair value. Article 38 confers upon the directors the power to refuse to register the transfer of a share for four reasons, the last of which is that the transfer will make the number of members exceed the limit of 50. Article 50, which also, is important, provides that the offer of new shares shall be made by a notice specifying the number of shares offered and limiting the time within which the offer, if not accepted, will be deemed to have been declined. If the offer is declined or is not accepted, before the expiration of the time fixed for its acceptance, the directors have power to dispose of the shares in such manner as they think most beneficial to the company. It is urged by Shri Seervai that none of the articles of the company provides otherwise than what is provided in clause (c) of section 81(1) and therefore, clause (c) must have its full play in the case of NIIL. On the other hand, it is contended by Shri Nariman that the opening words, of clause (c) do not require or postulate that the articles of the company must contain an "express" provision, contrary to what is contained in clause (c). The contention, in other words, is that if the articles of a company contain a provision which, by necessary implication, is otherwise than what is provided in clause (c); that clause can have no application. In view of our finding that keeping aside the opening words of clause (c), the provisions of that clause cannot apply to section 43A proviso companies, it is academic to consider whether the word "provide" in the opening part of clause (c) postulates an express provision on the subject of renunciation or whether it is sufficient compliance with the opening words, if the articles contain by necessary implication a provision which is otherwise than what is provided in clause 820 (c). We would, however, like to express our considered conclusion on this point since the point has been argued fully by both the counsel and needs to be examined, as it is likely to arise in other cases. In the first place, while construing the opening words of section 81(1)(c), it has to be remembered that section 43A companies are entitled under the proviso to that section to include provisions in their Articles relating to matters specified in section 3(1)(iii). The right of renunciation in favour of any other person is wholly inconsistent with the Articles of a private company. If a private company becomes a public company by virtue of section 43A and retains or continues to include in its Articles matters referred to in section 3(1)(iii), it is difficult to say that the Articles do not provide something which is otherwise than what is provided in clause (c). The right of renunciation in favour of any other person is of the essence of clause (c). On the other hand, the absence of that right is of the essence of the structure of a private company. It must follow, that in all cases in which erstwhile private companies become public companies by virtue of section 43A and retain their old Articles, there would of necessity be a provision in their Articles which is otherwise than what is contained in clause (c). Considered from this point of view, argument as to whether the word "provide" in the opening words of clause (c) means "provide expressly" loses its significance. On the question whether the word "provide" means "provide expressly", we are unable to accept Shri Seervai 's submission that the Articles must contain a provision which is expressly otherwise than what is provided in clause (c). In the context in which a private company becomes a public company under section 43A and by reason of the option available to it under the proviso, the word "provide" must be understood to mean "provide expressly or by necessary implication". The necessary implication of a provision has the same effect and relevance in law as an express provision has, unless the relevance of what is necessarily implied is excluded by the use of clear words. Considering the matter from all reasonable points of view, particularly the genesis of section 43A proviso companies, we are of the opinion that in order to attract the opening words of clause (c) of section 81(1), it is not necessary that the Articles of the Company must contain an express provision otherwise than what is contained in clause (c). We do not think it necessary to consider the decision of the Privy Council in Shanmugam vs Commissioner for Registration, 821 cited by Shri Nariman, which says that to be an "express provision" with regard to something it is not necessary that the thing should be specially mentioned; it is sufficient that it is directly covered by the language, however broad the language may be which covers it, so long as the applicability arises directly from the language used and not by inference therefrom. We may only mention that though Articles of NIIL do not contain an express provision that there shall be no right of renunciation, the right is wholly inconsistent with the Articles. We have already stated above that the right of renunciation is tantamount to an invitation to the public to subscribe for the shares in the company and can violate the provision in regard to the limitation on the number of members. Article 11, by reason of its clause (iv), prevails over the provisions of all other Articles if there is inconsistency between it and any other Article. For these reasons we are of the opinion that clause (c) of section 81(1) of the Companies Act, apart from the consideration arising out of the opening words of that clause, can have no application to private companies which have become public companies by virtue of section 43A and which retain in their Articles the three matters referred to in section 3(1)(iii) of the Act. In so for as the opening words of clause(c) are concerned, we are of the opinion that they do not require an express provision in the Articles of the Company which is otherwise than what is provided for in clause (c). It is enough, in order to comply with the opening words of clause (c), that the Articles of the Company contain by necessary implication a provision which is otherwise than what is provided in clause (c). Articles 11 and 50 of NIIL 's Articles of Association negate the right of renunciation. The question immediately arises, which is of great practical importance in this case, as to whether members of a section 43A proviso company have a limited right of renunciation, under which they can renounce the shares offered to them in favour of any other member or members of the company. Consistently with the view which we have taken of clause (c) of section 81(1) our answer to this question has to be in the negative. The right to renounce shares in favour of any other person, which is conferred by clause (c) has no application to a company like NIIL and therefore, its members cannot claim the right to renounce shares offered to them in favour of any other member or members. The Articles of a company may well provide for a right of transfer of shares by one member to another, but that right is very much different from the right or 822 renunciation, properly so called. In fact, learned counsel for the Holding Company has cited the decision in Re Pool Shipping Co. Ltd., (supra) in which it was held that the right of renunciation is not the same as the right of transfer of shares. Coming to sub section (1A) of section 81, it provides, stated briefly, that notwithstanding anything contained in sub section (1), the further shares may be offered to any persons in any manner whatsoever, whether or not those persons include a person referred to in clause (a) of sub section (1). That can be done under clause (a) of sub section (1A) by passing a special resolution in the General Meeting of the company or under clause (b), where no such special resolution is passed, if the votes cast in favour of the proposal exceed the votes cast against it and the Central Government is satisfied that the proposal is most beneficial to the company. For reasons similar to those which we have come to the conclusion that clause (c) of section 81 cannot apply to a section 43A proviso company, we must hold that sub section (1A) can also have no application to such companies. To permit the further shares to be offered to the persons who are not members of the company will be clearly contrary to the Articles of Association of a section 43A proviso company, in regard to the three matters which bear on the structure of such companies. At the highest, the method provided for in clauses (a) and (b) of sub section (1A) may be resorted to by a section 43A proviso company for the limited purpose of offering the net shares to its members otherwise than in proportion to the capital paid up on the equity shares of the company. That course may be open for the reason that sub section (1A) permits the further shares to be offered "in any manner whatsoever". A change in the pro rata method of offer of new shares is not necessarily violative of the basic characteristics of a private company which becomes a public company by virtue of section 43A. To this limited extent only, but not beyond it, the provisions of sub section (1A) of section 81 can apply to such companies. The following proposition emerge out of the discussion of the provisions of FERA, sections 43A and 81 of the Companies Act and of the articles of association of NIIL: (1) The Holding Company had to part with 20% out of the 60% equity capital held by it in NIIL; (2) The offer of Rights Shares made to the Holding Company as a result of the decision taken by Board of 823 Directors in their meeting of April 6, 1977 could not have been accepted by the Holding Company; (3) The Holding Company had no right to renounce the Right Shares offered to it in favour of any other person, member or non member; and (4) Since the offer of Rights Shares could not have been either accepted or renounced by the Holding Company, the former for one reason and the latter for another, the shares offered to it could, under article SO of the articles of association, be disposed of by the directors, consistently with the articles of NIIL, particularly article 11, in such manner as they thought most beneficial to the Company. These proposition afford a complete answer to Shri Seervai 's contention that what truly constitutes oppression of the Holding Company is not the issue of Rights Shares to the existing Indian shareholders only but the offer of Rights Shares to all existing shareholders and the issue thereof to existing Indian shareholders only. The meeting of 2nd May, 1977 was unquestionably illegal for reasons already stated. It must follow that the decision taken by the Board of Directors in that meeting could not, in the normal circumstances, create mutual rights and obligations between the parties. But we will not treat that decision as non est because a point of preponderating Importance is that the issue of Rights Shares to existing Indian shareholders only and the non allotment thereof to the Holding Company did not cause any injury to the proprietary rights of the Holding Company as shareholders, for the simple reason that they could not have possibly accepted the offer of rights shares because of the provisions of FERA and the conditions imposed by the Reserve Bank in its letter dated May 11, 1976, nor indeed could they have renounced the shares offered to them in favour of any other person at all because section 81(1)(c) has no application to companies like NIIL which were once private companies but which become public companies by virtue of section 43A and retain in their articles the three matters referred to in section 3(1)(iii) of the Act. It was neither fair nor proper on the part of NIIL 's officers not to ensure the timely posting of the notice of the meeting for 2nd May so as to enable Sanders to attend that meeting. But there the 824 matter rests. Even if Sanders were to attend the meeting, he could not have asked either that the Holding Company should be allotted the rights shares or alternatively, that it should be allowed to "renounce" the shares in favour of any other person, including the Manoharan group. The charge of oppression arising out of the central accusation of non allotment of the rights shares to the Holding Company must, therefore, fail. We must mention that we have rejected the charge of oppression after applying to the conduct of Devagnanam and his group the standard of probity and fairplay which is expected of partners in a business venture. And this we have done without being influenced by the consideration pressed upon us by Shri Nariman that Coats and NEWEY, who were two of the three main partners, were not of one mind and that NEWEY never complained of oppression. They may or they may not. That is beside the point. Such technicalities cannot be permitted to defeat the exercise of the equitable jurisdiction conferred by section 397 of the Companies Act. Shri Seervai drew our attention to the decision in Blissett vs Daniel (supra) the facts of which as they appear at pp 1036 37, bear, according to him, great resemblance to the facts before us. The following observations in that case are of striking relevance; "As has been well observed during the course of the argument, the view taken by this Court with regard to morality of conduct amongst all parties most especially amongst those who are bound by the ties of partnership is one of the highest degree. The standard by which parties are tried here, either as trustees or as co partners, or in various other relations which may be suggested, is a standard, I am thankful to say so, far higher than the standard of the world; and, tried by the standard, I hold it to be impossible to sanction the removal of this gentleman under these circumstances". (p 1040) Not only is the law on the side of Devagnanam but his conduct cannot be characterised as lacking in probity, considering the extremely rigid attitude adopted by Coats. They drove him into a tight corner from which the only escape was to allow the law to have its full play. Even though the company petition fails and the appeals succeed on the finding that the Holding Company has failed to make out a case of oppression, the court is not powerless to do substantial justice between the parties and place them, as nearly as it may, in the same 825 position in which they would have been, if the meeting of 2nd May were held in accordance with law. The notice of the meeting was received by Sanders in U.K. On the 2nd May when everything was over, bar the post meeting recriminations which eventually led to this expensive litigation. If the notice of the meeting had reached the Holding Company in time, it is reasonable to suppose that they would have attended the meeting, since one of the items on the Agenda was "Policy (a) Indianisation, (b) allotment of shares". Devagnanam and his group were always ready and willing to buy the excess shares of the Holding Company at a fair price as clear from the correspondence to which our attention has been drawn. In the affidavit dated May 25, 1977, Devagnanam stated categorically that the Indian shareholders were always ready and willing to purchase one third of the shareholding of the non resident shareholders, at a price to be fixed in accordance with the articles of Association by the Reserve Bank of India. On May 27, he sent a cable, though 'without prejudice ', offering to pay premium if the Holding Company were to adopt disinvestment as a method of dilution of their interest. In the Trial Court, counsel for the Indian shareholders to whom the rights shares were allotted offered to pay premium on the 16,000 rights shares. The cable and the offer were mentioned before us by Shri Nariman and were not disputed by Shri Seervai. There is no reason why we should not call upon the Indian shareholders to do what they were always willing to do, namely, to pay to the Holding Company a fair premium on the shares which were offered to it, which it could neither take nor renounce and which were taken up by the Indian shareholders in the enforced absence of the Holding Company. The willingness of the Indian shareholders to pay a premium on the excess holding or the rights shares is a factor which, to some extent, has gone in their favour on the question of oppression. Having had the benefit of that stance, they must now make it good. Besides, it is only meet and just that the Indian shareholders, who took the rights shares at par when the value of those shares was much above par, should be asked to pay the difference in order to nullify unjust unjustifiable enrichment at the cost of the Holding Company. We must make it clear that we are not asking the Indian shareholders to pay the premium as a price of oppression. We have rejected the plea of oppression and the course which we are now adopting is intended primarily to set right the course of justice, in so far as we may. The question then is as to what should be taken to be the reasonable value of the shares which were offered to the Holding Company but taken over by the bulk of the Indian shareholders. In 826 his letter dated December 17, 1975 to M.M.C. Newey, D.P. Kingsley, the Secretary of NIIL, had assessed the value of NIIL 's shares at Rs. 175 per share. That value was arrived at by averaging the break up value, the yield and the average market price in the case of quoted shares. Citing a paragraph from a book on the Foreign Exchange Regulation Act, Kingsley says in his letter that the method which was adopted by him far valuing the shares was also followed by the Controller of Capital Issues. Copies of Kingsley 's letter were sent to Alan Mackrael and Devagnanam. On June 9, 1976 Price Waterhouse, Peat & Co., Chartered Accountants, Calcutta wrote a letter to Mackrael in response to the latter 's cable, valuing the shares of NIIL at Rs. 204 per share. That letter shows that while valuing the shares, they had taken into account various factors including "the average of the net asset value and the earnings basis", which, according to them, are considered as relevant factors by the Controller of Capital Issues while valuing the shares of companies. The Chartered Accountants applied "the CCI formula" and after making necessary adjustments to the fixed assets, the proposed dividend and the gratuity liabilities for 1975, they valued NIIL 's business, on a net asset basis, at Rs. 50 lakhs. On an earnings basis, the valuation of the Company based on the past three years ' net profits capitalized at 15% was Rs. 80 lakhs. That gives an average valuation of Rs. 65 lakhs for the business or Rs. 204 per share. The purported offer to Devagnanam by Khaitan "a sewing needle competitor to Ketti", at 3.6 times par, cannot afford any criterion for valuing NIIL 's shares. Khaitan, purportedly, had competitive business interests and was therefore prepared to "pay the earth to acquire NIIL". According to the learned trial Judge, one thing which appeared to be certain was that the market value of the shares of NIIL at or about the time when disputes arose between the parties, and particularly during the period when the controversial meetings of the Board of Directors were held, ranged between Rs. 175 and Rs. 204. We agree with the learned Judge and hold that it would be just and reasonable to take the average market value of the rights shares on the crucial date at Rs. 190 per share. The learned trial Judge awarded a sum of Rs. 90 per share on 9495 shares to the Holding Company by way of "solatium", which, with respect, is not an accurate description of the award and is likely to confuse the basis and reasons for directing the payment to be made. Since the average market price of NIIL 's shares in April May 1977 can be taken to be Rs. 190 per share, the Holding Company, which was offered 9495 rights shares, will be entitled to receive from the Indian shareholders 827 an amount equivalent to that by which they unjustifiably enriched themselves, namely, Rs. 90x9495 which comes to Rs. 8,54,550. We direct that Devagnanam, his group and the other Indian shareholders who took the rights shares offered to the Holding Company shall pay, pro rata, the sum of Rs. 8,54,550 to the Holding Company. The amount shall be paid by them to the Holding Company from their own funds and not from the funds or assets of NIIL. As a further measure of neutralisation of the benefit which the Indian shareholders received in the meeting of 2nd May, 1977, we direct that the 16,000 rights shares which were allotted in that meeting to the Indian shareholders will be treated as not qualifying for the payment of dividend for a period of one year commencing from January 1, 1977, the Company 's year being the Calendar year. The interim dividend or any further dividend received by the Indian shareholders on the 16,000 rights shares for the year ending December 31, 1977 shall be repaid by them to NIIL, which shall distribute the same as if the issue and allotment of the rights shares was not made until after December 31, 1977. This direction will not be deemed to affect or ever to have affected the exercise of any other rights by the Indian shareholders in respect of the 16,000 rights shares allotted to them. We have not considered the possibility of Manoharans taking up the rights shares offered to them because, by a letter dated May 11, 1977 to NIIL 's Secretary, N. Manoharan had declined the offer on the ground that he was "not in a position to take those shares". Finally, in order to ensure the smooth functioning of NIIL, and with a view to ensuring that our directions are complied with expeditiously, we direct that Shri M.M. Sabharwal who was appointed as a Director and Chairman of the Board of Directors under the orders of this Court dated November 6, 1978 will continue to function as such until December 31, 1982. The Company will take all effective steps to obtain the sanction or permission of the Reserve Bank of India or the Controller of Capital Issues, as the case may be; if it is necessary to obtain such sanction or permission for giving effect to the directions given by us in this judgment. In the result, the appeals are allowed with the directions above mentioned and the judgments of the learned single Judge and of the Division Bench of the High Court are set aside. We make no order as to costs since both the sides are, more or less, equally to 828 blame, one for creating an impasse and the other for its unjust enrichment. All parties shall bear their own costs throughout. The interim orders passed by this Court are vacated. The amount of Rs. 8,54,550 which the Indian shareholders have been directed to pay to the Holding Company shall be paid in two instalments, the first of which shall be paid before August 31, 1981 and the second before November 30, 1981. The interim Board of Directors shall forthwith hand over charge to the Board which was superseded, but with Shri M.M. Sabharwal as a Director and Chairman of the Board of Directors. After taking the charge from the interim Board, the Board of Directors will take expeditious steps for convening an Annual General Meeting for the year 1976 77 and the years thereafter for the purpose of passing the accounts, declaring dividends electing all Directors and for dealing with other necessary or incidental matters. N.V.K. Appeals allowed.

M/s. Needle Industries (India) Ltd. (NIIL), the appellant was incorporated under the Indian Companies Act 1913 as a Private Company on 20.7.1949 with its Registered office at Madras and at the time of its incorporation it was a wholly owned subsidiary of Needle Industries (India) Ltd., Studley, England (NI Studley). In 1961, NI Studley entered into an agreement with Newey Bros. Ltd., Birmingham, England (Newey) to invest in the Indian Company. In 1963, NI Studley and Newey combined to form the Holding Company in England M/s Needle Industries Newey (India) Holding Ltd., the respondent. The entire share capital of NIIL held by NI Studley and Newey was transferred to the Holding Company in which NI Studley and Newey became equal shares. 699 As a result of this arrangement, the Holding Company came to acquire 99.95 per cent of the issued and paid up capital of NIIL. The balance of 0.05 cent, which consisted of six shares being the original nominal shares, was held by Devagnanam the managing director of NIIL. By virtue of the introduction of section 43A in the Companies Act in 1961, NIIL became a public company, since not less than twenty five per cent of its paid up share capital was held by a body corporate, the Holding Company. However, under the first proviso to section 43(1) it had the option to retain its articles relating to matters specified in section 3(1)(iii) of the Companies Act. NIIL did not alter the relevant provisions of its articles after its became a public company within the meaning of section 43A. By 1971 about 40 per cent of the share capital of NIIL came to be held by the Indian employees of the company and their relatives and the balance of about 60 per cent remained in the hands of the Holding Company NINIH Ltd. In 1972 Coats Paton Ltd. became an almost 100% owner of NI Studley. The position at the beginning of the year 1973 was that 60% (to be exact 59.3%) of the share capital of NIIL came to be owned half and half by Coats and NEWEY, the remaining 40% being in the hands of the Indian Group of which 28.5% was held by the Devagnanam 's group. Though NIIL was at one time wholly owned by NI Studley and later by NI Studley and Newey, the affairs were managed ever since 1956 by an entirely Indian Management with Devagnanam as its Chief Executive and Managing Director with effect from the year 1961. The Holding Company which was formed in 1963 had only one representative on the Board of Directors of NIIL. He was N.T. Sanders, who resided in England and hardly ever attended the Board Meetings. The holding company reposed great confidence in the Indian management which was under the direction and control of Devagnanam In July 1972 Mr. Devagnanam was offered by the office of Managing Director of group of four companies in Hong Kong and Taiwan and his family began to reside in Hong Kong and he cogitated over resigning from his position in NIIL. Coats, on their part were clear that Devagnanam should relinquish his responsibilities in NIIL. in view of the time his role in Newey 's Far Eastern interests was consuming. The Foreign Exchange Regulation Act 1973, came into force on Junuary 1, 1974. S.29(1) prohibited non residents, non citizens and non banking companies not incorporated under any Indian law or in which the non resident interest was more than 40 per cent, from carrying on any activity in India of a trading, commercial or Industrial nature except with the general or special permission of the Reserve Bank of India. By section 29(2)(a) if such person was engaged in any such activity at the commencement of the Act, he or it had to apply to the Reserve Bank of India, for permission to carry on that activity, within six months of the commencement of the Act or such further period the Reserve Bank may allow. section 29 (4) (a) imposed a similar restriction on such person or company from holding shares in India, of any company referred to cause (b) of section 29(1), without the permission of the Reserve Bank. The 700 time for making the application for the requisite permission under section 29 was extended by the Reserve Bank until August 31, 1974. Since the Holding Company was a non resident and its interest in NIIL exceeded 40% NIIL had to apply for the permission of the Reserve Bank under section 29 (1) FERA for continuing to carry on its business. The Holding Company had also to apply for the permission of the Reserve Bank under section 29 (4) (a) FERA for continuing to hold its shares in NIIL. NIIL applied to the Reserve Bank for the necessary permission on September 3, 1974. By its letter dated May 11, 1976 the Reserve Bank condoned the delay and allowed the application and imposed conditions on NIIL that it must bring down the non resident interest from 60% to 40% within one year of the receipt of its letter. The Holding Company applied to the Reserve Bank for a Holding Licence under section 29 (4) (a) of FERA, on September 18, 1974; which application was late by 18 days and was still pending with the Reserve Bank Devagnanam who was residing in Hong Kong obtained a holding licence dated March 5, 1975 from the Reserve Bank in respect of his shares in NIIL. On receipt of the letter of the Reserve Bank dated March 11,1976 NIIL 's secretary sent a reply on May 18, 1976 to the Bank confirming the acceptance of the various conditions under which permission was granted to NIIL to continue its business. On August 11, 1976 the term of Devagnanam 's appointment as the Managing Director of NIIL came to an end but in the meeting dated October 1, 1976 of NIIL 's Board of Directors his appointment was renewed for a further period of 5 years. On October 20th and 21st, 1976 a meeting took place between the U.K. shareholders and the Indian shareholders of NIIL. But the meeting ended in a stalemate because whereas the Holding Company wanted a substantial part of the share capital held by it in excess of 40 per cent to be transferred to Madura Coats an Indian company in which the Holding Company had substantial interest as an Indian shareholder. Devagnanam insisted that the existing Indian shareholders of NIIL alone had the right under its Articles of Association to take up the shares which the Holding Company was no longer in a position to hold because of the directives issued by the Reserve Bank pursuant to FERA. As negotiations were going on between the competing groups regarding the Indianisation of NIIL, on April 4, 1977 NIIL received a reminder letter dated March 30, 1977 from the Reserve Bank which pointed out that the company had not submitted any concrete proposal for reduction of the non resident interest and asked it to submit its proposal in that behalf without any further delay and that failure to comply with the directive regarding dilution of foreign equity within the stipulated period would be viewed seriously. A meeting of NIIL 's Board of Directors was held on April 6, 1977. All the directors were present in the meeting with Devagnanam in the chair at the commencement of the proceedings. Mr. C. Doraiswamy, solicitor partner of 701 King and Partridge was one of the directors present at the meeting. He had no interest in the proposal of Indianisation which the meeting was to discuss. In order to complete the quorum of two independent directors, the other directors apart from C. Doraiswamy being interested in the business of the meeting, Silverston an ex partner of Doraiswamy 's firm of solicitors, was appointed to the board as an additional director under article 97 of the Articles of Association. Silverston chaired the meeting after his appointment as additional director. The meeting resolved that the issued capital of NIIL be increased by a new issue of 16,000 equity shares of Rs. 100 each to be offered as rights shares to the existing shareholders in proportion to the shares held by them. The offer was to be made by a notice specifying the number of shares which each shareholder was entitled to and in case the offer was not accepted within 16 days from the date on which it was made it was to be deemed to have been declined by the concerned shareholder. In pursuance to the aforesaid resolution a letter of offer dated April 14, 1977 was prepared. The envelope containing Devagnanam 's explanatory letter dated April 12 (without the copy of the letter of the Reserve Bank dated March 30, 1977) and the letter of offer dated April 14 were received by the Holding Company on May 2, 1977 in an envelope bearing the Indian postal mark of April 27, 1977. The letter of offer which was sent to one of the Indian shareholders, Manoharan was posted in an envelope which also bore the postal mark of 27th April. The next meeting of the Board was due to be held on May 2, 1977. The Holding Company was thus denied an opportunity to exercise its option whether or not to accept the offer of right shares, assuming that any such option was open to it. The meeting of the Board of Directors was held an May 2, 1977 as scheduled and in the meeting the whole of the new issue consisting of 16,000 rights share was allotted to the Indian shareholders including members of the Manoharan group. Out of these the Devagnanam group was allotted 11,734 shares. After marking the allotment of shares a letter was sent to the Reserve Bank by NIIL reporting compliance with the requirements of F.E.R.A. by the issue of 16,000 rights shares and the allotment thereof to the Indian shareholders which resulted in the reduction of the foreign holding to approximately 40% and increased that of the Indian shareholders to almost 60%. The Holding Company filed a company petition in the High Court under section 397 and 398 of the Indian alleging that the Indian Directors abused their fiduciary position in the Company by deciding in the meeting of April 6 to issue the rights shares at par and by allotting them exclusively to the Indian shareholders in the meeting of 2nd May, 1977. In doing so, they acted mala fide and in order to gain an illegal advantage for themselves. By deciding to issue the rights shares at par, they conferred a tremendous and illegitimate advantage on the Indian shareholders. Devagnanam delayed deliberately the intimation of the proceedings of the 6th April to the Holding Company. By that means and by the late giving of the notice of the 702 meeting of the 2nd May, the Devagnanam group presented a fait uccompli to the Holding Company in order to prevent it from exercising its lawful rights. The conduct of the Indian directors lacked in probity and fair dealing which the Holding Company was entitled to expect. The acting Chief Justice who tried the Company Petition, found several defects and infirmities in the Board 's meeting dated May 2, 1977 and being of the view that the average market value of the rights shares was about Rs. 190 per share on the crucial date and that, since the rights shares were issued at par, the Holding Company was deprived unjustly of a sum Rs. 8,54,550 at the rate of Rs. 90 per share on the 9,495 rights shares to which it was entitled. Exercising the power under section 398 (2) of the , the learned Judge directed NIIL to make good that loss which, could have been avoided by adopting a fairer process of communication with the Holding Company and 'a consequential dialogue ' with them in the matter of the issue of rights shares at a premium. The Holding Company being aggrieved by the aforesaid judgment filed an appeal and NIIL filed cross objections to the decree. The appeal and cross objections were argued before the Division Bench of the High Court on the basis of affidavits, the correspondence that had passed between the parties and certain additional documents which were filed before the Appellate Court. The Division Bench concluded that the affairs of NIIL were being conducted in a manner oppressive, that is to say burdensome, harsh and wrongful to the Holding Company and held that since the action of the Board of Directors of NIIL was taken merely for the purpose of welding the Company into Newey 's Far Eastern complex it was just and equitable to wind up the Company. With regard to the cross objections, the Division Bench held that the injuries suffered by the Holding Company could not be remedied by the award of compensation and, therefore, the action of the Board of Directors in issuing the rights shares had to be quashed. It accordingly allowed the appeal filed by the Holding Company and dismissed the cross objections of the appellant and directed that the Board of Directors be suspended and an interim Board consisting of nine directors proposed by the Holding Company be constituted and that the rights issue made on 6th April, 1977 and the allotment of shares made on 2nd May, 1977 at the Board Meeting be set aside and the Interim Board be directed to make a fresh issue of shares at a premium to the existing shareholders including the Holding Company which was to have a right of renunciation. In the appeals to this Court, on the question whether the decisions taken at the meetings of the Boards of Directors of NIIL on April 6 and May 2, 1977 constitute acts of oppression within the meaning of section 397 of the . Allowing the appeals ^ HELD: 1. The charge of oppression rejected after applying to the conduct of Devagnanam and his group the standard of probity and fairplay, which is expected of partners in a business venture. Not only is the law on his side, but his conduct cannot be characterised as lacking in probity, considering the extremely rigid attitude by Coats. He was driven into a tight corner from which the only escape was to allow the law to have its full play. [824 B C; G H] 703 2. Even though the company petition falls and the appeals succeed on the finding that the Holding Company has failed to make out a case of oppression, the court is not powerless to do substantial justice between the parties and place them, as nearly as it may, in the same position in which they would have been, if the meeting of 2nd May were held in accordance with law. [824 H 825 A] 3. The willingness of the Indian shareholders to pay a premium on the excess holding or the rights shares is a factor which, to some extent, has gone in their favour on the question of oppression. Having had the benefit of that stance, they must now make it good. Besides, it is only meet and just that the Indian shareholders, who took the rights shares at par when the value of those shares was much above par, should be asked to pay the difference in order to nullify their unjust and unjustifiable enrichment at the cost of the Holding Company. The Indian shareholders are not asked to pay the premium as a price of oppression. The plea of oppression having been rejected the course being adopted is intended primarily to set right the course of justice. [825 F G] 4. Devagnanam, his group and the other Indian share holders who took the rights shares offered to the Holding Company shall pay, pro rata, the sum of Rs. 8,54,550 to the Holding Company. The amount shall be paid by them to the holding company from their own funds and not from the funds or assets of NIIL. [827 A B] 5. As a further measure of neutralisation of the benefit which the Indian shareholders received in the meeting of 2nd May, 1977, it is directed that the 16,000 rights shares which were allotted in that meeting to the Indian shareholders will be treated as not qualifying for the payment of dividend for a period of one year commencing from January 1, 1977 the Company 's year being the Calendar year. The interim dividend or any further dividend received by the Indian shareholders on the 16,000 rights shares for the year ending December 31, 1977 shall be repaid by them to NIIL, which shall distribute the same as if the issue and allotment of the rights shares was not made until after December 31, 1977. This direction will not be deemed to affect or ever to have affected the exercise of any other rights by the Indian shareholders in respect of the 16,000 rights shares allotted to them. [827 B D] 6. In order to ensure the smooth functioning of NIIL and with a view to ensuring that the directions are complied with expeditiously, it is directed that Shri M.M. Sabharwal who was appointed as a Director and Chairman of the Board of Directors under the orders of this Court dated November 6, 1978 will continue to function as such until December 31, 1982. [827 F] 7. The Company will take all effective steps to obtain the sanction or permission of the Reserve Bank of India or the Controller of Capital Issues, as the case may be, if it is necessary to obtain such sanction or permission for giving effect to the directions. [827 G] 8. Devagnanam and his group acted in the best interests of NIIL, in the matter of the issue of rights shares and indeed, the Board of Directors followed in the meeting of the 6th April a course which they had no option but to adopt and in doing which, they were solely actuated by the consideration as to what 704 was in the interest of the company. The shareholder Directors who were interested in the issue of rights shares neither participated in the discussion of that question nor voted upon it. The two Directors who, forming the requisite quorum, received upon the issue of rights shares were Silverston who, was a disinterested Director and Doraiswamy who, unquestionably, was so. [792 A C] 9. Disinvestment by the Holding Company, as one of the two courses which could be adopted for reducing the non resident interest in NIIL to 40% stood ruled out, on account of the rigid attitude of Coats who, during the period between the Ketty meeting of October 20 21, 1976 and the Birmingham discussions of March 29 31, 1977 clung to their self interest, regardless of the pressure of FERA, the directive of the Reserve Bank of India and their transparent impact on the future of NIIL. [792 D E] 10. Devagnanam and the disinterested Directors, having acted out of legal compulsion precipitated by the obstructive attitude of Coats and their action it being in the larger interest of the company, it is impossible to hold that the resolution passed in the meeting of April 6 for the issue of rights shares at par to the existing shareholders of NIIL constituted an act of oppression against the Holding Company. [792 E F] 11. It puts a severe strain on ones credulity to believe that the letters of offer dated April 14 to the Holding Company, to Raeburn and to Manoharan were posted on the 14th itself but that somehow they rotted in the post office until the 27th on which date they took off simultaneously for their respective destinations. [793 E] 12. The purpose behind the planned delay in posting the letters of offer to Raeburn and to the Holding Company, and in posting the notice of the Board 's meeting for May 2 to Sanders, was palpably to ensure that no legal proceeding was taken to injunct the holding of the meeting. The object of withholding these important documents, until it was quite late to act upon them, was to present to the Holding Company a fait accompli in the shape of the Board 's decision for allotment of rights shares to the existing Indian shareholders. [794 C E] 13. In so far as Devagnanam himself is concerned, there is room enough to suspect that he was the part author of the late postings of important documents, especially since he was the prime actor in the play of NILL 's Indianisation. But even in regard to him, it is difficult to carry the case beyond the realm of suspicion and 'room enough ' is not the same thing as 'reason enough '. [795 B C] 13A. With regard to the impact on the legality of the offer and the validity of the meeting of May 2, (i) It is quite clear from the circumstances that the rights shares offered to the Holding Company could not have been allotted to anyone in the meeting of May 2, for the supposed failure of the Holding Company to communicate its acceptance before April 30. The meeting of May 2, of which the main purpose was to consider 'Allotment ' of the rights shares must, therefore, be held to be abortive, [796 H 797 A] 705 (ii) The utter inadequacy of the notice to Sanders in terms of time stares in the face and needs no further argument to justify the finding that the holding of the meeting was illegal, at least in so far as the Holding Company is concerned. It is self evident that Sanders could not possibly have attended the meeting. There is, therefore, no alternative save to hold that the decision taken in the meeting of May 2 cannot, in the normal circumstances, affect the legal rights of the Holding Company or create any legal obligations against it. [797 D E] 13B. The dilution of the non resident interest in the equity capital of the Company to a level not exceeding 40% "within a period of 1 (one) year from the date of receipt of" the letter was of the very essence of the matter. The sanction for enforcement of a conditional permission to carry on business, where conditions are breached, is the cessation, ipso facto, of the permission itself on the non performance of the conditions at the time appointed or agreed. When NIIL wrote to the Bank on February 4, 1976 binding itself to the performance of certain conditions, it could not be heard to say that the permission will remain in force despite its non performance of the conditions. Having regard to the provisions of section 29 read with sections 49, 56(1) and (3) and section 68 of FERA, the continuance of business after May 17, 1977 by NIIL would have been illegal, unless the condition of dilution of non resident equity was duly complied with. [799 B; F H] 14. By reason of the provisions of section 29(1) and (2) of FERA and the conditional permission granted by the RBI by its letter dated May 11, 1976 the offer of rights shares made by NIIL to the Holding Company could not possibly have been accepted by it. [800 B] The acceptance of the offer of rights shares by the Holding Company would have resulted in a violation of the provisions of FERA and the directive of the Reserve Bank. No grievance can be made by the Holding Company that since it did not receive the offer in time, it was deprived of an opportunity to accept it. [800 D G] 14A. An offer of shares undoubtedly creates "fresh rights" but, the right which it creates is either to accept the offer or to renounce it; it does not create any interest in the shares in respect of which the offer is made. [801 B] Mathalone vs Bombay Life Assurance Co. ; referred to. 15(i) Before granting relief in an application under section 210 of the English as under section 397 of the Indian the Court has to satisfy itself that to wind up the company will unfairly prejudice the members complaining of oppression, but that otherwise the facts will justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up. The fact that the company is prosperous and makes substantial profits is no obstacle to its being wound up if it is just and equitable to do so. [744 A B; 775 G] Scottish Co op. Wholesale Society Ltd. vs Meyer , Re Associated Tool Industries Ltd. [1964] Argus Law Reports, 75, Ebrahimi vs Westbourne 706 Galleries LTd. , Blissett vs Daniel [68] E.R. 1024. Re Yenidge Tobacco Co. & Loch vs John Blackwood ; referred to. (ii) On a true construction of section 397, an unwise, inefficient or careless conduct of a Director in the performance of his duties cannot give rise to a claim for relief under that section. The person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes prejudice to him in the exercise of his legal and proprietary rights as a shareholder. [748 E G] (iii) Technicalities cannot be permitted to defeat the exercise of the equitable jurisdiction conferred by section 397 of the . Blissett vs Daniel referred to. 16. An isolated act which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which the object is to cause or commit the oppression of persons against whom those acts are directed. [746 G 747 A] 17. An isolated order passed by a Judge which is contrary to law will not normally support the inference that he is biased, but a series of wrong or illegal orders to the prejudice of a party are generally accepted as supporting the inference of a reasonable apprehension that the Judge is biased and that the party complaining of the orders will not get justice at his hands. [747 B C] S.M. Ganpatram vs Sayaji Jubilee Cotton and Jute Mills Co. & Elder vs Elder referred to. 18. It is generally unsatisfactory to record a finding involving grave consequences to a person on the basis of affidavits and documents without asking that person to submit to cross examination. Men may lie but documents will not and often, documents speak louder than words. But a total reliance on the written word, when probity and fairness of conduct are in issue, involves the risk that the person accused of wrongful conduct is denied an opportunity to controvert the inferences said to arise from the documents. [754 E G] Re Smith and Fowcett Ltd. , 545; Nana Lal Zaver vs Bombay Life Assurance , 394 Piercy vs Mills [1920] (1) Chancery 77, Hogg vs Cramphorn, [1967] 1, Chancery 254, 260; Mills vs Mills [60] CLR 150, 160, Harlowe 's Hominees [121] CLR 483, 485 & Howard Smith vs Amphol ; , 831 Punt vs Symons ; Franzer vs Whalley ; referred to. In the instant case the High Court was right in holding that, having taken up a particular attitude, it was not open to Devagnanam and his group to con 707 end that the allegation of mala fides could not be examined, on the basis of affidavits and the correspondence only. There is ample material on the record in the form of affidavits correspondence and other documents, on the basis of which proper and necessary inferences can safely and legitimately be drawn. [755B C] These documents and many more documents were placed on the record mostly by consent of parties, as the case progressed from stage to stage. That shows that the parties adopted willingly a mode of trial which they found to be most convenient and satisfactory. [756 A B] 19. When the dominant motivation is to acquire control of a company, the sparring groups of shareholders try to grab the maximum benefit for themselves. If one decides to stay on in such a company, one must capture its control. If one decides to quit, one must obtain the best price for one 's holding, under and over the table, partly in rupees and partly in foreign exchange. Then, the tax laws and the foreign exchange regulations look on helplessly, because law cannot operate in a vacuum and it is notorious that in such cases evidence is not easy to obtain. [761 G H; 762A] 20. It is difficult to hold that by the issue of rights shares the Directors of NIIL interfered in any manner with the legal rights of the majority. The majority had to disinvest or else to submit to the issue of rights shares in order to comply with the statutory requirements of FERA and the Reserve Bank 's directives. Having chosen not to disinvest, an option which was open to them, they did not any longer possess the legal rights to insist that the Directors shall not issue the rights shares. What the Directors did was clearly in the larger interests of the Company and in obedience to their duty to comply with the law of the land. The fact that while discharging that duty they incidentally trenched upon the interests of the majority cannot invalidate their action. The conversion of the existing majority into a minority was a consequence of what the Directors were obliged lawfully to do. Such conversion was not the motive force of their action. [782 A E] Howard Smith Ltd. vs Ampol Petroleum Ltd. [1974] A.C. 821, 874, Punt vs Symons & Fraser vs Whalley [71] E.R. 361 Piercy vs Mills , Hogg vs Cramphorn , 260 referred to 21. (i) The Directors have exercised their power for the purpose of preventing the affairs of the company from being brought to a grinding halt, a consumption devoutly wished for by Coats in the interest of their extensive world wide business. [784 C] (ii) The mere circumstance that the Directors derive benefit as shareholders by reasons of the exercise of their fiduciary power to issue shares, will not vitiate the exercise of that power. [785 E] (iii) The test is whether the issue of shares is simply or solely for the benefit of the Directors. If the shares are issued in the larger interest of the 708 company that decision cannot be struck down on the ground that it has incidentally benefited the Directors in their capacity as share holders, [786 C] In the instant case the Board of Directors did not abuse its fiduciary power in deciding upon the issue of rights shares. [786 D] Harlowe 's Nominess Pvt. Ltd. vs Woodside (Lakes Entrance) Oil Company No. Liability & Anr. (121) CLR 483, 485, Trek Corporation Ltd. vs Miller et al (33) DLR 3d. 288; Nanalal Zaver & Anr. vs Bombay Life Assurance Co. Ltd. , 419 429; Hirsche vs Sims , 660 661; Gower in Principles of Modern Company Law, 4th Edn. 578 referred to. 22. Under section 287 (2) of the the quorum for the meeting of the Board of Director was two. There can be no doubt that a quorum of two directors means a quorum of two directors who are competent to transact and vote on the business before the Board. [786 E] 23. (i) It is wrong to attribute any bias to Silverston for having acted as an adviser to the Indian shareholders in the Ketty meeting. Silverston is by profession a solicitor and legal advisers do not necessarily have a biased attitude to questions on which their advice is sought or tendered. Silverston 's alleged personal hostility to Coats cannot, within the meaning of section 300 (1) of the , make him person "directly or indirectly, concerned or interested in the contract or arrangement" in the discussion of which he had to participate or upon which he had to vote. [787 E G] (ii) The concern or interest of the Director which has to be disclosed at the Board meeting must be in relation to the contract entered or to be entered into by or on behalf of the company. The interest or concern spoken of by sections 299 (1) and 300 (1) cannot be a merely sentimental interest or ideological concern. Therefore, a relationship of friendliness with the Directors who are interested in the contract or arrangement or even the mere fact of a lawyer client relationship with such directors will not disqualify a person from acting as a Director on the ground of his being, under section 300 (1) as "interested" Director. Howsoever one may stretch the language of section 300 (1) in the interest of purity of company administration, it is next to impossible to bring Silverston 's appointment within the framework of that provision. [788 A C] The argument that Silverston was an interested Director, that therefore his appointment as an Additional Director was invalid and that consequently the resolution for the issue of rights shares was passed without the necessary quorum of two disinterested Directors has no force. [788 D E] 709 Firestone Tyre and Rubber Co. vs Synthetics and Chemicals Ltd., [1971] 41 Company Case 377 distinguished. Silverston 's appointment as an Additional Director is not open to challenge on the ground of want of agenda on that subject. Section 260 of the preserves the power of the Board of Directors to appoint additional Directors if such a power is conferred on the Board by the Articles of Association of the Company. Article 97 of NIIL 's Articles of Association confers the requisite power on the Board to appoint additional Directors. The occasion to appoint Silverston as an Additional Director arose only when the picture emerged clearly that the Board would have to consider the only other alternative for reduction of the non resident holding, namely, the issue of rights shares. It is for this reason that the subject of appointment of an Additional Director could not have, in the state of facts, formed a part of the agenda. [788 F.G; 789 A C] 25. (i) The power to issue shares is given primarily to enable capital to be raised when it is required for the purposes of the company but that power is not conditioned by such need. That power can be used for other reasons as for example to create a sufficient number of shareholders to enable the company to exercise statutory powers or to enable it to comply with legal requirements. [789 D E] Punt vs Symons and Co., ; Hogg vs Cramphorn, ; Howard Smith vs Amphol, ; (ii) The minutes of the Ketty meeting of October 20 21, 1976 saying that it was agreed that the rights issues, with the Indian shareholders taking up the U.K. members ' rights, would be considered provided it was demonstrated by NIIL that "there is a viable development plan requiring funds that the expected NIIL cash flow cannot meet", cannot also justify the argument that the power of the Company to issue rights shares was, by agreement conditioned by the need to raise additional capital for a development plan. [790 H; 791 A] (iii) In the instant case the rights shares were issued in order to comply with legal requirements which apart from being obligatory as the only viable course open to the Directors, was for the benefit of the company since, otherwise, its developmental activities would have stood frozen as of December 31, 1973. The shares were not issued as a part of takeover war between the rival groups of shareholders. [790 B C] 26. It is not true to say, as a statement of law, that Directors have no power to issue shares at par, if their market price is above par. These are primarily matters of policy for the Directors to decide in the exercise of their discretion and no hard and fast rule can be laid down to fetter that discretion. Such discretionary powers in company administration are in the nature of fiduciary powers and must be exercised in faith. Mala fides vitiate the exercise of such discretion. [791 E & G] Hilder and Others vs Dexter , 480 referred to. The definition of 'private company ' and the manner in which a 'public company ' is defined ("public company means a company which is not a private 710 company") bear out the argument that these two categories of companies are mutually exclusive. But it is not true to say that between them, they exhaust the universe of companies. A private company which has become a public company by reason of section 43A, may continue to retain in its articles, matters which are specified in section 3(1)(iii) and the number of its members may be or may at any time be reduced below 7. [810 H; 811 A B] (i) A section 43A company may include in its articles as part of its structure, provisions relating to restrictions on transfer of shares, limiting the number of its members to 50, and prohibiting an invitation to the public to subscribe for shares, which are typical characteristics of a private company. The expression 'public company ' in section 3(i)(iv) cannot therefore be equated with a 'private company ' which has become a public company by virtue of section 43A. [811 D E] (ii) A section 43A company can still maintain its separate corporate indentity qua debts even if the number of its members is reduced below seven and is not liable to be wound up for that reason. [811 F] (iii) A section 43A company can never be incorporated and registered as such under the . It is registered as a private company and becomes, by operation of law, a public company. [811 G] (iv) The three contingencies in which a private company becomes a public company by virtue of section 43A (mentioned in sub sections (1), (1A) and (1B) read with the provisions of sub section (4) of that section) show that it becomes and continues to be a public company so long as the conditions in sub sections (1), (1A) or (1B) are applicable. The provisos to each of these sections clarify the legislative intent that such companies may retain their registered corporate shell of a private company but will be subjected to discipline of public companies. When necessary conditions do not obtain, the legislative device in section 43A is to permit them to go back into their corporate shell and function once again as private companies, with all the privileges and exemptions applicable to private companies. The proviso to each of the sub sections of section 43A clearly indicates that although the private company has become a public company by virtue of that section, it is permitted to retain the structural characteristics of its origin, its birthmark. [811 H 812 A B] (v) Section 43A when introduced by Act 65 of 1960 did not adopt the language either of section 43 or of section 44. Under section 43 where default is made in complying with the provisions of section 3(1)(iii) a private company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act, and this Act shall apply to the company as if it were not a private company. Under section 44 of the Act, where a private company alters its Articles in such manner that they no longer include the provisions, which under section 3(1)(iii) are required to be included in the Articles in order to constitute it a private company, the company "shall as on the date of the alteration cease to be a private company". Neither of the 711 expression, namely, "This Act shall apply to the company as if it were not a private company" (section 43) nor that the company "shall. cease to be a private company (section 44) is used in section 43A. If a section 43 A company were to be equated in all respects with a public company, that is a company which does not have the characteristics of a private company, Parliament would have used language similar to the one in section 43 or section 44, between which two sections, section 43A was inserted. If the intention was that the rest of the Act was to apply to a section 43A company "as if it were not a private company", nothing would have been easier than to adopt that language in section 43A; and if the intention was that a section 43A company would for all purposes "cease to be a private company", nothing would have been easier than to adopt that language in section 43A. [812 E H; 813 A] (vi) A private company which becomes a public company by virtue of section 43A is not required to file a prospectus or a statement in lieu of a prospectus. [813 C] After the Amending Act 65 of 1960 these distinct types of companies occupy a distinct place in the scheme of our : (1) private companies (2) public companies and (3) private companies which have become public companies by virtue of section 43A, but which continue to include or retain the three characteristics of a private company. Private companies enjoy certain exemptions and privileges which are peculiar to their constitution and nature. Public companies are subjected severely to the discipline of the Act. Companies of the third kind like NIIL, which become public companies but which continue to include in their articles the three matters mentioned in clauses (a) to (c) of section 3(1)(iii) are also, broadly and generally, subjected to the rigorous discipline of the Act. They cannot claim the privileges and exemptions to which private companies which are outside section 43A are entitled. And yet, there are certain provisions of the Act which would apply to public companies but not to section 43A companies. [813 D; 814 A C] There is no difficulty in giving full effect to clauses (a) and (b) of section 81(1) in the case of a company like NIIL, even after it becomes a public company under section 43A. Clause (a) requires that further shares must be offered to the holders of equity shares of the Company in proportion, as nearly as circumstances admit, to the capital paid up on these shares, while clause (b) requires that the offer further shares must be made by a notice specifying the number of shares offered and limiting the time, not being less than fifteen days from the date of the offer, within which the offer, if not accepted will be deemed to have been declined. [815 H; 816 A B] The provision contained in clause (c) cannot be construed in a manner which will lead to the negation of the option exercised by the company to retain in its articles the three matters referred to in section 3(1)(iii). Both these are statutory provisions and they are contained in the same statute. They must be harmonised, unless the words of the statute are so plain and unambiguous and the policy of the statute so clear that to harmonise will be doing violence to those words and to that policy. The policy of the statute if any 712 thing, points in the direction that the integrity and structure of the section 43 A proviso companies should, as far as possible not be broken up. [817 E F] Park vs Royalty Syndicates and Re Pool Shipping Co. Ltd. referred to. Palmer 's Company Law 22nd. I para 12 18 Gower 's Company Law 4th End p. 351 referred to. When section 43A was introduced by Act 65 of 1960, the legislature apparently overlooked the need to exempt companies falling under it, read with its first proviso, from the operation of clause (c) of sec. 81(1). That the legislature has overlooked such a need in regard to other matters, in respect of which there can be no controversy, is clear from the provisions of sections 45 and 433(d) of the . Undar section 45, if at any time the number of members of a company is reduced, in the case of a public company below seven, or in the case of a private company below two, every member of the company becomes severally liable, under the stated circumstances, for the payment of the whole debt of the company and can be severally sued therefor. No exception has yet been provided for in section 45 in favour of the section 43A proviso companies, with the result that a private company having, say, three members which becomes a public company under section 43A and continues to function with the same number of members, will attract the rigour of section 45. Similarly, under section 433(d) such a company would automatically incur the liability of being wound up for the same reason. [818 A D] While construing the opening words of section 81(1)(c) it has to be remembered that section 43A companies are entitled under the proviso to that section to include provision in their Articles relating to matters specified in section 3(1)(iii). The right of renunciation in favour of any other person is wholly inconsistent with the Articles of a private company. If a private company becomes a public company by virtue of section 43A and retains or continues to include in its Articles matters referred to in section 3(1)(iii) it is difficult to say that the Articles do not provide something which is otherwise than what is provided in clause (c). The right of renunciation in favour of any other person is of the essence of clause (c). On the other hand, the absence of that right is of the essence of the structure of a private company, It must follow, that in all cases in which erstwhile private companies become public companies by virtue of section 43A and retain their old Articles, there would of necessity be a provision in their Articles which is otherwise than what is contained in clause (c). Considered from this point of view, the argument as to whether the word "provide" in the opening words of clause (c) means "provide expressly" loses its significance. [820 B D] In the context in which a private company becomes a public company under section 43A and by reason of the option available to it under the proviso the word "provide" must be understood to mean "provide expressly or by necessary implication". The necessary implication of a provision has the same effect and relevance in law as an express provision has, unless the relevance of what is necessarily implied is excluded by the use of clear words. [820 E F] 713 The right of renunciation is tentamount to an invitation to the public to subscribe for the shares in the company and can violate the provision in regard to the limitation on number of members. Article 11, by reason of its clause (iv) prevails over the provisions of all other Articles if there is inconsistency between it and any other Article. [821 C] 28. Clause (c) of section 81(1) of the apart from the consideration arising out of the opening words of that clause, can have no application to private companies which have become public companies by virtue of section 43A and which retain in their Articles the three matters referred to in section 3(1)(iii) of the Act. In so far as the opening words of clause (c) are concerned they do not require an express provision in the Articles of the Company which otherwise than what is provided for in clause (c). It is enough, in order to comply with the opening words of clause (c). that the Articles of the Company contain by necessary implication a provision which is otherwise than what is provided in clause (c). Articles 11 and 50 of NIIL 's Articles of Association negate the right of renunciation. [821 D F] 29. The right to renounce shares in favour of any other person, which is conferred by clause (c) has no application to a company like NIIL and, therefore, its members cannot claim the right to renounce shares offered to them in favour of any other member or members. The Articles of a company may well provide for a right of transfer of shares by one member to another, but that right is very much different from the right of renunciation, properly so called. [821 G H] Re Poal Shipping Co. Ltd. referred to. 30. A change in the pro rata method of offer of new shares is necessarily violative of the basic characteristics of a private company which becomes a public company by virtue of section 43A. To this limited extent only, but not beyond it, the provisions of sub section (1A) of section 81 can apply to such companies. [822 F] 31. The following propositions emerge out of the discussions of the provisions of FERA, Sections 43A and 81 of the and of the Articles of association of NIIL: (1) The Holding Company had to part with 20% out of the 60% equity capital held by it in NIIL; [822 H] (2) The offer of Rights shares made to the Holding Company as a result of the decision taken by Board of Directors in their meeting of April 6, 1977 could not have been accepted by the Holding Company; [822 H; 823 A] (3) The Holding Company had no right to renounce the Rights shares offered to it in favour of any other person, member or non member; and [823 B] (4) Since the offer of Rights Shares could not have been either accepted or renounced by the Holding Company, the former for one reason and 714 the latter for another, the shares offered to it could, under article 50 of the articles of association, be disposed of by the directors, consistently with the articles of NIIL, particularly article 11, in such manner as they thought most beneficial to the Company. [822 B C] 32. These propositions afford a complete answer to the respondents ' contention that what truly constitutes oppression of the Holding Company is not the issue of Rights Shares to the existing Indian shareholders only but the offer of Rights Shares to all existing shareholders and the issue thereof to existing Indian shareholders only. [823 D] 33. It was neither fair nor proper on the part of NIIL 's officers not to ensure the timely posting of the notice of the meeting for 2nd May so as to enable Sanders to attend that meeting. But there the matter rests. Even if Sanders were to attend the meeting, he could not have asked either that the Holding Company should be allotted the rights shares or alternatively, that it should be allowed to "renounce" the shares in favour of any other person, including the Manoharan group. The charge of oppression arising out of the central accusation of non allotment of the rights shares to the Holding Company must, therefore fail. [823 H; 824 A B]

Appeal No. 869 of 1987. From the Judgment and Order dated 22.12.1981 of the Orissa High Court in Original Judicature Case No. 412 of 1976. WITH CA No. 870 of 1987 R.K. Garg and A.K. Panda for the Appellants. C.S. Srinivasa Rao for the Respondent. The Judgment of the Court was delivered by B.P. JEEVAN REDDY,J. 1. These appeals raise the question whether it is permissible to the government to order compulsory retirement of a government servant on the basis of material which includes uncommunicated adverse remarks. While the appellants (government servants, compulsory retired) rely upon the decisions of this court in Brij Mohan Singh Chopra, and Baidyanath Mahapatra; , , in support of their contention that it is not permissible, the respondent government relies upon the decision in M.E. Reddy. ; to contend that it is permissible to the government to take into consideration uncommunicated adverse remarks also while taking a decision to retire a government servant compulsorily. The appellants in both the appeals have been compulsorily retired by the government of Orissa in exercise of the power conferred upon it by the first proviso to Rule 71 (a) of the Orissa Service Code. Since the relevant facts in both the appeals are similar, it would be sufficient if we set out the facts in Civil Appeal No. 869 of 1987. 841 3. The appellant, Sri Baikuntha Nath Das was appointed as a Pharmacist (then designated as Compounder) by the Civil Surgeon, Mayurbhanj on 15.3.1951. By an order dated 13.2.1976 the government of Orissa retired him compulsorily under the first proviso to sub rule of Rule 71 of the Orissa Service Code. The order reads as follows: ``In exercise of the powers conferred under the first proviso to sub rule (a) of rule 71 of Orissa Service Code, the Government of Orissa is pleased to order the retirement of Sri Baikunthanath Das, Pharmacist now working under the Chief District Medical Officer, Mayurbhanj on the expiry of three months from the date of service of this order on him. By order of the Governor. ' ' 4. The petitioner challenged the same in the High Court of Orissa by way of a writ petition, being O.J.C.No. 412 of 1976. His case was that the order was based on no material and that it was the result of ill will and malice the Chief District Medical Officer bore towards him. The petitioner was transferred by the said officer from place to place and was also placed under suspension at one stage. He submitted that his entire service has been spot less and that at no time were any adverse entries in his confidential character rolls communicated to him. In the counter affidavit filed on behalf of the government, it was submitted that the decision to retire the petitioner compulsorily was taken by the Review Committee and not by the Chief Medical Officer. It was submitted that besides the remarks made in the confidential character rolls, other material was also taken into consideration by the Review Committee and that it arrived at its decision bonafide and in public interest which decision was accepted and approved by the government. The allegation of malafides was denied. The High Court looked into the proceedings of the Review Committee and the confidential character rolls of the petitioner and dismissed the writ petition on the following reasoning: An order of compulsory retirement after putting in the prescribed qualifying period of service does not amount to punishment as has been repeatedly held by this court. The order in question was passed by the State Government and not by the Chief Medical Officer. It is true that the confidential character roll of the petitioner contained several remarks adverse to him which were, no doubt, not communicated to him, but the decision of this court in Union of India 842 vs M.E.Reddy; , , holds that uncommunicated adverse remarks can also be relied upon while passing an order of compulsory retirement. The said adverse remarks have been made by successive Civil Surgeons and not by the particular Chief District Medical Officer against whom the petitioner has alleged malafides. It is unlikely that all the Chief District Medical Officers were prejudiced against the petitioner. In particular, the court observed, "the materials placed before us do not justify a conclusion that the remarks in the confidential character rolls had not duly and properly been recorded." The decision to retire has been taken by the Review Committee on proper material and there are no grounds to interfere with its decision, it opined. 6. The adverse remarks made against the petitioner in the words of the High Court are to the following effect: ". most insincere, irregular in habits and negligent and besides being a person of doubtful integrity, he had been quarrelsome with his colleagues and superior officers and had been creating problems for the administration. Rule 71 (a) alongwith the first proviso appended thereto which alone is relevant for our purpose reads thus: "71. (a) Except as otherwise provided in the other clauses of this rule the date of compulsory retirement of a Government servant, except a ministerial servant who was in Government service on the 31st March, 1939 and Class IV Government servant, is the date on which he or she attains the age of 58 years subject to the condition that a review shall be conducted in respect of the Government servant in the 55th year of age in order to determine whether he/she should be allowed to remain in service upto the date of the completion of the age of 58 years or retired on completing the age of 55 years in the public interest: Provided that a Government servant may retire from service any time after completing thirty years qualifying service or on attaining the age of fifty years, by giving a notice in writing to the appropriate authority at least three months before the date on which he wishes to retire or by giving the said notice to the 843 said authority before such shorter period as Government may allow in any case. It shall be open to the appropriate authority to withhold permission to a Government servant who seeks to retire under this rule, if he is under suspension or if inquires against him are in progress. The appropriate authority may also require any officer to retire in public interest any time after he has completed thirty years qualifying service or attained the age of fifty years, by giving a notice in writing to the Government servant at least three months before the date on which he is required to retire or by giving three months pay and allowances in lieu of such notice. xx xx xx" 8. It is evident that the latter half of the proviso which empowers the government to retire a government servant in public interest after he completes 30 years of qualifying service or after attaining the age of 50 years is in pari materia with the Fundamental Rule 56(j). The Government of Orissa had issued certain instructions in this behalf. According to these instructions, the Review Committee, if it is of the opinion that a particular government servant should be retired compulsorily, must make a proposal recording its full reasons therefor. The administrative department controlling the services to which the particular government servant belongs, will then process the proposal and put it up to the government for final orders. In Shyam Lal vs State of Uttar Pradesh, ; , a Constitution Bench of this court held that an order of compulsory retirement is not a punishment nor is there any stigma attached to it. It said: "There is no such element of charge or imputation in the case of compulsory retirement. The two requirements for compulsory retirement are that the officer has completed twenty five years ' service and that it is in the public interest to dispense with his further services. It is true that this power of compulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence of Note 1 to Article 465 A make it abundantly clear that an imputation or charge is not in terms made a condition for the exercise of the power. 844 In other words, a compulsory retirement has no stigma or implication of misbehaviour or incapacity. In Shivacharana vs State of Mysore, A.I.R. 1965 S.C. 280, another Constitution Bench reaffirmed the said principle and held that "Whether or not the petitioner 's retirement was in the public interest, is a matter for the State Government to consider and as to the plea that the order is arbitrary and illegal, it is impossible to hold on the material placed by the petitioner before us that the said order suffers from the vice of malafides. As far back as 1970, a Division Bench of this court comprising J.C. Shah and K.S. Hegde, JJ. held in Union of India vs J.N Sinha, [1971] 1 S.C.R. 791, that an order of compulsory retirement made under F.R. 56 (j) does not involve any civil consequences, that the employee retired thereunder does not lose any of the rights acquired by him before retirement and that the said rule is not intended for taking any penal action against the government servant. It was pointed out that the said rule embodies one of the facets of the pleasure doctrine embodied in Article 310 of the Constitution and that the rule holds the balance between the rights of the individual Government servant and the interest of the public. The rule is intended it was explained, to enable the Government to energise its machinery and to make it efficient by compulsory retiring those who in its opinion should not be there in public interest. It was also held that rules of natural justice are not attracted in such a case. If the appropriate authority forms the requisite opinion bonafide, it was held, its opinion cannot be challenged before the courts though it is open to an aggrieved party to contend that the requisite opinion has not been formed or that it is based on collateral grounds or that it is an arbitrary decision. It is significant to notice that this decision was rendered after the decisions of this court in State of Orissa vs Dr. Binapani Devi; , and A.K.Kraipak vs Union of India, A.I.R. 1970 S.C. 150.Indeed, the said decisions were relied upon to contend that even in such a case the principles of natural justice required an opportunity to be given to the government servant to show cause against the proposed action. The contention, was not accepted as stated above. The principles enunciated in the decision have been accepted and followed in many a later decision. There has never been a dissent not until 1987. In R.L. Butial vs Union of India, relied upon by the appellant 's 845 counsel, the Constitution Bench considered a case where the government servant was denied the promotion and later retired compulsorily under F.R. 56(j) on the basis of adverse entries in his confidential records. The appellant, an electrical engineer, entered the service of Simla Electricity Board in 1934. In 1940, he was transferred to Central Electricity Commission later designated as Central Water and Power Commission (Power Wing). In 1955 he was promoted to the post of Director wherein he was confirmed in the year 1960. In his confidential reports relating to the years 1964 and 1965, certain adverse remarks were made. They were communicated to him. He made a representation asking for specific instances on the basis of which the said adverse remarks were made. These representations were rejected. Meanwhile, a vacancy arose in the higher post. The appellant was overlooked both in the year 1964 as well as in 1965 by the Departmental Promotion Committee and the U.P.S.C. On August 15, 1967, on his completing 55 years of age, he was compulsorily retired under F.R. 56(j). Thereupon he filed three writ petitions in the High Court challenging the said adverse entries as also the order of compulsory retirement. The writ petitions were dismissed whereupon the matters were brought to this court on the basis of a certificate. The Constitution Bench enunciated the following propositions: 1. The rules framed by the Central Water and Power Commission on the subject of maintenance of confidential reports show that a confidential report is intended to be a general assessment of work performed by the government servant and that the said reports are maintained to serve as a data of operative merit when question of promotion, confirmation etc. arose. Ordinarily, they are not to contain specific instances except where a specific instance has led to a censure or a warning. In such situation alone, a reasonable opportunity has to be afforded to the government servant to present his case. No opportunity need be given before the entries are made. Making of an adverse entry does not amount to inflicting a penalty. When the petitioner was overlooked for promotion his representations against the adverse remarks were still pending. But inasmuch as the said representations were rejected later there was no occasion for reviewing the decision not to promote the appellant. Withholding a promotion is not a penalty under the Central Service Rules. Hence, no enquiry was required to be held before deciding not to promote the 846 appellant more so, when the promotion was on the basis of selection and not on the basis of seniority alone. So far as the order of compulsory retirement was concerned, it was based upon a consideration of his entire service record including his confidential reports. The adverse remarks in such reports, were communicated from time to time and the representations made by the appellant were rejected. It is only thereafter that the decision to retire him compulsorily was taken and, therefore, there was no ground to interfere with the said order. It is evident that in this case, the question arising for our consideration viz, whether uncommunicated adverse remarks can be taken into consideration alongwith other material for compulsorily retiring a government servant did not arise for consideration. That question arose directly in Union of India vs M.E.Reddy. 15. The respondent, M.E. Reddy belonged to Indian Police Services. He was retired compulsorily under Rule 16 (3) of All India Service (Death cum Retirement Rules) 1958 corresponding to F.R. 56 (j). The contention of the respondent was that the order was passed on non existing material inasmuch as at no time were any adverse remarks communicated to him. His contention was that had there been any adverse entries they ought to have been communicated to him under the rules. The said contention was dealt with in the following words: ". This argument, in our opinion, appears to be based on a serious misconception. In the first place, under the various rules on the subject it is not every adverse entry or remarks that has to be communicated to the officer concerned. The superior officer may make certain remarks while assessing the work and conduct of subordinate officer based on his personal supervision or contract. Some of these remarks may be purely innocuous, or may be connected with general reputation of honesty or integrity that a particular officer enjoys. It will indeed be difficult if not impossible to prove by positive evidence that a particular officer is dishonest but those who have had the opportunity to watch the performance of the said officer from close quarters are in a position to know the nature and character not only of his performance but also of the 847 reputation that he enjoys". The Learned Judges referred to the decisions in R.L.Butail,J.N.Sinha and several other decisions of this court and held that the confidential reports, even though not communicated to the officer concerned, can certainly be considered by the appointing authority while passing the order of compulsory retirement. in this connection, they relied upon the principle in J.N. Sinha that principles of natural justices are not attracted in the case of compulsory retirement since it is neither a punishment nor does it involve any civil consequences. the principle of the above decision was followed in Dr. N.V.Puttabhatta vs State of Mysore; , , a decision rendered by A.N.Grover and G.K.Mitter , J.J. Indeed, the contention of the appellant in this case was that since an order of compulsory retirement has adverse effects upon the career and prospects of the government servant, the order must be passed in accordance with principles of natural justice. It was contended that before passing the order, a notice to show cause against the order proposed must be given to the government servant . Reliance was placed upon the decisions in Binapani Devi and Kraipak. This contention was negatived following the decision in J.N.Sinha. It was also pointed out, applying the principles of Shivacharana that an order of compulsory retirement is not a punishment nor does it involve any stigma or implication or misbehaviour. Another contention urged in this case was that the order of compulsory retirement was based upon uncommunicated adverse remarks and that the appellant was also not afforded an opportunity to make a representation against the same. At the relevant time, no appeal lay against the orders passed upon the representation. Dealing with the said contention, the court observed: "as the confidential reports rules stood at the relevant time, the appellant could not have appealed against the adverse remarks and if the opinion of the government to retire him compulsorily was based primarily on the said report, he could only challange the order if he was in a position to show that the remarks were arbitrary and malafide." 18. Yet another contention which is relevant to the present case is this : the retirement of the appellant therein was ordered under Rule 235 of Mysore Civil Services Rules. The language of the said rule corresponded to 848 F.R.56(j) but it did not contain the word "absolute" as is found in F.R.56(j). An argument was sought to be built up on the said difference in language but the same was rejected holding that even in the absence of the word "absolute" the position remains the same. We are refering to the said aspect in as much as the proviso to Rule 71 (a) of the Orissa Service Code, concerned in the appeals before us, also does not contain the word "absolute". In (A.I.R.1980 S.C.1894) Gian Singh Mann vs Punjab and Haryana High Court, a Bench consisting of Krishna Iyer and Pathak, JJ. reiterated the principle that an order of compulsory retirement does not amount to punishment and that no stigma or implication of misbehaviour is intended or attached to such an order. In O.N.G.C vs Iskandar Ali, a probationer was terminated on the basis of adverse remarks made in his assessment roll. A Bench comprising three learned Judges (Fazal Ali, A.C. Gupta and Kailasam, JJ.) held that the order of termination in that case was an order of termination simpliciter without involving any stigma or any civil consequences. Since the respondent was a probationer, he had no right to the post. The remarks in his assessment roll disclosed that the respondent was not found suitable for being retained in service and even though some sort of enquiry was commenced, it was not proceeded with. The appointing authority considered it expedient to terminate the service of the respondent in the circumstances and such an order was beyond challenge on the ground of violation of Article 311. This court has taken the view in certain cases that while taking a decision to retire a government servant under Rule 56(j), more importance should be attached to the confidential records of the later years and that much importance should not be attached to the record relating to earlier years or to the early years of service. In Brij Bihari Lal Agarwal vs High Court of Madhya Pradesh, , upon which strong reliance is placed by the appellant 's counsel a Bench comprising Pathak and Chinappa Reddy,JJ. observed thus: ". .What we would like to add is that when considering the question of compulsory retirement, while it is not doubt desirable to make an overall assessment of the Government servant 's record, more than ordinary value should be attached to the confidential reports pertaining to the years immediately 849 preceding such consideration. It is possible that a Government servant may possess a somewhat erratic record in the early years of service, but with the passage of time he may have so greatly improved that it would be of advantage to continue him in service up to the statutory age of superannuation. Whatever value the confidential reports of earlier years may possess, those pertaining to the later years are not only of direct relevance but also of utmost importance. We may mention that the order of compulsory retirement in the above case is dated 28th September, 1979. The High Court took into account the confidential reports relating to the period prior to 1966 which were also not communicated to the concerned officer. However, the decision is based not upon the non communication of adverse remarks but on the ground that they were too far in the past. It was observed that reliance on such record has the effect of denying an opportunity of improvement to the officer concerned. The decision in Baldev Raj Chaddha vs Union of India, ; , is to the same effect. In J.D. Srivastava vs State of Madhya Pradesh, ; , it was held by a Bench of three learned Judges that adverse reports prior to the promotion of the officer cannot reasonably form a basis for forming an opinion to retire him. The reports relied upon for retiring the appellant were more than 20 years old and there was no other material upon which the said decision could be based. It was held that reliance on such stale entries cannot be placed for retiring a person compulsorily, particularly when the officer concerned was promoted subsequent to such entries. We now come to the decision in Brij Mohan Singh Chopra vs State of Punjab, relied upon by the learned counsel for the petitioner. In this case, there were no adverse entries in the confidential records of the appellant for a period of five years prior to the impugned order. Within five years, there were two adverse entries. In neither of them, however, was his integrity doubted. These adverse remarks were not communicated to him. The Bench consisting of E.S. Venkataramiah and K.N. Singh JJ. quashed it on two grounds viz., 1. It would not be reasonable and just to consider adverse entries of remote past and to ignore good entries of recent past. If entries for a period of more than 10 years past are taken into account it would be an act of 850 digging out past to get some material to make an order against the employee. In Gurdyal Singh Fiji vs State of Punjab, and Amarkant Chaudhary vs State of Bihar, ; , it was held that unless an adverse report is communicated and representation, if any, made by the employee is considered, it may not be acted upon to deny the promotion. The same consideration applies where the adverse entries are taken into account in retiring an employee pre maturely from service. K.N. Singh, J. speaking for the Bench observed: "it would be unjust and unfair and contrary to principles of natural justice to retire pre maturely a government employee on the basis of adverse entries which are either not communicated to him or if communicated, representations made against those entries are not considered and disposed of". This is the first case in which the principles of natural justice were imported in the case of compulsory retirement even though it was held expressly in J.N. Sinha that the said principles are not attracted. This view was reiterated by K.N. Singh, J. again in ; Baidyanath Mahapatra vs State of Orissa, (Bench comprising of K.N. Singh and M.H. Kania, JJ.). In this case, the Review Committee took into account the entire service record of the employee including the adverse remarks relating to the year 1969 to 1982 (barring certain intervening years for which no adverse remarks were made). The employee had joined the Orissa Government service as an Assistant Engineer in 1955. In 1961 he was promoted to the post of Executive Engineer and in 1976 to the post of Superintending Engineer. In 1979 he was allowed to cross the efficiency bar with effect from 1.1.1979. He was compulsorily retired by an order dated 10.11.1983. The Bench held in the first instance that the adverse entries for the period prior to his promotion as Superintending Engineer cannot be taken into account. It was held that if the officer was promoted to a higher post, and that too a selection post, notwithstanding such adverse entries, it must be presumed that the said entries lost their significance and cannot be revived to retire the officer compulsorily. Regarding the adverse entries for the subsequent years and in particular relating to the years 1981 82 and 1982 83 it was found that though the said adverse remarks were communicated, the period prescribed for making a representation had not expired. The Bench observed: ". .These facts make it amply clear that the appellant 's 851 representation against the aforesaid adverse remarks for the years 1981 82 and 1982 83 was pending and the same had not been considered or disposed of on the date of impugned order was issued. It is settled view that it is not permissible to prematurely retire a government servant on the basis of adverse entries, representations against which are not considered and disposed of. See Brij Mohan Singh Chopra vs State of Punjab. On the above basis, it was held that the Review Committee ought to have waited till the expiry of the period prescribed for making representation against the said remarks and if any representation was made it should have been considered and disposed of before they could be taken into consideration for forming the requisite opinion. In other words, it was held that it was not open to the Review Committee and the government to rely upon the said adverse entries relating to the years 1981 82 and 1982 83, in the circumstances. Unfortunately, the decision in J.N. Sinha was not brought to the notice of the learned Judges when deciding the above two cases. The basis of the decisions in Brij Mohan Singh Chopra and Baidyanath Mahapatra, it appears, is that while passing an order of compulsory retirement, the authority must act consistent with the principles of natural justice. It is said to expressly in Brij Mohan Singh Chopra. This premise, if carried to its logical end, would also mean affording an opportunity to the concerned government servant to show cause against the action proposed and all that it involves. It is true that these decisions do not go to that extent but limit their holding to only one facet of the rule viz., `acting upon undisclosed material to the prejudice of a man is a violation of the principle of natural justice. ' This holding is in direct conflict with the decision in J.N.Sinha which excludes application of principles of natural justice. As pointed out above, J.N. Sinha was decided after, and expressly refers to the decisions in, Binapani Devi and Kraipak and yet holds that principles of natural justice are not attracted in a case of compulsory retirement. The question is which of the two views is the correct one. While answering this question, it is necessary to keep the following factors in mind: (a) Compulsory retirement provided by F.R. 56 (j) or other corresponding rules, is not a punishment. It does not involve any stigma nor any implication of misbehaviour or incapacity. Three Constitution Benches have said so vide Shyam Lal Shivacharana and R.L. 852 Butail. (b) F.R. 56 (j) as also the first proviso to Rule 71(a) of the Orissa Service Code, empower the government to order compulsory retirement of a government servant if in their "opinion", it is in the public interest so to do. This means that the action has to be taken on the subjective satisfaction of the government. In R.L. Butail, the Constitution Bench observed: ". In Union of India vs Col J.N. Sinha this Court stated that F.R. 56(j) in express terms confers on the appropriate authority an absolute right to retire a Government servant on his attaining the age of 55 years if such authority is of the opinion that it is in public interest so to do. The decision further states: "If that authority, bona fide forms that opinion, the correctness of that opinion cannot be challenged before courts. It is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision. The law on the subjective satisfaction has been dealt with elaborately in Barium Chemicals vs Company Law Board, ; At page 323, Shelat, J., after referring to several decisions dealing with action taken on subjective satisfaction, observed thus: "Bearing in mind these principles the provisions of section 237 (b) may now be examined. The clause empowers the Central Government and by reason of delegation of its powers the Board to appoint inspectors to investigate the affairs of the company, if "in the opinion of the Central Government" (now the Board) there are circumstances "suggesting" what is stated in the three sub clauses. The power is executive and the opinion requisite before an order can be made is of the Central Government or the Board as the case may be and not of a Court. Therefore, the Court cannot substitute its own opinion for the opinion of the authority. But the question is, whether the entire action under the section is subjective?" 27. The learned Judges then referred to certain other decisions including the decision in Vallukunnel vs Reserve Bank of India, ; and concluded as follows: 853 "Therefore, the words, "reason to believe" or "in the opinion of"do not always lead to the construction that the process of entertaining "reason to believe" or "the opinion" is an altogether subjective process not lending itself even to a limited scrutiny by the court that such "reason to believe" or "opinion" was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rule of natural justice where the function is administrative. The blurring of the dividing line between a quasi judicial order and an administrative order, pointed out in Kraipak has no effect upon the above position, more so when compulsory retirement is not a punishment nor does it imply any stigma. Kraipak or for that matter, Maneka Gandhi cannot be understood as doing away with the concept of subjective satisfaction. On the above premises, it follows, in our respectful opinion that the view taken in J.N. Sinha is the correct one viz., principles of natural justice are not attracted in a case of compulsory retirement under F.R. 56(j) or a rule corresponding to it. In this context, we may point out a practical difficulty arising from the simultaneous operation of two rules enunciated in Brij Mohan Singh Chopra. On one hand, it is stated that only the entries of last ten years should be seen and on the other hand, it is stated that if there are any adverse remarks therein, they must not only be communicated but the representations made against them should be considered and disposed of before they can be taken into consideration. Where do we draw the line in the matter of disposal of representation. Does it mean, disposal by the appropriate authority alone or does it include appeal as well. Even if the appeal is dismissed, the government servant may file a revision or make a representation to a still higher authority. He may also approach a court or Tribunal for expunging those remarks. Should the government wait until all these stages are over. All that would naturally take a long time by which time, these reports would also have become stale. A government servant so minded can adopt one or the other proceeding to keep the matter alive. This is an additional reason for holding that the principle of M.E. Reddy should be preferred over Brij Mohan Singh Chopra and Baidyanath Mahapatra, on the question of taking into consideration uncommunicated adverse remarks. 854 30. Another factor to be borne in mind is this: most often, the authority which made the adverse remarks and the authority competent to retire him compulsorily are not the same. There is no reason to presume that the authority competent to retire him will not act bonafide or will not consider the entire record dispassionately. As the decided cases show, very often, a Review Committee consisting of more than one responsible official is constituted to examine the cases and make their recommendation to the government. The Review Committee, or the government, would not naturally be swayed by one or two remarks, favourable or adverse. They would form an opinion on a totality of consideration of the entire record including representations, if any, made by the government servant against the above remarks of course attaching more importance to later period of his service. Another circumstance to be borne in mind is the unlikelihood of succession of officers making unfounded remarks against a government servant. We may not be understood as saying either that adverse remarks need not be communicated or that the representations, if any, submitted by the government servant (against such remarks) need not be considered or disposed of. The adverse remarks ought to be communicated in the normal course, as required by the Rules/orders in that behalf. Any representations made against them would and should also be dealt with in the normal course, with reasonable promptitude. All that we are saying is that the action under F.R.56(j) (or the Rule corresponding to it) need not await the disposal or final disposal of such representation or representations, as the case may be. In some cases, it may happen that some adverse remarks of the recent years are not communicated or if communicated, the representation received in that behalf are pending consideration. On this account alone, the action under F.R.56(j) need not be held back. There is reason to presume that the Review Committee or the government, if it chooses to take into consideration such uncommunicated remarks, would not be conscious or cognizant of the fact that they are not communicated to the government servant and that he was not given an opportunity to explain or rebut the same. Similarly, if any representation made by the government servant is there, it shall also be taken into consideration. We may reiterate that not only the Review Committee is generally composed of high and responsible officers, the power is vested in government alone and not in a minor official. It is unlikely that adverse remarks over a number of years remain uncommunicated and yet they are made the primary basis of action. Such an unlikely situation if indeed present, may be indicative of malice in law. We may 855 mention in this connection that the remedy provided by Article 226 of the Constitution is no less an important safeguard. Even with its well known constraints, the remedy is an effective check against mala fide, perverse or arbitrary action. At this stage, we think it appropriate to append a note of clarification. What is normally required to be communicated is adverse remarks not every remark, comment or observation made in the confidential rolls. There may be any number of remarks, observations and comments, which do not constitute adverse remarks, but are yet relevant for the purpose of F.R. 56(j) or a Rule corresponding to it. The object and purposes for which this power is to be exercised are well stated in J.N. Sinha and other decisions referred supra. The following principles emerge from the above discussion: (i) An order of compulsory retirement is not a punishment. It implies no stigma nor any suggestion of misbehaviour. (ii) The order has to be passed by the government on forming the opinion that it is in the public interest to retire a government servant compulsorily. The order is passed on the subjective satisfaction of the government. (iii) Principles of natural justice have no place in the context of an order of compulsory retirement. This does not mean that judicial scrutiny is excluded altogether. While the High Court or this Court would not examine the matter as an appellate court, they may interfere if they are satisfied that the order is passed (a) mala fide or (b) that it is based on no evidence or (c) that it is arbitrary in the sense that no reasonable person would form the requisite opinion on the given material; in short, if it is found to be perverse order. (iv) The government (or the Review Committee, as the case may be) shall have to consider the entire record of service before taking a decision in the matter of course attaching more importance to record of and performance during the later years. The record to be so considered would naturally include the entries in the confidential records/character rolls, both favourable and adverse. If a government servant is promoted to a higher post notwithstanding the adverse remarks, such remarks lose their 856 sting, more so, if the promotion is based upon merit (selection) and not upon seniority. (v) An order of compulsory retirement is not liable to be quashed by a Court merely on the showing that while passing it uncommunicated adverse remarks were also taken into consideration. That circumstance by itself cannot be a basis for interfere. Interference is permissible only on the grounds mentioned in (iii) above. This aspect has been discussed in paras 29 to 31 above. Before parting with the case, we must refer to an argument urged by Sri R.K. Garg. He stressed what is called, the new concept of Article 14 as adumberated in Maneka Gandhi (A.I.R. 1978 S.C. 579) and submitted on that basis that any and every arbitrary action is open to judicial scrutiny. The general principle evolved in the said decision is not in issue here. We are concerned mainly with the question whether a facet of principle of natural justice audi alteram partem is attracted in the case of compulsory retirement. In other words, the question is whether acting upon undisclosed material is a ground for quashing the order of compulsory retirement. Since we have held that the nature of the function is not quasi judicial in nature and because the action has to be taken on the subjective satisfaction of the Government, there is no room for importing the said facet of natural justice in such a case, more particularly when an order of compulsory retirement is not a punishment nor does it involve any stigma. So far as the appeals before us are concerned, the High Court which has looked into the relevant record and confidential records has opined that the order of compulsory retirement was based not merely upon the said adverse remarks but other material as well. Secondly, it has also found that the material placed before them does not justify the conclusion that the said remarks were not recorded duly or properly. In the circumstances, it cannot be said that the order of compulsory retirement suffers from mala fides or that it is based on no evidence or that it is arbitrary. For the above reason, both the appeals are dismissed but in circumstances of the case, we make no order as to costs. V.P.R. Appeals dismissed.

The appellant, a company registered under the Indian , was using industrial alcohol as one of the raw materials for manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals. In May, 1970, the company installed its own distillery for the purpose of manufacturing industrial alcohol from mollasses. The respondent No.2 on 3.7.1969 issued a licence to the company for manufacturing spirit. In accordance with the conditions No. 2 and No. 3, the respondent No. 2 appointed a 9 member supervisory staff consisting of one Inspector, one Sub Inspector, one Nayak, one Jamadar and five constables, to supervise the manufacture of the spirit in the company 's distillery plant. The appellant company was required to provide residential accommodation to the supervisory staff within its factory premises and to deposit supervisory charges from time to time. The company complied the requirements. In 1973 the appellant company filed a Civil Application in the High Court challenging the constitutional validity of the Section 58(A) of the Bombay Prohibition Act, 1949. The High Court dismissed the petition, hence this appeal by certificate granted by the High Court under Articles 132(1)133(1)(a) of the Constitution. The appellant company contended that this Court in Synthetics and Chemicals Ltd. case, [1989] Supp.1 SCR 623 held that in respect of 676 industrial alcohol, the States had no power to impose the impost;that in view of the judgment of this Court, the theory of privilege as adumbrated by the High Court could not be sustained, and that there was no quid pro quo. The respondent State submitted that the Synthetics and Chemicals Ltd. case dealt merely with the vend fees, and not about supervisory charges. Dismissing the appeal, this Court HELD: 1.01. The States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and/or check industrial alcohol being used as intoxicating or drinkable alcohol. This is an added reasoning to uphold the validity of Section 58(A). [684D, F G] Synthetics & Chemicals Ltd.v. State of U.P. and Ors., [1989] Supp.1 SCR 623 Followed. 1.02.Section 58(A) of the Bombay Prohibition Act creates a statutory duty of supervision and incidentally provides for recovering from a manufacturer or a businessman having been permitted under a licence to carry on lawfully a business or industrial activity which would otherwise have been unlawful. [684G 685A] 1.03.The maintenance of the staff contemplated under Section 58(A) of the Act is primarily for the purpose of ensuring that while dealing with industrial alcohol, no attempt shall be made to divert non potable alcohol. Therefore, by regulatory measures, the State sees to it that industrial alcohol is not diverted for the use as potable alcohol. Such a regulatory measure is perfectly valid. However, such a power was sustained though not on police power but as a regulatory measure. [679C D] Southern Pharmaceuticals & Chemicals vs State of Kerala, ; ; Sh. Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. vs The State of Gujarat & Anr., C.A. No. 503 of 1974 Followed. The appellants are precluded from contending that the services did not make the impost, since the High Court has noted that it was not contended before it that there was not sufficient quid pro quo between the 677 quantum of impost and the services rendered to the manufacturer or businessman. [679E F]

tion No. 1219 of 1987. (Under Article 32 of the Constitution of India. ) T.S. Krishnamoorthy Iyer, P.N. Puri and R.K. Talwar for the Petitioner. PG NO 400 Kuldip Singh and B. Dutta, Additional Solicitor Generals, Mahabir Singh, C.M. Nayar, A.K. Srivastava, Ms. A. Subhashini, A.S. Bhasme and A.V. Rangam for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. This application is under Article 32 of the Constitution. The All India Sainik Schools Employees Association through its President is the petitioner. The Sainik School Society (hereinafter referred to as "the Society") is a society registered under the Societies Registration Act, 21 of 1860. The main object of the Society, as available from clause 3(a) of the Memorandum of Association is: `to establish Sainik Schools in various parts of India, providing special school education of a high standard with the aim of preparing boys academically and physically for entry into National Defence Academy and other walks of life. " With a view to implementing this object 18 schools located in different States of the country have been established. The petitioner has impleaded the Chairman and Members of the Board of Governors of the Society as respondents 1 to 6; Ministers of Education of the seventeen States as respondents 7 to 23 and Principals of the 18 schools as respondents 24 to 41 The petitioner has asked for a writ of mandamus to the Union of India as also respondent No. l: (1) to implement the recommendations of the Fourth Pay Commission in the Sainik Schools and to extend all the benefits already given to employees of the Kendriya Vidyalayas by way of implementing the recommendations of the Chattopadhya Commission; (2) to give to the employees of the Sainik Schools the differential wages in terms of the Third Pay Commission between 1973 (when it applied to Government institutions) and 1978 (when the benefits were extended to the employees of the Sainik Schools); (3) to direct that the employees of the Sainik Schools shall have the benefits of leave travel concession house rent, pension, group insurance, contributory provident fund, pensionary benefits and gratuity in the same pattern as PG NO 401 obtaining in Kendriya Vidyalaya Sangthan or given to Defence Services Officers working in the Sainik Schools, and; (4) enhance the age of superanuation to 60 years as in the case of Kendriya Vidyalaya employees. When notice was issued to the respondents, respondent No. I alone entered appearance and made a return. Apart from raising certain technical pleas against the maintainability of the petition, it has pleaded that the Society was not an instrumentality of the State. According to the respondent No. 1, the entire capital expenditure on land, buildings, furniture and educational equipment and the major portion of the recurring expenditure is borne by the concerned State Government/Union Territory Administration of the places where the school is located. Maintenance, additions and replacement are also the obligation of the respective State Governments. The Principal, the Head Master, the Registrar and an Army Physical Training Corps/ National Cadet Corp Instructor posted in every school are paid out of the Defence budget All other expenses are met out of the fees payable by the parents or taken out of the scholarships paid by the State/Central Governments to the students. The quantum of the fees,scholarships is fixed by the Board of Governors from time to time taking into consideration the financial position The counter affidavit accepted the petitioner 's plea that several Committees had been established for bringing about improvement in the functioning of the Sainik Schools and improvement of conditions of service such as the High Power Committee Sahare Committee, Balaram Committee and the Academic Study Group Though it essence the Kendriya Vidyalayas and the other establishments of the Central Government differ from the Sainik Schools, many of the benefits admissible to Government servants and Vidyalaya teachers have already been extended to employees of the Sainik Schools The counter affidavit traversed the petitioner 's averment that the guideline of Kendriya Vidyalayas has to be adopted and the benefits admissible to the employees of such Vidyalayas should be extended to the employees of Sainik Schools According to the respondent, the Sainik Schools are of a different pattern; the historical background of their creation, the purpose for which they are founded and the other benefits which are admissible to the employees should also be borne in mind when considering the claim raised by the petitioner According to the respondents the claim based on the concept of equal pay for equal work PG NO 402 contained in Article 39(d) of the Constitution is misconceived inasmuch as unless the nature and the status of the service is the same there can be no equality. On behalf of the petitioner a rejoinder has been filed reiterating some of the averments in the main petition and meeting some of the pleadings in the counter affidavit of respondent No 1. During the pendency of this application, the Board of Governors decided to extend certain advantages and benefits to the employees of the Sainik Schools. Some of these benefits had been claimed in the writ petition. An affidavit has been filed on behalf of the petitioner indicating what are the claims still in issue on the basis of the respondents ' affidavit dated July 29, 1988. It is not necessary to recount the concessions extended by the Society and in our view what is claimed as subsisting items may now be dealt with These are: 1. The age of retirement should be 60 years applicable to all categories of employees being the same as obtaining in the case of employees of the kendriya Vidyalaya Sangathan (K.V.S.). Bonus and gratuity should be effective from 1.1.1986 and employees who have either retired or resigned after that date should be given benefit of the Contributory Provident Fund and gratuity at Central Government rates. 3 Medical reimbursement should he provided on the same basis as admissible to K.V.S. and Central Government employees. Leave Travel Concession including once in a block of four years to travel anywhere in lndia as available to employees of K.V.S. and Central Government employees should be available. Leave rules to all categories of employees should be placed at par with employees of K.V.S. 6. House Rent Allowance should be granted with effect from 1.10.1986, at par with Central Government employees. The pay scale recommended by the Chattopadhyay Commission to Teachers should be effective from 1.1.1986. PG NO 403 8. The Librarians should be given the benefit of pay revision as per the Chattopadhyay Commission pay scale with effect from 1.1.1986. Office Superintendent, Accountants and Personal Assistant to the Principals should be given the same pay as their counterpart receive from the Central Government with effect from 1.1.1986. Nursing Sisters/Assistants/Compouders should be granted pay scales at par with Pharmacists in Central Government under Para Medical Staff as per recommendations of the 4th Pay Commission with effect from 1.1.1986. House Construction Loan, Scooter and Car Purchase Loan should be granted at par with K.V S./Central Government Scheme. 15% extra pay over and above scales admissible to K.V.S. teachers should be admissible to the Sainik School teachers . The difference in wages between 1.1.1973 and 30th June, 1978 on account of delayed implementation of the 3rd Pay Commission 's recommendations should be paid. Bonus for 1984 85 and 1985 86 should also be paid at par with K.V.S 15. All employees who have retired by now before completing 60 years of age and have not yet attained the age of 60 years should be called back to duty and given postings. As we have already indicated, it is the contention of the petitioner that the Sainik School Society is `State ' within the meaning of Article 12 and is accordingly amenable to claim and enforcement of fundamental rights. It is also to be guided by what is provided in Part 4of the Constitution by way of Directive Principles of State Policy. A Constitution Bench of this Court in Ajay Hasia & Ors. vs Khalid Mujib Sehravardi & Ors., ; was considering whether a Society registered under the PG NO 404 Societies Registration Act of 1861 could be "State" within the meaning of Article 12. Bhagwati, J., as he then was, speaking for the unanimous Bench called out six tests from the judgment of this Court in International Airport Authority case (1979) 3 SCC489. Those tests are: "(1) One thing is clear that if the entire share capital of the Corporation is held by Government, it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government. (2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the Corporation, it would afford some indication of the Corporation being impregnated with Governmental character. (3) It may also be a relevant factor . whether the Corporation enjoys monopoly status which is a State conferred or State protected. (4) Existence of deep and pervasive State control may afford an indication that the Corporation is agency or instrumentality. (5) If the functions of the Corporation are of public importance and closely related to governmental functions it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government. (6) "Specifically, if a department of Government is transferred to a Corporation, it would be ;l strong factor supportive of this inference" of the Corporation being an instrumentality or agency of Government. " Applying those tests the Constitution Bench found that the Society which managed the Regional Engineering College at Srinagar and several others elsewhere was `State '. Having said so, this Court pointed out: "It is also necessary to add that merely because a juristic entity may be an authority and therefore State within the meaning of Article 12, it may not be elevated to the position of State for the purpose of Articles 309, 310 PG NO 405 and 311 which find a place in Part XIV. The definition of State in Article 12 which includes an authority within the territory of India or under the control of the Government of India is limited in its application only Part III and by virtue of Article 30, to Part IV; it does not extent to the other provisions of the Constitution and hence a juristic entity which may be State for the purpose of Part III and IV would not be so for the purpose of Part XIV or any other provision of the Constitution. " Applying the tests indicated at page 737 of the Reporter it cannot be doubted that the Sainik School Society is also `State '. The entire funding is by the State Government and the Central Government. The main object of the Society is to run schools and prepare students for the purpose of feeding the National Defence Academy. Defence of the country is one of the regal functions of the State. Once it is held that the Sainik School Society is `State ' within the meaning of Article 12 of the Constitution, application of Article 14 is attracted. Similarly under the Directive Principles the claim for equal pay for equal work becomes tenable. The main plank for substantiating the petitioner 's claim for relief is the allegation of discrimination founded upon the basis that the employees of the Sainik School Society though in every respect comparable to employees of K V.S. and the Central Government are not being given the same treatment K V.S. is a creation of the Government of lndia and is wholly financed out of the Central Exchequer Sainik School Society, as already pointed out, is not wholly funded by the Central Government. In fact substantial contribution for running the Sainik School comes from the funds of the State where the school is located. The Central Government 's contribution is minimal The mode of funding is mainly through scholarship by the State payable to the students. It follows out of this fact that the employees of the Sainik School cannot be treated as Central Government employees nor can they be treated as at par with the employees of K V.S. They are a class by themselves and, therefore, the stand on the basis of Article 14 by pleading discrimination against the guarantee of equality is not available. To put unequals as equals is against the objective of Article 14; in the same way is to discriminate between equals The later, however, is on the hypothesis that the two are equals. In view of the position that the employees of the Society are a distinct class by themselves, we do not think that there is any merit in the claim that there has been discrimination. PG NO 406 Similarly the claim of equal pay for equal work is indeed not tenable. No acceptable material has been placed before us to support the stand that the work in the two institutions is equal. A bare statement that both the Kendriya Vidyalayas and the Sainik Schools impart education to the students cannot sustain the claim of equal work. To maintain a claim for equal pay on the allegation of equal work requires clear material to support the basis that the work in both the institutions is the same. Kendriya Vidyalayas popularly known as Central Schools, are more or less schools as understood in common parlance. A Sainik School intended essentially to draw young men for being recruited into the National Defence Academy is not an ordinary school. Its curriculum, the pattern of teaching, the life style, the discipline and attention differ. The Sainik Schools are totally residential and the teacher is provided accommodation within the complex with a view to exposure of students to the teacher throughout the period and allow the teacher to exercise regulation over the students at all material times. The teacher is also expected to interact with the students beyond the class room. The Principal of the Sainik School is a defence service officer; so is the Headmaster for the lower classes; the Physical Instructor is also drawn from the Army. We are not in a position to accept the claim of the petitioner that the work in the two institutions is equal, and therefore, the claim for equality of pay cannot be accepted. Even though that claim is not accepted, the Sainik Schools being `state ' is amenable to the jurisdiction of the Court and it is open to the court to examine whether the conditions of service are of an acceptable pattern. The age of retirement of teachers in the Sainik Schools is till 60 years but continuance beyond 58 years is subject to physical fitness and continued satisfactory performance of duties. For non academic staff the age is 58 years which is same for most government employees. There is nothing unreasonable in this condition of service. There has been a switch over to pension and gratuity scheme with effect from 29.7.1988. The claim of the petitioner is that it should be with effect from. 1.1.1986. Keeping the mode of funding in view, we do not think the liability that would arise by ante dating the benefit from 1.1.1986 can be conveniently met. We, however, see no reason why the benefit should be extended only from 29.7.1988, which is said to be the date of the decision. It should be made operative from 1st April, ]988, which is the commencement of the current financial year. We would accordingly direct that the pension and revised gratuity scheme should be made operative from 1.4.1988. PG NO 407 We see no reason to interfere in the matter of claim for medical reimbursement. The Society has extended the benefit of medical allowance which is a known form in respect of even government servants not covered under the C.G.H. Scheme. But here again the benefit should be operative from 1st April, 1988. Coming to the Leave Travel Concession advantage, the same should be available from 1st April, 1988, while permitting the visit to the home town once in a block of two years. In terms of the recommendation of the Academic Study Group, we are inclined to extend the benefit of Leave Travel Concession for visiting any place in India once in a block of four years. When such scheme is being accepted even by non government employers on the basis that these visits improve the quality of service, we extend it to the Sainik School employees effective from 1.4.1988. Most of the employees have accommodation provided by the Sainik Schools and according to the Respondent No. 1 free furnished accommodation is provided. There may be cases where in the absence of such accommodation the employees may be living in rented accommodation, but we do not think that we should interfere in respect of this claim. The other claims raised do not appear to be reasonable except the prayer for providing house construction loan, scooter, car purchase loan. This is really nOt a heavy burden and out of the fund to be created loans are to be provided and the loan amounts are recoverable with concessional interest. According to modern thinking these advantages are normal service benefits. A residential accommodation adds to the security of the employee and a conveyance adds to his mobility. We are of the view that this benefit should be admissible to the employees. The Society shall, therefore, create an appropriate fund either to be operated through every college or through such method as may be found convenient for entertaining claims for house construction loan and loans for purchase of scooter, car etc. as may be admissible in terms of the scheme to be framed. We direct that the further benefits which we have granted by our present order should be made available to the employees by the end of 31st March, 1989. The writ petition is accordingly disposed of. There shall be no order as to costs. Before we part, we would like to place on record that learned Additional Solicitor General appearing for respondent No. 1 had candidly stated in Court that if over PG NO 408 and above what the Board of Governors had decided to sanction, if this Court was of the view that some more benefits should be given, the same may be ordered. R.S.S. Petition disposed of.

Industrial Court Duty of Must give an opportunity to applicants to explain the delay if the complaints are barred by limitation. The respondents were earlier the employees of an organisation called the Maharashtra State Cooperative Marketing Federation Limited (Marketing Federation). Later a new organisation namely the Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd., the appellant herein, was formed and some of the activities of the Marketing Federation were assigned to it. By letter dated l0th August, 1984, the Government directed the Marketing Federation that the Services of the seasonal staff should be terminated and those of the regular staff be placed at the disposal of the new organisation. As the Marketing Federation and the appellant failed and neglected to give them the permanent status, the respondents made a complaint before the Industrial Court complaining of unfair labour practices on the part of the Marketing Federation as also the appellant herein as contained in Items 6 and 9 of the Schedule IV of the Act. The workers stated that even when there was an award in their favour by the Industrial Tribunal declaring them as permanent employees, yet the Marketing Federation and the appellant did not give them the status of permanent employees. The Industrial Court took the view (i) that the complaints made by the respondents did not come under items nos. 6 and 9 but they came under item No. I and as such he could not decide the complaints in view of PG NO 472 PG NO 473 section 5(d) of the Act, (ii) that there was no unfair labour practice on the part of the Marketing Federation or the appellant, and (iii) that the complaints were barred by limitation. The Industrial Court dismissed the complaints of the respondents. Feeling aggrieved the respondents filed writ petitions before the High Court and the same were allowed. Hence these appeals by special leave. The appellant contended that the award of the Industrial Court was not binding on them. Dismissing the appeals, this Court, HELD: In view of the Award, it must be held that the respondents were the permanent employees of the Marketing Federation, and that after the constitution of the appellant and the transfer ot the employees of the Marketing Federation to the appellant, the appellant was bound to accept the respondents as permanent employees and not to treat them as seasonal employees or temporary employees. This act on the part of the appellant amounts to unfair labour practice. [476E F] There is no justification for the finding of the Industrial Court that the complaints made by the respondents do not come within the purview of Items Nos. 6 and 9 of the Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. No reason has been given by the Industrial Court why the complaints come within Item No. I of Schedule IV and, as such, can be decided only by the labour Court and not by the Industrial Tribunal. The complaints made by the respondents are clear and specific and there was no scope for categorising them as complaints under Item No. I of Schedule IV. [476G H;477] It has been assumed 1 the Industrial Tribunal that the respondents came to now That they were being appointed as seasonal employees on the respective dates of their appointment letters. There is, however, no material on record to show on what dates the appointment letters were served on the respondents. In the circumstances, the Industrial Court was not at all Justified in holding than the complaints filed by the respondents were barred by limitation. Even assuming that the complaints were barred by limitation, as held by the Industrial Court, the Industrial Court should have given an opportunity to the respondents for explaining the delay. No such opportunity has been given to the respondents. Accordingly, this Court is unable to subscribe to the view of the Industrial Court that the complaints filed by the respondents were barred by limitation. [477B D]

: Civil Appeals Nos. 40 to 110 of 1955. Appeals from the judgment and order dated November 12, 1953, of the former Judicial Commissioner 's Court, Vindhya Pradesh, Rewa, in Misc. Applications (Writ) Nos. 51 to 119 and 121 of 1953. C. K. Daphtary, Solicitor General of India, M. Adhikari, Advocate General for the State of Madhya Pradesh and I. N. Shroff, for the appellant (in C.As. 40 to 109 of 55) and respondent (in C.A. No. 110/55). K. B. Asthana, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents (in C.As. Nos. 40, 51, 52, 54, 65 and 100155) and appellant (in C.A. No. 110/55). February, 24. The Judgment of the Court was delivered by 108 WANCHOO, J. These seventy one appeals on certificates granted by the Judicial Commissioner of Vindhya Pradesh arise out of seventy petitions under article 226 of the Constitution filed before that Court challenging the constitutionality of the Vindhya Pradesh Abolition of Jagirs and Land Reforms Act, No. XI of 1952, (hereinafter called the Act). They were disposed of by a common judgment by the Judicial Commissioner. We shall also dispose of these appeals, by a common judgment. Seventy (Nos. 40 to 109), out of these appeals, are by the State 'of Vindhya Pradesh (now Madhya Pradesh) while one (No. 110) is by the Brijindar Singh, a jagirdar. The case of the petitioners in the Court of the Judicial Commissioner was that the Act was unconstitutional as various provisions in it placed an unreasonable restriction on the exercise of the fundamental rights guaranteed to the petitioners under Part III of the Constitution. The Judicial Commissioner held that the Act was constitutional, except for three provisions thereof, namely, section 22(1), section 37 and cl. (4) (e) of the Schedule to the Act. The seventy appeals by the 'State are with respect to this part of the order declaring these three provisions unconstitutional. The appeal of Brijindar Singh is against that part of the order by which the rest of the Act was held constitutional. We shall first deal with the appeal of Brijindar singh. Learned counsel for Brijindar Singh was unable and in our opinion rightly to challenge the constitutionality of the Act as a whole in view of article 31 A of the Constitution and the decisions of this court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh (1), Visweshwar Rao vs The State of Madhya Pradesh (2) Raja Suriya Pal Singh vs The state of U.P. (3), K. C. Gajapati Narayan Deo vs The State of Orissa (4), Thakur Amar Singhji vs The State of Rajasthan (5), Raja Bhairebendra Narayan Bhup vs "he State of Assam (6), Sri Ram Ram Narain vs The state of Bombay (7), Raghubir Singh vs The State of Ajmer (now Rajasthan) (8) and Atma Ram vs The State of Punjab (9), relating to similar legislation in the (1) (2) (3) (4) [1954] S.C.R. i. (5) ; (6) [1956] S.C.R. 303. (7) [1939] SUPPL. (1)S.C R. 499 (8) [1959] Suppl. (1) S.C.R. 478 (9) [1959] Suppl. (1) S.C.R. 748. 109 States of Bihar, Madhya Pradesh, Uttar Pradesh Orissa, Rajasthan, Assam, Bombay, Ajmer and Punjab. It is not necessary therefore to examine the provisions of the Act in detail. In the circumstances, Appeal No. 110 is dismissed; but as it was not pressed we think it right that the parties should bear their own costs of this appeal. Now we turn to the appeals by the State. The object of the Act is to resume jagir lands. 5 provides for the appointment of a date for the resumption of any class of jagir land by notification and power is given to the State Government to fix different dates for different classes of jagir lands. 6 provides for the consequences of such resumption. Sec. 7, however lays down that notwithstanding anything contained in section 6, certain lands will remain in possession of jagirdars and cl. (a) thereof is material and may be quoted here " The jagirdar shall continue to remain in possession of his sir and khudkasht to the extent and subject to the conditions and restrictions specified in Ch. " Sec. 10 and the subsequent sections appearing in Ch. III of the Act provide for compensation and the Schedule provides the manner in which the compensation shall be computed. Then comes Ch. IV, which deals with sir and khudkasht lands. 20 provides for an application by the jagirdar for allotment of land for personal cultivation. 21 provides for an enquiry by the Tahsildar on such application in the prescribed manner, and the allotment of land and the issue of a patta thereof to the jagirdar having regard to the remaining provisions of the Chapter. Then comes section 22, which may be quoted in full " (1) A jagirdar shall be allotted all sir and khudkasht lands which he was cultivating personally for a continuous period of three years immediately preceding the date of resumption. " (2) A jagirdar whose jagir lands have been resumed under this Act (a) who is not allotted any sir or khudkasht land under sub section (1), or 110 (b) who had been allotted any such land which is less than the minimum area, may if he applies in this behalf, be allotted any other sir or khudkasht land in his personal cultivation at the date of resumption or where there is no such land or sufficient area of such land any unoccupied cultivable waste land in the jagir land subject to availability of such land, so that (i) in a case falling under cl. (a), the total area allotted to him under this sub section is equal to the minimum area, and (ii) in a case falling under cl. (b), the area allotted to him under this sub section together with the area allotted under sub section (1) is equal to the minimum area. Explanation In this sub section, the expression minimum means ten per cent. of the total cultivated land in the jagir land at the date of resumption or 30 acres whichever is greater: Provided that in no case the minimum area shall exceed 250 acres." Chapter V deals with rights of tenants, grove holders and occupants in jagir land and confers certain benefits on them. Chapter VI provides for the machinery and the procedure for carrying out the purposes of the Act. The last section (42) gives power to the State Government to make rules to carry out the purposes of the Act. The learned Judicial Commissioner has held that section 22(1) is a colourable piece of legislation. The scheme of section 22 is to give effect to section 7(a) by which certain lands were allowed to remain in the possession of the jagirdar. Section 22(1) lays down that all sir and khudkasht lands which a jagirdar was cultivating personally for a continuous period of three years immediately preceding the date of resumption shall be allotted to him by the Tahsildar. Sub section (2) provides for those cases where there is no land which can be allotted to a jagirdar under sub section (1) or where the land, which can be allotted to him under sub sec tion (1) is less than the minimum area as defined in the section. In such a case the jagirdar can be allotted any other sir or khudkasht land in his personal culti 111 vation at the date of resumption upto the minimum area. Where, however, the minimum is not reached even after such allotment, the jagirdar can be allotted under sub section (2) any unoccupied cultivable waste land in the jagir subject to availability of such land upto that area. The minimum area means ten per cent. of the total cultivated area in the jagir at the date of resumption or 30 acres whichever is greater subject to the proviso that in no case the minimum area shall exceed 250 acres. In other words, section 22 (1) provides that in the first instance the jagirdar will get all his sir and khudkasht land which he had been cultivating for three years continuously before the date of resumption. If, however, there is no such land or if the land of this kind allotted to a jagirdar is less than the minimum area he will be entitled to further allotment out of the sir or khudkasht land in his possession for less than three years to make up the minimum area. Lastly if the minimum area is not made up even by allotment of such land which has been in the jagirdar 's possession for less than three years he will be entitled to allotment of unoccupied cultivable waste land subject to availability of such land to make up the minimum area; but the provisions of sub section (2) are subject to a minimum of 250 acres. We have not been able to understand how these provisions can be called a piece of colourable legislation. The learned Judicial Commissioner seems to be of the view that as a period of three years ' continuous cultivation is made a condition of allotment under section 22(1), there is discrimination between jagirdars and other occupants of land in whose case section 28(1) provides that every person who is entered in the revenue record as an occupant of any jagir land at the date of resumption, shall be deemed to be pattadar tenant in respect of such land which shall be assessed at the village rate. The learned Judicial Commissioner was not unconscions of the provisions of article 31 A which lays down that no such legislation would be struck down on the ground of discrimination under article 14. He however thought that this was an extra condition which had been imposed so that the jagirdar might.be deprived of as much sir and khudkasht land as possible subject 112 to the minimum and that this was done to create in convenience to the jagirdars whom the legislature did not like. He therefore thought that such legislation was altogether outside the power of the legislature and was invalid as a colourable piece of legislation. In the first place we cannot see how any discrimination can arise in circumstances like this, for the jagirdars are obviously one class while the occupants of lands other than jagirdars belong to another class. Secondly, even if it could be held that jagirdars and other occupants of land stood in the same class and there was discrimination under section 22(1) as compared to section 28(1), such discrimination could not be a ground for striking down section 22(1) in view of the specific constitutional provision in article 31 A. It was because of this difficulty that the learned Judicial Commissioner did not strike down section 22(1) on the ground of discrimination but held that it was a colourable piece of legislation. What is a colourable piece of legislation has been laid down by this Court in K. 0. Gajapati Narayan Deo vs The State of Orissa (1). It was pointed there that : "The question whether a law was a colourable legislation and as such void did not depend on the motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do directly. " Applying this principle it is obvious that the Vindhya Pradesh legislature in this case had full competence to make this provision under Entry 18, List II of the Seventh Schedule. There is no question here of transgressing those powers and veiling the transgression under a pretence or disguise. We do not think it was proper for the Judicial Commisisioner to (1) [1954] S.C.R. (1) 113 ascribe motives to the legislature as he seems to have done by saying that the provision was made for creating inconvenience to a class whom the legislature did not like. Nor do we think that there is any force in the argument that article 31 A has no application to provisions dealing with allotment of land, for sections 7 and 22 of the Act work out the scheme of acquisition of estates and are incidental provisions which are equally protected under that Article along with the main provisions contained in sections 5 and 6 of the Act; (see Raghubir Singh vs The State of Ajmer (now Rajasthan) (1). The provisions of section 22 as a whole provide a scheme for carrying out the intention of the legislature expressed in section 7(a) of the Act and are in our opinion perfectly constitutional. We now turn to section 37 of the Act. That section appears in the procedural part of the Act and is as follows: " (1) No civil court shall have jurisdiction to settle, decide or deal with any question which is, by or under this Act, required to be settled, decided or dealt with by the Tahsildar, the Deputy Commissioner, the Land Reform Commissioner, or the Board of Revenue. (2) Except as otherwise provided in this Act no order of a Tahsildar, a Deputy Commissioner, the Land Reform Commissioner, or the Board of Revenue under this Act shall be called in question in any court. " Sub section (1) thus takes away the jurisdiction of the civil court to decide any matter which under the Act is to be decided by the Tahsildar, the Deputy Commissioner, the Land Reform Commissioner or the Board of Revenue. Sub section (2) provides that no order passed by any of these authorities shall be called in question in any court. The learned Judicial Commissioner has held this section invalid on the ground that it.is repugnant to section 9 of the Code of Civil Procedure, inasmuch as it takes away the jurisdiction of the civil court which it has under that section. 9 lays down that the civil courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. (1) (1959] Suppl (1) C.R. 478 therefore gives jurisdiction to civil courts to try all suits of a civil nature excepting those which are expressly or impliedly barred by any other law. The provision of section 37 is an express bar to the matters dealt with in the Act being agitated in civil courts. The learned Judicial Commissioner seems to think that section 9 takes away the power of the legislature of a Part State like Vindhya Pradesh to legislate with respect to the jurisdiction of courts. The power to the legislature is given by Entry 3, List 11 and cannot be affected by section 9 of the Code of Civil Procedure. As a matter of fact section 9 recognises that if a competent legislature passes a law barring the jurisdiction of a civil court, the jurisdiction of the civil court to take cognizance of such suit, even though of a civil nature, is ousted. It was in our opinion unnecessary to go into section 22 of the Government of Part C States Act, No. XLIX of 1951 and compare it with article 254 of the Constitution in this connection. 37 does not in any way affect section 9. All that it provides is that civil courts shall have no jurisdiction to hear certain matters of a civil nature; and section 9 expressly recognizes that if such a provision is made by any law, the jurisdiction of the civil courts will disappear. There is thus no question of any repugnancy between section 9 of the Code of Civil Procedure and section 37 of the Act. The legislature in this case had power to make a provision like section 37 and once it did so, the last part of section 9 will apply and the jurisdiction of the civil courts will become barred by virtue of section 9 read with section 37 of the Act. The decision of the Judicial Commissioner there. fore that section 37 is ultra vires the powers of the Vindhya Pradesh legislature is not correct. Lastly we come to el. (4) (e) of the Schedule. The Schedule provides for the method of computing compensation. Clause (3) lays down the manner in which the gross income of a jagirdar shall be arrived at. Clause (4) lays down how net income will be arrived at after making certain deductions. One of these deductions is in sub cl. (e) of this Clause, which is as follows: "Where the jagirdar is allotted any sir. or khudkasht or other land or any grove under this Act an 115 amount equal to the valuation of rent for such land or grove for the basic year at the current settlement rates (less the land revenue paid by him in respect of such land and grove in the basic year to be ascertained in such manner as may be prescribed). " This sub clause is in fact a contra entry to sub cl. (b) (i) of cl. The method of calculation provided by these two clauses is that the gross income is first arrived at without taking into account the land which remains with the jagirdar under section 7 (a). Thereafter in order to arrive at the net income for the purpose of compensation the rent for sir and khudkasht land which remains with the jagirdar is taken into account and its value determined under el. (3) (b) (i) minus the revenue payable in respect thereof. This is then deducted from the gross income, for the reason that this land remains, with the jagirdar. The learned Judicial Commissioner thinks that the arithmetical result of this provision is that so far as these lands are concerned the landlord has lost his proprietary interest and has to pay rent to the government, but at the same time gets no compensation. it should however be noted that though the landlord may have to pay rent in future for the land remaining with him, he does not pay any revenue which was payable by him so far with respect to such land. In the circumstances, it cannot be said that he has been deprived of the proprietary interest without any compensation, for he is relieved of the charge of paying land revenue which has also been taken into account in arriving at the net assets for that purpose, and that is all that he can expect considering that the land remains in his possession for all other purposes. We are therefore of opinion that there is nothing unconstitutional in el. (4) (e) of the Schedule. We therefore dismiss Appeal No. 110 but order parties to bear their own costs. We allow Appeals Nos. 40 to 109 and hold that section 22 (1), section 37 and cl. (4) (e) of the Schedule are valid and constitutional. As the respondents in these appeals have not seriously contested them we order parties to bear their own costs. Appeal No. 110 dissmissed. Appeals Nos. 40 to 109 allowed.

The first respondent filed an election petition for an order that the election of the appellant be declared void on the ground that the appellant had committed the corrupt practice under section 123(5) of the Representation of the People Act, 1951, in that he had hired a tractor for conveying women electors from their houses to places of polling and back. By an amendment application the first respondent gave particulars about the conveying of voters, but he did not give any particulars regarding the contract of hiring nor did the appellant ask for such particulars. At the trial t~he first respondent led evidence in respect of t~he contract of hiring and the appellant raised no objection to the relevance of that evidence. The Election Tribunal dismissed the petition but on appeal the High Court held the charge proved and declared the election of the appellant void. The appellant contended that the election petition ought to have been dismissed because particulars of the contract of hiring which was an essential ingredient of the corrupt practice had not been given. Held, (per Sinha Lc. J., jafer Imam, K. N. Wanchoo and J. C. Shah, jj), that the corrupt practice under s~. I23~(5) was the conveying of electors to and from the polling station and not the contract of hiring. If the election petition gave particulars about the use of a vehicle for conveying of electors to ' and from the polling station, the failure to give particulars of the contract of hiring, as distinguished from the fact of hiring, did not render the petition defective. An election petition was not liable to be 92 dismissed in limine merely because full particulars of a corrupt practice alleged were not set out. If an objection was taken and the Tribunal was of the view that full particulars had not been set out the petitioner had to be given an opportunity to amend or amplify the particulars. It was only in the event of noncompliance with the order to supply the particulars that the charge which remained vague could be struck out. Besides, in the present case no material prejudice was caused to the appellant by the absence of the particulars of the contract of hiring. Sarkar J. Under section 123(5) the hiring of the vehicle for conveyance of electors was an essential element of the corrupt practice and it was necessary to give particulars of the contract of hiring. But the failure to give such particulars did not render the petition liable to be dismissed. Section 83 of the Act did not provide for the dismissal of the petition for failure to furnish particulars nor did section 90(3) empower the Tribunal to dismiss a petition for non compliance with the provisions of section 83. The appellant was entitled to apply for particulars but he did not do so; he could not at a later stage complain about the absence of the particulars.

Civil Appeal Nos. 1286, 1287 and 2511 of 1969 From the Judgment and Order dated 20 8 1968 and 3 4 1969 of the Punjab and Haryana High Court in Civil Writ Nos.800/66, 2625/65 and LPA No 141 of 1969. Harbans Singh and R. N. Sachthey for the Appellant in all the appeals. E. C. Agarwala and M. L. Srivastava for the Respondent in C.A. 1286/69. 406 H.K. Puri for the Respondent in C. A. 1287/69 N. N. Keswani for the Respondent in C.A. 2511/69 The Judgment of the Court was delivered by SHINGHAL, J. These three appeals by certificates granted by the High Court of Punjab and Haryana are directed against two judgments of that court dated August 20? 1966, and another judgment of that court dated November 22, 1968. The High Court first decided the writ petition of constable Dwarka Das, which is the subject matter of appeal No.1286 of 1969, and disposed of the other two writ petitions, which are the subject matter of appeals Nos. 1287 and 2511 of 1969, on the basis of that judgment. These three appeals therefore Raise common questions of law and have been heard together at the request of learned counsel for the parties and will be disposed of by a common judgment The writ petitioners in all the three cases were recruited as constables in the police force of the Punjab State. It is not in dispute before us that (i) they were police officers of the State, (ii) they were enrolled as police officers, (iii) they had put in more than three years service after their recruitment and enrolment as police officers, and (iv) they were discharged under the provisions of rule 12.21 of the Punjab Police Rules, 1934, (hereinafter referred to as the Rules and not by way of punishment under the provisions of Chapter XVI of the Rules. No attempt has been made to distinguish one case from the others on facts. On the other hand learned counsel for the parties are in agreement that the facts of the three cases are quite similar and they raise the common question of law whether the orders of discharge were valid. The respondents challenged the validity of those orders by writ petitions which were allowed by the impugned judgments of the High Court and the three appeals are before us for that reason. It has been argued by Mr Harbans Singh, on behalf of the appellant State, that even though the respondents had put in more than three years service as police officers of the State Government, their appointments were temporary and could be terminated for that reason even if the termination could not strictly be said to fall within the purview of rule 12.21 of the Rules. that in fact is the only question II for consideration in these appeals and can easily be answered with reference to the provisions of the , hereinafter refer red to as the Act, and the Rules. 407 Section 1 of the Act defines "Police" to include all persons who A shall be enrolled under it. Section 2 provides that the entire police establishment under the State Government shall be deemed to be one police force, and shall be formally enrolled. It further provides that the conditions of service of the members of the subordinate ranks of the police force shall be such as may be determined by the State Government. Section 8 is also relevant, for it expressly provides that every police officer appointed to the police force of the State (other than an officer mentioned in section 4), shall receive on his appointment a certificate in the form annexed to the Act, by virtue of which he shall be vested with the powers, functions and privileges of a police officer. The certificate states that the police officer concerned has been appointed a member of the police force under the Act, and vested with the powers. functions and privileges of a police officer. The certificate is not therefore the order of appointment or enrolment, but is subsequent to the appointment and the enrolment, even though it is a part of the process of appointment and enrolment, in as much as it certifies that the police officer has been vested with the necessary powers, functions and privileges of a police officer. The certificate does not however have any bearing on the question whether its holder is a permanent or a temporary police officer, for that is a matter which has to be governed by the other conditions of his service. It is not in dispute before us that such certificates were issued to all the three respondents and that they functioned as police officers for more than three years. Chapter XII of the Rules deals with the appointment and enrolment of police officers. Clause (3) of rule 12.2. provides, inter alia, as follows, "(3) All appointments of enrolled police officers are on probation according to the rules in this chapter applicable to each rank. " It is therefore obvious that as the respondents were enrolled police officers, they were on probation. The period of probation has not been specified in the Rules, but rule 12.21 provides for the discharge of an inefficient police officer as follows "12.21. A constable who is found unlikely to prove an efficient police officer may be discharged by the Superintendent at any time within three years of enrolment. There shall be no appeal against an order of discharge under this rule. " 408 So if rules 12.2(3) and 12.21 are read together, it will appear that the maximum period of probation in the case of 3 police officer of the rank of constable is three, years, for the Superintendent OF Police concerned has the power to discharge him within that period. It follows that the power of discharge cannot be exercised under rule 12.21 after the expiry of the period of three years. If therefore it is proposed to deal with an inefficient police officer after the expiry of that period, it is necessary to do so in accordance with the rules of Chapter XVI of the Rules which makes provision for the imposition of various punishments including dismissal from the police force. It is not permissible to ignore those rules and make a simple order of discharge under rule 12.21 after the expiry of the period of three years for that will attract article 311 of the Constitution. The Superintendent of Police concerned could not have ignored that requirement of the law and terminated the services of the three respondents after the expiry of the period of three years from their enrolment in the police force of the State. The High Court therefore rightly set aside the orders of termination of the services of the three respondents and to that extent the impugned judgments are correct. But we are constrained to say that it was not justified in holding that "a constable who has obtained a certificate under rule 12.22 cannot be dealt with under rule 12.21", and that "if he is to be removed from service, procedure prescribed in Chapter XVI has to be followed. " The reason is that, as has been shown, the certificate prescribed under rule 12.22 is meant to serve the purpose of section 8 of the Act by vesting a police officer with the powers, functions and privileges of a police officer, and has to be issued on his appointment as such. The certificate is thus a letter of authority, and enables the police officer concerned to enter upon his duties as a police officer. It has to be granted almost from the inception, when a person is appointed and enrolled as police officer, and it is not correct to say that the mere issue of the certificate puts its holder beyond the reach of rule 12.21 even if it is found that he is unlikely to prove an efficient police officer and has not completed the period of three years after his enrolment. Except for this slight clarification, we find no merit in these appeals and they are dismissed with costs. M.R. Appeals dismissed.

The respondent writ petitioners were constables of the Punjab State Government, and had put in more than 3 years service, when they were discharged for inefficiency, under Rule 12.21 of the Punjab Police Rules, 1934. the High Court allowed their writ petitions challenging the validity of their discharge orders. It was contended by the State that although the respondents had put in more than three years service, their appointments were temporary and could be terminated for that reason, even if the termination could not strictly b said to fall within the purview of rule 12.21. Dismissing the appeal. the Court ^ HELD: If rules 12.2(3) and 12.21 are read together, it will appear that the maximum period of probation in the case of a police officer of the rank of constable is three years and the power of discharge cannot be exercised under rule 12.21 after expiry of that period. If it is proposed to deal with an inefficient police officer after the expiry of three years, it is necessary to do so in accordance with the rules of Chapter XVI of the Rules which makes provision for the imposition of various punishments including dismissal from the police force. [408A B] The High Court was not justified in holding that a constable who had obtained a certificate under rule 12.32 cannot be dealt with under rule 12.21 "I`hat certificate is meant to serve the purpose of section 8 of the Police Act. 1861, by vesting a public officer with the powers, functions and privileges of a police officer and has to be issued on his appointment as such. The certificate is a letter of authority and enables the police officer to enter upon his duties as a police officer. It has to be granted almost From the inception and it is not correct to say what the mere issue of the certificate puts its holder beyond the reach of rule 12.21 even if it is found that he is unlikely to prove an efficient police officer and has not completed the period of three years of his enrolment. [408D G]

Civil Appeal No. 2060 of 1970. From the judgment and order dated the 26th August, 1969 of the Madhya Pradesh High Court in First Appeal No. 100 of 1965 Harbans Singh for the Appellant. Gopal Subramaniam, D.P. Mohanty and R.A. Shroff for the Respondent. The Judgment of the Court was delivered by BALARRISHNA ERADI, J. This appeal by certificate granted by the High Court of Madhya Pradesh under Article 133 (1) (a) arises out of a suit Regular Civil Suit No. 7 A of 1963 on the file of the First Additional District Judge, Bhopal instituted by the appellant herein against the State of Madhya Pradesh, for recovery of a sum of Rs. 29,500 from the defendant by way of refund of the first instalment of the sale price deposited by the plaintiff with the Forest Department of the defendant State pursuant to an auction of two forest coupes held on August 17, 1960, together with damages alleged to have been sustained by the plaintiff on account of alleged breach of contract by the defendant. The plaint contained a further prayer that the defendant should be restrained by a permanent injunction from taking any steps to recover from the plaintiff the second and third instalments of the sale price for which the two coupes had been knocked down in favour of the plaintiff at the auction sale. The trial court held that the plaintiff is entitled to recover from the defendant Rs. 17, 500 by way of refund of the first instalment of the sale price of the two coupes, but rejected the plaintiff 's claim for recovery of damages. Accordingly, a decree was passed in the plaintiff 's favour for recovery of Rs. 17,500 with proportionate costs. The plaintiff 's prayer for the relief of permanent injunction was also granted by the trial court. 897 The State (defendant) carried the matter in appeal before the High Court of Madhya Pradesh. The High Court took the view that the plaintiff 's claim for refund of the first instalment of the sale price was unsustainable inasmuch as he had not proved that the number of trees which were actually available for extraction in the two coupes, according to the proper markings, was less than the number of trees which was covered by the assurance given to the contractor at the time of the auction. As regards the relief of permanent injunction, the High Court held that from the notice (Exh. P 7) issued by the concerned Divisional Forest officer to the plaintiff on April 17, 1961, it was seen that the Government had indicated to the plaintiff its intention to terminate the contract before the second instalment had become due and hence the only right which the Government thereafter had was to realise from the plaintiff the deficiency, if any, occasioned by a resale of the two coupes. In this view, the High Court held that the Government had no longer the right to claim from the plaintiff the balance of the sale consideration represented by the second and third instalments and that the decree for permanent injunction granted by the trial court did not, therefore, call for any interference. Accordingly, the appeal filed by the defendant was allowed in part by the High Court and the decree granted to the plaintiff by the trial court for recovery of Rs. 17,500 was set aside. Hence, this appeal by the plaintiff. The facts of the case on which there is no dispute are as follows. On July 22, 1960, the Forest Department of the State Government of Madhya Pradesh published in the State Gazette a notice notifying for general information that forest contracts of East Bhopal, Forest Division will be settled by public auction to be held by the Divisional Forest officer at Sader Manjil, Bhopal on August 17, 1960. The plaintiff attended the said auction after having deposited the requisite earnest money. At the time o the auction, the respective Range officers announced the details of the quantities of the forest produce available in each coupe. In the said announcement, the total number of trees of each species available in each coupe as also their girth etc., were announced by the concerned Range officers and the bids were invited on the basis of the said information given out to the intended bidders. The plaintiff was the highest bidder in respect of two coupes, namely, Searmau Coupe C/2 "A" and "B". The plaintiff 's bid of Rs. 69,000 for those two coupes was accepted by the Auctioning officer and pursuant thereto, the plaintiff deposited on August 22, 1960 Rs. 16, 250 being the balance of the first instalment of Rs. 17,250 after adjustment of the 898 earnest money already deposited. The plaintiff also produced a solvency certificate and executed the requisite Security Bonds. On October 27, 1960, the plaintiff was informed by the concerned Divisional Forest officer that the security bonds furnished by the plaintiff were accepted and that the contract in respect of the two coupes was sanctioned in his favour by the Chief Conservative officer of Forests. By the said communication, the plaintiff was directed to proceed to the site and sign the 'coupe boundary certificate ' before the Range officer for getting possession of the two coupes. The plaintiff 's case is that when, in pursuance of the aforesaid intimation, he visited the two coupes and conducted a detailed inspection of the trees available for extraction, he found that the coupes did Dot contain the forest produce as announced at time of auction, that a very large number of big trees which had been marked for felling and given serial numbers did not bear hammer marks either at the breast height or at the bottom, with the result that the contractor was debarred under the rules from felling those trees, that similarly a large number of trees which were hammer marked had not, however, been given serial numbers and that a large number of trees situated along the bank of a Nala in Coupe No. 2 "B" which had been marked for felling and had been serially numbered were found to have been subsequently "reserved" with the result that it was no longer open to the contractor to cut any of those trees. The plaintiff states that the aforesaid vital discrepancies and irregularities were pointed out by him to the Range officer and inasmuch as the number of trees available for cutting in the two coupes was found to be very much short of the quantity and quality of the forest produce given out at the time of auction as being available in the two coupes, he refused to sign the boundary certificate. Thereafter, correspondence concerning the matter passed between the plaintiff and the Department, but notwithstanding joint inspections of the site and deliberations the parties could not reach any agreement. The plaintiff took the stand that unless the Department was ready and (; willing to put him in possession of the forest produce conforming to the quantity and quality of timber announced at the time of the auction, he was entitled to repudiate the contract and claim a refund of the amount remitted by him by way of first instalment of the sale price. The Forest Department issued a notice to the plaintiff on April 17, 1961, calling upon him to show cause why the contract should not be terminated and the two coupes reauctioned at the 899 plaintiff 's risk. In the meantime, on January, 19, 1961, the plaintiff had been served with a notice requiring him to deposit the second instalment of Rs. 17,250 and threatening that in the event of failure to comply with the said demand, the amount will be recovered as arrears of land revenue. Subsequently, the Forest authorities of the State initiated action for recovering from the plaintiff the sum of Rs. 34,500 purporting to be the second and third instalments of the sale price, and a notice of demand under Section 146 of the Madhya Pradesh, Land Revenue Code was issued to the plaintiff by the Tehsildar, Bhopal. Thereupon, the plaintiff instituted the present suit praying for the relief aforementioned, after Serving on the defendant a due notice under Section 80, Code of Civil Procedure. Admittedly, the auction sale was of the right to cut the trees which had been marked and numbered in the entire area covered by the two coupes in question. Details regarding the quantity and quality of timber available for cutting in the respective coupes were announced by the concerned Range officers at the time of auction and it was on the basis of the said information that the participants in the auction were invited to bid. The trial Court as well as the High Court have concurrently found that an assurance had been given by the Department at the time of the auction that the two coupes contained the specified quantity of timber of different varieties and girth and that the details then given were as set out in the tabular statement appended to paragraph 3 of the written statement of the defendant. The plaintiff (examined as P.W. 2) and P.Ws. 3 to 6 all of whom had inspected the coupes subsequent to the auction sale have sworn that the quantity of the timber that was actually available for cutting in the two coupes was considerably less than the quantity announced at the time of the auction. The oral testimony given by them is corroborated by the statements contained in Exhibits p 1, P 3, P 5, P 6 and P 8, which are copies of the various representations made by the plaintiff to the offices of the Forest Department after he found out on inspection of the coupes that there was vast divergence between what was announced at the time of the auction as the quantity of the timber available for cutting from the two coupes in question and the quantity that was actually found to be available. Even though the then Sub Divisional Forest officer, who was examined as D.W. 2, has stated in the evidence that after receipt of the plaintiff 's complaint, he inspected the coupes and submitted a detailed inspection report to the Divisional Forest officer, the defendant did not produce the said report in Court, it has also 900 come out in the evidence of D.W. 3, who was the Forest Guard in the area concerned at the relevant time, that he had submitted to the Range officer a report containing details of the timber available for cutting in the two coupes. The aforementioned two reports would have been of valuable assistance in determining the extent of shortfall, if any, in the quantity of timber actually available for cutting in the coupes when compared with the particulars given out at the auction. The non production of the two reports by the dependant, who alone was in possession of the documentary evidence capable of throwing light on the subject matter of this crucial issue, assumes significance in view of the admission made by D.W. 3 that during his inspection of the coupes pursuant to the complaint received from the plaintiff he had found that there were some trees which had been numbered for cutting but had not been hammer marked, that there were some other trees which contained hammer marks only at one place instead of at the base as well as at breast height, as required under the rules, and that there were still some other trees which had been marked by hammer but had not been assigned any number. The inspection report prepared by this witness which has been suppressed is a very material document since the witness has sworn that he had actually counted and noted the precise number of trees in respect of which such irregularities were found to have been committed. Another important admission made by this witness is that there was some truth in the complaint of the plaintiff with respect to the 'reservation ' of the Nala. The evidence clearly shows that there was a large number of trees of different varieties situated on the bank of a Nalla in Coupe No. 2 "B" and they had been hammer marked and serially numbered for cutting and removal. At the time of the auction sale, the Department had treated these trees as being available for extraction by the contractor and it was on that basis that the particulars regarding the total quantity of timber belonging to different species available for cutting in the two coupes were announced to the bidders. However, subsequently, the area comprising the bank of the said Nalla was declared as "reserved", with the result that there was a prohibition against cutting of the trees from the said 'reserved ' area. The plaintiff in his evidence, as P.W.2, has stated that there were about 300 teak trees in the area forming the bank of the Nalla and that the value of those trees would amount to between Rs. 10,000 and Rs. 12,000. Though three officers of the Forest Department were examined on the side of the defendant, the aforesaid testimony given by the plaintiff has not been controverted by them, 901 Notwithstanding the aforesaid facts brought out in the A evidence, the High Court summarily rejected the plaintiff 's contention based on the factum of reservation of the trees standing on the bank of Nalla by stating as follows: "But there is nothing in the plaintiff 's complaints to the Department at any stage alleging that this reservation had been made after the auction had taken place. The idea appears to be an after thought. The mere oral statement of the plaintiff and his witnesses that this marking for reservation had taken place after the auction, on the basis that they did not see these markings about reservation of the trees near the Nalla when they had gone to that forest on earlier occasions, are wholly insufficient to come to the conclusion that the Nalla area had been reserved after the auction. ' ' The aforesaid reasoning is based entirely on the assumption that in one of the complaints preferred by the plaintiff before the Department officers, it had been alleged by him, that the reservation of the trees on the bank of Nalla had been made after the auction had taken place. A mere reference to Exh. P l is sufficient to show that the aforesaid assumption made by the High Court is wholly erroneous. P l is a copy of the representation dated December 28, 1960 submitted by the plaintiff to the Divisional Forest officer (East), Bhopal. In paragraph 4 thereof, the plaintiff had stated as follows: "That the applicant inspected the coupe in or about the first week of November 1960 to give the coupe boundary certificate as is required under Clause 2 of the draft agreement deed. During this inspection the applicant was surprised to know that there were numerous irregularities committed in the marking of trees and huge area containing the Forest Produce marked for sale in the said coupe was subsequently reserved." (underlining supplied) Thus, the correct factual position is that the plaintiff had categorically complained to the Department that a substantial area containing the forest produce, which had all been originally marked for sale, had been subsequently 'reserved ', with the result that the quan 902 tity of timber available for extraction had become substantially reduced, The criticism made by the High Court that the argument advanced by the plaintiff was the result of an after thought, was therefore not justified. We may at this stage refer to Condition No. 3 in the sale notice (Exn. D/l) on which strong reliance was placed on behalf of the respondent. That condition reads: "The details of quantities of forest produce announced at the time of auction are correct to the best of the knowledge of the Divisional Forest officer but are not guaranteed to any extent The intending bidders are, therefore, advised to inspect on the spot the contract area and the produce they intend to bid for with a view to satisfy themselves about its correctness. No claim shall lie against the State Government for compensation or any other relief, if the details of the quantities are subsequently found to be incorrect". In our opinion, the trial court was perfectly right in its view that, while the said condition will operate to prevent the Contractor from claiming any damages or compensation from the State Government on the ground that the details of the quantity of the forest produce were subsequently found to be incorrect, it will not preclude him from repudiating the contract on its being found that there was substantial variance between the particulars furnished at the time of the auction regarding the quantity and quality of timber that will be available for extraction in the concerned coupes and the quantity etc. Of tree growth actually found to be available on the site. It has been clearly established by the evidence in this case that a very substantial quantity of timber standing on the bank of Nalla had been marked for extraction and numbered and the auction sale had been held on the basis that the highest bidder would be entitled to fell and remove all those trees. But by the time the coupes were allowed to be inspected by the auction purchaser, that area was declared to be "reserved", with the result that there was a complete prohibition against the felling of any timber therefrom. This has substantially altered the very foundation of the contract and hence it was perfectly open to the plaintiff to repudiate the contract and claim a refund of the amount deposited by him as a part payment of the purchase price. 903 We are unable to agree with the view expressed by the High A Court that "the plaintiff cannot succeed unless he proved that, even after excluding the trees standing on the reserved area, the rest of the forest did not have sufficient number of trees which would satisfy the assurance given at the time of the auction". The subject matter of the auction sale was the totality of the trees which were marked for cutting in the two coupes. Since a substantial number of the marked trees was contained in the area which was subsequently declared as "reserved", it is inevitable that there was a corresponding diminution in the total quantity of timber which was announced as available for cutting at the time of the auction sale. We do not, therefore, find it possible to agree with the reasons stated by the High Court for refusing the plaintiff 's prayer for refund of the amount paid by him by way of the first instalment of the sale price. The conclusion recorded by the trial court on this issue was perfectly correct and the High Court was in error in interfering with the said finding. We notice, however, that a slight mistake has crept into the judgment and decree of the trial court, inasmuch as the amount of the first instalment refund has been wrongly mentioned therein as Rs. 17,500, whereas the amount actually paid by the plaintiff by way of the first instalment was only Rs. l7,250. A modification to this extent is, therefore, called for in the decree passed by the trial court. This appeal is accordingly allowed, the judgment and decree passed by the High Court are set aside and those of the trial court are restored subject to the modification that the amount recoverable by the plaintiff from the defendant shall be only Rs. 17,250 and not Rs. 17,500 as stated in the trial court decree. In all other respects, the decree passed by the trial court will remain in tact. The respondent (defendant) will pay the costs of the piaintiff in this Court as well as in the High Court.

Under the deed of settlement (exhibit 2A) dated May 22,1930, the appellant landlady acquired a life interest in certain agricultural lands under dispute and the reversion remainder was in her children. During her lifetime she was entitled to enjoy the income of the property but she could not dispose of the property by will, gift or sale. She was also under a disability to encumber the estate though she had the right of carrying on the "vahivat" (management). By virtue of the provisions of section 32 of the Bombay Tenancy and Agricultural Lands Act, 1948, providing that on April 1, 1957 styled as tillers ' day, a tenant of Agricultural land covered by the said Act would be the owner of the land held by him, if other conditions specified therein are fulfilled, the respondents made five separate applications on August 27, 1962 against the appellant before the Agricultural Lands Tribunal, Raver under section 32G for determining the price of the land held by each of them as tenant. The appellant contested the right of the tenant to purchase the land, inter alia contending that under the deed of settlement she acquired a right only to usufruct of land involved in the dispute and she being a limited owner and the settlement imposing certain disability on her precluding her from dealing with the property which would indicate that she could not have leased out the land thereby creating an encumbrance which would be impermissible under the deed of settlement and consequently the tenant of each piece of land could not be said to be lawfully cultivating the land so as to a become the deemed tenant under section 4 of the Tenancy Act. The respondents not being tenants within the meaning of the Tenancy Act could not have become the owner of the land on the tillers ' day. Alternatively it was contended that the minor children of the appellant, she being a limited owner had acquired a vested right in the land and, therefore, as they were minors the date of compulsory purchase would be postponed under section 32F ousting the jurisdiction of the tribunal to determine the price under section 32G. The Tribunal allowed 608 the applications and negatived the appellant 's contentions. All the five appeals preferred by the appellant were allowed by the Collector of Jalgaon. The revision petitions filed by the tenants under section 76 of the Tenancy Act before the Maharashtra Revenue Tribunal were allowed holding that even though the landlady in these cases was a limited owner the instrument settling the property on the landlady did not preclude her from leasing the land and the lease was accordingly valid under section 4, the tenant would be a deemed tenant within the meaning of the Tenancy Act and such deemed tenant would become the owner of the land held by him on the tillers ' day. The appellant approached the High Court under Article 227 of the Constitution. While rejecting the special civil applications the High Court remanded the case to the Collector to give an opportunity to the appellant to agitate the contention about the quantum of price as it was not dealt with by the Collector on merits. The appellant having obtained a certificate under Article 133(1) (a) and (b) of the Constitution preferred these five appeals. Dismissing the appeals, the Court, ^ HELD: 1. On a plain reading of the deed and the admitted position that the appellant had leased the land to each of the respondents and in view of the requirements of section 4 of the Tenancy Act, 1948, it is clear that the respondents would be deemed tenants under that section. [616 E F] 1 :1. Section 4 comprehends within its sweep any person lawfully cultivating any land belonging to another person. If land belongs to one person and another is lawfully cultivating it, unless such person falls under any of the excepted categories; he would acquire the status of a deemed tenant. The excepted categories are: (a) a member of the owner 's family, or (b) a servant on wages, payable in cash or kind but not in crop share or a hired labourer cultivating the land under the personal supervision of the owner or any member of the owner 's family, or (c) a mortgagee in possession. It would thus appear that if the land belonging to one person is being lawfully cultivated by another person and that such other person is not a member of the owner 's family or a servant on wages payable in cash or kind but not in crop share or a hired labourer or a mortgagee in possession then such cultivator lawfully cultivating the land would be deemed to be a tenant. The legal fiction of clothing a lawful cultivator of land belonging to other person has widened the traditional concept of expression "tenant" which would normally imply contractual relationship. [615 E H, 616A] 1:2. Under the deed of settlement appellant was given a life estate. She was the owner of the land during her life time with a limitation that she could not will, gift or sell the property or encumber the same. In view of these four limitations she is undoubtedly a limited owner. But this limited owner holding the life estate has been given the right to administer the estate after she attained majority. Administration of the estate would normally include leasing of the property except where a specific condition is prescribed precluding the administrator from leasing the property. There is no such limiting or restrictive condition prohibiting the appellant in the course of her management from leasing the land. The appellant beneficiary being a woman, the settlors must have thought that she may not be able to personally carry on agricultural operations and therefore when the settlors authorised her, on attaining majority, to administer the estate 609 it would per se in the absence of a limiting or restricting condition to the countrary enable her to lease the land. Thus, if the appellant as beneficiary after attaining majority took over the administration and as part of the administration leased the land, the person so inducted by her on the land would be lawfully cultivating the land belonging to the appellant and being not in any of the excepted categories would be deemed to be a tenant.[616 B E] Dahyalal and Ors. vs Rasul Mohammed Abdul Rahim, ; , followed. Upon a pure literal construction of deed coupled with intendment of the settlement, the appellants ' interest in the property was a vested interest during the life lime with a right to take over management on attaining majority and to deal with the property in her own way, and the children had only contingent interest during the period. The property would devolve on the heirs named in the deed and the devolution would take place on her death. Section 13 of the Transfer of Property Act makes this position clear since none of her children to whom the remainder was given was in existence at the time of transfer. Even if transfer is in favour of unborn person, at the date of transfer to be valid there has to be a prior interest created by the very transfer. This prior interest though limited would not be contingent but vested interest. In fact the interest of future born children would be contingent till the death of the appellant. The deed of settlement cannot be construed as a transfer in favour of unborn person, yet it settles property on trust and the unborn children, under trust, may be beneficiaries but they can claim interest only after the death of the appellant and no interest in her life time. Under the deed of settlement an interest is created in favour of the children of the appellant and the interest would take effect on the happening of specified uncertain event uncertain as to time namely, the death of the appellant the interest of the children would be contingent. It is nothing short of spes successionis [618 D H, 619 A] Rajes Kanta Roy vs Santi Debi, ; , discussed and distinguished. The right to administer the property conferred on the appellant on her attaining majority inheres the right to lease the property. If it be so, it is futile to contend that restraint on the right to encumber would preclude her from leasing the land. The right to manage or administer an immovable property such as agricultural land as a prudent man, comprehends the right to lease, save where the contrary intention is indicated. It is equally well recognised that a limited owner or a life estate holder in agricultural land, unless a clear intention to the contrary is expressed, would be entitled to lease the land during his or her life time. Reading the deed of settlement as a whole no such contrary intention could be found. [620 B D]

Appeal No. 882 of 1968. Appeal by special leave from the judgment and order dated July 1, 1966 of the Calcutta High Court in Civil Reference No. 20 of 1963. 445 D. N. Mukherjee and Sunil Kumar Ghosh, for the appellant. A. K. Sen, Sukumar Ghose and Krishna Sen, for respondent No. 1. B. Sen, Sukumar Basu and P. K. Chakravarti, for respondent No. 2. Niren De, Attorney General, V. A. Seyid Muhammad, R. H. Dhebar and section P. Nayar, for the Union of India. The Judgment of the Court was delivered by Bhargava, J. Rama Sundari Debi, the first respondent in this appeal by special leave, instituted a suit for the ejectment of Indu Bhusan Bose appellant who was a tenant in premises No. 18, Riverside Road, owned by respondent No. 1, situated within the cantonment area of Barrackpore. The agreed rent was Rs. 250/per mensem but there was a dispute as to whether the owner or the tenant was liable to pay rates and taxes. On an application presented by the appellant, the Rent Controller fixed fair rent under section 10 of the West Bengal Premises Tenancy Act No. XII of 1956 (hereinafter referred to as "the Act") at Rs. 170/per month inclusive of all cantonment taxes, and, in appeal, the amount was enhanced to Rs. 188/ per month inclusive of all cantonment taxes. Respondent No. 1, in December, 1960, served a notice on the appellant to quit and, on failing to get vacant possession, filed a suit in the Court of the Munsif. In the plaint, respondent No. 1 claimed that, regulation of house accommodation including control of rents being a subject in entry No. 3 of List I of the Seventh Schedule to the Constitution, the State Legislature could not competently enact a law on the same subject for cantonment are as, so that the appellant was pot entitled to protection under the Act which had been extended to that area by the State Government. It was urged that the extension of that State Act to the cantonment area was ultra vires and void. The Munsif, thereupon, made a reference under section 113 of the Code of Civil Procedure to the High Court of Calcutta for decision of this constitutional question raised in the suit before him. The High Court decided the reference by making a declaration that the notification, whereby the State Government had extended the provisions of the Act to the Barrackpore cantonment area, was ultra vires and void. This is the decision of the High Court that has been challenged in this appeal. It has been contended on behalf of the appellant that the High Court is not correct in holding that the field of legislation covered by the Act, which is primarily concerned with control of rents and eviction of tenants, is included within the expression 446 "regulation of house accommodation in cantonment areas" used in entry No. 3 of List I. That entry is as follows : "3. Delimitation of cantonment areas, local self government in such areas, the constitution and powers within such areas of cantonment authorities and the regulation of house accommodation (including the control of rents) in such areas. " The submission made is that regulation of house accommodation will not include within it laws or rules on the subject of relationship of landlord and tenant of buildings situated in the cantonment areas. On the other hand, according to the appellant, legislation on this subject can be made either under entry No. 18 of List II, or entries Nos. 6, 7 and 13 of List 111, so that a State ,Legislature is competent to legislate and regulate relationship between landlord and tenant even in cantonment areas. These relevant entries are reproduced below "List II 18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and allenation of agricultural land; land improvement and agricultural loans; colonisation." "List III 6. Transfer of property other than agricultural land; registration of deeds and documents. Contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land. Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration. " On the scope of entry 3 of List 1, the argument advanced is that Parliament is empowered to legislate in respect of house accommodation situated in cantonment areas only to the extent that that house accommodation is needed for military purposes and laws are required for requisitioning or otherwise obtaining possession of that accommodation for such purposes. In the alternative. the submission made is that regulation of house accommodation by parliamentary law should be confined to houses acquired,. requisitioned or allotted for military purposes. This entry 3, according to the appellant, should not be read as giving Parliament the power to legislate, on the relationship of landlord 447 and tenant in respect of houses situated in cantonment areas if such houses are let out privately by a private owner to his tenant and have nothing at all to do with the requirements of the military. We are unable to accept this submission. The language of the entry itself does not justify any such interpretation. In the entry, when power is granted to Parliament to make laws for the regulation of house accommodation in cantonment areas, there are no qualifying words to indicate that the house accommodation, which is to be subject to such legislation, must be accom modation required for military purposes, or must be accommodation that has already been acquired, requisitioned or allotted to the military. In fact, if a legislation in respect of any cantonment was to be undertaken by Parliament for the first time under this entry, there would be, at the time of that legislation, no house in the cantonment already acquired, requisitioned or allotted for military purposes; and, if the interpretation sought to be put on behalf of the appellant were accepted, the power of Parliament to pass laws cannot be exercised by Parliament at all. It is also significant that, in the entry, various items, which can be the subject matter of legislation by Parliament, are mentioned separately, and these are : (i) Delimitation of cantonment areas; (ii) local self government in such areas; (iii) the constitution and powers within such areas of cantonment authorities; and (iv) the regulation of house accommodation (including the control of rents) in such areas. In none of these clauses there is any specification that the legislation is to be confined to areas or accommodation required for military purposes. When legislating in respect of local self government in cantonment areas, it is obvious that Parliament will have to legislate for the entire cantonment area including portions of it which may be in possession of civilians and not military authorities or military officers. Similarly, the powers of the cantonment authorities, which could be granted by legislation by Parliament; cannot be confined to those areas or buildings which are in actual possession of military authorities or officers and must be in respect of the entire cantonment area including those buildings and lands which may be in actual ownership as well as occupation of civilians. In these circumstances, there is no reason to narrow down the scope of legislation on regulation of house accommodation and confine it to houses which are required or are actually in possession of military authorities or military officers. The power to regulate house accommodation by law must extend to all house accommodation in the cantonment area 448 irrespective of its being owned by, or in the possession of, civilians. In fact, if a law were to be made for the first time under ' this entry, all the houses would be either vacant or occupied by owners or occupied by tenants of owners under private agreements and the law, when first made, will have to govern such houses. The scope of the expression "regulation of house accommodation" in this entry cannot, therefore, be confined as urged on behalf of the appellant. It is, in the alternative, contended that, even if the expression "regulation of house accommodation" in this entry includes regulation of houses in private occupation, it should not be interpreted as giving Parliament the power even to legislate for eviction of tenants who may have occupied the houses under private arrangement with the owners. It should be confined to legislation for the purpose of obtaining possession and allotment of such accommodation to military authorities or military officers. We cannot accept that the, word "regulation" can be so narrowly interpreted as to be confined to allotment only and not to other incidents, such as termination of existing tenancies and eviction of persons in possession of the house accommodation. The dictionary meaning of the word "regulation" in the Shorter Oxford Dictionary is "the act of regulating" and the word "regulate. is Given the meaning "to control, govern or direct by rule or regulation". This entry, thus, gives the power to Parliament to pass legislation for the purpose of directing or controlling all house accommodation in cantonment areas. Clearly, this power to direct or control will include within it all aspects as to who is to make the constructions under what conditions the constructions can be altered, who is to occupy the accommodation and for how long, on what terms it is to be occupied, when and under what circumstances the occupant is to cease to occupy it, and the manner in which the accommodation is to be utilised. All these are ingre dients of regulation of house accommodation and we see no reason to hold that this word "regulation" has not been used in this wide sense in this entry. It appears that, in the Government of India Act, 1935, the corresponding entry No. 2 in List I of the Seventh Scheiule to that Act was similar to this entry No. 3 of List I of the Seventh Schedule to the, Constitution, but the expression "including centrol of rents" which is now in entry No. 3 of List I within brackets did not exist. An argument was sought to be built on it that regulation of house accommodation was not intended to cover control of rents when that expression was used in the corresponding entry in the Government of India Act, and that this expression used in the Constitution should also be interpreted to cover the same field, so that, but for the addition made within brackets, Parliament 449 could not have legislated for control of rents of house accommodation within cantonment areas. It is further urged that, if the expression "regulation of house accommodation" is interpreted as not including within it regulation or control or rents, it should also be held that it will not include regulation of eviction of private tenants. This argument is based on the premise that the words "including control of rents" was introduced in entry 3 of List I of the Seventh Schedule to the Constitution for the purpose of en larging the scope, of the legislative authority of Parliament and making it wider than that of the Federal Legislature under the Government of India Act. Such an assumption is not necessarily justified. It may be that the words "including the control of rents" were introduced by way of abundant caution or to clarify that the regulation of house accommodation is wide enough to include control of rents. The addition may have been made so as to concentrate attention on the fact that legislation was needed for control of rents in the situation that existed at the time when the Constitution was passed by the Constituent Assembly. It has to be remembered that cantonments are intended to be and are, in fact, military enclaves and regulation of occupation of house accommodation in the cantonment areas by parliamentary law is necessary from the point of view of security of military installations in cantoriments and requirements of military authorities and personnel for accommodation in such areas. Such a purpose ' could only be served by ensuring that Parliament could legislate in respect of house accommodation in cantonment areas in all its aspects, including regulation of grant of leases, ejectment of lessees, and ensuring that the accommodation is available on proper terms as to rents. On an interpretation of the contents of the entry itself, therefore, we are led to the conclusion that Parliament was given the exclusive power to legislate in respect of house accommodation in cantonment areas for regulating the accommodation in all its aspects. In this connection, we may refer to three decisions which explain the object of legislation on the subject of rent control. In Prout vs Hunter(1), Scrutton, L.J., dealing with the legislation during the war in England, held: "Great public feeling was aroused by the exorbitant demands for rent that were made and the ejectments for nonpayment of it, with the result that Parliament passed the Rent Restriction Acts with the two fold object, (1) of preventing the rent from being raised above the prewar standard, and (2) of preventing tenants from being turned out of their houses even if the term for which they had originally taken them had expired. " (1) 450 In Property Holding Company Limited vs Clark(1), it was held : "There are certain fundamental features of all the Rent Restriction legislation, or at any rate of the legislation from 1920 to 1939. The two most important objects of policy expressed in it are (1) to protect the tenant from eviction from the house where he is living, except for defined reasons and on defined conditions; (2) to protect him from having to pay more than a fair rent. The latter object is achieved by the provisions for standard rent with (a) only permitted in creases, (b) the provisions about furniture and attendant liabilities from the landlord to the tenant which would undermine or nullify the standard rent provisions. The result has been held to be that the Acts operate in rem upon the house and confer on the house itself the quality of ensuring to the tenant a status of irremovability. In this description of the distinguishing characteristics conferred by statute upon the clouse, the most salient is the tenant 's security of tenure his protection against eviction; although the scope of the statutory policy about a fair rent must also be borne in mind especially in connexion with the provisions relating to furniture, attendance, services and board. " In Curl vs Angelo and Another(2), Lord Greene, M.R., dealing with Rent Restrictions Act, held : "The courts have had to consider what the over riding purpose and intention of the Acts are, and I cannot put it in a more clear or authoritative way than by using the words of Scrutton, L.J., in Skinner vs Geary ,560), that the object was to protect the person residing in a dwelling house from being turned out of his home." All these three cases clearly show that whenever any legislation is passed relating to control of rents, that legislation can be effective and can serve its purpose only if it also regulates eviction of tenants. Consequently, when in entry 3 of List I the power is granted to Parliament specifically to legislate on control of rents, that power cannot be effectively exercised unless it is held that Parliament also has the power to regulate eviction of tenants whose rents are to be controlled. Such power must, therefore, be necessarily read in the expression "regulation of house accommodation". Of course, it has to be remembered that this power (1) (2) 451 reserved for Parliament is to be exercised in respect of house accommodation situated in cantonment areas only and not other areas the legislative power in respect of which is governed by entries either in List II or in List III. This view that we are taking is also borne out by the historical background provided by the legislation relating to cantonments and house accommodation in cantonments in India. Carnduff in his book on "Military and Cantonment Law in India" has indicated how the need for legislating with the object of overcoming difficulties experienced by military officers in obtaining suitable accommodation in cantonments came under consideration, and has stated : "In the early days of the British dominion in India, the camps, stations, and posts of the field army gradually developed into cantonments, where troops were regularly garrisoned. The areas so occupied were at first set apart exclusively for the military and intended for occupation by them only; but, by degrees, non military persons were admitted land was taken possession of by them, and houses were built under conditions laid down by the Government from time to time. These conditions were undoubtedly framed with the main object of rendering accommodation always primarily available for the military officers whose duties necessitated their residence within cantonment limits." (p. clxii). He goes on to relate that a Bill which ultimately became the Contonments Act, 1889, originally contained a set of provisions on the subject, insisting on the prior claim of military officers to occupy houses in cantonments and proposing that disputes as to the rent to be paid and the repairs to be executed should be referred to, and settled by, committees of arbitration. That part of the Bill was, however, omitted as it evoked considerable opposition and a separate measure was, consequently, taken up, but not till after many years of discussion. The new Bill was introduced in the Governor General 's Council in 1898, and was passed into law as the Cantonments (House Accommodation) Act II of 1902. The main provision in this Act was that, on the Act being applied to any cantonment, every house situated therein became liable to appropriation at any time for occupation by a military officer. It recognised the paramount claim of the military authorities to insist upon houses in cantonments being, where necessary, made primarily available for occupation by the military officers stationed therein. In addition, a provision was made in section 10 that no house in any cantonment or part of a cantonment was to be occupied for the purposes of a hospital, bank, hotel, shop or school, or by a railway administration, without the previous sanc 452 tion of the General Officer of the Command, given with the concurrence of the Local Government. This provision, thus, clearly regulated the letting out of houses in a cantonment even for some of the civilian purposes, such as hospital, bank, etc. The reason obviously was that it was considered inappropriate that a house occupied for such a purpose should be required to be vacated in order to make the house available for military officers. Keeping the primary object of facilitating availability of house accommodation for military officers in view, even private letting out was, thus, regulated at that earliest stage. Subsequently came the Cantonments (House Accommodation) Act VI of 1923 which was in force when the Government of India Act was enacted, as well as at the time when the Constitution came in to force. This Act also contained similar provisions which permitted military authorities to direct an owner to lease out a house to the Central Government, to require the existing occupier to vacate the house and to refrain from letting out any house for purposes of a hospital, school, school hostel, bank, hotel, or shop, or by a railway administration. a company or firm engaged in trade or business or a club, without the previous sanction of the Officer Commanding the District given with the concurrence of the Commissioner or, in a Province where there are no Commissioners, of the Collector. This Act also, thus, interfered with and regulated letting out of house accommodation by owners for civilian purposes even though, at the time of letting, the house was not required for any military purpose. It was in the background of this legislative history that provision was made in the Government of India Act in entry 2 of List I of the Seventh Schedule reserving for the Federal Legislature the power to legislate so as to regulate house accommodation in cantonment areas. and the same power with further clarification was reserved for Parliament in entry 3 of List I of the Seventh Schedule to the Constitution. Obviously, it could not be intended that Parliament should not be able to pass a law containing provisions similar to the provisions in these earlier Acts which did interfere with private letting out of house accommodation in cantonment areas by owners for certain purposes. Another aspect that strengthens our view is that if we were to accept the interpretation sought to be put on behalf of the appellant that the power of Parliament is confined to legislation for the purpose of obtaining house accommodation in cantonment areas for military purposes and excludes legislation in respect of house accommodation not immediately required for military purposes, all that Parliament will be able to do will be to make provision for acquisition or requisition of house accommodation. On the house accommodation being acquired or requisitioned, it will be available for use by military authorities. Such power, obviously, could riot be intended to be conferred by entry 3 in List I when 453 the same power is specifically granted concurrently to both Parliament and the State Legislatures under entry 42 of List III of the Seventh Schedule to the Constitution. On behalf of the appellant, reliance was placed on some decisions of some of the High Courts in support of the proposition that the power of Parliament under entry 3 of List I does not extend to regulating the relationship between landlord and tenant which power vests in the State Legislature under entry 18 of List II. The first of these cases is A. C. Patel vs Vishwanath Chada(1) where the Bombay High Court was dealing with entry 2 of List I of the Seventh Schedule to the Government of India Act, 1935 and entry 21 of List 11 of that Act. The Court was concerned with the applicability of the Bombay Rent Restriction Act No. 57 of 1947 to cantonment areas. Opinion was first expressed that the Rent Restriction Act had been passed by the Provincial Legislature under Entry 21 of List II and reliance was placed on the English interpretation Act to hold that land in that entry would include buildings so as to confer jurisdiction on the Provincial Legislature to legislate in respect of house accommodation. Then, in considering the effect of Act 57 of 1947, the Court said : "As the preamble of the Act sets out, the Act was passed with a view to the control of rents and repairs of certain premises, of rates of hotels and lodging houses, and (A evictions. Therefore, the pith and substance of Act LVII of 1947 is to regulate the relation between landlord and tenant by controlling rents which the tenant has got to pay to the landlord and by controlling the right of the landlord to evict his tenant. Can it be said that when the Provincial Legislature was dealing with these relations between landlord and tenant, it was regulating house accommodation in cantonment areas ? In our opinion, the regulation contemplated by Entry 2 in List I is regulation by the State or by the Government. Requisitioning of property, acquiring of property, allocation of property, all that would be regulation of house accommodation, but when the Legislature merely deals with relations of landlord and tenant, it is not in any way legislating with regard to house accommodation. The house accommodation remains the same, but the tenant is protected quae his landlord. " We have felt considerable doubt whether the power of legislating on relationship between landlord and tenant in respect of house accommodation or buildings would appropriately fall in Entry 21 of List II of the Seventh Schedule to the Government of India (1) I.L.R. 3SupCI69 15 , or in the corresponding Entry 18 of List II of the Seventh Schedule to the Constitution. These Entries permit legislation in respect of land and explain the scope by equating it with rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents. It is to be noted that the relation of landlord and tenant is mentioned as being included in land tenures and the expression "land tenures" would not, in our opinion, appropriately cover tenancy of buildings or of house accommodation. That expression is only used with reference to relationship between landlord and tenant in respect of vacant lands. In fact, leases in respect of non agricultural property are dealt with in the Transfer of Property Act and would much more appropriately fall within the scope of Entry 8 of List III in the seventh Schedule to the Government of India Act read with Entry 10 in the same List, or within the scope of Entry 6 of List III in the Seventh Schedule to the Constitution read with Entry 7 in the same List. Leases and all rights governed by leases, including the termination of leases and eviction from pro perty leased, would be covered by the field of transfer of property and contracts relating thereto. However, it is not necessary for us to express any definite opinion in this case on this point because of our view that the relationship of landlord and tenant in respect of house accommodation situated in cantonment areas is clearly covered by the Entries in List I. In the Constitution, the effect of Entry 3 of List I is that Parliament has exclusive power to make laws with respect to the matters contained in that Entry, notwithstanding the fact that a similar power may also be found in any Entry in List 11 or List III. Article 246 of the Constitution confers exclusive power on Parliament to make laws with respect to any of the matters enumerated in List 1, notwithstanding the concurrent power of Parliament and the State Legislature, or the exclusive power of the State Legislature in Lists III and 11 respectively. The general power of legislating in respect of relationship between landlord and tenant exercisable by a State Legislature either under Entry 18 of List II or Entries 6 and 7 of List III is subject to the overriding power of Parliament in respect of matters in List 1, so that the effect of Entry 3 of List I is that, on the subject of relationship between landlord and tenant insofar as it arises in respect of house accommodation situated in cantonment areas, Parliament alone can legislate and not the State Legislatures. The submission made that this interpretation will lead to a conflict between the powers conferred on the various Legislatures in Lists I, II and III has also no force, because the reservation of power for Parliament for the limited purpose of legislating in 'respect of cantonment area only amounts to exclusion of this part of the legislative power from the general powers conferred on State Legislatures in the other two Lists. This kind of exclusion is not confined only to legislation in respect of house accommodation in 455 cantonment areas. The same Entry gives Parliament jurisdiction to make provision by legislation for local self government in cantonment areas which is clearly a curtailment of the general power of the State Legislatures to make provision for local self government in all areas of the State under Entry 5 of List R. That Entry 5 does not specifically exclude cantonment areas and, but for Entry 3 of List I, the State Legislature would be competent to make provision for local government even in cantonment areas. Similarly, power of the State Legislature to legislate in respect of : (i) education, including universities, under Entry 1 1 of List 11 is made subject to the provisions of Entries 63, 64, 65 and 66 of List I and Entry 25 of List III; (ii) regulation of mines and mineral development in Entry 23 of List II is made subject to the provisions of List I with respect to regulation and development under the control of the Union; (iii) industries in Entry 24 of List 11 is made subject to the provisions of Entries 7 and 52 of List 1; (iv) trade and commerce within the State in Entry 26 of List II is made subject to the provisions of Entry 33 of List III; (v) production, supply and distribution of goods under Entry 27 of List 11 is made subject to the provisions of Entry 33 of List III; and (vi) theatres and dramatic performances; cinemas in Entry 33 of List 11 is made subject to the provisions of Entry 60 of List I. Thus, the Constitution itself has specifically put down entries in List II in which the power is expressed in general terms but is made subject to the provisions of entries in either List I or List III. In these circumstances, no anomaly arises in holding that the exclusive power of Parliament for regulation of house accommodation including control of rents in cantonment areas has the effect of making the legislative powers conferred by Lists 11 and III subject to this power of Parliament. In this view, we are unable to affirm the decision of the Bombay High Court in A. C. Patel 's case(1) which is based on the interpretation that Entry 2 in List I of the Seventh Schedule to the Government of India Act only permitted laws to be made for requisitioning of property, acquiring of property and allocation of property only. The same High Court, in a subsequent case in F. E. Darukhanawalla vs Khemchand Lalchand(2), placed the same interpretation on Entry 3 of List I of the Seventh Schedule to the Constitution. That decision was also based on the same interpretation of the scope of regulation of house accommodation as was accepted by that Court in the earlier case. The Nagpur High Court in Kewalchand vs Dashrathlal(3) pro ceeded on the assumption that the decision in the case of A. C. Patel vs Vishwanath Chada(1) correctly defined the scope of Entry (1) I.L.R. (2) I.L.R. (3) I.L.R. 3 Sup. CI 69 16. 456 2 in List I of the Seventh Schedule to the Government of India Act, and considered the narrow question whether the relationship of landlord and tenant specifically mentioned in Entry 21 in List It of that Act covered the requirement of permission to serve a notice for eviction in regulating the relation of landlord and tenant and fell within the scope of Entry 21 in List II or in Entry 2 in List I of that Act. The Court held that it substantially fell in Entry 21 in List II and not in Entry 2 in List I. That Court did not consider it necessary to express any opinion on the question whether the expression "regulating of house accommodation" included something besides what Chagla, C.J., had said was its ambit in the case of A. C. Patel vs Vishwanath Chada(1), but expressed the opinion that the expression could not be stretched to include the aspect of the relation of landlord and tenant involved in that particular case. It is clear that, in, that case also, a narrow interpretation of the expression "regulation of house accommodation" was accepted, because it appears that there was no detailed discussion of the full scope of that expression. Similar is the decision of the Patna High Court in Babu Jagtanand vs Sri Satyanarayanji and Lakshmiji Through the Shebait and Manager Jamuna Das (2) . In fact, this last case merely followed the decision a the Bombay High Court in the case of F. E. Darukhanawalla vs Khemchand Lalchand(3). On the other hand, the Rajasthan High Court in Nawal Mal vs Nathu Lal(4) held that the power of the State Legislature to legislate in respect of landlord and tenant of buildings is to be found in Entries 6, 7 and 13 of List III of the Seventh Schedule to the Constitution and not in Entry 18 of List 11, and that that power was circumscribed by the exclusive power of Parliament to legislate on the same_subject under Entry 3 of List I. That is also the view which the Calcutta High Court has taken in the judgment in appeal before us. We think that the decision given by the Calcutta High Court is correct and must be upheld. The appeal fails and is dismissed with costs payable to plaintiff respondent only. R.K.P.S. (1) I.L. R. (2) I.L.R. 40 Patna 625. (3) I.L.R. (4) I.L.R. R.K.P.S Appeal dismissed.

The assessee firm used to promote companies. It purchased all the shares of a Company at the ruling rates with borrowed money and very soon thereafter disposed of all of them at a profit. Before the Income tax authorities the assessee claimed that it had taken over the shares with a view to secure the managing agency of that Company and had thereafter distributed the shares to its allied concerns, that the transaction was only to facilitate acquisition of a capital asset and the profit realised from the sale of such a capital investment was a capital gain. It was, found by the Departmental authority and the Tribunal that the shares were not merely 'distributed to the assessee 's associates, but that, some of the shares were sold to its allied concerns and others to strangers, through brokers, in small lots and at a profit. Also, the interest which the assessee had to pay for the amount borrowed for purchasing the shares was debited in its revenue account and was claimed before the Income tax authorities as a revenue allowance. The assessee also purchased shares of two other Companies which were its allied concerns, and commenced selling them soon after at a profit. It was claimed before the Income tax authorities, with respect to these transactions that when a part of the new issue of capital of those two Companies was not taken over by the public, the assessee, as the financiers of those two companies took over the shares, that the were in the nature of a capital investment and the shares were sold on account of 'financial embarrassment ' and not with the object of earning income and so the profit realised by the sale did not attract income tax. The Departmental authorities and the Tribunal found that the first lot of shares in one of these two Companies was purchased in January, 1945 and the firm went on purchasing and selling the shares of that Company thereafter from February, 1945 and hence, there could not have been any 'financial embarrassment '. As regards the shares in the second company they were purchased in February, 1945 and sold in August, 1945. The sales were all through brokers and at a profit. On the question whether the total profits realised by the assessee was a capita1 gain or revenue income, HELD: Whether a transaction is or is not an adventure in the nature of trade is a mixed question of law and fact: in each case, the legal effect of the facts found by the Tribunal on which the tax payer could be treated as a dealer or an investor in shares has to be determined. [724 C D] In the present case, on the facts found, there was a well planned scheme for earning profit. Therefore, all the transactions were impressed with the character of a commercial transaction entered into with a view to earn profits and were not capital investments and hence were liable to tax [724 D; 725 A B] 721 Ram Narain Sons (P) Ltd. T., Bombay, C.) explained.

Special Leave Petition (Civil) No. 5863 of 1979. 139 From the Judgment and Order dated 15 12 1978 of the Kerala High Court in Original Petition No. 679/78 II. N. Sudhakaran for the Petitioner. A. section Nambiar for the Respondents. The Order of the Court was delivered by KRISHNA IYER, J. All the parties are represented by counsel and we have heard them in extenso. We therefore proceed to pass a speaking order. The princely family of Cochin with a proletarian plurality of members has been the cynosure of special legislations, the last of which is Act 15 of 1978, the target of attack in this special leave petition. Articles 14 and 19 of the Constitution have been the ammunation used by the petitioner in the High Court and here to shoot down the legislation as ultra vires. A brief sketch of the family law of the Cochin royalty may serve to appreciate the scheme of the latest legislation under challenge. The Maharaja of Cochin, reigned and ruled over a pretty princely State, Cochin, which is now an integral part of the Kerala State. When the curtain of history rose to find India free, the constellation of princedoms fused into Independent India 's democratic geography. Cochin and Travancore finally fell in with this trend. As a first step they were integrated into the Travancore Cochin State which came into being on July 1, 1949. Two days before this constitutional merger, the Maharaja of Cochin issued a Proclamation to provide for the impartibility, administration and preservation of the Royal Estate and the Palace Fund through a Board of Trustees. A small process of family legislation on the Cochin Palace followed the political transformation of the State. The Valiamma Thampuram Kovilakam Estate and the palace Fund (Partition) Act, 1961 (Actt 16 of 1961) was the first, the primary purpose of which was to undo the impartibility of the royal estate as declared by the Proclamation of 1949. The shares of the members, the mode of division and the machinery for partition were statutorily prescribed by Sections 4 and 5 of the said Act. The basics of those two sections were that on a majority of the major members of the royal family expressing their wish to be divided, the Maharaja would consider whether it was in the interest of the family to partition the estate among the members and, if he did, direct the Board of Trustees to proceed with the partition under his supervision and control. Each member, including a child in the womb, was eligible for a single share on an equal basis. The privi 140 leges of the Maharaja were preserved as his personal right but vis a vis family assets feudal 'Primogeniture ' fell to modern egalite, within limits. The next epochal legislation was the 26th Constitution Amendment Act of December 1971 which extinguished all royal privileges, privy purses and cher dignities of the erstwhile rulers of the Indian States. With the denudation of his royal privileges the Cochin Maharaja stepped down to the level of the karta of a joint Hindu family. The royalty which was once a reality became a mere memory and with the statutory injection of democratic rights into this blue blooded family, plebeian claims for equal shares began to be voiced, especially because the multifid of little royalties of the Maharaja 's matriarchal family lived in lurid poverty, as counsel distressingly described. Indeed, the marummakkattayam system which at one time ensured impartibility and management by the senior most member had lost its functional value and virtually vanished from the Kerala coast, thanks to the erosive process of legislative individualism. The final blow to this system was delivered by the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976) which fully wiped out the matriarchal pattern of holding and the Hindu undivided family system in the State of Kerala. Despite this revolutionary change, the Cochin royal family maintained its former status as a marummakkattayam undivided coparcenary since it was governed by special legislation which remained unrepealed. This regal matriarchal survival levelled into the main stream of proprietary life with equal, partible shares for young and old, like the rest of the community when the Kerala legislature enacted the Valiamma Thampuram Kovilakam Estate and the Palace Fund (Partition) and the Kerala Joint Hindu Family System (Abolition) Amendment Act, 1978 (Act 15 of 1978) (preceded by Ordinance No. 1 of 1978). A close up of this statutory scheme is necessary since it is this legislation which is furiously fusilladed as unconstitutional by counsel for the petitioner. The legislative Proclamation of 1949, if we briefly recapitulate, commended the Constitution by His Highness the Maharaja of a five man Board of Trustees charged with the plenary task of 'administration, management and conservation ' of the 'Estate ' and 'Palace Fund '. Act 16 of 1961 brought about a degree of economic democratisation while preserving some of the special legal habiliments of the royal estate. The Board nominated under the earlier Proclamation was continued but its responsibilities were broadened to include partitioning of the Kovilakam assets if a majority of major members the voice of Palace democracy asked for divi 141 sion and the Maharaja deemed it desirable in the interests of the family. This was a half way house between the impartible old and partible at will new. A short provision of great relevance to the issue of constitutionality is to be found in Section 7. The public policy behind this Section excluding civil court jurisdiction is not merely the special situation of the former royal family but the virtual impossibility within a life time of division by metes and bounds and allotment of shares to the 800 odd members, most of whom are little royalties in rags, homeless and hungry, seeking to survive by the small pieces from the large cake if ever it will be sliced and distributed. The exasperating longevity of partition litigation, what with the present cantankerous orientation and procedural interminability, preliminary decree, appeals thereon, commissions, objections, revisions, final decrees, and a ruinous crown of other interlocutory proceedings punctuating the suit, followed by inevitable appeals and special leave petitions and the like, baffles the humble and baulks their hope of getting a morsel in their short life span. When this phenomenon an Indo Anglican processual bequest is compounded by the calamitous fact that there are around 800 sharers and a variety of considerable assets to be divided, civil litigation for partition is the surest punishment to the tattered 'princelings ' by pauperising them through the justice process and giving them stones instead of bread in the end, if the end would arrive at all ! The compulsive pragmatics of distributive justice elicited legislative compassion for this uniquely numerous crowd of pauperised patricians by exclusion of civil court 's jurisdiction. The pathology of protracted, exotic processual legalistics needs comprehensive renovation if the Justice System is to survive but the legislature salvaged the largest royal family with the littlest individual resources without waiting for the remote undertaking to overhaul Processual Justice to the People. Sociology is the mother of law, lest law in the books should be bastardised by the law of life. A radical measure which swept off the matriarchal system and the Joint family form of estate for Hindus is the next statutory even which needs mention. Kerala Act 30 of 1976 (The Kerala Joint Hindu Family System (Abolition) Act, 1975), abolished at one stroke the Hindu undivided family and converted them into tenancies in common with the rule of one member one share. The Cochin 'Kovilagam ' was not affected because neither Act 16 of 1961 nor the prior royal proclamation expressly repealed. But the individualist spirit of Act 30 of 1976 invaded the royal family legislatively as there is no basis for proprietary privilege, even as vestiges of past glory, in a democracy charged with social justice. So, Act 15 of 1978 (The Valiamma 142 Thampuram Kovilakam Estate and the Palace Fund (Partition) and the Kerala Joint Hindu Family System (Abolition) Amendment Act, 1978) came to be passed whereby division of the Kovilakam assets was freed from the Maharaja 's subjectivism and made a mandate of the statute, in tune with the common trend. The modus operandi to work out partition was the Board and no specific prescription regarding the shares of members is given. No appeal from the partition effected by the Board is specified and Sections 4 and 5 of Act 16 of 1961 are deleted retrospectively. A quick glance at the provisions gives the impression that the legislature merely equated the right in partition of the junior members of the Kovilakam with that of the commonalty of marumakkattayam families save that instead of the Civil Court the division by metes and bounds was to be carried out by the Board which was already in management and was familiar with the features of the family and the assets. A closer look, in the light of the constitutional challenge which was repelled by the High Court, leaves us cold, hot submissions to burn down the allegedly arbitrary and irresesonable legislation notwithstanding. Let us dissect the anatomy of the Amending Act of 1978. Be it remembered that Act 16 of 1961 (the principal Act) is not and has never been attacked as ultra vires. If the principal Act was good the search for the invalidatory vice must be confined to the cluster of new clauses. The principal violation pressed before us by Shri Govindan Nair for the petitioner, who is a senior member of the family, is of article 14 and the customary contention, more easily waged than established, is that arbitrary, unguided, naked and tyrannical power is conferred on the Board and therefore the whole Act is bad because the central piece of the statutory scheme is this machinery. True, our constitutional order is sensibly and sensitively allergic to arbitrary power and we have no hesitation in striking down any provision which can be anathematised as creating uncanalised and Neronised Power. The very creation of the Board was challenged as violative of article 14 since the jurisdiction of the Civil Court is the common forum with other judicial remedies, appellate and revisional, available for the aggrieved party. While the Board is given plenary power to divide and distribute with validity being conferred on such partition the grievance is that there are no appeals and revisions and the arbitrament of the Board even if it is arbitrary becomes final. This is castigated as a caprice of the legislature. More than all, the very singling 143 out of the ruler 's family, populous though it be, is anathematised as discriminatory. Incidentally, the powers of the Board are charged as unreasonable since there is no provision to give a hearing to the affected parties in the process of adjudication and the whole process may well be the deliberations of a secret campaign. These violent vices imputed to the statute will certainly invalidate the Act 15 of 1978, if there were some substance therein. Even an imaginative exercise, if informed by realism, discovers no such infirmity. Let us clear the confusion caused by the omission of Sections 4 and 5 of the principal Act. Shri Govindan Nair for the petitioners relied on this omission to contend that the wholesome provisions of sections 4 and 5 of the Principal Act of 1961 have been waywardly withdrawn leaving it to the Board to award such shares as they fancied to the various members. This submission proceeds on a simple misconception. Section 4 provides for an equal share for every member including a child in the womb and Section 5 arrogates to the Maharaja of Cochin the power to exclude any properties from the category of partible estate. No democrat will shed a tear if Section 5 were deleted. The members, as Shri Govindan Nair himself urged, were mostly indigent. If that were so, the infliction upon such members by the Maharaja 's act of exclusion of as many properties as he thought should not be divided would be unjust. Since every member was entitled to an equal share with the Maharaja himself all the properties should be available for partition and this result, which is eminently just, is achieved by the omission of Section 5 from Act 16 of 1961. Therefore, the provision in Act 15 of 1978 omitting Section 5 from the principal Act is a virtue to be commended, not a vice to be condemned. It is eminently reasonable and to contend against it is obviously unreasonable. A different criticism has been made regarding the deletion of Section 4 by Shri Govindan Nair; but it is equally mis conceived, if we may say so. Section 4 of Act 16 of 1961 provided for the share of members including those en ventre sa mere. This provision was deleted because its purpose was otherwise served by the substituted Section 3 of Act 16 of 1961 by including a direction to the Board "to effect partition of the Estate and the Palace Fund among all the members entitled to a share. under Section 4 of the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976). " The effect of the importation of Section 4 of the Abolition Act is to ensure partition per capita among all the members as in the case of a Joint Hindu Family other than an undivided Mitakshara Hindu family. 144 What was otiose, namely, Section 4 of Act 16 of 1961, was cut out. This was merely a drafting operation not making any change in the substantive law bearing upon the shares of the members. The contention that by this deletion the members of the Kovilagam had been made over as hostages to the caprice of the Board of Trustees is a frightful error or disingenuous scare. In the course of his submissions, counsel had a dig at the Board, which, according to him, was an imperium in imperio, a law unto itself and, therefore, arbitrary. This again is an egregious error. The Board was not a new creation but an old concoction. Thirty years ago the Ruler brought it into being. Since then, the Kerala legislature, in Act 16 of 1961, continued it and the latest legislation now denounced before us recognised this time honoured entity wherein the heads of the four branches were members and entrusted it with the work of division of assets. The Board, being an old institution in plenary management since 1949 and wisely composed of the seniormost members of the four branches, is sentimentally and functionally the best instrument to divide and distribute. Indeed Act 16 of 1961 had also entrusted the task of partition to the same Board and no member had during nearly two decades challenged the wisdom of the provision. We see no legal ground to blaspheme this Board. The greater grievance of counsel about the Board was something else. He contended that the Board under Section 3 (2) was empowered to effect the partition of the Estate and the Palace Fund "and the partition so effected shall be valid. " From this the criticism was spun out that the Board was likely to act in any manner it pleased, sell the properties at any price, distribute the assets at its sweet will or whim and thus reduce the partition of Kovilagam properties to a mock exercise by an unchallengable Board. He contrasted this grim picture with the advantageous alternative of a civil suit where the shares were fixed according to law, the properties were valued by a Commissioner, objections to the report of the Commissioner were considered by the Court and a decree, preliminary or final, was subject to appeal and further appeal. The judicial process was a great guarantee of the rights of parties which was unavailable before the statutorily immunised and potentially eccentric Board of Trustees. We remained unmoved by this sombre picturisation made up of illusory apprehensions. We have earlier pointed out that the strength of the Cochin Royal family is around 800. The properties consist of urban lands, rural lands, buildings and other assets considerable in volume and value. A litigative resolution of the conflicts among members with the plethora of interlocutory proceedings plus revisions 145 and appeals may be an endless adventure which would surely bankrupt the poorer members and deny to everyone a share in the properties by metes and bounds for a generation to come. Of course, those who are already in possession of properties and counsel for the respondent hinted that the petitioners belong to this category would benefit by striking down this legislation and delay in legislative rectification of the situation and the further litigation that might be launched and so on. Those who have, have a vested interest in procratination; those who have not, have an urgent interest in instant justice. In this view, a non curial instrumentality and procedure for partitioning the properties cannot be condemned as discriminatory. The alternative created by the statute is quite a reasonable and in our view a better instrument having regard to the totality of factors. Law is not a cocoon and keeps its eyes wide awake to the realities of life. The legislation in question has taken note of the fact that the Board has been for decades entrusted by the Maharaja by his Proclamation with the administration of the family estate and no complaints have ever been voiced against their management. The latter legislation of 1961 has sanctified this Board. That legislation has gone to the extent of conferring powers of partitioning the Kovilagam properties on this Board and the present Act of 1978 does nothing more. We are unable to understand how what was good and valid in 1961 Act could become vicious and invalid in 1978. The composition of the Board and its history and experience convince us that it was a fit instrument for the task entrusted. The fear expressed before us that the Board may ignore the norms of judicial procedure while settling the rights of parties is misplaced. We do not regard Section 3 of Act 15 of 1978 as dispensing with canons of fairplay of natural justice and of quasi judicial values. We realise that the enormous work of dividing the properties has to be carefully carried out. Quasi judicial responsibilities are implied by the statute in the Board 's functions and if the Board breaches these norms and canons the constitutional remedy under Article 226 comes into play. After all, the Board is a statutory body and not an executive creature. It has been saddled with effecting the rights of parties and is bound to act quasi judicially. Its deviances are not unreviewable in writ jurisdiction. Therefore, we direct the Board to comply with the requirements prescribed in several decisions of this Court in quasi judicial jurisdictions. Natural justice is obviously the first as this Court has ruled in a shower of cases especially highlighting in Maneka Gandhi 's case(1) and M. section Gill 's case(2). This Court has 146 gone to the extent of holding that natural justice require reasons to be written for conclusions made. The Organo Chemical Industries & Anr. vs Union of India & Anr.(1) this Court has held that the absence of a right of appeal does not spell arbitrariness. It is further held in the same ruling that giving of reasons for conclusions is ordinarily an important component of natural justice in quasi judicial tribunals. In short, every facility that a party will reasonably receive before a quasi judicial body when rights are adjudicated upon, will be available before this Board and we mandate it to extend such facilities and opportunities. We need hardly mention that when properties are sold parties must be intimated and the principles embedded in the Partition Act must be taken note of when properties are valued and allotted. The services of valuers of properties or of Commissioners must also be used. Moreover, parties must be given opportunity to object to reports of Commissioners, if any, appointed. In short, the general law, processual and substantive, bearing on allotment of properties cannot be thrown to the winds by the Board merely because Section 3 does not write these details into it. We must hasten to caution that no party can hold the Board in ransom by raising vexatious and frivolous objections and putting in proceeding after proceeding merely to delay or defeat. The Board is geared to completion of the partition with a reasonable speed and that purpose must inform its activities. While every party is entitled to a reasonable voice in the proceedings no party can enjoy the privilege of thwarting the processes of justice. These observations and directions which are built in in Section 3, in our view, are sufficient guidelines to repel the submission that the power under Section 3(2) is unbridled and unconstitutional. Partitions are best done by a broad consensus and the Board will remember that constant consultation with the members may facilitate its work and reduce tension and friction. Nor are we impressed with the argument that because appeals are absent justice is jettisoned. Oftentimes, appeals are the bane of the justice system, especially because the rich can defeat the poor and the weak can be baulked of their rights indefinitely that way. We do not mean to decry the right of appeal, but may not go with the petitioner in glorifying it in all situations. We have emphasised that the Board is a statutory body and when it violates the prescriptions of the law or otherwise acts arbitrarily or mala fide, article 226 of the Constitution is a corrective. Nothing more is needed because everything needed is implied in that power. 147 The last and perhaps the least valid submission, with meretricious attraction, is the challenge based on unequal legislation picking out one from among equals for hostile treatment. We have held that the royal family estate is being partitioned on principles similar to those applicable to all other Kerala Hindu families and the only difference is a Board instead of a court to allot shares by metes and bounds. This, we have shown, is fully justified by the special circumstances. The Cochin Kovilakam vis a vis the Kerala State is sui generis. It has been legislatively dealt with as a special class throughout the history of Kerala and before. The Act impugned has none of the characteristics of class legislation and, is on the other hand, an equalising measure with a pragmatic touch. We negative the specious submission. We find no merit in this Special Leave Petition and dismiss it without costs. V.D.K. Petition dismissed.

The Maharaja of Cochin, reigned and ruled over a pretty State, Cochin, which is now an integral part of the Kerala State. The Travancore Cochin State came into being on July 1, 1949. Two days before this constitutional merger, the Maharaja of Cochin issued a Proclamation to provide for the impartibility, administration and preservation of the Royal Estate and the Palace Fund through a Five man Board of Trustees. A small Process of family legislation on the Cochin Palace followed the political transformation of the State. The first was the Valiamma Thampuram Kovilakam Estate and the Palace Fund (Partition) Act, 1961 (Act 16 of 1961), the primary purpose of which was to undo the impartibility of the Royal Estate, as declared by the Proclamation of 1949. Sections 4 and 5 of the Act prescribed the shares of the members, the mode of division and the machinery for partition under these provisions, on a majority of the major members of the royal family expressing their wish to be divided, the Maharaja would consider whether it was in the interest of the family to partition the estate among the members and, if he did, direct the Board of Trustees to proceed with the partition under his supervision and control. Each member including en ventra sa mere, was eligible for a single share on an equal basis. The Board nominated under the earlier Proclamation was continued but its responsibilities were broadened. The privileges of the Maharaja were preserved as his personal rights but vis a vis family assets feudal "primogeniture" fell to modern egalite, within limits. As a result of the 26th Constitution Amendment Act of 1971 which extinguished all royal privileges, privy purses and other dignities of the erstwhile rulers of the Indian States, the Cochin Maharaja stepped down to the level of the Karta of a Joint Hindu Family. The Marummakkattayam system which ensured impartibility and management by the senior most member had lost its functional value and virtually vanished from the Kerala coast with the passing of the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976). Despite this revolutionary change, the Cochin royal family maintained its former status as Marummakkattayam undivided coparcenary since it was governed by special legislation which remained unrepealed. Therefore, the Kerala Legislation enacted the Valiamma Thampuram Kovilakam Estate and the Palace Fund (Partition) and the Kerala Joint Hindu Family System (Abolition) Amendment Act, 1978 (Act 15 of 1978). Before the High Court and in the special leave petition, the vires of the Amending Act omitting sections 4 and 5 from the Principal Act 16/1961 was challenged as offending Articles 14 and 19 of the Constitution. Dismissing the special leave petition, the Court, 137 ^ HELD: The public policy behind Section 7 of the Valiamma Thampuram Kovilakam Estate and the Palace Fund (Partition) Act, 1961, excluding civil court jurisdiction is not merely the special situation of the former royal family but the virtual impossibility within a life time of division by metes and bounds and allotment of shares to the 800 odd members, most of whom are real royalties in rags, homeless and hungry, seeking to survive by the small pieces from the large cake if ever it will be sliced and distributed. [141A B] Civil litigation for partition is the surest punishment to the tattered 'princelings ' by pauperizing them through the justice process and giving them stones instead of bread in the end, if the end would arrive at all. The compulsive pragmatics of distributive justice elicited legislative compassion for this uniquely numerous crowd of pauperised patricians by exclusion of civil courts jurisdiction. The pathology of protracted, exotic processual legalistic needs comprehensive renovation if the Justice System is to survive but the legislature salvaged the largest royal family with the littlest individual resources without waiting for the remote undertaking to overhaul Processual Justice to the People. Sociology is the mother of law, lest law in the books should be bastardized by the law of life. [141D F] 2. Our constitutional order is sensibly and sensitively allergic to arbitrary power and the Supreme Court will unhesitatingly strike down any provision which can be anathematised as creating uncanalised and Neronised power. Section 4 of the Principal Act of 1961 provided for an equal opportunity for every member including those en ventre sa mere. This provision was deleted because its purpose was otherwise served by the substituted Section 3 of Act 16 of 1961 by including a direction to the Board "to effect partition of the Estate and the Palace Fund among all the members entitled to a share". . . under Section 4 of the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976). " The effect of the importation of Section 4 of the Abolition Act is to ensure partition per capita among all the members as in the case of a Joint Hindu Family other than an undivided mitakshara Hindu family. What was otiose, namely, Section 4 of Act 16 of 1961, was cut out. This was merely a drafting operation not making any change in the substantive law bearing upon the shares of the members. The contention that by this deletion the members of the Kovilagam had been made over as hostages to the caprice of the Board of Trustees is a frightful error or disingenuous scare. [142 F G, 143H, 144A B] 3. Section 5 of the 1961 Act arrogated to the Maharaja of Cochin the power to exclude any properties from the category of partible estate. If most members were to be indigent, the infliction upon such members by the Maharaja 's act of exclusion of as many properties as he thought should not be divided would be unjust. Since every member was entitled to an equal share with the Maharaja himself all the properties should be available for partition and this result, which is eminently just, is achieved by the omission of Section 5 from Act 16 of 1961. Therefore, the provision in Act 15 of 1978 omitting Section 5 from the principal Act is a virtue to be commended, not a vice to be condemned. It is eminently reasonable and to contend against it is obviously unreasonable. [143D F] 4. To blaspheme the Board as an imperium in imperio, a law unto itself and therefore, arbitrary is an egregious error. The Board was not a new creation 138 but an old concoction brought into being by the Ruler thirty years ago, continued by the Kerala Legislature in Act 16 of 1961 and recognised by the latest amendment Act. The Board is a time honoured entity wherein the heads of the four branches are members and is entrusted with the work of division of assets. The Board, being an old institution in plenary management since 1949 and wisely composed of senior most members of the four branches, is sentimentally and functionally the best instrument to divide and distribute. Indeed Act 16 of 1961 had also entrusted the task of partition to the same Board and no member had during nearly two decades challenged the wisdom of the provision. [144B D] Section 3 of the Act 15 of 1978 does not dispense with canons of fair play of natural justice and of quasi judicial values. A non curial instrumentality and procedure for partitioning cannot be condemned as discriminatory. The alternative created by the statute is quite reasonable and is a better instrument having regard to the totality of factors. Law is not a cocoon and keeps its eyes wide awake to the realities of life. The legislation in question has taken note of all facts namely; (a) absence of any complaint against their management ever since the Board 's creation; (b) sanctification of the Board by the principal Act 16 of 1961 by conferring powers of partitioning the "Kovilagam" properties on this very Board; and does nothing more What was good and valid in 1961 could not become vicious and invalid in 1978. [145 B D, E] Quasi judicial responsibilities are implied by the statute in the Board 's function and if the Board breaches these norms and canons, the constitutional remedy under Article 226 comes into play. After all, the Board is a statutory body and not an executive creature. It has been saddled with effecting the rights of parties and is bound to act quasi judicially. Its deviances are not unreviewable in writ jurisdiction. Sufficient guidelines are built in Section 3 and therefore Section 3 (2) is not unbridled and unconstitutional. [145F G. 146E] Maneka Gandhi vs Union of India, [1976] Suppl. S.C.R. 489; M. section Gill and Anr. vs Union of India, [1978] 2 S.C.R. 621, Organo Chemical Industries and Anr. vs Union of India & Anr., [1980] 1 S.C.R. p. 61 referred to. Absence of appeals does not jettison justice, though often times, appeals are the bane of the justice system, especially because the rich can defeat the poor and the weak can be baulked of their rights indefinitely that way. The Board is a statutory body and when it violates the prescriptions of the law or otherwise acts arbitrarily or malafide, article 226 of the Constitution is a corrective. [146 F G] of 1978 has none of the characteristics of class legislation and is on the other hand, an equalising measure with a pragmatic touch. The Cochin Kovilagam vis a vis the Kerala State is sui generis. It has been legislatively dealt with as a special class throughout the history of Kerala and before. Partitioning of the royal family estates on principles similar those applicable to all other Kerala Hindu Families with the only difference that a Board instead of a Civil Court allots shares by metes and bounds, is fully justifiable by the special circumstances. [147 A B]

ivil Appeal No. 420 of 1963. Appeal from the judgment and decree dated September 9. 1960 of the Andhra Pradesh High Court in Appeal Suit No. 300 of 1955. M. Suryanarayana Murti and T.V.R. Tatachari, for the appellant. K.R. Chaudhuri, for respondents 1 to 13. The Judgment of Sarkar and Raghubar Dayal, JJ. was delivered by Sarkar J. Ramaswami, J. delivered a separate Opinion. Sarkar, J. In a certain money suit, being Small Cause Suit No. 9 of 1953. a decree had been passed against Narasimhaswamy and his four sons who were members of a Mitakshara Hindu joint family. In execution of that decree the shares of the four sons in the joint family properties, described altogether as 4/5th share, were put up to auction on December 21, 1936 and purchased by one Sivayya whose successors in interest are the appellants. The father Narasimhaswamy 's share had not been put up for sale because= an application fo.r his adjudication as insolvent was then pending. The sale to Sivayya was duly confirmed. Thereafter Sivayya sold the properties purchased by him at the auction to one Prakasalingam. On November 6, 1939, an order was made. under O. 21, rr. 35(2) and 96 of the Code of Civil Procedure for delivery of joint possession of the properties purchased to Prakasalingam along with the members of the joint family in actual ' possession. This order was duly carried out and possession was delivered to Prakasalingam by publishing that fact by beat of drum as prescribed in these rules. Subsequently, Prakasalingam re transferred the properties to Sivayya. On October '16, 1951, Sivayya filed the. suit out of which this appeal arises, against the then members of the joint family whose Sup. /65 12 632 number had by that time increased, and various other persons holding as alienees from them, asking for a partition of the joint family properties into five equal shares and thereafter for possession of four of such shares by removing the defendants from possession. The trial Court decreed the suit but held that Sivayya was not entitled to a 4/5th share but only to a 2/3rd share because before the decree a 5th son had been bom to Narasimliaswamy who had not been made a party to the suit or the execution proceedings and whose share had not consequently passed under the auction sale. Some of the defendants appealed to the High Court of Andhra Pradesh from this judgment. The High Court allowed the appeal on the ground that the suit was barred by limitation under article 144 of Schedule 1 to the Limitation Act. Sivayya had filed a cross objection in the High Court on the round that he should have been held entitled to a 4/5th share of the properties which was dismissed by the High Court without a discussion of its merits in view of its decision on the question of limitation. Sivayya having died pending the appeal in the High Court, the appellants as his successors in interest, have come up to this Court in further appeal under article 133 of the Constitution. Various questions had been raised in the trial Court but only two survive after its decision. They are, whether the suit was barred by limitation and whether Sivayya was entitled to a 4/5th share. On the question of limitation, two articles of the Act were pressed for our consideration as applicable to the ease. They are articles 144 and 120. We consider it unnecessary to decide in this ,case which of the two articles applies for in our view, the suit was not barred under either. As earlier stated the High Court held that article 144 applied. The application of this article seems to us to present great difficulties to some of which we like to refer. That article deals with a suit for possession of immovable property or any interest therein not otherwise specially provided for and prescribes a period of twelve years commencing from the date when the possession of the defendant becomes adverse to the, plaintiff. This article obviously contemplates a suit for possession. of property where the defendant might be in adverse possession of it as against the plaintiff. Now, it is well settled that the purchaser of a copartner 's undivided interest in joint family property is not entitled to possession of what he has purchased. His only right is to sue for partition of the property and ask for allotment to him of that which on partition might be found to fall to the share of the coparcener 63 3 whose share he had purchased. His right to possession "would date from the period when a specific allotment was made in his favour": Sidheshwar Mukherjee vs Bhubneshwar Prasad Narain (1) It would, therefore, appear that Sivayya was not entitled to possession till a partition had been made. That being so, it is arguable that the defendants in the suit could never have been in adverse possession of the properties as against him as possession could be adverse against a person only when he was entitled to possession. Support for this view may be found in some of the observations in the Madras full bench case of Vyapur vs Sonamm Boi Ammani (2). In the case in hand the learned Judges of the High Court thought that the applicability of article 144 to a suit like the present one was supported by the decision of the Judicial Committee in Mahant Sudarsan Das vs Mahan Ram Kirpal Das(3). We feel considerable doubt that the case furnishes any assistance. It held that article 144 extends the conception of adverse possession to include an interest in immovable property as well as the property itself. In that case a purchaser of an undivided share in a property which was not coparcenery property, had obtained possession of that share and he was held to have acquired title to it by adverse possession. That was not a case of a person who was not entitled to possession. We are not now concerned with adverse possession of an interest in property. Having expressed our difficulties on the matter let us proceed on the assumption without deciding it, that article 144 is applicable. Even so, it seems to us that the suit is not barred. It is not in dispute that in order that the suit may be barred under the article the defendant must have been uninterrupted possession for twelve years before the date of the suit. Now, in. the present case that was not so. By the delivery of symbolical possession under the order of November 6, 1939, the adverse possession of the, defendants was interrupted. Time has, therefore, to commence to run from that date and so considered, the suit having been brought within twelve years of that date, it was not barred under that article. That would follow from the case of Sri Radha Krishna Chanderji vs Ram Bahadur (4) where it was held that delivery of formal possession also interrupted the continuity of adverse possession. It was however said that the order for delivery of possession (1) ; ,188. (3) (1949) L.R. 77 I.A. 42. (2) Mad. (4) A.I.R. 1917 P.C. 197. 634 made in the present case was a nullity because Sivayya and his transferee who had purchased an undivided share in coparcenery property were not entitled to any possession at all. We agree that the order cannot be supported in law but we do not see that it was for this reason a nullity. It is not a case where the order was without jurisdiction. It was a case where the learned Judge making the order had, while acting within his jurisdiction, one wrong in law. Such an order has full effect if it is not set aside, as it was not in this case. Yelumalai Chetti vs Srinivasa Chetti(1) to which we were referred, does not support the contention that the order was a nullity There a purchaser of an undivided share in coparcenery property at an execution sale had applied for possession under section 318 of the Code of Civil Procedure of 1882 which corresponds to 0 21, r. 95 of the present Code. That application was dismissed as barred by limitation. Later, the purchaser who had subsequently acquired the interest of the other coparceners in the property under a private sale, filed a suit for possession of the whole. it was contended that the suit was barred under section 244 of the old Code (= section 47 of the present Code) as the purchaser could only proceed by way of execution. In dealing with that contention it was said that though the purchaser of an undivided share in coparcenery property was only entitled to ask for a partition, it was not competent to a court on a mere application for execution by a purchaser of such a share at a court sale, to order a partition and, therefore, the dismissal of the application under section "II 8 of the old Code had no effect by way of yes judicature on the second Suit for Possession. This case said nothing about the legality of an order under 0. 21, rr. 35, 95 or 96. It seems to us that the question of adverse possession is one of fact. If the person against whom adverse possession is set up, should that he had in fact obtained possession, whether lawfully or not, that would interrupt any possession held adversely against him. The question is whether there was in fact an interruption of the adverse possession and not whether that interruption was justifiable in law. Under the order for delivery of symbolical possesSion, whether it was legal or otherwise, Prakasalingam did obtain possession and this was an interruption of the adverse possession by the respondents. In respect of the present suit time under article 144 must, therefore, commence from that interruption. We wish to observe here that this aspect of the matter exposes the anomaly that seems to arise from the application of article 144 to this case. If Prakasalingam 's possession under the order of (1) Mad. 63 5 November 6, 1939 was no possession in law because, as is contended, he was not entitled to possession at all, then it would be difficult to hold that at that time somebody else was holding the property adversely to him. Since Prakasalingam or his successor Sivayya was not entitled to possession till after the decree in a suit for partition brought by him, article 144 would seem to be inapplicable to that suit. Learned counsel for the respondents referred us to Mahadev Sakharam Parkar vs Janu Namji Hatle(1) and Jang Bahadur Singh vs Hanwant Singh(1) to show that the delivery of symbolical possession does not avail the appellants. On behalf of the appellants it was said that these decisions are no longer good law in view of the judgment of the Judicial committee in Sri Radha Krishan Chanderji 's (3) case. Apart however from the merits of this contention which no doubt, deserve consideration, the principle of these cases does rot seem to us to be applicable to the present case. That principle was expressed in the case of Jang Bahadur Singh (2 ) which also is clearly to be implied from the decision in the case of Mahadev Sakharam Parkar(1) in these words, "If possession was delivered in accordance with law that undoubtedly would, as between the parties to the proceedings relating to delivery of possession, give a new start for the computation of limitation and the possession of the defendants would be deemed to be a fresh invasion of the plaintiff 's right and a new trespass on the property. But if possession was not delivered in the mode provided by law, that delivery of possession cannot, in our opinion, give a fresh start to the plaintiff for computing limitation. " By the words "in accordance with law" the learned Judges meant, in accordance with the Code of Civil Procedure and not any other law. These cases dealt with an order for delivery of symbolical possession where an order for actual possession could have been made under the Code. Because of this, it was held that the order for delivery of symbolical possession did not interrupt the adverse possession of the defendant. That is not the case here. The only order for delivery of possession that could possibly be made under the Code in the present case was under 0. 21 rr. 35(2) and 96 because the other members of the family whose share had not been sold were certainly entitled to remain in possession. The fact that ;,I view of the provisions of the Hindu law the order made is illegal, is irrelevant for the present purpose. That would not bring the case within the principle of either the Bombay case or the Allahabad case. (1) Bom. (2) All. (3) A.I.R. 1917 P.C. 197. 636 Learned counsel for the respondents however contended that 0. 21, r. 35(2) only applied where there was a decree for joint possession and it did not apply to the present case because here there was only an order for delivery of joint possession and not a decree. This contention cannot be accepted because under section 36 of the Code the provisions relating to the execution of decrees are applicable to execution of orders. In any case, the order is clearly within the terms of 0. 21, r. 96. The delivery of symboli cal possession made in this case was quite in terms of the Code and so amounted to an interruption of the respondent 's adverse possession and the period of limitation for the purpose of the application of article 144 would start from the date of such delivery. As the suit was brought within twelve years from the date of that delivery of possession, article 144 even if it applies, does not bar it. We then turn to article 120. In Bai Shevantibai vs Janardan R. warick(1) it has been held that to a suit like the present, this is the article that applies. Learned counsel for the respondents himself contended that this was the appropriate article to be applied. This article applies to suits for which no period of limitation is provided elsewhere and prescribes a period of six years commencing from the date when the right to sue accrues. Learned counsel for the respondents relied on the observation in Shevantibai 's(1) case that in a suit like the present one. the period of limitation under article 120 commences to run from the date of the sale. This the case no doubt held, but we think in that respect it did not lay down the law correctly. It has been held by this Court in Mst. Rukhmabai vs Lala Laxminarayan (2 ) and C. Mohammad Yunus vs Syed Unnissa(3) that the right to sue accrues for the purpose of 120 when there is an accrual of the right asserted in the suit and an unequivocal threat by the respondent to infringe it. Now whatever the nature of the plaintiff 's right in the present case, there is nothing to show that right was ever challenged in any way by the respondents. It is impossible, therefore, to hold that his suit was barred under article 120. The result is that the suit was not barred whether article 144 or article 120 applied to it. It remains now to deal with the cross objection. We do not think that it has any merit. Both the courts below have held that what Sivayya purchased at the auction sale was the share of the four sons of Narasimhaswamy in the joint family properties. At the date of the auction sale that share which was originally (1) A.I.R. 1939 Bom. (3) ; (2) ; 637 4/5th had been reduced to 2/3rd by the birth of another son, Venugopal, to Narasinihaswamy who had not been made a party either to the suit or the execution proceedings. It is irrelevant to enquire whether after his birth the fifth son 's share could be proceeded against in the execution of the decree in suit No. 9 of 1933. It is enough to say that was not in fact done. What was purchased at the execution sale was only the shares of Venugopal 's four brothers at the date of the sale and this was 2/3rd. That being so, we think Sivayya was not entitled to get Venugopal 's 1/6th share also allotted to hi in in the partition suit. The crossobjection must fail. We may add that no claim has been made against Narasimhaswamy 's share whose insolvency once ordered, appears subsequently to have been annulled. In the result we would allow the appeal, set aside the judgment and decree of the High Court except as to the dismissal of the cross objection and restore that of the learned trial Judge. The appellants will be entitled to proportionate costs here and in the High Court. Ramaswami, J. The question of law involved in this appeal is what is the period of limitation applicable to a suit filed by an alienee of a coparcener of an undivided share in the joint family property for general partition. The appellants are the legal representatives of the deceased plaintiff Mamidi China Venkata Sivayya. The suit was filed by him on October 16, 1951 for partition and separate possession of the 4/5th share in the joint family properties. It is alleged that he purchased the undivided share of defendants 2 to 5 at a Court auction sale held on December 21, 1936 in execution of a decree of the Court of Small Causes. The sale was confirmed on February 23, 1937. Later on i.e., on March 5, 1939 the purchaser Sivayya sold the right he had purchased to one Prakasalingam who, it is alleged, obtained symbolic delivery of possession of the undivided share of the joint family properties on November 6, 1939. It appears that Sivayya obtained a reconveyable of the right from Prakasalingam on April 11, 1945. Sivayya brought the present suit on October 16, 1951 against the other coparceners and alienees from some of the coparceners. The suit was filed by Sivayya for general partition. The main defence of the contesting defendants was that the suit was barred by limitation. The trial court held that the suit was governed by Article 144 of the Limitation Act and Article 120 did not apply. The trial court also found that there was symbolic delivery of possession in favour of Prakasalingam on November 6, 1939 and there was break up of adverse 638 possession of defendants 1 to 5 and that the suit was, therefore, brought within time. The trial court held that the 1/6th share of the 6th defendant one of the coparceners did not pass to the plaintiff as the 6th defendant was born before the Court sale and he was not implement as a party in the present case. The trial court accordingly gave a decree for partition and separate possession to the plaintiff of 2/3rds share of the properties mentioned in Sch. 'A ' of the plaint. The defendants preferred an appeal before the High Court of Andhra Pradesh against the judgment and decree of the trial court. The plaintiff also filed a Memorandum of Cross Objections claiming the 1/6th share of the 6th defendant also. The High Court held that Article 144 of the Limitation Act applied to the suit and the adverse possession of the defendants commenced from the date of the auction sale and that the suit was barred by limitation as it was filed on October 16, 1951 i.e., more than 12 years after the auction sale. The High Court also held that the symbolic delivery had no legal effect and did not break the adverse possession of the defendants. Accordingly the High Court allowed the appeal and the suit was dismissed with costs throughout. The present appeal is presented on behalf of the legal representatives of the deceased plaintiffs against the judgment and decree of the High Court of Andhra Pradesh. Before dealing with the question as to which Article of the Limitation Act applies to the present case it is necessary to examine the legal position of persons like Sivayya who purchase shares of some of the coparceners of the Hindu Joint Family. It is wellsettled that the purchaser does not acquire any interest in the property sold and he cannot claim to be put in possession of any definite piece of family property. The purchaser acquires only an equity to stand in the alienor 's shoes and work out his rights by means of a partition. The equity depends upon the alienation being one for value and not upon any contractual nexus. The purchaser does not become a tenant in common with the other members of the joint family. He is not entitled to joint possession with them. The alienee 's suit for partition must be one for partition of the entire property and not for the partition of any specific item of, or interest in, the family property. Such a suit, however, will not be technically on a par with a suit for partition filed by a coparcener. Such a suit would not have the necessary effect of breaking up the joint ownership of the members of the family in the remaining property nor the corporate character of the family. (Mayne 's Hindu Law, eleventh edition, page 489). 639 On behalf of the appellants learned Counsel put forward the argument that the right of the alienee to sue for partition is a continuing right and there is no period of limitation for enforcing such right. In my opinion, there is no warrant for this argument. A suit for partition filed by the alienee from a coparcener is not, in a technical sense, a suit for partition and, as already stated, such a suit will not have the necessary effect of breaking up the joint ownership of the members of the family in the joint property nor the corporate character of the family. As observed by Bhashyam Ayyangar, J. in Aiyyangari Venkataramayya vs Aiyyagari Ramayya "The vendee 's suit to enforce the sale by partition is not a suit for 'partition ', in the technical sense in which 'partition ' or 'vibhaga ' is used in the Hindu law. A suit for partition, in the technical sense, can be brought only by an undivided member of the family. The right to such partition is personal to him and not transferable. Such a suit can be brought only in the lifetime of the coparcener and even if so brought, it will abate if he should die before final decree, without leaving male issue. A partition in the technical sense, whether effected amicably or by decree of Court, breaks up not only the joint ownership of property, but also the family union, i.e., the corporate character of the family. Each member thereafter becomes a divided member with a separate line of heirs to himself. An undivided member of a family, though he may alienate either the whole (Gurulingappa vs Nandappa I.L.R. , or any part of his undivided share will continue to be an undivided member of the family with rights of survivorship between himself and the remaining members in respect of all the family property other than what he has transferred. . . The transferee, however, does not step into the shoes of the transferor as a member of the family and there will be no community of property between him and all or any of the members of the family in respect either of the property transferred to him or the rest of the family property". In my opinion, a suit like the present one will fall within Article 144 of the Limitation Act. (1) I.L.R. at p. 717. 64 0 It is true that an alienee of an undivided interest of a Hindu coparcener is not entitled to joint possession with the other coparcener and he is also not entitled to separate possession of any part of the family property. But the alienee is entitled to obtain possession of that part of the family property which might fall to the share of his alienor at a partition. What the alienee acquires by a purchase is not any interest in specific family property but only an equity to enforce his right in a suit of partition and have the property alienated set apart for the alienor 's share, if possible. In the present case the alienee has instituted a suit for general partition with the prayer that he may be put in possession of that part of the family property which may be allotted to his alienor. It is not right to consider such a suit as a suit for more partition. The main relief sought by the plaintiff is the relief for possession of that part of the property which may be allotted to the alienor 's share and a relief for partition is only a machinery for working out his right and ancillary to the main relief for possession of the property allotted to the alienor 's share. What the plaintiff seeks is actual delivery of possession. In my opinion, such a suit falls within the purview of Article 144 of the Limitation Act and the law on this point is correctly stated in Thai vs Dakshinamutthy(1). If Article 144 is the proper article applicable, when does time commence to run ? According to the third column of Article 144, time begins to run from the date when the possession of the defendant becomes adverse to the plaintiff. As I have already pointed out, the possession of the non alienating members of the family cannot be deemed to be possession on behalf of the alienee also, because the purchaser alienee does not acquire any interest in the property sold and does not become tenant in common with the members of the family nor is he entitled to joint possession with them. It is clear that in the absence of a clear acknowledgment of the right of the alienee or participation in the enjoyment of the family property by the alienee, the possession of the nonalienating coparceners would be adverse to the alienee, from the date on which he became entitled to sue for general partition and possession of his alienor 's share. The fact that the alienee has purchased an undivided interest of joint family property is not inconsistent with the conception of adverse possession of that 64 1 interest. As Lord Radcliffe observed in Sudarsan Das vs Ram Kirpal Das(1) : "Now it is the respondents ' case it is in fact their main contention on this issue that the appellant has never at any time had 'adverse ' possession against them because, the disputed property being a fourteen undivided share, his possession has been throughout no more than a joint possession with them. And the joint possession which coparceners enjoy in respect of the undivided property involves that, prima facie, the exclusive possession of any one of them is not adverse to the others. Their Lordships have no doubt of the validity of this general rule : but they are unable to think that it will be in any way departed from if they hold that in respect of the disputed property itself the appellant 's possession has been adverse to the owners of the other shares. In truth there is some confusion involved in the argument. What is in question here is not adverse possession of the block of property in which the various undivided interests subsist but adverse possession of one undivided interest. Article 144 certainly extends the conception of adverse possession to include an interest in immovable property as well as the property itself nor was it disputed in argument by the respondents that there could be adverse possession of an undivided share, given the appropriate circumstances. " In the present case, therefore, adverse possession began to run from the date of purchase of the undivided share i.e., from December 21, 1936 but it was submitted on behalf of the appellants that Prakasalingam obtained symbolic delivery and possession of the undivided share on November 6, 1939 after notice to defendants 2 to 5 and there was a fresh cause of action to Sustains the present suit for possession. It was contended on behalf of the respondents that the symbolic delivery was illegal and the executing court was not competent to make an order of delivery of possession, either symbolic or actual with regard to the sale of an undivided interest of joint family property. In support of this argument reliance was placed on the decision in Yelumalai Chetti vs Srinivasa Chetti (2 ) in which it was held that the purchaser at a Court sale of the share of an undivided member of a joint Hindu family acquires only a right to sue for partition and for delivery of what may be allotted as the share of such undivided member (1) A.I.R 1950 C.44at p. 47. (2) I.L.R. 642 and the Court cannot, on a mere application for execution by such purchaser, enforce his right by an order for partition. It was further held that no such order can be made under section 318 of the Code of Civil Procedure and the dismissal by the Court of an application by the purchaser under section 318 cannot be a bar to a suit by the purchaser for partition. Even assuming that the ,grant of symbolic delivery of possession ought not to have been made and that the executing court acted illegally in making such an order, it cannot be argued that the executing court had no jurisdiction to make the order or that the act of symbolic possession was a nullity in the eye of law. I am, therefore, of the opinion that the rant of symbolic possession by the court in favour of Prakasalingam after notice to the defendants 2 to 5 was tantamount in law to delivery of actual possession and, there fore, sufficient to break up the continuity of adverse possession in favour of the defendants. In Sri Radha Krishna Chanderji vs Ram Bahadur(1) it was held by Lord Sumner that symbolic posses sion was available to dispossess a party sufficiently where he was a party to the 'Proceedings in which it was ordered and given. I am accordingly of the opinion that the suit of the plaintiff is not barred by limitation under Article 144 of the Limitation Act and the view taken by the High Court on this part of the case is not correct and must be overruled. On behalf of the appellants it was also argued that a decree for 5/6th share of the joint family properties and not merely for 2/3rds share should have been granted. The claim of the appellants was rejected by the trial court. It is not disputed by the plaintiff that the 6th defendant was born before the Court sale and it is also not disputed that the execution case was taken out only against defendants 2 to 5. It is manifest that the plaintiff is not entitled to recover the possession of the share of the 6th defendant in execution proceedings and there is no merit in the cross objection filed on behalf of the plaintiff in the High Court. am unable to accept the argument advanced by the appellants ' on this point. For these reasons I hold that the judgment and decree of the High Court should be set aside and the judgment and decree of the trial court should be restored and a preliminary decree of partition of the properties should be ranted as mentioned in the trial court 's decree. The appeal is accordingly allowed with costs, Appeal allowed. (1) A.I.R.1917 P.C. 197.

Section 7 (1) (c) of the East Punjab Public Safety Act, 1949, as extended to the Province of Delhi provided that "the Provincial Government or any authority authorised by it in this behalf, if satisfied that such action is necessary for preventing or combating any activity prejudicial to the public safety or the maintenance of public order may, by order in writing addressed to a a printer, publisher or editor require that any matter relating to a 606 particular subject or class of subjects shall before publi cation be submitted for scrutiny. " Held per KANIA C. J., PATANJALI SASTRI, MEHR CHAND MAHAJAN, MUKHERJEA and DAS JJ. (FAZL ALI J. dissenting) that inasmuch as section 7 (1) (c) authorised the imposition of restrictions on the fundamental right of freedom of speech and expression guaranteed by article 19 (1.) (a) of the Consti tution for the purpose of preventing activities prejudicial to public safety and maintenance of public order, it was not a law relating to "a matter which undermines the security of or tends to overthrow, the State" within the meaning of the saving provisions contained in cl. (9.) of article 19 and was therefore unconstitutional and void. Romesh Thappar vs The State ([1950] S.C.R. 594) followed. Per FAZL ALI J. The expression "public safety" has, as a result of a long course of legislative practice acquired a well recognised meaning and may be taken to denote safety or security of the State; and, though the expression "public order" is wide enough to cover small disturbances of the peace which do not jeopardise the security of the State yet, prominence given in the Act to public safety, the fact that the Act is a piece of special legislation providing for special measures and the aim and scope of the Act in gener al, show that preservation of public safety is the dominant purpose of the Act, and "public order" may well be para phrased in the context as "public tranquillity". Public disorders which disturb the public tranquillity do undermine the security of the State and as section 7 (1) (c) of the im pugned Act is aimed at preventing such disorders it is difficult to hold that it falls outside the ambit of article 19 (2) of the Constitution. Held by the Full Court. The imposition of pre censor ship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by article 19 (1)(a). Black stone 's Commentaries referred to.

Appeal No. 125 of 1955. Appeal from the judgment and decree dated November 20, 1951, of the former Court of Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 47 of 1951, arising out of the judgment and decree dated June 4, 1951, of the Court of Additional District Judge, Umaria, in Civil Original Suit No. 17/19/17 of 1950. Sardar Bahadur, for the appellants. Achhru Ram, B. C. Misra and P. K. Chakravarty, for the respondents. December 9. The Judgment of the Court was delivered by S.K. DAS, J. This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is now part of the State of Madhya Pradesh. On behalf of respondent No. 1, Nagar Mal, who was defendant No. 1 in the suit, a preliminary objection has been taken to the effect that the suit was not maintainable by reason of the provisions of section 4 of the Rewa State Companies Act, 1935, and the appeal filed by the plaintiffs must, therefore, be dismissed. As this preliminary objection was not taken in any of the two courts below, learned counsel for the appellants wanted time to consider the point. Accordingly, on October 28, 1958, we adjourned the hearing of the appeal for about a month. The appeal was then heard on November 27, 1958. As we are of the opinion that the preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it. When cloth control came into force in Rewa State, the cloth dealers of Budhar a town in that State, formed themselves into an Association to collect the quota of cloth to be allotted to them and sell it on profit wholesale and retail. The, Association at Budhar consisted of 25 members who made contributions to the initial 771 capital of the association which was one lac of rupees. No formal Articles of Association were written; nor Se was it registered. The Association functioned through a President and a pioneer worker; they kept accounts and distributed the profits. Respondent No. 1, Nagar Mal, was the President of the said Association from January 1946 to June 26, 1946. Before that, Seth Badri Prasad, one of the plaintiffs appellants before us, was the President. Nagar Mal ceased to be President after June 26, 1946, and Seth Badri Prasad again became President. The Association worked till Febr uary 1948 ; then cloth was decontrolled and the work of the Association came to an end. On June 25, 1949, thirteen members of the Association out of the twenty five brought a suit, and in the plaint they alleged that respondent No. 1, who was President of the Association, from January 1946 to June 1946, had given an account of income and expenditure for the months of January, February and March, 1946, but had given no accounts for the months of April, May and June, 1946. They, therefore, prayed (a)that defendant No. 1 (Nagar Mal) be ordered to give the accounts of the Cloth Association, Budhar, from the beginning of the month of April 1946 to June 26, 1946; (b)that defendant No. 1 be ordered to pay the amount, whatever is found due to the plaintiffs on account being done, along with interest at the rate of annas 12 per cent. per month; and (c)that interest for the period of the suit and till the realisation of the dues be allowed. Besides Nagar Mal the other eleven businessmen, who were members of the Association, were joined as proforma defendants, some of whom later filed an application to be joined as plaintiffs. Though the plaint did not mention any particular transaction of the Association during the period when Nagar Mal was its President, the judgments of the courts below show that the real dispute between the parties related to the sale of cloth of a consignment known as the Gwalior consignment. It appears that in April 1946 a consignment of 666 bales of cloth had come from Gwalior 772 and an order was passed by the Cloth Control Officer that the consignment would be allotted to Nagar Mal who would give the Association an option of taking over the consignment; if the Association did not exercise the option, the consignment would be taken over by Nagar Mal. It appears that there was some dispute as to whether the other members of the Association were willing to take over the consignment of Gwalior cloth. We are not concerned now with the details of that dispute because we are not deciding the appeal on merits. It is enough if we say that ultimately there was an order to the effect that only 390 bales should be allotted to the Association out of which Nagar Mal had given the Association benefit of the sales of 106 bales, and the dispute related to the share of profits made on the remaining 284 bales. Respondent No. 1, Nagar Mal, raised various points by way of defence, his main defence being that none of the members of the Association were entitled to any share in the profits on the sales of 284 bales of Gwalior cloth. The learned District Judge, who dealt with the suit in the first instance, passed a preliminary decree in favour of the plaintiff appellants. The decree directed Nagar Mal to render accounts of the Cloth Association at Budhar from April 1, 1946 to June 26, 1946, and it further directed that leaving out 106 bales of Gwalior cloth which Nagar Mal gave to the Association, an account should be rendered of the rest of the 390 bales and the profits on the sale thereof shall be according to the capital shares of the members of the Association. Nagar Mal preferred an appeal to the learned Judicial Commissioner of Vindhya Pradesh, who reversed the finding of the learned District Judge and came to the conclusion that the other members of the Association were not entitled to participate in the profits made on the sale of 284 bales of the Gwalior cloth and inasmuch as Nagar Mal had rendered accounts with regard to all other transactions, the suit for accounts must fail. He accordingly allowed the appeal and dismissed the suit. The preliminary point taken before us is founded on 773 the provisions of section 4 of the Rewa State Companies Act, 1935. Sub section (1) of section 4 relates to banking business. We are concerned with sub section (2) of section 4 which is in these terms: " 4(2). No company, association or partnership, consisting of more than twenty persons shall be formed for the purpose of carrying on any other, business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of a Charter from the Durbar." Mr. Sardar Bahadur, who has appeared on behalf of the appellants and who took time to consider the point, has now conceded before us that the aforesaid provision was in force in the Rewa State at the relevant time when the Association was formed at Budhar and he, has further conceded that the said provision was in force till the Indian Companies Act came into force in the said area in 1950. We must, therefore, decide the preliminary point on the basis of the provision in section 4(2) of the Rewa State Companies Act, 1935. Now, the preliminary point taken on behalf of respondent no.1 is this. It is contended that by reason of section 4(2) aforesaid, the Cloth Association at Budhar was not a legal Association, because it was formed for the purpose of carrying on a business which had for its object the acquisition of gain by the individual members thereof and further because it was not registered as a Company under the Rewa State Companies Act, 1935; nor was it formed in pursuance of a charter from the Durbar. It has been contended before us on behalf of respondent no.1 that by reason of the illegality in the contract of partnership the members of the partnership have no remedy against each other for contribution or apportionment in respect of the partnership dealings and transactions. Therefore, no suit for accounts lay at the instance of the plaintiffs appellants, who were also members of the said illegal Association. We consider that this contention is sound and must be upheld. On behalf of the appellants, Mr. Sardar 774 Bahadur has urged the following points in answer to the preliminary objection: firstly, he has contended that we should not allow the preliminary objection to be raised at this late stage; secondly, he has contended that even though the Association was in contravention of section 4(2) of the Rewa State Companies Act, 1935, the purpose of the Association was not illegal and a suit was maintainable for recovery of the contributions made by the appellants and also for accounts; thirdly, he has contended that on the analogy of section 69(3)(a) of the , it should be held that the appellants had a right to bring a suit for accounts of the Association which was dissolved in February 1948. We proceed now to consider these contentions of learned counsel for the appellants. The first contention that respondent No. 1 should not be allowed to raise an objection of the kind which he has now raised at this late stage can be disposed of very easily. The objection taken rests on the provisions of a public statute which no court can exclude from its consideration. The question is a pure question of law and does not require the investigation of any facts. Admittedly, more than twenty persons formed the Association in question and it is not disputed that it was formed in contravention of section 4(2) of the Rewa State Companies Act, 1935. A similar question arose for consideration in Surajmull Nargoremull vs Triton Insurance Company Ltd. (1). In that case sub section (1) of section 7 of the Indian Stamp Act (11 of 1899) was pleaded as a bar before their Lordships of the Privy Council, the section not having been pleaded earlier and having passed unnoticed in the judgments of the courts below. At p. 128 of the report Lord Sumner said:,, The suggestion may be at once dismissed that it is too late now to raise the section as an answer to the claim. No court can enforce as valid that which competent enactments have declared shall not be valid, nor is obedience to such an enactment a thing from which a court can be dispensed by the consent of the parties, or by a failure to plead or to argue the (1)(1924) L.R. 52 I.A. 126, 128. 775 point at the outset: Nixon vs Alibion Marine Insurance Co., (1867) L. R. ; The enactment is prohibitory. It is not confined to affording a party a protection, of which he may avail himself or not as he pleases ". In Sri Sri Shiba Prasad Singh vs Maharaja Srish Chandra Nandi (1), the provisions of section 72 of the Indian Contract Act were overlooked by the High Court; the section was only mentioned in passing by the Subordinate Judge and it appears that the bar of section 72 of the Indian Contract Act was not argued or only faintly argued before the Subordinate Judge or in the High Court. In these circumstances, their Lordships of the Privy Council held that they were unable to exclude from their consideration the provisions of a public statute. In our view, the same principle applies in the present case and section 4(2) of the Rewa State Companies Act, 1935, being prohibitory in nature cannot be excluded from consideration even though the bar of that provision has been raised at this late stage. On his second contention learned counsel for the appellants has relied on U. Sein Po vs U. Phyu (2). That was a case in which three members of an association formed for carrying on a rice business claimed a decree (1) declaring the respective shares of the subscribers to that association and (ii) directing that the plaintiffs be repaid their shares after reconverting the property of the association into cash and after payment of all debts and liabilities. The association, it was found, consisted of twenty seven members; it was not registered and its formation was in contravention of sub section (2) of section 4 of the Indian Companies Act. The lower court granted the decree asked for and this was affirmed in appeal by the High Court. The learned Judges referred to the decision in Sheppard vs Oxenford(3) and Butt vs Monteaux (4), and rested their decision on the following passage of " Lindley on Partnership " (the learned Judges quoted the passage at p. 145 of the 9th edition but the same passage will be found at pp. 148 149 of the 11th edition): (1) (1949) L.R. 76 I.A. 244. (2) Ran. 540. (3) ; ; (4) ; ; 69 E.R. 345. 776 Although, therefore, the subscribers to an illegal company have not a right to an account of the dealings and transactions of the company and of the profits made thereby, they have a right to have their subscriptions returned; and the necessary account taken; and even though the moneys subscribed have been laid out in the purchase of land and other things for the purpose of the company the subscribers are entitled to have that land and those things reconverted into money, and to have it applied as far as it will go in payment of the debts and liabilities of the concern, and then in repayment of the subscriptions. In such cases no illegal contract is sought to be enforced; on the contrary, the continuance of what is illegal is sought to be prevented. " We do not think that the decision aforesaid, be it correct or otherwise, is of any help to the appellants in the present case. The appellants herein have not asked for a return or refund of their subscriptions; on the contrary, they have asked for a rendition of accounts in enforcement of an illegal contract of partnership. The reliefs they have asked for necessarily imply a recognition by the court that an association exists of which accounts ought to be taken. When the association is itself illegal, a court cannot assist the plaintiffs in getting accounts made so that they may have their full share of the profits made by the illegal association. The principles which must apply in the present case are those referred to in the following passage at p. 145 of Lindley on Partnership (11th edition): " The most important consequence, however, of illegality in a contract of partnership is that the members of the partnership have no remedy against each other for contribution or apportionment in respect of the partnership dealings and transactions. However ungracious and morally reprehensible it may be for a person who has been engaged with another in various dealings and transactions to set up their illegality as a defence to a claim by that other for an account and payment of his share of the profits made thereby, such a defence must be allowed to prevail in 777 a court of justice. Were it not so, those who ex hypothesi have been guilty of a breach of the law, would obtain the aid of the law in enforcing demands arising out of that very breach; and not only would all laws be infringed with impunity, but, what is worse, their very infringement would become a ground for obtaining relief from those whose business it is to enforce them. For these reasons, therefore, and not from any greater favour to one party to an illegal transaction than to his companions, if proceedings are instituted by one member of an illegal partnership against another in respect of the partnership transactions, it is competent to the defendant to resist the proceedings on the ground of illegality It is true that in order that illegality may be a defence, it must affect the contract on which the plaintiff is compelled to rely so as to make out his right to what he asks. It by no means follows that whenever money has been obtained in breach of some law, the person in possession of such money is entitled to keep it in his pocket. If money is paid by A to B to be applied by him for some illegal purpose, it is competent for A to require B to hand back the money if B has not already parted with it and the illegal purpose has not been carried out: see Greenberg vs Cooperstein (1). The case before us stands on a different footing. It is a claim by some members of an illegal association against another member on the footing that the association should be treated as legal in order to give rise to a liability to render accounts in respect of the transac tions of the association. Such a claim is clearly unten able. Where a plaintiff comes to court on allegations which on the face of them show that the contract of partnership on which he sues is illegal, the only course for the courts to pursue is to say that he is not entitled to any relief on the allegations made as the courts cannot adjudicate in respect of contracts which the law declares to be illegal (Senaji Kapurchand vs Pannaji Devichand(2)). The same view, which we (1) (2)A.I.R. 98 778 think is correct, was expressed in Kumaraswami vs Chinnathambi (1). As to the last contention of learned counsel for the appellants, based on the analogy of section 69(3)(a) of the Partnership Act, it is enough to point out that under the , an unregistered firm is not illegal; there is no direct compulsion that a partnership firm must be registered, though the disabilities consequent on non registration may be extremely inconvenient. Moreover, the suit before us was not one for accounts of a dissolved firm, but for accounts of an illegal association which was in existence at the relevant period for which accounts were asked. We do not think that the argument by analogy is of any help to the appellants; in our opinion, the analogy does not really apply. For the reasons given above, we hold that the preliminary objection succeeds. The appeal is accordingly dismissed. As the preliminary objection was taken at a very late stage, we direct that the parties must bear their own costs of the hearing in this Court. Appeal dismissed. (1) I.L.R. [1951] Mad 593.

The appellant issued a notice calling upon the respondent who was a dealer in tobacco to show cause why duty should not be demanded under Rule 160 of the Central Excise Rules, 1944 on the tobacco removed from his warehouse and not accounted for, and further to show cause why penalty should not be imposed for infraction of the Rules. The respondent sent a detailed reply, and after hearing him the appellant came to the conclusion that the respondent had evaded payment of duty. Thereupon the appellant issued a demand notice for the duty payable and further imposed a penalty. The respondent filed a writ petition in the High Court challenging the order of the appellant. The learned Single Judge allowed the petition taking the view that the appellant 's action was time barred because under section 40(2) of the no suit, prosecution or other legal proceedings could be instituted for anything done or ordered to be done under the law after the expiration of six months from the accrual of the cause of action. The Division Bench dismissed the appellant 's appeal. Before this Court it was inter alia contended on behalf of the appellant that the expression `other legal proceeding ' is preceded by particular words of a certain genus, i.e., `suit ' and `prosecution ', indicating reference to proceedings taken in courts only, and, therefore, the wide words must be limited to things ejusdem generis and must take colour from the preceding words and receive a limited meaning to exclude proceedings of the type in question. Allowing the appeal of the Revenue, this Court, HELD: (1) The rule of ejusdem generis is generally invoked where 127 the scope and ambit of the general words which follow certain specific words (which have some common characteristic and constitute a genus) is required to be determined.[131G] (2) The cardinal rule of interpretation is to allow the general words to take their natural wide meaning unless the language of the statute gives a different indication or such meaning is likely to lead to absurd results in which case their meaning can be restricted by the application of the rule of ejusdem generis and they may be required to fall in line with the specific things designated by the proceding words. But unless there is a genus which can be comprehended from the preceding words, there can be question of invoking this rule. Nor can this rule have any application where the general words precede specific words [132B C] (3) The wide expression `other legal proceeding ' must be read ejusdem generis with the preceding words `suit ' and `prosecution ' as they constitute a genus. [133H] (4)`Suit ' or `prosecution ' are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority, even if a statutory one. [132E F] (5) The penalty and adjudication proceedings in the instant case did not fall within the expression `other legal proceeding ' employed in section 40(2) of the Act, as it stood prior to its amendment by Art.22 of the 1973, and therefore, the said proceedings were not subject to the limitation prescribed by the said sub section. [ 133H; 134A] Public Prosecutor, Madras vs R. Raju & Anr. ; , ; Universal Cables Ltd. vs union of India, [1977] E.L.T. (J92); Amar Chandra vs Excise Collector, Tripura, ; ; C.C. Industries & Ors. vs H.N. Ray & Anr., , referred to.

minal Appeal No. 190 of 1966. Appeal by special leave from the judgment and order dated February 4, 1966 of the Patna High Court in Government Appeal No. 14 of 1963. B.P. Singh and S.N. Prasad, for the appellant. A.S.R. Chari and U.P. Singh, for the respondent. The Judgment of the Court was delivered by Mitter, J. The main question involved in this appeal is, whether the statement of the appellant recorded by a village Mukhiya before he was handed over to the police is admissible in evidence; and if so, whether the court could reject a part thereof and rely on the remainder along with other evidence adduced to hold him guilty of an offence he was charged with. The evidence against the appellant was all circumstantial and there can be no doubt that if the statement before the Mukhiya is to be left out of consideration, the appellant cannot be held guilty. The appellant who was a student of a school in Jhajha was charged with the murder of a fellow student of the same school and robbing him of the sum of Rs. 34 On October 12, 1961. The Additional Sessions Judge, Santal Parganas acquitted the appellant of both the charges but, in appeal, the High Court found him guilty of the charge of murder and sentenced him to imprisonment for life. The appellant has come up to this Court by special leave. The case of the prosecution leading to the discovery of the murder and arrest of the appellant is as follows. When the Barauni Sealdah passenger reached Madhupur station at about 3.52 p.m. on 12th October 1961 the dead body of a person was discovered in the lavatory of a first class compartment of that train. One Anil Kumar Roy who wanted to board the said compartment at Jasidih station (in between Jhajha and Madhupur) could not get the door opened and had to board another compartment. The dead body was found with the neck cut and besmeared with blood. Blood was coming out from the veins of the neck and there was plenty of it on the floor of the lavatory. The clothes of the deceased and his belongings like a comb, handkerchief were also blood stained and there were finger marks in the lavatory. Photographs of the deceased were taken and later the body was identified as that of Jai Prakash Dubey, a student of class X B Science of Jhajha High School. The post mortem report showed that there were no less than six incised injuries caused by some sharp cutting weapon. The injuries were homicidal and death was caused by bleeding and shock 1035 The appellant was noticed by one Ram Kishore Pandey (P.W. 17) washing blood stained clothes with soap in the river patro about one hour before sunset on 12th October 1961. Pandey noticed that the left hand of the appellant was cut and he questioned the appellant as to how he had got ' his clothes bloodstained. The appellant 's version was that when he was coming from the side of Gangamarni a cow boy had assaulted him and cut his finger with glass and snatched away his money. Reaching his house in village Saptar, Pandey mentioned this to Shiv Shankar Pandey, P.W. 25. Shiv Shankar Pandey learnt from his eider brother, Basdeo that a murder had been committed in the Barauni train and the murderer was missing. They suspected that the appellant might be the murderer and decided to go and search for him. All the three along with Pathal Turi and one, Ayodhya Turi, two chowkidars went to the bank of that river but could not find the appellant. There they were told by Jaganath Mahto and Rameshwar Mahto (P.Ws. 19 and 20) that they had noticed a man with wet clothes asking the way to Deoghar. Proceeding further, this group of persons found the appellant about a mile from Titithapur going behind a bullock cart. On being accosted the appellant said that he was going to village Roshan to his sister 's place and that he had not committed any murder. The appellant was then wearing a pair of trousers and a shirt and had with him some books. an exercise book, a chhura (knife) besides a pair of trousers and a shirt which were both wet. They apprehended the appellant and took him to village Saptar. They called on the Sarpanch of the village who directed them to take the appellant to the Mukhiya not making any enquiry himself The Mukhiya 's place in Lorajore was at a distance of about a mile from Saptar. The party reached there at about 9 O ' clock at night and stayed there for 2 or 3 hours. At about midnight on 12th October 1961 the Mukhiya took down the statement (exhibit 6) of the appellant and directed the party to take the appellant to the police station. The party reached Madhupur police station at about 5 a.m. on October 13, 1961. Brij Bihari Pathak, Sub Inspector of Police (P.W. 39) seized the articles which the appellant had with him in the presence of two witnesses and prepared a seizure list. The articles seized from the accused included a shirt, a pair of trousers, a leather belt, a pair of shoes, 4 bloodstained copy books, two books, pages of one being blood stained. He also prepared an injury report of the appellant and sent him to a doctor for examination. The officer in charge of the Railway Police Station Madhupur, Gorakh Prasad Singh (P.W. 511) proceeded with the investigation, took charge of various articles found in the compartment of the Barauni passenger, received the post mortem report, examined witnesses and sent all the material exhibits to the Chemical Examiner for examination and report. The report of the Chemical Examiner showed that among the 1036 articles found with the appellant Nishi Kant Jha and sent up for examination the following were stained with human blood: (1) leather belt cutting (2) cuttings of underwear, trousers and shirt (3) pair of chappal (4) portion of a shoe (5) one big knife and (6) several books, papers and an exercise book. The report also showed that sample of blood found on the deceased was of the same group as that of the appellant. The appellant pleaded not guilty. Before taking a note of his statement under section 342 of the Code of Criminal Procedure, it will be useful to reproduce his statement exhibit 6 recorded by Mukhiya at Lorajore before he was handed over to the police. The statement reads: "I am Nishi Kant Jha, son of Nilkanth Jha, resident of Baburpur, P.S. Jasidih sub division Deoghar, District Santhai Parganas. To day 12 10 61 at about 12 midnight, chowkidars Pathal Turi and Ayodhya Turi of village Saptar and Sheo Shankar Pandey, Ram Kishore Pandey and Basudeo Pandey of the same village arrested me and brought me. My statement is that when I boarded the first class compartment in Barauni passenger at Jhajha, an unknown person was sitting in it when the train reached near Simultala and when it stopped there, Lal Mohan Sharma, resident of Deoghar, P.S. Deoghar, district Dumka entered into that compartment. I had been knowing him from before. When the train stopped at the Jasidih station and when I went to get down, Lal Mohan Sharma who had boarded the train at Simultala, did not allow me to get down at the Jasidih station. When the train moved ahead of Jasidih station, in the meanwhile Lal Mohan Sharma took that outsider into the lavatory and began to beat him. At this I caught hold of his hand, as a result of which my left fore finger got injured with knife. Thereupon he asked me to be careful. Then, on being afraid, I sat quietly in that very compartment. He further said that I should not open the door and window of the compartment and if would do so I would be inviting death. At that very time, he killed him. When the train was reaching near Mathurapur, he jumped down from the running train and fled away. Lal Mohan Sharma fled away. also jumped down on the other side of Patro river near Madhupur and fled away in order to save my life, because I apprehended that I would be the only person who would be arrested. Thereafter, I came to the village Ratu Bahiar lying by the side of Patro river and afterwards I took my clothes to Patro river and washed them with a soap. Mean 1037 while a bullock cart was going to Deoghar. Therefore I sat on that very bullock cart and started for Deoghar. After I had covered about a mile, Pathal Turi, Shanker Pandey, Ram Kishore Pandey, Ayodhya Turi, the chowkidar and Rameshwar Mahto got me down from the bullock cart and brought before you. I know their names after enquiring the same from them. " At the end of the statement there was an endorsement reading: "On my understanding my statement, I affix my signature. " The signature appearing thereunder was admitted by the appellant to be his beating date 12th October 1961. From the said statement the following emerge: (1 ) The appellant had boarded a first class compartment in Barauni passenger at Jhajha already occupied by a person not known to him. (2) When the train reached Simultala one Lal Mohan Sharma, resident of Deoghar entered that compartment (3 ) When the train proceeded further and stopped at Jasidih station, the appellant wanted to get down but was prevented from doing so by Lal Mohan. (4) After the train moved out of Jasidih Lal Mohan caught hold of the first occupant of the compartment and took him into the lavatory and started beating him. (5) The appellant wanted to prevent this and in trying to catch hold of the assailant 's hand he was injured by a knife. Thereafter he took no further steps to prevent the commission of the crime. (6) Lal Mohan Sharma threatened him with death in case he wanted to open the door or the window of the compartment and killed the stranger. (7) When the train was reaching Mathurapur Lal Mohan jumped out of it and ran away. (8) The appellant also jumped out of the train after it had crossed the river Patro near Madhupur and fled away to save his life because he was apprehensive of being arrested as the only person left in the compartment. (9) He went to the village Ratu Bahiar near the river Patro and washed his clothes in the river with a soap. (10) Thereafter he took a tide in a bullock cart going to Deoghar but after covering a mile or so he was apprehended by Pathal Turi, Shanker Pandey, Ram Kishore Pandey, Ayodhya Turi, the chowkidar and Rameshwar Mahto. 1038 On the face of it the statement goes to show that the appellant was present in the compartment when the murder was committed by Lal Mohan Sharma, that he did not know the victim, that the murder was committed after the train had left Jasidih station, that he himself was prevented from getting out of the train at Jasidih, that he suffered an injury on his left fore finger from the knife of the assailant and that he jumped out of the train near the river Patro. He did not mention having been accosted by Ram Kishore Pandey while he was washing his clothes in the river nor did he make any statement to the effect that he had received the injury as a result of a scuffle with a cow boy. At the trial evidence was adduced by the Headmaster of the school that Jai Prakash Dubey, the victim, was an old student while the appellant had joined that school in the month of March 1961. They belonged to the same standard but were not in the same section inasmuch as one was in the arts section while the other was in the science section. The headmaster deposed to the fact that both of them used to play football and that no enmity was known to exist between the two. In his statement under section 342 Cr. P.C. the appellant said that he could not identify the photographs of the victim as those of Jai Prakash Dubey and that he did not know Jai Prakash Dubey. He did not board a first class compartment of Barauni passenger at Jhajha, that he did not jump off the train when it was nearing Madhupur. He admitted having washed his blood stained clothes in the river Patro near the village of Ratu Bahiar and that a person had enquired of him the reason for his clothes being stained with blood. He did not admit that he had told anyone that while coming from the side of Gangamarni he had been assaulted by some herdsman and cut his finger with glass and said that his reply to the query was that he had an altercation with a herdsman on his asking about the way when the latter wanted to assault him with a sharp edged knife and on his catching hold of it he had cut his hand. He denied having enquired of anybody about the way leading to Deoghar and he also denied that he was arrested while he was a mile ahead of village Titithapur following a bullock ' cart. He admitted having held in his hand clothes which had been washed in the river and blood stained 'books and copy books, pages of some of the books being blood stained. He did not admit that he had with him a knife when he was arrested. He admitted having been taken to the house of the Mukhiya, Sudama Raut but his version was that when he reached there they all began to beat him and told him that he must make a statement as suggested by them. With regard to exhibit 6 his version was that it was not his statement but that he had been made to put his signature on a piece of ' blank paper which was later made use of as his statement. He denied that the writing of the 1039 endorsement ascribed to him was his. His account of the activities. on that day was 'as follows. He had boarded a third class compartment in Toofan Express on 12th October 1961 intending to pay a visit to his father 's sister 's daughter at Roshan and thereafter going to his native place. He had reached Madhupur at about 12.30 p.m. and left for Roshan. He had lost his way after some distance and enquired of some herdsmen about the way to the village. , These herdsmen started to abuse him for having lost his way. On his remonstration, a scuffle took place. At this point of time another herdsman appeared with a lathi which was shining like glass and wanted to assault him with this. On his catching hold of the lathi he got his hand cut which was bleeding. His clothes and books also got stained with blood whereupon the herdsman ran away. He purchased a soap and went to wash his clothes in Patro river and take his bath. People who met him there had asked. him about his injury and he had given them the version just now mentioned. Thereafter when he was nearing the village, Roshan a number of persons came and apprehended him on a charge of murder. They took him to the Mukhiya 's house at 8.30 p.m. in the night and kept him there assaulting him with lathis and slaps. The Mukhiya had asked him to confess his guilt and give a statement and on his refusing to do so, he was again assaulted and threatened with death. Through fear he had affixed his signature on a blank paper. On the evidence the High Court found that the train had left Jasidih at 3.23 p.m. its next halt being Madhupur where it reached at 3.52 p.m. The door of a first class compartment was found closed at Jasidih and could not be opened. In the view of the High Court the murder was committed in the lavatory of the first class compartment between Jasidih and Madhupur. On a close scrutiny of the evidence adduced, the High Court found the following incriminating circumstances against the appellant : (a) Only about two hours after the murder i.e. between 5 to 6 p.m. he was seen washing his blood stained ,,clothes on the bank of the river Patro. (b) At the time of his apprehension by Ram Kishore Pandey and others he was holding blood stained exercise books, and other books some of the pages being blood stained. (c) He also had with him at that time a knife 'the length of the blade and the handle of which was about 9". (d) According to the medical evidence the injuries. of the victim could have been caused by that knife ,which was in the possession of the, appellant . One of the horizontal '. incised inJuries i.e. injury No. 6, was 5" x 2" x '3/4 ' '. 6 Sup. CI/69 15 1040 (e) The left hand of the respondent was noticed with a cut injury at the bank of the said river. The marks of other injuries on the body of the appellant were compatible with a scuffle with the victim in the compartment of the train. (f) The explanation of the appellant with regard to the possession of blood stained clothes and articles and the injury on his body,was not acceptable. In the light of the above incriminating circumstances culled from the evidence, the acceptance of the statement of the appellant in exhibit 6 that he had travelled together with an unknown person, later identified as the victim Jai Prakash Dubey in the same compartment would be conclusive to prove the guilt of the appellant if his further statement in exhibit 6 about the part played by Lal Mohan Sharma be rejected. The appellant had admitted his presence on the scene of the murder, but it was his version that the crime was committed by someone else while he himself was a helpless spectator. When the assailant jumped off the train he followed suit being apprehensive of arrest on the charge of murdering the unknown person. He had done so near the river Patro. Some portions of the statement were not found to be acceptable. It is not possible to believe that if Lal Mohan Sharma wanted to commit the murder he would prevent the appellant from getting off the train at Jasidih so as to have a witness who knew his name and address and testify to his commission of the crime. Lal Mohan Sharma was not in the train at Jhajha and no details were given about any quarrel between him and the victim which might lead the former to make the attack on Jai Prakash. Apparently there was no motive for Lal Mohan Sharma 's commission of the crime. Again it is not possible to believe that Lal Mohan Sharma should not have tried to do away with the appellant also. The version of the appellant receiving the injury on his left hand in the railway compartment was also unbelievable. So was his story of a scuffle with the herdsman and cutting his hand as a result thereof. The cause for the herdsmen abusing the appellant and his remonstrance followed by an attack on his person all appear to be imaginary. The only incised injury which the appellant had suffered was skin deep and it is impossible to accept the story that the bleeding was so profuse as to have necessitated his washing his shirt and trousers in the river. Nor does such an injury account for the other articles like his belt, shoes and books being stained with blood which was sought to be removed by washing. The contention urged on behalf of the appellant that the statement was not voluntarily made and as such could not be admitted in evidence was rightly rejected by the High Court,. The High. 1041 Court noted that no suggestion had been made to any one of the persons who had taken the appellant to the Mukhiya and had been tendered for cross examination that any of them had assaulted the appellant nor was any suggestion made that the appellant had been coerced or threatened with dire consequences if he did not make the statement. The appellant 's own version that he was made to give his signature on a blank ' piece of paper cuts at the root of his case that he made a statement as a result of a threat or assault, for in that case, all that was necessary was to get his signature. A point was sought to be made by counsel for the appellant ,that the footprints and finger prints in the lavatory of the first class compartment taken at Madhupur station were found to be different from those of the appellant and that this went to show that the appellant could not have been the murderer. The High Court turned down this contention on the ground that before the police took charge of the situation many people had entered the compartment of the train and the above difference therefore was not a factor on which any reliance could be placed. The High Court found that the appellant 's version that he did not know the victim unacceptable. His version in exhibit 6 as to how he came to sustain his cut injury was entirely different from that given in his statement under section 342. The High Court also could not accept his version that he had lost his way to his sister 's village at Roshan and that he had suffered an injury in the way suggested by him in his statement under section 342. But however grave the incriminating circumstances against the appellant as summarised by the High Court may be, they were not enough to fasten the guilt on the accused unless a portion of his statement exhibit 6 is pieced together with them. It is only this statement which contains an admission that he was travelling by the Barauni passenger in a compartment where he saw a murder committed and that he had jumped out of the train near the river Patro before getting to Madhupur and the entire evidence minus the unacceptable portion of exhibit 6 lead to the irresistible conclusion of the appellants guilt. It was contended before us by learned counsel for the appellant that if the statement is to be considered at all, it must be taken as a whole and the Court could not act upon one portion of it while rejecting the other. Counsel sought to rely on three judgments of this Court in aid of his contention that a statement which contains any admission or confession must be considered as a whole and the Court is not free to accept one part while rejecting the rest. In our view, the proposition stated so widely cannot be accepted. As Taylor puts it in his Law of Evidence (11th edition) article 725 at page 502 that with regard to the general law of admissions, the first important rule is that 1042 "the whole statement containing. admissions must be taken together; for though some part of it may be favourable to the party, and the object is only to ascertain what he has conceded against himself, and what may therefore be presumed to be true, yet, unless the whole is received, the true meaning of the part, which is evidence against him, cannot be ascertained. But though the whole of what he said at the same time, and relating to the same subject, must be given in evidence, it does not follow that all the parts of the 'statement should be regarded as equally deserving of credit; but the jury must consider, under the circumstances, how much of the entire statement they deem wo rthy of belief, including as well the facts asserted by the party in his own favour as those making against him. " With regard to criminal cases, ,Taylor states: "In the proof of confessions as in the case of admissions in civil causes the whole of what the prisoner said on the subject at the time of making the confession should be taken together. But if, after the entire statement of the prisoner has been given in evidence, the prosecutor can contradict any part of it, he is at liberty to do so; and then the whole testimony is left to the jury for their consideration, precisely as in other cases where one part of the evidence is contradictory to another. Even without such contradiction it is not to be supposed that all the parts of a confession are entitled to equal credit. The jury may believe that part which charges the prisoner, and reject that which is in his favour, if they see sufficient grounds for so doing. If what he said in his own favour is not contradicted by evidence offered by the prosecutor, nor is improbable in itself, it will be naturally believed by the jury; but they are not bound to give weight to it on that account, being at liberty to judge of it, like other evidence, by all the circumstances of the case. " In Roscoe 's book on Criminal Evidence (16th Edition, page 52). the statement of law is much to the same effect. Roscoe also cites a decision in Rex vs Clewes(x) where the confession of the prisoner charged with murder 'that he was present at the murder but that it was committed by another person and that he took no part in it, was left to be considered by the jury with a direction that the jury might, if they thought proper, believe one part of it (1) 4 Car. &.P, 221. 1043 and disbelieve another. According to Archbold 's Criminal Pleading, Evidence and Practice (Thirty sixth Edition, page 423): "In all cases the whole of the confession should be given in evidence; for it is a general rule that the whole of the account which a party gives of a transaction must be taken together; and his admission of a fact disadvantageous to himself shall not be received, without 'receiving at the same time his contemporaneous assertion of a fact favourable to him, not merely as evidence that had made such assertion, but admissible evidence of the matter thus alleged by him in his discharge . It has been said that if there be no other evidence in the case, or none which is incompatible with the confession, it must be taken as true; but the better opinion seems to be that, as in the case of all other evidence, the whole should be left to the jury, to say whether the facts asserted by the prisoner in his favour be true. " In this case the appellant 's statement in 'exhibit 6 on which reliance is placed to show that the appellant could not be guilty of the crime was found wholly unacceptable. His version of Lal Mohan Sharma 's commission of the crime, his being prevented from getting down from the train at Jasidih, Lal Mohan apparently committing the crime forcing the appellant to be a witness to it and the latter 's version of the manner in which he received the injury were unacceptable to the High Court and we see no reason to come to any different conclusion. The other incriminating circumstances already tabulated, considered along with the appellant 's statement that he was present in the compartment when the murder was committed, that he, jumped from the train near the river, that he gave a different version as to how he had received his injury, his statement that he had lost his way to the village Roshan being unacceptable, all point conclusively to having committed the murder. There is nothing in the judgments of this Court to which reference was made which. can help the appellant. In Hanumant vs The State of Madhya Pradesh(1) the facts were 'as follows. On a complaint filed by the Assistant Inspector. General of Police, Anti Corruption Department, two persons by name Nargundkar and. Patel, were tried for the offence of conspiracy to secure a contract of Seoni Distillery by forging the tender exhibit P 3A and for commission of the offence of forgery of the ,tender and of another document exhibit P 24. The ' Special Magistrate convicted both the appellants on all the three charges. The Sessions Judge quashed the conviction of both the appellants under the first Charge of (1) [1952] s.c. R. 1044 Criminal conspiracy but maintained the convictions and sentences under section 465 I.P.C. on the charges of forging exhibit P 3A and P 24. Both the appellants went up in revision to the High Court without any success. Examining the evidence in the appeal by special leave, this Court held that the peculiar features relied on by the courts below in exhibit P 3A should be eliminated from consideration and it was held that there were really no circumstances inconsistent with exhibit P 3A being a genuine document. In respect of the charge regarding exhibit P 24 the trial Magistrate and the Sessions Judge used the evidence of experts to arrive at the finding that the letter exhibit P 24 was typed on article A which had not reached Nagpur till the end of December 1946 and therefore the letter was antedated. The High Court although of the view that the evidence of the experts was inadmissible proceeded nevertheless to discuss it and place some reliance on it. The lower courts held that the evidence of experts was corroborated by the statements of the accused recorded under section 342. In rejecting this conclusion it was observed by this Court: "If the evidence of the experts is eliminated, there is no material for holding that exhibit P 24 was typed on article A. The trial Magistrate and the learned Sessions Judge used part of the statement of the accused for arriving at the conclusion that the letter not having been typed on article B must necessarily have been typed on article A. Such use of the statement of the accused was wholly unwarranted. It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him. An admission must be used either as a whole or not at all. If the statement of the accused is used as a whole, it completely demolishes the prosecution case and, if it is. not used at all, then there remains no material on the record from which any inference could be drawn that the letter was not written on the date it bears . . we hold that there is no evidence whatsoever on the record to prove that this letter exhibit P 24 was antedated and that being so, the charge in respect of forgery of this letter also fails. " Learned counsel for the appellant sought to rely on the above statement of law in aid of his Contention that the statement in exhibit 6 should either be taken as a whole or rejected altogether. In our view that was not the ratio decidendi in Hanumant 's case(1). As was pointed out by this Court, with the elimination of the evidence of the experts, there was no material for holding that exhibit (1) [1952] s.c. R. 1045 P 24 was typed on article A and consequently the only evidence on the subject being in the statement of the accused a part of it could not be relied on leaving apart the exculpatory part. This is made more clear in the next case which was cited by learned counsel. In Palvinder Kaur vs The State of Punjab(x) 'the appellant was tried for offences under sections 302 and 201, Indian Penal Code in connection with the charge of 'murder of her husband. She was convicted by the Sessions Judge under section 302 but no verdict was recorded regarding the charge under section 201. On appeal, the High Court acquitted her of the charge of murder but convicted her under section 201 I.P.C. With regard to this, the High Court held that the most important piece of evidence in support thereof was the confession made by the appellant which though retracted was corroborated on this point by independent evidence so as to establish the charge. This Court held that there was no evidence to establish affirmatively that the death of the appellant 's husband was caused by poisoning and that being so the charge under section 201 I.P.C. also must fail. According to this Court, the High Court in reaching a contrary conclusion not only acted on suspicions and conjectures but on inadmissible evidence. ,With regard to the alleged confession of the appellant, it was held that the High Court not only was in error in treating the same as evidence in the case but was further in error in accepting a part of it after finding that the rest of it was false. In that case, the evidence showed that the body of the appellants husband was found in a trunk and discovered in a well and that the accused had taken part in the disposal of the body but there was no evidence to show the cause of his death or the manner and circumstances in which it came about. Referring to the decision of Hanumant 's case(2) it was reiterated that the Court cannot accept the inculpatory part of a statement and reject the exculpatory part. The Court also referred to the observations of the Full Bench of the Allahabad. High Court in Emperor vs Balmakund(3) and fully concurred therein. In the Allahabad case the question referred to the Full Bench was, whether the court could accept the inculpatory part of a confession which commended belief and reject the exculpatory part which was inherently incredible. On reference to a large number of authorities cited the Full Bench observed that these authorities actually established no more than this that (a) where there is other evidence, a portion of the confession may in the light of that evidence; be rejected while acting upon the remainder with the other evidence; and (b) where there is no other (1) [1953].S.C.R. 94. (:2) [1952] S.C.R. Allahabad 1011. 1046 evidence and the exculpatory element is not inherently incredible ;, the court cannot accept the inculpatory element and reject the exculpatory element. According to the Full Bench of the Allahabad High Court the two rules above stated had been applied during the last one hundred years and the Full Bench answered the reference by holding "where there is no other evidence to show affirmatively that any portion of the exculpatory element in the confession is false, the court must accept or reject the confession as a whole ,and cannot accept only the inculpatory element while rejecting the exculpatory element as inherently ' incredible. " Relying on the above statement of the law it was said by this Court in Palvinder Kaur 's case(1) that no use could be made of her statement contained in the alleged confession to prove that the death of her husband was caused by poisoning or as a result of an offence having been committed and once this. confession was excluded altogether, there remained no evidence for holding that her husband had died as a result of the administration of potassium cyanide. The last decision of this Court referred to by counsel, viz. Narain Singh vs The State of Punjab(2) does not add anything which need be taken note of to the propositions of law laid down in the above mentioned case. In this case the exculpatory part of the statement in exhibit 6 is not only inherently improbable but is contradicted by the other evidence. According to this statement, the ' injury which the appellant received was caused by the appellant 's attempt to catch hold of the hand of Lal Mohan Sharma to prevent the attack on the victim. This was contradicted by the statement of the accused himself under section 342 Cr. P.C. to the effect that he had recceived the injury in a scuffle with a herdsman. The injury found on his body when he was examined by the doctor on 13th October 1961 negatives both these versions. Neither of these versions accounts for the profuse bleeding which led to his washing his clothes and having a bath in the river Patro, the amount of bleeding and the washing of the bloodstains being so considerable as to affact the attention of Ram Kishore Pandey, P.W. 17 and asking him about the cause thereof. The bleeding was nora simple one as his clothes all got stained with blood as also his books, his exercise book and his belt and shoes. More than that the knife which was discovered on his person was found to have been stained with blood according to the report of the Chemical Examiner. According to the postmortem report this knife could have been the cause of the injuries on the victim. In circumstances like these there (1) [1953] S.C.R.94. (2) 1047 being enough evidence to reject the. exculpatory part of the statement of the appellant in exhibit 6 the High Court had acted rightly in accepting the inculpatory part and piecing the same with the other evidence to come to. the conclusion. that the appellant was the person responsible for the crime. The appeal therefore fails and the conviction and sentence are upheld y.p. Appeal dismissed.

At an auction held on April 8, 1950 of the theka for collecting Tahbazari dues of a Mandi, the appellant 's bid was accepted. At the time of auction a meeting of the respondent Board was also held in which the auction was confirmed by resolution and the usual conditions relating to the payment of auction money were amended to provide for payment in four installments. The appellant was asked to execute and complete an agreement in favour of the respondent according to the conditions and rules, but he 'failed to do so. In view of this and the fact that he failed to pay the second installment, the respondent Board cancelled the appellant 's theka and reauctioned it. After taking into account the money received from the reduction and the instalment paid by the defendant, the Board sued the appellant for the recovery of the balance and future interest. One question considered by the Trial Court was whether the provisions of section 97 of the U.P. Municipalities Act, 1916, which required certain contracts made by or on behalf of the Board be in writing, had been complied with. The Trial Court found that there was a list of bidders at the auction held on 8th April, 1950 which bore the signature of the appellant and of the Chairman of the respondent Board; it therefore considered that the contract was a written contract and decreed the suit. In appeal the High Court remanded the case as it took the view that the question of the applicability of and compliance with section 97 of the Act had not been dealt with. On appeal to this Court, HELD: On the facts, it was clearly proved that there was a contract in writing within the meaning of the proviso to section 97(1) and the provisions of sub. section (2). The signed list of bidders and the resolution of the Board passed at the time of the auction constituted a contract in writing within the meaning of section 97 of the Act. There was therefore no justification in the High Court remanding the case. [797 H; 798 F G] Union of India vs Ralla Ram, ; , 173, referred to.

Appeal No. 2134 of 1970. Appeal by special leave from the judgment and order dated March 5, 1970 of the Madhya Pradesh High Court in (Indore Bench) in Second Appeal No. 618 of 1964. K. Rajendra Chowdhry, for the appellant. P. C. Bhartari, D. N. Mishra and J. B. Dadachanji, for, respondent No. 1. 302 The Judgment of the Court was delivered by BEG, J. This is a Defendant 's appeal by Special Leave against the judgment and decree of the High Court of Madhya Pradesh allowing a second appeal in a partition suit between members of a family governed by Muslim law. The Defendant Appellant and the Plaintiff Respondent are both sons of Kadir Ali Bohra who died on 5 4 1952 leaving behind five sons, a daughter and his widow as his heirs. It appears that Kadir Ali had incurred debts so heavily that all his property would have been swallowed up to liquidate these. Three of his sons, namely, Ghulam Abbas, Defendant No. 1, Abdullah, Defendant No. 2, and Imdad, Defendant No. 3, who had prospered, came to his rescue so that the property may be saved. But, apparently, they paid up the debts only in order to get the properties for themselves to the exclusion of the other two sons, namely, Kayyumali, Plaintiff Respondent, and Nazarali, Defendant No. 4, who executed, on 10 10 1942, deeds acknowledging receipt of some cash and moveable properties as consideration for not claiming any rights in future in the properties mentioned in the deeds in which they gave up their possible rights in future. The executant of each deed said : "I have accordingly taken the ' things mentioned above as the equivalent of my share and I have out of free will written this. I have no claim in the properties hereafter and if I put up a claim in future to any of the properties I shall be proved false by this document. I shall have no objection to my father giving any of the properties to my other brothers. .". During the father 's life time, when all chance or expectation of inheritance by either Kayyumali or Nazarali could be destroyed by disposition of property, neither of these two raised his little finger to object. The only question before us now is whether the Plaintiff and Defendant No. 4 are estopped by their declarations and conduct and silence from claiming their shares in the properties covered by these deeds. The first Appellate Court, the final court on questions of fact, recorded the following findings, after examining the, whole set of facts before it, to conclude that the plaintiff and defendant No. 4 were estopped from claiming their shares in the inheritance "In the instant case, it is evident that the release deeds exhibit D/2 and exhibit D/3 were executed by the plaintiff and defendant No. 4, Nazarali, when the defendants NO. 1, 2 and 3 had with their labour and money straightened the status of his father Kadar Ali and had cleared up the debts which would have devoured the, 303 whole property of Kadar Ali and the plaintiff was doing nothing and was in a way a burden to his father. In such state of things when the plaintiff and defendant No. 4 executed the release deeds in question, it can be said that it was a family settlement to prevent the future disputes that may arise and to secure the peace and happiness in the family of the parties and thereby induced the defendants No. 1, 2 and 3 to believe that the plaintiff would not claim a share in the suit properties and led them to discharge the debts due to Kadar All and to be in affluent circumstances themselves as they are at present and the plaintiff now seeks benefit of it against his own past undertakings". The High Court reproduced the passage, quoted above, from the judgment of the First Appellate Court, without any dissent from any of the findings of fact contained there. It specifically held that the Court below was correct in finding that consideration had passed the Plaintiff and Defendant No. 4 for the relinquishment of their future possible rights of inheritance. It proceeded on the assumption that, it the law had not prohibited the transfer of his right of inheritance by a Muslim heir, an estoppel would have operated against the Plaintiff and Defendant No. 4 on the findings given. It held that the rule. of Muslim Personal law on the subject has the same effect as Section 6(a) of the Transfer of Property Act which lays down: "The chance of an heir apparent succeeding to an" estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred. It pointed out that, although, Section 2 of the Transfer of Property Act provided that nothing in the second Chapter of the, Act will be deemed to affect any rule of Mahomedan Law, so that section 6(a) contained in Chapter 2 could not really be applied, yet, the effect of Mahomedan Law itself was that the chance of a Mahomedan heir apparent succeeding to an estate cannot be the subject of a valid transfer or lease" (See : Mulla 's Principles of Mahomedan Law 17th Edn. ss 54, page 45). After equating the effect of the. rule of Mahomed an Law with that of Section 6(a) of the Transfer of Property Act, the High Court applied the principle that no estoppel can arise against statute to what it considered to be an estoppel put forward against a rule of Mahomedan law. The High Court had relied on a decision of the Madras High ' Court in Abdul Kafoor vs Abdul Razack(l), which had been (1) A.I.R. 1959 Mad. p. 131. 304 followed by the Kerala High Court without giving fresh reason in Valanhivil Kunchi vs Kengayil Pattikavil Kunbi Avulla(1) in preference to the view adopted by the Allahabad High Court in Latafat Hussain vs Hidayat Hussain(2) followed by the, Travancore Cochin High Court in Kochunni Kachu Muhammed vs Kunj Pillai Muhammed(3) The principal question for decision before us is whether the Madras or the Allahabad High Court view is correct. The Madras High Court, in Abdul Kapoor 's case (supra) had specifically dissented from the Allahabad view in Latafat Hussain ' case (supra) on the ground that, if an estoppel was allowed to pleaded as a defence, on the strength of relinquishment of a spes successionis for consideration, the effect could be to permit the pro visions of Mahomedan Law to be defeated. Hence, it held that such an attempt would be struck by section 23 of the Indian Con tract Act. The object however, of the rule of Mahomedan law which does not recognise a purported transfer of a spes succession is as a legally valid transfer at all, is not to prohibit anything but only to make it clear what is and what is not a transferable right or interest in property just as this is what section 6(a) of Transfer of Property Act is meant to do. Its purpose could not be to protect those who receive consideration for what they do not immediately have so as to be able to transfer it at all. It could, if protection of any party to a transaction could possibly underlie such a rule, be more the protection of possible transfers so that they may know what is and what is not a legally enforceable transfer. With due respect, we are unable to concur with the view of the Madras High Court that renunciation of an expectancy, as a purported but legally ineffective transfer, is struck by Section 23 of the Indian Contract Act. As it would be void as a transfer at all there was no need to rely on Section 23 Contract Act, If there was no "transfer". of property at all, which was the correct position but a simple contract, which could only operate in future, it was certainly, not intended to bring about an immediate transfer which was all that the rule of Muslim law invalidated. The real question was whether quite apart from any transfer or contract, the declarations in the deeds of purported relinquishment and receipt of valuable consideration could not be parts of a course of conduct over a number of years which, taken as a whole, created a, bar against a successful assertion of a right to property when that Tight actually came ' into being. An equitable estoppel operates, if its elements are established, as a rule of evidence preventing the assertion of rights which may otherwise exist. (1) A.F.R. 1964 Kerala P. 200 (2) A I R. 1936 All. 573. (3) A.I.R. 1956 Travancore 217. 305 High Court in Asa Beevi vs Karuppan(1) where Macnaghten 's "Principles and Precedents of Moohumudan Law", Sir Roland Wilson 's Digest of Anglo Mohhamadan Law" P. 260, and Ameer Ali 's "Mohommedan Law" (Vol. II, third edition, p. 50 51), and Tyabji 's "Muslim Law" have been referred to in support of the conclusion that ",here is a large preponderance of authority in favour of the view that a transfer or renuniciation of the right of inheritance before that right vests is prohibited under the Mahomedan Law". The whole discussion of the principle in the body of the judgment, however brings out that the real reason is not a prohibition but that there cannot be a renunciation of a right which is incohate or incomplete so long as it remains in that state. In fact, it is not correct to speak of any right of inheritance before it arises by the death of the predecessor who could have, during his life time, deprived the prospective heir of his expectation entirely by dispositions inter vivos. Sir Roland Wilson, in his "Anglo Mohhamadan Law" (P 260, paragraph 208) states the position thus : "For the sake of those, readers Who are familiar with the joint ownership of father and son according to the most widely prevalent school of Hindu Law, it is perhaps desirable to state explicitly that in Muhammadan, as in Roman and English Law, nemo est heres viventis a living person has, no heir. An heir apparent or presumptive has no such reversionary interest as would enable him to object to any sale or gift made by the owner in possession; see Abdul Wahid, L.R. 12 I.A., 91, and All., 456 (1885) which was followed in Hasan Ali, 1 1 All. 456 (1889). The converse is also true : a renunciation by an expectant heir in the lifetime of his ancestor is not valid, or enforceable against him after the vesting of the inheritance". This is a correct statement, so far as it goes, of the law, because a bare renunciation of an expectation to inherit not bind the expectant heir 's conduct in future. But if the expectant heir goes further and receives consideration and so conducts himself as to mislead an owner into not making dispositions of his property inter vivos the expectant heir could be debarred from setting up his right when it does unquestionably vest in him other words, the principle, of estoppel remains untouched by this statement. As the Madras Full Bench pointed out, the subject was dis cussed more fully, in Ameer Ali 's "Mohammedan Law" (Vol. 11), than elsewhere. There we find the reason for or the object underlying the rule. It is that there is nothing to renounce in such a case because an expectancy remains at most before it has mate (1) [1918] (41 Madras) I.L.R. 365. 306 rialized only an "incohate right". It is in this light that the following observations in Hurmoot Ool Nisa Begum vs Allehdia Khan,(`) is explained by Ameer Ali : "According to the Mahomedan Law the right of inheritance may be renounced and such renunciation need not be express but may be implied from the ceasing or desisting from prosecuting a claim maintainable against another. " Ameer Ali explained, citing an opinion of the law officers, given in Khanum Jan vs Jan Bibi; (2 .lm15 "Renunciation implies the yielding up of a right already vested, or the ceasing or desisting from prosecuting a claim maintainable against another. It is evident that, during the life time of the mother the daughters have no right of inheritance and their claim on that account is not maintainable against any person during her life time. It follows, therefore, that this renunciation during the mother 's life time of the daughters ' shares is null and void it being in point of fact giving up that which had no existence. " In view of the clear exposition of the reason for the rule contained in the authorities relied upon by the Full Bench of the Madras High Court in Asa Beevi 's case (supra), we think that it described, by oversight, a rule based on the disability of a person to transfer what he has not got as a rule of prohibition enjoined by Mohamedan Law. The use of the word "prohibited" by the Full Bench does not really bring out the object or character of the rule as explained above. It may be mentioned here that Muslim Jurisprudence, where theology and moral concepts are found sometimes mingled with secular utilitarian legal principles, contains a very elaborate theory of acts which are good (because they proceed from 'hasna '), those which are bad (because, they exhibit "qubuh"), and those which are neutral per se. It classifies them according to 'varying degrees of approval or disapproval attached to them (see Abdur Rahim 's "Muhammadan Jurisprudence" P. 105). The renunciation of a supposed right, based upon an expectancy, could not, by any test found there, be considered "prohibited". The binding force in 'future of such a renunciation would, even according to strict Muslim Jurisprudence, depend upon the attendant circumstances and the whole course of conduct of which it forms a part. I In other words, the principle of an equitable estoppel, far from being opposed to any principle of Muslim law will be found, on investigation, to be completely in consonance with it. (1) [1871] 17 W.R.P.C. 108 (2) [1827] 4 S.D.A. Rep. 210. 307 As already indicated, while the Madras view is based upon the erroneous assumption that a renunciation of a claim to inherit in future is in itself illegal or prohibited by Muslim law, the view of the Allahabad High Court, expressed by Suleman, C.J., in Latafat Hussain 's case (supra) while fully recognising that "under the Mahomedan law relinquishment by an heir who has no interest in the life time of his ancestor is invalid and void", correctly lays down that such an abandonment may, nevertheless, be part of a course of conduct which may create an estoppel against claiming the right at a time when the right of inheritance has accrued. After considering several decisions, including the Full Bench of, the Madras High Court in Asa Beevi 's case (supra) Suleman, C.J., observed at page 575 : "The question of estoppel is really a question arising, under the Contract Act and the Evidence Act, and is not a question strictly arising under the Mahomedan Law. " He pointed out (at page 575 576) "It has been held in this Court that contingent reversioners can enter into a contract for consideration which may be held binding on them in case they actually succeed to the, estate : See , and It was pointed out in , at PP. 876 7, that although a reversionary right cannot be the subject of a transfer, for such a transfer is prohibited by section 6, T.P. Act, there was. nothing to prevent a re versioner from so acting as to estop himself by his own ,conduct from subsequently claiming a property to which he may succeed. Among other cases reliance was placed on the pronouncement of their Lordships of the Privy Council in 40 All 487, where a reversioner was held bound by a compromise to which he was a party. " Incidentally, we may observe that, in Mohammad Ali. Khan vs Bisar Ali Khan,(1) the Oudh Chief Court has relied upon Hurmoot Ool Nisa Begum 'section case (supra) to hold that "according to Mahomedan Law there may be renunciation of the right to inheritance and such renunciation need not be express but may be implied from the ceasing or desisting from prosecuting a ,claim maintainable against another". As we are clearly of opinion that there is nothing in law to bar the application of the principle of estoppel, contained in Section 115 of the Evidence Act, against the plaintiff and (1) A.I.R. 1928 Oudh 67. 308 Defendant No. 4, upon the totality of facts found by the final Court of facts, which were apparently accepted by the High Court,, it is not necessary for us to deal at length with the question whether the facts found could give rise to the inference of a "family settlement" in a technical sense. It is true that in Latafat Hussain 's case (supra) Suleman, C.J., had observed that the conclusion of the Subordinate Court, that there had been an arrangement between a husband and a wife "in the nature of a family settlement which is binding on the plaintiff", was correct. This was held upon circumstances which indicated that a husband would not have executed a deed of Wakf if the wife had not relinquished her claim, to inheritance. In other words, an arrangement which may avoid future disputes in the family, even though it may not technically be a settlement or definition of actually disputed claims, was referred to broadly as a "family arrangement". It was in this wide sense that in the case before us also, the first Appellate Court had considered the whole set of facts and circumstances examined by it to be sufficient to raise the inference of what it described as a "family settlement". As our law relating to family arrangements is based on English law, we may refer here to a definition of a family arrangement in Halsbury 's Laws of England, (1) where we find: A family arrangement is an agreement between members of the same family intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. We also find there : The agreement may be implied from a long course of ,dealing, 'but it is more usual to embody or to effectuate the against in a deed no which the term 'family arrangement ' is :applied. " It is ,pointed out there : "Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements. " As we have already indicated, it is enough for the decision of this case that the plaintiff and defendant No. 4 were estopped by their conduct, on an application of Section 115 Evidence Act, from claiming any Tight to inheritance which accrued to them, on their father 's death, covered by the deeds of relinquishment for consideration, irrespective of the question whether the, deeds could operate as legally valid and effective surrenders of their spes successionis. Upon the facts and circumstances in (1) Halsbury 's Laws of England, 3rd. 17, p. 215,216. 309 the case found by the courts ,below we hold that the plaintiff and defendant No. 4 could not, when rights of inheritance vested in them at the time of their father 's death, claim, these as such a claim would be barred by estoppel. The result is that we allow this appeal, set aside the judg ment and the decree of the High Court, and restore that of the first Appellate Court. In the circumstances of this case, we order that the parties will bear their own costs. K.B.N. Appeal allowed.

The Food Inspector purchased 1 1/2 seers of Shakkar from the appellant after paying its price. He divided the sample into three parts, gave one to the appellant and retained the other two with him. One of the samples retained ' was sent to the Public Analyst for examination. The Public Analyst found it to be adulterated because of excess of extraneous matter. The food Inspector filed a complaint before the Magistrate who convicted the appellant 'for an offence under section 16 read with section 7 of the . In appeal the Sessions Judge acquitted the appellant but in further appeal to High Court the appellant was again convicted. He appealed to this Court by special leave. The contentions on behalf of the appellant were : (i) that Shakkar is not jaggery and since no standard of quality has been prescribed for Shakkar under the rules framed under the Act the Shakkar was not adulterated; (ii) that he had not kept the Shakkar for sale but for manufacturing Rab out of it and therefore the convicion under section 16 read with section 7 of The Act was bad. HELD : (i) Shakkar is a product obtained by following processing juce pressed from out of sugar cane and therefore in view of the definition of jaggery in para A.07.05 of Appendix B of the rules framed under the Act Shakkar is jaggery. In Chambers 20th Century Dictionary (revised edition) also the Hindi equivalent of jaggery given as Shakkar. Therefore the finding of the High Court on the basis of the report of the Analyst that the Shakkar did not conform to the standard of quality prescribed for jaggery and was thus adulterated was correct and had to be maintained. [353 B F] (2) The finding of the High Court was that the Shakkar was kept by the appellant for the purpose of sale and not for the purpose of manufacturing Rab out of it and that the attempt of the appellant was to sell the Shakkar as an article of food after mixing Shelkhari in it. There was no reason to think that the finding was wrong. But assuming that the finding was wrong and that the appellant kept the Shakkar not for sale, but for manufacturing Rab out of it, the appellant would still be guilty. If Shakkar is an article of food, it does not matter whether the appellant kept it, for sale or for manufacturing Rab out of it provided the appellant bad sold it. And a sale to the Food Inspector is a sale for the purpose of 16(1) of the Act. [C D] The Food Inspector, Calicut Corporation v, Charukanttil Gopalan and another, , followed and applied. The appeal must accordingly be dismissed.

vil Appeal No. 2 147 of 1984. From the Judgment and Order dated 16.3. 1984 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB) No. 425/82 C (Order No. 15 1 of 1984). J. Sorabjee, M.A. Rangaswamy and Ms. Radha Rangas wamy for the Appellant. A.K. Ganguli, K. Swami and C.V. Subba Rao for the Re spondents. The Judgment of the Court was delivered by 217 VENKATACHALIAH J. This appeal under Section 35 L of the Central Excise and Salt Act, 1944, (ACT) by Messrs Siddesh wari Cotton Mills (P) Ltd., preferred against the appellate order dated 16.3.1984, of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, raises a short question whether the appellant, which manufactures cotton fabric on power looms which is otherwise exempt from duties of excise and the additional duties of excise respectively under Notification No. 230/77 and 231/77 dated 15.7.1977, looses the benefit of exemption by process of 'calendering ' on a calendering plant situated in the appellant 's premises. The Notification 230/77. CE dated 15.7.1977 issued by Central Government under Rule 8(1) of the Central Excise Rules, 1944, exempts from the whole of the duty of Excise, 'unprocessed ' cottonfabric, falling under sub item (1) of item No. 19 of the First Schedule to the Act, which is manufactured on power looms (without spinning or processing plants) installed and worked with the permission of the Textile Commissioner. Likewise, Notification No. 231/77. CE dated 15.7.1977 exempts such cotton fabric from payment of the additional duties of excise. The question in the appeal is whether such cotton fabric ceases to be "unprocessed" cotton fabric if it is subjected to calendering. The Tribunal has held in the affirmative and has upheld the levy of duty imposed on the appellant. We have heard Sri Soli J. Sorabjee, learned Senior Counsel for the appellant and Sri A,K. Ganguly, learned Senior Counsel for the Revenue. The facts which are not in dispute may briefly be stated. The Central Excise authorities held appellant to have contravened the provisions of the relevant rules by manufacturing and removing, between 14.5. 1981 and 19.9.1981.6,09,848.47 Sq. Metres of calendered cottonfabric falling under item 19 l(b) of the First Schedule to the Act without payment of Rs.2,62,767.04 leviable thereon as excise duty. The Collector of Central Excise, Calcutta, directed the appellant to pay the said duty and also imposed on the appellant a penalty of Rs. 1,00,000 under rule 173 Q. The Central Board of Excise and Customs, by its order dated 24.8.1982, partly allowed the appellant 's appeal and while 218 affirming the levy of the duty, however, set aside the imposition of the penalty. The further appeal before the Appellate Tribunal preferred by the appellant against the confirmation of the levy and the duty came to be dismissed by the Tribunal 's order dated 16.3.1984 now under appeal. Before the Appellate Tribunal it was contended for the appellant that the process of plain calendering to which the cotton fabric was subjected, though might, in itself, be a process in the larger and general sense of that term, would not, however, fall under "any other process ' within the meaning of Sec. 2(f)(v) the Act. It was contended that even after the calendering, the cotton fabric remained an "unproceased" cotton fabric and the expression "any other process" in Sec. 2(f)(v) must be considered ejus dem gener is, so as to partake of the nature and character of the processes and belong to the same genus as those envisaged in the preceding expressions in that clause. 2(f)(v ') reads: "in relation to goods comprised in Item No. 19 I of the Schedule to the , includes bleaching, merce rising, dyeing, printing, water proofing, rubberising, shrink proofing, organdie proc essing or any other process or any one or more of these processes;" The Appellate Tribunal did not accept this contention. It held: " . There is prima facie nothing in the language employed in Section 2(f) and item 19 1 of the CET to suggest that the words "any other process" will take within sweep only such processes as are of the same class or genus as the specifically enumerated process es. It may be that for the enumerated process es some extreneous substance may be required. That, however, would 'not make the processes a class. They enumerated processes from a group of disparate and dissimilar processes for example, bleaching and rubberising or dyeing and organdie processing. Sigficantly, what follows the enumerated process is not an expression like "any other like process or any such process", in which case it could be argued that the non enumerated process should of the same genus or class as the enumera 219 ted ones. ." " . . Admittedly, calendering is a fin ishing process. The machine employed may be a simple or complex one. The effect ought to be brought about may be simple or not. That, however, would not mean that calendering is not a process. In fact, from the sample pro duced by the appellants before us it was seen that the appellants had stamped cotton sarees as calendered. It was stated before us that the sarees were sold as calendered. Saree calendering will thus fail within the ambit of the expression "any other process" occurring in Section 2(f) and Item 19 I CET particularly when sub item (b) of Item 19 1 is read in juxta position with sub item (a) which covers cotton fabrics not subjected to any process. In this view of the matter; the Appellate Tribunal did not accept the contention that though "calendering" might be a "process", it is not any 'process ' that satisfies the requirement of "any other process" occurring in sec. 2(f)(v), but only those processes that partake of the same common characteristic of and belong to same genus as the processes such as bleaching, mercerising, dyeing, printing, waterproofing, rubberising, shrink proofing, or organdie processing occurring in Section 2(f)(v). The Appellate Tribunal held that it was not necessary for the "process" , process of calendering in ' the present case to be a process which belongs to the same genus as those enumerated in sec. 2(f)(v) to take the cotton fabric out of the exemption and that it would be sufficient that if calendering is a "process" of cotton fabric even if it does not partake of the other processing specifically enumerated in the preceding expressions in Section 2(f)(v). According ly, the Appellate Tribunal did not specifically examine the alternative position whether the process of calendering of the type and kind adopted by the appellant really shared the common element or characteristic possessed by the other processes specifically enumerated. Therefore, if it is to be held that the expression "any other process" in Sec. 2(f)(v) must be understood and construed ejus dem generis, then the question whether the "process" of calendering employed in the present case belongs to the same genus as the processes envisaged in the preceding expressions in the section would have to be examined afresh. 220 6. The definition of "manufacture" obtaining in Sec. 2(f) of the Act was amended by Act 5 of 1986 giving it an extended meaning. In repelling the contention that the extended meaning was introduced as an artificial concept of "manufacture" not belonging to, but outside, Entry 84 of List 1 of the Seventh Schedule to the Constitution, this Court in Empire Industries vs Union of India, [1985] Suppl. 1 SCR 292 held: "As has been noted, processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the con cept of "manufacture" that these could not come within that concept." (p.323) If, accordingly, the processes such as bleaching, merce rising, dyeing, printing, water proofing, rubberising, shrink proofing, organdie processing, are not unrelated to the concept of manufacture and bring .about such a change in the cotton fabric as to render it a commercially different product, then by parity of reasoning, "any other process" in Sec. 2(f)(v) which is a part of the scheme of the extended meaning of "manufacture" must also share the same character istic of those other expression. That apart, even if the amendment is beyond Entry 84 of List 1 and is supportable under or referrable to the residuary Entry 97 of List 1, on the principles of construction appropriate to the provision in Sec. 2(f)(v), is "any other process" in Sec. 2(f)(v), though otherwise of wide import, must share the characteris tics of and be limited by the preceding expressions. The expression ejus dem generis, 'of the same kind or nature ' signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the test with more limited words are, by implication, given a restricted operation and are limited to matters of the same class or genus as preceding. If a list or string or family of genus describing terms are followed by wider or residuary or sweeping up words, then the verbal context and the linguistic implications of the preceding words limit the scope of such words. In 'Statutory Interpretation ' Rupert Cross says: " . The draftsman must be taken to have inserted the general words in case something which ought to have been included among the specifically enumerated items had been omitted . . " (Page 116) 221 The principle underlying this approach to statutory construction is that the subsequent general words were only intended to guard against some accidental omission in the objects of the kind mentioned earlier and were not intended to extent to objects of a wholly different kind. This is a presumption and operates unless there is some contrary indication. But the preceding words or expressions of re stricted meaning must be susceptible of the import that they represent a class. If no class can be found, ejus dem gener is rule is not attracted and such broad construction as the subsequent words may admit will be favoured. As a learned author puts it: " . . if a class can be found, but the specific words exhaust the class, then rejec tion of the rule may be favoured because its adoption would make the general words unneces sary; if, however, the specific words do not exhaust the class, then adoption of the rule may be favoured because its rejection would make the specific words unnecessary. " [See: Construction of Statutes by E.A. Driedg er p.95 quoted by Francis Bennion in his Statutory Construction page 829 and 830]. Francis Bennion in his Statutory Construction observed: "For the ejus dem generis principle to apply there must be a sufficient indication of a category that can properly be described as a class or genus, even though not specified as such in the enactment. Furthermore the genus must be narrower than the words it is said to regulate. The nature of the genus is gathered by implication from the express words which suggest it . " [p . 830] " It is necessary to be able to formulate the genus; for if it cannot be formulated it does not exist. 'Unless you can find a catego ry ', said Farwell L J, 'there is no room for the application of the ejus dem generis doc trine '." [p. 831] In SS. Magnild (Owners) vs Macintyre Bros. & Co., Mc Cardie J said: 222 "So far as I can see the only test seems to be whether the specified things which precede the general words can be placed under some common category. By this I understand that the speci fied things must possess some common and dominant feature. " In Tribhuban Parkash Nayyar vs Union of India, ; the Court said: " . . This rule reflects an attempt to reconcile incompatibility between the specific and general words, in view of the other rules of interpretation, that all words in a statute are given effect if possible, that a statute is to be construed as a whole and that no words in a statute are presumed to be super fluous . " [p. 740] In U.P.S.E. Board vs Hari Shanker, ; it was observed: " . . The true scope of the rule of "ejus dem generis" is that words of a general nature (following specific and particular words should be construed as limited to things which are of the same nature as those specified. But the rule is one which has to be "applied with caution and not pushed too far" . . " [p . 73] 8. The preceding words in the statutory provision which, under this particular rule of construction, control and limit the meaning of the subsequent words must represent a genus or a family which admits of a number of species or members. If there is only one species it cannot supply the idea of a genus. In the present case the expressions bleaching, merceris ing, dyeing, printing, water proofing, rubberising, shrink proofing, organdie processing ' which precede the expression 'or any other process ' contemplate processes which impart a change of a lasting character to the fabric by either the addition of some chemical into the fabric or otherwise. 'Any other process ' in the section must, share one or the other of these incidents. The expression "any other process" is used in the context of what constitutes manufacture in its extended meaning and the expression "unprocessed" in the exempting notification draws 223 its meaning from that context. The principle of construction considered appropriate by the Tribunal in this case appears to us to be unsupportable in the context in which the ex pression "or any other process" has to be understood. It was then contended by Sri Sorabjee that "plain calendering" process neither adds anything to the cotton fabric nor the effect brought about by it is lasting. It is, according to learned counsel, nothing more than pressing the cotton fabric by running it between plain Rollers to improve its appearance. Learned counsel submitted that it was purely a temporary finish and that having regard to the nature of the process it is plainly manifest that it does not impart to the fabric either of the two ingredients necessary to bring the process into the family of processes envisaged by the preceding expressions in the section. Sri A.K. Ganguly, learned counsel for Revenue, however, submitted that this aspect requires investigation of the factual aspects and that since the Appellate Tribunal had not specifically exam ined this aspect and recorded its finding thereon, it would be appropriate to remit the matter to the Appellate Tribunal for a fresh disposal of the appeal in the light of the pronouncement of this Court on the proper rule of construc tion to be applied in the understanding of the expression "any other process" in Sec. 2(f)(v) and to consider whether the particular process of calendering adopted by the appel lant would satisfy that requirement. We think we should accept this submission of Sri Ganguly. In the result, this appeal is allowed, the order under appeal is set aside, and the appeal No. 151 of 1984 before the Appellate Tribunal is remitted to it for a fresh disposal in accordance with law. There will be no order as to costs in this appeal. G.N. Appeal allowed.

The appellant manufactures cotton fabric on power looms. By virtue of two notifications issued under Rule 8(1) of the Central Excise Rules 1944 unprocessed cotton fabric was exempt from excise duty as also additional duties. Since the appellant was using the process of 'calendering ', the Cen tral Excise authorities held that the cotton fabric manufac tured by it ceases to be "unprocessed". The collector of Central Excise, directed the appellant to pay levy on the manufacture of the calendered cotton fabric, and also levied a penalty of Rs. 1,00,000 under Rule 173. On appeal, the Central Board of Excise and Customs affirmed the levy of duty, but set aside the imposition of penalty. The appellant preferred an appeal before the Cus toms, Excise and Gold (Control) Appellate Tribunal. The Tribunal held that calendering is a finishing process and it was not necessary for the process of calendering to be a process which belonged to the same genus as those enumerated in Sec. 2(f)(v) to take the cotton fabric out of the exemp tion. It would be sufficient that of calendering is a "process" of cotton fabric even if it does not partake of the other processes specifically enumerated in the preceding expression in section 2(j)(v)2. In that view of the matter the Tribunal 215 dismissed the appeal preferred by the appellant. This appeal under Sec. 35L of the Act is against the Tribunal 's Order. On behalf of the appellant, it was contended that "plaincalendering" process neither adds anything to the cotton fabric nor the effect brought about by it is lasting; it was purely a temporary finish and that having regard to the nature of the process it is plainly manifest that it does not impart to the fabric either of the two ingredients necessary to bring the process into the family of processes envisaged by the preceding expressions in Sec. 2(f)(v). On behalf of the Revenue it was submitted that since the Tribunal had not specifically examined this aspect and recorded its finding thereon, it would be appropriate to remit the matter to the Tribunal. Allowing the appeal, and remitting the matter to the Appellate Tribunal for a fresh disposal, the Court, HELD: 1. The expression ejus dem generis 'of the same kind or nature ' signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the text with more limited words are, by implication, given a restricted operation and are limited to matters of the same class are genus as preceding them. If a list or string or family of genus describing terms are followed by wider or residuary or sweeping up words, then the verbal context and the linguistic implications of the preceding words limit the scope of such words. But the preceding words or expressions of restricted meaning must be susceptible of the import that they represent a class. If no class can be found, ejus dem generis rule is not attracted and such broad construction as the subsequent words may admit will be favoured. [220F; 221A B] S.S. Magnhild (owners) vs Mc Intvre Bros. & Co., ; Tribhuban Parkash Nayyar vs Union of India, [1970] 216 2 SCR 732 and U.P.S.E. Board vs Hari Shankar, ; relied on. Statutory Interpretation by Rupert Cross; Statutory Construction by Francis Bennian, relied on. The definition of "manufacture" obtaining in Sec. 2(f) of the Central Excise Act was amended by Act 5 of 1986 giving it an extended meaning. [220A] Empire Industries vs Union of India, [1985] Suppl. 1 SCR 292 relied on. In the present case the expressions 'bleaching, mercerising, dyeing, printing, water proofing, rubberising, shrink proofing, organdie processing ' which precedes the expression 'or any other process ' contemplate processes which impart a change of a lasting character to the fabric by either the addition of some chemical into the fabric or otherwise. 'Any other process ' in the section must, share one or the other of these incidents. The expression "any other process" is used in the context of what constitutes manufacture in its extended meaning and the expression "unprocessed" in the exempting notification draws its mean ing from that context. [222G H; 223A]

Appeal No. 84 of 1957. Appeal from the judgment and decree dated November 7, 1955, of the Bombay High Court in Appeal No. 629 of 1955, arising out of the judgment and decree dated August 9, 1955, of the. City Civil Court, Bombay, in Suit No. 2178 of 1954. A.V. Viswanatha Sastri and I. N. Shroff, for the appellants. Purshotam Tricumdas and C. P. Lal, for the respondents. March 31. The following Judgment of the Court was delivered by IMAM J. The sole question considered and decided by the High Court was whether the suit filed by the appellants in the City Civil Court could be entertained by that Court, having regard to the provisions of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Act). The High Court was of the opinion that the City Civil Court had no jurisdiction to entertain the suit. It did not pronounce any opinion on the merits of the appellants ' case. The only question which requires con sideration in this appeal is whether the High Court correctly decided that the City Civil Court had no jurisdiction to entertain the suit filed by the appellants. The first plaintiff in the suit before the City Civil Court, was a tenant of the premises in question under the first defendant. The second and third plaintiffs were persons to whom the said premises were sublet by 369 the first plaintiff. The first defendant as landlord of the premises in suit gave notice to quit to the first plaintiff on December 6, 1947. Thereafter, he filed suit ' No. 483/4400 of 1948 in the Court of Small Causes Bombay on April 29,1948, whereby he sought to evict the first plaintiffs To that suit the first defendant also made the second and the third plaintiffs parties alleging that they were trespassers and had no right to be on the premises. The Small Cause Court held that the second and third plaintiffs were not lawful subtenants and the subletting by the first plaintiff to them being contrary to law the latter had deprived himself of the protection of the Act. It accordingly passed a decree for eviction of all the plaintiffs of the present suit. An appeal against the decree was unsuccessful and a revisional application to the High Court of Bombay was summarily dismissed by that Court. Thereafter, the present suit No. 2178 of 1954 was filed by the appellants in the Bombay City Civil Court on September 20, 1954. In this suit the appellants prayed for a declara tion that the first plaintiff was a tenant of the defendants and was entitled to protection under the Act and that the second and the third plaintiffs were lawful subtenants of the first plaintiff and were entitled to possession, use and occupation of the premises as subtenants thereof. The City Civil Court held that it had jurisdiction to entertain the suit but dismissed the suit on the ground that there bad been no lawful subletting, by the first plaintiff of the premises to the second and the third plaintiffs as the provisions of section 10 of the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944 (Bombay Act No. VII of 1944) (hereinafter referred to as the Bombay Rents Act, 1944) had not been properly complied with. Against that decision the appellants appealed to the Bombay High Court which was dismissed. The High Court disagreed with the view of the Judge of the City Civil Court that he had jurisdiction to entertain the suit but did not record any decision on the merits of the appellants ' case. The preamble of the Act states that it was expedient 47 370 to amend and consolidate the law relating to the control of rents and repairs of certain premises, of rates of hotels and lodging houses and of evictions. The entire provisions of the Act read as a whole show that the Act was passed to achieve that purpose. The Act defines " landlord " to mean " any person who is for the time being, receiving, or entitled to receive, rent in respect of any premises whether on his own account or on account, or on behalf, or for the benefit of any other person or as a trustee, guardian, or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant ; and includes any person not being a tenant who from time to time derives title under a landlord; and further includes in respect of his subtenant a tenant who has sublet any premises " and " tenant " to mean " any person by whom or on whose account rent is payable for any premises and includes (a) such subtenants and other persons as have derived title under a tenant before the coming into operation of this Act, (a) any person to whom interest in premises has been transferred under the proviso to section 15, (b) any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title before the coming into operation of this Act, (c) any member of the tenant 's family residing with him at the time of his death as may be decided in default of agreement by the Court. " Section 12 gives protection to a tenant from eviction if he pays or is ready and willing to pay standard rent and permitted increases. Section 13 states the grounds upon which the landlord is entitled to recover possession of any premises. Amongst the numerous grounds one is if the tenant had since the coming into operation of the Act sublet the whole or part of the premises or assigned or transferred in any other manner his interest therein. Section 14 states: ,,Where the interest of a tenant of any premises is determined for any reason, any subtenant to whom the premises or any part thereof have been lawfully 371 sublet before the coming into operation of this Act shall subject to the provisions of this Act, be deemed to become the tenant of the landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued. " Section 28 of the Act deals with jurisdiction of courts and it states: " (1) Notwithstanding anything con tained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction, (a) in Greater Bombay, the Court of Small Causes, Bombay, (aa) in any area for which, a Court of Small Causes is established under the Provincial Small Cause Courts Act, 1887, such Court and (b) elsewhere, the Court of the Civil Judge (Junior Division) having jurisdiction in the area in which the premises are situate or, if there is no such Civil Judge, the court of the Civil Judge (Senior Division) having ordinary jurisdiction, shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply and to decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions and subject to the provisions of subsection (2), no other court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question." Section 29 deals with appeals. It provides that there will be no further appeal from the appellate order. Section 29A, however, states that nothing contained in sections 28 or 29 shall be deemed to bar a party to a suit, proceeding or appeal mentioned therein in which a question of title to premises arises and is determined, from suing in a competent court to establish his title to such premises. The plaint in the suit filed by the appellants in the City Civil Court clearly asserts that the first plaintiff was entitled in law to sublet the premises in question to the second, and third plaintiffs and that there had been a lawful subletting of the premises to them. It 372 was not necessary for the first plaintiff to comply with the provisions of section 10 of the Bombay Rents Act, 1944. It further alleged that the Appeal Court of Small Causes of Bombay erred in holding that the first plaintiff could sublet the premises only if he had complied with the provisions of section 10 of the aforesaid Act. According to para. 11 of the plaint the plaintiffs asserted that they were always ready and willing to pay the rent in respect of the said premises and to observe and perform the terms and conditions of the tenancy. Paragraph 12 states the declaration which the plaintiffs prayed for in the suit, which is in the following terms: " The plaintiffs submit that they are entitled to a declaration that 1st plaintiff is a tenant of the said premises within the meaning of the Bombay Rents, Hotel and Lodging House Rates Control Act of 1947, and that the 2nd and 3rd plaintiffs are entitled to the possession, use and occupation of the said premises as the lawful subtenants of the 1st plaintiff in respect of the said premises". Clauses (a) and (b) of para. 18 of the plaint contain the relief sought by the plaintiffs. They are in substance what is stated in para. 12 though separately stated for the first plaintiff and second and third prayer in cl. (c) of the defendants, their plaintiffs respectively. The para an injunction against servants or agents restraining them from proceeding further with the execution of the decree of the Court of Small Causes in suit No. 483/4400 of 1948. It is manifest from the assertion in the plaint and the nature of the relief asked for that the plaintiffs based their case on the provisions of the Act. According to them, the Act gave the first plaintiff protection and the second and third plaintiffs were entitled to remain in possession as subtenants of the first plaintiff. They accordingly sought to avoid eviction by seeking an injunction against the execution of the decree for eviction. One of the grounds upon which a landlord is permitted to evict a tenant under section 13 of the Act is that he has since the coming into operation of the Act, sublet the premises or assigned or transferred in any other manner his interest therein. The 373 Act, however, saved a subletting before its commencement, provided the premises had been lawfully sublet. "Tenant " in the Bombay Rents Act, 1944, means " any person by whom or on whose account rent is payable for any premises, and includes every person I from time to time deriving title under a tenant. " It was never pretended here or in the High Court, as indeed it could not be, that outside the Act a subtenancy would continue to subsist and the sub tenant would become the tenant when the principal tenancy itself had been lawfully terminated. As the definition of "tenant " in the Bombay Rents Act, 1944, included a subtenant, that Act required, under section 10, certain conditions to be complied with for the creation of a lawful subtenancy, as a statutory status of a tenant was being conferred on a subtenant unknown to the ordinary law. Even a lawful termination of the principal tenancy would not affect the subtenant. In suit No. 483/4400 it was finally held by the Appeal Court that the first plaintiff had not lawfully sublet the premises and as his tenancy had been terminated he and his subtenants were liable to be evicted. The plaintiffs seek for a redetermination of these very questions in the suit filed by them in the City Civil Court. The plaintiffs rely upon section 29A of the Act in justification of the suit filed by them in the City Civil Court. According to them, questions of title are expressly allowed to be reagitated in a competent Civil Court other than those specified in section 28 even if such a question arose and was determined by a court exercising jurisdiction under that section. This contention of the plaintiffs makes it necessary to construe the provisions of sections 28 and 29A of the Act. In a suit for recovery of rent where admittedly one party is the landlord and the other the tenant, section 28 of the Act explicitly confers on courts specified therein jurisdiction to entertain and try the suit and expressly prohibits any other court exercising jurisdiction with respect thereto. Similarly, in a suit relating to possession of premises where the relationship of landlord and tenant admittedly subsists between the parties, jurisdiction to entertain and try such a suit is in the 374 courts specified in section 28 and no other. All applications made under the Act are also to be entertained and disposed of by the courts specified in section 28 and no other. In all such suits or proceedings the courts specified in section 28 also have the jurisdiction to decide all claims or questions arising out of the Act or any of its provisions. The words employed in section 28 make this quite clear. Do the provisions of section 28 cover a case where in a suit one party alleges that he is the landlord and denies that the other is his tenant or vice versa and the relief asked for in the suit is in the nature of a claim which arises out of the Act or any of its provisions ? The answer must be in the affirmative on a reasonable interpretation of section 28. Suit No. 483/4400 of the Court of Small Causes, Bombay was admittedly by a landlord. Eviction of the tenant and those to whom he had sublet the premises was sought on the ground that the latter were trespassers and the former was not entitled to remain in possession, that is to say, that none of the defendants to that suit were protected from eviction by any of the provisions of the Act. The suit, in substance, was a denial of the right of the defendants as tenants. The claim of the defendants was that they were protected by the provisions of the Act. In such a suit the claim of the defendants was one which arose out of the Act or any of its provisions and only the courts ,specified in section 28 and no other could deal with it and decide the issue. The present suit filed in the City Civil Court raised in substance a claim to the effect that the plaintiffs were the tenants of the premises within the meaning of the Act. Such a claim was one which arose out of the Act or any of its provisions. The suit related to possession of the premises and the right of the landlord to evict any of the plaintiffs was denied on the ground that the first plaintiff was a tenant within the meaning of the Act and the premises had been lawfully sublet by him to the second and third plaintiffs. The City Civil Court was thus called upon to decide whether the first plaintiff was a tenant of the premises within the meaning of the Act and whether he had 375 lawfully sublet the same to the second and third plaintiffs. The City Civil Court, therefore, had to determine whether the plaintiffs had established their claim to be in possession of the premises in accordance with the provisions of the Act. As the tenancy of the first plaintiff had been terminated by the landlord, this plaintiff could resist eviction only if he established his right to continue in possession under the provisions of the Act. On the termination of the tenancy of the first plaintiff, outside the provisions of the Act, the subtenancy would come to an end and the landlord would be entitled to possession. This could be denied to him only if the second and third plaintiffs could establish that the premises had been lawfully sublet to them and under section 14 of the Act they must be deemed to be tenants of the premises. in other words, the City Civil Court could not decree the suit of the plaintiffs unless their claim to remain in possession was established under the Act or any of its provisions. Independent of the Act the plaint in this suit disclosed no cause of action. Section 28 obviously contemplates the filing of any suit relating to possession. of any premises to which any of the provisions of Part 11 of the Act apply between a landlord and a tenant and it authorizes the court to deal with any claim or question arising out of the Act or any of its provisions in such a suit. The suit of the plaintiffs filed in the City Civil Court certainly is one relating to possession of premises to which the provisions of Part 11 of the Act apply and in that suit claims and questions arising out of the Act or any of its provisions had to be dealt with. It was, however, suggested that the suit in the City Civil Court was not one between a landlord and a tenant because the defendants of this suit did not admit that the plaintiffs were the tenants of the premises in question. Section 28 applies to a suit where admittedly the relationship of landlord and tenant within the meaning of the Act subsists between the parties. The plaint in the suit in the City Civil Court admits that the defendants were landlords of the premises at various stages and the plaintiffs were their tenants. The suit, therefore, was 376 essentially a suit between a landlord and a tenant. The suit did not cease to be a suit between a landlord and a tenant merely because the defendants denied the claim of the plaintiffs. Whether the plaintiffs were the tenants would be a claim or question arising out of the Act or any of its provisions which had to be dealt with by the court trying the suit. On a proper interpretation of the provisions of section 28 the suit contemplated in that section is not only a suit between a landlord and a tenant in which that relationship is admitted but also a suit in which it is claimed that the relationship of a landlord and a tenant within the meaning of the Act subsists between the parties. The courts which have jurisdiction to entertain and try such a suit are the courts specified in section 28 and no other. No doubt section 29A expressly provides that nothing contained in section 28 or section 29 shall be deemed to bar a party to a suit, proceeding or appeal, mentioned therein, in which a question of title to premises arises and is determined, from suing in a competent court to establish his title to such premises. Even if it be assumed that a claim to a right to tenancy of premises is a question of title to the premises, is that a title which section 29A permits a party to establish in a com petent court other than that specified in section 28 ? If it is possible to avoid a conflict between the provisions of section 28 and section 29A on a proper construction thereof, then it is the duty of a court to so construe them that they are in harmony with each other. It is possible to conceive of cases where in a suit under section 28 a question of title to premises which does not arise out of the Act or any of its provisions may be determined incidentally. Any party to the suit aggrieved by such a determination would be free to sue in a competent court to establish his title to such premises by virtue of the provisions of section 29A. On the other band, in a suit where a question of title entirely arises out of the Act or any of its provisions, the jurisdiction to try such a suit was exclusively vested in the courts specified in section 28 and no other. That is to say, a title which could not be established outside the Act but 377 which arose under the provisions of the Act by virtue of a claim made thereunder must be determined by a court specified in section 28 and a title de hors the Act may be determined in any other court of competent jurisdiction. The Act purported to amend and consolidate the law relating to the control of rents of certain premises and of evictions. It defined " landlord " and " tenant " to have a meaning wider in scope and concept than those words have under the ordinary law. Any one, who was a landlord or a tenant, as defined in the Act, would have to conform to the provisions of the Act and all claims to such a status would have to be determined under the provisions of the Act as they would be claims arising out of it. The Act specially provided that the courts specified in section 28 shall have the jurisdiction to deal with any claim or question arising out of the Act or any of its provisions and expressly excluded any other court from having such jurisdiction. It is difficult to accept the suggestion that the legislature intended, after setting up special courts under section 28 to deal with such matters, that the same should be reagitated and redetermined in another suit by a court not specified in section 28. By enacting section 29A the legislature clearly intended that no finality should be attached to the decision of a court trying a suit under section 28 on a question of title de hors the Act. The provisions of the Act, on the other hand, clearly indicate that all claims or questions arising out of the Act or any of its provisions, even though they may be in the nature of a title to the premises, were to be determined by the courts specified in section 28 and no other. Some reference was made to section 49 of the which provides that recovery of possession of any immovable property under Ch. VII of the Act shall be no bar to the institution of a suit in the High Court for trying the title thereto. The provisions of this section render no assistance in the matter of interpretation of sections 28 or 29A.; Chapter VII of the deals with the recovery of possession of 48 378 immovable property from a person including a tenant. The provisions of section 41 onwards prescribe a summary mode for recovery of possession which could even be stayed by the Small Cause Court if the provisions Of section 47 were complied with. Indeed, under section 41 no claims or rights are determined. In such a situation it is clearly understandable that nothing contained in Ch. VII could be a bar to the institution of a suit in the High Court for trying the title to the immovable property. In a suit under section 28 the court has to determine all questions relating to recovery of rent or relating to possession and all claims or questions arising out of the Act or any of its provisions. Section 29 provides for an appeal against the decision of the court. Under Ch. VII of the there is no provision for an appeal against an order directing recovery of possession. In our opinion, the High Court correctly decided that the suit filed by the plaintiffs, who are the appellants in this appeal, could not be determined by the City Civil Court. On behalf of the appellants a request was made that if the appeal should fail, they may be given some time to vacate the premises. The High Court in dismissing the appeal had directed " Decree not to be executed for a fortnight ". In granting special leave this Court had granted an ex parte stay, staying the execution of the decree in suit No. 483/4400 of 1948 of the Court of Small Causes, Bombay until the 16th day of January, 1956 and had directed that the stay application be posted for hearing on that date. On that (lay the application for stay was allowed on two conditions being fulfilled and on the non compliance of which the stay order would stand vacated. On February 19, 1957, another order was passed by this Court when its attention was drawn to the non compliance of the conditions stated in the order of January 16, 1956, on the part of the appellants. The stay order was not vacated as the appellants were ordered to do certain things and because of the undertaking given by them that they would deliver forthwith possession of the premises to the respondents in 379 the event of the appeal being dismissed or decided against them. Having regard to the undertaking given, as also the fact that execution of the decree in suit No. 483/4400 of the Court of Small Causes, Bombay has been delayed long enough. , we are unable to accede to the request made by the appellants. The appeal is accordingly dismissed with costs. Appeal dismissed.

A who was a tenant of N sub let the premises to B and C. N filed a suit for ejectment against A, B and C in the Court of Small Causes, Bombay, on the ground of illegal sub letting. The suit was decreed. Thereafter, A, B and C filed the present suit in the Bombay City Civil Court for a declaration that A was a tenant of N and was protected from eviction by the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, and that B and C were lawful sub tenants of A and were as such entitled to possession, use and occupation of the premises. The City Civil Court held that it had jurisdiction to entertain the suit but dismissed it on the ground that there was no lawful subletting. On appeal, the Bombay High Court held that the City Civil Court had no jurisdiction to entertain the suit and dismissed the appeal without going into the merits : Held, that the High Court was right in holding that section 28 of the Act barred the City Civil Court from entertaining the suit. Section 28 explicitly confers on courts specified therein jurisdiction to entertain a suit between a landlord and a tenant in respect of a claim which arose out of the Act or any of its provisions, 368 and expressly prohibits any other court exercising jurisdiction with respect thereto. In the present suit the claim being one which arose out of the Act, and the City Civil Court not being a court specified in section 28, it could not entertain the suit. Though section 29A of the Act allows questions of title to be regarded in a civil court, it applies only to titles which do not arise out of the Act or any of its provisions; and titles which could riot be established outside the Act but which arose under the provisions of the Act by virtue of a claim made thereunder must be determined by a court specified in section 28.

Civil Appeal No. 90 of 1973. From the Judgment and Order dated the 24th and 25th July, 1972 of the Gujarat High Court in Election Petition No. 2 of 1971. section N. Andley, K. J. John and Shri Narain Mathur for the appellant. F. section Nariman, P. H. Parekh, Mrs. section Bhandare and Manju Jaitley for respondent No. 1. The Judgment of the Court was delivered by ALAGIRISWAMI, J. This appeal arises out of an election petition questioning the election of 1st respondent in the election held in March 1971 to the Lok Sabha from the Banaskantha constituency in Gujarat. In that election the 1st respondent, a nominee of the Ruling Congress was declared elected securing 1,16,632 votes as against 92,945 votes secured by the 2nd respondent, a nominee of the Organisation Congress. The appellant, a voter in the constituency, also belonging to the Organisation Congress, filed a petition challenging the validity of the election on various grounds out of which only those covered by issue No. 10, hereinafter set out, survive for consi deration: "(10) Whether respondent No. 1 or his agents or/ other persons with his consent made a gift or promise of gratification to the petitioner with the object directly or indirectly of inducing the petitioner to vote for respondent No. 1 or to refrain from voting for respondent No. 2 ?" The allegation relating to this charge in the election petition is that the 1st respondent and his agent Maulvi Abdur Rehman and the 1st respondent 's son Bipin Popatlal Joshi with the consent of the 1st respondent had made a gift and a promise of gratification to the appellant for voting in 1st respondent 's favour. The appellant as well as one Madhusudansinhji, who has been examined as P.W. 10, seem to have been at that time prominent members of the Organisation Congress and also leaders of the Kshatriya community which formed 900 about 20 to 25 per cent of the votes in the Banaskantha constituency. It was alleged that on February 9, 1971 the 1st respondent and Maulvi Abdur Rehman came to the appellant 's residence and persuaded him to leave Congress (O) and join Congress (R) offering (1) to secure a party ticket for the appellant for the election to the Gujarat Legislative Assembly in 1972, (2) to meet all his expenses for that election and to pay him Rs. 10,000/ in cash towards the said expenses, and (3) to construct a hostel for the Kshatriya students of the Banaskantha district. A specific allegation was made that the 1st respondent wanted the appellant to vote for him. It was also alleged that the 1st respondent asked the appellant to convey to Madhusudansinhji an offer of a party ticket for the Legislative Assembly election in 1972 and to pay him also a sum of Rs. 10,000/ . The Prime Minister was addressing a meeting at Palanpur on that day. The appellant, his wife and Madhusudansinhji were taken to the helipad, Palanpur when the Prime Minister landed there and also to the dais from which the Prime Minister was addressing a public meeting. One Akbarbhai Chavda, convener of the District Congress Committee announced that the appellant and Madhusudansinhji had joined Congress (R), and asked the appellant to say a few words. The appellant went to the microphone, took out the bundle of notes of Rs. 10,000/ given to him and flung it in the air and told the gathering that he and his colleagues could not be purchased and that they would remain loyal to the Organisation Congress. During the trial of the election petition Madhusudansinhji, who had by that time joined the Ruling Congress and Maulvi Abdur Rehman were examined as witnesses on behalf of the appellant. The learned Judge of the High Court after considering the evidence before him held that Bipin Popatlal Joshi, son of the 1st responident, handed over Rs. 10,000/ to the appellant as a bribe to bring about the appellant 's defection from the Organisation Congress. But he took the view that the object of the gift was to bring about the appellant 's defection from the Organisation Congress and not induce directly or indirectly any voters to cast their votes for the Ruling Congress candidate or to refrain from voting in favour of the 2nd respondent. As regards the offer to build the hostel for Kshatriya students he held that the fact that a person who defects from another party to the Ruling Congress would be expected to work for that party and would be expected to use his personal influence in support of the candidate of that party does not mean that the object of bringing about the defection was to indirectly induce the Kshatriya voters to cast their votes for the 1st respondent. He therefore held that payment of such money and holding out such inducement does not amount to any offence under the Election Law and it was with regret that he had to decide the case in favour of the 1st respondent. We are in entire agreement with the finding of the learned Judge as regards the payment of Rs. 10,000/ to the appellant and also the offer to build hostel for Kshatriya students and do not consider it 901 necessary to go into the evidence in support of that finding. That finding is supported not only by the evidence of Madnusudansinhji and Maulvi Abdur Rehman but also the letter exhibit T, passed by the latter to the appellant and Madhusudansinhji. The question is whether that finding is enough to establish the charge of bribery against the 1st respondent. There is still another finding necessary in regard to the allegations made in the petition in respect of which the learned Judge has given no finding and that is with regard to what happened of the 9th of February 1971. We are at one with the view of the learned Judge that the payment of Rs. 10,000/ to the appellant was with a view to induce him to defect from organisation Congress to the Ruling Congress. It may carry with it the implication that he was expected to use his influence with the voters to vote for the candidate set up by the Ruling Congress. It has been held by this Court in Kalia Singh vs Genda Lal & ors.(1) to which two of us (Untwalia & Alagiriswami JJ) are party, that a payment made to a person in order to induce him to canvass votes on behalf of the bribe giver would not be bribery within the definition of that word in section 123(1) of the Representation of the People Act. It was held that it is only in a case where the payment to a third person by itself induces the voter to vote for the bribe giver that it would fall under section 123(1). Mr. Andley appearing on behalf of the appellant tried to persuade us that that decision requires reconsideration. After having considered his arguments we are still of the opinion that the view taken in that decision is correct. The object of providing that a payment should not be made to a person in order that that payment should induce some other person to vote for the bribe giver is obvious. It is apparently intended to cover situations where payment to a husband, wife, son or father is intended to induce the wife, husband, father or son to vote for the bribe giver. That would be indirect inducement. otherwise it would be easy for the bribe giver to say that he did not bribe the voter himself and therefore it is not bribery. That this provision was not intended to cover a case where money is paid to a certain person in order to make him induce another person to vote for the person who paid him the money would be obvious by looking at the converse case. Under section 123(1)(B)(b) the receipt of or agreement to receive, any gratification, whether as a motive or a reward by any person whomsoever for himself or any other person for voting or refraining from voting or inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to with draw or not to withdraw his candidature is bribery. Under this clause any person who receives or agrees to receive any gratification as a reward for inducing or attempting to induce any elector to vote etc. would be receiving a bribe. The law therefore contemplates that where a person makes any payment to another person in order to make him use his influence to induce a third person to vote for him that is not bribery by the person who pays but the receipt of money by the second person for inducing or attempting to induce another elector to vote is bribery. It is also bribery for the voter himself to receive 902 the money. We, therefore, reiterate the view that when a candidate or anybody on his behalf pays any gratification to a person in order that the payment made to him may induce the voter to vote for the bribe giver it is bribery. But where the gratification is paid to a person in order that he may induce the other persons to vote for the bribe giver it is not bribery on the part of the bribe giver. It is, however, as we have explained above, bribery on the part of the bribe taker even when he takes it in order to induce an elector to vote for the bribe giver. In this case it is obvious that the primary object of the payment made to the appellant was to induce him to defect from the Organisation Congress to the Ruling Congress. That is not a corrupt practice under the Representation of the People Act. Even if the payment was received with the promise that he would induce the voters to vote for the bribe giver it will not be bribery on the part of the bribe giver but only bribery on the part the bribe taker. The defection of the appellant to the Ruling Congress, if it took place, might mean that he was expected to work for the Ruling Congress. Equally it may not. A person who changes his party allegiance at the time of the election probably might not command much respect among electors if the 1 electors knew that he had done so after receiving some money. Otherwise the fact that two important persons the appellant and Madhusudansinhji, a younger brother of the ex ruler of Danta Stata had joined the Ruling Congress might be expected to influence the voters to vote for the candidate set up by the Ruling Congress. But that would be not because of the payment made to the appellant and Madhusudansinhji. Nor would such payment be bribery. To reiterate, it is the payment to the appellant that must induce the voters to vote for the candidate set up by the Ruling Congress in order that it might amount to bribery. It is not enough that his defection from organisation Congress to the Ruling Congress induces voters to vote for the Ruling Congress candidate. As we said earlier, if the payment to the appellant came to be known as the cause for his changing allegiance it may have a boomerang effect. It is therefore clear that the payment made to the appellant would not have induced the voters to vote for the Ruling Congress candidate. While after his defection therefore the appellant might have been expected to work for the Ruling Congress candidate or equally might not have been, it is perhaps implicit that he would also vote for the Ruling Congress candidate. Is this enough to make the payment made to the appellant bribery ? The payment was made not for the purpose of inducing him to vote but to make him defect to the Ruling Congress. That was the purpose for which the payment was made. That incidentally he might vote for the Ruling Congress candidate does mean that the payment was made to him in order to make him vote for the Ruling Congress candidate. The bargain was not for his vote, the bargain was for his defection. Therefore on this point we agree with the learned Judge of the High Court. But if there was a specific request by the 1st respondent to the appellant that he should vote for him then the position would be different. In that case it would be bribery and even bribery to one 903 person is enough to make an election void. A specific allegation to that effect has been made in the election petition and that has not been considered by the learned Judge of the High Court. We shall now proceed to do so. The appellant gave evidence to the effect that the 1st respondent asked him on 9th February to vote for him and made the three promises earlier referred to. He was not cross examined on that point but the 1st respondent in his turn deniesd this when he gave evidence. Maulvi Abdul Rehman speaks to his having met the appellant on February 9, 1971 but he says that the 1st respondent was not with him at that time. Madhusudansinhji says that he had met the appellant before the 14th and that at that time the appellant told him that the Maulvi and the 1st respondent were insisting that the appellant and he (Madhusudansinh) should join Congress (R). He also denied a suggestion put to him in cross examination that it was not true that the appellant had told him before the 14th of February anything about the Maulvi or the 1st respondent telling the appellant that the appellant and he (Madhusudansinh) should join the Congress (R) on certain terms. This is the evidence relied on to show that on the 9th the 1st respondent also had met the appellant. If the appellant and Madhusudansinhji had met at Palanpur before the 14th and the appellant then told him that Maulvi and the 1st respondent were insisting that they should join the Ruling Congress the meeting should have been on the 13th or earlier and the request to him on the 12th or earlier. Naturally having chosen to examine Madhusudansinhji, who had by that time joined the Ruling Congress, as his witness the appellant would not have risked putting questions about the exact date on which Maulvi and the 1st respondent had met him. Quite possibly there was no such meeting on the 9th of February and that was why that question was not specifically put to him. When that question was put to Maulvi Abdul Rehman, who was examined as P.W. 8 a little earlier, he denied that the 1st respondent was with him on the 9th February. Coming to the conversation which the appellant and Madhusudansinhji had before the 14th, if the Maulvi and the 1st respondent were insisting either on the 13th or earlier that the appellant should join the Ruling Congress there should have been a meeting between them a little earlier than the 13th and it should have been on the 9th is the argument on behalf of the appellant. But there are many imponderables in this argument. If the Maulvi and the 1st respondent were insisting that the appellant and Madhusudansinhji should join the Ruling Congress it does not mean that they both did so at the same time. They could have been doing it on different occasions separately. Nor does it follow that the Maulvi and the 1st respondent met him on the 9th. Nor does it follow that on that date the 1st respondent asked the appellant to vote for him. The statement of Madhusudansinh is too slender a foundation on which this argument could be built. It is thus a case of the appellant 's oath against 1st respondent 's oath and in a case of a serious charge like bribery we would not be satisfied merely on the basis of an oath against oath to hold that it has been satisfactorily established that the 904 1st respondent asked the appellant on 9th February to vote for him. He may also mention that with regard to the alleged visit of the Maulvi and the 1st respondent to the appellant three other possible witnesses including the appellant 's wife, Pushpaben who could have been examined to establish that the 1st respondent accompanied the Maulvi to the appellant had not been examined. A further fact which improbabilises this story is that in the election petition it is stated that the 1st respondent told the appellant that he would arrange for a ticket for Madhusudansinh in the 1972 elecations and pay him Rs. 10,000/ if Madhusudansinh left organisation Congress and joined the Ruling Congress and voted and worked for him (1st respondent) and asked him to convey the offer to Madhusudansinh. No evidence was let in about the voting and what is more Madhusudansinh was not a voter in the Banaskantha Constituency. This shows that the allegation regarding the request to appellant to vote for 1st respondent is of the character as the request to Madhusudansinh and put in merely for the purposes of the election petition and not a fact. On broader considerations also it is very unlikely that when the talk was about the appellant and Madhusudansinh defecting to the Ruling Congress from the organisation Congress there would have been any talk about the voting itself. All parties would have proceeded on the understanding that when they defected to the Ruling Congress they would both work and vote for the Ruling Congress. The distinction between a gift or offer combined with the request to vote and the gift or offer to a person asking him to work for him with the incidental result that person might vote for him should always be kept in mind. In such a case there is no specific bargain for the vote. Were it not so it would be impossible for persons standing for election to get any person to work for them who is not also a voter in the constituency. This was brought out by this Court in the decision in onkar Singh vs Ghasiram Majhi(1). We would, therefore, hold that the case that 1st respondent bargained for the appellant 's vote has not been satisfactorily made out. On behalf of the 1st respondent it was urged that the actions of the appellant and Madhusudansinhji immediately after the payment of Rs. 10,000/ and the dramatic developments at the meeting addressed by the Prime Minister show that there would not have been any bargaining for the appellant 's vote. The points relied upon were (1) that it was not said by the appellant when he threw the money into the crowd on the 18th that he was asked to vote for the 1st respondent, (2) that it was not mentioned in the statement (exhibit 5) made by the appellant and Madhusudansinhji on 18 2 1971, (3) that was not mentioned in the interview given to the newspaper reporters found in exhibit 7 or in the newspaper report exhibit 8. We do not consider that these things are of much importance. At that time the most important factor was the attempt to persuade the appellant and Madhusudansinhji to defect to the Ruling Congress and any request to the appellant to vote for the 1st respondent would have been insignificant 905 even as we have held that when requesting the appellant and Madhusudansinhji to defect to the Ruling Congress it is not likely that they would have been asked to vote for the 1st respondent. The reference to the piece of evidence just mentioned cannot be said to establish that there was no request made to the appellant to vote for the 1st respondent. That would have to be decided on other factors and other evidence and on the basis of that evidence we have already held that it is not established that the 1st respondent requested the appellant to vote for him. Now remains the question of the offer to build a hostel for Kshatriya boys. Strictly speaking this does not arise on issue 10. This is probabilised by the evidence of Madhusudansinhji, Maulvi Abdul Rehman and the appellant as well as exhibit T. Whether it was to be in Danta or Banaskantha does not make much difference as long as it was for the Kshatriya boys. The two places are near to each other though in different Parliamentary constituencies and in whichever place it was situate it will benefit Kshatriya boys and there is No. doubt that if the hostel were constructed by respondent No. 1 or the Ruling Congress party at his instance that would induce the voters to vote for the Ruling Congress candidate. But before that happens the matter should come to the knowledge of the voters. Only if the voters knew that the promise had been made to the appellant and Madhusudansinhji that promise would induce the voters to vote for 1st respondent. But the knowledge of the prormise remained confined to the appellant and P.W. 10, in addition of course to Maulvi Abdul Rehman and the 1st respondent 's son. If the payment or the promise was to induce the voters, it cannot induce the voters unless they come to know about the payment or the promise. There is no evidence her that the voters knew about the promise to build the hostel. The bargain in such cases as we have mentioned in the judgement delivered by us today in section Iqbal Singh vs Gurdas Singh & Ors. is really an offer on the part of the bribe giver that he would do such a thing if the voters would vote for him. It is not necessary that the voters should have accepted it. But the voters should have a knowledge about the offer. Then only it would be a bargain. An offer contemplated and retained in the mind of the offerer and not articulated and made known to the offeree will not be a bargain. It therefore follows that in this case the offer to build a hostel does not also amount to bribery. In the result we upheld the judgment of the High Court and dismise this appeal. We make no order as to costs. P.H.P Appeal dismissed.

On 10 4 1968, a steamer arrived at the Madras port and landed inter alia a consignment or 202 bundles of black plain sheets of various sizes. The appellants received the goods and stored them in the transit sheds. The goods were imported by the first respondent under an authorisation issued by the State Trading Corporation of India which held a licence to import the goods from Hungary. The clearing agents of the first respondent filed a bill of entry with the Collector of Customs. But, the Customs authorities detained the goods as the specifications in the import licence did not tally with the description of the imported goods. The Customs Authorities then issued a show cause notice to the 1st respondent and after considering his explanation passed an order confiscating the goods. The first respondent preferred an appeal against that order to the Board which allowed the appeal. On an application of respondent No. 1 the Customs Authorities issued a certificate stating that the goods were detained by the Customs Authorities from 24 4 1963 to 21 8 1964 for examination under sections 17(3) and 17(4) of the other than in the ordinary process of appraisement and that the detention was due to no fault or negligence on the part of the correspondent. Acting on this certificate, the appellants waived the demurrage for the period covered by the certificate. As a result of the said certificate, the appellant charged respondent No. 1, Rs. 1963/ instead of Rs. 3,20,951/ by way of demurrage. Thereafter, the respondent No. I cleared the consignment. In January, 1965, the appellants wrote a letter to the Customs Authorities stating that the certificate was issued erroneously and that the Customs Authorities should reconsider the matter. In April, 1965, the Customs Authorities owned the mistake that the certificate was incorrect as the goods were detained in order to ascertain whether the Import Trade Control formalities were complied with and not for examination and assessment of duty under Sections 17(3) and 17(4) of the . The appellants brought the present suit against respondent No. 1. and the Union of India and Customs Authorities to recover the balance of ' demurrage amounting to about Rs. 3 Lacs. The first respondent disputed is liability to pay the demurrage on the ground that it could not be penalised either for the delay caused by the Customs Authorities in clearing the goods or in the issuance by them of a wrong certificate. The first respondent also contended that the scale of charges in the Port Trust Regulations under the heading Demurrage was void and ultra vires both for the reason that it was unreasonable and because the scale of charges was not within the authority of the appellants. The High Court dismissed the suit for the following reasons (1) The Scale of rates fixed by the Board is in the nature of bye laws. (2) Viewed as a bye law Rule 13(b) under which the Board can charge demurrage for the period during which the goods are detained for. no fault or negligence of the importer or his agent, is unreasonable and therefore void. (3) In principle, there can be no distinction between cases falling under clause (a) and those falling under clause (b) of Rule 13 and if 722 no demurrage is leviable in respect of cases falling within clause (a) no demurrage could be charged in respect of cases falling within clause (b). The distinction made by the Board between the two kinds of cases was therefore arbitrary and unreasonable. (4) 'Demurrage ', being a charge for wilful failure to remove the goods, can be levied only if the failure to remove the goods is due to the fault or negligence, of the importer or his agent. (5) Having regard to this well accepted meaning of the word 'demurrage ', the authority given to the Board by section 12 of the Act to frame the scale of rates can be exercised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had defaulted or was negligent in clearing the goods. (6) Since Rule 13(b) empowers the Board to charge demurrage even when the goods are detained for no fault or negligence of the importer or his agent, it is beyond the authority conferred by section 42 and is therefore, void. Allowing the appeal, ^ HELD:(1) The High Court erred in holding that the sale of rates and statements of condition framed by the appellant under sections 42, 43, and 43A are by laws. Those sections confer authority on the. Board to frame a sale of rates at which and a statement of conditions under which any of the services specified therein shall be performed. [732 C, 731 F] 2. A bye law has been said to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers, ordering something to be done or not to be done and accompanied by some sanction or penalty for its non observance. The Board 's power to frame a scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done. The rates and conditions govern the basis on which the Board performs the services. Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed by the Board. In fact some of the services which the Board renders are optional. Where services are offence by a public authority on payment of a price, conditions governing the offer and acceptance of services are not in the nature of bye laws. They reflect or represent an agreement between the parties one offering his services at the prescribed rates and the other accepting the service at those rates. [732 D H] 3. Bye laws may be treated as ultra vires on the grounds, amongst others that they are repugnant to the statute under which they are made or that they are unreasonable. But even a bye law cannot be declared ultra vires on the ground of unreasonableness merely because the court thinks that it goes further than is necessary or that it does not contain the necessary qualifications or exceptions. Kruse vs Johnson , relied on. [731 F. 733 B] 4. Port Trusts are bodies of a public representative character who are entrusted by the Legislature with authority to, frame a scale of ' rates and a statement of conditions subject to which the shall or may perform certain services. Port Trusts are not commercial organisations which carry on business for their own profit. The Board of Trustees is broad based body representing a cross section of a variety of interests. The requirement of sanction by the Central Government is a restraint on unwise, excessive, or arbitrary fixation of rates. section or a variety of interests. The requirement of sanction by the Central whole or any portion of rates or charges leviable according to any scale in force under section 44. Thus the Statute provides for the necessary safeguards, checks and counter checks as an insurance against fixation and levy of harsh or unjust rates. Section 49 of the Act confers power on the Assistant Collector of Customs if he is satisfied that the goods cannot be cleared within a 723 reasonable time to permit that the goods might pending clearance be stored in a public warehouse or in a private warehouse. In face of these considerations it is impossible to characterise the scheme for the levy of rates as arbitrary or unreasonable. [734 & G H, 735 A C] 5. The High Court erred in equating cases falling under clause (h) with those falling under clause (a) of Rule 13. The two classes deal with different sets of cases. Clause (a) deals with cases where goods are detained for examination under sections 17(3) and 17(4) or for chemical test under section 144 whereas clause (b) deals with cases where the goods are detained on account of Import Trade Control formalities or for compliance of formalities prescribed under the Drugs Act. There is no warrant for the court substituting its own view as to the allowance of three days in a technical matter like the fixation of rates which has been considered by an export Board of Trustees and whose decision has been confirmed by the Central Government. Equating the two clauses of cases dealt with by clauses (a) and (b) of Rule 13 might seem to the court a more prudent or reasonable way of fixing scales of rates but that is not a correct test for deciding the validity of the impugned provision. [735 D F] 6. The High Court overlooked a fundamental aspect of fixation of rates. The Board is under a statutory obligation to render services of various kinds and those services have not to be rendered for the personal benefit of this for that importer but in the larger national interest. Congestion in the ports affects the free movement of ships and of essential goods. The scale of rates has, therefore, to be framed in a manner which will act both as an incentive and as a compulsion for the expeditious removal of the goods from the transit area. Ships, like wagons, have to be kept moving and that can happen only if there is pressure on the importer to remove the goods from the Board 's permises with the utmost expedition. 1735 F H; 736 A] 7. As regards the appellants ' claim against the first respondent. facts must come before the law because legal principles cannot be applied in a vacuum. No oral evidence was let by the parties and documents do not prove them selves nor indeed is the admissibility of a document proof by itself of the truth of its; contents. The Import Licence stood in the name of the State Trading Corporation. It issued an authorisation in favour of the first respondent. The first respondent was only entitled to charge a commission for the work done by it in pursuance of the authorisation issued by the Corporation. If the appellants were to enforce the statutory lien. the incidence of the demurrage would have fallen on the Corporation in whom the title to the goods was vested. The appellants permitted the goods to be cleared without demanding the demurrage which they claimed later, thereby depriving the respondent of the opportunity and the right to reject the goods as against the supplier. In the absence of any more faces, it is impossible on the record as it stands, to accept the appellants ' claim against the first respondent. [737 F H, 738 A B]

Writ Petition No. 146 of 1979 (Under Article 32 of the Constitution) R. Jethmalani and Mrs. K. Hingorani for the Petitioner. U. R. Lalit. J. L. Jain and M. N. Shroff for the Respondents. The Judgment of the Court was delivered by BHAGWATI, J. , This petition is directed against the validity of an order of detention dated 31st November, 1978 made by the first respondent who is the Secretary to the Government of Maharashtra, Home Department in exercise of the power conferred under sub section (I) of section 3 of the (hereinafter referred to as the Act). The petitioner has urged several grounds before us but it is not necessary to refer to theme since there is one ground which is in our opinion sufficient to dispose of the petition in favour of the petitioner. To appreciate this ground, it is necessary to state a few facts. On 13th November, 1978, an order was made by the 1st respondent in exercise of the power conferred on him under sub section (1) old section 3 of the Act directing the detention of the petitioner. Pursuant to the order of detention, the petitioner was arrested and he was immediately served with the grounds of detention which were embodied in a communication dated 13th November, 1978 addressed by the 1st respondent to the petitioner. The grounds of detention were quite elaborate and they alleged various smuggling activities against the petitioner and several statements and documents were referred to and relied upon in support of those allegations. The petitioner, by his 1009 advocate 's letter dated 25th November, 1978, requested the 1st respondent to furnish copies of the statements and documents referred to and relied upon in the grounds of detention and stated that he required the same for the purpose of enabling him to make a representation against the order of detention. It seems that a copy of this letter was also sent by the petitioner to the Collector of Customs. The Assistant Secretary to the Government of Maharashtra, Home Department, informed the petitioner 's advocate by his letter dated 27th November, 1978 that copies of the relevant documents and statements required by the petitioner for the purpose of making a representation against the order of detention may be obtained from the Collector of Customs. The petitioner thereupon addressed his advocate 's letter dated 2nd December, 1978 to the Collector of Customs requesting him Lo furnish copies of the relevant documents and statements. The Assistant Collector of Customs, however, replied by his letter dated 6th December, 1978 stating that copies of the relevant documents and statements would be supplied after a show cause notice under the Customs Act, 1926 was issued to the petitioner. The petitioner was thus unable to get copies of the relevant documents and statements from the Collector of Customs. The petitioner obviously could not wait for making a representation since the period of thirty days within which a representation must be made was expiring and he, therefore, sent a representation dated 4/9th December, 1978 to the Home Secretary and it was received by the Home Department on 12th December 1978. The Asstt. Secretary, Home Department, by his letter dated 22nd December, 1978, acknowledged that the representation of the petitioner was received on 12th December, 1978 and intimated that the issue regarding the supply of copies of relevant documents and statements to the petitioner was under consideration of the Government and after this issue was decided, the representation of the petitioner would be considered and a suitable reply would be given. Now it appears from the affidavit in reply filed by the 1st respondent that the case of the petitioner was in the meanwhile referred to the Advisory Board and since the meeting the Advisory Board was fixed on 20th December, 1978, the representation of the petitioner was forwarded to the Advisory Board for its consideration. The Advisory Board reported to the 1st respondent that in its opinion there was sufficient cause for the detenion of the petitioner and this report was received by the 1st respondent on 6th January, 1979. The 1st respondent, after considering the report of the Advisory Board made an order dated 15th January, 1979 confirming the detention of the petitioner. 1010 The petitioner on these facts contended that the order confirming the detention of the petitioner was passed by the 1st respondent without considering the representation of the petitioner and the. detention of the petitioner was, therefore, unlawful as being in con travention of Article 22(S) of the Constitution. This contention has in our opinion great force and it must result in invalidation of the detention of the petitioner. It is now settled law that the power to preventively detain a person cannot be exercised except in accordance with the constitutional safegudards provided in clauses (4) and (S) of Article 22 and if any order of detention is made in violation of such safeguards, it would be liable to be struck down as invalid. It is immaterial whether these constitutional safeguards are incorporated rated in the law authorising preventive detention, because even if they are not, they would be deemed to be part of the law as a super imposition of the Constitution which is the supreme law of the land and they must be obeyed on pain of invalidation of the order of detention. The 1st respondent was, therefore, bound to observe these constitutional safeguards provided inter alia in clauses (4) and (5) of Article 22 in detaining the petitioner. We are concerned in this case only with a complaint of violation of the provisions of clause (5) of Article 22 and that clause reads as follows: "When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, com municate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. " This Court explained the true meaning and import of this clause in Khudiram Das vs The State of West Bengal(l): "The constitutional imperatives enacted in this article are twofold: (1) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, com municate to the detenu the grounds on which the order of detention has been made, and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention. These are the barest minimum safeguards which must be observed before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security. (1) A. I. R. 1975 section C. 550 1011 It will, therefore, be seen that one of the basic requirements of clause (5) of Article 22 is that the authority making the order of detention must afford the detenu the earliest opportunity of making a representation against the order of detention. Now this requirement would become illusory unless there is a corresponding obligation on the detaining authority to consider the representation of the detenu as early as possible. It could never have been the intention of the constitution makers that the detenu should be given the earliest opportunity of making a representation against the order of detention but the detaining authority should be free not to consider the representation before confirming the order of detention. That would render the safeguard enacted by he constitution makers meaningless and futile. There can, therefore, be no doubt that the constitutional imperative enacted in clause (S) of article 22 requiring the earliest opportunity to be afforded to the detenu to make a representation carries with it by necessary implication a constitutional obligation on the detaining authority to consider the representation as early as possible before making an order confirming the detention. The detaining authority must consider the representation of the detenu and come to its own conclusion whether it is necessary to detain him. If the detaining authority takes the view, on considering the representation of the detenu, that it is not necessary to detain him, it would be wholly unnecessary for it to place the case of the detenu before the Advisory Board. The requirement of obtaining opinion E; of the Advisory Board is an additional safeguard over and above the safeguard afforded to the, detenu of Making a representation against the order of detention. The opinion of the Advisory Board even if given after consideration of the representation is no substitute for the consideration of the representation by the detaining authority. This Court pointed out in Khairul Haque vs The State of West Bengal(1). "It is implicit in the language of Article 22 that the appropriate Government, while discharging its duty to consider the representation, cannot depend upon the views of the Board on such representation. It has to consider the representation on its own without being influenced by any such view of the Board. There was, therefore, no reason for the Government to wait for considering the petitioner 's representation until it had received the report of the Advisory Board. As laid down in Sk. Abdul Karim vs State of West Bengal (AIR 1969 SC lO28) (supra), the obligation of the appropriate Government under article 22(5) (1) W. P. 245 of 1969, dec. On Sept. 10, 1969. 1012 is to consider the representation made by the detenu as expeditiously as possible. The consideration by the Government of such representation has to be, as aforesaid, independent of any opinion which may be expressed by the Advisory Board. The fact that article 22 (5) enjoins upon the detaining authority to afford to the detenu the earliest opportunity to make a representation must implicity mean that such representation, must, when made, be considered and disposed of as expeditiously as possible, otherwise, it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning. " There are thus two distinct safeguards provided to a detenu; one is that his case must be referred to an Advisory Board for its opinion if it is sought to detain him for a longer period than three months and the other is he should be afforded the earliest opportunity of making a representation against the order of detention and such representation should be considered by the detaining authority as early as possible before any order is made confirming the detention. Neither safeguard is dependent on the other and both have to be observed by the detaining authority. It is no answer for the detaining authority to say that the representation of the detenu was sent by it to the Advisory Board and the Advisory Board has considered the representation and then made a report expressing itself in favour of detention. Even if the Advisory Board has glade a report stating that in its opinion there is sufficient cause for the detention, the State Government is not bound by such opinion and it may still on considering the representation of the detenu or otherwise, decline to confirm the order of detention and release the detenu. The detaining authority is, therefore, bound to consider the representation of the detenu on its own and keeping in view all the facts and circumstances relating to the case, come to its own decision whether to confirm the order of detention or to release the detenu. Here in the present case, the representation of the petitioner was received by the Home Department on 12th December, 1978 and it was immediately forwarded to the Advisory Board because the meeting of the Advisory Board was fixed on 20th December, 1978. The report of the Advisory Board stating that in its opinion there was sufficient cause for the detention of the petitioner was received by the 1st respondent on 6th January, 1979 and on the basis of this report, 1013 the 1st respondent confirmed the order of detention on 15th January, 1979. There is nothing on the record to show that the 1st respondent considered the representation of the petitioner before making the order confirming the detention of the petitioner. We do not find anywhere in the affidavit of the 1st respondent in reply to the petition any statement that he considered the representation of the petitioner before making the order of confirmation dated 15th January, 1979. On the contrary, there is a positive statement in paragraph 16 of this affidavit that the detention order was confirmed after consideration of the report of the Advisory Board which was of the opinion that the detention should be continued. We called upon the learned advocate appearing on behalf of the 1st respondent to place before us the file relating to the detention C. Of the petitioner and when this file was shown, we found that there was an endorsement made on 12th March, 1979 which showed that it was only on that date that the representation of the patitioner was considered by the 1st respondent and rejected. This is also borne out by the letter dated 12th March, 1979 addressed by the Deputy Secretary, Home Department to the petitioner stating that the representation was considered by the "Advisory Board/Government" and his request for release from detention could not be granted. It is, therefore, amply clear from the record that the representation of the petitioner was not considered by the 1st respondent before he confirmed the order of detention. The 1st respondent thus failed to comply with the constitutional obligation imposed upon him under clause (5) of E: article 22. The subsequent consideration and rejection of the representation could not cure the invalidity of the order of confirmation. The detention of the petitioner must, therefore, be held to be illegal and void These were the reasons for which we made our order dated 11th April, 1979 quashing and setting aside the detention of the petitioner and directing that the petitioner be set at liberty forthwith.

^ HELD: (Per Sarkaria, J.) The records of this case be submitted to the Hon 'ble Chief Justice for C constituting a larger Bench which would resolve the doubts, difficulties and inconsistencies pointed out by Kailasam J. in his order, particularly in its last paragraph. (Per Kailasam, J.) 1. Before the amendment of Section 367(5) of the Code of Criminal Procedure by the Criminal Procedure Code (Amendment) Act 1955 (Act 26 of 1955) was introduced, the normal sentence for an offence of murder was death and the lesser sentence was the exception. After the introduction of the amendment it was not obligatory for the court to state the reasons as to why the sentence of death was not passed. By the amendment the discretion of the court in deciding whether to impose a sentence of death or imprisonment for life became wider. The court was bound to exercise its judicial discretion in awarding one or the other of the sentences. By the introduction of Section 354(3) of the Code of Criminal Procedure 1973, the normal sentence is the lesser sentence of imprisonment for life and if the sentence of death is to be awarded, special reasons will have to be recorded. In other words, the court, before imposing a sentence of death, should be satisfied that the offence is of such a nature that the extreme penalty is called for. [1203A C] 2. In a number of decisions, this court has reiterated the position that under section 354(3) of the 1973 Code, the court is required to state the reasons for the sentence awarded and in the case of sentence of death special reasons are required to be stated. [1203D] Balwant Singh vs State of Punjab [1976] 2 S.C.R. 684; Ambaram vs The State of Madhya Pradesh ; and Sarveshwar Prasad Sharma vs Slate of Madhya Pradesh [1978] I S.C.R. 560 referred to. In Jagmohan Singh vs State of U.P. ; in which the constitutional validity of imposition of death sentence was challenged, this Court held that the deprivation of life is constitutionally permissible if that is done according to the procedure established by law and that it cannot be held that capital sentence is per se unreasonable and not in the public interest. It was also held that the Judges are invested with very wide discretion in the matter of fixing the degree of punishment and that discretion in the matter of sentence is liable 20 409SCI/79 1194 to be corrected by superior courts, that exercise of judicial discretion on well recognised principles is, in the final analysis, the safest possible safeguard for the accused. [1204C D] 4. Section 367(5) of the Criminal Procedure Code which came into force on April 1, 1974, after the judgment in Jagmohan Singh 's case, provides that the judgment shall state the special reasons where a sentence of death is award ed for an offence punishable with death or in the alternative with imprisonments life or imprisonment for a term of years. The requirement that courts should state the special reasons for awarding the death sentence would indicate that the normal sentence for an offence punishable either with death or with imprisonment for life is imprisonment for life and that if the court considered that sentence of death is appropriate on the particular facts of the case it should give special reasons. [1204 G H] 5. But in Rajendra Prasad vs State of U.P. ; , the majority of a Division Bench of this Court held that "special reasons" necessary for imposing the death penalty must relate not to the crime as such but to the criminal. The death sentence can be awarded only in certain restricted categories where a crime holds out a durable And continuing threat to social security in the setting of a developing country and poses a grave peril to society 's survival and when an economic offender intentionally mixes poison in drugs and knowingly and intentionally causes death for the sake of private profit and so on. The decision is in many respects contrary to the law laid down by the Constitution Bench of this Court in Jagmohan Singh 's case. The court in this case has proceeded to make law as regards the conditions that are necessary for imposition of a sentence of death under section 302 I.P.C. and to canalisation of sentencing discretion and has embarked on evolving working rules on punishment bearing in mind the enlightened flexibility of social sensibility. In doing so the Court has exceeded its power conferred on it by law. Courts have no power to legislate and to frame rules to guide the infliction of death penalty. [1205C F] 6. So far as the enacted law is concerned, the duty of the court is to interpret and construe the provisions of the enactment. Courts must take it absolutely for granted that the Legislature has said what it meant and meant what it has said. Judges are not at liberty to add or to take from or modify the letter of the law simply because they have reason to believe the true sentence legis is not completely or correctly expressed by it. Though the courts are free to interpret, they are not free to overlook or disregard the constitution and the laws. [1207B D] 7. It is for the court to administer the law as it stands. In awarding sentence or death, the court has to take into consideration the various aspects regarding a crime and the reason for committing the crime and pass the appropriate sentence, and if it is death sentence, to give reasons as required by the Code of Criminal Procedure. If in deciding a case on particular facts a principle is stated, it would be binding as a precedent. If courts resort to rule making, it will not be binding as a precedent. If the courts are to embark on rule making the question arises whether the responsibility can be undertaken by a bench of three Judges with majority of 2: 1. There is no machinery by which the court could ascertain the views of the various cross sections of the society, which is a pre requisite before any law making is resorted to. 1195 Rajendra Prasad 's ease the court embarked on framing rules prescribing conditions for the imposition of death sentence. The view of the majority that in awarding a sentence the criminal is more important than the crime is not warranted by the law as it stands today. The general principles laid down in Rajendra Prasad 's case are not the ratio decidendi of the case. The enunciation of the reasons or the principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is binding between the parties to it but it is the abstract ratio decidendi ascertained on a consideration of the judgment in relation to the subject matter of the decision which alone bas the force of law and which, when it is clear what It was, is binding. Statements which are not necessary to the decision, which go beyond the occasion and lay down a rule that is unnecessary for the purpose in hand have no binding authority on another court, though they may have merely persuasive efficacy. Decisions upon matters of facts are not binding on any other court [1207G H; 1202D F] Tribhuvandas vs Ratilal ; = 70 Bom. L. R. 73; Amritsar Municipality vs Hazara Singh A.I.R. ; and Quinn vs Leatham 1901 A.C. 495 at p. 506; referred to. In Rajendra Prasad 's case the conclusion of the majority was that as nothing on record suggested that the accused was beyond redemption and since the record did not hint that such an attempt was made inside the prison there was no special reason to award death sentence. The utmost to which this case can be considered as an authority is that if in similar circumstances when a person stabs two persons several times it would not furnish special reasons for inflicting the death penalty. In the second case (Kunjukunju) the majority was of the view that the test should be whether the accused was a social security risk altogether beyond salvage by therapeutic life sentence was neither in accordance with the requirements of the Code of Criminal Procedure nor law laid down by the Constitution Bench. Therefore, it cannot be followed as a precedent. Similarly, in the third case (Dubey 's case) also the majority view that it would be illegal to award capital punishment without considering the correctional possibilities inside the prison and that the accused being young and of malleable age and other circumstances bearing on the offender called for the lesser sentence is not in conformity with the decisions of this Court or the requirements of the law. [1213H; 1214A H] 9. In the instant case the appellant was released after undergoing a term of imprisonment for the murder of his wife. After release he lived with his cousin. When his cousin 's son and wife objected to his stay with the family he inflicted a fatal injury on the son and two daughters of his cousin when they were asleep and caused grievous injury on another daughter The courts below came to the conclusion that the appellant acted in a very cruel manner. They have rightly characterised the offence as heinous and held that the only appropriate sentence was the extreme penalty of death. The trial court and the High Court were right in their conclusions. [1215 C E] [Rajendra Prasad 's case cannot be treated as a binding precedent yet as it is a decision of a division bench of this Court. The papers were directed to be placed before the Hon 'ble the Chief Justice for constituting a larger bench to decide the case.]

Civil Appeals Nos. 85 & 389 of 1957. Appeal from the judgment and order dated August 26, 1955, of the Calcutta High Court in Income tax References Nos. 44 of 1954 and 17 of 1953. section Mitra and P. K. Mukherjee, for the appellant (in C. A. No. 85/57.) N. C. Chatterjee and P. K. Ghosh, for the appellant (in C. A. No. 389/57). R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent. April 15. The judgment of Sinha and Kapur, JJ., was delivered by Sinha, J. Hidayatullah, J., delivered a separate judgment. SINHA, J. The common question of law arising in these two appeals on certificates of fitness granted by the High Court of Calcutta under section 66A(2) of the Indian Income tax Act, 1922, is the effect and scope of the words " constituted under an instrument of partnership" in section 26A of the Income tax Act, which, in the course of this judgment, will be referred to as the Act. 644 The facts of the two cases, leading upto these appeals, though not dissimilar, are not identical. They are, therefore, set out separately. In Civil Appeal No. 85 of 1957, Messrs. R. C. Mitter and Sons, 54, Rani Kanto Bose Street, Calcutta, claim to be a firm said to have been constituted in April 1948, with four persons whose names and shares in the nett profits of the partnership business, are stated to be as under (a) Ramesh Chandra Mitter 40 per cent. of the nett profits. (b) Sudhir Chandra Mitter 30 per cent. of the nett profits. (c) Sukumar Mitter 20 per cent. of the nett profits. (d)Sushil Chandra Mitter 10 per cent. of the nett profits. The firm intimated its bank, the Bengal Central Bank, Limited, (as it then was), of the constitution of the firm as set out above, by its letter dated April 15, 1948. The letter also stated that a partnership deed Was going to be drawn up and executed by the partners aforesaid, and that the deed so drawn up, will be forwarded to the bank in due course. Though the firm is said to have come into existence in April 1948, the deed of partnership which is set out as annexure " A " at P. 5 of the paper book, was drawn up only on September 27, 1949. This deed of partnership appears to have been registered under the provisions of the Indian Partnership Act, on October 1,2, 1949. It was also forwarded to the Bengal Central Bank, Ltd., Head Office at Calcutta, as it appears from the seal of the bank and the signature dated December 7, 1949. An application to register the firm under section 26A, for the assessment year 1949 50, was made to the Income tax Authorities. The date of the said application does not appear from the record before us. The application was rejected by the Income tax Authorities. The firm preferred an appeal to the Income tax Appellate Tribunal, which was also dismissed by the Tribunal by its order dated September 7, 1953. The ground of the order of the Tribunal was that as the firm admittedly 645 was formed by a verbal agreement in April 1948, and not by or under an instrument in writing dated September 27, 1949, and as the assessment was for the year 1949 50, for which registration of the firm was sought, the registration could not be ordered. The Tribunal also referred to the letter aforesaid to the Bengal Central Bank, and observed that the letter merely contained information as to the formation of the partnership and of the personnel thereof, but it did not contain the terms on which the partnership had been formed. It also showed that a partnership had been created but not by deed. Hence, the Tribunal further observed, the letter might be useful for consideration on the question of the genuineness of the firm, but it could not fulfil the requirements of section 26A, namely, that the firm should be constituted under an instrument of partnership. Therefore, the Tribunal held that assuming the firm to be genuine, it was not entitled to be registered under section 26A of the Act. Thereupon, the assessee moved the Tribunal under section 66(1) of the Act. That application was granted by the order dated February 2, 1954, and the case stated to the High Court for its decision on the following question : " Whether the assessee firm which is alleged to have come into existence by a verbal agreement in April, 1948, is entitled to be registered under section 26A for the purpose of assessment for 1949 50, where the Instrument of Partnership was drawn up only in September, 1949, after the expiry of the relevant previous year ". The High ' Court Bench, presided over by Chakravarti, C. J., by its judgment dated August 26, 1955, answered the question in the negative. The learned Chief Justice considered the matter from all possible view points, including grammatical, etymological and textual matters, and came to the conclusion that " constituted " meant created ". He also considered that the preposition under " is " obviously inappropriate after having convinced himself that " constituted could be equated with "created". He also found no difficulty in observing that " some of the 646 paragraphs of the Form appear to be ill adjusted to the provisions of the Act and the Rules ". In the end, therefore, he concluded with the remarks: " It appears to me to be desirable that the language of the section, as also that of the Rules should receive legislative attention ". In Civil Appeal No. 389 of 1957, Messrs. D. C. Auddy & Brothers, Calcutta, claim to be a partnership consisting of Dulal Chand Auddy, Prem Chand Auddy, Gora Chand Auddy and Kalipada Nandy. The partnership business is said to have begun in June, 1944. An application was made on August 24,1949, for the registration of the partnership. The Income tax Officer and the Appellate Assistant Commissioner were of the opinion that the partnership was not a genuine one, and could not be registered. Another reason for not ordering registration was that the partnership deed, having been executed on June 2, 1948, could not be operative during the two years under consideration, namely, 1945 46 and 1946 47. On appeal, the Income. tax Appellate Tribunal rested its decision on the finding that the alleged partnership had not been constituted under an instrument of partnership within the meaning of those words in section 26A of the Act. At the instance of the assessee, the Tribunal framed the fol lowing question for determination by the High Court: " Whether the assessee firm constituted orally in June, 1944, can validly be registered in the assessment years 1945 46 and 1946 47 under Section 26A of the Indian Income Tax Act on the basis of a Memorandum of Partnership executed in June 1948. " The other parts of the statement of the case by the Tribunal, refer to the merits of the assessment, with which we are not concerned in this appeal. Hence, it is not necessary to set out those facts. On this part of the statement of the case, the High Court gave the same answer as in the other appeal. In this case also, the High Court granted the necessary certificate under section 66A(2), read with article 135 of the Constitution. As both the cases raise the same question of law, they have been heard together, and will be governed by this judgment. 647 It is convenient at this stage to set out the relevant provisions of the Act. Section 26A is in these terms :" 26A. Procedure in registration of firms. (I) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with 'by the Income tax Officer in such manner as may be prescribed. " The section contemplates the framing of rules laying down the details of the Form in which the application has to be made and the particulars which should be stated in the application, and other cognate matters. Section 59 of the Act, authorizes the Central Board of Revenue, subject to the control of the Central Government, to make rules for carrying out the purposes of the Act, and sub section (5) of section 59 provides that rules made under the section, shall be published in the Official Gazette, and " shall thereupon have effect as if enacted in this Act". Income tax Rules 2 to 6B lay down the details of the procedure for making an application for the registration of a firm, as contemplated under section 26A, quoted above. These rules have been amended extensively in 1952, but we are concerned in this case with the rules before those amendments. Rule 2 requires such an application to be signed by all the partners personally, and to be made before the income of the firm is assessed for the year, under section 23 of the Act. Rule 3 requires that the application be made in the Form annexed to the rule, and that the application shall be accompanied by the original Instrument of, Partnership under which the firm is constituted. . The Form appearing in r. 3, requires the assessment year to be specified. Thus, the registration is for a particular year of assessment, and not for future years also, and therefore, the application for registration has 648 to be made every year, which in fact means an application for renewal of the registration. Paragraph 3 of the Form requires a certificate to be signed by the applicants for registration, to the effect that the profits (or loss, if any) of the previous year were divided or credited as shown in Section B of the Schedule. The Form contains the Schedule in 7 columns which require the names of the partners, their addresses, the date of admittance to partnership, their shares in the profits or loss, etc., to be filled in. Under the Schedule, there are Section A and Section B. Section A has to contain particulars of the firm as constituted at the date of the application, and Section B has to contain the particulars of the apportionment of the income, profits or gains (or loss) of the business in the previous year between the partners who in that previous year were entitled to share therein. Rule 4 provides that if the Income tax Officer. is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership, and that the application has been properly made, he has to enter a certificate at the foot of the Instrument of Partnership that the firm has been registered under section 26A of the Act, and that the certificate of registration shall have effect for the assessment for the year specified therein. Rule 5 is as follows:" 5. The certificate of registration granted under Rule 4 shall have effect only for the assessment to be made for the year mentioned therein. "And Rule 6 makes provision for the certificate of registration to be renewed for a subsequent year, on an application being made in that behalf in accordance with the preceding Rules. It is manifest that for a true and proper construction of the relevant provisions of the Act, relating to registration of firms, sections 26, 26A and 28, and the Rules summarized above, have to be read together. So read, it is reasonably clear that the ' following essential conditions must be fulfilled in order that a firm may be held entitled to registration: (1) That the firm should be constituted under an Instrument of Partnership, specifying the individual shares of the partners. 649 (2) That an application on behalf of, and signed by, all the partners, containing all the particulars as set out in the Rules, has been made; (3) That the application has been made before the assessment of the income of the firm, made under section 23 of the Act (omitting the words not necessary for our present purpose), for that particular year; (4) That the profits (or loss, if any) of the business relating to the previous year, that is to say, the relevant accounting year, should have been divided or credited, as the case may be, in accordance with the terms of the Instrument; and lastly, (5) That the partnership must have been genuine, and must actually have existed in conformity with the terms and conditions of the Instrument. It is clear from what has been said above with reference to the relevant provisions of the Act, that the certificate of registration has reference to a particular assessment year, and has effect for the assessment to be made for that particular year. In other words, the terms of the partnership should appear in the Instrument of Partnership in respect of the relevant accounting year. It is equally clear that the firm to be registered, should have been in existence during the accounting year, " constituted as shown in the Instrument of Partnership ". The Rules, thus, contemplate a document operative during the accounting year. We are not here concerned with the further question whether the document should be in existence at the very inception of the accounting year, or before the year is out. The provisions of the Act, set out above, do not present any serious difficulty except for the words it constituted under an Instrument of Partnership " occurring in section 26A and the relevant Rules. On the interpretation of these words, there has been a conflict of judicial opinion, as will presently appear. On behalf of the assessee appellants, it has been contended that so long as the assessment has not been made, the assessees are entitled to have their firms registered in accordance with the terms of the Instrument of 82 650 Partnership, irrespective of the year in which the Instrument may have come into existence. Strong reliance was placed upon the decision of the Bombay High Court (Chagla, C. J., and Tendolkar, J.) in the case of Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay(1), wherein, the following observations have been made: " Any firm can make an application under section 26A for registration and the two conditions that it has got to comply with are that it must be constituted under an instrument of partnership and the second condition is that the instrument of partnership must specify the individual shares of the partners. If these two conditions are satisfied it would be entitled to registration. The section does not say that the firm must be constituted by the instrument of partnership. It does not require that the firm must come into existence by reason of the instrument of partnership, or that the firm should be the creature of the instrument of partnership, or that the firm must not exist prior to the instrument of partnership being executed. In the case decided by the Bombay High Court, the Instrument of Partnership had been executed on March 27, 1946, with effect from January 1, 1946. On an application made to the Department to register the firm, the matter was determined by the Income tax Appellate Tribunal against the assessee on the ground that the partnership was in existence before the deed was executed, and that, therefore, it could not be registered. Before the Bombay High Court, reliance had been placed on behalf of the Department on the decision of the Calcutta High Court, now before us in appeal, as also on a decision of the Punjab High Court. The decision of the Calcutta High Court now under examination, in the case of R. C. Mitter & Sons vs Commissioner of Income tax (2), takes the view that section 26A of the Act contemplates a firm created or brought into existence by an Instrument of Partnership, which governs the distribution of shares in the relevant accounting period. Such a deed should have (1) [1956) , 907. (2) , 704, 705. 651 come into existence on or, before the commencement of the relevant accounting period. The other decision relied upon in the Bombay High Court, had been given by a Division Bench of the Punjab High Court, reported in Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi (1). On the other hand, it has been contended on behalf of the Revenue that in order to entitle a firm to be registered, the firm should have been created by an Instrument of Partnership, or at any rate, such an Instrument should be in existence during the relevant accounting year, that is, the year previous to the year of assessment in respect of which the application for registration has been made. For the first part of the submission on behalf of the respondent, there is ample authority in the decision under appeal, which bad been relied upon before the Bombay High Court. In that case, (R. C. Mitter & Sons vs Commissioner of Income tax (supra) (2) ), Chakravarti, C. J., who delivered the opinion of the Court under section 66(1) of the Act, after a very elaborate discussion, came to the conclusion which may best be expressed in his own words, as follows: " If by the expression I constituted under an instrument of partnership ' is meant a firm which originated in a verbal agreement but with respect to which a formal deed was subsequently executed, there would be no room in the section for partnerships actually created by an instrument and such partnerships, although most obviously entitled to registration, would be excluded from the purview of the section. Even etymologically or textually, I do Dot think that the word constituted ', when used in relation to a firm or such other body, can mean anything but I created when the reference is to some deed or instrument to which the inception of the firm or other body is to be traced. " After having, thus, held that section 26A contemplated firms created or brought into existence by a deed in writing, he had no difficulty in substituting " by " for " under ", thus, making the crucial words " constituted (I) (2) , 704, 705. 652 by " instead of " constituted under ". In our opinion, the learned Chief Justice fell into the error of re constructing the provisions of the statute, instead of construing them. The word " by " could be substituted for the word " under " in section 26A only if the words, as they stand in the section, were not capable of making sense, and it would, thus, have been necessary to amend the wording of the section. Turning his attention from the wording of the section to that of the Rules and the Form appearing under the Rules, he again came to the conclusion that " some of the paragraphs of the Form appear to be ill adjusted to the provisions of the Act ". Referring to other parts of the Rules, he was constrained to observe that they" would lend strong support to the view that what is meant by 'any firm constituted under an instrument of partnership ' in section 26A is no more than a fir of which the constitution appears from an instrument in writing. It is obvious that if such be the meaning of the expression 'constituted under an instrument of partnership ', the instrument need not be one by which the partnership was created ". But then he attempted to get over that difficulty by observing that the language of the Rules and the Form could not supersede a provision contained in the Act itself. He further opined that the language in para. 4(1) is " un doubtedly unsatisfactory ". In our opinion, any attempt to reconstruct the provisions of the relevant section and the Rules, on the assumption that the intention of the legislature was to limit the registration of firms to only those which have been created by an Instrument of Partnership, is, with all respect, erroneous. The proper way to construe the provisions of the statute is to give full effect to all the words of the relevant provisions, to try to read them harmoniously, and then to give them a sensible meaning. Hence, we have to consider, at the threshold, the question whether the words " constituted under an Instrument of Partnership " have some meaning which can be attributed to them harmoniously with the rest of the relevant provisions. A partnership may be created or set up by a contract in writing, 653 setting out all the terms and conditions of the partnership, but there may be many cases, and perhaps, such cases are more numerous than the other class, where a partnership has been brought into existence by an oral agreement between the parties on certain terms and conditions which may subsequently be reduced to writing which will answer the description of an Instrument of Partnership. Such an instrument would, naturally, record all the terms and conditions of the contract between the parties which,. at the initial stages, had not been reduced to writing. In such a case, though the partnership had been brought into existence by an oral agreement amongst the partners, if the terms and conditions of the partnership have been reduced to the form of a document, it would be right to say that the partnership has been constituted under that instrument. The word " constituted " does not necessarily mean " created " or " set up ", though it may mean that also. It also includes the idea of clothing the agreement in a legal form. In the Oxford English Dictionary, Vol. II, at pp. 875 & 876, the word " constitute " is said to mean, inter alia, " to set up, establish, found (an institution, etc.) " and also " to give legal or official form or shape to (an assembly, etc.) ". Thus, the word in its wider significance, would include both, the idea of creating or establishing, and the idea of giving a legal form to, a partnership. The Bench of the Calcutta High Court in the case of R. C. Mitter and Sons vs Commissioner of Income tax(1), under examination now, was not, therefore, right in restricting the word " constitute " to mean only " to create ", when clearly it could also mean putting a thing in a legal shape. The Bombay High Court, therefore, in the case of Dwarkadas Khetan and Co. vs Commissioner of Income tax, Bombay City, Bombay (2), was right in holding that the section could not be restricted in its application only to a firm which had been created by an instrument of partnership, and that it could reasonably and in conformity with commercial practice, be held to apply to a firm which may have come into existence earlier by an (1) , 704, 705. (2) , 907. 654 oral agreement, but the terms and conditions of the partnership have subsequently been reduced to the form of a document. If we construe the word " constitute " in the larger sense, as indicated above, the difficulty in which the learned Chief Justice of the Calcutta High Court found himself, would be obviated inasmuch as the section would take in cases both of firms coming into existence by virtue of written documents as also those which may have initially come into existence by oral agreements, but which had sub. sequently been constituted under written deeds. The purpose of the provision of the Income tax Acts. 26A is not to compel the firms which had been brought into existence by oral agreements, to dissolve themselves and to go through the formality of constituting themselves by Instruments of Partnership. If we construe the words " constituted under " in that wider sense, we give effect to the intention of the legislature of compelling a firm which bad existed as a result of an oral agreement, to enter into a document defining the terms and conditions of the partnership, so as to bind the partners to those terms, before they could get the benefit of the provisions of section 23 (5) (a). Section 23 (5) (a) confers a privilege upon partners who may find it more worth their while to be assessed upon their individual total income than upon the total income of the partnership. It is, therefore, very important from the point of view of the Revenue that the Department should be apprised in time of the true constitution of the partnership, the names of the true partners and the precise share of each of them in the partnership profits (or loss, if any). The very object of this provision will be defeated if the alleged partner ship is not genuine, or if the true constitution of the partnership and the respective shares of the partners, are not fully and correctly placed on record as soon as possible, for the purpose of 'assessment. In this connection, the provisions of section 28(2) of the Act, are also worth noticing. That sub section provides that if the Income tax Officer or the Appellate Authorities under the Act, are satisfied that the profits of a registered firm have been distributed otherwise than 655 in accordance with the shares of the partners, as shown in the Instrument of Partnership registered under the Act, and governing such distribution, and that any partner has concealed any part of his profits, the penalty prescribed therein may be imposed upon such a partner. Unless the Instrument of Partnership has been registered in respect of the accounting year and before the assessment has been done, the penal provisions aforesaid cannot be enforced. It is, therefore, essential, in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms, that the firms should strictly comply with the requirements of the law, and it is incumbent upon the Income tax Authorities to insist upon full compliance with the requirements of the law. But, in our opinion, there is no warrant in the words of the relevant provisions of the statute for restricting registration under section 26A of the Act to those firms only which have been created or brought into existence by an Instrument of Partnership. In our opinion, it is more in consonance with the terms of the relevant provisions of the Act, referred to above, to hold that the words " constituted under an instrument of partnership " include not only firms which have been created by an Instrument of Partnership but also those which may have been created by word of mouth but have been subsequently clothed in legal form by reducing the terms and conditions of the partnership to writing. We have already indicated that there has been a conflict of judicial opinion in the different High Courts in India on the question now before us. But on a consideration of the facts in each case, it will be found that the decision arrived at in most of the cases, was correct, though the reasons given appear to have gone beyond the requirements of the case. The decision of the Bombay High Court in Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay (1), discloses that the partnership then in question had come into existence with effect from the beginning of 1946, though the Instrument of Partnership (1) [1956) , 907. 656 was executed on March 27, 1946. Thus, the Instrument of Partnership came into existence during the accounting year, whatever that year may have been, because the year 1946 was the starting year of the partner Ship. Hence, even the earliest assessment year, presumably the year 1947 48, would be governed by the terms and conditions of the written Instrument of Partnership aforesaid. The decision of the Bombay High Court was followed by the same Bench of that Court in the case of Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & Co. (1). In the second case, the learned Judges ruled that the second partnership deed of September 12, 1951, which set out the names and shares of all the partners who constituted the partnership, could be registered in respect of the accounting year November, 1948 to October, 1949. This conclusion was arrived at without even a mention, far less a discussion, of the relevant provisions of the Act. Apparently, the matter was not critically placed before the learned Judges, when they decided the second case. The con clusion in this case is, with all respect, apparently wrong in view of our conclusion that the Instrument of Partnership should have been in existence in the accounting year. In the High Court of Punjab, the question was fully discussed in a judgment of a Division Bench, given by one of us (Kapur, J., as he then was), in the case of Kalsi Mechanical Works, Nandpur vs Commissioner of Income tax, Simla (2). In that case, the firm had come into existence by a verbal agreement in June, 1944. The deed of partnership was drawn up as late as May 9, 1949. The application for registration of the firm under section 26A for the assessment year 1949 50, was dismissed by the lncome tax Authorities as also by the Tribunal. The High Court, after an elaborate examination of the relevant provisions of the Act, including the Rules and the Forms, upheld the orders of the Department. The conclusion of the Bench was in these terms: " The sections of the Income tax Act show that (1) (2) , 361. 657 for the purpose of registration it is necessary that the firm should be constituted by an instrument of partnership and in my opinion the Rules read with Sections 26 and 28 of the Act indicate that such a firm as is constituted under an instrument of partnership should have been in existence during the account period and should not come into existence during the assessment year, and if it was not in existence during the account period it cannot be registered so as to affect the liabilities of the partners for income tax accruing during the account period. " The conclusion reached is correct, except, with all respect, for the observation that under section 26A, it is necessary that the firm should be constituted " by " an instrument of partnership. That is the leading judgment in the High Court of Punjab. It was followed by another Division Bench of that Court in the case of Padam ParshadRattan Chand vs Commissioner of Income tax, Delhito the effect that constituted under an instrument in section 26A, meant created or formed by a formal deed". In this case, the business of the firm had started from April 1, 1947, but the Instrument of Partnership was executed on April 10, 1950. The application for registration was made in respect of the assessment year 1948 49. It is clear with reference to these dates that the Instrument of Partnership was not in existence either during the accounting year or even during the assessment year, and the Court, therefore, rightly held that the partnership could not be registered in respect of the assessment year; but they proceeded further to observe that there was no objection to the firm being treated as having been constituted under the Instrument as from the date of the Instrument itself. The answer of the Court to the question posed, was that the firm could be registered not in respect of the assessment year for which the application had been made, but with effect from the date of the Instrument. Apparently, the attention of the Court was not drawn to the Rules aforesaid, particularly, Rules 2 and 3, which require (1) 83 658 that the application has to be made before the assessment is completed and for a particular assessment year. More or less to the same effect, are two other Division Bench rulings Of that High Court in Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi (1) and Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal (2). In all these cases in the Punjab High Court, the deeds came into existence later than the accounting year or the assessment year, and therefore, could not have been registered. The actual decisions in these cases were correct, though there are orbiter dicta to the effect that section 26A requires that the firm should have been created or set up by an Instrument of Partnership. In the Patna High Court, the very same question was discussed at great length by a Division Bench of that Court, presided over by Ramaswami, C. J., in the case of Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa (3). The learned Chief Justice, after an elaborate examination of the relevant provisions of the Act, came to the conclusion in these terms " It is necessary for the purpose of registration under Section 26A that the partnership should be constituted by an instrument of partnership and that such a partnership as is constituted under an instrument of partnership should have been in existence during the accounting year ". It is on the same lines as the leading judgment of the Punjab High Court, supra. With reference to the dates given in the judgment, the decision is right, though, in this case also, the words " constituted under " have been construed as " constituted by ", without discussing the necessity for so amending the words of the statute, even as in the Punjab High Court decisions. As a result of the above discussion, the conclusion is reasonably clear that unless the partnership business was carried on in accordance with the terms of an Instrument of Partnership which was operative during (1) (2) (3) , 470. 659 the accounting year, it cannot be registered in respect of the following assessment year. As in these cases, the partnership did not admittedly function under such a deed of partnership, the Department and the High Court were right in refusing registration. We would, therefore, dismiss these appeals, but for different reasons to those given below. The respondent is entitled to his costs one set of hearing fees to be paid half and half by the appellants. HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Sinha, J. I agree that section 26A of the Indian Income tax Act must be read as it is. The words of the section, as they stand, are not meaningless, and in view of the decision in Commissioners for special Purpose of the Income tax vs Pemsel (1) it is not possible to read for the expression " constituted under " the words constituted by ". I entertain, however, some doubt as to whether the instrument sought to be registered, should be in existence in the accounting year, before registration can be claimed. There is nothing in the Act which says this specifically. My brother has reasoned from the contents of the Act and the Rules that such a condition is implied. While I entertain some doubts, I am not prepared to record a dissent, more so as the Board of Revenue has issued instructions that all firms should be registered, whether the documents under which they were constituted existed in the accounting year or not, provided the Income tax Officer was satisfied about the genuineness of the firms. In the result, I agree that the appeals should be dis. missed with costs. Appeals dismissed. (1) ; 542.

The question for determination in these two appeals was whether the appellant firms were entitled to registration under section 26A of the Indian Income tax Act and the common point of law involved was the interpretation of the words " constituted under an instrument of partnership " occurring in that section. In Appeal No. 85 the assessee firm was said to have been constituted by a verbal agreement in April, 1948, and the deed of partnership was drawn up in September, 1949. The application for registration under section 26A of the Act for the assessment year 1949 1950 was made thereafter to the Income tax Officer. In Appeal NO. 389 the assessee firm was verbally constituted in 81 642 June, 1944, and a memorandum of partnership was executed in June 1948. The application for registration under section 26A for the assessment years 1945 46 and 1946 47 was made on August 24, 1949. The applications were rejected by the Income tax Officer and the appeals preferred by the assessees were also dismissed by the Income tax Appellate Tribunal. The High Court took the view that section 26A of the Indian Income tax Act contemplated a firm created or brought into existence by an instrument of partnership and answered the questions against the assessees. It was contended on their behalf that solong as the assessment was not made, they were entitled to registration irrespective of the year in which the instrument of partnership came into existence. This was controverted on behalf of the Revenue and their case was that a firm seeking registration under section 26A of the Act should be created by an instrument of partnership, or at any rate, such instrument should be in existence during the relevant accounting year, i. e. the year previous to the year of assessment in respect of which the application for registration was made. Held, that the words " Constituted under an instrument of partnership occurring in section 26A of the Indian Income tax Act included not only firms that were created by instruments of partnership but also those that were subsequent to their creation, clothed in legal form by reducing the terms and conditions of the partnership in writing. Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , approved. Kalsi Mechanical Woyks, Nandpur vs Commissioner of Income tax, Simla, , Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi, , Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi, , Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal, and Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa, , dissented from. Section 26A, read with SS. 26, 28 and Rules 2 to 6B, laid down the following essential conditions that a firm must fulfil before it could claim registration under section 26A of the Act (1) that it must be constituted under an Instrument of Partnership, specifying the individual shares of the partners; (2) that an application on behalf of and signed by, all the partners, containing all the particulars as set out in the Rules, must be made; (3) that the application must be made before the assessment of the income of the firm was made under section 23 Of the Act for that particular year; (4) that the profits (or loss, if any) of the business relating 643 to the previous year, i. e., the relevant accounting year, must be divided or credited, as the case may be, in accordance with the terms of the Instrument ; and lastly, (5) that the partnership must be genuine and in actual existence in conformity with the terms and conditions of the Instrument. Where, therefore, as in the instant cases, the partnership did not admittedly function in terms of an instrument of partnership which was operative during the accounting year, it could not be registered during the following assessment year. Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & CO. , dis approved. Per M. HIDAYATULLAH, J. While it was clearly not possible to read " constituted by " for the words " constituted under " occurring in section 26A of the Act, it was doubtful whether the instrument of partnership sought to be registered must be in existence in the accounting year in order to entitle it to registration. Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , referred to.

Civil Appeal Nos. 6092 & 6093 of 1983 Appeals by Special leave from the Judgment and order dated the 4th February, 1983 of the Bombay High Court in W.P. No. 173 of 1983 M.K Ramamurthi and Urmila Sirur for the Appellant. Gobind Das, P.H. Parekh and Indu Malhotra for the Respondent The Judgment of the Court was delivered by DESAI, J. General Labour Union (Red Flag) Bombay filed two complaints, one against M/s. Delta Wires Pvt. Ltd. and second against M/s. Delta Spokes Manufacturing Company, two sisters concerns ( 'employers ' for short) under Sec. 28 read with Items l(a), l(b), 2, 4(a), 4(f) and 6 of Schedule II of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 ( 'Act ' for short). Broadly stated the complaints were that the employers were guilty of imposing and continuing a lock out and had thus committed unfair labour practice. The employers contended that they had finally and irrevocably closed the industrial undertaking and were not guilty of any unfair labour practice. The complaints were filed in the Industrial Court, Maharashtra, Bombay. The learned Judge framed an issue whether the employers had committed an unfair labour practice by imposing and continuing a lock out as provided in Item 6 of Schedule II of the Act. After hearing the parties, the learned Judge answered the issue in negative and dismissed the complaints. The appellant Union filed two special civil applications in Bombay High Court under article 226 of the Constitution questioning the correctness of the decision of the Industrial Court. Both the applications were dismissed in limine. The Union thereupon filed these two appeals by special leave. 66 At the hearing of the appeals, Mr. Govind Dass, learned counsel for the employers stated that the employers have re opened the industrial units and there is partial resumption of manufacturing process. He further stated that the employers are willing to take back all the old workmen and in order to satisfy the court about the bonafides of the employers he pointed out that nearly 16 old workmen, who responded to the advertisement in a local newspaper, have already been re employed. Mr. Govind Dass stated that the employer will put on record an unconditional undertaking as affidavit in these appeals that no new workman will be recruited in afore mentioned two industrial undertakings who had not been in previous employment with them without giving first preference to the workmen who were in employment of the two concerns on April 8, 1980 when they were closed down. Mr. M. K. Ramamurthy learned counsel for the appellant union, on the other hand, contended that the industrial undertakings of the employers had never been closed or at any rate have resumed working in full and that the old workmen are not being re employcd and new hands arc being recruited. We record the unequivocal undertaking given on behalf of the employers by the learned counsel Shri Govind Dass that all the old workmen who were in service of the employers at the time of the alleged closure, that is upto and inclusive of April 8, 1980, will be re inducted in service as resumption of work is gradually expanding and that till all the old workmen are re inducted in service no new hand will be recruited. An undertaking to that effect by Dr. P. D. Meghani s/o Dharam Chand Meghani has been placed on record and is treated as an integral part of this judgment. In order to be assured that the undertaking is carried out in letter and spirit we direct the Industrial Court Maharashtra Bombay to depute its senior ministerial officer to visit the industrial undertakings of the employers and to satisfy itself that the old workmen are being re inducted in service and that as resumption of production is gradually expanded, the old workmen will be re inducted in service. There will be a continuous watch by the ministerial officer to be appointed by the Industrial Court till all the old workmen who are willing to be re inducted in service are taken back in service. In fact this undertaking should have concluded the matter. But there is a statement of law made by the Industrial Court while rejecting the complaints filed by the appellant union which does not command to us and to avoid any such error being repeated in future, we, with a view to set right the matter proceed to examine the same in this judgment. 67 The complaints of the union were that the employers were guilty of imposing and continuing a lock out which under the law was illegal. On the other hand, the submission on behalf of the employers was that there was a closure of the industrial undertaking and it was not a case of lock out. In such a situation there the parties are at variance whether the employers have imposed a lockout or have closed the establishment it is necessary to find out what was the intention of the employer at the time when it resorts to lock out or claims to have closed down the industrial undertaking. It is to be determined with accuracy whether the closing down of the industrial activity was a consequence of imposing lock out or the owner employer had decided to close down the industrial activity. Lock out is generally an employer 's response to some direct action taken by the workmen. Closure may be on account of various reasons which may have necessitated closing down of the industrial undertaking. In this case the issue was whether the employer had imposed a lock out or has closed down the business. In examining this aspect, the Industrial Court observed as under: D "It is not necessary to refer to each and every decision pointed out by Mr. Bhatt on the point of lock out and closure, since now it is well established that in case of a lockout there is only closure of the place of business where as in case of a closure there is a closure of the business itself permanent and irrevocable. Whether the closure is brought about malafide and whether it could have been avoided are matters irrelevant and what is to be seen is whether in fact and in effect there is a closure or not. " We fail to appreciate both the approach and the reasons in support of the approach. Lock out has been defined in Sec. 2(L) of the Industrial Disputes Act, 1974 ( 'lD Act ' for short) to mean the closing of a place of business, or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him. In lockout the employer refuses to continue. to employ the workmen employed by him even though the business activity was not closed down. The essence of lock out is the refusal of the employer to continue to employ workman. There is no intention to close the industrial activity. Even if the suspension of work is ordered it would constitute lock out. On the other hand closure implies closing of industrial activity as a 68 consequence of which workmen are rendered jobless. 22(2) of the ID Act prohibits an employer in a public utility service from locking out any of his workmen without giving notice as provided therein. 23 prohibits an employer from declaring a lock out in any of the eventualities mentioned therein. Lockout in contravention of Sec. 23 is declared illegal. Section 26 of the ID Act provides that any of the practices listed in Schedule 11, III and IV would be an unfair labour practice. Imposing and continuing a lock out deemed to be illegal under the Act is an unfair labour practice. While examining whether the employer has imposed a lock out or has closed the industrial establishment, it is not necessary to approach the matter from this angle that the closure has to be irrevocable, final and permanent and that lockout is necessarily temporary or for a period. The employer may close down industrial activity bonafide on such eventualities as suffering continuous loss, no possibility of revival of business or inability for various other reasons to continue the industrial activity. There may be a closure for any of these reasons though these reasons are not exhaustive but are merely illustrative. To say that the closure must always be permanent and irrevocable is to ignore the causes which may have necessitated closure. Change of circumstances may encourage an employer to revive the industrial activity which was really intended to be closed. Therefore the true test is that when it is claimed that the employer has resorted to closure of industrial activity, the industrial court in order to determine whether the employer is guilty of unfair labour practice must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bonafide and for reasons beyond the control of the employer. The duration of the closure may be a significant fact to determine the intention and bonafides of the employer at the time of closure but is not decisive of the matter. To accept the view taken by the Industrial Court would lead to a startling result in that an employer who has resorted to closure, bonafide wants to re open, revive and re start the industrial activity he can not do so on the pain that the closure would be adjudged a device or pretence. Therefore the correct approach ought to be that when it is claimed that the employer is not guilty of imposing a lockout but has closed the industrial activity, the Industrial Court before which the action of the employer is questioned must keeping in view all the relevant circumstances at the time of closure decide and determine whether the closure was a bonafide one or was a device or a pretence to determine 69 the services of the workmen. Answer to this question would permit A the Industrial Court to come to the conclusion one way or the other. Having clarified the position in law, we dispose of the appeals in terms of the undertaking of Dr. P.D. Meghani as recorded in this judgment. Both the appeals are disposed of accordingly.

An Ambassador car No. MHX 3771 was purchased by M/s. Karamchand Thapar & Bros. (Coal Sales) Ltd, Delhi in the year 1966 and was transferred to respondent No. I United Collieries Ltd., the owners in relation to the North Chirimiri Collieries, and it was, therefore, the owner of the said vehicle. On and from the appointed day i.e. May 1, 1973, the right, title and interest of the owners in relation to the coal mines specified in the schedule stood transferred to and became vested in the Central Government free from all encumbrances, under sub section (1) of section 3 of the . Immediately after the nationalisation of the coal mines, the Deputy Custodian General, Coal Mines Authority Limited, Nagpur addressed a letter dated May 9, 1973 to the Technical Advisor to the North Chirimiri Collieries using the said staff car to hand over if to the custodian. Since the car was not handed over on the plea that it was not used by the Technical Advisor exclusively for the North Chirimiri Collieries but used by him for looking after the multifarious activities of the Thapar Group of industries which was a composite concern With the businesses other than coal mining, and therefore although the car belonged to respondent No. 1, the owners of the North Chirimiri Collieries, it was not a staff car 'belonging to the mine '. The Managing Director, Western Division, Coal Mines '. Authority by an order dated August 9, 1983 directed the respondents to hand over possession of the car failing which they would be liable to prosecution under the Act. Thereupon, respondent No. 1 and the Technical Advisor assailed his order by a petition under article 226 of the Constitution before the Nagpur Bench of the Bombay High Court. The High Court purporting to rely on the decision of this Court in New Satgram Engineering Works & Anr. vs Union of India ; held that the question as to whether the staff car should be treated as belonging to the owner of a mine as part of the 210 mine itself raised disputed questions of fact relating to its user which would A have to be determined on the basis of evidence. lt accordingly discharged the rule and left the parties to have their rights adjudicated in a civil suit. Feeding aggrieved. Union of India preferred the appeal by special leave as the question involved affected a large number of cases. Allowing the appeal, the Court ^ HELD: Parliament by an enlarged definition of 'mine ' in section 2(h) of the Act has indicated the nature of the properties that vest and the question whether a particular asset is taken within the sweep of section 2(h) depends on whether it answers the description given therein. The staff car in question was undoubtedly a fixed asset of the North Chirimiri Collieries Ltd., the owners in relation to the said mine, being the staff car of the Technical Advisor, was a fixed asset ' belonging to the mine. 'Fixed assets ' in general comprise house assets Which are held for the purpose of conducting a business, in contradistinction to those assets which proprietor they include real estate, building, machinery etc. The staff car, therefore, fell within the definition of 'mine ' as contained in section 2(h)(xii) and vested in the Central Government under subsection (1) of section 3 of the . Merely because the Technical Advisor was putting the staff car to his personal use or for multifarious activities of the Thapar Group of Industries would not alter the true legal position since the subsequent user for a different purpose was not really germane. [214D G] There is a difference in the language used in section 2(h)(xi) and (xii) Sub clause (xi) uses the words if solely used ' in relation to lands and buildings for the location of the management, sale or liaison offices, or for the residence of officers and staff, of the mine, while sub clause (xii) uses the words belonging to the owner of mine, wherever situated '. The difference in language between the two expressions 'if solely used ' and 'belonging to the owner of a mine ' is obvious. The observations of this Court in New Satgram Engineering Works case that "where there is a dispute as to whether a particular property vest in the Central Government or not under sub s.(i) or section 3 of the Act, the dispute undoubtedly is a civil dispute and must therefore be resolved by a suit" where made in the context of section 2(h)(xi) of the Act. In that case it was observed that was therefore possible to contend that lands and buildings appurtenant to a coal mine, if not exclusively used for the purpose of the colliery business, would not come within the definition of mine ' in section 2(h) i.e it would depend upon the nature of user, and that the crucial date is the date of vesting. The present case is clearly covered by section 2(h)(xii) and not by section 2(h)(xi). [213G H; 214A B ; 213A B] New Satgram Works & Anr. vs Union of India ; distinguished

vil Appeal No. 16 13 of 1990. From the Judgment and Order dated 1.4. 1987 of Patna High Court in Civil Writ Jurisdiction Case No. 4097 of 1985. 196 R.K. Garg, Praveen Swarup and Pramod Swarup for the Appellants. M.K. Ramamurthi, L.R. Singh, B.B. Singh, D.P. Mukherjee and M.P. Jha for the Respondents. The Judgment of the Court was delivered by RAY, J. Arguments heard. Special Leave granted. This appeal on Special Leave is directed against the Judgment and Order dated April 1, 1987 passed by the High Court, Patna m C.W.J.C. No. 4097/1985 allowing the writ petition in part. The subject matter of the writ petition is the gradation list dated 9.1. 1986 of the Inspectors of Excise by which the Government of Bihar has finally fixed the inter se seniority of the petitioners (respondents in this Appeal) who were promoted vis a vis the respondents Nos. 3 and 4 (appellants in this appeal) who are promoted to posts of Inspectors of Excise in 5% quota for promotion from the posts of Upper Division Assistants of Excise Department in the said Civil Writ Petition. The matrix of this case in short is that the appellants Nos. 1 and 2 who were respondents 3 and 4 of the writ peti tion were promoted to the posts of Excise Inspectors from among the Upper Division Assistants of the Excise Department against the vacancies of the year 1974 75 and they joined as Inspectors of Excise on May 7, 1976. The respondent Nos. 3 and 4 who were Sub Inspectors of Excise were promoted on 24.4.74 in the vacancy of the year 1974 75 by the Commis sioner of Excise, Bihar. In the gradation list prepared by the Government on January 9, 1986 the appellants were shown as seniors to the respondents even though the respondents were promoted from selected Sub Inspectors of Excise and they joined the posts of Excise Inspectors earlier than the date when the appellants were promoted as Excise Inspectors. This has been challenged by the respondents on the ground that there is an apparent error committed by the State in showing the respondents juniors to the appellants in the gradation list. The gradation list was challenged mainly on two grounds namely: (1) the State Government has no jurisdiction to determine the seniority of Excise Inspectors and the only competent authority for determining the same was the Excise Commis sioner who has neither determined the seniority nor prepared the gradation list. 197 (2) The respondents (petitioners of the writ petition) have continuously officiated for years together in the vacancy of direct recruits and merely because the respondents were appointed against the vacancy of direct recruits they could not be pushed down for determining the seniority and shown junior to the contesting appellants. The writ petition was allowed by the High Court holding that the respondents were not appointed in the 5% quota set apart for being filed up by promotion from the posts of Upper Division Assistants in the Excise Department inasmuch as this quota was notified by the Government on March 31, 1975 even though the Government passed order providing 5% of the total vacancies to be filled by the promotion from among the selected Upper Divi sion Assistants and selected Head Clerks. It has, therefore, been contended that the petitioners Nos. 3 and 4 (respond ents Nos. 3 and 4 in this appeal) cannot be shown as juniors to the appellants. Moreover it has been alternatively urged that these respondents having been promoted to the posts of Inspectors of Excise in the quota of direct recruitment for several years, they could not be pushed down and the appel lants who joined on promotion to the posts of Inspectors of Excise subsequently cannot be shown as senior to the re spondents Nos. 3 and 4 in the said gradation list. The High Court, Patna after hearing the parties held that the re spondents Nos. 3 and 4 who were appointed in the vacancies of the promotees of the year 1974 75 and who joined as Inspectors on 24.4.1974 cannot be made juniors to appellants Nos. 1 and 2 who were promoted and joined two years later on 7.5. The High Court allowed the writ petition in part by quashing the gradation list (Annexure 15) and directed the Government to draw up a fresh gradation list in the light of observations made therein. It is against this judgment and order passed in C.W.J.C. No. 4097/85, the instant appeal on special leave has been filed by the appellants. The only question that falls for consideration in this appeal is whether the appellants who claim to be promoted to the posts of Inspectors of Excise in the 5% quota set apart for promotion to the posts of Inspector of Excise from among the Upper Division Assistants of the Excise Department against the vacancies of the year 1974 75 had been promoted in this quota. In order to decide this question, it is relevant to refer to certain provisions of the Bihar Excise Act, 1915 as well as Rules 1 & 4 of the Inspectors of Excise Recruitment Rules, 1936. 198 Section 2(7) of the Bihar Excise Act, 1915 (hereinafter referred to as Act) defines Excise Commissioner "as the Officer appointed under Section 7 sub section 2 clause (a) of the said Act". Section 7 Sub Section (2)(a) provides that the State Government may appoint an officer who shall sub ject to such control as the State Government may direct, have the control of the administration of the Excise Depart ment and the collection of the excise revenue. Section 7(2)(a) further provides that the State Government may delegate to the Board, the Commissioner of a Division or the Excise Commissioner all or any of the powers conferred upon the State Government by or under this Act except the powers conferred by Section 89 to make Rules. Section 7(2)(f) provides that the State Government may withdraw from any officer or person all or any of the powers of duties con ferred or imposed upon him by or under this Act. By Notifi cation No. 417 dated January 15. 1919, in exercise of the powers conferred under the Act, the Lt. Governor in Council was pleased to make clause (ii) of the Notification order to the effect that there shall be an Excise Commissioner who shall subject to the control of the Board will have through out the province of Bihar the control of the administration of the Excise Department and the collection of excise reve nue. It has also been provided in clause (iv) of the Notifi cation that the power to appoint by promotion Inspector of Excise was delegated to the Excise Commissioner by the Government. Thus, it is clear and apparent that the Excise Commis sioner has been delegated the powers by the State Government to appoint by promotion from selected Sub Inspectors of Excise, but no here it has been mentioned in any of those provisions that the Excise Commissioner has been vested with the power of determining the seniority of the Inspectors of Excise. Therefore, the submission that the seniority list or the gradation list prepared by the State Government is unauthorised being beyond the powers of the State Government is unsustainable and the gradation list that has been pre pared on January 9, 1986 by the State Government is legal and valid as upheld by the High Court. It is necessary to refer to the recruitment rules to determine seniority. Rule 1 of Excise Recruitment Rules, 1936 reads as follows: "1. Inspectors of Excise and Salt shall be appointed: (i) by direct recruitment by the Board of Revenue,or, 199 (ii) by promotion of selected Sub Inspectors by the Commissioner of Excise and salt. Not more than 25 per cent of the vacancies shall ordinarily be filled by direct recruitment; but with the approval of the Board of Revenue on the recommendation of the Commissioner of Excise this proportion may on any occa sion, be increased to 50 per cent". Later on by Notification No. 1451 dated 2.3. 1945 published in the Bihar Gazette on March 7, 1945, the expression "not more than" in the last paragraph of Rule 1 has been delet ed. Subsequently by Government Notification S.O. 411, dated 31st March, 1975 published in the Bihar Gazette, Extra ordinary Issue on that day, after clause (2) or rule 1 clause (3) has been added and it reads as follows: "by promotion from among selected confirmed Upper Division Assistants of the Excise Commissioner 's office and selected confirmed Head Clerks of the District Excise Offices". By the said notification the following has been added at the end of rule 1 "Atleast 5 per cent of the total vacancies shall be filled by promotion from among the selected Upper Division Assistants and selected Head Clerks." Thus on a perusal of the said rule as amended clearly it indicates that 25% of the total vacancies for the post of Inspectors of Excise shall be filled by direct recruitment, 70% shall be filled by promotion from among the selected Sub Inspectors and 5% shall be filled by promotion from among the confirmed Upper Division Assistants of the Excise Commissioner 's Office and confirmed Head Clerks of the District Excise Offices. The 25% quota of direct recruits can be relaxed and increased to 50 per cent. It is signifi cant to note in this connection that no provision has been made in the said rules for relaxation of the quota of promo tees. The necessary question arises if the promotion from Sub Inspectors of Excise to the post of Inspectors of Excise have been made in excess of the quota of the promotees in the vacancy of direct recruits and later on direct recruit ment has been made the promotees can in such circumstances be treated to be juniors to the direct recruits or not. This question was under consideration before this Court in the case of V.B. Badami vs State of Mysore, A.I.R. 1980 SC 1561. In this case The Mysore Administrative Service 200 (Recruitment) Rules, 1957 classified class 1 posts into two categories: senior scale posts and the junior scale posts. Two thirds of the junior class I posts were filled by promo tion from Class II officers and the balance one third by direct recruitment by the Public Service Commission. By the Mysore Recruitment of Gazetted Probationers Rules, 1959, the quota for direct recruitment to the Mysore Administrative Service was increased from one third to two thirds for a period of five years as a consequence of which the quota for promotees had been reduced to one third, Rule 17(b) of the 1957 Recruitment Rules empowered the Government to fill up posts temporarily by promotion against vacancies for direct recruits but such promotees were liable to be reverted after the appointment of direct recruits. In January 1972, a Gradation List was published in which the direct recruits (respondents) were shown as senior to the appellants. The appellants challenged the seniority of the respondents in writ petitions on the ground mainly that the respondents were recruited only to the 20 temporary posts created and that the appellants and 51 others were appointed to 59 permanent vacancies. The appeal was dis missed by this Court and it has been observed as follows: "The principles generally followed in working out the quota rule are, (i) Where rules prescribe quota between direct recruits and promotees confirmation or substantive appoint ment can only be in respect of clear vacancies in the perma nent strength of the cadre; (ii) confirmed persons are senior to those who are officiating; (iii) as between per sons appointed in officiating capacity, seniority is to be counted on the length of continuous service; (iv) direct recruitment is possible only by competitive examination which is the prescribed procedure under the rules. In promo tional vacancies, the promotion is either by selection or on the principle of Seniority cum merit. A promotion could be made in respect of a temporary post or for a specified period, but direct recruitment has generally to be made only in respect of a clear permanent vacancy, either existing or anticipated to arise at or about the period of probation is expected to be completed; (v) if promotions are made to vacancies in excess of the promotional quota, the promotions may not be totally illegal but would be irregular. The promotees can not claim any right to hold promotional posts unless the vacancies fall within their quota. If the promo tees occupy any vacancies which are within the 201 quota of direct recruits, when the direct recruitment takes place, the direct recruits will occupy the vacancies within their quota. Promotees who are occupying the vacancies within the quota of direct recruits will either be reverted or they will be absorbed in the vacancies within their quota in the facts and circumstances of the case; and (vi) as long as the quota rule remains, neither promotees can be allotted to any of the substantive vacancies of the quota of direct recruits nor direct recruits can be allotted to promotional vacancies; and (vii) quotas which are fixed are unalterable according to exigencies of the situation. They can only be altered by fresh determination of quotas under the relevant rules. One group either on the ground that the quotas are not filled up or that because there had been a number in excess of the quota the same should be absorbed depriving the other group of quota. " It thus emanates from the said Judgment of this Court that when promotion has been made in excess of the quota the promotees who have been promoted in the quota of direct recruits will be pushed down and will be absorbed in the quota of promotees of subsequent years and the direct re cruits made within their quota would be deemed to be senior to those promotees recruited in excess of their quota. In the case of A. Janardhana vs Union of India & Ors., ; the question of determination of seniority between the direct recruits to the post of Assistant Execu tive Engineer (AEE) and the promotees from the post of Assistant Engineer fell for consideration. The Military Engineer Services Class I (Recruitment, Promotion and Sen iority) Rules (1949 Rules for Short) were brought into operation on or from 1.4. Under Rule 3 and 4 of 1949 Rules the recruitment to MES Class I was to be made from two sources, namely, by competitive examination in accordance with Part II of the Rules and by promotion in accordance with Part III of the Rules. Rule 4 prescribed a quota of 9:1 between direct recruits and promotees. During the years 1962, 1963 and 1964 particularly and until the year 1969, the Class I Service Rules were not statutory in character. The Union Government relaxed the Rules both in regard to recruitment by interview and in regard to the quotas fixed by the Rules for direct recruitment and recruitment by promotion to Class I Service. The 1949 Rules and the subse quent amendments thereto acquired statutory flavour in character by incorporation only in 1969 and till then they were mere administrative instructions. 202 It was due to emergency situation in .the market of recruitment of engineers between 1959 and 1969 and the dire need of urgently recruiting engineers which led the Govern ment to make recruitment m relaxation of quota rule by foregoing the competitive examination and promoting subordi nate ranks to Class i Service. Appellant and similarly situated persons were thus promoted to meet the dire need of service in relaxation of the quota rule. It has been observed by this Court that when recruitment is from two independent sources, subject to prescribed quota, but the power is conferred on the Government to make recruitment in relaxation of the rules any recruitment made contrary to quota rule would not be invalid unless it is shown that the power of relaxation was exercised mala fide. It was also observed that the recruitment made to meet the exigencies of service by relaxing the quota rule the promo tion in excess of quota would be valid. It had further been observed that once the quota rule was fully relaxed between 1959 and 1969 to suit the requirements of service and the recruitment made in relaxation of the quota rule and the minimum qualification rule for direct recruits was held to be valid, no effect could be given to the seniority rule enunciated in Para 3(iii) of Appendix V of the 1949 Rules, which was wholly interlinked with the quota rule and could not exist apart from it on its own strength. This was im pliedly accepted by the Union Government and was implicit in the seniority lists prepared in 1963 and 1967 68 in respect of AEE, because both those seniority lists were drawn up in accordance with the rule of seniority provided in Army Instruction No. 241 of 1950. It has been further held that there was no justification for redrawing the seniority list affecting persons recruited or promoted prior to 1969 when the rules acquired statutory character. Therefore, the 1974 seniority list was liable to be quashed and the two 1963 and 1967 seniority lists must hold the field. In Shri O.P. Singla and another vs Union of India & Ors., ; the question of inter se seniority between promotees and direct recruits came up for consideration before this Court. Delhi Higher Judicial Service was consti tuted on May 15. It was governed by the Delhi Higher Judicial Service Rules, 1970. Rule 7 provides that the recruitment to the service will be made from two sources i.e. by promotion on the basis of selection from members of the Delhi Judicial Service, who have completed not less than ten years of service in the Delhi Judicial Service and by direct Recruitment from the Bar 203 provided that not more than 1/3rd of the substantive posts in the service shall be held by direct recruits. The senior ity of direct recruits vis a vis promotees shall be deter mined in the order of rotation of vacancies between the direct recruit and promotees based on the quota of vacancies reserved for both categories. Rule 7 provided that the first available vacancy will be filled by a direct recruit and the next two vacancies by promotees and so on. It has been observed that persons who are appointed or promoted on an ad hoe basis or for fortuitous reasons or by way of a stop gap arrangement cannot rank for purposes of seniority with those who are appointed to their posts in strict conformity with the rules of recruitment, whether such latter class of posts are permanent or temporary. It has also been observed that persons belonging to the Delhi Judicial Service who are appointed to temporary posts of Additional District and Sessions Judges on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement, constitute a class which is separate and dis tinct from those who are appointed to posts in the Service in strict conformity with the rules of recruitment. In view of this, the former class or promotees cannot be included in the list of seniority of officers belonging to the Service. It has, therefore, been held that those who are appoint ed to the post of Additional District and Sessions Judges on ad hoc basis for fortuitous reasons cannot be taken into consideration in determining the seniority of the members of the Service. In the case of G.S. Lamba & Ors. vs Union of India & Ors. , ; the question of inter se seniority between direct recruits and promotees cropped up for consid eration before this Court. The Indian Foreign Service Branch 'B ' was constituted in 1956. The statutory rules Indian Foreign Service Branch 'B~ (Recruitment, Cadre, Seniority and Promotion) Rules, 1964 were enforced on or from May 6, 1964. It provided for recruitment from three sources: (1) direct recruitment on the result of a competitive exami nation held by the Union Public Service Commission (2) substantive appointment of persons included in the selective list promoted on the basis of a limited competi tive examination held by the Union Public Service Commission and 204 (3) Promotion on the basis of seniority By a notification dated February 12, 1975, Rule 13 was amended to provide that recruitment to the three different sources of integrated Grades II and III to be: (1) 1/6th of the substantive vacancies to be filled in by direct recruitment (2) 331/3 % of the remaining 5/6 of the vacancies to be filled on the basis of results of the limited competitive examination and (3) the remaining vacancies to be filled in by promotion on the basis of seniority. The petitioners were selected by the Union Public Serv ice Commission on the basis of the merit obtained at the examination of Assistants conducted for the purpose for appointment to the post and allocated to the Ministry of External Affairs. After the initial constitution of the service of 1956, they were offered an option whether they would like to join the I.F.S. Branch 'B ' in grade IV. They opted and were inducted into the service. Later they were promoted between 1976 and 1979 from Grade IV to the inte grated Grades II and III. The Government of India published a seniority list of the integrated Grades II and III as on June 25, 1979 and before objections taken by the petitioners to the seniority list were dealt with, another seniority list was published on June 30, 1983. This list was assailed by the petitioners on the ground that it is discriminatory and is consequently violative of Article 14 and 16 of the Constitution. This Court upheld their contention and quashed the seniority list. The Union Government was directed to prepare a fresh seniority list. In the instant case direct recruitment had not been presumably made in excess of the quota and the promotees were appointed to substantive vacan cies in the service and they had been holding the posts for over 6 to 8 years. In the seniority list that was prepared the direct recruits who were promoted much later to the promotees in excess of their quota were shown senior to the promotees, it has been held that once the promotees were promoted regularly and they have been officiating for a number of years the continuous officiation confers on them an advantage of being senior to the later recruits under Rule 21(4). It has been further observed that if there has been an enormous departure from the quota fixed by exercis ing the powers to relax, the quota rule was not adhered to, the rota rule for inter se seniority as prescribed in 205 Rule 25(i) and (ii) cannot be given effect. In the absence of any other valid principle of seniority it has been held that continuous officiation in the cadre, grade or service will provide a valid principle of seniority. It has been held that where the direct recruitment had not been made according to the quota for years and promo tions have been made in excess of the quota and the promo tees were appointed in the vacancies of the direct recruits and work for a number of years, the quota rule cannot be given effect to and the promotees cannot be shown as junior to the direct recruits in the seniority list. Continuous officiation in the cadre, grade or service will provide a valid principle of seniority. Seniority List was, therefore, quashed and set aside. In the case of Narendra Chadha vs Union of India, ; there was a quota rule for filling up the vacancies from two sources by direct recruitment as well as by promotion. The direct recruitment was not made for number of years and the posts of direct recruits were filed up by promotion. The promotees were allowed to function in the promoted posts for 15 to 20 years. Thereafter direct re cruitment was made. There was a rule which empowers the Government to relax the quota. It was held that whenever a person is appointed in a post without following the rules prescribed for that appointment to the post, he should not be treated as a person regularly appointed to that post. Such a person may be reverted from that post but in a case where persons have been allowed to function in higher posts for 15 to 20 years without due deliberation it would be unjust to hold that they had no claim to such posts and could be reverted unceremoniously or treated as persons not belonging to the service at all particularly where govern ment is endowed with the power to relax the rules to avoid injustice. It has been held by this Court that continuous officiation of the promotees could be justified on the basis of the rule 16 on the presumption that the Government had relaxed the rules and appointed the promotees to the posts in question to meet the administrative requirements. In the instant case undoubtedly, the Government made an order on 20.3.1974 for reservation of 5% of the posts for recruitment by promotion from among selected confirmed Upper Division Assistants of the Commissioner 's Office and the selected confirmed Head Clerks of the District Excise Of fices. Pursuant to that order, the Government later on published a Notification S.O. 411 in the Bihar Gazette on March 31, 1975 stating therein about the quota of 5% of total vacancies reserved for the promotion of the selected Upper Division 206 Assistants to the post of Inspectors of Excise. It has been urged by the learned counsel appearing on behalf of the respondents that the respondent Nos. 3 and 4 being promoted and appointed as Inspectors of Excise from the 75% quota for promotion from selected SubInspectors of Excise in April, 1974 they cannot be shown as junior to the appellants, in the seniority list inasmuch as the appellants were appointed on 7.5.1976. It has been further submitted in this connec tion that the appointment of the appellants on promotion from the 5% quota of the vacancies available in 1974 cannot be made. It has also been submitted that the Notification referring to the 5% quota for promotion of Upper Division Assistants cannot be deemed to be a quota in respect of vacancies for the year 1974 75. As such quota cannot be enforced unless and until the reservation of 5% quota of vacancies is published in the official gazette for informa tion of the public. In support of this submission the deci sion in Harla vs State of Rajasthan, ; was cited at the Bar. In this case on 11.12. 1923 the counsel passed a resolution which purported to enact a law called The Jaipur Opium Act and the only question was whether the mere passing of the resolution without promulgation or publication in the Gazette or by other means to make the Act known to the public was sufficient to make it a law and enforce the same. There was an amendment of Section 1 of the Jaipur Opium Act to the effect that it shall came into force from 1.9.1924. The Act was never published in the Gazette. It was held that the Jaipur Laws Act 1923 which required the whole of the Act to be published instead of publication of only one section, will not validate the same. In the instant case, the Government made an order reserving 5% of the total vacancies in a year for being filled in by promotion from the selected Upper Division Assistants and Notification to that effect was published in the Gazette in March, 1975. This Notification related to the vacancies for the year 1974 75 i.e. the year ends on March 31, 1975. It is perti nent to refer to the specific averments made by Excise Commissioners, Government of Bihar, on behalf of the re spondent Nos. 1 and 2 The State of Bihar and Commissioner cum Secretary, Excise and Prohibition, Government of Bihar. It has been stated in paragraph 3 of the Counter Affidavit: "That the promotion of the petitioners were caused in the Quota of 5% which was given to the petitioner by a Notifica tion dated 31.3. 1975 which is annexed in the petition as Annexure A but due to the noting given in the File, firstly by the Member of Board of Revenue on 20.3. 1974 and the 207 same has caused promotion to the petitioner which should not have been done unless there is a notification in effect to the noting given by the State Government. " Noting given by the Board is reproduced herein below: quota in the cadre of Excise Inspector is given from the cadre of confirmed Upper Division Clerks, Excise Commissioner 's office and confirmed Head Clerks of District offices. " It has been further stated that in the year 1976 the Secre tary of the Commission, Excise Department gave a note whose English translation is given below: "As stated at page 22 of the notesheet that the pay scale of Upper Division Assistants is more than the Head Clerks and therefore they will rank senior on that basis. So first of all the question of promoting Sarvasri Awadh Prasad Singh and Ram Vriksh Pd. Singh 's against the vacancy at Roster 67 and 68 has to be considered. The question of promotion of Sarvasri Vidyadhar Ghatwari and Devendra Narain Pd. would be considered against future vacancies and therefore it is proposed to keep their names in the waiting list Sd/ Ravikishore Narain 26.4. 1976" It has been further stated in paragraph 5 of the said affi davit that the Excise Commissioner accordingly passed an order in the year 1976, which is dated 5.5. 1976, promoting the petitioner in accordance with the quota. The English translation of the same is as follows: " So far the question of promotion of Assistants/Head Clerks is concerned the rule has been framed in 1974 and for the first time promotion is being given on this account. I have carefully gone through the above rules and from perusal of the file it would appear that only 5% of the total vacan cies shall be filled in by the promotion. In the rule, the word 2% at least" has come perhaps inadvertantly in at least 5%.". There is no such mention in the file. On this basis, as has been mentioned in the note of the Secretary only two posts have to be filled up from the quota of 208 Assistants. So far as the persons by whom the filling up of the vacancies are concerned, I agree with the note of the Secretary marked 'Kh ' in the notesheet i.e. at present Awadh Prasad Singh and Ram Brikh Pd. Singh should be promoted. The name of Vidyadhar Pd. and Devendra Narayan Pd. should be kept in the waiting list. " It has been further stated that the Notification giving 5% quota which is annexed in the petition as Annexure A from the grade of Assistant/Head Clerks came into picture only on 31.3.1975 on the basis of order made by Government in March, 1974. However, the petitioners were promoted on the vacan cies caused in the year 1974 75, because the decision was taken in the year 1974 itself and accordingly the Department carried out the same and accordingly a Gradation List was prepared. A counter affidavit has also been filed on behalf of the respondent Nos. 6 & 7, that is, promotees, Inspectors of Excise. It has been stated in paragraph 6 that the rules of recruitment of Inspectors of Excise were modified by Notifi cation No. 411 dated 31.3. There was no provision in the Excise Act and Rules for appointment of Inspectors of Excise from among selected Assistants of Commissioner 's office and Head Clerks of the District Excise offices prior to this Notification. This Notification for the first time required the Department of Excise to fill at least 5% of the total vacancies by promotion from among the confirmed Upper Division Assistants and selected Head Clerks. The respond ents were promoted as Inspectors of Excise from Sub Inspec tors of Excise vide Order 2091 dated 24.4.1974 in their own quota and joined the promotional posts on 1.5. It has also been stated that the appellants were appointed Inspec tors of Excise in the year 1976 and joined on 7.5. Apparently there was no quota for appointment of Inspectors of Excise from among Assistants and Head Clerks in the year 1974 and the averments made by the respondent State or appellants to this effect is mala fide, ridiculous and false. The appellants being appointed in the year 1976 by virtue of the Notification which came into existence on 31.3. 1975 cannot claim this vacancy of 1974 and hence seniority allotted to them by the respondent State was in flagrant, violation of law laid down by the Supreme Court and hence the High Court rightly allowed the C.W.J.C. No. 4097/85 against the appellants herein. In the supplementary rejoinder affidavit on behalf of the appellants it has been stated in paragraph 4 that the State of Bihar has 209 proved the appellants, right to promotion on a vacancy that occurred in 1974 by the following clear admissions made by the State of Bihar in its counter affidavit. "So far the question of promotion of Assistants or Head Clerks is concerned, the rule has been framed in 1974 and for the first time promotion is being given on this account." "However, the petitioners were promoted on the vacancies caused in the year 1974 75, because the decision was taken in the year 1974 itself and accordingly the Department carried out the same." It has also been stated in paragraph 5 of the said Rejoin der: "That the Government who was clearly conscious of the rights created by the decision to amend the Rules taken in 1974 and in accordance with the decision a Notification was issued later in March 1975. But the ministerial failure to make the Notification conformed to the decisions taken in 1974 is no more than a clerical error and the Government therefore rightly promoted the petitioner within their quota against the vacancies occurred in 1974 by its Order. " 1t has been further stated in paragraph 10 of the said rejoinder: "That there is a provision of seniority of Excise Inspector in Rule 6 of Recruitment Rules vide notification No. 54 dated 3.1.1936 for Excise Inspector. It is clearly stated that the seniority of all Inspectors on confirmation will be determined in accordance with Government Order No. 6509/A dated 12.12.1934 which is still in force. Besides there are also Government instructions with regard to seniority such as letter No. 15784 dated 26.8.1972. The High Court ought to have considered the Rules of seniority when the case related to the seniority of Excise Inspector. " In paragraph 11 it has been further averred: "That in view of the clear admission of the Government the petitioners are entitled to the benefit of promotion with effect from as against the vacancies of 1974 as fixed by the Government and the High Court order is liable to be set aside and the appeal may be allowed. " 210 It thus appears from a perusal of the Affidavit in counter sworn by the Commissioner of Excise on behalf of the State of Bihar, the respondent Nos. I and 2, that the order creating 5% of the vacancies for promotion from the posts of confirmed Upper Division Assistants and selected Head Clerks have been made by the Notification dated 31.3. 1975, though according to the noting given in the File by the Member, Board of Revenue on 20.3. 1974 on the basis of the Govern ment Order the petitioners (appellants of this appeal) were promoted in the vacancies of the year 1974 75 by order of the Excise Commissioner dated 5.5.1976. Therefore, the argument on behalf of the respondents in this appeal that the appellants were promoted against the 5% quota in respect of the vacancies of the year 1975 76 is not sustainable. The appellants having been appointed in the quota of 5% out of the vacancies of 1974 75 are entitled to be shown as senior in the gradation list prepared by the Government on 9.1. We have already mentioned hereinbefore that the re spondent Nos. 3 and 4 were promoted from the selected Sub Inspectors Excise, that is, in the 5% quota reserved for promotion from the Upper Division Assistants of the Excise Department. In accordance with the decisions rendered by this Court in the case of V.R. Badami vs State of Mysore, (supra) the respondent Nos. 3 and 5 who were promoted to officiate in the 5% quota of Upper Division Assistants and confirmed Head Clerks are to be pushed down as soon as the appellants have been recruited in the said quota to the posts of Inspectors of Excise in 1976 inasmuch as the promo tion though not illegal is irregular and the promotees are to be accommodated in the vacancies of subsequent years in their quota. 1t is only in the case of Narendra Chandha vs Union of India, (supra) exception was made by this Court to the aforesaid decision on the ground that the quota was broken down or not adhered to as there was no recruitment from the quota of direct recruits for a period of 15 to 20 years and the promotees were allowed to officiate in the quota of direct recruits for a long period of 15 to 20 years, in such circumstances, it was held that in view of Rule 16 empowering the Government to relax the quota rules, the promotees officiating in the vacancies of direct re cruits were presumable permitted to do so in relaxation of the quota as such the seniority will be determined from the date of their continuous officiating in the said posts. Similar view has been expressed in G.S. Lamba 's case (supra). In the instant case there was no rule for relaxa tion of the quota nor the respondent Nos. 3 and 4 who were promoted from selected Excise Sub Inspectors to the Inspec tors of Excise in the 5% quota of Upper Division Assistants in 1974 officiated till 7.5.1976 when the appellants joined as Inspectors of Excise from their 5% quota. It cannot be said in such circumstances 211 that the quota has not been filled up for a long period nor can it be said that the respondents 3 and 4 who were promot ed in excess of their quota have worked as Inspectors of Excise for long time and as such the respondents Nos. 3 and 4 cannot claim to be seniors to the appellants. Moreover, it is evident from the affidavit of the Commissioner of Excise on behalf of the State of Bihar that the 5% quota of vacan cies were brought into being by the Board of Revenue of March 20, 1974 though there was delay in notifying the same in the Gazette till 31.3. Nevertheless, it has been subsequently averred that the appellants were promoted from the said 5% quota of vacancies of the year 1974 75. In these circumstances on a conspectus of the decisions referred to hereinbefore as well as of the Government Order reserving 5% quota of vacancies on 20.3. 1974 and subsequent Notification of the same on 31.3. 1975 the only conclusion that follows is that the appellants being promoted as In spectors of Excise from the 5% quota of vacancies of the year 1974 75, they were rightly shown as seniors in the gradation list prepared by the Government on 9.1. The findings of the High Court to the effect that the appellants were not promoted in the 5% quota of vacancies for the year 1974 75 is wholly wrong. Accordingly, the gradation list prepared by the Government on 9.1. 1986 showing the appel lants as seniors to the respondents are quite legal and valid and so the same is upheld. We, therefore, set aside the judgment and order passed by the High Court in C.W.J.C. No. 4097/ 85. In the facts and circumstances of the case, there will be no order as to costs. S.B. Petition allowed.

Rule 4 of the Bihar Engineering Service Rules, 1939 provided for recruitment to the cadre of Executive Engineers in the Bihar Public Works Department by (i) direct recruit ment, and (ii) promotion from Class II Service. The State Government by a memorandum dated February 18, 1977 merged with the cadre of Executive Engineers of the Public Works Department, the cadre of District Engineers functioning under the Rural Engineering Organisation. The latter cadre was constituted by the State in 1965 by integration of the Rural Engineering Ceil of the Public Works Department and the cadre of District Engineers created by the erstwhile District Boards under the Government District Engineers Service Rules, 1957 framed under sections 36(a) to 36(1) of the Bihar and Orissa Local Self Government Act, 1885. The appellants Assistant Engineers assailed the said merger before the High Court on the ground that it adversely affected their chances of promotion, that the District Engineers ' Service was constituted under the 1957 Rules framed under the 1885 Act whereas the cadre of Executive Engineers in the Public Works Department was created by the 1939 Rules, and, as such the two cadres having been created under their respective statutory rules the same could not be merged by an executive order, and that since under rule 4(i) and 4(ii) of the 1939 Rules recruitment to the cadre of Executive Engineers could only be by direct recruitment and by way of promotion, the merger of District Engineers ' cadre with the Executive Engineers was contrary to the 1939 Rules. The High Court negatived their contentions. Dismissing the appeal, the Court, HELD: 1. The appellants, who were Assistant Engineers in the Bihar Engineering Service, Class II were not affected adversely by the merger in any manner. The District Engi neers were merged in the 374 cadre of the Executive Engineers along with the permanent posts which they were holding on the date of merger. The cadre of the Executive Engineers was thus enlarged with the result that more vacancies would become available in future to be filled by way of promotion from the cadre of Assistant Engineers. The merger would thus operate to their advantage rather than disadvantage. [378E F] 2. The provincialised cadre of District Engineers under the District Boards was constituted by the 1957 Rules but in the year 1977 when merger took place the District Engineers constituted an entirely different cadre which was created in the year 1965 as a part of Rural Engineering Organisation. It did not have any statutory frame work. Since the cadre of District Engineers under the Rural Engineering Organisation was created by the State Government by an executive order the State Government could further merge the same with any other cadre by an executive fiat. The Executive Engineers were governed by the 1939 Rules which are statutory. Their statutory character has not been interfered with. The Dis trict Engineers were being merged with Executive Engineers and not the vice versa. [378H, 379B,379D] 3. Rule 4(i) and 4(ii) of the 1939 Rules do not come into picture at all. It was not a question of appointment of an individual to the Service. A group of persons similarly situated in respect of rank and pay scale was sought to be brought into the Service along with their posts. The State Government could always increase the number of posts in the cadre of Executive Engineers. The conditions of service of the existing members of Service are not being altered or affected to their prejudice in any manner. [379E F] 4. The merger order being a policy decision is in a way supplemental to the Rules and does not go contrary to any of the provisions of the Rules. [379F G]

Appeals Nos. 1594 and 1595 of 1968. Appeals from the judgment and order dated August 29, 1963 of the Calcutta High Court in Income Tax Reference No. 38 of 1960. Sachin Chaudhuri, T. A. Ramachandran and D. N. Gupta, the appellant (in both the appeals). D. Narsaraju, section K. Aiyar, R. N. Sachthey and B. D. Sharma for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. In respect of assessment years 1949 50 and 1950 51 the Income tax Appellate Tribunal referred five questions to the High Court of Calcutta under section 66(1) of the Indian Income tax Act, 1922. Three of those questions which are canvassed in these appeals need be set out : Assessment year 1949 50 "(1) Whether on the facts and in the circumstances of the case, the sum of Rs. 51,550/ was A profit in the nature of revenue and therefore liable to tax under the Indian Income tax Act ?" Assessment year 1950 51 "(3) Whether, on the facts and in the circumstances of the case, the sum of Rs. 8,756/ was a profit 798 in the nature of revenue 'and was subject to tax under the Indian Income tax Act ? (4) Whether, on the facts and in the circumstances of the case, the loss of Rs. 34,891/ was allowable as a deduction against the business income of the assessee for the assessment year 1950 51?" The appellant a limited Company incorporated under the Indian Companies Act, 1913 carries on business as managing agents, dealers in shares and stocks, stores and spare parts of machinery and acts as insurance agents and manufacturers of carbon dioxide. It also works certain coal mines. The Company obtained a prospecting licence from the State of Korea for the Chirimiri Colliery in 1944 and after prospecting for coal sold the colliery, and thereby earned a profit of Rs. 51,550 in the account year 1948 49 and Rs. 8,756 in the account year 1949 50. The Income tax Officer brought the profits arising out of the sale of the colliery to tax as business profits. The order was confirmed in appeal by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. The Company conducted a Dry Ice Factory at Lahore. The factory was sold in September 1948 to the Indo Pakistan Corporation Ltd. The purchaser took over the factory on October 1, 1948, but the price was finally settled in December, 1949. By the sale the Company suffered a loss of Rs. 34,891. The Company claimed to deduct this loss from its income assessable to tax in the assessment year 1950 51. The Income tax Officer disallowed, the claim. The Appellate Assistant Commissioner agreed with that view, and the Tribunal confirmed the order. In answering questions (1) & (3) the High Court observed "The Chirimiri Colliery was sold after prospecting and proving coal. The sale in such 'a case was a part of the trading activities of the assessee and such activity could be gathered from the surrounding circum stances as also from the manner in which it was sold, that is, within a very short time after its acquisition and after it was made fit for obtaining a reasonably higher price at the sale. . The profit thus acquired can not be treated as a capital asset. " In answering question (4) the High Court observed "The loss of Rs. 34,891 sustained by the assessee after the sale of Dry Ice Factory at Lahore in September 1948 cannot be treated as a loss of the business of sale, inasmuch as the Tribunal found as a fact that the loss not having occurred in the relevant accounting 799 year, was referable to the transaction of business during a period when the business completely ceased before the commencement of the accounting year. Counsel for the Company urges that prospecting for coal under a licence obtained from the State of Korea was not, part of the business operations of the Company and that by selling the rights in the mine, the Company disposed of its assets and made gains of a capital nature. In any event, it was urged, this was a single transaction and in the absence of evidence that the Company carried on the business of obtaining prospecting licences and of selling the mines if "coal was proved", the profit arising out of sale of the mine which was a capital asset acquired by that transaction was not taxable. Where a person disposes of a part or the whole of his assets the general rule is that the mere change or realisation of an investment does not attract liability to income tax but where such a realisation is an act which in itself is a trading transaction, profit earned by sale or conversion is taxable : Commissioner of Taxes vs Melbourne Trust Ltd.(1) The cases which illustrate this distinction fall broadly into two categories those where the sales formed part of trading activity, and, those in which the sale or realisation was not an act of trading. As observed in Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes) (2) the test is Is the sum of gain that has been made a mere enhancement of value by realising a security, or, is it a gain made in an operation of business in carrying out a scheme for profit making ?" In determining whether the gain is realization of mere en hancement of value or is a gain made in an operation of business in carrying out a scheme for profit making, do uniform rule ran be evolved. It was observed by this Court in Janki Ram Bahadur Ram vs Commissioner of Income tax(3) : ". . no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record. But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases. if, for instance, a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an, adventure in the nature of trade may readily be inferred. (1) , 1010 (P.C.) (2) ,166. (3) , 25. 800 A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold, or is converted into a different commodity and then sold. Magnitude of the transaction of pur chase, the nature of the commodity, subsequent dealings and the manner of disposal may be such that the transaction may be stamped with the character of a trading venture: . " A transaction of sale may in a given case be isolated : in another it may be intimately related to the normal business of the tax payer. In the latter class profit arising from the transaction will probably arise out of the tax payer 's business and will be assessable as business profits. An instructive case of this class is Imperial Tobacco Co. (of Great Britain and Ireland) Ltd. vs Kelly(1). In that case the Company carried on the business of tobacco manufacture, for which large quantities of tobacco leaf were purchased in the United States, where the Company maintained a large buying Organisation. To finance the purchases and the expenses of this Organisation the Company bought dollars in the United Kingdom through its bankers who remitted them to the banking accounts of the Company in the United States, and it was the practice of the Company to accumulate a large holding of dollars each year before the leaf season commenced. The Company never bought dollars for the purpose of resale as a speculation. On the outbreak of war, in September 1939. the appellant Company, at the request of the Treasury, stopped all further purchases of tobacco leaf in the United States, and, as a result, the Company had on hand, a holding of dollars accumulated between January and August, 1939. On September 30, 1939, the Company was ordered under the Defence (Finance) Regulations, 1939, to sell its surplus dollars to the Treasury, and, owing to the rise in the rate of exchange, the sale resulted in a profit to the Company. It was held by the Court of Appeal that the profit was liable to be included as profits of its trade under Sch. D Case 1. The tax payer was not carrying on business in dollars, but the transactions in dollars were intimately related to their principal business and the profits earned by sale of dollars were treated as profits taxable as business profits. In T. Beynon & Co. Limited V. Ogg (Surveyor of TaxeS(2) the tax payer carrying on business as Coal Merchants, Ship and Insurance Brokers, and as sole selling agent for various Colliery Companies, in which latter capacity it was part of its duty to purchase wagons on behalf of its clients, bought a large number of wagons on his own account with the intention of reselling them (1) (2) 801 at profit. The contention of the tax payer that the transaction being an isolated one, the profit was in the nature of a capital profit on the realisation of an investment was negatived. The profits realised in this transaction were held to result from the operation of the Company 's business and properly includable in the computation of the Company 's profits for assessment under Sch. D. In Gloucester Railway Carriage and Wagon Co. Ltd. vs The Commissioners of Inland Revenue(1) the tax payer carried on the business of manufacturing wagons for sale or hire. The tax payer sold some of the wagons which were formerly hired out. The tax payer contended that the profit realized by sale was an isolated transaction resulting in a capital profit. The House of Lords held that the "business was all one ', namely, to make profit out of wagons and on that account the profits realized by sale of wagons were taxable. The Tribunal in the present case recorded the following findings : "It is no doubt true that this was a single transaction ' But we were told by the assessee 's counsel that the assessee obtained prospecting licence in the colliery, developed the colliery and then sold out. What was the purpose of obtaining the prospecting licence has not been told to us. The assessee was carrying on business of coal mining. The prospecting of coal is a part of the coal mining business. Therefore, in our opinion, the transaction of prospecting, developing and selling the colliery is a transaction in the nature of a business. Therefore, the profit arising from the sale is a profit in the nature of revenue and has been rightly brought to tax. " Our task would have been lightened if the Tribunal had stated the findings in greater detail. Nevertheless the Tribunal has found that the Company was carrying on the business, of coal mining and prospecting of coal was a part of the coal mining business and on that account the transaction of prospecting, developing and selling the colliery was a transaction in the nature of a business. On the findings recorded by the Tribunal it follows that the prospecting for, coal being a part of the coal mining business, the income was properly regarded as taxable. The answer recorded by the High Court on questions (1) & (3) must be upheld. Turning to the fourth question : the sale transaction of the Dry Ice Factory, was completed on October 1, 1948, but the price was finally settled in December 1949. In the settlement, the Company suffered a loss of Rs. 34,891. The loss was suffered in the (1) 802 business transaction and the only dispute raised before the Tribunal related to the year in which the loss was liable to be taken into account. The Tribunal disallowed the loss in the assessment of income for the year 1950 51. The Tribunal held that the business of the Dry Ice Factory was not carried on in the year of account April 1, 1949 to March 31, 1950, and on that account the loss was hot admissible as a permissible deduction in computing the taxable income of the Company for the assessment year 1950 51. The High Court agreed with the Tribunal. In our judgment, the High Court was in error in holding that the loss was not a permissible deduction. Section 24 of the Income tax Act, 1922, in the relevant year of assessment read as follows : "(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against as income, profits or gains under any other head in that year Provided that (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head profits of business, profession or vocation, and the loss cannot be wholly set off under sub section (1) the portion not so set off shall be carried forward to the following year and set off against the profits or gains, if any, of the assessee from the same business, profession or vocation for that year Provided that By sub section ( 1 ) the loss or profits or gains suffered under any head in any year was liable to be set off against the income, profits or gains under any other head, and by sub section (2) where the loss suffered in any business, profession or vocation could not be wholly set off under sub section ( 1 ) the loss not so set off had to be carried forward to the following year and set off against the profits and gains of the same business in the subsequent years. The Tribunal and the High Court applied sub section (2) of section 24 in computing the taxable income of the Company for the assessment year 1950 51. But in so proceeding, in our judgment, they were in error. The business of Dry Ice Factory was sold in October, 1948. We will assume that the Dry Ice Factory was 'a separate business of the Company and was not a part of the other business carried on by the Company. But the price for which the business was sold was settled in December 1949. Until the price was 803 settled, loss did not accrue or arise to the Company. The loss was suffered in the account year 1949 50 and could be allowed against the income of that year under section 24(1). The assumption that the loss was suffered in the previous year i.e., 1948 49 was, in our judgment, not warranted. The case was plainly governed by sub section (1) of section 24. The answer to the fourth question recorded by the High Court must be discharged. The answers to questions (1) & (3) recorded by the High Court are affirmed. Question (4) Will be answered in the affirmative and in favour of the Company. In view of the divided success, there will be no order as to costs in this Court. The order as to costs in the High Court is maintained. V.P.S. Appeals allowed in part.

The respondent a dealer purchased unginned cotton and after ginning the cotton and removing the seeds sold the ginned cotton to customers outside the State. The respondent paid parchase tax on the purchase turnover. In respect of cotton seeds sold by it to registered dealers,the respondent claimed deduction from the parchase turnover under section 5 (2) (a) (vi) of the Punjab Sales Tax Act, 1948. But the assessing authority did not allow the deduction holding that the goods sold viz., cottonseeds were not the goods in respect of which purchase taxhad been levied as the unginned cotton underwent a manufacturing process and the goods. produced were different from those purchased. The respondent filed a writ petition in the High Court, which was allowed and the State 's Letters. Patent Appeal was dismissed. Allowing the State 's appeal, this Court; HELD : The respondent was not entitled to deduction under section 5(2) (a) (vi) of the Act in respect of cotton seeds sold by it to registered dealers. "Declared goods" in section 14 of the are individually specified under separate items. "Cotton ginned ' or unginned" is, treated as a single commodity under one item of declared goods. It is. evident that cotton ginned or unginned being. treated as a single commodity and as a single species of declared goods cannot be subject unders. 15(a) of the to a tax exceeding two per cent of the sale or purchase price thereof or at more than one state. But so far as cotton seeds are concerned it cannot be held that the sale of cotton seeds must be treated as a sale of 'declared goods for the purpose of is. 15(a) or (b) of the . Cotton in its unginned state contains cotton seeds, but it is by a manufacturing process that the cotton and the seed are separated and it is not correct to say that the seed so separated is cotton itself or part of the cotton. They are two. distinct commercial goods though before the manufacturing process the seeds might have been a part of the cotton itself. [853 E] Patel Cotton Company Private Ltd. vs State of Punjab & Ors., 15 S.T.C. 865, disapproved.

Appeal No. 73 of 1950. Appeal from the Judgment and Decree dated the 26th January, 1944, of the High Court of Judicature at Patna (Fazl Ali C. J. and Chatterji J.) in Appeal from Original Decree No. 4 of 1941, arising out of Judgment and Decree dated the 20th September, 1940, of the Court of the Additional Subordinate Judge of Hazaribagh in Title Suit No. 45 of 1939. section N. Mukherjee for the appellant. Gangacharan Mukherjee and A. N. Sinha for the respondents. October 23. The judgment of the Court was delivered by BHAGWATI J, 110 BHAGWATI J. The judgment of the Court was delivered by BHAGWATI J. 110 BHAGWATI J. The question that arises for our consideration in this appeal is whether prior to the enactment of section 65 A of the Transfer of Property Act in 1929 a mortgagor in possession had the power to grant a permanent lease of the mortgaged property so as to bind the mortgagee. One Raja Nilkanth Narain Singh was the owner of Gadi Sirampur and he executed the 1st August, 1914, a simple mortgage of Gadi Sirampur in favour of the Chota Nagpur Banking Association Limited. In 1920 the Bank filed a suit against his son Wazir Narain Singh to enforce the mortgage security and obtained a mortgage decree the 29th November, 1921. The Bank purchased a third share of Gadi Sirampur in execution of that decree the 28th October, 1922. Proceedings were taken to set aside this sale. During the pendency of these proceedings it appears that the 5th November, 1925, Wazir Narain Singh granted a permanent lease of four villages Nawadih, Koldih, Pandna and Chihutia by a registered Patta to one Hiraman Ram who was the Manager and Karta of his joint Hindu family. The Permanent lease was taken by him in his own name and in the name of his son Chohan Ram. An agreement was subsequently arrived at between the Bank and Wazir Narain Singh that if Wazir Narain Singh paid to the Bank or before the 16th August, 1926, the sum of Rs. 1,10,631 4 0 the sale would be set aside. Wazir Narain Singh executed the 14th August, 1926, a mortgage of Gadi Sirampur in favour of the Manager of the Court of Wards in charge of the plaintiff 's estate during his minority to secure repayment of a sum of Rs. 1,47,000 and out of the same satisfied the dues of the Bank and the sale in favour of the Ban was accordingly set aside. The plaintiff through the Manager of the Court of Wards filed a suit the 4th February, 1929, to enforce this mortgage and he impleaded as co defendants in that suit Hiraman Ram as defendant 20 and his father Dilo Ram as defendant 19. A final decree for sale was passed the 18th September, 1931, and the 111 Plaintiff purchased Gadi Sirampur at the auction sale held in execution of this decree the 6th April, 1935. Delivery of possession was obtained by the plaintiff through the Court the 16th February, 1936. Dilo Ram died after the mortgage decree but Hiraman Ram and his son Chohan Ram continued in actual possession of the disputed villages and the plaintiff therefore filed the 16th November, 1939, the suit, out of which this appeal arises, in the Court of the Additional Subordinate Judge of Hazaribagh against Hiraman Ram and Chohan Ram, defendants 1 and 2, for khas possession of these villages. The plaintiff contended that he was subrogated to the position of the Bank, that the decree which had been passed in the mortgage suit was binding the defendants, that he was the auction purchaser in execution of that mortgage decree and that the Patta being subsequent to the plaintiff 's mortgage thus came to an end and he was entitled to recover khas possession from the defendants. Defendant 2 filed his written statement contesting the plaintiff 's claim. He denied that the plaintiff. was subrogated to the position of the Bank. He contended that the decree in the mortgage suit was not binding him as he was not :a party to that suit. lie further contended that the Patta could not be put an end to by the auction sale of the mortgaged property. The defendant I filed a separate written statement. He denied that he was the Manager and Karta of the joint Hindu family. He also contended that there was a partition amongst the members of the joint family within a year after their possession of the properties in suit and the properties had been allotted at that partition to the defendant 2. The trial Court hold that, the plaintiff was subrogated to the position of the Bank. It also held that the defendant 1 was the Manager and Karta of the joint family and that the defendant 2 was fully represented in the mortgage suit, that the decree in the mortgage suit was binding the defendants and that the plaintiff was entitled to recover possession 112 of the said properties and mesne profits from the defendants. The defendants appealed against this decree to the High Court of Judicature at Patna. The High Court negatived the contention in regard to constructive res judicata which was urged behalf of the plaintiff. It then considered the further contention that Wazir Narayan Singh had, after creating the mortgage in favour of the Bank no power to grant the permanent lease in question to the defendants. After considering all the authorities which were cited before it, it came to the conclusion that the question whether Wazir Narayan Singh had got such power or not had to be determined with reference to the provisions of section 66 of the Transfer of Property Act and the crucial test was whether the lease rendered the mortgagee 's security insufficient. In spite of the fact that there was no allegation in the plaint that the defendant 's lease had the effect of rendering the security of the Bank insufficient, the High Court went into this question and a calculation of some figures came to the conclusion that the lease of the disputed villages in favour of the defendants did not in any way render the security of the bank insufficient. It therefore held that the lease was valid and was not affected by the plaintiff 's mortgage, decree or by the execution sale under that decree and accordingly dismissed the plaintiff 's suit. The plaintiff obtained leave to appeal to the Privy Council from this decision of the High Court and the appeal was admitted the 9th January, 1946. Both the Courts below found that the plaintiff was subrogated to the position of the Bank. They also found that the defendant 2 was sufficiently represented in the mortgage suit. These findings were not challenged before us and the only question which survived for our consideration was whether Wazir Narayan Singh had the power to grant a permanent lease to the defendants so as to bind the plaintiff. The question whether Wazir Narayan Singh had such power has got to be determined under the law as it stood prior to the enactment of section 65 A of 113 the Transfer of Property Act by Act XX of 1929. The mortgagor 's power to lease the mortgaged property was the subject matter of conflicting judicial decisions. Relying upon the rule of English common law under which the mortgagor had no power to lease, it was held in some cases that a mortgagor could not ordinarily without the concurrence of the mortgagee execute a lease which could be binding the mortgagee. In other cases a distinction was drawn between English mortgages and other mortgages and it was considered that the mortgagor in India remained the owner and when in possession could prima facie exercise the rights of ownership inclusive of the power to grant leases of the mortgaged property. The Question was decided with reference to section 66 of the Transfer of Property Act and it was held that the mortgagor could grant leases which were not wasteful in their effect the mortgagee 's security. This was the principle deduced by Jenkins C.J. in Balmukund vs Motilal(1) from the old case of Banee Pershad vs Beet Bhunjun Singh(1). This line of reasoning was not adopted in other cases which laid down a different rule, viz., that a mortgagor in possession might grant a lease conformable to usage in the ordinary course of management but was not competent to grant a lease unusual terms or authorise the use of land in a manner, or for a purpose, different from the mode in which he himself had used it before he granted the mortgage. This was laid down by Sir Ashutosh Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(3)and was followed in a number of cases. There was thus a conflict of decisions which was sought to be resolved by the enactment of section 65 A of the Transfer of Property Act which dealt with the mortgagor 's power to lease while lawfully in possession of the mortgaged property. "It is an elementary rule that though a mortgagor may assign the mortgaged premises, the assignee can only take subject to the encumbrances, and if the (1) (2) (i868) (3) (i9i6) 114 property is sold or foreclosed by the mortgagee, any interest which the mortgagor may have created since the mortgage will be destroyed" '. (Ghosh Mortgage, Vol. I, p. 212.) As was observed by Lord Selborne in Corbett vs Plowden(1), "If a mortgagor left in possession, grants a lease without the concurrence of the mortgagee (and for this purpose, it makes no difference whether it is an equitable lease by an agreement under which possession is taken or a legal lease by actual demise), the lessee has a precarious title, inasmuch as although the lease is good as between himself and the mortgagor who granted it, the paramount title of the mortgagee may be asserted against both of them. " It does not however follow that a lessee from the. mortgagor acquires no interest whatever in the property demised to him. A person taking a lease from a mortgagor after the mortgage does acquire an interest in the equity of redemption and can claim to redeem that footing. But this right of redemption does not necessarily mean that a lease of this character is always operative against the mortgagee. Merely because a lessee acquires an interest in the mortgaged property which is sufficient to enable him to redeem the mortgage it does not follow that the interest which the lessee has thus acquired is operative against the mortgagee. The true position is somewhere in the middle of these two extremes. The mortgagee is not normally bound by the acts of the mortgagor with reference to the mortgaged property. " But if a mortgagee takes his security with knowledge of the purposes to which the land is applied and allows the mortgagor to remain in possession he *ill be bound by the acts done by the mortgagor in accordance with the usual course." (Ghosh Mortgage, Vol. I, p. 212.) As indicated in the observations of Sir James Parke in Pope vs Briggs (2) the mortgagor might be considered as acting in the nature of a bailiff or agent for the mortgagee. Con sequently, if the mortgagor, after he has granted the (1) at p. 681. (2) (1829) 9 Barn. & Cres. 245 at p. 258. 115 mortgage, deals with the property in the usual course of management, the interest created by him may be rightly deemed operative against the mortgagee. An illustration of this view is found in the ease of Moreland vs Richardson(1) where a person took a mortgage of a burial ground and it Was held that, as the object of the burial ground is to grant rights of burial, this ' being the mode in which such property is dealt with, the mortgagee was not entitled to disturb the graves of those who had been: buried the land, while the mortgagor continued to hold it. , The mortgagor could thus in the usual course of management create a ten ancy from year to year in the case of agricultural land or from month to month in the case of property consisting of houses and his dealings with the mortgaged property in the usual course of management would be operative against the mortgagee. [Per Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(2)] "Whether the mortgagor possesses any larger powers of leasing is however very questionable. The only reported case in which such a power was recognized is Banee Pershad vs BeetBhunjun Singh(1) but the report in Sutherland is very meagre. The judgment too does not give forth any certain sound (sic.). It is only said that a mortgagor is not restricted in the management of the property by making a mortgage and that so long as nothing takes place to impair the value of the mortgagee 's security the mortgagor does not exceed his powers in making a lease for a term. The learned judges add perhaps somewhat unnecessarily that their decision should not go beyond the particular facts of the case before them." (Ghosh Mortgage, Vol. I, p. 213.) This case of Banee Pershad vs Beet Bhunjun Singh(3 was considered by Jenkins C. J. in Balmukund vs Motilal(4) as an authority for the proposition that as long as nothing took place which impaired the value or impeded the operation of the mortgage, the mortgagor in creating a temporary lease acted within his powers and these observations of Jenkins C.J. were (1) ; (2) at pp. 91, 92. (3) (4) , 116 considered by the Courts as justifying the applicability of the provisions of section 66 of the Transfer of Property Act while determining the binding nature of the leases created by. the mortgagor in possession the mortgagee. ; Mukherjee J. had occasion, to consider this very case in Madan Mohan Singh vs Raj Kishore kumari(1) and he cited it in support of the proposition that the interest created by the mortgagor while dealing with the mortgaged property in the usual course of management could be rightly deemed operative against the mortgagee. The following observations of Mukberjee J. in this connection at page 91 are very apposite: "As the case is very imperfectly reported, we have examined the record and ascertained the questions in controversy. The proprietor of an estate mortgaged it the 12th March, 1861. the 7th July, t862, the mortgagor granted an ijara potta of the property for a term of ten years. The mortgagee subsequently sued the mortgagor alone and got a decree; at the execution sale which followed, the property was sold the 24th December, 1863. The purchaser sued the 12th March, 1867, to eject the lessee, the ground that as he had acquired the property in the condition in 'Which it was when mortgaged, the lease, which would otherwise run till the 7th July, 1872, did not bind him. 'The Court of first instance overruled this contention 'as too broadly formulated, and held that as the mortgagor had in good faith granted the lease for a limited term a fair and reasonable rent, the mortgagee or the purchaser in execution of his decree could not repudiate it, specially as the mortgage deed did not prohibit the grant of temporary leases to middlemen or cultivators. appeal, the District Judge affirmed this view and declined to accept the broad contention that leases of all descriptions granted by a mortgagor were void as against the mortgagee. second appeal to this Court, Jackson and Mitter JJ. took substantially the same view. " (1) 117 These observations of Mukherjee J. point out what was the ratio decidendi of that case. The question of the sufficiency or insufficiency of the security was not really gone into but the Court considered that the lease was granted in good faith, was for a limited term and stipulated a fair and reasonable rent and it was therefore operative against the mortgagee. The Court was really guided by the consideration that the mortgagor dealt with the property in the usual course of management and the interest which was thus created by the mortgagor in the usual course must rightly be deemed operative against the mortgagee. ,The case of Banee Pershxd vs Beet Bhunjan Singh(1) therefore is really no authority for the wide proposition that a mortgagor was not restricted in the management of the property by making a mortgage and that so long as nothing took place,to impair the value, or impede the operation of the mortgage the mortgagor would be well within his powers in making a lease for a term. In our opinion section 66 of the Transfer of Property Act has nothing to do with the mortgagor 's power to lease the mortgaged property. Section 66 is a statutory, enactment of the powers of the mortgagor in.possession in regard to waste of mortgaged property. The mortgagor in possession is not liable for what in terms of the English Law of Real Property is known as permissive waste, i.e., for omission to repair or to prevent natural deterioration. He is however liable for destructive waste is acts which are destructive or permanently injurious to the mortgaged property if the security was insufficient or would be rendered insufficient by such acts. This section therefore has no application to the grant of a lease by the mortgagor in possession. The only relevant consideration is whether, the mortgagor in possession having the authority to deal with the property in the usual course of management, the lease granted by him can be rightly deemed operative against the mortgagee. , The true position has been stated in the following terms by,, Mukherjee, in Madan Mohan Singh vs Baj Kishore Kumar(2) (i) 16 (2) at page 92. 118 "The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But it is not competent to the mortgagor to grant a lease unusual terms, or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used it before he granted the mortgage. " The question whether the mortgagor in possession has power to lease the mortgaged property has got to be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. It has to be determined general principles and not the distinction between an English mortgage and a simple mortgage or con siderations germane to section 66 of the Transfer of Property Act. Having regard therefore to the position that section 66 has no application to leases of the mortgaged property, the decision of Jenkins C.J. in Balmukund vs Motilal(1) and the cases following that line of reasoning do not govern the question before us. While we are this subject we would like to em phasise that it is for the lessee if be wants to resist the claim of the mortgagee to establish that the lease in his favour was granted the usual terms in the ordinary course of management. Such a plea if established and it must not be overlooked that the burden of proof in this matter is upon him would furnish a complete answer to the claim of the mortgagee. If the lessee failed to establish this position he would have certainly no defence to an action at the instance of the mortgagee. No allegation was made behalf if of the defendants that the grant of the permanent lease was a dealing with the mortgaged property in the usual course of management by the mortgagor, In the absence of (9) , 119 any such plea we are of the opinion that there was No. answer to the plaintiff 's claim and the permanent lease granted by Wazir Narayan to the defendants could not prevail against the plaintiff. We have therefore come to the conclusion that Wazir Narayan Singh had no power to grant the permanent lease in question to the defendants, that the same was not binding and operative against the plaintiff, that the defendants had ample opportunity to@ redeem the mortgage if they so desired but did not choose to exercise their right of redemption, that the execution sale of Gadi Sirampur including the four villages in question was binding them and that the plaintiff was entitled to khas possession of the four villages of which the defendants were in wrongful possession. The appeal is allowed. The decree passed by the High Court dismissing the plaintiff 's suit is set aside and the decree passed by the trial court in favour of the plaintiff is restored with costs throughout. Appeal allowed. Agent for respondent No. 1: B. B. Biswas.

The respondent, the Textile Labour Association at Ahmedabad, entered into a five years pact with the Ahmedabad Mill Owners ' Association, representing the member mills, in regard to payment of bonus to the employees of the mills for the years 1953 57. The Labour Union demanded bonus for the year 1958 on the basis of the pact, but the mill owners claimed that the pact was contrary to the formula evolved by the Full Bench in Mill Owners ' Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, Bombay, , which was approved by the Supreme Court in The Associated Cement Companies Ltd. vs Its Workmen, , inasmuch as (1) rehabilitation provided in the Agreement differed vitally from rehabilitation as explained in that decision, (2) the Agreement provided for payment of a minimum bonus even though there may be no available surplus and even though the particular mill might have made actual loss, and (3) while the Full Bench Formula, as approved by the Supreme Court treated a particular year as a self sufficient unit, there was provision for set off and set on in the Agreement. The Industrial Tribunal to which the dispute was referred in the. form of sixty six references, one relating to each mill, took the view that the pact did not in any way run counter to the law laid down by the Supreme Court, and that the extension of the agreement for one more year would help in promoting peace in the industry in Ahmedabad. Held (Subba Rao, J. dissenting) that the Agreement in question departed from the Full Bench Formula in the matter of bonus, in certain vital aspects and that the Tribunal when it extended the Agreement for the year 1958 was ignoring the law as laid down by the Supreme Court as, to what profit, bonus,was and how it should be worked out. 2 The Tribunal had no power by extending the Agreement to make it possible for payment of a minimum bonus for the year 1958 even when there was either insufficient available surplus to pay bonus or no available surplus at all or even actual loss. The jurisdiction of the Tribunal was limited by its terms of reference, which was not on industry cum region basis, but one for each mill to consider the question of bonus for each mill for the year 1958 and, consequently, it had no jurisdiction to apply the principle of set off and set on to be found in the Agreement in respect of payment of bonus or take into account the profits of the industry as a whole in Ahmedabad. Per Gajendragadkar, Sarkar, Wanchoo and Mudholkar, JJ.It is open to an industrial court in an appropriate case to impose new obligations on the parties before it or modify contracts in the interest of industrial peace or give awards which may have the effect of extending Agreement or making new one, but this power is conditioned by the subject matter with which it is dealing and also by the existing industrial law and it would,not be open to it while dealing with a particular matter before it to overlook the industrial law relating to that matter as laid down by the legislature or by the Supreme Court. Western India Automobile Association vs Industrial Tribunal, Bombay, , Rohtas Industries Limited vs Brijnandan Pandey; , and Patna Electricity Supply Co.v. Patna Electric Supply Workers ' Union, [1959] SUPP. 2 S.C.R. 761, relied on. Per Subba Rao, J. (1) The impugned five years pact was not contrary to industrial law as laid down by the Supreme Court. (2) The pact also did not infringe the principle that bonus depends upon profits; but it applied the same by evolving a formula of set off and set on to a complicated situation of the entire industry in a particular area for a number of years. (3) The Full Bench Formula in regard to rehabilitation was not contravened by the pact. The decisions of the Supreme Court did not preclude employers and employees from agreeing to a particular valuation of the block having regard to the circumstances obtaining at the time of the agreement. (4) Neither the Full Bench Formula nor the decisions of the Supreme Court affirming it precluded the Tribunal from extending the terms of the pact by another year if that was necessary to maintain industrial peace.

Writ Petition (Crl) No. 163 of 1988. (Under Article 32 of the Constitution of India). Petitioner in person. K. Parsaran, Attorney General, Kuldip Singh, Additional Solicitor General and Ms. A. Subhashini for the Respondents. The Judgment of the Court was deliver by VENKATARAMIAH, J. On the basis of the allegations made in the above Writ Petition at the time of the preliminary hearing the Court felt that notice should be issued to the Union of India regarding two matters and accordingly the court made an order that the Union Government shall show PG NO 226 cause (i) why it should not be directed to implement faithfully the decision of this Court in Prem Shankar Shukla vs Delhi Administration, ; as regards the handcuffing of the accused arrested under the provisions of the Criminal Law; and (ii) why it should not be directed to consider the question of issuing a Notification bringing section 30 of the (hereinafter referred to as 'the Act ') into force since already more than 25 years had elapsed from the date of the passing of the Act. The first question referred to above arose on account of the allegations relating to the alleged handcuffing of an advocate practising in Delhi contrary to law while he was being taken to the Court of the Metropolitan Magistrate at Delhi after he had been arrested on the charge of a criminal offence. It is urged that the Union Government and the Delhi Administration had not issued necessary instructions to the police authorities with regard to the circumstances in which an accused, arrested in a criminal case, could be handcuffed or fettered in accordance with the judgment of this Court in Prem Shankar Shukla vs Delhi Administration, (supra). The learned Attorney General of India very fairly conceded that it was for the Union of India to issue necessary instructions in this behalf to all the States Governments and the Governments of Union Territories. We accordingly direct the Union of India to frame rules or guidelines as regards the circumstances in which handcuffing of the accused should be resorted to in conformity with the judgment of this Court referred to above and to circulate them amongst all the State Governments and the Governments of Union Territories. This part of the order shall be complied with within three months. We shall now take up for consideration the second question referred to above. The received the assent of the President of lndia on the 19th of May, 1961. Sub section (3) of section 1 of the Act provides that it shall in relation to the territories other than those referred to in sub section (4) come into force as the Central Government may by notification in the Official Gazette appoint and different dates may be appointed for different provisions of the Act. Chapters I, II and VII of the Act were brought into force on 16.8.1961, Chapter III and section 50(2) on 1.12.1961, section 50(1) on 15.12.1961, sections 51 and 52 on 24.1.1962, section 46 on 29.3.1962, section 32 and Chapter VI (except sections 50(1) and (2), 51, 52 and 46 which had already come into force) on 4.1.1963, Chapter V on 1.9.1963 and sections 29, 31, 33 and 34 of Chapter IV of the Act on 1.6.1969. Section 30 of the Act, with which we are concerned, has not yet been brought into force. Section 30 of the Act reads thus: PG NO 227 "30. Right of advocates to practise Subject to the provisions of this Act, every Advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends (i) in all courts including the Supreme Court, (ii) before any tribunal or person legally authorised to take evidence; and (iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise. " When section 30 of the Act is brought into force every advocate whose name is entered in the State roll will be entitled as of right to practise throughout the territories to which the Act extends, before the Courts, Tribunals and other authorities or persons referred to therein. Even today there are laws in force in the country which impose restrictions on the right of an advocate to appear before certain Courts, Tribunals and authorities. Section 36(4) of the provides that in any proceeding before a Labour Court, Tribunal or National Tribunal a party to a dispute may be represented by a legal practitioner with the consent of the other parties to the proceeding and with the leave of the Labour Court, Tribunal or National Tribunal, as the case may be. Section 13 of the Family Courts Act, 1984 provides that no party to a suit or proceeding before a Family Court shall be entitled, as of right, to be represented by a legal practitioner. There is a proviso to the said scction whereunder if the Family Court considers it necessary in the interests of justice it may seek the assistance of a legal expert as amicus curiae. There are certain land tribunals constituted under some of the Acts which are in force in certain States before which advocates cannot appear at all. In many of the cases which come up before the Courts or Tribunals before which advocates cannot appear as of right complicated questions of law affecting the rights of individuals arise for consideration and they need the assistance of advocates. We have travelled a long distance from the days when it was considered that the appearance of a lawyer on one side would adversely affect the interests of the parties on the other side. The Legal Aid and Advice Boards, which are functioning in different States, can now be approached by people PG NO 228 belonging to weaker sections, such as, Scheduled Castes, Scheduled Tribes, women, labourers etc. for legal assistance and for providing the services of competent lawyers to appear on their behalf before the Courts and Tribunals in which they have cases. In these circumstances prima facie there appears to be now no justification for not bringing into force section 30 of the Act. It is no doubt true that the Central Government has been given the power by Parliament to appoint the date on which any of the provisions of the Act shall come into force by sub section (3) of section 1 of the Act and the said provision does not lay down any objective standards for the determination of the date on which any of the specific provisions of the Act should be brought into force. The question for consideration is whether this Court can issue a writ in the nature of mandamus to the Central Government to bring section 30 of the Act into force. Dealing with a similar question a Constitution Bench of this Court in A.K. Roy, etc. vs Union of India & Another, ; has taken the view that a writ in the nature of mandamus directing the Central Government to bring a statute or a provision in a statute into force in exercise of powers conferred by Parliament in that statute cannot be issued. Chandrachud, C.J., who spoke for the majority of the Constitution Bench has observed at pages 314 to 316 of the Report thus: "But we find ourselves unable to intervene in a matter of this nature by issuing a mandamus to the Central Government obligating it to bring the provisions of section 3 into force. The Parliament having left to the unfettered judgment of the Central Government the question as regards the time for bringing the provisions of the 44th Amendment into force, it is not for the Court to compel the Government to do that which, according to the mandate of the Parliament, lies in its discretion to do when it considers it opportune to do it. The executive is responsible to the Parliament and if the Parliament considers that the executive has betrayed its trust by not bringing any provision of the Amendment into force, it can censure the executive. It would be quite anomalous that the inaction of the executive should have the approval of the Parliament and yet we should show our disapproval of it by issuing a mandamus . . . . But, the Parliament has left the matter to the judgment of the Central Government without PG NO 229 prescribing any objective norms. That makes it difficult for us to substitute our own judgment for that of the Government on the question whether section 3 of the Amendment Act should be brought into force . . It is for these reasons that we are unable to accept the submission that by issuing a mandamus, the Central Government must be compelled to bring the provisions of section 3 of the 44th Amendment into force . . If only the Parliament were to lay down an objective standard to guide and control the discretion of the Central Government in the matter of bringing the various provisions of the Act into force, it would have been possible to compel the Central Government by an appropriate writ to discharge the function assigned to it by the Parliament. " The effect of the above observations of the Constitution Bench is that it is not open to this Court to issue a writ in the nature of mandamus to the Central Government to bring a statute or a statutory provision into force when according to the said statute the date on which it should be brought into force is left to the discretion of the Central Government. As long as the majority view expressed in the above decision holds the field it is not open to this Court to issue a writ in the nature of mandamus directing the Central Government to bring section 30 of the Act into force. But, we are of the view that this decision does not come in the way of this Court issuing a writ in the nature of mandamus to the Central Government to consider whether the time for bringing section 30 of the Act into force has arrived or not. Every discretionary power vested in the Executive should be exercised in a just, reasonable and fair way. That is the essence of the rule of law. The Act was passed in 1961 and nearly 27 years have elapsed since it received the assent of the President of India. In several conferences and meetings of lawyers resolutions have been passed in the past requesting the Central Government to bring into force section 30 of the Act. It is not clear whether the Central Government has applied its mind at all to the question whether section 30 of the Act should be brought into force. In these circumstances, we are of the view that the Central Government should be directed to consider within a reasonable time the question whether it should bring section 30 of the Act into force of not. If on such consideration the Central Government feels that the prevailing circumstances are such that section 30 of the Act should not be brought into force immediately it is a different matter. But it cannot be allowed to leave the matter to lie over without applying its mind to the said PG NO 230 question. Even though the power under section 30 of the Act is discretionary, the Central Government should be called upon in this case to consider the question whether it should exercise the discretion one way or the other having regard to the fact that more than a quarter of century has elapsed from the date on which the Act received the assent of the President of India. The learned Attorney General of India did not seriously dispute the jurisdiction of this Court to issue the writ in the manner indicated above. We, therefore, issue a writ in the nature of mandamus to the Central Government to consider within a period of six months whether section 30 of the Act should be brought into force or not. The Writ Petition is accordingly disposed of. N.P.V. Petition disposed of.

The Kothari Commission appointed by the Government of India to examine the conditions of service of teachers with the object of improving the standards of education in the country recommended inter alia that the scales of pay of school teachers belonging to the same category but working under different managements such as Government, local bodies or private organisations should be the same, and, falling in line with other States, the State of Haryana decided to implement the same with effect from 1 December, 1967. As the deficit between the original grades and the revised grades was found too burdensome for the managements of the aided schools to bear, the State decided to meet the increased expenditure entirely in regard to Pay and Dearness Allowance. The State Government followed the principle of parity between the teachers working in aided schools and Government schools until 1979. In 1979, the pay scale of teachers in Government schools was revised by the State after the report of the Pay Commission, but in the case of the teachers of aided schools the revision was effected two years later. The appellants and the writ petitioners, who were teachers employed in various recognised aided private schools, alleged that the salary and other emoluments such as Dearness Allowance, House Rent Allowance, City Compensatory Allowance, Medical Reimbursement, Gratuity, etc., paid to them had fallen far behind the emoluments paid to the teachers in Government schools and this Court should interfere in order to remove such discrimination since the constitutional responsibility of providing education in schools devolved on the Government and it exercised deep and pervasive control over the running of aided schools. Disposing of the appeal and petitions, ^ HELD: There is general agreement between the parties that there is no reason for discrimination between the teachers employed in aided 683 schools and those employed in Government schools far as the salaries and Additional Dearness Allowances are concerned. The State Government has expressed its readiness to reimburse the payment of ten instalments of the Additional Dearness Allowance, but not the twenty five Additional Dearness Allowance instalments released after 1 April, 1981. In our opinion, the teachers of aided schools must be paid the same pay scale and Dearness Allowance as teachers in Government schools for the entire period claimed by the petitioners, and that the expenditure on that account should be apportioned between the State and the Management in the same proportion in which they share the burden of the existing emoluments of the teachers. [685B C, E G] The State Government will also take up with the managements of the aided schools the question of bringing about Party between the teachers of aided schools and the teachers of Government schools so that 9 scheme for payment may be evolved after having regard to the different allowances claimed by the petitioners. [686C]

iminal Appeal No. 69 of 1961. Appeal by special leave from the Judgment and order dated December 23, 1960, of the Punjab High Court (Circuit; Bench) at Delhi in Criminal 'Appeal NO.: 10 D of 1960. WITH CRIMINAL APPEAL NO. 62 of 1960. Appeal from the judgment and order dated December 23, 1959, of the Allahabad High Court in Criminal Revision No. 1694 of 1958. Sarjoo Prasad and K. K. Sinha, or the appellant in Cr. A. No. 69 of 1961. B. K. Khanna and P. D. Menon., for the respondent in Cr. A. No. 69 of 1961. R. K. Garg, D. P. Singh and section C. Agarwala, for the respondent in Cr. A. No. 62 of 1960. G. C. Mathur and C. P. Lal, for the respondent in Cr. A. No. 62 of 1960. May 3. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J. The appellant in Criminal Appeal 69 of 1961 Jia Lal Was searched by the Delhi Police on April 15, 1959, and was found to be in possession of ' an ' English pistol for Which he held no licence. He was then prosecuted for an offence under section 20 of the Indian Arms Act of 1878 (XI of 1878), hereinafter referred to as 'the Act ' 867 before the Additional Sessions Judge; Delhi who convicted him under section 19 (f) of the Act, and sentenced him to rigorous 'imprisonment for nine ,months. No sanction for the prosecution had been obtained as required by section 29 of the Act. the appellant then took the matter in appeal to the High Court of Punjab which confirmed his conviction but reduced the sentence to 4 1/2 months rigorous imprisonment. It is against this judgment that this appeal by special leave is directed. Bhagwana was searched by the Saharanpur Police on August 6, 1956, and was found to be in possession of a country made pistol and four cartridges for which he held no licence. He was prosecuted before the City Magistrate, Saharanpur under a. 19(f) of the Act and was convicted and sentenced to six months rigorous imprisonment. No sanction was obtained for his prosecution, obviously because under section 29 of the Act it is not required when the offence are committed in certain areas and Saharanpur is within those areas. The appellant preferred an appeal against his conviction and sentence to the Sessions Judge, Saharanpur but the appeal was dismissed and the conviction and sentence were confirmed. The appellant then took the; matter in revision to the High Court of Allahabad which rejected the same but granted certificate under article 134(1) of the Constitution. This , is how this appeal comes before us. Though the two appeals arise out of two different prosecutions un. connected with each other, they were heard together as the same questions of law arise for determination in both. The first question that arises for our decision is whether a. 29 of the Act is unconstitutional and void as contravening article 14, in that it requires sanction for prosecution for offences under the Act, 868 when they axe committed in some areas, but not in others. Section 29 of the Act is as follows: "Where an offence punishable under section 19, clause (f), has been committed within three months from the date on which this Act comes into force in any State, district or place to which section 32, clause 2 of Act XXXI of 1860 applies at such date, or where such an offence has been committed in. any part of India not being such a district, State or place, no proceedings shall be instituted against any person in respect of such offence without the previous sanction of the Magistrate of the district or in a presidency town, of the Commissioner of police. " For a correct understanding of the true scope of the section, it is necessary to refer to the history of the Legislation relating to it. The earliest enactment dealing with this subject is the Arms and Ammunition and Military Stores Act 18 of 1841 which came into force on August 30, 1841, and that prohibited the export of arms and ammunition out of the territories belonging to the East India Company and enacted certain prohibitions as regards the storing of ammunition. This Act was repealed by Act 13 of 1852. After the uprising against the British rule in 1857, the Government felt that a more stringent law was required for preventing insurrections and maintaining order and so a new Act was passed, Act 28 of 1857. This Act is a comprehensive one dealing with many matters not dealt with in previous legislation, and contains elaborate provisions as regards the manufacture, import, sale, possession and use of arms and ammunition. of particular relevance to the present discussion is P. 24 of this Act which empowered the Governor 869 General to order general search for arms and ammunition in any district. In exercise of the power conferred by this section, the Governor General issued a notification on December 21, 1858, ordering a general search and seizure of arms in in the territories north of the Jumna and Ganga then known as North Western Provinces. The reason for this was that it was this territory that was the main seat of the disturbances of 1857. Act 28 of 1857 was a temporary Act which was to be in force for a period of two years and after some extentions it finaly lapsed on October 1, 1 60. On that date a new Act, Arms and Ammunition Act 31 of 1860 came into force. This statute contains in addition to what was enacted in Act 28 of 1857, certain new provisions, of which a. 32 is material for our discussion. It is as follows: " 'Clause 1. It shall be lawful for the Governor General of India in Council or for the Executive Government of any Presidency or for any Lieutenant Governor, or with the sanction of the Gevernor General in Council for the Chief Commissioner or Commissioner of any Province, District or place subject to their administration respectively, when. ever it shall appear necessary for the public ,safety, to order that any Province, District, or place shall be disarmed. "Clause 2. In every such Province, District, or place as well as in any Province, District, or place in which an order for a general search for arms has been issued and is still in operation under Act XXVIII of 1857, it shall not be lawful for any person to have in his possession any arms of the description mentioned in section 6 of this Act, or any percussion caps, sulphur, gunpowder or other ammunition without a licence. 870 This Act ,,a, in was repealed, in 1878,and the present Indian Arms Act (XI of 1878) was enacted. Now examining section 29 in the light of the history of the legislation as aforesaid, it will be seen that it makes a distinction between the areas to which section 32 of Act 31 of 1860 applied and the other areas. The former included territories which had been disarmed under orders of the Governor General in accordance, with cl. (1) and those in which a general search had been ordered under cl. (2) which under the notification of December 1858 comprised the territories north of the Jumna and Ganga. Section 29, provides,.that for prosecution for offences committed within the rem to which section 32 applied, No. sanction was required but suoh sanction was required, for a prosecution for the same offence when committed in 'other areas. The point for decision is whether this, discrimination which is hit by article, 14 of th Constitution. Now the principles governing the application of Art 14 are ,Well, settled and there is no need to restate them. Article, 14 prohibits hostile legislation directed against individuals or groups of individuals, but it does not forbid reasonable Classiit scation. And in order that a classifcation might be valid, it must rest on an intelligent ,differentia which distinguishes it from others and that further that must ' have, a reasonable relation to the ob ject of the legislation. There can be a valid classi fication based on a geographical differentia, but even then, that differentia must be, ,pertinent to the object of the legislation. The short question before decision the are fore is whether the differentiation between the territories north of, the; Jumna and Ganga on theme band and the other Territories on the other, has any relevance to the object of 871 the legislation. As already Pointed out this differen tiation came to be made as a result of the political situation during 1857, and has reference to the fact ' that the largest opposition to the British Grovernment came from the Taluqdars to the north of the Jumna and Ganga. But more, than a ventury has since elapsed and the conditions have so radically, changed that if is impossible now to sustain any distinction between the territories, north of the Jumna and Ganga and the other territories on any ground pertinent to the object of the law in question and on the well known principles differentiation is discrimination repugnant to article 14. That was the the view taken by, the Allhabad High Court in Mehar Chand vs State(1) and we are in agreement with it. The correctness of this decision on this point has been assailed, before us. On this conclusion two questions arise,for decision: (i) Is a. 29, omitting that part, of it which" contravenes article 14, valid, and are the prosecutions in the instant cases bad for want of sanctions thereunder; and (ii) if a. 29 is void in toto whether a. 19 also 'becomes void and unenforceable. On the first question our attention has, been drawn to two decisions of the High Court of Allahabad where this Point has been considered. in Mehar Chand 's case (1) already referred to, after holding that the distinction made in section 29 between offences committed in territories to the north of the Jamuna and Ganga and those committed elsewhere was repugned to Art, 14, the learned Judges stated as its consequence that sanction for prosecution under the Act was necessary in all cases. But this decision was overruled by a Full Bench of the Allahabad High Court in Bhai Singh vs The State(2) (1) A.I.R. (1959) All. 660. (2) A.I.R. (1960) All 369. 872 where it was held that the effect of the finding that the section was in part unconstitutional was to render it void in its entirety and that accordingly no sanction was necessary for instituting prosecutions under the Act. The respondent relies on this decision, and contends that the present proceedings are not illegal for want of sanction. The position of the appellants in the two appeals in relation to this question is somewhat different. In Criminal Appeal 69 of 1961 the appellant comes from an area which is not to the north of the Jumna and Ganga and under s.29 sanction would be required for his prosecution but the appellant in Criminal Appeal 62 of 1960 comes from an area north of the Jumna and Ganga and no sanction would be required under that section for his prosecution. The arguments of learned counsel on this question therefore proceeded on somewhat different lines. Mr. Sarju Prasad appearing on behalf of the appellant in Criminal Appeal 69 of 1961 contended that the decision in Bhai Singh 's case (1) was erroneous, that the fact that the section was invalid in its operation as regards territories to the north of the Jumna and Ganga did not render it invalid in its application to the other territories, as the two parts of the section were distinct and severable and that on the principles enunciated by this Court in R.M.D. Chamarbaugwalla vs The Union of India (2), that portion of the section which requires sanction must be held to be valid. Mr. Garg appearing for the appellant in Criminal Appeal 62 of 1960 also contended that sanction was required for prosecution under the Act and his argument in support of the contention may thus be stated It "the portion of section 29 873 which offends article 14 is , struck out, what remains will read as follows: "Where an offence under section 19 clause (f) has been committed in any part of India; No proceedings shall be instituted against any, person in respect of such of offence without the previous sanction of the Magis trate of the District. " The section as thus expurgated is complete in itself and in harmony with the rest of the Act. The appropriate rule of interpretation applicable to this situation is thus stated in Chamarbaugwalla 's Case "On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable. " (p. 951). On this test, the part of section 29 which requires sanction must be held to be severable from the portion, under which no sanction is required, and therefore valid. This contention must fail for the simple reason, that if accepted it must result in defeating the intention clearly and unequivocally expressed in the section, that no sanction is required for prosecution for offences committed north of the Jumna and Ganga. It will be opposed to all recognised canons of interpretation, to construe a statute as forbidding what it expressly authorises. We cannot therefore so read the section as to require sanction for prosecution for offences in the areas north of the Jumna and Ganga. When once this conclusion is reached it is difficult to accept (1) ; 874 the contention, of Mr. Sarju Prasad that the section insofar as it requires sanction for prosecution for offences committed in territories other than those to the north of the Jumna and Ganga is severable from the rest and that to that extent the law is valid. If this contention is correct, it must necessarily result in discrimination between persons who commit offences in the territories to the north of the Jumna and Ganga and those who commit the same offences elsewhere in that while the latter cannot be prosecuted without sanctions the former can be. It will then be open 'to the persons who are charged with offences committed to the north of the Jumna and Ganga to assail the law on the, ground that it discriminates against them. , and there can be no answer, to it as we have held that, the classification made by the section is not valid. The fact is that it is inherent in the very vice of discrimination that it is incapable.of being broken up into what is good and what is bad. The gravemen of the charge that article 14 has been contravened is that it makes an irrational distinc tion among persons who are similarly circumstanced and where such a charge is well founded the section must in its entirety be struck down. We are accordingly of the opinion that on our conclusion that the section is repugnant to article 14 in that it discriminates between the persons who commit offence in areas north of the Jumna and Ganga and those who commit the same offences elsewhere, the whole of it ought. to to be held to be bad. It is next contended that if section 29 is void in its entirety, section 19(f) of the Act should also be held to be void, as both these provisions form integral parts of a single scheme and must stand or fall together. 'it is, argued that the policy behind section 29 was manifestly. , to give protection to innocent subjects, against, frivolous and, vexatious prose cution, and that sanction under that section must 875 therefore be regarded as one of the essential elements, which go to make the offence. Support for this contention was also sought in the statement of objects and reasons, made when the measure 'was introduced in the Legislature, wherein it was said that ample safeguards were provided "to prevent this prohibition pressing unfairly against respectable persons". It was strongly pressed on us that in view of the above statement. it ought to be inferred that the Legislature would not have enacted section 19, if it had known that section 29 was void, and on that the conclusion must follow that the two sections are inseverable. In support of this argument reliance was placed on certain observations in Daris vs Wallace (1) and Lemke vs Farmers ' Grain Company (2). In Davis Wallace (1) the point for decision was whether when a provision which is in the nature of an exception in held to be unconstitutional, the main provision which it is intended to qualify can be enforced in its own terms. In answering it in the negative the Court observed : "Here the excepting provision was in the statute when it was enacted, and there can be no doubt that the legislature intended that the meaning of the other provisions should be taken as restricted accordingly. Only with that restricted meaning did they receive the legislative sanction which was essential to make them part of the statute law of the State '; and no other authority is competent to give them a larger application." In Lemke Farmers Grain Company (2), a law of North Dakota was assailed as unconstitutional on the ground that it was one on interstate commerce which the State Legislature could not enact. One of the contentions raised was that there were certain provisions in the Act which could be sustained as within the competence of State Legislature In rejecting this contention the Court (1) ; (1921) 257 U.S. 477 ; , 329. (2) (1921) 258 V.S. 506 876 observed : ,It is insisted that the price fixing feature of the statute may be ignored, and its other regulatory features of inspection and grading sustained if not contrary to valid Federal regulations of the same subject. But the features of this act, clearly regulatory of interstate commerce, are essential and vital parts of the general plan of the statute to control the purchase of grain and to, determine the profit at which it may be sold. It is apparent that, without these sections, the State legislature would not have passed the act. Without their enforcement the plan and scope of the act fails of accomplishing its manifest purpose. We have no authority to eliminate an essential feature of the law for the purpose of saving the constitutionality of parts of it. " It is contended that on the rule of construction laid down above, a. 19 must be held to be inseverable from section 29, and must be struck down. We are unable to agree. The contention that sanction under section 29 should be regarded as an essential ingredient of the offence under a. 19 proceeds on a misconception as to the true scope of that section. The scheme of the act is that it imposes certain obligations and breaches thereof are made offences for which penalties are prescribed. These provisions pertain to the domain of substantive law. Thus with reference to the, matters involved in this appeal, sections 14 and 15, enact that no person shall have possession of arms, and ammunition, specified therein, without a licence, and under section 19(f) a contravention of these sections is an offence punishable, as provided therein. The offence is complete, when the conditions mentioned in sections 14 and 15 are satisfied, and sanction is thus not one of the elements which enter into the constitution of the offence. Then comes section 29. It is purely procedural. It comes 877 into operation only when there is an offence already completed. It cannot therefore be regarded as an ingredient of the offence, which is" to be punished under a. 19 (f) . This must be further clear from the fact that offences under the Act are punishable under a. 19, without sanction under a. 29, when they are committed in the territories to the north of the Jumna and Ganga. It cannot be contended that the contents of as. 14 and 15, for example , which are punishable under a. 19(f) differ according as they are to be applied to areas north of the Jumna and Ganga or elsewhere. We agree with the appellants that the object a. 29 was to give protection to subjects against harassment. That appears clearly on the reading of the section. There was some argument before us as to whether the statement of objects and reasons relied on for the appellants is admissible in evidence. It is well settled that proceedings 'of the Legislature cannot be called in aid for constructing a Section, vide Administrator General of Bengal, vs Prem Lal Mullick Krishna Ayyangar vs Nellapuru mal (2). "It is clear" observed Lord Wrightin Assam Railway & Trading Co. Ltd. vs Inland Revenue Commissioner (3) "that the languageof a Minister of the Crown in proposing in Parliament a measure which eventually becomes law is inadmissible. " The question whether the statement of objects and reasons admissible in evidence for construing the statue arose directly for decision In Aswini Kumar Ghosh vs Arabinda Bose (4), and it was held that it was not. It was argued that the history of a legislation Would be admissible for ascertaining the legislative intent when the question is one of severability. That is so as held by this Court in B.M.D. Chamarbaugwalla 's case (5) at pages 951 952. (1) (1895) 221.A.107,118. (2) (1919) L.R. 47 I.A. 33, 42. (3) ; , 458. (4) (1953) S.C.R. I. 28. (5) ; 878 But the statement of objects and reasons is not a part of the history of the legislation. It is merely an expression of what according to the mover of the Bill are the scope and purpose of the legislation. But the question of severability has to be judged on the intention of the legislature as expressed in the Bill as passed, and to ascertain if the statement of the mover of the Bill is no more admissible than a speech made on the floor of the House. It may be mentioned that there are observations in some of the, judgments of this Court judgments of this that the statement of objects and reasons but for Act right be admissible not for construing the Act but for ascertaining the conditions which prevailed when the legislation was enacted. Vide the State of West Bengal vs Subodh Gopal Bose (1), M. K. Ranganathan vs Government of Madras (2), A. Thangal Kunju Mudaliar vs M. Venkitachalam Potti (3) and Commissioner of Income tax, Madhya Pradesh V. Sm. Sodra Devi It is sufficient for the purpose of this case to say that the statement of objects and reasons is sought to be used by the appellants not for ascertaining the conditions which existed at the time When the statute was passed but for showing that the legislature would not have enacted the law without the protection afforded by section 29. In our opinion it is clearly not ' admissible for this purpose. But even apart from the statement of objects, it is clear on the face of the section that it has been enacted with a, view to giving protection to the subjects. But is this sufficient to support the conclusion that the legislature would not have enacted section 19 if it had known that a. 29 was void ? It is this that the appellant has to establish before he (1) ; , 628. (2) ; , 385. (3) ; , 1237. (4) ; 879 can succeed, and the policy behind a. 29 is only one element in the decision of it. Now it appears to us ' that what is really determinative of the question is what has been already stated that section 19 is a substantive provision, whereas section 29 is an adjectival one, and in general, the invalidity of a procedural enactment cannot be held to affect the validity of a substantive provision. It might be possible to conceive of oases in which the invalidity of a procedural section or rule might so react on substantive provision, as to render it ineffective. But such cases must be exceptional. And we see nothing in the present statute to take it out of the general rule. On the other hand, the paramount intention behind the law was to punish certain offences. No doubt section 29 was enacted with a view to give some measure of protection to the subjects. But if the legislature had been told that section 29 would be bad, can there be any doubt as to whether it would have enacted the statute without section 29 ? The consequence of withdrawing the protection of that section is only that the accused will have to take up his trial in a court, but there ultimately justice will be done. Therefore if the choice was given to the legislature between allowing an offence against the State to go unpunished, and failing to give protection to a subject against frivolous prosecution, it is not difficult to see where it would have fallen. We cannot, be mistaken if we conclude that the intention of the legislature was to enact the law, with section 29 if that was possible, without it, if necessary. And that is also the inference that is suggested by the provision in section 29, exempting certain areas from its operation. The American authorities cited for the appellants do not require detailed consideration, as the principles laid down therein have been approve by this Court in Chamarbaugwalla 's case (1) at pages 950 951. The question is only one of application (1) ; 880 of the rules of interpretation laid down therein to particular legislation. It is however worthy of note that in Davis V. Wallace (1) as well as Lemke vs Farmers Grain Company the point for decision was to what the effect was of holding that a substantive provision in a law was unconstitutional, on another substantive law in the same statute. We are aware that it has some times been stated that a distinction should be made in the matter ' of severability between Criminal and Civil Laws, and that a penal statute must be construed strictly against the State. But there are numerous decisions in which the same rules of construction have been applied in deciding a question of severability of a Criminal statute as in the case of a Civil Law, and on principle it is difficult to see any good ground for the distinction. "Perhaps the moist that can be said" ' says Sutherland, for the distinction between criminal and civil statutes is that the penal nature of a statute may be a make weight on the side of inseparability" Vide Statutory Construction Vol. 2 p. 197 para 2418. In the present case the fact that a. 29 is a procedural and not a substantive enactment is sufficient to turn. the scale heavily in favour of the State. On a consideration of the scheme of the Act, and its provisions, we are of opinion that section 29 is severable from the other portions of the Act, and that its invalidity does not affect the validity of 19. In Criminal Appeal 69 of 1961 a contention was also raised that the pistol of which the appellant was 'in possession was not in a fit condition to be effectively used, and it bad no chamber, and it therefore did not fall within the definition of 'Arms ' in section 4(1) of the Act. There is no force in this (1) ; 7: ; 329, (2) ; ; 881 contention which is accordingly rejected. In Criminal Appeal 62 of 1960 an argument was advanced that the State had launched prosecutions under the De Act, some with, and others without ' sanction, and that was discrimination bit by article 14. There is no substance in this contention, which also is rejected. In the result both these appeals are dismissed. Appeal dismissed.

Section 29 of the Indian Arms Act, 1878, provided that for prosecution for an offence under section 19(f) of the Act com mitted in the territories north of the jumna and Ganga no sanction was required but sanction was required for the pro. section if the offence was committed in other areas. j was found in possession of an unlicensed firearm in Delhi, and though sanction under section 29 was necessary, he was tried and convicted without obtaining such sanction. B was found in possession of an unlicensed firearm in Saharanpur and as no sanction under section 29 was necessary for his prosecution he was tried and convicted without obtaining any sanction. The respondents contended that section 29 offended article 14 of the Constitution and was unconstitutional. j contended that even if section 29 was invalid in its operation as regards territories to the. ,North of the jurnna and Ganga it was not invalid in its 865 application to the other territories as the parts of section 29 were separate and severable. B contended that if the portion of section 29 which offended article 14 was struck down the remaining portion was complete in itself and required sanction for prosecution in all cases, and that if s.29 was void in toto s.19 could not stand and also become void and unenforceable. Held, that section 29 Arms Act offended article 14 and was unconstitutional and as such no sanction was necessary for the prosecution of either j or B. The differentiation between the territories north of the jumna and Ganga and the other territories had no relevance now to the object of the legislation. The differentiation had come into being an account of the fact that the largest opposition to the British Government in 1857 had come from the people to the north of the jumna and Ganga and they had been disarmed. But now after more than a century conditions have changed and the distinction could not be sustained on any ground pertinent to the object ,of the law in question. Mehar Chand vs State, A.I.R. (1959) All. 660, approved. Held, further, that it was not permissible to strike out only the offending words from section 29 and to read the section as requiring sanction for prosecution for offences in areas north of the jamna and Ganga. The section could. not be construed as for bidding what it expressly authorised. Nor could the section insofar as it required sanction for prosecution for offences committed in other territories be severed from the rest and held valid as that would necessarily again result in discrimination. The entire section 29 must be struck down. Bhai Singh vs State, A.I.R. (1960) All. 369. approved. Chamarbaugwalla vs Union of India, ; , referred to. Held, further, that section 29 was severable from the other, provisions of the Act and that its invalidity did not affect the validity of section 19. Section 19 was a substantive provision providing punishment for violation of sections 14 and 15 and section 29 was merely procedural and in general the invalidity of a procedural provision could not be held to affect the validity of a substantive provision. There was nothing in the Arm Act to take it out of the general rule. Section 29 was intended for giving protection to the subjects against frivolous and vexatious prosecutions but sanction was not one of the elements of the under offence s, 19(f). It could not be said that the legislature 866 would not have enacted the ' law without the; protection afforded by section 29. Davis vs Wallace, (1921)257 U.S. 477; ; and Lemka Parmers ' Grain Company; , ; 66 L. Ed. 458, referred to.

l Appeal No. 3381 of 1982. From the judgment and order dated 18.10 82 of the High Court of Delhi in C.M. (M)) No. 174/82. V.M. Tarkunde, B. Dutta and Mrs. & Mr. A. Minocha for the Appellant. L N. Sinha and Mr. Parmod Dayal, for the Respondent. The Judgment Or the Court was delivered by TULZAPURKAR. The only question raised in this appeal is whether a warrant for recovery of possession can be issued ill favour of a landlord without notice to the tenant under section 21 of the Delhi Rent Control Act, 1958 (hereinafter referred to as the Act) ? A tenancy for a limited period of three years commencing from 1.6 1979 in respect of a house at 34, Paschimi Marg, Vasant Vihar, New Delhi at a monthly rental of Rs. 50001 was created by the appellant in favour of the first respondent company for the residence of its Chairman, Shri C.L. Sachdev after obtaining the requisite permission under s.21 of the Act. It appears that the said house was constructed by the appellant for his own use and occupation but having taken a loan for its construction he was desirous of clearing the said before occupying the same and he, therefore, offered in writing the tenancy for a limited period of three years to the first respondent company, and since the offer was accepted a joint application seeking permission of the Rent Controller under s.21 for creating such limited tenancy was made by the parties on 9th May, 1979 in which it was expressly stated that three years tenancy was being created as the appellant had to clear the construction loan; the proposed lease deed containing the terms and conditions of letting was annexed thereto, clause 2 whereof expressly recited that the premises shall be used by the respondent Company only for the residential purposes of its Chair man, Shri C.L. Sachdev (second respondent). On 10th May 1979 the parties appeared before the Rent Controller and their statements were recorded; the second respondent stated on oath that the premises were being taken by the respondent company for the residence of its Chairman (i.e. himself) on a monthly rental of Rs. 5000/ for 903 three years with effect from 1.6.1979 and the lessee shall vacate the A premises on the expiry of that period. By his order passed on that very day the Rent Controller, on being satisfied that the requirements of s.21 had been fulfilled, 1, granted permission for the creation of the tenancy for the said period which Was to expire on 31st May 1982. The appellant was desirous of getting possession of the house at the expiry of the period but before applying for possession under s.21 of the Act, by two registered letters one dated 1st March 1982 and the other dated 5th May 1982 h called upon the respondents to hand over vacant possession of the leased premises on the due date as the period permitted by the Rent Controller was coming to an end and also because h required the, pretenses for himself. There was no reply to any of this letters nor was possession handed over and, therefore, the appellant filed application under s.21 for recovery of possession before the Rent Controller on 1st July 1982; the application was directed to be registered on that day and the appellant was directed to file a certified copy of the plan on 16.7.1982; the appellant, however, filed the certified copy of the plan on the 6th July 1982; the Rent Controller, therefore cancelled the date 16th July 1982 fixed for filing the plan, took on record certified copy of the plan and issued warrant of possession in favour of the appellant. On 9.7.1982 the appellant took possession of the house through the bailiff and started residing therein with his family members. On 14th July 1982 the respondents filed a writ petition (C.M. No. (Main) 174 of 1982) in the Delhi High Court under article 227 of the Constitution seeking to quash the warrant of possession issued by the Rent Controller on 6.7.1982 and the further proceedings taken in pursuance thereof on two grounds: (3) that the initial order dated 10th May 1979 granting permission to create the limited tenancy was vitiated by fraud practised by the appellant inasmuch as he had suppressed the fact that an earlier application for such permission his been declined on the ground that premises had been let out for commercial cam residential purposes and therefore, there Was no executable order pursuant to which any warrant for possession could be issued under s.21 of the Act and (b) that the issuance of a warrant for recovery of possession on 6th July 1982 without notice to the tenant was erroneous in have and in violation of principles of natural justice and such non issuance of notice on the part of the Rent Controller had deprived the tenant of an opportunity to prove his case of fraud. By this reply the appellant denied all the allegations made in the Writ Peti 904 tion and particularly denied that the premises were let out for commercial cum residential purposes or that permission on the earlier occasion had been declined on that ground or that any fraud was practised by him as alleged at the time when the order granting permission was passed on 10th May 1979; it was asserted that the earlier application for permission was not refused but was got with drawn for technical defect. The appellant also disputed that anoints to the tenant Was contemplated by s.21 of the Act before issuing the warrant for recovery of possession thereunder; he also pleaded that on the facts of the case the respondents had ample opportunity to approach the Rent Controller to prove their case of alleged fraud inasmuch as the appellant had issued two registered notices to the respondents informing them that he was desirous of recovering possession at the expiry of the lease period and as such though there was no requirement of a notice in law, the principles of natural justice could be said to have been substantially observed. By its judgment and order dated 18th October 1982 the High Court allowed the writ petition, quashed the warrant of possession issued by the Rent Controller and sent the matter back to him for hearing and adjudicating upon the objections of the tenant to the issuance of such warrant of possession and in the meanwhile it also directed that possession be restored to the tenant. In doing so the High Court took the view that no warrant for recovery of possession under s.21 of the Act could be issued in favour of the landlord without issuance of a notice to the tenant. It is this view of the High Court that is being challenged before us by the appellant in this appeal. In support of the appeal the principal contention of the counsel for the appellant has been that neither s.21 of the Act nor any Rules framed thereunder require or contemplate the service of a notice on the tenant before issuing the warrant of possession for the purpose of putting the landlord in vacant possession of the leased premises at the expiry of the limited period for which the tenancy has been permitted to be created under the Rent Controller 's order. Counsel submitted that s.21 postulates summary eviction of the tenant by a process which is really in the nature of executing the earlier order creating a tenancy for a limited period as no fresh eviction order is contemplated and that insistence upon a prior notice to the tenant before issuing the warrant of possession followed by an elaborate inquiry would defeat the very object or purposes for which s.21 has been enacted and incorporated in the Act which, 905 as explained by this Court in S.B. Noronah vs Prem Kumari Khanna,(l) is to afford an assurance to the landlord that he will get back possession forthwith at the expiry of the fixed period of tenancy but for which a landlord would never let out his premises and would continue to keep them vacant even though he may not require the premises for a fixed period. Counsel for the appellant pointed out that even under the Civil Procedure Code no prior notice is required to be served on a judgment debtor when execution processes say for attachment and sale of his properties or even for dispossessing him are taken within two years of the decree. Counsel for the appellant, therefore, urged that the High Court was ; error in taking the view that a warrant of possession could not be issued in favour of the landlord without service of a prior notice upon the tenant under C s.21, and according to him the decision in Noronaths case (supra on which High Court has relied in this behalf is not on this point. Counsel for the appellant further urged that even in a case where fraud is alleged to have been practised by the landlord in obtaining the Rent Controller 's sanction for creating the limited tenancy the section does not cast any duty or obligation upon the Rent Controller to invite a plea of fraud from the tenant by issuing notice to him after the landlord has applied for recovery of possession under that section Further the counsel pointed out that in the facts of the instant case the fraud, if at all there was any, was known to the tenant right from the time the limited tenancy was created under the Rent Controller 's order and the respondents could have approach the Rent Controller to have the issue decided at any time during the three years period and in any case at least immediately after the receipt of two registered letters from the appellant 's which were issue months ahead of the appellant 's application for recovery of possession under s.21. Counsel, therefore, urged both in law as well as on the facts of the present case the service of a notice by the Rent Controller upon the tenant before issuing warrant of possession was uncalled for and not required and the High Court was in error in taking the view it did; in any case the High Court was wrong in directing the restoration of possession back to the respondents when the matter was remanded by it to the Rent Controller for hearing and adjudicating upon the tenant 's objection and the appellant 's possession need not have been disturbed pending such adjudication. (1) [1980] I S.C.R. 281. 906 On the other hand counsel for the respondents strongly sup ported the view taken by the High Court and in that behalf relied upon this Court`s decision in the Noronah 's case (supra) which has the view that even at the execution stage it is open to the tenant to put forward a case of fraud in the matter of obtain g Rent Controller 's permission at the initial stag, for creating a limited tenancy and the Rent controller is bound to hold an inquiry when such a plea of fraud is put forward by the tenant and according to counsel such inquiry into the, plea of fraud would not be possible unless notice is served Upon the tenant before issuing the warrant of possession . In order to decide the question raised in the appeal it will be necessary to set out section 21 of the Act. The section ruts thus: "21. Recovery of possession in case of tenancies for limited period where a landlord does not require the whole or any part of premises for a particular period, and the landlord, after obtaining the permission of the Controller in the prescribed in the manner , let the whole of the premises or part thereof as a residence for such period as may be agreed to in writing between the landlord and the tenant and the tenant does not, on the expiry of the said period , vacate such premises then, notwithstanding anything contained in section 14 or any other law the Controller may , on an application mad to him in this behalf by the landlord within such time as may be prescribed, place the landlord in vacant possession of the premise or part thereof by evicting the tenant and every other person who may be in occupation of such premises . An analysis of the provision will show that in regard to tenancies for limited period mentioned there in only two orders are contemplated by the section: (i) an order by the Rent Controller sanctioning or permitting the creation of 3 tenancy for a particular fixed period only, and (ii) an order by the Rent Controller putting the landlord in vacant possession of the leased premises by evicting the tenant and every other occupier thereof at the expiry of that period. It is also clear that before passing the first order the Rent Controller is required to satisfy himself that the two conditions mentioned in the section are genuinely satisfied in every 907 case, namely, (a) that the landlord does not require the premises A 'for a particular period ' only and (b) that the letting itself is for residential purposes and no other. The landlord 's non requirement of the premises for a particular period may arise out of various circumstances; for instance, being an Officer he may be going on some other assignment for a particular period or being in occupation of official quarters he may have to vacate the same on his retirement or having borrowed a loan for the construction he may desire to clear it of before occupying the premises for his own use, etc. It cannot be disputed that both the condition must be truly fulfilled and not by Way of any make belief before the Rent Controller grants his permission for the creation of such limited toenails but once such laminated tenancy is properly created the second order of putting the landlord in vacant possession of the leased premises by evicting the tenant at the expiry of the fixed period to be passed as matter of course because the tenant, in view of the non obstinate clause contained in the section, has no right or protection whatsoever under law to continue the possession nor has he any defense to eviction and the section does not Contemplate the passing of any order of eviction against the tenant before issuing the warrant of possession in favour of the landlord. It is the clear that the second order contemplated by the section is in the nature Or a process in execution whereunder the landlord has to put in possession of the leased premises by evicting the tenant and every occupant thereof, and no notice to the tenant is contemplated before issuing the warrant of possession for putting the landlord in possession As far as the Delhi Rent Control Rules 1956 framed by the Central Government under section 56 of the Act are concerned there is only one rule being Rule 5 which merely provides for period of limitation by saying that every application for recovery of possession under sec. 21 shall be made by the landlord within six months from the date of the expiry of the period of tenancy and there is no rule requiring a notice being served upon the tenant before the issuance Or warrant of possession to evict him. Counsel for the respondents relied upon sec. 37 of the Act to canvas the contention the service of a prior notice Upon the tenant before he is evicted would be necessary but that deals with the practice and procedure required to be followed by the Rent Controller in proceedings before him and it mainly provides that subject to any rules 908 That may be made under the Act the Controller shall, while holding an inquiry in any proceeding before him, follow as may b the practice and procedure of a court of small causes, including the recording of evidence. In particular counsel relied upon sub sec. (1) of sec. 37 which provides that "no order which prejudicially affects any person shall be made by the Controller under this Act without giving him a reasonable opportunity of showing cause against the order proposed to be made and until his objections, if any, and ,any evidence he may produce in support of the same have been considered by the Controller. " In our view all that sub sec. (1) does is to incorporate a rule of natural justice, namely, that an order prejudicially affecting a person shall not be made without hearing him and considering his objections if any to the proposed order. But an order can be said to affect a person prejudicially only if any right of his would b affected adversely and as stated earlier in view of the non obstinate clause contained in sec. 21 the tenant on the expiry of the limited period his no right or protection what so ever under any law to continue in possession and as such the issuance of a warrant of possession directing him to vacate the premises in his occupation cannot be regarded as one which prejudicially affects him. Section 37 (1) therefore, cannot be construed as requiring service of a prior notice upon the tenant before issuance of a warrant of possession against him. In other words neither sec. 21 nor sec. 37 nor the Rules framed under the Act require service of any prior notice upon the tenant before he is evicted and the order directing issuance of warrant of possession under sec. 21, without prior notice to the tenant, for the purpose of putting the landlord in possession of the leased premises at the expiry of the limited tenancy cannot be regarded as illegal, invalid or unwarranted. The question at issue could also be considered by having regard to the object or purpose with which section 21 has been enacted and incorporated in the Act. It cannot be disputed that sec. 21 carves out tenancies of particular category for special treatment and the raison d 'etre of the provision has been explained by this Court in Noronah 's case (supra) in these words: "Parliament was presumably keen on maximising accommodation available for letting, realising the scarcity crises. One source of such spare accommodation which is usually shy is potentially vacant building or a part 909 thereof which the landlord is able to let out for a strictly limited period provided he has some credible assurance that when he needs he will get it back. If an officer is going on other assignment for a particular period, or the owner has official quarters so that he can let out if he is confident that on his retirement he will be able to re occupy, such accommodation may add to the total lease worthy houses. The problem is felt most for residential uses. But no one will part with possession because the lessee will be come a statutory tenant and, even if bonafide requirement is made out the litigative tiers are so many and the law 's delays so tantalising that no realist in his sense will trust the sweet promises of a tenant that h will return the building after the stipulated period. So the law has to make itself credit worthy. The long distance between institutions of recovery proceedings and actual dispossession runs often into a decade or more a factor of despair which can be obviated only by a special procedure. Section 21 is the answer. ' 'The law seeks to persuade the owner of a premise available for letting for a particular or limited period by giving him the special assurance that at the expiry of that period the appointed agency will place the landlord in vacant possession." (Emphasis supplier). It is thus clear that the object of incorporated section 21 in the Act is to provide a special procedure that will ensure to the landlord vacant possession of the leased premises forthwith at the expiry of the fixed period of tenancy but for which he would be shy to let out his premises and would continue to keep them vacant even though he may not require the premises for a fixed period. Moreover the assurance of getting vacant possession forthwith is further strengthened by the provision that under the warrant of possession not merely the tenant but every person who may be in occupation is also to be evicted. If such is the avowed object of prescribing the special procedure then service of a prior notice on the tenant upon receipt of the landlord 's application for recovery of possession and inviting his objections followed by in elaborate enquiry in which evidence may have to be recorded will really frustrate that object. In our view precisely for this reason the scheme of sec. 21 and the connected relevant provisions do not require service of a prior notice on the tenant before issuing the warrant of possession against 910 him for putting the landlord in possession of the leased premises, for, the law has to make itself credit worthy. Strong reliance was placed by counsel for the respondents on the decision of this Court in Noronah '.s case (supra) where according to counsel a view has been taken that even at the second stage when the landlord applies for recovery of possession under sec 21, the Rent Controller must satisfy himself by such inquiry he may make about the compulsive requirements of that provision that is to say, whether the twin conditions requisite for granting, the permission for the creation Or limited tenancy had been really fulfilled or not and counsel argued that no such inquiry would be possible unless on receipt of landlord s application. for recovery of possession a notice served is upon the tenant which would enable the tenant to put forth a plea that at initial stage a mindless order granting, permission ion for the creation of limited tenancy had been made with it the will condition being really satisfied or that the said initial order granting permission was the result of either fraud on the part of ' the landlord or collusion between the parties Counsel urged that a more ritulistic enforcement the condition of ' the permission udders sec. 21 or a mechanical grant of permission thereunder would amount to subverting the whole effect of sec. 21 and it is well settled fraud and collusion (especially collusion between two to unequal the strong and the weak) will vitiate completely the permission so granted and render it non est. 'therefore, it would be the duty of the Rent Controller to hear and adjudicate upon such pleas of the tenant before issuing warrant of possession in favour of the landlord. At the outset we would like to observe that in Noronah 's case the question whether a prior notice is required to be served upon the tenant before issuance of warrant of possession in favour of the landlord under sec. 21, did not arise for consideration. It was a case where upon receipt of landlord`s application for reconvey of possession under the section the tenant raised pleas that the premises had been let out for non residential purposes and that the sanction or permission granted for the creation of the limited tenancy was vitiated by fraud and collusion and the question that arose for consideration was whether at that stage the Rent Controller should consider those peas even when reside at the stage. In other words all that the said case decided in that if such please by the tenant event at the exception 911 stage (i.e. at the stage of passing the second order) the Rent Controller should consider and adjudicate upon such pleas but the decision is no authority for the proposition that upon receipt of landlord 's application for recovery of possession the Rent Controller must issue a notice to the tenant inviting from him the pleas of fraud, collusion etc. and hold an inquiry into such pleas before issuing the warrant of possession in favour of the landlord; for there cannot be a presumption that in very case there was a m re ritualistic observance of the procedure contemplated while passing the initial order granting pertain or that the Controls had passed a mindless order or that the order granting permission was the result of either fraud on the part of the landlord or collusion between the strong and the weak. In fact clean in Noronah case this Court has observed that there will be a presumption in favour of the sanction or permission being regular and if that be so, we fail to appreciate as to why the Rent Controller should invite such pleas of fraud, collusion etc. at the instance of the tenant by being required to serve a notice upon, him before issuing the warrant of possession in favour of the landlord especially when the scheme of sec. 21 and the connected relevant provisions do not require it. what then is the remedy available to the tenant in a case where there was in fact a mere ritualistic observance of the procedure while granting permission for the creation of a l limited tenancy or where such permission has procured by fraud practised by the landlord or was a result of collusion between n the strong and the weak ? Must the tenant in scull cases be unceremoniously evicted without his plea being inquired into ? The answer is obviously in the negative. At the same time must he be permitted to protract the delivery of possess on of the leased premises to the I Landlord on a false plea of fraud or collusion or that there was a mechanical grant of permission and thus defeat the very subject of the special procedure provided for the benefit of the landlord in sec. 21 ? The answer must again be in the negative. In our view these two competing claims must be harmonized and the solution lies not in insisting upon service of a prior notice on the tenant b fore the issuance of the warrant of possession to evict him but by insisting upon his approach the leant Controller during the currency of the limited tenancy for adjudication of his pleas no sooner he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission. Either it is a mechanical grantor permission or it is procured by fraud practised by the landlord or it is the result 912 of collusion between two unequals but in each case there is no reason for the tenant to wait till the landlord makes his application for recovery of possession after the expiry of the fixed period under sec. 21 but there is every reason why the tenant should make an i mediate approach to the Rent Controller to have his pleas adjudicated by him as soon as facts and circumstances giving rise to such pleas come to his knowledge or are discovered by him with due diligence. The special procedure provided for the benefit of the landlord in sec. 21 warrants such immediate approach on the part of the tenant. Of course if the tenant aliunde comes to know about landlord 's application for recovery of possession and puts forth his plea of fraud or collusion etc. at that stave the Rent Controller would inquire into such plea but he may run the risk of getting it rejected as an afterthought. There is however no need to imply any obligation on the part of the Rent Controller r to serve a notice on the tenant inviting him to file his objections before issuing the warrant of possession in favour of the landlord. Having regard to the above discussion we are clearly of the view that the High Court Was in error in taking the view that no warrant for recovery of possession under sec. 21 could be issued without serving a notice on the tenant. We hold that the Rent Controller 's order directing the issuance of warrant of possession in favour of the appellant landlord herein and the further proceedings of putting him in position of the suit premises in pursuance thereof were valid and proper and ought not to have been quashed by the High Court. However, since the High Court has remanded the matter back to the Rent Controller for adjudication upon pleas of the respondent tenant we not propose to interfere with that e the order and the adjudication of the objections raised by the respondent talent may be proceeded with and decided in accordance with the law but on the facts of the instant case there was no justification for the direction issued by the High Court that pending such adjudication possession of the premises be restored to the respondent tenant. Admittedly in the instant case long before he applied for recovery of possession under sec. 21 of the Act the appellant had sent two registered notices to the registered notices calling upon it to vacate the, premises as the period of the limited tenancy was about to expire and also because he wanted the premises for his own use and occupation and nothing was done by the respondents and it was only after the warrant of possession had been executed and the landlord got possession of the premises 913 in question that the respondent company approached the High A Court by means of a Writ Petition challenging the issuance of warrant of possession on the ground that no prior notice had been served upon him and that the first order granting permission for limited tenancy was the result of fraud practised by the landlord. Obviously the respondent company has thought fit to raise the plea of fraud belatedly. We, would therefore, quash that part of the High Cortege order which directs restoration of possession of the suit premises to the respondent company during the i of the proceedings before the, Rent Controller and direct that the appellant 's possession of the suit premises which he has secured in pursuance, of the warrant of possession shall not be disturbed till the respondent company objections and or pleas are finally decided. Since the appeal substantially succeeds the respondents are directed to ply the, cost of the appeal to appellants. S.R. Appeal allowed.

The appellant had taken a plot of land on lease under a lease deed for a term of 10 years for M/s Jain Motors. At that time he was only a partner of M/s Jain Motors but later he became its sole owner. The respondent took from the appellant on licence for one year under a deed the suitshed for carrying on work shop business Since he did not vacate the she dafter the expiry of the period the appellant terminated the licence and filed the suit for a mandatory injunction directing the respondent to vacate the premises. The respondent opposed the suit contending that the appellant sub let to him a plot of land and he had raised a new construction thereon and is carrying on workshop business, and that the relationship between the parties was that of landlord and tenant and the suit for mandatory injunction was not maintainable. The trial court dismissed the suit, for mandatory injunction as not maintainable. On appeal, the Additional District Judge held that the relationship between the parties was only one of licensee and that suit for mandatory injunction was maintainable, allowed the appeal decreed the suit and directed the respondent to deliver vacant possession of the shed. In the second appeal, the respondent filed an application for receiving as additional evidence a sale deed dated 27.8.1979 whereby he claimed to have purchased the entire property from its original owner. On a finding called for 185 by the High Court, the trial court found that the respondent had purchased the property from its original owner by that sale deed. The High Court held that after the commencement of the tenancy or the license a tenant or licensee who has purchased the property from its original owner cannot be evicted from that property on the basis of the lease or laciness. The Second appeal was allowed, the judgment and decree of the additional District Judge was set aside and the trial court s decree dismissing the suit was restored. Allowing the Appeal, ^ HELD: 1. There is no merger of the whole property by it original owner in favor of the appellant by reason of the sale of the entire property by too original owner in favor of the respondent or of the license given by the appellant to the respondent which had been revoked prior to the date of the suit. The lease in favor of the appellant continues and under the East Punjab Rent Restrictions Act 1949 even the tenant of a vacant land cannot be evicted therefrom except in accordance with the provisions of that Act. [188F G] K.K Verma & Anr. vs Union of India & Anr., AIR 1954 Bombay 358, Milka Singh vs Diana & Ors., AIR 1964 Jammu & Kashmir 99, relied upon. In the instant case, it has not been shown that the appellant had filed the suit for mandatory injunction after considerable delay which will disentitle him to the discretionary relief. Even if there was some delay, in a case of this kind attempt should be made to avoid multiplicity of suits and the licensor should not be driven to file another suit with all the attendant delay trouble and expense. [189E F] 3. The suit is in effect one for possession though couched in the form of a suit for mandatory injunction as what would be given to the plaintiff in case he succeeds in possession of the property to which he may found to be entitled. Therefore, the appellant should not be denied relief merely because he had couched the plaint in the form of a suit for mandatory injunction. [189G ] 4. The respondent was a licensee and he must be deemed to be always a licensee. It is not open to him, during the subsistence of the licence or in the licence or in the suit for recovery of possession of the property instituted after revocation of the licence to set up title to the property in himself or anyone else. It is his plain duty to surrender possession of the property as a licensee and seek his remedy separately in case he has acquired title to the property subsequently through some other person. He need not do so if he has acquired title to the property from the licensor or from some one else lawfully claiming under him, in which case there would be clear merger. The respondent had not surrendered the possession of the property to the appellant even after the termination of the licence and the institution of the suit. The appellant is, therefore, entitled to recover possession of the property. The respondent is directed to deliver possession of the property to the appellant forthwith failing which it will be open to the appellant to execute the decree and obtain possession. [189H; 190A C] 186

ivil Appeal No. 709 of 1957. Appeal by special leave from the judgment and order dated April 18, 1955, of the Madras High Court in Case Referred No. 25 of 1952. A. V. Viswanatha Sastri and M. section K. Sastri, for the appellant. "M. C. Setalvad, Attorney General for India, R, Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent. November.24. The Judgment of the Court was delivered by 649 GAJENDRAGADKAR, J. The appellant is a firm acting as managing agents of the Janardana Mills Ltd., Coimbatore. It purchased four contiguous plots of land admeasuring 5 acres 26 cents under four sale deeds executed on October 25, 1941, November 15, 1941, June 29, 1942, and November 19, 1942, respectively for a total consideration of Rs. 8,712 15 6. After about five years these properties were sold by the appellant in two lots to the Janardana Mills Ltd. The first lot was sold on September 1, 1947, and the second on November 10, 1947, the total consideration for the two sales being Rs. 52,600. These two sales realised for the appellant a sum of Rs.43,887 0 6 in excess of the purchase price. The Income tax Officer treated the said amount of Rs. 43,887 as the income of the appellant for the assessment year 1948 49, and assessed it to income tax under the head " business ". The officer held that there was no evidence to show that the appellant had purchased the said lands for agricultural purposes or that it had acquired them as an investment. He also found that, since the lands were adjacent to the Janar dana Mills, the appellant must have purchased them solely with a view to sell them to the said mills with a profit. That is why, though the transaction was in the nature of a solitary transaction, it was held that it had all the elements of a business transaction and was thus an adventure in the nature of trade. Against this order of assessment the appellant preferred an appeal to the Appellate Assistant Commissioner. The appellate authority upheld the appellant 's contention that the amount in question was not assessable as it cannot be hold to be income or profit resulting from a profit making scheme, and set aside the order under appeal. The respondent challenged the correctness of this order by taking an appeal against it to the Incometax Appellate Tribunal. The tribunal agreed with the view taken by the Income tax Officer and held that the amount in question was not a capital accretion but a gain made in an adventure in the nature of business 82 650 in carrying out a scheme of profit making. The tribunal rejected the explanations given by the appellant as to why it had purchased the properties and held that the purchase had been made by the appellant solely with a view to sell the said properties at profit to the Janardana Mills. At the instance of the appellant the tribunal then referred to the High Court of Madras the question suggested by it in these words: " whether there was material for the assessment of the sum of Rs. 43,887 being the difference between the purchase and sale price of the four plots of land as income from an adventure in the nature of trade ". This reference was heard by Rajagopalan and Rajagopala Ayyangar, JJ., and the question referred has been answered against the appellant. The High Court has held that the transaction in question was an adventure in the nature of trade and so the respondent was justified in taxing the amount in question under the head " business " for the relevant year. The application for leave made by the appellant was rejected by the High Court. Thereupon the appellant applied for, and obtained, special leave to appeal to this Court. That is how the appeal has been admitted in this Court ; and the only question which it raises for our decision is whether the High Court was right in holding that the transaction in question was an adventure in the nature of trade. We may at this stage brie y indicate the material facts and circumstances found by the tribunal and the inference drawn by it in regard to the character of the transaction in question. The appellant purchased the four plots under four different sale deeds. The first purchase was for Rs. 521 and it covered a piece of land admeasuring 281 cents; the second purchase related to 2 acres 791 cents and the price paid was Rs. 1,250; while the third and the fourth purchases were for Rs. 1,942 and Rs. 5,000 and they covered 28 1/4 cents and 1 acre and 90 cents respectively. The property purchased under the first sale deed was sold on November 10, 1947, for Rs. 2,825 whereas the three remaining properties were sold on September 1, 1947, 651 for Rs. 49,775, the purchaser in both cases being the Janardana Mills Ltd. The purchase of the first item of property by the appellant had been made in the name of Mr. V. G. Raja, assistant manager of the Janardana Mills Ltd., who is the son in law Of G. Venkataswami Naidu, one of the partners of the appellant firm. Naturally when this property was sold to the mills the document was executed by the ostensible owner V. G. Raja. It is not disputed that the purchase in the name of V. G. Raja was benami for the appellant. All the plots which were thus purchased by the appellant piecemeal are contiguous and they adjoin the mills. On the plot purchased on June 29, 1942, there stood a house of six rooms which fetched an annual rent of about Rs. 100; and after deduction of taxes, it left a net income of Rs. 80 per year to the appellant. The other plots are vacant sites and they brought no income to the appellant. During the time that the appellant was in possession of these plots it made no effort to put up any structures on them or to cultivate them; and so it was clear that the only object with which the appellant had purchased these plots was to sell them to the mills at a profit. It was, however, urged by the appellant that the properties had been bought as an investment. This plea was rejected by the tribunal. The tribunal likewise rejected the appellant 's case that it had purchased the plots for building tenements for the labourers working in the Janardana Mills. Alternatively it was urged by the appellant that the Janardana Mills decided to purchase the plots because ' an award passed by an industrial tribunal in June 1947 had recommended that the mills should provide tenements for its labourers. Thus the appellant 's case was that it had not purchased the properties with a view to sell them to the mills and the mills in fact would not have purchased them but for the recommendation made by the award which made it necessary for the mills to purchase the adjoining plots for the purpose of building tenements for its employees. The tribunal was not impressed even by this plea; and so it ultimately held that the plots had been purchased by the appellant wholly and solely, 652 with the idea of selling them at profit to the mills. The tribunal thought that since the appellant was the managing agent of the mills it was in a position to influence the decision of the mills to purchase the properties from it and that was the sole basis for its initial purchase of the plots. On these findings the tribunal reached the conclusion that the sum of Rs. 43,887 was not a capital accretion but was a gain made in the adventure in the nature of business in carrying out the scheme of profit making. The appellant contends that, on the facts and circumstances found in the cage, it is erroneous in law to hold that the transaction in question is an adventure in the nature of trade. There is no doubt that the jurisdiction conferred on the High Court by section 66(1) is limited to entertaining references involving questions of law. If the point raised on reference relates to the construction of a document of title or to the interpretation of the relevant provisions of the statute, it is a pure question of law; and in dealing with it, though the High Court may have due regard for the view taken by the tribunal, its decision would not be fettered by the said view. It is free to adopt such construction of the document or the statute as appears to it reasonable. In some cases, the point sought to be raised on reference may turn out to be a pure question of fact; and if that be so, the finding of fact recorded by the tribunal must be regarded as conclusive in proceedings under section 66(1). If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved. in the case, its correctness or validity is open to challenge in reference proceedings within narrow limits. The assessee or the revenue can contend that the inference has been drawn on considering inadmissible evidence or after excluding admissible and relevant evidence; and, if the High Court is satisfied that the inference is the result of improper admission or exclusion of evidence, it would be justified in examining the correctness of the conclusion. It may also be open to the party to challenge a conclusion of fact drawn by the tribunal on the ground that it is not supported by any legal evidence; or that the impugned conclusion drawn 653 from the relevant facts is not rationally possible; and if such a plea is established, the court may consider whether the conclusion in question is not perverse and should not, therefore, be set aside. It is within these narrow limits that the conclusions of fact recorded by the tribunal can be challenged under section 66(1). Such conclusions can never be challenged on the ground,,, that they are based on misappreciation of evidence. There is yet a third class of cases in which the assessee or the revenue may seek to challenge the correctness of the conclusion reached by the tribunal on the ground that it is a conclusion on a question of mixed law and fact. Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. The need to apply the relevant legal principles tends to confer upon the final conclusion its character of a legal conclusion and that is why it is regarded as a conclusion on a question of mixed law and fact. In dealing with findings on questions of mixed law and fact the High Court would no doubt have to accept the findings of the tribunal on the primary questions of fact; but it is open to the High Court to examine whether the tribunal had applied the relevant legal principles correctly or not; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law. This question has been exhaustively considered by this Court in Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras (1). In this case the appellate tribunal had come to the conclusion that certain sales entered in the books of the appellant company in the names of certain intermediaries, firms and companies, were fictitious and the profits ostensibly earned by them were in fact earned by the appellant which had itself sold the goods to the real purchasers and received the prices. On this finding the tribunal had ordered that the profits received from such sales should be added to the amount shown as profits in the appellant 's books and should be taxed. The appellant 654 applied for a reference to the tribunal under section 66(1) and the High Court of Madras under section 66(2), but his application was rejected. Then it came to this Court by special leave under article 136 and it was urged on its behalf that the tribunal had erred in law in holding that the firms and companies described as the intermediaries were its benamidars and that its application for reference should have been allowed. This plea was rejected by this Court because it was held that the question of benami is purely a question of fact and not a mixed question of law and fact as it does not involve the application of any legal principles for its determination. In dealing with the argument urged by the appellant, this Court has fully considered the true legal position in regard to the limitation of the High Court 's jurisdiction in entertaining references under section 66(1) in the light of several judicial decisions bearing on the point. The ultimate decision of the Court on this part of the case was that " on principles established by authorities only such questions as relate to one or the other of the following matters can be questions of law under section 66(1): (1) the construction of a statute or a document of title (2) the legal effect of the facts found where the point for determination is a mixed question of law and fact; and (3) a finding of fact unsupported by evidence or unreasonable and perverse in nature ". Having regard to this legal position this Court held that the question of benami was a pure question of fact and it could not be agitated under section 66(1). The point about the scope and effect of the provisions of section 66(1)has again been considered by this Court in The Oriental Investment Co. Ltd. vs Commissioner of Income tax, Bombay(1) This was a case on the other side of the line. It was held that whether the appellant 's business amounted to dealing in shares and properties or to investment is a mixed question of law and fact and that the legal effect of the facts found by the tribunal as a result of which the appellant could be treated as a dealer or investor is a question of law. As a result of this conclusion the appeal (1) ; 655 preferred by the appellant was allowed, the order passed by the High Court refusing the appellant 's request for reference was set aside and the case was remitted to it for directing the tribunal to state a case, on the two questions mentioned in the judgment. ' These two decisions bring out clearly the distinction between findings of fact and findings of mixed questions of law and fact. What then is the nature of the question raised before us in the present appeal ? The tribunal and the High Court have found that the transaction in question is an adventure in the nature of trade; and it is the correctness of this view that is challenged in the present appeal. The expression " adventure in the nature of trade" is used by the Act in section 2, sub section (4) which defines business as including any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture. Under section 10, tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him. Thus the appellant would be liable to pay the tax on the relevant amount if it is held that the transaction which brought him this amount was business within the meaning of section 2, sub section (4) and it can be said to be business of the appellant if it is held that it is an adventure in the nature of trade. In other words, in reaching the conclusion that the transaction is an adventure in the nature of trade, the tribunal has to find primary evidentiary facts and then apply the legal principles involved in the expression " adventure in the nature of trade " used by section 2, sub section It is patent that the clause " in the nature of trade " postulates the existence of certain elements in the adventure which in law would invest it with the character of a trade or business; and that would make the question and its decision one of mixed law and fact. This view has been incidentally expressed by this Court in the case of Meenakshi Mills, Madurai (1) in repelling the appellant 's argument based on the decision of the (1) ; 656 House of Lords in Edwards vs Bairstow (1). For the respondent, the learned Attorney General has, however, relied on the fact that the relevant observations in the case of Meenakshi Mills, Madurai, are obiter and he has invited our attention to the decision in the case of Edwards (1) in support of his contention that the judgment of the House of Lords would show that the question about the character of the transaction was ultimately treated as a question of fact. Before we refer to the said decision it may be relevant to observe that there are two ways in which the question may be approached. Even if the conclusion of the tribunal about the character of the transaction is treated as a conclusion on a question of fact, it cannot be ignored that, in arriving at its final conclusion on facts proved, the tribunal has undoubtedly to address itself to the legal requirements associated with the concept of trade or business. Without taking into account such relevant legal principles it would not be possible to decide whether the transaction in question is or is not in the nature of trade. If that be so, the final conclusion of the tribunal can be challenged on the ground that the relevant legal principles have been misapplied by the tribunal in reaching its decision on the point; and such a challenge would be open under section 66(1) because it is a challenge on a ground of law. The same result is achieved from another point of view and that is to treat the final conclusion as one on a mixed question of law and fact. On this view the conclusion is not treated as one on a pure question of fact, and its validity is allowed to be impeached on the ground that it has been based on a misapplication of the true legal principles. It would thus be seen that whether we call the. conclusion in question as one of fact or as one on a question of mixed law and fact, the application of legal principles which is an essential part in the process of reaching the said conclusion is undoubtedly a matter of law and if there has been an error in the application of the said principles it can be challenged as an error of law. The difference then is merely one of form and not substance; and on the whole it is (1) ; ; 657 more convenient to describe the question involved as a mixed question of law and fact. That is the view expressed by this Court in the case of Meenakshi Mills, Madurai (1); and, in our opinion, it avoids any confusion of thought and simplifies the position by treating such questions as analogous to those falling under the category of questions of law. Let us then consider whether the decision of the ' House of Lords in the case of Edwards(2) is inconsistent with this view. In this case the respondents, who were respectively a director of a leather manufacturing company and an employee of a spinning firm, purchased a complete cotton spinning plant in 1946 with the object of selling it as quickly as possible at a profit. They hoped to sell the plant in one lot, but ultimately had to dispose of it in five separate lots over the period from November 1946 to February 1948. Assessments to income tax in respect of profits arising from this transaction were made under Case I of Schedule D for the years 1946 47 and 1947 48. On the matter being taken before the Chancery Division, it was held in accordance with the earlier decisions of the Court of Appeal in Cooper vs Stubbs (3) and Leeming vs Jones (4) that the finding of the General Commissioners was a finding of fact which could not be challenged in appeal. The attention of the court was drawn to the different view expressed in a Scottish case, Commissioners of Inland Revenue vs Fraser (5) where the Court of Session had held that it was at liberty to treat the matter as a mixed question of fact and law, and in fact it had overruled the finding of the General Commissioners in that behalf " It does not seem to me ", observed Upjohn, J., " that in this court I am at liberty to follow the practice of the Scottish Court, attractive though it would be to do so, if the matter was res integra ". However, since apparently the finding of the General Commissioners did not appear to the court to be satisfactory, the matter was remitted to them with an intimation that they should consider (2) [1956]A.C.14;; (4) (1) [1956)S.C.R. 691. (3) (1925) To Tax Cas. 29. (5) 83 658 the question whether the transaction, being an isolated transaction, there was nevertheless an adventure in the nature of trade which was assessable to tax under Case 1 of Schedule D. The Commissioners were directed to hear further arguments on this point before stating a supplementary case. After remand, the Commissioners adhered to their earlier view and stated that they were of opinion that the transaction was an isolated case and not taxable and so they discharged the assessments. With the statement of this supplementary case, the matter was argued before the Chancery Division again. Wynn Parry, J., who delivered the judgment on this occasion referred to the earlier decisions of the Court of Appeal and held that " on those authorities prima facie the matter is concluded by the decision of the Commissioners that the transaction, the subject matter of the case, was not an adventure in the nature of trade ". Then the learned judge examined the question as to whether the decision of the Commissioners can be said to be perverse; and held that it could not be so characterised. In the result the appeal was dismissed. The question then reached the Court of Appeal but the result was the same. The Court of Appeal observed that the earlier decisions were binding on it no less than the Court of First Instance ; and so it held that the conclusion of the Commissioners was a finding of fact which the court cannot disturb. However, it is apparent from the discussion that took place when the court granted leave to. the Crown to take the matter to the House of Lords that the court did not feel happy about the correctness of the finding made by the General Commissioners in the case. That is how the matter reached the House of Lords. The facts in this case were so clearly against the finding of the Commissioners that Viscount Simonds made it clear at the outset that in his opinion, " what. ever test is adopted, that is, whether the finding that the transaction was not an adventure in the nature of trade is to be regarded as a pure finding of fact or as the determination of the question of law or of mixed law and fact, the same result would be reached in this 659 case. The determination cannot stand. This appeal must be allowed and the assessments must be confirmed". It is in the light of this emphatic statement that the rest of the judgment of Viscount Simonds must be considered. He referred to the divergence of views expressed in English and Scottish decisions and his conclusion was that " if and so far as there is any,, divergence between the English and Scottish approach it is the former which is supported by the previous authority of this House to which reference has been made "; but he analysed the position involved in both the approaches and held that the difference between them was not of substance. " To say that a transaction is or is not an adventure in the nature of trade ", observed Viscount Simonds, " is to say that it has or has not the characteristics which distinguish such an adventure but it is a question of law not of fact what are those characteristics, or, in other words, what the statutory language means. It follows that the inference can only be regarded as an inference of fact if it is assumed that the Tribunal which makes it is rightly directed in law what the characteristics are and that, I think, is the assumption that is made ". Dealing with the merits of the case, Viscount Simonds observed that " sometimes, as in the case as it now comes before the Court where all the admitted or found facts point one way and the inference is the other way, it can only be a matter of conjecture why that inference has been made. In such a case it is easy either to say that the Commissioners have made a wrong inference of fact because they have misdirected themselves in law or to take a short cut and say that they have made a wrong inference of law, and I venture to doubt whether there is more than this in the divergence between the two jurisdictions which has so much agitated the Revenue authorities ". Lord Radcliffe substantially agreed with this view. He also referred to the divergence of views expressed in Scottish and English decisions and observed that " the true position of the Court in all these cases can be shortly stated. If a party to a hearing before the Commissioners expresses dissatisfaction with their determination 660 as being erroneous in point of law,it is for them to state a case and in the body of it to set out the facts that they have found as well as their determination. I do not think that inferences drawn from other facts are incapable of themselves being findings of fact, although there is value in the distinction between primary facts and inferences drawn from them. When the case comes before the Court, it is its duty to examine the determination having regard to its knowledge of the relevant law. If a case contains anything ex facie which is bad in point of law and which ' bears upon the determination, it is obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no persons acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances,too, the Court must intervene ". Lord Radcliffe remarked that the English courts had been led to be rather overready to treat these questions as pure questions of fact and added "if so I would say with very great respect that I think it a pity that such a tendency should persist ". Therefore, it seems to us that in effect this decision is not inconsistent with the view we have taken about the character of the question raised before us in the present appeal. As we have already indicated, to avoid confusion or unnecessary complications it would be safer and more convenient to describe the question about the character of the transaction in the context as a question of mixed law and fact. The learned Attorney General has invited our attentionto the fact that the form in which the question referred tothe High Court has been framed in the present case seems to assume that the impugned finding is a finding of fact. It is only in regard to a finding of fact that a question can be properly framed as to whether there was material to support the said finding. We would, therefore, like to add that it would be more appropriate to frame the question in this form: whether, on the facts and circumstances proved in the case, the inference that the transaction in 661 question is an adventure in the nature of trade is in law justified ? In substance, that is the basis on which the question has been framed by the respondent and considered by the High Court. This question has been the subject matter of several judicial decisions; and in dealing with it all the judges appear to be agreed that no principle can be evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be considered. When section 2, sub section (4), refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or business. It is allied to transactions that constitute trade or business but may not be trade or business itself. It is characterised by some of the essential features that make up trade or business but not by all of them; and so, even an isolated transaction can satisfy the description of an adventure in the nature of trade. Sometimes it is said that a single plunge in the waters of trade may partake of the character of an adventure in the nature of trade. This statement may be true; but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade. In other words, at least some of the essential features of trade must be present in the isolated or single transaction. On the other hand, it is sometimes said that the appearance of one swallow does not make a summer. This may be true if, in the metaphor, summer represents trade; but it may not be true if summer represents an adventure in the nature of trade because, when the section refers to an adventure in the nature of trade, it is obviously referring to transactions which individually cannot themselves be described as trade or business but are essentially of such a similar character that they are treated as in the nature of trade. It was faintly argued for the appellant that it would be difficult to regard a single or an isolated transaction as one in the nature of trade because income resulting from it would inevitably lack the characteristics attributed to it by Sir George Loundes in Commissioner of I. T. vs Shaw Wallace and Company(1). 'Income their Lordships (1) (1932) L. R. 59 I.A. 206. 662 think ", observed Sir George Loundes, " in this Act connotes a periodical monetary return coming in with some sort of regularity or expected regularity from definite sources Then the learned judge proceeded to observe that income has been likened pictorially to the fruit of a tree, or the crop of a field. It is essentially the produce of something which is often loosely spoken of as capital". In our opinion, it would be unreasonable to apply the test involved in the use of this pictorial language to the decision of the question as to whether a single or an isolated transaction can be regarded as an adventure in the nature of trade. In this connection we may, with respect, refer to the comment made by Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of I. P., Bihar and Orissa (1) that " it is clear that such picturesque similes cannot be used to limit the true character of income in general ". We are inclined to think that, in dealing with the very prosaic and sometimes complex questions arising under the Income tax Act, use of metaphors, however poetic and picturesque, may not help to clarify the position but may instead introduce an unnecessary element of confusion or doubt. As we have already observed it is impossible to evolve any formula which can be applied in determining the character of isolated transactions which come before the courts in tax proceedings. It would besides be inexpedient to make any attempt to evolve such a rule or formula. Generally speak ing, it would not be difficult to decide whether a given transaction is an adventure in the nature of trade or not. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade. Cases of realisation of investments consisting Of purchase and resale, though profitable, are clearly outside the doma in of adventures in the nature of trade. In deciding (1) (1943) L.R. 70 I.A, 180, 193. 663 the character of such transactions several factors are treated as relevant. Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidential to it ? Affirmative answers to these questions may furnish relevant data for determining the character of the transaction. What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold ? If the commodity purchased is generally the subject matter of trade, and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or Goverment. Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby made it more readily resaleable ? What were the incidents associated with the purchase and resale ? Were they similar to the operations usually associated with trade or business ? Are the transactions of purchase and sale repeated ? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture ? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction ; and if such a claim is upheld that would be a factor against the contention that the transaction is in the nature of trade. These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any of them may help the court to draw a similar inference; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction; and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us. In this connection it would be relevant to refer to another test which is sometimes applied in determining the character of the transaction. Was the purchase made with the intention to resell it at a profit ? It is often said that a transaction of purchase followed by resale can either be an investment or an adventure in the nature of trade. There is no middle course and no half way house. This statement may be broadly true; and so some judicial decisions apply the test of the initial intention to resell in distinguishing adventures in the nature of trade from transactions of investment. Even in the application of this test distinction will have to be made between initial intention to resell at a profit which is present but not dominant or sole; in other words, cases do often arise 'Where the purchaser may be willing and may intend to sell the property purchased at profit, but he would also intend and be willing to hold and enjoy it if a really high price is not offered. The intention to resell may in such cases be coupled with the intention to hold the property. Cases may, however, arise where the purchase has been made solely and exclus ively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself 'or otherwise enjoying or using it. The presence of such an intention is no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. We thus come back to the same position and that is that the decision about the character of a transaction in the context cannot be based solely on the application of any abstract rule, principle or test and 665 m st in every case depend upon all the relevant facts and circumstances. Let us now consider some of the decisions to which our attention was invited. Normally the purchase of land represents investment of money in land; but where a company is formed for the purpose inter alia of acquiring and reselling mining property, and after acquiring and working various property, it resells the whole to a second company receiving payment in fully paid shares of latter company, it was held in The Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes) (1) that the difference between the purchase price and the value of the shares for which the property was exchanged is a profit assessable to income tax. In this case Lord Justice Clerk has observed that "it is quite a well settled principle in dealing with the question of assessment of Income Tax, that where the owner of an ordinary in. vestment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit in the sense of Schedule D of the Income Tax Act "; and he added that " it is equally well established that the enhanced value obtained from realisation or conversion of security may be so assessable where what is done is not merely a realisation or a change of investment but an act done in what is truly the carrying on or carrying out of a business ". This was a clear case where the company was held to be carrying on the business of purchase and sale of mining property. Where land purchased, and subsequently developed, with the object of making it more readily saleable, was sold at a profit, the intention of the assessee was treated to be not to hold the land as an investment, but as a trading asset in Cayzer, Irvine and Co. Ltd. vs Commissioners of Inland Revenue(2). In his judgment, Lord President Normand referred to the large development expenditure incurred by the assessee to improve the property and observed that it appeared to be on the whole consistent with the idea that it was carrying on a trade in land rather than with the idea that (1) (2) 84 666 it was throughout holding it as an investment only to be realised if at all when it desired to meet some financial need. In repelling the plea that the transaction showed investment, the Lord President added that the Commissioners " with their knowledge and experience of these matters, have come to the conclusion that the intention was to hold this estate not as an investment but as a trading asset and in, order to develop it and to market it ". It would thus appear that the conduct of the assessee in incurring a large amount of expenditure on the development of land consisting mainly in the construction of roads and sewers was held to justify the inference that the transaction was an adventure in the nature of trade, though the property purchased and sold was land. In the Commissioner 's of Inland Revenue vs Livingston (1) the assessees respondents were a ship repairer, a blacksmith and a fish salesmen 's employee; they purchased as a joint venture a cargo vessel with a view to converting it into a steam drifter and selling it. They were not connected in business and they had never previously bought a ship. After the ship was purchased, extensive repairs and alterations were carried out by the orders of the respondents and the ship was then sold at a profit. It was held that the profit arising from the transaction was assessable to income tax under Case I of Schedule D. Lord President Clyde said that in deciding whether the profits in question were taxable, regard must be had to the character and circumstances of the particular venture. " If the venture was one consisting simply in an isolated purchase of some article against an expected rise in price and, a subsequent sale ", observed the Lord President, " it might be impossible to say that the venture was in the nature of trade ". According to him the test to be applied would be whether the operations involved in the transaction are of the same kind and carried on in the same way as those which are characteristic of ordinary trading in the line of business in which the venture was made. If they are, there was no reason why the venture should not be (1), 667 regarded as in the nature of trade merely because it was a single venture which took only three months to complete. Reference was then made to the steps taken ,by the assessees to buy a secondhand vessel and to ,convert into a marketable drifter; and it was stated that the profit made by the venture arose not from the mere appreciation of the capital value of an isolated purchase for resale but from the expenditure on the subject purchased of money laid out upon it for the purpose of making it marketable at a profit. " That ", said the Lord President, " was the very essence of trade ". It was in this connection that the Lord President observed that the appearance of a single swallow does not make a summer. It would thus be noticed that this decision was based substantially on the ground that after the ship was purchased the assessees bestowed labour and money on converting it into a marketable drifter and that imprinted upon the transaction the character of trade. It is true that some of the observations made by the Lord President would indicate that from the intention to resell at a profit it would be impossible to attribute to the transaction the character of an adventure in the nature of trade. However, as we will presently point out, these observations have been explained by the Lord President himself subsequently in Rutledge vs Commissioners of Inland Revenue (1); and it is to this case that we will now refer. In the case of Rutledge(2) the appellant was a moneylender who was also interested in a cinema company in 1920. Since that time he had been interested ill various businesses. He was in Berlin in 1920 on business connected with the cinema company where he was offered an opportunity of purchasing very cheaply a large quantity of paper. He effected the purchase and within a short time after his return to England he sold the whole consignment to one person at a considerable profit. This profit 'Was held liable to assessment to income tax, Schedule D, and to excess profits duty as being profit of an adventure in the nature of trade. This assessment was the subject matter (1) 668 of an appeal before the Court of Appeal, and on behalf of the appellant the observations made by the Lord President Clyde in the case of Livingston (1) were pressed into service; but the Lord President did not accept the plea based on his earlier observations because he said that the said observations were intended to show that a single transaction fell far short of constituting a dealer 's trade; whereas, in the present case, the question was whether the transaction was an adventure in the nature of trade. The Lord President agreed that mere intention is not enough to invest a transaction with the character of trade but he added that, if the purchase is made for no purpose except that of resale at a profit, there seems little difficulty in arriving at the conclusion that the deal was in the nature of trade though it may be wholly insufficient to constitute by itself a trade. Then he referred to the illustration which he had cited in his earlier decision about the purchase of a picture and observed that if a picture was purchased to embellish the purchaser 's own house for a time, he might sell it if the anticipated appreciation in the value ultimately realised itself. " In such a case ", says the Lord President, " I pointed out that it might be impossible to affirm that the purchase and sale constituted an adventure in the nature of trade although, again, the crisis of judgment might turn on the particular circumstances ". It would thus be clear that the strong observations made by the Lord President in the case of Livingston (1) must be considered in the light of the clarification made by him in this case. Lord Sands, who agreed with the Lord President has thus observed: "Your Lordship in the Chair has indicated that there may be cases of purchase and resale at a profit where the transaction cannot be said to be in the nature of trade. In particular, this may be the case where there is no definite intention of reselling when the purchase is made ". This decision, therefore, shows that where the assessee purchased a very large quantity of paper with the intention to sell it at profit the transaction was treated as an adventure in the nature of trade. It was held (1) 669 to be a most successful adventure on the part of the assessee and having regard to the circumstances attending the purchase and sale it was treated as an adventure in the nature of trade. In T. Beynon & Co. Ltd. vs Ogg (1) the court was dealing with the case of a company which was carrying on business as coal merchants, ship and insurance brokers and as sole selling agent for various colliery companies in which latter capacity it was a part of its duty to purchase wagons on its own account as a speculation and subsequently to dispose of them at a profit. The assessee contended that the transaction of purchase and sale being an isolated one the profit was in the nature of a capital profit on the sale of an investment and should be excluded in computing its liability to income tax. The court held that the profit realised was made in the operation of the company 's business and was properly included in the computation of company 's profits for assessment under Schedule D. It appears that, in 1914, acting as agent on behalf of two colliery , companies, the assessee had purchased two lots of wagons each of which consisted of 250 wagons. During the course of negotiations the assessee, foreseeing that the cost of material and wages was likely to increase, determined to buy a, third lot of 250 wagons for itself and did eventually purchase it. In July 1915 the assessee sold this lot and made a profit of pound 2,500. The question which arose for decision was whether this sum was chargeable to incometax. In dealing with the argument that as an isolated transaction the profit arising out of it was not chargeable to tax, Sankey, J., observed that he thought " in most cases an insolated transaction does not fall to be chargeable ". But he added " you have to consider the transaction and you cannot lay it down as a matter of law without regard to the circumstances that in this case the pound, 2,500 is not chargeable ". Then the learned judge considered that the number of wagons purchased was large and held that the other circumstances attending the purchase and sale of the said wagons showed that this transaction was a (1) 670 transaction, and this profit was a profit " with the result that it made the operation of the assessee in that behalf its business. The learned judge ' however, added a word of caution that he did not think it desirable to lay down any rule as to where the line ought to be drawn, and that it was not even possible to lay down such a rule. " But ", said the learned judge, " it is perfectly easy to say whether Case A or Case B falls on the one side or the other ". In the Balgownie Land Trust, Ltd. vs The Commissioners of Inland Revenue (1) the owner of a landed estate, at his death, had left his estate to trustees with a direction to realise. The trustees were not successful in their efforts to sell the estate in the market. So they formed a company with general powers to deal in real property ' and transferred the estate to this company in exchange for shares which were allotted to the beneficiaries under the trust and were, at the date of the appeal still mainly held by those beneficiaries or their representatives. Soon after its incorporation the purchaser company made a substantial purchase of some other property acquired by borrowing on the security of the original estate. The company received rents and paid a regular dividend on its capital. In 1921 and the following years parts of the original estate were sold and in 1925 the whole of the additional property was sold. When the profits realised by the sales were taxed under Schedule D for the year 1926 27, the assessee contended that the transactions in question were not in the nature of trade and the profits arising therefrom cannot be taxed. This contention was negatived by the General Commissioners whereupon the assessee appealed. Lord President Clyde described the problem raised by the assessee as one of. the most familiar problems under Case I of Schedule D and ob. served that " a single plunge may be enough provided it is shown to the satisfaction of the Court that the plunge is made in the waters of trade; but the sale of a piece of property if that is all that is involved in the plunge may easily fall short of anything in the nature of trade. Transactions of sale are characteristic (1) 671 of trade, but they are not necessarily distinctive of it; much depends on the circumstances". Then the conduct of the assessee after its incorporation was considered and it was held that the purchase of the property in substance amounted to a launching forth albeit, not in a very large scale. In the result the finding of the Commissioners was confirmed and the profit, Was held liable to tax. In Martin vs Lowry (1) the House of Lords was considering a case of a wholesale agricultural machinery merchant who had never had any connection with the linen trade purchasing from the government the whole of its surplus stock of aeroplane linen (some 44 million yards) at a fixed price per yard. The contract of purchase provided in detail as to delivery, and the payment of the price. The purchaser failed in his original attempt to sell the whole of the linen to Belfast linen manufacturers outright. Then he sought to bring pressure on them by placing the linen for sale to the public. It led to an extensive advertising 'campaign, renting of offices and engaging advertising manager, a linen expert as adviser and a staff of clerks. Sales then proceeded rapidly and soon the whole stocks were disposed of. In all 4,279 orders were received from 1,280 purchasers. Assessment to income tax and excess profits duty were made upon the assessee in respect of profits of the transaction. It was held that the dealings of the assessee in linen constituted the carrying on of a trade of which the profits were chargeable to income tax and excess profits duty. One of the points raised before the House of Lords was that the assessee did not carry on trade or business but only engaged in a single adventure not involving trading operation. In rejecting this contention, Viscount Cave, L. C., observed that " the Commissioners have found as a fact that he did carry on trade, and they set out in the Case ample material upon which they could come to that conclusion ". He added that, indeed, having regard to the methods adopted for the resale of the linen, to the number of operations into which the assessee entered and to the time occupied by (1) 672 the resale, he did not himself see how they could have come to any other conclusion. The other point raised in the appeal was that the profits in question did not come within the description of annual profits or ,gains but we are not concerned with that point. In F. A. Lindsay, A. E. Woodward and W. Hiscox vs Commissioners of Inland Revenue (1) the appellant L, a wine merchant, had on hand a large quantity of American rye whisky. He invited the appellants W & H who were also engaged in the wine trade to join with him in a venture of shipping the whisky to the United States. It was agreed that W & H should contribute certain sums towards expenses and that the profits should be shared in certain proportions. agreement was not reduced to writing. The shipping of the whisky was arranged by L with consultation with W & H and was carried out gradually over a period of two years. From time to time W & H met L who told them that the whisky had been successfully shipped to the United States and sold there profitably. Subsequently the appellants decided to discontinue the export of whisky and to employ the monies which they had accumulated in the purchase with a view to resale of a wine business in Portugal. In respect of the profits made by the appellants from the sale of wine an assessment was made on them jointly for 1922 23. The Special Commissioners found that a partnership or joint venture subsisted between the appellants and that the profits of the sales of whisky were assessable to income tax. The Lord President Clyde rejected the appellant 's contention and observed that " the nature of the transaction apart from the fraudulent breaches of law which were inherent in it was neither more nor less than the commercial disposal of a quantity of rye whisky ". In point of fact the disposal was not effected by a single transaction but extended over a year and more; and so it could not fall outside the sphere of trade. This was a clear case where a large number of distinctive features of trade were associated with the transaction. (1) 673 The transaction of the purchase and sale of whisky was again brought before the court for its decision in the Commissioners of Inland Revenue vs Fraser (1). In this case the assessee, a woodcutter, bought through an agent for resale whisky in bond for pound 407. Nearly three years thereafter the whisky was sold at a profit for pound, 1,131. This was the assessee 's sole dealing in whisky. He had no special knowledge of the trade and he did not take delivery of the whisky nor did he have it blended and advertised. Even so, it was held that the transaction was an adventure in the nature of trade. It may be mentioned that when the matter was first taken before the Commissioners they took the view that an adventure in the nature of trade had not been carried on by the assessee, that merely an investment had been made and subsequently realised and so the profit was not assessable to income tax. This view was, however, reversed by the First Division of the Court of Session and it was held that in coming to the conclusion the Commissioners had misdirected themselves as to the meaning of " being engaged in an adventure in the nature of trade ". The Lord President Normand conceded that it would be extremely difficult to hold that a single transaction amounted to a trade but he added that it may be much less difficult to hold that a single transaction was an adventure in the nature of trade. " There was much discussion ", observed the Lord President, " as to the criterion which the court should apply. I doubt if it would be possible to formulate a single criterion. " The following observations made by the Lord President in this connection may be usefully quoted: " It is in general more easy to hold that a single transaction entered into by an individual in the line of his own trade (although not part and parcel of his ordinary business) is an adventure in the nature of trade than to hold that a transaction entered into by an individual outside the line of his own trade or occupation is an adventure in the nature of trade. (1) 85 674 But what is a good deal more important is the nature of the transaction with reference to the commodity dealt in. The individual who enters into a purchase of an article or commodity may have in view the resale of it at a profit, and yet it may be that that is not the only purpose for which he purchased the article or the commodity, nor the only purpose to which he might turn it if favourable opportunity of sale does not occur. In some of the cases the purchase of a picture has been given as an illustration. An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or after wards that the possession of the picture will give him aesthetic enjoyment if he is unable ultimately, or at his chosen time, to realise it at a profit. A man may purchase stocks and shares with a view to selling them at an early date at a profit, but, if he does so, he is purchasing something which is itself an investment, a potential source of revenue to him while he holds it. A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he continues to hold it ' If he continues to hold it, there may be also a certain pride of possession. But the purchaser of a large quantity of a commodity like whisky, greatly in excess of what could be used by himself, his family and friends, a commodity which yields no pride of possession, which cannot be turned to account except by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade; and I can find no single fact among those stated by the Commissioners which in any way traverses that view. In my opinion the fact that the transaction was not in the way of business (whatever it was) of the Respondent in no way alters the character which almost necessarily belongs to a transaction like this. Most important of all, the actual dealings of the Respondent with the whisky were exactly of the kind that take place in ordinary trade. " These observations indicate some of the important considerations which are to be borne in mind in determining the character of a single transaction. 675 We may now refer to the decision of the House of Lords in Leeming vs Jones (1). In this case the appellant was a member of a syndicate of four persons formed to acquire an option over a rubber estate with a view to resell it at a profit. The option was secured but the estate was considered too small for a resale to a company for public floatation. An option over another adjoining estate was accordingly secured and it was decided to resell the two estates to a public company to be formed for the purpose. Another member of the syndicate undertook to arrange for the promotion of this company. The syndicate 's total receipts resulting from the transactions in respect of the estates amounted to pound 3,000 and the balance remaining, after deduction of certain expenses, was divided between the members. The appellant was assessed to income tax, Schedule D, in respect of his share. The General Commissioners held that the appellant acquired the property or interest in the property in question with the sole object of turning it over again at a profit and that he at no time had any intention of holding it as an investment. That is why they confirmed the assessment. After the case was heard before the King 's Bench Division it was remitted to the General Commissioners for a finding as to whether there was or was not a concern in the nature of trade. The Commissioners then found that the transaction in question was not a concern in the nature of trade and that there was no liability to assessment. It may be pointed out that in remitting the case for the re consideration of the General Commissioners, Rowlatt, J., had observed that it was quite clear that what the Commissioners had got to find was whether there was a concern in the nature of trade and all that they had found was that the property was acquired with the sole object of turning it over again at a profit and without any intention of holding it as an investment. " That describes ", said Rowlatt, J., " what a man does if he buys a picture that he sees going cheap at Christie 's, because he knows that in a month he will sell it again at Christie 's That ", according to (1) 676 the learned judge, " is not carrying on trade " and " so what the Commissioners must do is to say, one way or the other, was this, I will not say carrying on a trade, but was it a speculation or an adventure in the nature of trade ". The learned judge to doubt added that he did not indicate which way the finding ought to be, but he commended the Commissioners to consider what took place in the nature of organising the speculation, maturing the property and disposing of the property, and when they have considered all that, to say whether they think it was an adventure in the nature of trade or not. It is thus clear that Rowlatt, J., indicated clearly though in cautious words what he thought was the true nature of the transaction made. Even so, on reconsideration of the matter the Commissioners returned a finding in favour of the assessee. After the finding was returned Rowlatt, J., held that he must abide by his own decision in Pearm vs Miller (1) and so the appeal was allowed. The matter was then taken to the Court of Appeal where the revised finding of the Commissioners was treated as a finding on a question of fact not open to challenge and the point which was considered at length was whether even if the transaction was not an adventure in the nature of trade, could the profit resulting from it be taxed under Case VI? The Master of the Rolls Lord Hanworth traced the history of the dispute, mentioned how Mr. Justice Rowlatt had indicated to the Commissioners what they had to consider in determin ing the question remitted to them and observed that " Mr Justice Rowlatt, and I think this Court, might perhaps have taken the course of saying that having regard to what he had called attention to in this case, the particular facts, of organising the speculation, of maturing the property, and the diligence in discovering a second property to add to the first, and the disposing of the property, there ought to be and there must be a finding that it was an adventure in the nature of trade; but Mr. Justice Rowlatt withheld his hand from so doing and I think he was right, for however strongly one may feel as to the facts, the facts (1) 677 are for the decision of the Commissioners ". It would thus be clear that the decision of the Commissioners appeared both to Rowlatt, J., and the Court of Appeal to be erroneous. Even so, they refused to interfere with it on the ground that it was a decision on a question of fact. We may, with respect, recall that it was in regard to this approach that Lord Radcliffe observed in the case of Edwards (1) that " it was a pity that such a tendency should persist to treat the findings of the Commissioners on the question as to the character of the transaction as conclusive ". In dealing wit the question as to whether if Case I did not apply Case VI could apply, Lord Justice Lawrence observed that " in the case of an isolated transaction of purchase and resale of property there is really no middle course open. It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property ". The Court of Appeal held that if the transaction did not fall in Case. It was difficult to see how it could fall under Case VI. The discussion on this part of the case is, however, not relevant for our purpose. This decision of the Court of Appeal was taken before the House of Lords and the question debated before the House of Lords was about the application of Case VI to the transaction. The House of Lords affirmed the view taken by the Court of Appeal and held that " Case VI was inapplicable because Case VI neces sarily refers to the words of Schedule D, that is to say, it must be a case of annual profits and gains and those words again are ruled by the first section of the Act which says that when an Act indicates that income tax shall be charged for any year at any rate the tax at that rate shall be charged in respect of the profits and gains according to the Schedules ". Lord Buckmaster agreed with the observations of Lord Justice Lawrence that there can be no middle course open in such cases. Viscount Dunedin, in concurring with the opinion of Lord Buckmaster, dealt with the several arguments urged by the Crown but the observations made by him with regard to the last argument are relevant for our purpose. " The last argument of the (1) ; ; 678 counsel for the Crown ", observed Viscount Dunedin, was that there was a finding that the respondent never meant to hold the land bought as an investment. The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or concern in the nature of trade in respect of his investment but per se it leads to no conclusion whatever ". According to Viscount Dunedin, recourse to Case VI ignores the fact that it had been settled again and again that Case VI does not suggest that anything that is a profit or gain falls to be taxed. The observations made by Viscount Dunedin were considered in the Commissioners of Inland Revenue vs Reinhold (1). We ought to add that the appellant has placed strong reliance on this decision. In this case, the respondent was a director of a company carrying on a business of ware house men; he bought four houses in January 1945 and sold them at a profit in December 1947. He admitted that he had bought the property with a view to resale and had instructed his agents to sell whenever a suitable opportunity arose. The profits made by him on resale were assessed to tax. On appeal before the General Commissioners he contended that the profit on resale was not taxable. The Crown urged that the transaction was an adventure in the nature of trade and that profits arising therefrom were chargeable to Ax. The General Commissioners being equally divided allowed the appeal and discharged the assessment. It was on these facts that the matter was then taken before the First Division of the Court of Session and it was urged on behalf of the Crown that the initial intention of the assessee clearly was to sell the property at a profit and so the view taken by the General Commissioners about the character of the transaction was erroneous. This argument was, however, rejected and the order of discharge passed by the General Commissioners was confirmed. When the Crown referred to the observations of Lord Dunedin in the case of Leeming (2) which we have (1) (2) 679 already cited, Lord Carmont observed that he did not wish to read the said passage out of its context and without regard to the facts of the case then under consideration. Then Lord Carmont added that though the language used by Lord Dunedin " may cover the purchase of houses" it " would not cover a situation in which a purchaser bought a commodity which from G its nature can give no annual return ". "This comment of mine ", said Lord Carmont, " is just another way of saying that certain transactions show inherently that they are not investments but incursions into the realm of trade or adventures of that nature Then reference was made to the fact that the assessee was a warehouse company director and not a property agent or speculator and that the only purchases of property with which he was concerned were two separated by ten years and that the first heritage was acquired without the intention to sell, which only arose fortuitously. His Lordship then put his conclusion in this way: "I would therefore say that the Commissioners of Inland Revenue have failed to prove and the onus is on them the case they sought to make out". According to Lord Carmont, Lord Dunedin 's observations do not suggest that the initial declaration of intention per se leads to the conclusion that the transaction was in the nature of trade. He thought that much more was required to show that the assessee was engaged in an adventure in the nature of trade than was proved in the case before the court. Lord Russell, who concurred with this opinion, began with the observation that " prima facie the difference of opinion among the General Commissioners suggests that the case is a narrow one and that the onus on the appellants of showing that the transaction was an adventure in the nature of trade is not a light one". Lord Russell then mentioned the argument of the Lord Advocate that if a person buys anything with a view to sale that is a transaction in the nature of trade because the purpose of the acquisition in the mind of the purchaser is all important and conclusive; and that the nature of the thing purchased and the other surrounding circumstances do not 680 and cannot operate so as to render the transaction other than an adventure in the nature of trade, and observed that in his opinion the argument so formulated " is too absolute and is not supported by the judicial pronouncements on which it was sought to be raised ". He then referred to the variety of circumstances which are or may be relevant to the determination of such a question; and he concluded with the observation that the appellants had not discharged the burden of showing that the transaction was an adventure in the nature of trade. Lord Keith also took the same view and stated that " the facts were, in his opinion, insufficient to establish that this was an adventure in the nature of trade ". This case was no doubt a case on the border line; and if we may say so with respect it was perhaps nearer an adventure in the nature of trade than otherwise. It would not be unreasonable to suggest that, in this case, if the Commissioners had found that the transaction was an adventure in the nature of trade, the court would probably not have interfered with the said conclusion; but the Commissioners were equally divided and so the assessment had been discharged by them. It was under these circumstances that the point about the onus of proof became a matter of substance; and, as we have already pointed out, all tile learned judges have emphasized that the onus had not been discharged and that no case had been made out for reversing the order of discharge passed by the Commissioners. However that may be, it would, we think, be unsafe to treat this case as laying down any general proposition the application of which would assist the appellant before us. We would also like to add that there can be no doubt that Lord Russell 's criticism against the contention raised by the Lord Advocate was fully justified because the contention as raised clearly overstated the significance and effect of the initial intention. As we have already pointed out, if it is shown that, in purchasing the commodity in question, the assessee was actuated by the sole intention to sell it at a profit, that no doubt is a relevant circumstance which would raise a strong presumption that the 681 purchase and subsequent sale are an adventure in the nature of trade; but the said presumption is not conclusive and it may be rebutted or offset by other relevant circumstances. What then are the relevant facts in the present case ? The property purchased and resold is land and it must be conceded in favour of the appellant that land is generally the subject matter of investment. It is contended by Mr. Viswanatha Sastri that the four purchases made by the appellant represent nothing more than an investment and if by resale some profit was realised that cannot impress the transaction with the character of an adventure in the nature of trade. The appellant, however, is a firm and it was not a part of its ordinary business to make investment in lands. Besides, when the first purchase was made it is difficult to treat it as a matter of investment. The property was a small piece of 28 1/4 cents and it could yield no return whatever to the purchaser. It is clear that this purchase was the first step taken by the appellant in execution of a well considered plan to acquire open plots near the mills and the whole basis for the plan was to sell the said lands to the mills at a profit. , Just as the conduct of the purchaser subsequent to the purchase of a commodity in improving or converting it so as to make it more readily resaleable is a relevant factor in determining the character of the transaction, so would his conduct prior to the purchase be relevant if it shows a design and a purpose. As and when plots adjoining the mills were available for sale, the appellant carried out his plan and consolidated his holding of the said plots. The appellant is the managing agent of the Janardana Mills and probably it was first thought that purchasing the plots in its own name and selling them to the mills may invite criticism and so the first purchase was made by the appellant in the name of its benamidar V. G. Raja. Apparently the appellant changed its mind and took the subsequent sale deeds in its own name. The conduct of the appellant in regard to these plots subsequent to their 86 682 purchase clearly shows that it was not interested in obtaining any return from them. No doubt the appellant sought to explain its purpose on the ground that it wanted to build tenements for the employees of the mills; but it had taken no steps in that behalf for the whole of the period during which the plots remained in its possession. Besides, it would not be easy to assume in the case of a firm like the appellant that the acquisition of the open plots could involve any pride of possession to the purchaser. It is really not one transaction of purchase and resale. It is a series of four transactions undertaken by the appellant in pursuance of a scheme and it was after the appellant had consolidated its holdings that at a convenient time it sold the lands to the Janardana Mills in two lots. When the tribunal found that, as the managing agent of the mills, the appellant was in a position to influence the mills to purchase its properties its view cannot be challenged as unreasonable. If the property had been purchased by the appellant as a matter of investment it would have tried either to cultivate the land, or to build on it; but the appellant did neither and just allowed the property to remain unutilised except for the net rent of Rs. 80 per annum which it received from the house on one of the plots. The reason given by the appellant for the purchase of the properties by the mills has been rejected by the tribunal; and so when the mills purchased the properties it is not shown that the sale was occasioned by any special necessity at the time. In the circumstances of the case the tribunal was obviously right in inferring that the appellant knew that it would be able to sell the lands to the mills whenever it thought it profitable so to do. Thus the appellant purchased the four plots during two years with the sole intention to sell them to the mills at a profit and this intention raises a strong presumption in favour of the view taken by the tribunal. In regard to the other relevant facts and circumstances in the case, none of them offsets or rebuts the presumption arising from the initial intention; on the other hand, most of them corroborate 683 the said presumption. We must, therefore, hold that the High Court was right in taking the view that, on the facts and circumstances proved in this case, the transaction in question is an adventure in the nature of trade. The result is the appeal fails and must be dismissed with costs. Appeal dismissed.

The appellant, who was a firm acting as managing agents of a limited company (the Mills), purchased four plots of land adjoining the Mills on various dates between 1941 and 1942, and about five years later sold them to the Mills, as a result. of which the appellant realised a sum of Rs. 43,887 in excess of the purchase price, For the assessment year. 1948 49 the Income tax Officer treated the amount as the income. of the appellant 'and assessed it to income tax under head 'business ', on the ground that there was no evidence to show that the appellant had purchased the said lands for agricultural purposes or that they were acquired as an investment, and, that since the lands: were adjacent to the Mills the appellant must have purchased them solely with a view to sell them to the Mills; with. profit. 'He considered that the transaction ' had ;ill the elements of a business transaction ' and was thus an adventure in the, natural of 'trade within section 2(4)of the Indian Income tax Act 7 The Appellate, Tribunal rejected the explanation given by the appellate 'regarding" the object with which it had purchased the plots of land agreed 641 with the view taken by the Income tax Officer. At the instance of the appellant the Tribunal referred to the High Court the question: " whether there was material for the assessment of the sum of. Rs. 43 87 being the difference between the purchase and sale price of the four plots of land as income from all adventure in the nature of trade. The High Court held that ' the transaction in question was an adventure in the nature of trade and so the income tax authorities were justified in taxing the amount under the head 'business ' for the relevant year. On appeal by special leave to the Supreme Court, it was contend ed for the appellant that on the facts and circumstances of the case it was erroneous in law to hold that the transaction ill question was an adventure in the nature of trade. On the other hand, it was urged for the respondent that the question as raised before the High Court was one of fact not liable to be challenged under section 66(1) of the Act. Held, (1) that the expression " adventure in the nature of trade " in sub section (4) Of section 2 of the Indian Income tax Act, 1922, postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and that a tribunal while considering a question as to whether a transaction is or is not an adventure in the nature of trade, before arriving at its final conclusion on facts, has to address itself to the legal requirements associated with the concept of trade or business. Such a question is one of mixed law and fact and the decision of the tribunal thereon is open to consideration under section 66(1) of the Act. Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras, ; and Oriental Investment Co., Ltd. vs Commissioner of Income tax, Bombay; , , relied on. Edwards vs Bairstow ; , considered and held not inconsistent with the above said decisions. 2) that in the circumstances of this case it would be more appropriate to frame the question in this from: " whether, on the facts and circumstances proved in the case, the inference that the transaction in question is an adventure in the nature of trade is in law justified. " Held, further, that even an isolated transaction might be regarded as an adventure in the nature of trade within section 2(4) Of the Act, if it is characterised by some of the essential features that make up trade or business. Though judicial decisions which deal with the character of transactions alleged to be in the nature of trade do not purport to lay down any general or universal test, the presence of all the relevant circumstances, mentioned by. them my help the court to draw a similar inference, but it is not a matter of merely counting the number of facts and circumstances pro and con; it is the total effect of all the relevant factors and circumstances that determine the distinctive character of the transactions 648 If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit,then it is a case of capital accretion and not profit derived from an adventure in the nature of trade. But where a purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser had no intention of holding the property for himself or otherwise enjoying or using it, there would be a strong presumption that the transaction is an adventure in the nature of trade; but this may be rebutted by the other facts or circumstances of the case. The Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes), ; T. Beynon lnland Revenue vs Livingston, ; Martin vs Lowry, ; Rutledge vs Commissioners of Inland Revenue, ; Balgownie Land Trust, Ltd. vs The Commissioners of Inland Revenue, ; F. A. Lindsay, A. E. Woodward and W. Hiscox vs Commissioners of Inland Revenue, and Cayzer, Irvine and Co., Ltd. vs Commissioners of Inland Revenue, , considered. Commissioners of Inland Revenue vs Reinhold, , distinguished and considered as not laying down any general proposition of law. In the present case, the circumstances showed that the appellant whose ordinary business was not to make investment in lands had purchased the plots of land with the sole intention of selling them to the Mills at a profit and this intention raised a strong presumption that the purchase and the subsequent sale were an adventure in the nature of trade; and, it was held that in the absence of any rebutting evidence, the Income tax authorities were justified in taxing the amount in question as income from business.

N: Criminal Appeal No. 403 of 1981. 841 From the judgment and order dated the 10th October, 1980 of Punjab & Haryana High Court in Crl. A. No. 954 of 1979. Sushil Kumar for the Appellant. K.C. Bhagat and R.N. Poddar for the Respondents. The Judgment of the Court was delivered by SEN, J. The short point involved in this appeal is whether the appellant is guilty of culpable homicide amounting to murder punishable under section 302, Indian Penal Code, or only of culpable homicide not amounting to murder punishable under section 304, Part II, Indian Penal Code (hereinafter called 'the Code '). It is not disputed that the appellant, Jagrup Singh, struck a blow with the blunt side of a gandhala on the head of the deceased, Chanan Singh, who was his uncle, resulting in his death. It appears that after the death of Joginder Singh, the deceased Chanan Singh was looking after the family of his brother, Joginder Singh consisting of his widow Mst. Dalip Kaur and her children. He had settled the betrothal and marriage of Mst. Dalip Kaur 's daughter, Tej Kaur. The prosecution case is that the appellant Jagrup Singh and his brothers, Billaur Singh, Jarmail Singh and Waryam Singh, co accused, although they were collaterals of Joginder Singh, were not invited by Mst. Dalip Kaur to the marriage of her daughter Tej Kaur, at the instance of the deceased Chanan Singh. On account of this, there was ill feeling between the parties. On the fateful evening, i.e. On 20.3.1978, at 5.15 p.m. the marriage of Tej Kaur was performed. It is alleged that shortly thereafter, the appellant Jagrup Singh armed with a gandhala, his brothers Billaur Singh armed with a gandasa and Jarmail Singh and Waryam Singh armed with lathis emerged suddenly and made a joint assault on the deceased Chanan Singh and the three eyewitnesses, Gurdev Singh, PW 10, Sukhdev Singh, PW 11 and Makhan Singh, PW 12. The deceased along with the three eye witnesses was rushed to the Rural Dispensary, Rori where they were examined at 6 p.m by Dr. Bishnoi, PW 3, who found that the deceased had a lacerated wound 9cm x 1/2cm bone deep on the right parietal region, 9 cm away from the tip of right pinna; margins of wound were red, irregular and were bleeding on touch; direction of wound was anterior posterior. The deceased was in a serious condition and, therefore, he was referred by Dr Bishnoi to the Civil Hospital, Sirsa, where he died on the morning of 21.3.1978 at 2.10 a.m. 842 Dr. Karan Singh, Senior Medical officer, Civil Hospital, Sirsa, PW 1, performed an atopsy on the dead body of the deceased. He found the following external injuries: A stitched contused wound 9 1/2 cm long situated on right side of the head, 9 cm above the top of pinna and 9 cm above the eye brow. Skull deep, direction anterio posterior. On dissection, he found the following internal injury: A fracture line running starting from the lower and the anterior part of parietal bone injuring the middle meningeal artery near its entrance into the skull and traversing medially across the base of right middle fossa, crossing the mid line and extending slightly to the left of mid line. There was a dark red haemotoma (extra dural) 3" 2x3" overlying the parietal and temporal lobes of brain on right side and the area was compressed. In his opinion, the death of the deceased was due to cerebral compression as a result of the head injury which was sufficient in the ordinary course of nature to cause death. He High Court of Punjab and Haryana, agreeing with the Additional Sessions Judge, Sirsa, held that the appellant struck a blow on the head of the deceased with the blunt side of the gandhala with the intent of causing such bodily injury which was sufficient in the ordinary course of nature to cause death and that being so, the appellant was guilty of culpable homicide amounting to murder punishable under section 302 of the Code. In assailing the conviction, learned counsel for the appellant contends that the appellant having struck a solitary blow on the head of the deceased with the blunt side of the gandhala, can be attributed with the knowledge that it would cause an injury which was likely to cause death and not with any intention to cause the death of the deceased. The offence committed by the appellant, therefore amounted to culpable homicide not amounting to murder, punishable under section 304, Part Ir of the Code. He further contends, in the alternative, that there could be no doubt that the appellant acted in the heat of the moment when he bit the deceased and is, therefore, entitled to the benefit of Exception of section 300 of the Code. On the other hand. Learned counsel for the State contends that the matter 843 squarely falls within Clause Thirdly of section 300 of the Code. He A submits that merely because the appellant rendered a solitary blow with the blunt side of the gandhala on the head would not necessarily imply that the offence amounted to culpable homicide not amounting to murder punishable under section 304, Part II of the Code. There is no justification for the assertion that the giving of a solitary blow on a vital part of the body resulting the death must always necessarily reduce the offence to culpable homicide not amounting to murder punishable under section 304, Part II of the Code. If a man deliberately strikes another on the head with a heavy log of wood or an iron 'rod or even a lathi so as to cause a fracture of the skull, he must, in the absence of any circumstances negativing a the presumption, be deemed to have intended to cause the death of the victim or such bodily injury as is sufficient to cause death. The whole thing depends upon the intention to cause death, and the case may be covered by either Clause Firstly or Clause Thirdly. The nature of intention must be gathered from the kind of weapon used, the part of the body hit, the amount of force employed and the circumstances attendant upon the death. The ingredients of Clause Thirdly of section 300 of the Code were brought out by Vivian Bose, J. in Virsa Singh vs State of Punjab in his terse language: "To put it shortly, the prosecution must prove the following facts before it can bring a case under section 300 "3rdly". First, it must establish, quite objectively, that a bodily injury is present; Secondly, the nature of the injury must be proved. These are purely objective investigations. Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was not accidental or unintentional, or that some other kind of injury was intended. Once these three elements are proved to be present, the enquiry proceeds further and, 844 Fourthly, it must be proved that the injury of the type just described made Up of the three elements set out above is sufficient to cause death in the ordinary course of nature. This part of the enquiry is purely objective and inferential and has nothing to do with the intention of the offender". The learned Judge explained the third ingredient in the following words: The question is not whether the prisoner intended to inflict a serious injury or a trivial one but whether he intended to inflict the injury that is proved to be present. If he can show that he did not, or if the totality of the circumstances justify such an inference, then, of course, the intent that the section requires is not proved. But if there is nothing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it. Whether he knew of its seriousness, or intended serious consequences, is neither here nor there. The question, so far as the intention is concerned, is not whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the in jury in question; and once the existence of the injury is proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite conclusion. These observations of Vivian Bose, J. have become locus classicus. The test laid down in Virsa Singh 's case (supra) for the applicability of Clause Thirdly is now ingrained in our legal system and has become part of the rule of law. Under Clause Thirdly of section 300 of the Code, culpable homicide is murder if both the following conditions are satisfied: (a) that the act which causes death is done with the intention of causing a bodily injury; and (b) that the injury intended to be inflicted is sufficient in the ordinary course of nature to cause death. It must be proved that there was an intention to inflict that particular bodily injury which, in the ordinary course of nature, was sufficient to cause death, viz. that the injury found to be present was the injury that was intended to be inflicted. The decision in Virsa Singh 's case (supra) has throughout been followed as laying down the guiding principles. The decisions 845 are too numerous and we may notice only two of them: Gudur Dusadh vs State of Bihar and Chahat Khan vs State of Haryana. In Gudur Dusadh 's case, the day before the occurrence, the accused had killed a goat and on the advice of the deceased, the complainant lodged a report. On the next morning, while the deceased was returning from his fields along with his son, they were assaulted by the accused persons who had been hiding on the route. Thereafter, the accused set fire to the hut of the deceased. On these facts it was held that the act of the accused who had waylaid the deceased was a pre meditated act, and, therefore, the accused had the necessary intention to commit murder. In Chahat Khan 's case also, the deceased was waylaid by the accused who were armed with lathis. That case is destructive of the theory that a solitary blow on the head reduces the offence to culpable homicide not amounting to murder punishable under section 304, Part II. From the evidence it emerged that the accused had both gun and a lathi, and he made full use of the lathi by using both the hands and struck a blow on the head of the deceased with sufficient force. The solitary blow with the lethi was sufficient in the ordinary course of nature to cause his death, and there was no occasion for using the gun which was hanging on his shoulders. Both these cases fell within Clause Thirdly as there was clear intention to cause such bodily injury which in the ordinary course of nature was sufficient to cause death. Looking at the totality of the evidence, it would not be possible to come to the conclusion that when the appellant struck the deceased with the blunt side of the gandhala, he intended to cause such bodily injury as was sufficient in the ordinary course of nature to cause death. A gandhala is a common agricultural implement consisting of a flat, rectangular iron strip, three sides of which are blunt, embedded in a wooden handle. The length of the iron strip is in continuation of the wooden handle and the end portion is sharp, which is used to dig holes in the earth to set up fencing on embankments in the field. If a man is hit with the blunt side on the head with sufficient force, it is bound to cause, as here, death. There can be no doubt that it was used with certain amount of force because there was cerebral compression. But that by itself is not sufficient to raise an inference that the appellant intended to cause such bodily injury as was sufficient to cause death. He could only be attributed with the knowledge that it was likely to cause an injury which was 846 likely to cause the death. The matter, therefore, does not fall within Clause Thirdly of section 300 of the Code. In Chamru Budhwa vs State of Madhya Pradesh in somewhat similar circumstances, where there was exchange of abuses between the two parties both of whom were armed with lathis, they came to blows and in the course of the fight that ensued, the accused struck a lathi blow on the head of the deceased which caused a fracture of the skull resulting in the death. In view of the fact the accused had given only one blow in the heat of the moment, it was held that all that can be said was that he had given the blow with the knowledge that it was likely to cause death and, therefore, the offence fell under section 304, Part II of the Code. In Willie (Williams) Slaney vs State of Madhya Pradesh there was, as here, a sudden quarrel leading to an exchange of abuses and in the heat of the moment a solitary blow with a hockey stick had been given on the head. The court held that the offence amounted to culpable homicide not amounting to murder punishable under section 304, Part II. At this stage, we think, it desirable to refer to two other decisions in Harjinder Singh (alias Jinda) vs Delhi Admn. and Lakshman Kalu Nikalje vs State of Maharashtra, where the court, relying upon the principles enunciated by Vivian Bose, J. in Virsa Singh 's case (supra), excluded the application of Clause Thirdly, because the third ingredient laid down, viz. the intention to cause the particular injury which was likely to cause death, was not present. In Harjinder Singh 's case (supra) there was a sudden commotion when the accused took out a knife and stabbed the deceased who intervened in a fight. At this stage, the deceased was in a crouching position presumably to intervene and separate the two persons fighting. It could not, therefore, be said with any definiteness that the accused aimed a blow at a particular part of the thigh that it would cut the femoral artery which would result in the death of the deceased. It was, therefore, not possible to apply Clause Thirdly of section 300 of the Code. In Laxman Kalu Nikalje 's case (supra) there was a sudden quarrel and the accused lost his temper and whipped out a knife and gave one blow. Although it was given on the chest, 847 it was not on a vital part of the chest and but for the fact that the knife cut the auxiliary artery, death might not have ensued. In the present case, there is no doubt that there was a sudden quarrel and the appellant assaulted the deceased with the blunt side of the gandhala on the head in the heat of the moment. What actually was the immediate cause for the assault by the appellant on the deceased at the marriage ceremony of Tej Kaur, is not clear. The genesis of the quarrel resulting in the head injury to the deceased is not known. The prosecution came with a positive case that the appellant, together with his three brothers, who had not been invited to the marriage of Tej Kaur by Mst. Dalip Kaur at the instigation of deceased Chanan Singh, came armed with different weapons to teach the deceased a lesson. But the prosecution has failed to examine Mst. Dalip Kaur and the defence version is that the appellant and his brothers had been invited to the marriage of Tej Kaur by Mst. Dalip Kaur. In view of these infirmities in the prosecution case, the High Court was constrained to observe: In the absence of any specific and positive evidence whether oral or documentary, it is not possible to arrive at any positive conclusion that this circumstance furnished any motive for the accused to attack Chanan Singh (deceased) and three other prosecution witnesses. After a careful perusal of the entire prosecution evidence, it appears more probable that the accused had also joined in the marriage as the collaterals, but something happened on the spur of the moment which resulted in the infliction of injury by Jagrup Singh on the person of Chanan Singh which resulted into his death. In the first information report, it had not been disclosed, as was subsequently made out at the trial, that the accused had come from the house of Jarmail Singh, accused, armed with weapons. (emphasis supplied) In our judgment, the High Court having held that it was more probable that the appellant Jagrup Singh had also attended the marriage as the collateral, but something happened on the spur of the moment which resulted in the infliction of the injury by Jagrup Singh on the person of the deceased Chanan Singh which resulted in his death, manifestly erred in applying Clause Thirdly of section 300 848 of the Code. On the finding that the appellant when he struck the deceased with the blunt side of the gandhala in the heat of the moment, without pre meditation and in a sudden fight, the case was covered by Exception 4 to section 300. It is not suggested that the appellant had taken undue advantage of the situation or had acted in a cruel or unusual manner. Thus, all the requirements of Exception 4 are clearly met. That being so, the conviction of the appellant Jagrup Singh, under section 302 of the Code cannot be sustained. The result, therefore, is that the conviction of the appellant under section 302 is altered to one under section 304, Part II of the Indian Penal Code. For the altered conviction, the appellant is sentenced to suffer rigorous imprisonment for a period of seven years. P.B.R Appeal allowed.

The respondent was the appellant 's wife. In her petition under section 125(3) Criminal Procedure Code, 1973 for grant of maintenance, the Metropolitan Magistrate, upheld her allegation that the appellant was impotent and was incapable of having sexual relations with his wife. But the Magistrate refused to grant maintenance to her on the ground that the husband 's impotence was not a just cause for her refusal to live with the husband. Holding that impotence of the husband was a just ground for the wife to refuse to live with the husband, the High Court granted her maintenance. In appeal to this Court while the husband contended that impotence was not a good ground for the wife 's refusal to live with him, the wife contended that the second proviso to section 125(3) 1973 Code enabled the wife to refuse to live with the husband if there was a suit ground for doing so and in this case the husband 's impotence was a just ground for such refusal. Dismissing the appeal, ^ HELD: Proved impotence of the husband and his inability to discharge his marital obligations amount to both legal and mental cruelty make it a just ground for the wife to refuse to live with the husband. The wife would be entitled to maintenance from him according to his means. [710G 711A] The second proviso to section 125(3) of the 1973 Code was a proviso to section 488 of the 1898 Code which provides that it is incumbent on the Magistrate to consider the grounds of refusal and to make an order of maintenance, if he is satisfied that there is a just ground for the wife to refuse to live with the husband. Decision of High Courts that section 488 of the 1898 Code had nothing to do with the ordinary conjugal rights were directly opposed. to the very object of the section. [703 D F] Bundoo vs Smt. Mahrul , Emperor vs Daulat Raibhan & Anr., A.I.R. 1948 Nagpur 69, Arunachala vs Anandayammal, A.I.R. 1933 Mad. 668, Jaggavarapu Basawamma vs Japgavarapu Seeta Reddi, A.l.R, & Vedayudhan vs Sukmari overruled. 696 In the Matter of the Petition of Din Muhammad ILR [1883] 5 Allahabad 226 approved. By an amendment made in 1949 the scope and ambit of the term "just ground" had been widened by adding a second proviso to section 488 of the 1898 Code. The object of introducing this provision was to widen the scope and ambit of the term "just ground". This provision is not exhaustive but purely illustrative and self explanatory and takes within its fold not only the two instances mentioned Therein but other circumstances also of a like nature which may be regarded by the Magistrate as a just ground by the wife for refusing to live with her husband. In the present Code this provision has been incorporated as explanation to the second proviso to section 125(3). [703 G 704 B] A perusal of this provision shows that it was meant to give a clear instance of circumstances which may be treated as a just ground for refusal of the wife to live with her husband. By virtue of this provision, the proviso takes within its sweep all other circumstances similar to the contingencies contemplated in the Amending provision as also other instances of physical, mental or legal cruelty not excluding the impotence of the husband. These circumstances clearly show that the grounds on which the wife refuses to live with her husband should be just and reasonable as contemplated by the proviso. Similarly, where the wife has a reasonable apprehension arising from the conduct of the husband that she is likely to be physically harmed due to persistent demands of dowry from her husband 's parents or relations, such an apprehension also would be manifestly a reasonable justification for the wife 's refusal lo live with her husband. [704 D F] Where a husband had contracted a married with another woman or kept a mistress, it was considered to be a just ground for the wife 's refusal to live with the husband Similarly where a wife refuses to live with an impotent husband who is unable to discharge his marital obligations that would be a just ground. Moreover when impotence under the civil law is a good ground for granting divorce or for refusing restitution of conjugal rights there is no reason to hold that it would not be a just ground under section 125. The concept of cruelty remains the same whether it is a civil case or a criminal case or a case under similar Acts. The general principles governing acts constituting cruelty legal or mental ill treatment or indifference cannot vary from case to case, though the facts may be different. [704 H 705 C, 709 C] It is well recognized that sex is the foundation of marriage and without a vigorous and harmonious sexual activity it would be impossible for any marriage to continue for long. Abstinence from intercourse effecting ill health of the wife can be held to be cruelty. [709 E, 710 F] Rita Nijhawan vs Balkishan Nijhawan, AIR 1973 Delhi 200, Bhikaji Maneckji vs Maneckji Mancherji, , Bai Appibai vs Khimji Cooverji, AIR 1936 Bom. 138, Gunni vs Babu Lal, AIR 1952 Madnya Bharat 131, Biro vs Behari Lal, AIR 1958 J & K. 47, Smt. Panchoo vs Ram Prasad, AIR 1956 All. 41 and Dr. Srikant Rangacharya Adya. vs Smt. Anuradha, AIR 1980 Karnataka 8, approved. Sheldon vs Sheldon referred to.

Appeal No. 455/59. Appeal by special leave from the judgment and order dated January 16, 1956, of the former 429 Nagpur High Court, in Misc. Petition No. 448 of 1954. N. section Bindra and D. Gupta, for the appellants. Purshottam Trikamdas, G. J. Ghate and Naunit Lal, for the respondents. April 6. The Judgment of the Court was delivered by MUDHOLKAR, J. The respondent was a proprietor of mauza Bhivapur, Tehsil Umerer, District Nagpur. His proprietary interest in the village was abolished by the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (M.P. 1 of 1951). By virtue of section 4 of the Act, ill rights, titles and interests, among others, in all pathways, village sites, hats, bazars and melas in Bhivapur vested in the State of Madhya Pradesh for the purposes of the State free from all encumbrances under section 4(1)(a) of the Act. Under the provisions of the those rights vested in the State of Bombay and now by virtue of Bombay Re Organisation Act, 1960 (11 of 1960) in the State of Maharashtra. The provisions of section 4(1)(a) are as follows: " All rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land (cultivable or barren) grass land, scrub jungle, forest, trees, fisheries, wells, tanks, ponds, waterchannels, ferries, pathways, village sites, hats, bazars and melas;. . shall cease and be vested in the State for purposes of the State free of all encumbrances; and the mortgage debt or charge or any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions (if this Act" 430 After the Act came into operation proceedings for compensation in respect of the village Bhivapur were started in the court of the Compensation Officer, Umrer, in Revenue case No. 583/1 A 4/1950 51 decided on January 19, 1952. The Compensation Officer held that 0. 14 acres of land out of Khasra No. 61/1 which is recorded in the village papers as abadi wherein a bazar is held, should be settled with the respondent under section 5(a). On a portion of the land which was used for bazar, ottas and chabutras, with or without sheds, and separated by passages, exist. It is common ground that they belong to the respondent. It is also common ground that the land covered by ottas and chabutras on which sheds have been constructed were ordered to be settled on the respondent in the revenue case referred to above. The respondent 's contention, however, was that not only the sheds and the land on which those sheds were erected but also the open uncovered ottas and chabutras should also have been settled with him by virtue of the provisions of section 5(a) of the Act along with the land appurtenant to those structures. The total area of this land, according to him, is 2.85 acres. The respondent, therefore, preferred an appeal against the order of the Compensation Officer which directed settling only 0.14 acres of land on him. That appeal was. however, dismissed by the Additional Commissioner of Land Reforms and Additional Commissioner of Settlement, Madhya Pradesh, on March 28, 1952. The respondent thereafter was asked to remove his ottas and chabutras. Even so, the matter of settling land covered. by ottas and chabutras on the expropriators was being considered by Government. On May 16, 1952, a press note was issued by the Directorate of Information and Publicity, Government, of Madhya Pradesh the material portion of which runs thus: "The Government consider that the option 431 given to expropriators to remove the material etc., might cause hardship to them in such cases. Government have, therefore, decided on the following lines of action in such matters: (i) where the ottas and chabutras were, constructed in brick and stone, they should be allowed to remain with the exproprietors and the land thereunder should be settled with them under section 5(a) of the Madhya Pradesh Abolition of Proprietary Rights Act, 1950 (1 of 1951) on terms and conditions determined by the Government; and (ii) where the ottas and chabutras are in mud, the land Under them should be deemed to have vested in the State Government. But after this press note was issued the Government, apparently on the advice of its law officers, issued instructions to the Deputy Commissioners on June 22, 1954, to give one month 's notice all ex proprietors to remove the materials, clear the site of ottas and chabutras other than those on which there were sheds. In pursuance of this, a notice was issued to the respondent on July 13, 1954. Feeling aggrieved by this, the respondent preferred a petition under article 226 of the Constitution before the High Court of Nagpur for issue of a writ of mandamus or certiorari or other appropriate to writ to quash the orders passed by the Commpensation Officer and the appellate authority as well as the order of the State Government of Madhya Pradesh dated June 22, 1954, and the notice issued in pursuance thereto on July 13, 1954. The High Court allowed the petition and set aside the impugned orders and directed the State Government to settle the on tire area of Khasra No. 61 /1 of Bhivapur 432 with the respondent on such terms and conditions as may be determined by it. It may be mentioned that the entire area of Khasra No. 61/1 is 12.85 acres or so. The State of Madhya Pradesh sought a certificate from the High Court under article 133(1)(c) of the Constitution. But the certificate was not granted. Thereupon a special leave petition was made before this Court under article 136 of the Constitution. Leave was granted by this Court by its order dated March 18, 1957. That is how the appeal has come up before us. It may be mentioned that the High Court granted the petition of the respondent on the view that ottas and chabutras etc. , are buildings within the meaning of section 5(a) of the Act and that consequently the State Government was bound to settle the land covered by them with ex proprietors along with land appurtenant to those structures. In the application made before the High Court for grant of certificate, the following three grounds were raised: "5. For that the total market area as claimed by the non applicant being only 2.85 the entire abadi area of 12.85 acres in Khasra No. 61/1 could not be granted and settled with the ex proprietor. For that the ottas and chabutras in the bazar area could not be held to be buildings contemplated under section 5(1)(a) read with section 4 (1) (a) of the Act 1 of 1941 and could not be settled with the ex proprietor under the law. For that the buildings envisaged in the provisions 5(1)(a) are those buildings which are situated in the abadi and not those stand ing in bazars even though the bazar may also be located in the abadi and that ottas and chabutras etc., in the bazar being an integral part thereof are clearly different from those other 433 buildings used for agricultural or domestic purposes. " It would, however, appear from para. 2 of the order of the High Court refusing certificate that the learned Advocate General for "the State did not challenge the correctness of the meaning given by the High Court to the word "buildings" in section 5(a) of the Act. But the contention he pressed was that the words "ottas and chabutras" must be restricted to structures standing on the abadi of the village excluding that on which bazar was held, which under section 4(1)(a) vests in the State. Before us however, Mr. Bindra reiterated the contention which was originally pressed in the High Court that ottas and chabutras cannot be regarded as buildings within the meaning of that word in section 5(a) of the Act. According to him the concession made by the learned Advocate General was on a question of law and the State is entitled to withdraw that concession. In our opinion the question whether ottas and chabutras fall within the term " 'buildings" is not purely one of law and the State is not entitled to withdraw that concession. It would also appear from grounds 5 and 6 in the special leave petition that what was really sought to be urged before this Court was the contention actually pressed by the learned Advocate General in support of the application for grant of certificate. All the same we allowed Mr. Bindra to urge the contention that ottas and chabutras are not included in the term "buildings" in section 5(a) of the Act. The relevant portion of section 5(a) of the Act reads thus: "Subject to the provisions in sections 47 and 63 all open enclosures used for agricultural of domestic purposes and in continuous possession for twelve years immediately before 1948 49; all open house sites purchased for 434 consideration; all buildings;. . . within the limits of a village site belonging to or held by the out going proprietor or any other person, shall continue to belong to or be held by such proprietor or other person as the case may be; and the land thereof with the areas appurtenant thereto shall be settled with him by the State Government on such terms and conditions as it may determine;" "Village site" means the abadi in an estate or a mahal. Section 5(a) is an exception to section 4(1)(a) of the Act. No. doubt, section 4(1)(a) provides for the vesting in the State of the land on which bazar is held. But reading that section along with section 5(a) it is clear that where any buildings belonging to the proprietor exist on any portion of the abadi land that land, together with the land appurtenant to those buildings, bad to be settled with the ex proprietor. Land on which the bazar is held is part of the village abadi land and, therefore, all buildings standing on such land would fall within section 5(a) of the Act and would have to be settled with the ex proprietor. The only question, therefore, is whether ottas and chabutras can be regarded as buildings. A perusal of that provision would show that where the ex proprietor has spent money on constructing something within the limits of the village sites, that thing had to be settled with him. The word "buildings" should, therefore, be given its literal meaning as something which is built. Mr. Bindra 's contention, however, is that for a structure to be regarded as a building, it should have walls and a roof and in support of this contention lie relied upon the decision in Moir vs Williams (1) In that case Lord Esher has observed that the term building generally means all (1) 435 enclosures of brick and stone covered by a roof. But he has also made it clear that the meaning to be given to that word must depend upon the enactment in which the word is used and the context in which it is used. There, what was being considered was the provisions of the Metropolitan Buildings Act, 1855 (10 & 19 Vict. c. 122) which dealt with residential houses. He also relied upon the decision in Morrison vs Commissioners of Inland Revenne (1). That was a case under the Finance (10 Miw. 7 c. 8). The observations on which he relied are as follows: " It is quite clear that the expression 'buildings ' does not mean everything that can by any means be described as built: it means buildings in a more narrow sense than struct ures, because there are other structures of a limited class which under the terms of the sub section may also be taken into considera tion. " Far from these observations helping him they clearly show that the natural or ordinary meaning to be given to the word "Buildings", is something which has been built. That meaning would be modified if the provisions of law justify giving some other meaning. Finally he relied upon the decision in Samuel Small vs Parkway Auto Supplies (2). The observations relied on by him are as follows: "The word 'building ' in its ordinary sense denotes 'a structure or edifice including a. space within its walls and usually covered with a roof, such as a house, a church, a shop, a barn or a shed. ' The word 'building ' cannot be held to include every Species of erection on land, such as fences, gates or other like structures. Taken (1) (1915) I K. B. 176 at 722. (2) 49 A.I.R. 1361 at 1363. 436 in its broadest sense, it can mean only an erection intended for use and occupation as a habitation or for some purpose of trade, manufacture, ornament or use, constituting a fabric or edifice, such as a house, a store, a church, a shed. . These observations must Be considered in the context of the Act which was being construed and in the context in which they were made. There the Court bad to consider whether erection of gasoline pumps and construction of under ground gasoline tanks and pits with concrete sides sunken in the ground are within a restrictive covenant that no building of any kind shall be erected or maintained within a certain distance of a street. In the particular context buildings had, according to the Court, to be given its popular meaning. That case, therefore, does not assist the appellants. In our opinion the High Court was quite right in holding that even uncovered ottas and chabutras fall within the term "building" as used in section 5(a) of the Act and, therefore, along with the land appurtenant to them they must be settled with the respondent. Mr. Bindra pointed out that the High Court was in error in asking the Government to settle the whole of Khasra No.61/1 on the respondent because whereas its area is 12.85 acres, the land covered by the structures, including the appurtenant land, does not measure more than 2.85 acres. Mr. Purushottam Trikamdas, learned counsel for the respondent readily conceded this fact and said that the High Court has committed an error through an oversight and that all that the respondent wants is 2.85 acres of land and nothing more. Mr. Bindra then said that it would not be proper to give a direction to the Government to settle any particular area of the land and it should be left to the revenue authorities 437 to determine the precise area covered by the structures and the passages separating these various structures. We agree with him. It would be sufficient to direct the Government to settle with the respondent the whole of the land covered by the structures as well as land appurtenant to those structures from out of Khasra No. 61/1. What the area of that land would be is a matter to be determined during the settlement proceedings. With this modification we dismiss the appeal with costs. Appeal dismissed.

The proprietary interest of the respondent in his village was abolished by the M. P. Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, and all rights, title and interest were vested in the State by section 4. Section 5(a) of the Act provide that where any "buildings" belonging to the proprietor exist on any portion of the abadi land, that land together with the land appurtenant to those buildings shall be settled with the ex proprietor. Land covered by ottas and chabutras on which sheds had been constructed was settled with the respondent but not the land on which open uncovered ottas and chabutras existed. Held, that the respondent was entitled under section 5(a) of the Act to have the land on which uncovered ottas an chabutras existed, as also the land appurtenant thereto, settled with him. Uncovered ottas and chabutras fell within the term "buildings" as used in section 5(a). The provisions showed that where the proprietor had spent money on constructing something on an abadi site within the limits of the village sites, that site had to be settled with him. Accordingly the word "buildings" has to be given its literal meaning as something which is built. Moir vs Williams, , Morrison vs Commissioners of Inland Revenue, and Samuel Small vs Parkway Auto Supplies, , distinguished.

ivil Appeal No. 1049 of 1965. Appeal from the judgment and order dated July 31, 1964 of the Gujarat High Court in Special Civil Application No. 1054 of 1963. Soli Sorabjee, D.M. Damodar, B. Datta and J.B. Dadachanji, for the appellant. V. A. Seyid Muhammad and S.P. Nayar, for the respondents. P.R. Mridul, Janendra Lal and B.R. Agarwala, for intervener No. 1. J.B. Dadachanji, for interveners Nos. 2 and 3. Ramaswam, J. This appeal is brought by certificate from the judgment of the High Court of Gujarat, dated July 31, 1964 in Special Civil Application No. 1054 of 1963. The appellant is the sole proprietor of Messrs Gordhandas and Co. carrying on business as a dealer in textiles in Bombay. Under an agreement between the appellant on the one hand and the Gandevi Vanat Udhoog Sahkari Mandli Ltd. (hereinafter referred to as the 'Society ') the Society manufactured cotton fabrics during the period between June, 1959 and September 1959 and from October 1, 1959 to January 31, 1961 for the appellant on certain terms and conditions which were later reduced to writing on October 12, 1959. Under these terms, the Society agreed to carry out weaving work on behalf of the appellant on payment of weaving charges fixed at 19 nP. per yard which included expenses the Society would have to incur in transporting yarn from Bombay and cotton fabrics woven by the Society to Bombay. The appellant was to supply yarn to be delivered at Bombay to the Society and the Society was to made its own arrangement to bring the yarn to its factory at Gandevi. Clause 11 provided that the yarn supplied by the appellant, remaining either in stock or in process or in the form of ready made pieces would be in the absolute ownership of the appellant and the Society, as the bailee of the yarn, undertook to 255 take such care of it as it would normally take if the yarn belonged to it. The Society also undertook to have the yam insured against fire, theft and all other risks including transit risks and further undertook to reimburse the appellant in case it failed to do so. The terms of the agreement though recorded on October 12, 1959 were to be deemed to be effective as from April 21, 1959 and the agreement was terminable by either party by giving one month 's notice. The Society was a cooperative society carrying on its work at Gandevi and was registered on or before May 31, 1961 and consisted of members who owned powerlooms. The Society started the weaving work for the appellant some time in May or June 1959 and supplied to the appellant between June 1, 1959 and January 3, 1961 cotton fabrics measuring 3,19,460 yards. The Society had obtained L 4 licence as required by the (hereinafter referred to as the 'Act '). By letters, dated August 29, 1959 and October 27, 1961 the Excise Department had granted exemption from excise duty payable on cotton fabrics manufactured by the Society under the notification issued by the Central Government. On November 10, 1961 the excise authorities issued a notice. the appellant demanding a sum of Rs. 1,69,263.44 payable as excise duty. It was alleged that the duty was. payable by the appellant as it had got the goods manufactured through the Society and had got them removed from the Society 's factory at Gandevi without payment of duty. On January 10, 1962 the Superintendent of Central Excise:, Bulsar sent another notice to show cause why penalty should not be imposed upon the appellant for contravention of rule 9 and why duty should not be charged for the cotton fabrics so removed by the appellant. The appellant showed cause and on November 26, 1962 the Assistant Collector of Central Excise and Customs, Surat held that the appellant was liable to pay excise duty to. the extent of Rs. 2,20,574.74, being the total amount of basic duty and a penalty of Rs. 250 was levied for contravention of rule 9. The appellant preferred an appeal to the Collector of Central Excise Baroda but the appeal was dismissed. Thereafter the appellant moved the High Court of Gujarat for grant of a writ under article 226 of the Constitution. The High Court dismissed the writ petition by its judgment, dated July 31, 1964 but gave a direction that the: respondent was to work out the excise duty on the footing that the appellant was entitled to exemption from duty altogether in respect of goods supplied for the period from June 1, 1959 to September 30, 1959. As regards the two other periods i,e., October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 31, 1961, the High Court dismissed the writ petition and directed the respondent to charge duty at the rate of 29.3 nP per square meter. 256 Clause (d) of section 2 of the Act defines "excisable goods" as meaning goods specified in the First Schedule as being subject to a duty of excise. Item 19 in the First Schedule provides for excise duty at different rates depending upon the variety of cotton fabrics. Section 3 which is the charging section, provides for the levy. and collection of duties specified in the First Schedule on all excisable goods which are produced or manufactured in India. Rule 8 authorises the Central Government to exempt any excisable goods from the whole or any part of duty payable on such goods. Clause (1) of rule 9 provides that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed. Clause (2) of that rule provides that if any excisable goods are, in contravention of sub rule (1 ), deposited in, or removed from any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made by the proper officer and shall also be liable to a penalty which may extend to two thousand rupees and such goods shall be liable to confiscation. In pursuance of the power under rule 8, the Central Government issued notifications from time to time granting exemptions on cotton fabrics, though such goods were excisable goods under tariff item 19. The first relevant notification is dated January 5, 1957. By this notification certain classes of cotton fabrics were exempt from payment of excise duty. of the items exempted the seventh item is as follows: "Cotton fabrics manufactured by or on behalf of the same person in one or more factories commonly known as powerlooms (without spinning plants) in which less than 5 powerlooms in all are installed;" The next relevant notification is notification No. 74/59, dated July 31, 1959 which reads. as follows: "G.S.R. 899 In pursuance of sub rule (1) of rule 8 of the Central Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, ' the Central Government hereby exempted cotton fabrics produced by any cooperative society formed of owners of cotton powerlooms, which is registered or which may be registered on or before the 31st March, 1961 under any law relating to co operative societies from the whole of the duty leviable thereon, subject to the following conditions : 257 (a) that every member of the co operative society has been exempt from excise duty for three years immediately preceding the date of his joining such society; (b) that the total number of cotton powerlooms owned by the co. operative society is not more than four times the number of members forming such society; (c) that a certificate is produced by each member of the co operative society from the State Government concerned or such officer as may be nominated by the State Government that he is a bona fide member of the society and that the number of cotton powerlooms in his ownership and actually operated by him does not exceed four and did not exceed four at any time during the three years immediately preceding the date of his joining the society, and that he would have been exempt from excise duty even if he had not joined the co operative society;. . . The Central Government issued another notification, dated April 30, 1960 by which the earlier notification, dated July 31, 1959 was superseded. By this notification the Central Government exempted cotton fabrics produced on power looms owned by any co operative society or owned by or allotted to the members of the society from the whole of the duty leviable thereon subject .to the four conditions. therein set out. The notification,dated April 30, 1960 is to the following effect: "In pursuance of sub rule (1 ) of rule 8 of the Central. Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, and in supersession of the Notification of the Govt. of India, Ministry of Finance (Department of Revenue) No. 74/59 Central Excise, dated the 31st July 1959, the Central Government hereby exempts cotton fabrics produced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society, which is registered or which may be registered on or before the 31st March, 1961 under any law relating to cooperative societies, from the whole of the duty leviable thereon subject to the following conditions : (a) that every member of the cooperative society who has been a manufacturer of cotton fabrics on powerlooms, has been exempt from excise duty for three years immediately preceding the date of his joining such society. 258 (b) that the total No. of cotton powerlooms owned by the cooperative society or owned by or allotted to its members is not more than four times the number of members forming such society. (c) that each member of the cooperative society produces a certificate from the State Government concerned or such officer as. may be nominated by the State Government that he is a bona fide member of the society and that the number of cotton power looms owned by or allotted to him and actually operated by him does not exceed four and did not exceed four at .any time during that three years immediately preceding the date of his joining the society and that he would have been exempt from excise duty even if he had not joined the cooperative society and. . . . . " The main contention on behalf of the appellant is. that the ,case fell within the language of the two notifications, dated July 31, 1959 and April 30, 1960 and the appellant was entitled to ,exemption from payment of excise duty on the cotton fabrics. The argument was stressed that the exemption applied to. all cotton fabrics which were produced on power looms owned by the Cooperative Society or on powerlooms. allotted to its members and it was not a relevant consideration as to who. produced or manufactured such fabrics, whether it was the Society itself or its members or even outsiders. It was conceded by the appellant that it was the owner of the cotton fabrics. But even upon that assumption the claim of the appellant is that it was entitled to exemption from excise duty as it was covered by the language of the two notifications already referred to. In our opinion, the argument of the appellant is well founded and must be accepted as. correct. The notification, dated July 31, 1959 grants exemption to "cotton fabrics produced by any Co operative Society formed of owners ,of cotton powerlooms which is registered or which may be registered on or before March 31, 1961" subject to four conditions set out in the notification. In the next notification, dated April 30, 1960 exemption was granted to "cotton fabrics. produced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society, which is registered or which may be registered on or before March 31, 1961" subject to, the conditions specified in the notification. It was contended on behalf of the appellant that under the contract between the appellant and the 'Society there was no relationship of master and servant but. the appellant supplied raw material and the contractor i.e., the Society produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to 259 exemption from excise duty since the case fell within the language of the two notifications, dated July 31, 1959 and April 30, 1960, and the cotton fabrics. were produced on power looms owned by the co operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the Cooperative Society "for itself" and not for a third party before it was entitled to claim exemption from excise duty. It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power looms during the three years immediately preceding their having joined the society. The policy was that instead of each such member operating his looms on his own, he should combine with others by forming a society which, through the cooperative effort should produce cloth. The intention was that the goods produced for which exemption could be claimed must be goods produced on its own behalf by the society. We are unable to accept the contention put forward on behalf of the respondents as correct. On a true construction of the language of the notifications, dated July 31, 1959 and April 30, 1960 it is clear that all that is. required for claiming exemption is that the cotton fabrics must be produced on power looms owned by the cooperative society. There is no further requirement under the two notifications that the cotton fabrics must be produced by the Co operative Society on the powerlooms "for itself". It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notificatlon. If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different, but that is not the case here. In this connection we may refer to the observations of Lord Watson in Salomon vs Salomon & Co.(1): "Intentlon of the legislature is a common but very slippery phrase, which, popularly understood may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words o.r by reasonable and necessary implication." (1) ; , 38. 260 It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgment of the Privy Council in Crawford vs Spooner(1). ". we cannot aid the legislature 's defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there. " Learned Council for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power looms by constituting themselves into Cooperative Societies. But the operation of the notifications has to be judged not by the object which the rule making authority had in mind but by the words which it has employed to effectuate the legislative intent. Applying this principle we are of opinion that the case of the appellant is covered by the language of the two notifications, dated July 31, 1959 and April 30, 1960 and the appellant is entitled to exemption from excise duty for the cotton fabrics produced for the period between October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 3, 1961. It follows therefore that the appellant is entitled to the grant of a writ in the nature of certiorari to quash the order of the Assistant Collector of Central Excise of Baroda, dated November 26, 1962 and the appellate order of the Collector of Central Excise, dated November 12, 1963. For the reasons expressed we hold that the judgment of the High Court of Gujarat, dated July 31, 1964 should be set aside, that Special Civil Application No. 1054 of 1963 should be allowed and that a writ in the nature of certiorari should be granted to quash the order of the Assistant Collector of Excise and Customs dated November 26, 1962 and the order of the Collector of Excise dated November 12, 1963. This appeal is accordingly allowed with costs. R.K.P.S. Appeal allowed.

The respondent 's lorry was used by the driver of the lorry and another, without the respondent 's knowledge, for illicit transport of forest timber worth more than Rs. 50. The driver and the other person were convicted for offences under sections 35 and 36 of the Andhra Pradesh Forest Act, 1882, and the magistrate directed confiscation of the lorry under section 43 of the Act as amended by Act 11 of 1963. The Sessions Court set aside the order of confiscation in appeal and the High Court confirmed the order of the Sessions Court. In appeal to this Court, HELD: The Legislature originally conferred both upon the trial court and the appellate court a discretion to pass an appropriate: order with regard to the disposal of a vehicle used in the commission of an offence under the Act. After the amendment of 1963, the Legislature made it obligatory upon the trial court to confiscate the vehicle used, but no such restriction was placed upon the appellate court; Under section 47, the appellate court could pass orders regarding disposal of property in the same manner 'as an appellate court under section 520 Criminal Procedure Code, corresponding to section 419 of the Code of 1872. Under section 520 of the Code, power is conferred upon the appellate court to pass any appropriate order, as may be just, regarding the disposal of property used in the commission of any offence. The order of the Sessions Court in appeal in the present case was essentially a just order and was rightly confirmed by the High Court. [626 B E]

Appeal No. 1672 of 1966. Appeal from the judgment and order dated 16th March 1965 of the Madras High Court in Appeal Suit No. 139 of 1961. P. Balagopal A. Y. Rangam and Lily Thomas, Advocates for the appellant. 4 28 M.Natesan, R. Ramamurthi lyer and R. Gopalakrishnan, for the Respondent. The Judgment of the Court was delivered 'by Grover, J. This is an appeal by certificate from a decree of the Madras High Court. The appellant mortgaged his property bearing No. 162A West Masi Street, Madurai town for a sum of Rs. 45,000/ with the. respondent Bank on October 14, 1950. He agreed to repay Rs. 5,0001 within a specified date and the balance was payable within two years from the date of the deed together with interest, at 101%. It was further agreed that if the mortgagor failed to pay the interest periodically and regularly he would be liable to. pay interest at the rate of 12% per annum from the date of such ', default and further it he failed to pay the entire amount stipulated, within two years he would have to pay the whole amount together with interest at 3 1/2 % per annum. The sum of Rs. 5,000/ was paid within the time specified but the balance remained unpaid. In January 1952 the appellant and his wife borrowed Rs. 25,000/and, jointly executed a promote. The wife deposited her title deeds relating to premises No. 162 West Masi Street. On June 25, 1952: the appellant and his wife created a mortgage of their respective properties Nos. '1 62A and, 162 West Masi Street to secure repayment of a sum of Rs. 8850/ . All the three mortgages were in favour of the respondent Bank. In 1953 the Bank instituted a suit on the foot of the last two, mortgages and obtained a decree against the appellant and his wife. , This decree appears to have been satisfied. In April 1958 the suit out of which the present appeal has arisen was filed by the Bank on the foot of the mortgage dated October 14, 1950. The main defence of the appellant, who was the sole mortgagor, was that the suit was not maintainable in view of the provisions of section 67A of the Transfer of Property Act and that the stipulation of interest was penal and in contravention of the provisions of the . A number of other issues were framed but it is altogether unnecessary to mention them. The trial court granted a preliminary decree for the recovery of principal amount, of Rs. ,40,000/ which remained unpaid with interest at 12% per. annum from August 1, 1952 till the date of the decree and thereafter at 6% per annum till realisation. An appeal was taken to the High Court where two points were agitated. The first was based on the provisions of section 67A of the Transfer of Property Act and the second related to the rate of interest. The High Court did not accede to any ' of the contentions and dismissed the appeal. Section 67A of the Transfer of Property Act provides that a I mortgagee who holds two or more mortgages executed by the same,. mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67 and who sues to obtain such decree 429 on any one of the mortgages, shall, in the, absence of a contract to the contrary, be bound to sue on all mortgages in respect of which the mortgage money has become due. This section was inserted by the Amending Act 20 of 1929 in view of certain conflict among the High Courts in this country, with regard to the right of the mortgagee to sue at different times on different mortgages although the mortgagor was the same. As pointed out in Mulla 's Transfer of Property Act, 5th Edn at page 481 sections 61 and 67A of this Act lay down the simple rule that if a mortgagor has made two or, more mortgages of the same property or of different properties to the same mortgagee the mortgagor may redeem each separately but that the mortgagee must enforce all or none. To attract the applicability of section 67A it is essential that the, mortgagor must be the same and he should have executed two or more mortgages in respect of each of which he has a right to obtain the same kind of decree under section 67A. In the present case it is not possible to hold that the mortgagor in the suit on the foot of. the mortgage dated October 14, 1950 is the same as the mortgagor in the previous suit which was filed on the foot of the mortgages in favour of the appellant and his wife. In the other two mortgages there were two mortgagors, one the appellant and the other his wife. There is no statutory provision or rule or principle by which the wife and the, husband could be treated as one entity for the purpose of the mortgages. Each was owner of a separate and distinct property and both joined in mortgaging their respective properties. In Moro Raghunath vs Balaji(1) the first mortgage, was by two bro thers and the second mortgage of part of the same property was by one brother. The Bombay High Court held that the suit to enforce the first mortgage did not bar a suit to enforce the second mortgage. This was before the insertion of section 67A but the principle embodied in that section is clearly illustrated by that case. The bar of section 67A, therefore, could not possibly come in the way of the institution of the present suit. On the question of interest we are of the view in the light of the provisions of the mortgage deed and all the circumstances that the rate of 12% is unfair and penal. We are inclined, therefore, to give this relief that the interest should be calculated 'at the rate of 10 1/2% (which was the original contractual rate) from the date of the mortgage to the date of the preliminary decree. Thereafter the interest shall be Payable as directed by the trial court 'at the rate of 6% per annum till realisation. With this 'modification the appeal is dismissed but in view of the entire circumstances the parties are left to bear their own costs in this Court. Appeal dismissed. G.C. (1) I.L.R. 13Bom.

The appellant mortgaged his property bearing No. 162A West Masi Street Madurai Town for a sum of Rs. 45,000 with the respondent Bank on October 14, 1950. In January 1952 the appellant and his wife borrowed Rs. 25,000 and jointly executed a pronote. The wife deposited her title deeds relating to premises No. 162 West Masi Street On June 25, 1952 the appellant and his wife created a mortgage of their respective properties Nos. 162A and 162 West Masi Street to secure repayment of a sum of Rs. 8,850. All the three mortgages were in favour of the respondent Bank. In 1953 the Bank instituted a suit on the foot of the last two mortgages and obtained a decree against the appellant and his wife. This decree was satisfied. In April 1958 the Bank filed a suit on the foot of the mortgage dated October 14, 1950. The main defence of the appellant, who was the sole mortgagor, was that the suit was not maintainable in view of the provisions of s, 67A of the Transfer of Property Act and that the stipulation of interest was penal and in contravention of the provisions of the . The trial court decreed the suit and the High Court dismissed the appeal. By special leave appeal was filed in this Court. HELD : If a mortgagor has made two or more mortgages of the same property or of different properties to the same mortgagee the mortgagor may redeem each separately but the mortgagee must enforce all or none. To attract the applicability of section 67A it is essential that the mortgagor must be the same and he should have executed two or more mortgages in respect of each of which he has a right to obtain the same kind of decree under section 67. In the present case it was not possible to hold that the mortgagor in the suit on the foot of the mortgage dated October 14, 1950 was the same as the mortgagor in the previous suit which was filed on the foot of the mortgages in favour of the appellant and his wife. In the other two mortgages there were two mortgagors one the appellant and the other, his wife. There is no statutory provision or rule or principle by which the wife and the husband could be treated as one entity for the purpose of the mortgage. Each was owner of a separate and distinct property and both joined in mortgaging their respective properties. The bar of section 67A therefore could not possibly come in the way of the institution of the ' present suit. [429 B F] Moro Raghunath vs Balaji, I.L.R , approved & applied. (ii)In the light of the provisions of the mortgage deed and all the circumstances the interest rate of 12% was unfair and penal. Rate suitably Reduced. [429 G]

Civil Appeal No. 578 of 1991. From the Judgment and Order dated 8.11.1990 of the Bombay High Court in W. P. No. 4497 of 1991. Ashok Desai, N. Serwai, Dilip Udeshi, P.H. Parekh and J.P. Pathak for the Appellants. U.R. Lalit, K.K. Singhvi and Soli J. Sorabjee, A.M. Khanwilkar, Ravinder Narain, section Ganesh, D.N. Misra and section Kachwaha, S.K. Dholakia and A.S. Bhasme for the Respondents. K.K. Venugopal, E.C. Agrawala, Ashwini Kumar, Ms. Purnima Sethi and A.V. Pilli for the Applicant. The Judgment of the Court was delivered by KANIA, J. This Special Leave Petition is directed against the judgment of a Division Bench of the Bombay High Court in Writ Petition No. 4497 of 1990. The High Court allowed the said writ petition and struck down a communication from the Bombay Municipal Corporation. respondent No. 2 herein, informing the petitioners in the said writ petition, who are arrayed as respondents nos. 3 to 13 before us, that their application for permission to develop the property, namely, the land in question situated at Village Balkum near Thane, was rejected in view of the representations submitted to the Government by the owners of chemical factories situated in the said village, who are the appellants/petitioners herein that no building construction permission should be granted within a certain distance from the said factories. The petitioners in the Special Leave Petition are some of the said chemical factories. They were not joined in the writ petition as respondents and have prayed for leave to file the Special Leave Petition on the ground that the judgment adversely affects them and they are aggrieved by the same. Permission is granted. Leave is granted. Counsel heard. We find that appellants can be said to be parties aggrieved by the impugned judgment, even if they are not regarded as necessary parties 252 in the writ petition. In the facts and circumstances of the case, we find that there is no need to set aside the impugned judgment of the Bombay High Court at the instance of the appellants. The appellants are. however, given liberty to file a review petition before the Bombay High Court for reviewing the impugned judgment, within a period of four weeks from today. 9 In our opinion, it is proper that the entire controversy to which the judgment relates should be determined in the light of the submissions which may be made by the appellants. In these circumstances, we direct that the review petition, if filed, shall be entertained by the Bombay High Court and the appellants will be given a hearing as if the matter were heard afresh as far as they are concerned. It is clarified that the hearing of the review application will not be confined to the normal grounds on which a review can be sought but the entire controversy will be regarded as open as between the appellants herein and the respondents. The interim order made by this Court on January 8, 1991 will continue to remain in operation till the review petition is decided by the High Court. However, it will be open for the High Court to vary or vacate the interim order on appropriate applications made to it by any of the parties or by any of the interveners here. If the review petition is not filed within the said period of four weeks, the appeal shall stand dismissed and all interim orders passed by us shall be deemed to be vacated. In our opinion, the review petition deserves to be disposed of with expedition and we would, therefore, request the High Court to dispose of the review petition, if filed as aforestated, within four months from today and in any event, by the 30th September, 1991. The matter shall now be placed before learned Chief Justice of the Bombay High Court for passing appropriate directions. The appeal is disposed of as aforestated with no order as to costs. V.P.R. Appeal disposed of.

The appellant tenant executed a lease agreement of the demised premises on a standard rent of Rs. 900 per month. In addition thereto, the tenant also undertook to pay a lump sum of Rs. 120 per month by way of education cess and other daxes in respect of the premises. The 1st respondent filed a suit for eviction of the tenant inter alia on the ground that he was in arrear of rent for more than six months and had failed and neglected to pay the amount within one month from the date of receipt of the notice served on him terminating the tenancy and for eviction. During the pendency of the suit, section 12(3) of the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947 was amended whereby clauses (a) and (b) of sub section 3 of section 12 were deleted and instead a new sub section 3 was substituted which restricted the court 's right to pass a decree of eviction on the ground of arrears of standard rent, etc., if the tenant paid or tendered in Court the arrears as stipulated in the amended clause. The appellant claimed that the said amendment had retrospective effect and he was entitled to the benefit thereof. The Trial Court dismissed the suit. The Court held that since the tenant had failed to pay or deposit the arrears claimed by the eviction notice within one one month from the receipt thereof, he was liable to be evicted under section 12(3)(a) of the Act, but in view of the substituted section 12(3), he was entitled to protection he had paid the entire arrears together with interest and costs before the passing of the decree. On appeal, the Appellate Court reversed the decree of the trial 52 Court. The Appellate Court held that the tenant having failed to pay arrears within one month of receipt of a valid notice, he was liable to be evicted under section 12(3)(a) of the Act, since the amended section 12(3) was prospective in nature. The appellant tenant preferred a writ petition to the High Court, which was dismissed on the ground of sub letting. Before this Court it was inter alia contended on behalf of the appellant that (i) since the tenant was obliged to pay the education cess and other taxes, by way of permitted increases, which were payable at the end of the year, the case would not attract section 12(3)(a) as a part of the rent became payable annually and not monthly and therefore the case attracted section 12(3)(b); and (ii) the tenant having deposited the arrears, etc., in time, the courts below were justified in granting and eviction decree for arrears of rent under section 12(3)(a). On the other hand, it was contended on behalf of the respondent that the case was clearly governed by the provisions of section 12(3)(a) since indisputably the rent inclusive of the quantified tax amount was payable by the month. It was argued that once the quantum in respect of the tax was determined by agreement between the parties, same formed part of the rent and it was not open to contend that notwithstanding the agreement the tax amount remained payable by the year and the tenant was obliged to pay the same only after the landlord had paid the taxes to the local authority. Dismissing the appeal, this Court, HELD:(1) In view of the decision of this Court, the case would be governed by section 12(3) as it stood before its amendment, since the substituted section 12(3) was found to be prospective in nature. [57G] Arjun Khaimal Makhijani vs Jamnadas C. Tuliani, , followed. (2) It is clear from the term of the lease agreement that the parties intended the tenancy to be a monthly tenancy. [62C] (3) The statutory right to recover the amount of education cess in respect of the demised premises from the occupant/tenant can be quantified by agreement of parties so long as the amount quantified does not exceed the total amount actually paid by the owner by way of education case. [62E] 53 (4) It seems to be well settled that education cess is a part of 'rent ' within the meaning of the ACt and when the same is claimed addition to the contractual or standard rent in respect of the demised premises it constitutes a permitted increase within the meaning of section 5(7) of the Act and being payable on a year to year basis, the rent ceases to be payable by the month within the meaning of section 12(3)(a) of the Act. [63D E) Panchal Mohanlal Ishwardas vs Maheshwari Mills Ltd. ,[1962] ; Prakash Surya vs Rasiklal Ishverlal Mehta, ; Vanlila Vadilal Shah vs Mahendrakumar J. Shah, A.I.R. 1975 Guj. 163; Muktabai Gangadas Kadam vs Muktabai Laxman Palwankar,[1969] 71 B.L.R. 752; Bombay Municipal Corporation vs Life Insurance Corporation of India, Bombay, ; (5) If for convenience and to facilitate payment, the parties by mutual consent work out an arrangement for the enforcement of the owner 's statutory right to recover the tax amount and for discharging the tenant occupant 's statutory obligation to reimburse the owner, no reasons are seen for refusing to uphold such a contract and if the parties have agreed thereunder to the tenant occupant discharging his liability by a fixed monthly payment not exceeding the total tax liability, the said monthly payment would constitute 'rent ' payable by the month within the meaning of section 12(3) (a) Act. [64B.C] Vishwambar Hemandas vs Narendra Jethalal Gajjar, A.I.R. 1986 Guj. 153 overruled. (6) As the tenant had failed to comply with the requirement of section 12(3)(a) to seek protection from eviction, the Courts below were justified in ordering his eviction.

Appeals Nos. 1687 and 1688 of 1968 Appeals from the judgment and order dated August 29, 30, 1967 of the Calcutta High Court in Income Tax Reference No. 16 of 1964. section Mitra, R. N. Sachthey and B. D. Sharma, for the appellant (in both the appeals). M. C. Chagla, section M. Jain, B. P. Maheshwari and R. K. Maheshwari for the respondent (in both the appeals). The Judgment of the Court was delivered by Hegde, J. These appeals by certificate arise from the decision of the Calcutta High Court in Income tax Reference No. 16 of 1964 on its file. Therein the High Court was considering a reference made by the Income Tax Appellate Tribunal 'B ' Bench Calcutta under section 66 (1) of the Indian Income Tax Act, 1922 to be hereinafter referred to as 'the Act '. The question of law which was referred for the opinion of the High Court reads thus : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that in view of the capital loss of Rs. 12,00,000/ suffered by the assessee on account of depreciation in the value of the shares of Messrs. Elphinstone Mills Ltd. payment of any dividend at all during any of the two relevant accounting years would have been unreasonable ?" The assessment years with which we are concerned in these appeals are 1955 56 and 1956 57, the corresponding accounting years being the years ending on June 30, 1954 and June 30, 1955. The assessee is a limited company doing business as selling agents of a Textile Mill. For the assessment year 1955 56 the assessee was assessed on a total income of Rs. 1,61,089/ and taxes paid were Rs. 69,973/ leaving a distributable balance of Rs. 91,116/ . According to the Profit & Loss Account, however, the company suffered a net loss of Rs. 11,63,874/ and this was due to the loss of Rs. 12,00,000/ on account of depreciation in the value of 83 shares held by the company in Elphinstone Mill Ltd. of Bombay. The Income tax authorities disallowed an amount of Rs. 11,88,000/ out of this loss on the ground that it relates to the price paid for the shares purchased for the sake of acquiring the managing agency of the: Elphinstone Mills Ltd. The Tribunal upheld the disallowance on the ground that the amount of Rs. 11,88,COO/was a loss relating to shares held by the company in its, investment account. The company however, did not declare any dividend for the year in question. The Income tax Officer in exercise of his powers under Section 23 A(1) levied additional super tax @ /4/ per rupee on the distributable surplus of Rs. 91,116/ . In so doing be ignored. the loss in the value of the, shares in Elphinstone Mills. Ltd. For the assessment year 1956 57 the total income assessed was Rs. 1,07,429/ and the taxes payable thereon were Rs. 46,668/ leaving a distributable surplus of Rs60,761/ . In this year also the company did not declare any dividend because of the loss referred to earlier. The. income tax Officer, however, again invoked the provisions of Section 23A (1) and levied additional super tax @ /4/ per rupee on the surplus of Rs. 60,761/ . In appeal, the Asstt. Commissioner took the view that the loss incurred by the company was a capital loss. But all the same as there was no commercial profits in the relevant accounting years it was not reasonable to expect the assessee company to declare any dividend in respect of those years in view of the capital loss incurred and he,. therefore, cancelled the orders of the Income tax Officer under section 23A (1). Aggrieved by the Order of the Appellate Assistant Commissioner, the department appealed to the Tribunal. The Tribunal agreed with the conclusions reached by the Appellate Assistant Commissioner. It held that under the circumstances the Directors were justified in 'not declaring any dividend in respect of the profits that had accrued in the accounting years. At the instance of the Commissioner, the Tribunal submitted to the High, Court of Calcutta the question of law set out by us earlier. The High Court answered that question in favour of the assessee. 8 4 The Tribunal the final fact finding authority has ,come to the conclusion that the assessee had incurred a capital loss of Rs. 12,00,000/ as a result of the depreciation of the value of the shares of Elphinstone Mills Ltd. The question is whether that was a relevant circumstance for not 'declaring any dividend. The further ,question is whether the Directors of the assessee company acted as prudent businessmen in refraining from ,declaring any dividend. Section 23A (1) of the Act reads : " Where the Income tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that previous year are less than the statutory percentage of the total income of the company of that previous year as reduced by (a) the amount of income tax and super tax payable by the company in respect of its total income, but excluding the amount of any super tax payable under this section (b) the amount of any other tax levied under any law for the time being in force on the company by the Government or by a local authority in excess of the amount, if any, which has been allowed in computing the total income; and (c) in the case of a banking company, the amount actually transferred to a reserve fund under section 17 of the Banking Companies Act, 1949; the Income tax Officer shall, unless he is satisfied that, having regard to the losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable, make an order in writing that the company shall, apart from the sum deter mined as payable by it on the basis of the assessment under section 23, be liable to pay super tax at the rate of fifty per cent in the case of a company whose business consists wholly or mainly in the 85 dealing in or holding of investments, and at the rate of thirty seven per cent in the case of any other company on the undistributed balance of the total income of the previous year, that is to say, on the total income as reduced by the amounts, if any, referred to in clause (a), clause (b) or clause (c) and the dividends actually distributed, if any." Whether in a particular year dividend should be declared or not is a matter primarily for the Directors of a company. The Income tax Officer can step in under Section 23A (1) only if the Directors unjustifiably refrain from declaring dividend. If the Directors of a company had reasonable grounds for not declaring any dividend, it is not open for the Income tax Officer to constitute himself as a super Director. As observed by this Court in Commissioner of Income tax, West Bengal, vs Gangadliar Bannerjee and Co. (Pvt. ) Ltd. ' the Income tax Officer, in considering whether the payment of a dividend or a larger dividend than that declared by a company would be unreasonable within the meaning of Section 23A of the Act does not assess any income to tax. He only does what the directors should have done putting himself in their place. Though the object of the section is to prevent evasion of tax, the provision must be worked not from the standpoint of the tax collector but from that of a businessman. The reasonableness or unreasonableness of the amount distributed as dividends is judged by business considerations, such as the previous losses, the present profits, the availability of surplus money and the reasonable requirements of the future and similar others. The Income tax Officer must take an overall picture of the financial position of the business. He should put himself in the position of a prudent businessman or the director of a company and deal with the problem with a sympathetic and objective approach. On the facts found by the Tribunal, there can be hardly any doubt that the assessee had suffered a capital loss of Rs. 12,00,000/ . In our opinion, in view of the the said loss, any reasonable body of Directors of a company would have done just what the Directors of the (1) 86 assessee company did. We think, that the Income tax officer took an erroneous view of the scope of Section 23A (1). Mr. Mitra, learned counsel for the department contended that the assessee had not in fact incurred any loss though the value of the shares had gone down in the market. As the assessee was still in possession of those shares, there was still a possibility of avoiding the anticipated loss. Hence there was no occasion to take note of the depreciation in the value of the shares in the matter of declaration of dividends. This is an unacceptable contention. The Directors of a company will be justified in taking things as they stand and not befool themselves in the wild hope that the value of the shares may come up again. They are expected to act as hard headed businessmen. They are not expected to gamble with the future of the concern. The question is not whether the value of the shares may not go up in future but whether the Directors were justified in not declaring dividends in view of the loss incurred. The Income tax Officer overlooked the fact the Directors were naturally more interested in the stability of their concern rather than in increasing the tax payable to the Government. Before the High Court, it appears to have been urge Mr. Mitra rightly did not press that plea that the loss incurred being a capital loss the same cannot be taken into consideration in the application of Section 23A (1). This very contention was examined and rejected by the Judicial Committee in Commissioner of Income tax vs Williamson Diamonds Ltd.(1). In that case their Lordships were con sidering the scope of section 21 (1) "(Consolidation) Ordinance, 1950 of Tanganyika. " That provision corresponds very closely to Section 23A (1) of the Act. Dealing with the scope of that provision, their Lordships observed: "It does not follow from what has been said that capital losses should not be taken into account by the Commissioner. Two matters are mentioned specifically in the words which give him a direction the first is 'losses ' (as interpreted above) and the second is "smallness of profit." The Commissioner (1) 87 is directed to come to a decision upon the question whether "the payment of a dividend or a larger divdend than. that declared" his unreasonable. "The form of the word used no doubt lends itself to, the suggestion than regard should be paid only to the two matters mentioned, but it appears to their Lordships that it is impossible to arrive at a conclusion as to reasonableness by considering the two matters mentioned isolated from other relevant factors. Moreover, the Statute does not say 'having regard only ' to losses previously incurred by the company and to the smallness of the profits made. No answer which can be said to be in any measure adequate, can be given to the question "unreasonableness" considering these two matters only. Their Lordships are of the opinion that the Statute by the words used while making sure that "losses and smallness of profit" are never lost sight of require all matters relevant to the question of unreasonableness to be considered capital loss, if established is one of them. " We respectfully agree with these observations. For the reasons mentioned above, these appeals fail and they are dismissed with costs. One hearing fee. G.C. Appeals dismissed.

The assessee was a limited company doing business as selling agents of a Textile Mill. During the previous years relevant for the assessment years 1955 56 and 1956 57 the company had assessable profits but did not declare dividend, because capital loss far in excess of profits was incurred by it due to fall in value of its share holdings. The Income tax Officer exercised his powers under section 23A (1) and levied additional super tax on the distributable surplus in the relevant years. The Appellate Assistant Commissioner, the Tribunal and the High Court however, took the opposite view, holding that in the circumstances it was not reasonable to expect the company to declare dividend. In appeal to this Court by the Revenue, HELD : Whether in a particular year dividend should be declared or, not is a matter primarily for the Directors of a company. The Income tax Officer can step in under section 23A(1) only if the Directors unjustifiably refrain from declaring dividend. If the Directors of a company had reasonable grounds for not declaring any dividend, it is not open for the Income tax Officer to constitute himself as a super Director. Though the object of the section is to prevent evasion of tax, the provision must be worked not from the standpoint of the tax collector but from that of a business man. [85C E] Commissioner of Income tax, West Bengal vs Gangadliar Bannerjee & Co. (P) Ltd. 57 , relied on. In the present case in view of the capital loss of Rs. 12 lacs as found by the Tribunal, any reasonable body of Directors of a company would have done just what the Directors of the Assessee company did. The Income tax Officer took an erroneous view of section 23A (1). [85H] The fact that the company continued to hold the shares whose value could possible go up again was irrelevant. The Directors of a company will be justified in taking things as they stand and not be fool themselves in the wild hope that the value of the shares may come up again. [86C] It would be incorrect to say that capital loss cannot be taken into consideration in the application of section 23A(1). [86E F] Commissioner of Income tax vs Williamson Diamonds Ltd. , applied. 82

Appeal No. 87 of 1958. Appeal by special leave from the Award dated October 10, 1956, of the Industrial Tribunal, Bihar, Patna, in Reference No. 6 of 1956. R. J. Kolah, section N. Andley and Rameshwar Nath, for the appellants. B. C. Ghose and P. K. Chatterjee, for the respondents. 705 1959. September 11. The Judgment of the Court was delivered by section K. DAS J. This appeal by special leave from an award dated October 10, 1956, made by the Industrial Tribunal, Bihar, raises an important question of interpretation in the matter of a disqualification for lay off compensation under section 25E read with section 25C of the (hereinafter called the Act), and so far as we know, this is the first case of its kind in which the expression " in another part of the establishment " occurring in cl. (iii) of section 25E has come up for an authoritative interpretation. The facts are simple and are shortly set out below. The Associated Cement Companies Ltd., hereinafter called the Company, have a number of cement factories in different States of the Indian Union as also in Pakistan. There are two such factories in the State of Bihar, one at Khelari and the other at a place called Jhinkpani in the district of Chaibasa in Bihar. The latter factory is commonly known as the Chaibasa Cement Works. There is a limestone quarry owned by the same Company situate about a mile and a half from the Chaibasa Cement Works, the quarry being known as the Rajanka limestone quarry. Limestone is the principal raw material for the manufacture of cement and the Chaibasa Cement Works, depended exclusively for the supply of limestone on the said quarry. At the time relevant to this appeal there were two classes of labourers at the quarry, those employed by the Company through the management of the Chaibasa Cement Works and others who were engaged by a contractor. There was one union known as the Chaibasa Cement Workers ' Union, hereinafter called the Union, of which the Company 's labourers both at the Cement Works and the quarry were members. There was another union consisting of the contractor 's labourers which was known as the A. C. C. Limestone Contractor 's Mazdoor Union. On January 3, 1955, the Union made certain demands on the management on behalf of the labourers in the limestone quarry, but these were rejected by the management. Then, by a subsequent letter dated February 18, 706 1955, the General Secretary of the Union gave a notice to the Manager of the Chaibasa Cement Works to the effect that the Union proposed to organise a general stay in strike in the limestone quarry from March 1, 1955, if certain demands, details whereof are unnecessary for our purpose, were not granted on or before February 28,1955. A similar notice was also given on behalf of the A.C.C. Limestone Contractor 's Mazdoor Union. These notices led to certain efforts at conciliation which however, failed. On February 24, 1955, the management gave a notice to all employees of the Chaibasa Cement Works, in which it was stated that in the event of the strike materialising in the limestone quarry, it would be necessary for the management to close down certain sections of the factory at Jhinkpani on account of the non supply of limestone; the notice further stated that in the event of such closure, it would be necessary to lay off the workers not required during the period of closure for the sections concerned. The strike commenced on March 1, 1955, and lasted till July 4, 1955. On March 25, 1955, the management wrote to the General Secretary of the Union intimating to him that the workers in certain departments referred to in an earlier letter dated March 19, 1955, would be laid off with effect from April 1, 1955. On March 28, 1955, the management gave the lists of employees who were to be laid off with effect from April 1, 1955, and they were, actually laid off from that date. During the period of the strike fresh efforts at conciliation were made and ultimately the strike came to an end on July 5, 1955, when the Central Government referred the dispute between the management and the workers of the limestone quarry to the Central Industrial Tribunal at Dhanbad. This reference was, however, withdrawn by mutual consent in terms of a settlement arrived at on December 7, 1955. The details of this settlement are not relevant to this appeal. Thereafter, a demand was made by the Union for payment of lay off compensation to those workers of Chaibasa Cement Works who had been laid off for the period April 1, 1955, to July 4, 1955. This demand 707 was refused by the management. This gave rise to an industrial dispute which was referred by the Government of Bihar under section 10 of the Act to the Industrial Tribunal, Bihar. The terms of reference set out the dispute in the following words: " Whether the workmen of the Chaibasa Cement Works are entitled to compensation for lay off for the period from April 1, 1955, to July 4, 1955. " The parties filed written statements before the Industrial Tribunal and the only witness examined in the case was Mr. Dongray, Manager of the Chaibasa Cement Works, Jhinkpani. At this point it is necessary to read the two sections of the Act which relate to the right of workmen to lay off compensation and the circumstances in which they are disqualified for the same. The right is given by section 25C and the disqualification is stated in three clauses of section 25E, of which the third clause only is important for our purpose. We now proceed to read sections 25C and 25E so far as they are material for our purpose. " section 25C. (1) Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid off, he shall be paid by the employer for all,days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent. of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off. " " section 25E. No compensation shall be paid to a workman who has been laid off (i) . . . . (ii). . . . (iii) if such laying off is due to a strike or slowing down of production on the part of workmen in another part of the establishment." 708 Now, the central point round which the controversy between the parties has raged is this. Was the lay off of the workers in certain sections of the Chaibasa Cement Works due to a strike on the part of workmen in another part of the establishment within the meaning of cl. (iii) of section 25E ? In other words, was the limestone quarry at Rajanka part of the establishment known as the Chaibasa Cement Works? The contention of the management was and is that the Cement Works and the limestone quarry form one establishment within the meaning of cl. (iii) aforesaid. The contention on behalf of the workmen is that they are not parts of one establishment but are separate establishments. The learned Chairman of the Industrial Tribunal held, for reasons which we shall presently discuss, that the limestone quarry was not part of the establishment known as the Chaibasa Cement Works and the workmen in the latter were not disentitled to lay off compensation by reason of cl. (iii) of section 25E. The correctness of this view is the principal point for decision in this appeal. On behalf of the respondent workmen it has been contended that the conclusion of the Industrial Tribunal that the factory at Jhinkpani and the limestone quarry at Rajanka are not parts of one establishment is a finding of fact and this appeal should be disposed of on that footing. We do not think that this contention is correct and we shall presently deal with it. We propose, however, to examine first the relation between the limestone quarry at Rajanka and the cement factory at Jhinkpani in the light of the evidence given before the Tribunal and the findings arrived at by it; because they will show the process of reasoning by which the Tribunal came to its final conclusion. The evidence was really one sided and the only witness examined was Mr. Dongray, Manager of the Chaibasa Cement Works. Now, the relation between the limestone quarry and the factory can be considered from several points of view, such as (1) ownership, (2) control and supervision, (3) finance, (4) management and employment, (5) geographical proximity and (6) general unity of purpose and functional integrality, 709 with particular reference to the industrial process of making cement. On all that above points Mr. Dongray gave evidence. It was not disputed that the Company owned the limestone quarry as also the factory and there was unity of ownership. Mr. Dongray 's evidence further showed that there was unity of control, management and employment. He said that the limestone quarry was treated as a part and parcel of the Chaibasa Cement Works, that is, as a department thereof and he as the Manager was in overall charge of both, though there was a Quarry Manager in charge as a departmental head under him. On this point Mr. Dongray said: " There is a Manager appointed for the quarries. The Manager is working under me. The Cement Works itself has about eight or nine departments under it. There are heads of each department. The Manager of the quarry has the same status as the heads of other departments at the Cement Works. " This was supported by a circular letter dated March 11, 1952, which said that the entire factory and the associated quarries were under the sole control of the Manager, who was responsible for maintaining full output at economic cost up to the expected standard. The circular letter further stated that all orders and contracts were to be issued by the Manager for the working of the factory and quarries and the relevant bills were to be passed by him. As to finance and conditions of employment, Mr. Dongray said: " All requirements of the quarry are sent by the Manager there to the office of the Cement. Works and if they are available in the Cement Works Stores, they are issued from there; otherwise I indent them from the Bombay office or purchase them locally. There is no account office in the quarries and their account is maintained in the Cement Works ' Office. I as Manager of the Chaibasa Cement Works make payment for the indents or requirements of the quarries stated above. The quarry has no separate banking account. The Quarry Manager is not entitled to operate banking account apart from myself At the quarries there are daily rated workers and monthly paid staff. 90 710 To the daily paid workers in the quarries, the cashier of the Cement Works or his Assistant makes payment, when required. The monthly paid staff of the quarries come to the Cement Office for receiving payment. In the Cement Works we have got a system of allocation of work for different jobs every day. It is done by the Departmental Heads. Same system prevails in the quarries also. The Quarry Manager does the distribution as head of that department. Attendance Register is maintained at the quarry in the same way as it is done in the different departments of the Cement Works. There is only one common pay sheet for all the monthly paid staff, whether he is at the factory or in the quarries. For the daily rated workers we have got different sheets department wise and there is one such sheet for the daily workers of the quarry as well. There is one summary sheet of the payment showing the payment of all the departments including the payment in the quarries as well. I have to send statutory intimation to the authorities under the Mines Act regarding the quarries for working faces and other accidents etc. The staff and workers working in the quarries are transferable to the Cement Works according to the exigencies of the work and also vice versa. There have been a few instances of such transfers. The terms and conditions of service, for instance, T. A., leave, provident fund, gratuity, etc., are same for workers in the Cement Works as also the workers in the quarries. We got the application of the statutory provident fund rules extended to our department in the quarries also. The report of the working of the quarry comes to me from the Manager there from time to time. I as Manager of the Cement Marks make payments of royalties in in respect of limestones raised from the quarries. Payments for compensation, maternity benefits, accidents, etc., in the quarry are made under my authority by the factory office and not by the Quarry Manager. " Exhibits 1 to 26 filed on behalf of the management, which showed the working of the quarry and the 711 factory, supported the aforesaid evidence of Mr. Dongray; they showed, as has been observed by the Tribunal itself, that the management was maintaining one common account and the final authority on the spot in respect of the quarry as also in respect of other departments of the factory was Mr. Dongray, the Manager. There were also other documents to show that the transfer of members of the staff from the quarry to the factory and vice versa was made by Mr. Dongray according to the exigencies of service. It is worthy of note here that the Union itself gave notice to the Manager of the factory with regard to the intended strike in the limestone quarry. The geographical proximity of the limestone quarry was never in dispute. It was adjacent to the factory, being situate within a radius of about a mile. As to general unity of purpose and functional integrality, this was also not seriouly in dispute. Mr. Dongray said that limestone was the principal raw material for the manufacture of cement and the cement factory at Jhinkpani depended exclusively on the supply of limestone from the quarry at Rajanka. His evidence no doubt disclosed that some excess limestone was sent to the factory at Khelari as well. On this point Mr. Dongray said: " Limestone from this quarry is at times sent to the Khelari Cement Works, but that is very rare and in small quantity. It is done only in cases of emergency." Mr. Dongray explained that the normal number of departmental workers in the quarry before the strike was in the neighbourhood of 250; but there were about 1,000 workers employed by contractors. The number of daily rated workers was in the neighbourhood of 950 and the total monthly paid staff varied from 100 to 105. The wages paid to the workers in the quarry were debited to limestone account of the Cement Works, and in the matter of costing, the amount spent on limestone was also debited. The bank accounts, however, were in the name of the Company and the persons who were entitled to operate on those accounts were Mr. Dongray, the Manager, the Chief Engineer, and the Chief Chemist of the Cement Works. 712 All the aforesaid evidence, oral and documentary, was apparently accepted by the Tribunal as correct; for the learned Chairman summarised the evidence of Mr. Dongray without any serious adverse comment. He then referred to certain contentions urged on behalf of the Union, which he said were not without force. We may now state those contentions. The first contention was that under the provisions of the Act, the appropriate authority in respect of the factory at Jhinkpani was the State Government of Bihar, whereas the appropriate authority in respect of the limestone quarry, which was a mine as defined in the , was the Central Government. The second con tention was that there were two sets of Standing Orders, one for the workmen of the factory and the other for the workmen in the limestone quarry. The third contention was that the limestone quarry had an office of its own and a separate attendance register, and the fourth contention was that under the provisions of the , Mr. Dongray was an Agent in respect of the limestone quarry and there was a separate Manager who was responsible for the control, management and direction of the mine under the provisions of section 17 thereof. The learned Chairman referred to certain criticisms made in respect of the evidence of Mr. Dongray. One criticism was that though the Company was the owner of both the factory and the limestone quarry, it had also factories and limestone quarries at other places in India and Pakistan and if the test of one ownership were the determining test, then all the factories and limestone quarries of the Company wherever situtate would be one establishment. This criticism was not, however, pertinent because the Company never claimed that all its factories in different parts of India and Pakistan formed one establishment by reason of unity of ownership only. The other criticism was that Mr. Dongray admitted that, if necessary in the interest of service, the workmen at the Chaibasa Cement Works could be transferred to some other factory of the Company and therefore transferability was not a sure test. This criticism was also not germane, because the Company 713 never claimed that transferability was the only sure test. A third criticism also advanced on behalf of the workmen was that Mr. Dongray admitted that all the accounts of the different factories and limestone quarries of the Company were ultimately consolidated into one Profit and Loss Account, a criticism which in our view was equally not pertinent to the question at issue. The learned Chairman then expressed his final finding in the following words: " From these and other admissions made by Mr. Dongray it would appear that it is only for economy and convenience that he was given charge of the control of both the concerns but his capacity was dual. While he was controlling the Cement Works as it Works Manager he had the control of the quarries as its Agent under the . It has also to be noted that if both these establishments which are inherently different by their very nature are treated as one and the same, anomalous position may arise in dealing with the employees in the quarries in matters of misconduct and such other things if there is a pendency of a dispute in the Cement Works and vice versa. Obviously, the employees of the Cement Works have to be dealt with by the State Tribunal while the employees of the quarries by the Central Tribunal. This also nullifies the force of the management 's contention that both are parts of the same establishment. Considering these it has to be held that the contention of the management fails and that of the Union must prevail. " We now revert to the contention urged on behalf of the respondent that this appeal should be disposed of on the footing that the final conclusion of the Industrial Tribunal is a finding of fact. The judgment of the Tribunal itself shows that the final conclusion was arrived at by a process of reasoning which involved a consideration of several provisions of the Act and some provisions of the . The Tribunal accepted a major portion, if not all, of the evidence of Mr. Dongray; but it felt compelled to hold against the appellant despite that evidence by reason of an 714 anomalous position which, it thought, would arise if the factory and the quarry were held to be one establishment. The question before the Tribunal, and this is also the question before us, was the true scope and effect of cl. (iii) of section 25E of the Act, with particular reference to the expression " in another part of the establishment " occurring therein. That question was not a pure question of fact, as it involved a consideration of the tests which should be applied in determining whether a particular unit is part of a bigger establishment. Indeed, it is true that for the application of the tests certain preliminary facts must be found; but the final conclusion to be drawn therefrom is not a mere question of fact. Learned counsel for the respondent is not, therefore, justified in asking us to adopt the short cut of disposing of the appeal on the footing that a finding of fact should not be disturbed in an appeal by special leave. In this case we cannot relieve ourselves of the task of determining the true scope and effect of cl. (iii) of section 25E by adopting the short cut suggested by learned counsel. We proceed now to consider what should be the proper tests in determining what is meant by " one establishment ". Learned counsel for the respondent has suggested that the test has been laid down by the Legislature itself in the Explanation to section 25A of the Act. That Explanation states: " In this section and in sections 25C, 25D and 25E, "industrial establishment " means (i) a factory as defined in clause (m) of section 2 of the ; or (ii) a mine as defined in clause (j) of section 2 of the ; or (iii) a plantation as defined in clause (f ) of section 2 of the . " The argument is that the Explanation states in clear terms what an industrial establishment means in certain sections of the Act including section 25E, and on a proper construction it negatives the idea of a factory and a mineforming parts of one establishment. Curiously enough, section 25E does not contain the 715 expression "industrial establishment". It uses the word " establishment " only. We agree, however, that if section 25E is read with section 25C and the definition of " layoff " in section 2 (kkk) of the Act, as it must be read, the word " establishment " in section 25E has reference to an industrial establishment. On the footing that the word " establishment " in section 25E means an industrial establishment, what then is the effect of the Explanation ? The contention of the respondent is that an industrial establishment may be either a factory as defined in clause (m) of section 2. of the , or a mine as defined in cl. (j) of section 2 of the , or a plantation as defined in cl. (f) of section 2 of the ; but it cannot be a combination of any two of the aforesaid categories; therefore, a factory and a mine together, as in the present case, cannot form one establishment. This argument proceeds on the assumption that the Explanation while stating what undertakings or enterprises come within the expression " industrial establishment " necessarily lays down the test of 'one establishment ' also. We do not think that there is any warrant for this assumption. The Explanation only gives the meaning of the expression " industrial establishment " for certain sections of the Act; it does not purport to lay down any test as to what constitutes one ' establishment '. Let us take, for example, a factory which has different departments in which manufacturing processes are carried on with the aid of power. Each department, if it employs ten or more workmen, is a factory within the meaning of cl. (m) of section 2 of the ; so is the entire factory where 1,000 workmen may be employed. The Explanation merely states that an undertaking of the nature of a factory as defined in cl. (m) of section 2 of the , is an industrial establishment. It has no bearing on the question if in the example taken, the factory as a whole or each department thereof should be treated as one establishment. That question must be determined on other considerations, because the Explanation does not deal with the question of one establishment. In our view, the true scope and effect 716 of the Explanation is that it explains what categories, factory, mine or plantation, come within the meaning of the expression " industrial establishment " ; it does not deal with the question as to what constitutes one establishment and lays down no tests for determining that question. We cannot, therefore, accept the argument of learned counsel for the respondent that a factory and a mine, a mine which supplies the raw material to the factory, can never be one establishment under the Act; that we do not think is the effect of the Explanation to section 25A. The Act not having prescribed any specific tests for determining what is 'one establishment ', we must fall back on such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment, having regard no doubt to the scheme and object of the Act and other relevant provisions of the , or the . What then is ' one establishment ' in the ordinary industrial or business sense ? The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment. Where, however, the industrial undertaking has parts, branches, departments, units etc. with different locations, near or distant, the question arises what tests should be applied for determining what constitutes 'one establishment '. Several tests were referred to in the course of arguments before us, such as, geographical proximity, unity of ownership, management and control, unity of employment and conditions of service, functional integrality, general unity of purpose etc. To most of these we have referred while summarising the evidence of Mr. Dongray ,and the findings of the Tribunal thereon. It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units etc. If in their true relation they constitute one integrated whole, we say 717 that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for con sideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities it may be difficult to discover the real thread of unity. In an American decision (Donald L. Nordling vs Ford Motor Company (1)) there is an example of an industrial product consisting of, 3,800 or 4,000 parts, about 900 of which came out of one plant; some came from other plants owned by the same Company and still others came from plants independently owned, and a shutdown caused by a strike or other labour dispute at any one of the plants might conceivably cause a closure of the main plant or factory. Fortunately for us, such complexities do not present themselves in the case under our consideration. We do not say that it is usual in industrial practice, to have one establishment consisting of a factory and a mine; but we have to remember the special facts of this case where the adjacent limestone quarry supplies the raw material, almost exclusively, to the factory ; the quarry is indeed a feeder of the factory and without limestone from the quarry, the factory cannot function. Ours is a case where all the tests are fulfilled, (1) 272. 91 718 as shown from the evidence given on behalf of the appellant to which we have earlier referred. There are unity of ownership, unity of management, supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity. We shall presently deal with the legal difficulties at which the Tribunal has hinted and which have been elaborated by learned counsel for the respondent. But apart from them, the only fair conclusion from the facts proved in the case is that the Chaibasa Cement Works consisting of the factory and the limestone quarry form one establishment. The existence of two sets of Standing Orders and a separate attendance register for the limestone quarry have already been adverted to. They have been sufficiently explained by Mr. Dongray, particularly the existence of two sets of Standing Orders by reason of the statutory requirement of approval by different authorities one set by the Labour Commissioner, Bihar, and other by the relevant Central authority. We proceed now to consider the legal difficulties which according to learned counsel for the respondent stand in the way of treating the limestone quarry and the factory as one establishment. The Tribunal has merely hinted at these difficulties by saying that an anomalous position will arise if the quarry and the factory are treated as one establishment. It is necessary to refer briefly to the scheme and object of lay off compensation and the disqualifications therefor as envisaged by the relevant provisions in Chapter VA of the Act. That chapter was inserted by the Industrial Disputes (Amendment) Act, 1953 (43 of 1953), which came into effect from October 24, 1953. The right of workmen to lay off compensation is obviously designed to relieve the hardship caused by unemployment due to no fault of the employee; involuntary unemployment also causes dislocation of trade and may result in general economic insecurity. Therefore, the right is based on grounds of humane public policy and the statute which gives such right should be 719 liberally construed, and when there are disqualifying provisions, the latter should be construed strictly with reference to the words used therein. Now, section 25 gives the right, and there are three disqualifying clauses in section 25E. They show that the basis of the right to unemployment compensation is that the unemployment is involuntary; in other words, due to no fault of the employees themselves; that is why no unemployment compensation is payable when suitable alternative employment is offered and the workman refuses to accept it as in cl. (1) of section 25E ; or the work man does not present himself for work at the establishment as in cl. (ii); or when the laying off is due to the strike or slowing down of production on the part of workmen in another part of the establishment as in cl. (iii). Obviously, the last clause treats the work men in one establishment as one class and a strike of slow down by some resulting in the laying off of other workmen disqualifies the workmen laid off from claiming unemployment compensation, the reason being that the unemployment is not really involuntary. It is against this background of the scheme and object of the relevant provisions of the Act that were must now consider the legal difficulties alleged by the respondent. The first difficulty is said to arise out of section 17 of the . That section says in effect that every mine shall be under a Manager having prescribed qualifications who shall be responsible for the control, management and direction of the mine; it is then pointed out that the word 'agent ' in relation to a mine means a person who acts as the representative of the owner in respect of the management of the mine and who is superior to a Manager. The argument is that the limestone quarry at Rajanka had a ' Manager ' under the , and Mr. Dongray acted as the agent, that is, representative of the owner, viz., the Company; and this arrangement which was in consonance with the provisions of the , it is argued, made the factory and the quarry two separate establishments. We are unable to accept this argument as correct. We do not think that section 17 of the , has any relevance 720 to the question whether the limestone quarry was part of a bigger establishment. It prescribes the appointment of a Manager for purposes of the , and does not deal with the question of 'one establishment ' within the meaning of cl. (iii) of section 25E of the Act. The fact that the quarry Manager worked under the overall control and supervision of Mr. Dongray showed, on the facts proved in this case, just the contrary of what learned counsel for the respondent has contended ; it showed that the factory and the quarry were treated as one establishment. The second difficulty is said to arise out of certain provisions of the Act which relate to the constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and the reference of industrial disputes to these bodies for settlement, inquiry or adjudication. The scheme of the Act is that except in the case of National Tribunals which are appointed by the Central Government, the appropriate Government makes the appointment of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and it is the appropriate Government which makes the refer ence under section 10 of the Act. Now, the expression appropriate Government is defined in section 2(a) of the Act. So far as it is relevant for our purpose, it means the Central Government in relation to the limestone quarry at Rajanka and the State Government of Bihar in relation to the factory at Jhinkpani. We had stated earlier in this judgment that in this very case the original dispute between the management and the workmen in the limestone quarry was referred to the Central Tribunal at Dhanbad, while the latter dispute about lay off compensation to workmen of the factory was referred by the Government of Bihar to the Industrial Tribunal at Patna. The argument before us is that when the statute itself brings the two units, factory and mine, under different authorities, they cannot be treated as one establishment for the purposes of the same statute. Our attention has also been drawn to section 18(3) of the Act under which in certain circumstances, a settlement arrived at in the course of conciliation proceedings under the Act or an award of 721 a Labour Court or Tribunal is made binding " on all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. " It is contended that it will be difficult to apply section 18(3) if the factory and the limestone quarry are treated as one establishment. Lastly, learned counsel for the respondent has referred us to section 33 of the Act. Sub section (1) of that section, in substance, lays down that during the pendency of any conciliation proceedings or of any proceeding before a Labour Court or Tribunal in respect of any industrial dispute, no employer shall alter the conditions of service to the prejudice of workmen or punish any workmen, save with the permission in writing of the authority before which the proceeding is pending. Sub sections (2) and (3) we need not reproduce, because for the purposes of this _ appeal, the argument is the same, which is that if a proceeding is pending before a Central Tribunal, say in respect of the limestone quarry, there will be difficulty in applying the provisions of section 33 in respect of workmen in the factory over which the Central Tribunal will have no jurisdiction. The Industrial Tribunal did not specifically refer to these provisions, but perhaps, had them in mind when it said that an anomalous position would arise if the factory and the quarry were treated as one establishment. We have given our most earnest consideration to these arguments, but are unable to hold that they should prevail. It is indeed true that in the matter of constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and also in the matter of reference of industrial disputes to them, and perhaps for certain other limited purposes, the Act gives jurisdiction to two distinct authorities, the Central Government in respect of the limestone quarry and the State Government in respect of the factory. The short question is does this duality ' of jurisdiction, dichotomy one may call it, necessarily imply that for all purposes of the Act, and particularly for 722 payment of unemployment compensation as per the provisions in Ch. VA, the factory and the quarry must be treated as separate establishments. We are unable to find any such necessary implication. There is no provision in the Act which says that the existence of two jurisdictions has the consequence contended for by learned counsel for the respondent; nor do we find anything in the provisions creating two jurisdictions which by reason of the principle underlying them or by their very nature give rise to an implication in law that the existence of two jurisdictions means the existence of two separate establishments. On the contrary, such an implication or inference will be at variance with the scheme and object of unemployment compensation as provided for by the provisions in Ch. VA of the Act. We have pointed out earlier that the object of unemployment compensation is to relieve hardship caused by involuntary unemployment, that is, unemployment not due to any fault of the employees. If in the ordinary business sense the industrial establishment is one, a lay off of some of the workmen in that establishment as a result of a strike by some other workmen in the same establishment cannot be characterised as involuntary unemployment. To hold that such an establishment must be divided into two separate parts by reason of the existence of two jurisdictions is to import an artificiality for which we think there is no justification in the provisions of the Act. Nor do we think that sections 18(3) and 33 present any real difficulty. Section 18(3) clearly contemplates a settlement or an award which is binding on a part of the establishment. It says so in express terms. If, therefore, in the case before us there is a settlement or award in respect of the limestone quarry, it will be binding in the circumstances mentioned in the subsection, on the workmen in that part of the establishment which is the limestone quarry. Similarly, a settlement or award in respect of the factory will be binding on the workmen of the factory. Section 33, as far as it is relevant for the argument now under consideration, is in two parts. Sub section (1) relates 723 to a matter connected with the dispute in respect of which a proceeding is pending. Sub section (2) relates to a matter not connected with the dispute in respect of which the proceeding is pending. In one case permission of the authority before which the proceeding is pending has to be obtained for punishing etc. ; in the other case, an application for approval of the action taken by the employer has to be made. We see no difficulty in applying section 33 in a case like the one before us. For workmen in the mine, the authority will be the one appointed by the Central Government; for the factory, the authority will be that appointed by the State Government. This is the same argument as the argument of two jurisdictions in another form. The assumption is that there cannot be two jurisdic tions for two parts of one establishment. This argument is valid, if the assumption is correct. If, however, there is no warrant for the assumption, as we have held there is none, then the argument has no legs to stand upon. So far we have dealt with the case irrespective of and apart from reported decisions, because there is no decision which really covers the point in controversy before us. Learned counsel for the appellant has referred to the decisions in Hoyle vs Cram (1) and Coles vs Dickinson (2 ). The question in the first case was if the appellants there were liable to be convicted of an offence against the Bleaching Works Act, 23 and 24 Vict. c. 78 in employing the child without a school master 's certificate. It was held that a child employed on the premises where the bleaching, dyeing and finishing were performed was employed in an incidental printing process within the second section of 8 and 9 Vict. c. 29; and that the place where he was so employed formed part of " the establishment where the chief process of printing was carried on " within the meaning of that Act. The decision proceeded mainly on the words of the statute; but Earle, C.J., said: " It appears that the works at Mayfield having some years ago become inadequate, by reason of the (1) ; (2) ; ; 724 increase of the business and by the detorioration and deficiency of the water of the river Medlock, the appellants transferred part of their works to Sandy Vale: but that the principal part of the work continued to be carried on at Mayfield, which was the principal seat of the firm. In a commercial sense, therefore, Sandy Vale clearly was part of one entire establishment. It was contended for the respondent that the statute did not mean forming part in a commercial sense, but in a popular and local sense. But I see no reason for confining the meaning to local proximity. The whole substantially forms one establishment. " In the second case the question was this : by the 73rd section of 7 and 8 Vict. c. 15, premises which are used solely for the manufacture of paper were excluded from the operation of the Factory Acts; there were two mills, one at Manchester and the other in Hertfordshire. The Manchester mill prepared what was called half stuff which was sent to the mill in Hertfordshire to be manufactured into paper, and the question was if the Manchester mill was exempted from the operation of the Factory Acts. The answer given was in the affirmative. It was stated that each step in the process was a step in the manufacture of paper, and the distance between the two places where the several parts were carried on was wholly immaterial in view of the words of the statute. The last decision to which our attention has been drawn is the American decision in Donald L. Nordling vs Ford Motor Company (1). This decision is perhaps more in point as it related to unemployment compensatiOn. The statute in that case provided that an individual losing his employment because of a strike or other labour dispute should be disqualified during its process " at the establishment in which he is or was employed ". The claimants there had been employed at a Minnesota automobile assembly plant which was partially shut down because of a lack of parts due to a strike at a manufacturing plant owned and operated by the same corporation in Michigan. The Minnesota Supreme Court to which an application was made for (1) 272. 725 a certiorari to review a decision of the director of the division of employment and security reviewed the tests which have generally been applied for determining what is meant by the term ' establishment ' within the meaning of the statute concerned; it pointed out that there was no uniformity of decision on the question and it was not possible to lay down an absolute or invariable test. The decision was based on the broader ground that the tests of functional integrality, general unity and physical proximity should all be taken into consideration in determining the ultimate question of whether a factory, plant or unit of a larger industry is a separate establishment within the meaning of the employment and security law. The test which was emphasized in that case was the test of the unity of employment and on that footing it was found that the evidence was ample to support the director 's finding that the Minnesota plant was a separate establishment. We do not think that these decisions carry the matter any further than what we have explained in earlier paragraphs of this judgment. We must have regard to the provisions of the statute under which the question falls to be considered; if the statute itself says what is one establishment, then there is no difficulty. If the statute does not, however, say what constitutes one establishment, then the usual tests have to be applied to determine the true relation between the parts, branches etc. , namely, whether they constitute one integrated whole or not. No particular test can be adopted as an absolute test in all cases of this type and the word 'establishment ' is not to be given the sweeping definition of one organisation of which it is capable, but rather is to be construed in the ordinary business or commercial sense. For the reasons which we have already given, we are of the view that the learned Chairman of the Industrial Tribunal wrongly held that the limestone quarry at Rajanka and the factory at Jhinkpani were separate establishments. In our view, they constituted one establishment within the meaning of cl. (iii) of 92 726 s.25E of the Act. It was conceded on behalf the respondent workmen that the lay off in the factory was due to the non supply of limestone by reason of the strike in the limestone quarry and the strike was decided on by the same Union which consisted of the workmen at the factory and the quarry. That being the position, the disqualification in cl. (iii) aforesaid clearly applied and the workmen at the factory were not entitled to claim lay off compensation. The result, therefore, is that the appeal succeeds and is allowed and the award of the Industrial Tribunal is set aside. In the circumstances of the case in which a difficult question of interpretation arose for decision for the first time, we pass no order as to costs. Appeal allowed.

The appellants were carrying on motor transport business in Krishna District in Andhra Pradesh. The General Manager of the State Transport Undertaking published a scheme for nationalisation of motor transport and objections to the said scheme were invited. The appellants, among others, filed their objections. The Secretary in charge of the Transport Department gave personal hearing to the objectors and heard the representation made on behalf of the State Transport Undertaking. The Chief Minister, who was in charge of transport, passed the order approving the scheme. The appellants moved this Court under article 32 of the Constitution for quashing the said scheme and this Court in Gullapalli Nageswara Rao vs Andhra Pradesh Road Transport Corporation, previously decided, held that the Secretary in charge of the Transport Department was incompetent to hear the objections on the around that no party could be a judge in his own cause and quashed the order approving the scheme. Thereafter notices were issued by the Government to the objectors. The Chief Minister himself heard the representatives of the objectors and the Road Transport Corporation and passed the order approving the scheme as originally published. The appellants moved the High Court under article 226 of the Constitution for writs of certiorari quashing the order passed by the Government confirming the scheme and subsequent orders Made by the Regional Transport Authority canceling their stage carriage permits. The High Court rejected the petitions and the appellants appealed. It was contended, inter alia, on their behalf that the same infirmity which attached to the Secretary in charge of the Transport Department on the previous occasion, attached to the Chief Minister, who was in charge of transport, and rendered him incompetent to hear the objections. Held, that the two well settled principles of the doctrine of bias that applied equally to judicial as well as quasi judicial tribunals, were, (i) that no man shall be a judge in his own cause and that (2) justice should not merely be done but must also appear to be done. Any kind of bias, therefore, in a judicial authority, whether financial or other, for or against any party, or any position that might impute bias, must disqualify him as a judge. 581 But when a State Legislature or the Parliament, in trans gression of the aforesaid principles, by statute empowers an authority to be a judge in its own cause or decide a dispute in which it has an official bias, such statute, unlike one passed by the English Parliament, has to stand scrutiny in the light of the fundamental rights enshrined in the Constitution. The King vs Bath Compensation Authority, and The King vs Leicester justices, [1927] i K.B. 557, discussed. In the instant case, however, the relevant provisions of the Act do not sanction any transgression of the aforesaid principles of natural justice or authorise the Government to constitute itself a judge in its own cause. Nor could it be said that the State Government, in the present case, acted in violation of the aforesaid principles. Since the appellants never questioned the competence of the Chief Minister to decide the objections on the last occasion and obtained the judgment of this Court on that basis, it was not open to them at this stage to reopen the closed controversy or take a contrary position. The position of the Chief Minister was quite distinct from that of the Secretary of the Department. While the Secretary of the Department was its head and so a part of it, the Minister in charge was only primarily responsible for the disposal of the business pertaining to that Department. It was not, therefore, correct to say that the Chief Minister was a part of the Department constituted as a Statutory Undertaking under the Act.

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

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