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Appeal No.1539 of 1971.
(From the Judgment and Order dated 5 8 1969 of the Allahabad High Court in Special Appeal No. 58/65).
B.B. Ahuja and R.N. Sachthey, for the Appellant.
A.T.M. Sampath and Ram Lal, for Respondent No. 1. 215 The Judgment of the Court was delivered by SARKARIA, J.
This appeal on certificate is directed against an appellate judgment, dated August 5, 1969, of a Bench of the High Court of Allahabad.
It arises as follows: M/s. S.B. Singar Singh and Sons (hereinafter called the assessee) were assessed to Excess Profits tax for the chargeable accounting periods, ending March 31, 1945 and March 31, 1946.
under two assessment orders dated August 26, 1949.
The previous years 193637 was chosen by the assessee as his standard period.
" The profits of that year were Rs. 38,703/ .
After deducting the profits of the standard year, the Excess Profits Tax Officer, assessed the tax on the remaining amounts of profits.
The Excess Profits Tax thus assessed for the accounting years, was to the tune of Rs. 1,06,181.5 and Rs. 48,978/ , respectively.
In his orders, the assessing Officer said that "for reasons detailed in the earlier assessment orders no adjustments are made for capital variations in the standard period and the chargeable accounting period".
These reasons as given in the earlier assessment order, dated October 30, 1947, per taining to the chargeable accounting period ending March 31, 1944, were: "As complete and regular accounts are not maintained by the assessee, it is not possible to make any adjustment for variations in average capital which cannot be accurately ascertained".
Against the orders of assessment, the assessee preferred two appeals on September 24, 1949 to the Assistant Appellate Commissioner.
By two separate applications dated October 24, 1949, the assessee took an additional ground of appeal which obvious ly he had not taken in the original memorandum of appeal that the Excess Profits Tax Officer had erred in not allowing adjustments on account of the increase and decrease of capital in the relevant chargeable accounting period.
The assessee added that he "was always prepared to file his computa tions of average capital".
Dismissing the appeals by his orders, dated November 24, 1949, the Assist ant Appellate Commissioner negatived the assessee 's contention, in these terms: "As in these years no regular accounts have been maintained and it is not possible to make any adjustment for variations in average capital which cannot be exactly ascertained.
No figures have been shown to me, nor has any exact working been fur nished at this stage.
The accounts are left in the same manner as for the earlier years.
Profits in the major accounts had to be worked out by the application of a rate to the turnover.
I am, thus, unable to allow this contention.
" Aggrieved, the assessee carried appeals to the Income tax Appellate Tribunal.
In the memoranda of appeals, one of the specific grounds taken was, that "the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing to the assessee proper standard profits in accordance with the standard period subject to the adjust ment on account of the increase and decrease of capital in the relevant chargeable accounting period.
" It was reiter ated that "the 216 appellant was always prepared to file his computation of average capital.
" This ground relating to standard profits was not dis cussed by the Tribunal and no finding was recorded thereon.
The Excess Profits Tax Appeals and other Income tax appeals filed by the assessee were heard together by the Tribunal and disposed of by common orders dated February 24, 1951.
In the Income tax appeals, some relief was granted, but in the Excess Profits appeals, no relief was granted due to the variation of the capital in the chargeable accounting period of 1945 46 and 1946 47.
The assessee on July 27, 1951, made an application under section 35 of the Income tax Act, 1922 for rectification of its order to the Tribunal on grounds other than the one regarding variation in the standard profits due to increase and decrease of the capital.
This application was dismissed on August 27, 1951 by the Tribunal on the ground that there was no mistake apparent on the record.
No grievance was made in this application that the Tribunal did not consider and decide the ground relating to adjustment of standard profits according to variation in capital during the relevant peri od.
On March 11, 1954, the assessee made a representation to the Central Board of Revenue praying for reopening of the assessments.
In this representation, also, he did not take up Ground No. 1.
Subsequently however on May 24, 1954 he wrote a letter to the Income tax Officer saying that he was sorry to omit 'one important point ' i.e., Ground No. 1, from his representation to the Board, and that the Income tax Officer should "supplement the same while making (his) report to the higher authorities. '
His representation dated March 11, 1954 and the petition dated May 24, 1954, both were rejected and the Commissioner communicated those rejec tions to the assessee by a letter dated May 25, 1955, saying that he did not see any justification for re opening the assessments which had become final and closed.
Thereafter on April 2, 1956, the assessee made a second application to the Tribunal (which in substance was one for review of its orders, dated .February 24, 1951), contending that Ground No. 1 raised in his two appeals, relating to the standard profits of the two chargeable accounting periods and pointing out the failure of lower authorities to make necessary adjustments in such profits according to section 6 of the Excess Profits Tax Act (hereinafter referred to as Ground No. 1 ) was not disposed of by the Tribunal.
It was prayed that the appeals relating to excess profits tax matters which should be deemed to be still pending owing to the non decision of Ground No. 1 be disposed of after hear ing the assessee.
The Tribunal rejected this contention with the remark that the appeals were decided as early as 24th February, 1951 and it is now futile to contend that the matter was pending when the Tribunal had already passed orders and the orders were served on the assessee.
" The Tribunal further observed that the absence of a reference "to the contention of the assessee regarding the standard profits and the necessary adjustments would not render the Tribunal 's order a nullity, nor would it mean that the Tribunal had partially disposed of the appeals and some residue is pending".
In the alternative, it held that even on the assumption that 217 Ground No. 1 was argued and was not disposed of by the Tribunal, the proper remedy for the assessee was either to apply for rectification under section 35 or to move an applica tion under section 66.
The Tribunal refused to treat this application as one for rectification because, in its opinion, such an application would be much too time barred.
In the result, the Tribunal dismissed that application by an order dated June 9, 1956.
The assessee had filed a reference application, also under section 66(1) the Income tax Act in these cases.
That application was dismissed by the Tribunal on August 28, 1951.
The assessee then made applications under section 66(2) of the Income tax Act before the High Court requesting for reference on certain question of law arising out of the order, dated February 24, 1951, of the Tribunal.
In these applications, alsO, he did not ask for reference on a question relating to Ground No. 1 (regarding adjustment of standard profits).
These applications were allowed by the High Court by an order, dated April 12, 1956, whereby the Tribunal was directed to state a case and refer for decision certain questions of law to the High Court.
Thereafter, during the proceedings before the Tribunal for preparation of the statement of the case, the assessee moved an application, dated July 23, 1957, requesting it to refer the question of adjustment of standard profits on account of increase and decrease in the capital in the relevant periods to the High Court, in addition to the questions of law directed by the High Court to be referred to it.
This application was rejected for the reason that the question had not been raised in the reference applica tion, nor did it arise out of the appellate orders of the Tribunal.
On July 24, 1957, the Tribunal stated the case and made a reference on the other question to the High Court in compliance with that Court 's order, dated April 12, 1956.
On November 4, 1968, the assessee filed a writ petition in the High Court praying for a writ of Mandamus requiring the Tribunal to consider his Ground No. 1 mentioned in the Excess Profits Tax Appeals Nos. 651 and 660 of 1949 and 1950 and his subsequent application dated April 2, 1956.
The writ petition was heard by a learned single Judge of the High Court who held that while disposing of the appeals, it was the duty of the Tribunal to record a finding on Ground No. 1 which had been specifically raised in the memoranda of appeals before it, that the Tribunal therefore, could and should have reviewed its orders and rectified its mistake in the exercise of its inherent powers when that mistake was brought to its notice by the assessee by his application dated April 2, 1956; that section 35 of the Income tax Act which provides a period of four years ' limitation for seeking rectification of mistakes in assessment orders, was not applicable to assessment orders made by the.
Tribunal under the Excess Profits Act; that consequently, the Tribunal was in error in refusing to treat the assessee 's application, dated April 2, 1956,.as one for rectification of a mistake of the Tribunal on 16 1003 8C1/76 218 the ground of limitation.
In the result, the learned Judge set aside the Tribunal 's order, dated June 9, 1956, and directed the Tribunal to dispose of the assessee 's applica tion dated April, 2, 1956, afresh in accordance with law.
The Revenue filed a Special Appeal against the order of the learned single Judge before the Appellate Bench of the High Court.
The Bench dismissed the appeal and affirmed the findings and orders of the learned single Judge.
Hence this appeal.
Mr. Ahuja, appearing for the appellant, con tends that the writ petition of the assessee should have been thrown out by the High Court on the preliminary ground that he had not come with clean hands.
In this connection Counsel has pointed out several circumstances which according to him, belie the main plea of the assessee that the Tribunal had not considered his Ground No. 1 although the same was urged before it at the hearing of the appeals.
It is stressed that .Ground No. 1 was not original ly taken by him in the grounds of appeal filed before the Assistant Appellate Commissioner, al though subsequently in the Additional grounds filed about one month after the institution of the ap peals, he, as an after thought, did introduce "Ground No. 1", that he did not make any grievance whatever on the score of Ground No. 1 in his appli cation for rectification of the Tribunal 's orders, filed on July 27, 1951; that for more than 5 years after the announcement of the appellate orders of the Tribunal, he made no application to the Tribu nal for review and rectification of its appellate orders in relation to Ground No. 1; that the assessee delayed the making of the application, dated April 2, 1956 presumably with a view to ensure that at the time of its presentation, none of the members of the Tribunal who had originally decided the assessee 's appeals, was there to hear the application; that even in this inordinately delayed application, review and rectification was not asked for in a straight forward manner but it was disguised as an application for decision of the appeals which on account of non decision of Ground No. 1 were alleged to be still pending; that the writ petition was filed after an abnormal delay of ten years; that a perusal of the assessment orders made by the Excess Profits Tax Officer and the Assistant Appellate Commissioner, and even the memoranda of appeals filed before the Tribunal shows that at no stage the assessee furnished complete accounts or even a statement showing variation in the capital during the relevant peri ods.
It is emphasised that all that the assessee said in the memoranda of appeals was that he was "prepared" to furnish a statement of such computa tion and accounts.
It is further pointed out that no certificate of Shri Surinderjit Singh, Advocate who is supposed to have argued the appeals before the Tribunal, was filed.
It is maintained that the only reasonable inference from these circumstances was that Ground No. 1 was not pressed or argued at all by Shri Surinderjit Singh before the Tribu nal who consequently, did not think it necessary to deal with it.
Mr. Sampath, appearing for the assessee respondent has not been able to deny the existence of the circumstances pointed out by Mr. 219 Ahuja.
His argument is that in the affidavit accompanying the writ petition, the deponent had sworn that Ground No. 1 was, in fact, argued before the Tribunal and that this sworn statement had been believed by the High Court.
This being the case, it is argued, this Court should not re open the question as to whether Ground No. 1 was, in fact, argued or not before the Tribunal.
According to Mr.Sampath, over 5 years ' delay in making the application dated April 2, 1956, partly stood explained by the circumstance that he had made a representation to the Board supplemented by the assessee 's letter of May 24, 1954 to the Income tax Officer, seeking relief on the basis of Ground No. 1.
We find a good deal of force in the submissions made by Mr. Ahuja.
The sheet anchor of the assessee 's case in the writ petition was that at the hearing of the appeals, his Counsel had argued Ground No. 1 set out in the memoranda of appeals, but the Tribunal did not consider it at all.
The question whether or not this Ground had been argued, was one of fact.
The tell tale circumstances enumerated by Mr. Ahuja, unerringly lead to the conclusion that, in all proba bility, Ground No. 1 was not argued by the Counsel, possibly because he was aware that in the absence of a complete statement of accounts showing variations in the capital during the relevant periods, a contention rounded on Ground No. 1 would be an exercise in futility.
It is noteworthy that at no stage before the Revenue authorities or the Tribunal, did the assessee categorically say that he had actually produced a complete statement of accounts and computation of the increase and decrease in capital.
All that he said in his Additional Grounds of appeal before the 'Assistant Appellate Commissioner and the Appellate Tribunal in Ground No. 1, was that he was prepared to file such a statement.
Shri Surinderjit Singh, Counsel who argued the appeals, has not thought it fit to certify that Ground No. 1 was actually argued, and not abandoned, by him.
The affida vit of another person who could not be the best informed person on this point, was of little value and could hardly displace the irresistible inference arising from the sur rounding circumstances and the conduct of the assessee, namely, that his Counsel had not argued on Ground No. 1, at all and had thus given it up.
In the light of what has been observed above, we are of opinion that the High Court could not justifiably interfere in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution with the appellate orders of the Tribunal.
In any case, the question as to whether the omission to record a finding on Ground No. I by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which de served rectification, was a .matter entirely for the author ities under those Taxation statutes.
It will be well to recall once more what this Court speaking through J.C. Shah J. (as he then was,) had stressed in Shivram Poddar vs Income tax Officer(1) "Resort to the High Court in exercise of its extraordi nary jurisdiction conferred or recognised by the Constitu tion in matters relating to assessment, levy and collection of income tax may be permitted only when questions of infringe ment of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess.
In attempting to bypass the provisions of the Income tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the Court to make assumptions of facts which remain to be investigated by the revenue authorities."
In the instant case, the High Court had assumed juris diction on the assumption that a certain ground had been urged before the Income tax Appellate Tribunal which had arbitrarily refused to consider the same and record a find ing thereon.
This assumption, in our opinion, stood thor oughly discounted by the concomitant circumstances of the ease, including the dilatory and questionable conduct of the assessee.
This was therefore not a fit ease for the exer cise of its special jurisdiction under Article 226 by the High Court.
Accordingly, on this short ground we allow the appeal and dismiss the writ petition.
As the appeal succeeds on a preliminary ground, we do not feel it necessary to express any opinion on the question as to whether or not the Appel late Tribunal under the Excess Profits Tax Act has statutory or inherent power to review and rectify mistakes in its orders.
The assessee shall pay one set of the costs of the appellant.
P.B.R. Appeal allowed.
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Since the assessee had not maintained complete and regular accounts for the purpose of Excess Profits tax, the Excess Profits Tax Officer assessed tax on the basis of accounts of certain previous years chosen by the assessee as his "standard period", pointing out that because of this position it was not possible to make any adjustment for variations in average capital.
The Assistant Appellate CommisSioner upheld the assessment order.
In appeal to the Appellate Tribunal one of the specific grounds taken by the assessee was that the Excess Profits Tax Officer and the Assistant Appellate Commissioner had erred in not allowing proper standard profits in accordance with the standard period subject to the adjustment on account of increase and decrease of capital in the relevant chargeable accounting period and that they were prepared to file computation of average capital.
Without discussing the ground relating to the standard profits the Tribunal disposed of the appeals.
The assessee 's second application alleging that the ground relating to the standard profits was not disposed of by it was rejected by the Tribunal.
In an application under section 66(2) of the Income Tax Act before the High Court, the assessee did not ask for a reference on this ground.
But during proceedings for preparation of statement of case, the assessee 's application requesting the Tribunal to refer this ground to the High Court was rejected by it.
The assessee 's petition for a writ of Mandamus requiring the Tribunal to consider the ground relating to standard profits was allowed by the High Court.
Allowing the Department 's appeal to this Court, HELD: The High Court could not justifiably interfere, in the exercise of its extraordinary jurisdiction under article 226 of the Constitution, with the appellate orders of the Tribunal.
The question as to whether the omission to record a finding on Ground No. 1 by the Tribunal was due to the failure of the appellant to urge that ground or due to a lapse on the part of the Tribunal, which deserved rectifica tion, was a matter entirely for the authorities under the statute to decide.
[219 G] Shivram Poddar vs Income tax Officer (1964) 51, I.T.R. 823, 829 (,S.C.) applied.
In the instant case the High Court had assumed jurisdic tion on the assumPtion that a certain ground had been urged before the Tribunal which had arbitrarily refused to consid er the same and record a finding thereon.
This assumption, stood thoroughly discounted by the concomitant circumstances of the case including the dilatory and questionable conduct of the assessee.
This was not a fit case for the exercise by the High Court of its ' special jurisdiction under article 226.
[220 C]
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**Court Case Summary**
The Allahabad High Court's judgment in Special Appeal No. 58/65 was challenged in Appeal No. 1539 of 1971. The case involved M/s. S.B. Singar Singh and Sons, an assessee who was assessed to Excess Profits Tax for the chargeable accounting periods ending March 31, 1945 and March 31, 1946. The assessee claimed that the Excess Profits Tax Officer erred in not allowing adjustments for the increase and decrease of capital in the standard period. The Tribunal dismissed the appeals, and the assessee made several attempts to rectify the mistake, but the Tribunal refused to treat the application as one for rectification.
**Important Mark - Only two paragraphs**
The High Court set aside the Tribunal's order and directed it to dispose of the assessee's application dated April 2, 1956, afresh. However, the Revenue filed a Special Appeal against the order of the High Court, which was allowed by the Appellate Bench of the High Court. The Revenue appealed to the Supreme Court, arguing that the High Court had erred in assuming jurisdiction and interfering with the appellate orders of the Tribunal. The Supreme Court held that the High Court had assumed jurisdiction without sufficient grounds and had made assumptions of facts which remained to be investigated by the Revenue authorities.
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vil Appeal No. 291 of 1955.
Appeal by special leave from the judgment and order dated March 29, 1955, of the Calcutta High Court in appeal from Appellate Order No. 134 of 1954, affirming the appeal against the judgment and order 361 dated July 29, 1954, of the Court of the District Judge of 24 Parganas in Misc.
Appeal No. 87 of 1954, arising out of the order of the 1st Additional Court of the Munsif at Sealdah dated February 2, 1954, in Misc.
Judicial Case No. 96 of 1953.
N. C. Chatterjee and section N. Mukherjee, for the appellant.
A. V. Viswanatha Sastri and D. N. Mukherjee, for the respondent.
1957 September 10.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by special leave in execution proceedings and the short point which the appellant has raised before us is that, under section 5 (1) of the Calcutta Thika Tenancy Act, 1949 (West Bengal II of 1949) as amended by the Calcutta Thika Tenancy (Amendment) Act, 1953 (West Bengal VI of 1953), execution proceedings taken out by the decrees against him could be entertained only by the controller and not by the civil courts.
This point arises in this way.
The appellant is a thika tenant in respect of a portion of the premises No. 28, R. G. Kar Road in Calcutta.
In Suit No. 46 of 1948 a decree for ejectment was passed against him and in favour of the respondent on March 16, 1949.
This decree was challenged by the appellant by preferring an appeal before the District Court and a second appeal before the High Court at Calcutta; but both those appeals failed and the decree for ejectment passed by the trial court was confirmed.
Then followed several proceedings between the parties and the course of litigation between them turned out to be protracted and tortuous.
Ultimately on May 22, 1953, the respondent filed an execution case before the First Additional Court, Sealdah (Title Execution Case No. 34 of 1953).
By this application the respondent claimed that the possession of the property covered by the decree should be delivered to him.
Thereupon the appellant filed a Miscellaneous Judicial Case under section 47 of the Code of Civil Procedure in the court raising several objections to the decree holder 's claim for execution (Miscellaneous 362 Judicial Case No. 96 of 1953).
This case was dismissed by the executing court on February 2, 1954.
A miscellaneous appeal preferred by the appellant before the learned District Judge, 24 Parganas, as well as the second miscellaneous appeal preferred by him before the High Court at Calcutta were likewise dismissed.
The appellant then applied for leave to prefer an appeal under the Letters Patent.
This application was rejected by Mr. Justice Renupada Mukherjee who had heard the second appeal.
On May 10, 1955, the appellant filed a petition for special leave to appeal to this Court and special leave was granted to him on May 18, 1955.
The courts below have held that the decree holder 's application for execution of the decree passed in his favour can and ought to be entertained by the civil courts and an order has been passed against the appellant that he should vacate the premises in question before the end of Jaistha 1362 B.S. (1 5th June, 1955), failing which execution will proceed according to law.
The appellant 's contention is that the view taken by the courts below about the competence of the civil courts to entertain the decree holder 's execution application proceeds on a misconstruction of section 5 (1) of the Calcutta Thika Tenancy Act.
That is how the only question which arises for our decision is about the construction of the said relevant section.
Before dealing with this point, it would be useful to consider briefly the history of legislation passed by the West Bengal Legislature with the object of affording protection to the thika tenants.
Until 1948 the rights and liabilities of the landlords and their thika tenants were governed by the provisions of the Transfer of Property Act.
On October 26, 1948, the Calcutta Thika Tenancy Ordinance XI of 1948, was promulgated because it was thought expedient, pending the enactment of appropriate legislation to provide for the temporary stay of the execution of certain decrees and orders of ejectment of thika tenants in Calcutta.
Section 2 of the Ordinance defined the thika tenant.
Section 3 provided that no decree or order for the ejectment of a thika tenant shall be executed during the continuance in operation of the Ordinance, From the 363 operation of this section were excluded decrees or orders for ejectment passed against, thika tenants on the ground of non payment of rent unless the tenants deposited in court the amount of the decree or order as required by the proviso.
The object of the Ordinance clearly appears to be to give protection to the thika tenants in Calcutta and to afford them interim ' relief by staying execution of certain decrees and orders as mentioned in section 3 until an appropriate Act was passed by the Legislature in that behalf.
Then followed Act II of 1949 on February 28, 1949.
Section 2, sub section
(5) of this Act defines a thika tenant.
Section 3 lays down the grounds on which a thika tenant may be ejected.
The effect of this section is that it is only where one or more of the six grounds recognized by section 3 is proved against a thika tenant that a decree for ejectment against him can be passed.
In other words, grounds other than those mentioned in section 3 on which a landlord would have been entitled to eject his thika tenant under the provisions of the Transfer of Property Act became inapplicable to the case of the thika tenants by virtue of section 3.
Section 5, sub section (1) reads thus: "section 5.
(1) Notwithstanding anything contained in any other law for the time being in force, a landlord wishing to eject a thika tenant on one or more of the grounds specified in section 3 shall apply in the prescribed manner to the Controller for an order in that behalf and, on receipt of such application, the Controller shall, after giving the thika tenant a notice to show cause within thirty days from the date of service of the notice why the application shall not be allowed and after making an inquiry in the prescribed manner either allow the application or reject it after recording the reasons for making such order, and, if he allows the application, shall make an order directing the thika tenant to vacate the holding and, subject to the provisions of section 10, to put the landlord in possession thereof." This section requires the landlord wishing to eject his thika tenant on one or more of the grounds specified in section 3 to apply in the prescribed manner to the Controller 47 364 for an order in that behalf.
This section further provides for the procedure to be followed by the Controller in dealing with such an application.
Two other sections of this Act need to be considered.
Section 28 deals with cases where decrees or orders for the recovery of possession of any holding from a thika tenant have been passed before the date of the commencement of the Act and it lays down that if possession has not been obtained by the decree holder in execution of such decrees or orders the court may consider whether the decree or order in question is or is not in conformity with any of the provisions of the Act other than subs.
(1) of section 5 or section 27.
On considering this matter jurisdiction is given to the court to rescind or vary the decree or the order for the purpose of giving effect to the relevant provisions of this Act.
A decree or order so varied has then to be sent to the Controller for execution as if it were an order made under and in accordance with the provisions of the Act.
Having thus dealt with decrees and orders for ejectment passed against thika tenants prior to the commencement of this Act, section 29 proceeds to deal with pending, proceedings for ejectment between the landlords and the thika tenants.
This section lays down that all pending proceedings of this character shall be transferred to the Controller who shall thereupon deal with them in accordance with the provisions of this Act as if this Act had been in operation on the date of the institution of the suit or proceeding.
The proviso to this section exempts the application of section 4 of this Act to such proceedings for obvious reasons.
It appears that the definition of the expression thika tenant " contained in the Act gave rise to some difficulties and it was discovered that some of the tenants in Calcutta who were in substance thika tenants failed to obtain the protection of the Act owing to some words used in the said definition.
In order to afford protection to the whole class of thika tenants in Calcutta, West Bengal Ordinance No. XV of 1952 was promulgated on October 21, 1952.
Accordingly, section 2 of this Ordinance amended section 2, sub section
(5) of the Calcutta Thika Tenancy Act II of 1949.
This is one important 365 change introduced by this Ordinance.
The other important change introduced by this Ordinance is to be found in section 5 of the Ordinance.
Section 5, sub section
(1) lays down that all cases pending before a court or Controller on the date of the commencement of this Ordinance shall be governed by the provisions of Act II of 1949, as amended by this Ordinance.
Sub section (2) of section 5 then deals with cases where decrees or orders have been passed for the recovery of possession at any time between the commencement of the said Act and this Ordinance.
In the present appeal, we are dealing with a decree falling under section 5, sub section
(2) of this Ordinance.
In respect of such decrees this sub section lays down that the judgment debtor could apply within three months of the commencement of the Ordinance to the court or the Controller as the case may be and invite his decision on the question of his status as thika tenant; according to the provisions of this subsection, the status of the judgment debtor as a thika tenant would then have to be determined under the amended definition of the expression "thika tenant".
If the finding on the question of status is in favour of the judgment debtor then the decree or order would have to be set aside and execution proceedings annulled, and the matter sent back to the court or Controller for disposal in accordance with law.
Subsection (3) of section 5 enables the court or the Controller to stay proceedings, if any, in execution pending the disposal of an application made under sub section
In other words, the effect of sub section
(2) of section 5 clearly appears to be that, in regard to decrees passed during the period mentioned by this subsection, a judgment debt or was given a right to challenge the validity of the said decree or order on the ground that he was a thika tenant under the amended definition of the said expression and this right could be exercised by making an appropriate application within the prescribed period of three months.
If no such application is made by the judgment debtor within the prescribed period, then the decree or order for ejectment passed against him would be executed under the ordinary law.
366 This Ordinance was followed by the Calcutta Thika Tenancy (Amendment) Act, 1953 (West Bengal VI of 1953).
This Act came into force immediately on the Calcutta Thika Tenancy (Amendment) Ordinance, 1952 (West Bengal Ordinance No. XV of 1952), ceasing to operate.
Under the proviso to section 1, sub section (2) of this Act, the provisions of the Calcutta Thika Tenancy Act II of 1949, as amended by this Act, shall also apply and be deemed to always apply to all suits, appeals and proceedings pending before any court or before the Controller or before a person deciding an appeal under section 27 of this Act on the date of the commencement of the said Ordinance of 1952.
It must, however, be added that this proviso was subject to the provisions of section 9 of this Act.
We will presently refer to section 9.
Section 2 of this Act adopted the amendment of the definition of the expression, " thika tenancy" introduced by the amending Ordinance of 1952.
Section 4 of this amending Act has amended a. 5, sub section
(1) of the original Act by deleting the words "but subject to the provisions of section 28" which occurred in the said section.
By s.8 of this Act, sections 28 and 29 in the original Act II of 1949 have been omitted and by a. 9 it is laid down that any proceedings commenced under sub section
(2) of section 5 of the amending Ordinance of 1952 shall, on the said Ordinance ceasing to operate be continued as if sub sections
(2), (3) and (4) of that section and the explanations to that section were in force.
It would thus appear that though the Ordinance ceased to be operative the remedy provided by section 5, sub section
(2) of the Ordinance to judgment debtors continued to be available to them and the applications made by them to seek.
the protection of the said provision bad to be dealt with as if the material provisions of the Ordinance were in operation.
It is true that section 9 of the amending Act has not been incorporated in the original Act II of 1949 but it is conceded that the omission to include this section in the original Act does not make any difference.
Mr. N. C. Chatterjee, for the appellant, has contended that the object in enacting the relevant 367 Thika Tenancy Acts and Ordinances is absolutely clear.
It is a piece of welfare legislation and as such its operative provisions should receive a beneficient construction from the courts.
If the scheme of the Act and the object underlying it is to afford full protection to the thika tenants, says Mr. Chatterjee, courts should be slow to reach the conclusion that any class of thika tenants are excluded from the benefit of the said Act.
In support of his argument Mr. Chatterjee hasnaturally relied on the observations made by Barons of the Exchequer in Heydon 's case (1).Indeed these observations have been so frequently cited with approval by courts administering provisions of welfare enactments that they have now attained the status of a classic on the subject and their validity cannot be challenged.
However, in applying these observations to the provisions of any statute, it must always be borne in mind that the first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself.
If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.
The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise.
When the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction.
It is only in such cases that it becomes relevant to consider the mischief and defect which the, Act purports to remedy and correct.
Indeed Mr. Chatterjee himself fairly conceded that be would not be justified in asking the court to put an undue strain on the words used in the section in order (1) (1584) 3 Co. Rep. 8. 368 that a construction favourable to the thika tenants should be deduced.
It is in the light of this legal position that we must now consider section 5, sub section
(1) of West Bengal Act II of 1949, amended by West Bengal Act VI of 1953.
Under the provisions of sections 5 and 28 of the original West Bengal Act II of 1949, the position was clear.
If a landlord wished to eject his tenant he could have obtained an order for ejectment only if his claim was justified on one or more of the grounds recognized by section 3 of the Act.
If, after the commencement of the Act, the landlord wanted to enforce his claim for ejectment, he had to apply for the said relief before the Controller under section 5 in the prescribed manner.
The application of section 5, sub section
(1) was, however, subject to the provisions of section 28.
As we have already pointed out, section 28 dealt with decrees or orders already passed whereas section 29 dealt with suits and proceedings pending at the commencement of the Act.
The appellant 's contention is that the effect of sections 5, 28 and 29 was to submit the claims of landlords for ejectment of the thika tenants to a scrutiny in the light of the provisions of section 3 and other relevant sections of the Act.
Whether the claim had merged in a decree or was pending in a proceeding at the time when the Act came into force or it was made after the commencement of the Act, in every case the test laid down by section 3 had to be applied; and the argument is that/ this position is not altered by the amendments made by Act VI of 1953.
In our opinion, this argument cannot be accepted.
Section 3 clearly refers to the claim for ejectment made by the landlord in a proceeding instituted by him.
It is difficult to understand how section 3 could be invoked against a landlord who has obtained a decree for ejectment of his thika tenant.
It is quite plain that when a decree holder seeks to obtain possession of his property in execution of a decree he cannot be said to obtain such possession on any of the grounds mentioned in section 3.
All that he does is to rely upon the decree passed by a court of competent jurisdiction and to insist upon its execution.
Similarly the proceedings contemplated by section 5, sub section
(1), cannot in 369 our opinion, be said to include execution proceedings of this type.
Section 5, sub section
(1) deals with cases where the landlord initiates original proceedings for ejecting his thika tenant.
This sub section refers to a landlord wishing to eject a thika tenant on one or more of the grounds specified in section 3.
Now this description is wholly inapplicable to a landlord who holds ' a decree for ejectment in his favour.
That is why we feel no hesitation in coming to the conclusion that landlords who have obtained decrees of ejectment against their thika tenants cannot be required to apply under the provisions of section 5, sub section
(1) of the Act.
That is one aspect of the matter.
The other provisions of the said sub section also point to the same conclusion.
When an application for ejectment is made under section 5, sub section
(1), notice is ordered to be issued to the thika tenant and enquiry follows in the light of the pro visions of section 3.
It is only if the Controller is satisfied that one or more of the grounds recognized by section 3 is proved by the landlord that an order for ejectment would be passed by him and this order would be followed by a direction in consequence of which the landlord would be put in possession of the premises.
Section 5, sub section
(1) thus provides for a self contained procedure for dealing with applications for ejectment made by a landlord against his thika tenant before the Controller.
Mr. Chatterjee, however, suggests that the deletion of the words " subject to the provisions of section 28 " which originally occurred in section 5 indicates that the Controller has been given jurisdiction not only to entertain original applications for ejectment made by the landlords but also to deal with decrees already passed in their favour.
Whether or not the use of the deleted words in the original section 5 (1) served any useful purpose and what exactly was their denotation are matters on which it is unnecessary to pronounce a judgment in the present case.
It is clear that since section 28 along with section 29 has been deleted from the Act by the subsequent amending Act VI of 1953, any reference to section 28 in section 5 (1) would have been entirely out of place.
But the deletion of the material words does not enlarge the 370 jurisdiction of the Controller to reopen disputes between the landlords and their thika tenants when in respect of such disputes decrees have already been passed by courts of competent jurisdiction in favour of landlords.
All the relevant provisions of section 5, sub section
(1) are absolutely inapplicable to cases of such decrees and so we are unable to accept the argument that even where a decree has been passed in favour of the landlord a claim for the execution of the decree would have to be entertained and considered by the Controller under section 5, sub section
Then it is urged that it would be unreasonable to hold that a certain class of thika tenants was precluded from obtaining the benefit of the Act merely because decrees for ejectment were passed before the Act came into force; and it is emphasised that the scheme of the original Act as evidenced by sections 5, 28 and 29 clearly was to afford protection to all thika tenants even where decrees for ejectment had been passed against them.
It must be conceded that under the original Act, section 28 purported to give protection to judgmentdebtors ' and required that the decrees passed against thika tenants should be examined by the courts that passed the decrees in the light of the provisions of the Thika Tenancy Act.
But, later on, it appears to have been thought prudent to limit the protection to such judgment debtors in the manner contemplated by section 5, sub section
(2) of the amending Ordinance of 1952.
Such judgment debtors were allowed liberty to apply for setting aside the decrees passed against them within three months after the commencement of the said Ordinance and such applications were required to be dealt with according to law even after the Ordinance ceased to be operative.
As we have already pointed out, the decree with which we are concerned in the present appeal falls within the purview of the provision of section 5, sub section
(2) of the Ordinance.
If the judgment.
debtor did not avail himself of the right conferred on him by this provision, he cannot now seek to rectify the omission by relying on the provisions of section 5, sub section
(1) as amended.
It may be unfortunate that owing to the steps that he was taking in several 371 proceedings adopted by him in the present litigation he was probably not advised to make a proper application under section 5, sub section
(2) of the Ordinance; but that is the only protection that he and judgment debtors of his class were entitled to after the amending Ordinance of 1952 came into force.
It would, therefore, not be reasonable to complain that no protection whatever has been given to this class of thika tenants.
It may be that the extent of the protection now afforded to this class may not be as wide as it originally was under section 28 of Act II of 1949 but the deletion of section 28 clearly indicates that the Legislature wanted to revise its policy in this matter.
The position, therefore, is that the conclusion which follows from a reasonable construction of section 5, sub section
(1) is corroborated by the deletion of section 28 from the Act and by the provision of section 5, sub section
(2) of the amending Ordinance of 1952 and section 9 of the amending Act VI of 1953.
We must,accordingly, hold that the Calcutta High Court was right in rejecting the appellant 's argument that civil courts had no jurisdiction to entertain the execution petition filed by the respondent against the appellant.
In the result, the appeal fails and must be dismissed with costs.
Appeal dismissed.
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Respondent obtained a decree for ejectment against the appellant, a thika tenant, and filed an application for execution of the decree before the civil Court.
Appellant resisted the application on the ground that in view Of section 5(1) Of the Calcutta Thika Tenancy Act, 1949, the civil Court had no jurisdiction to entertain the application.
Section 5(1) provides that a landlord wishing to eject a thika tenant on the grounds specified in section 3 shall apply to the Controller in that behalf.
Held that section 5(1) did not apply to a case where the landlord had already obtained a decree for ejectment against his thika tenant and consequently the civil Court had jurisdiction to entertain the execution application.
The operative provisions of welfare legislation should receive a beneficent construction from the Courts.
But the words used in a statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of adopting the construction which is more consistent with the policy of the Act arises.
Heydon 's Case, (1584) 3 Co. Rep. 8, referred to.
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Here is a two-paragraph summary of the court case:
The appellant, a thika tenant, appealed to the Supreme Court after his execution petition was dismissed by the Calcutta High Court. The issue at hand was whether the civil courts had the jurisdiction to entertain the execution petition filed by the respondent against the appellant. The appellant argued that, under section 5(1) of the Calcutta Thika Tenancy Act, 1949, as amended by the Calcutta Thika Tenancy (Amendment) Act, 1953, execution proceedings could only be entertained by the Controller and not by the civil courts.
The Supreme Court held that the civil courts did have the jurisdiction to entertain the execution petition. The Court interpreted section 5(1) as requiring the landlord to apply to the Controller for an order to eject the thika tenant on one or more of the grounds specified in section 3, and that execution proceedings against a thika tenant were not subject to this provision. The Court also noted that the deletion of section 28 of the Act and the provision of section 5(2) of the amending Ordinance of 1952 and section 9 of the amending Act VI of 1953 supported its conclusion. The appeal was dismissed with costs.
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s (Nos. 513, 566, 568, 570, 591,595, 596, 601, 616, 617, 623, 625, 631 and 632 of 1951) under article 32 of the Constitution for writs in the nature of habeas corpus.
The facts are stated in the judg ment.
Raghbir Singh (amicus curiae) for the petitioners in Petitions Nos.
513, 566, 568, 570.
595, 596, 609, 616, 617, 623,625 and 631.
A.S.R. Chari (amicus curiae) for the petitioner in Petition No. 591.
Shiv Charan Singh (amicus curiae) for the petitioner in Petition No. 632.
section M Sikri, Advocate General of the Punjab (Jindra Lal, with him) for the State of the Punjab.
January 25.
The Judgment of the Court was deliv ered by PATANJALI SASTRI C.J.
This is a petition under article 32 of the Constitution submitted through the Super intendent, Central Jail, Ambala, for the issue of a writ of habeas corpus for the release of the petitioner from custo dy.
On 5th July, 1950, the petitioner was arrested and detained under an order of the District Magistrate of Amrit sar in exercise of the powers conferred on him under section 3 of the , and the grounds of his detention were served on him as required by section 7 of the Act on 10th July, 1950.
The Act having been amended by the Preventive Detention (Amendment) Act, 1951, with effect from 22nd February, 1951, a fresh order No. 7853 ADSB, dated 17th May, 1951, was issued in the following terms : "Whereas the Governor of Punjab is satisfied with re spect to the person known as Naranjan Singh Nathawan, s/o Lehna Singh of village Chak Sikandar, 397 P.S. Ramdas, Amritsar District, that with a view to prevent ing him from acting in a manner prejudicial to the security of the State, it is necessary to make the following order: Now, therefore.
in exercise of the powers conferred by sub section (1) of section 3 and section 4 of the Preven tive Detention Act, 1950, as amended by the Preventive Detention (Amendment) Act, 1951, the Governor of Punjab hereby directs that the said Naranjan Singh Nathawan be committed to the custody of the Inspector General of Pris ons, Punjab, and detained in any jail of the State till 31st March, 1952, subject to such conditions as to maintenance, discipline and punishment for breaches of discipline as have been specified by general order or as contained in the Punjab Detenu Rules, 1950.
" This order was served on the petitioner on 23rd May, 1951, but no grounds in support of this order were served on him.
The petitioner thereupon presented this petition for his release contending that the aforesaid order was illegal inasmuch as (1) the grounds of detention communicated to him on 10th July, 1950, were "quite vague, false and imaginary" and (2) he was not furnished with the grounds on which the order dated 17th May, 1951, was based.
The petition was heard ex parte on 12th November, 1951, when this Court issued a rule nisi calling upon the respondent to show cause why the petitioner should not be released, and it was posted for final hearing on 23rd November, 1951.
Meanwhile, the State Government issued an order on 18th November, 1951.
revoking the order of detention dated 17th May, 1951, and on the same date the District Magistrate, Amritsar, issued yet another order for the detention of the petitioner under sections a and 4 of the amended Act; this last order along with the grounds on which it was based was served on the petitioner on 19th November, 1951.
Thereupon the petitioner submitted a supplemental peti tion to this Court on 28th November, 1951, challenging the validity of the last order on the ground 398 that "it was only a device to defeat the habeas corpus petition of the petitioner in which a rule had already been issued , and he put forward an additional ground of attack on the legality of the earlier order dated 17th may, 1951, namely, that it fixed the term of detention till 31st March, 1952, before obtaining the opinion of the Advisory Board as required by section 11 of the amended Act.
This ground was evidently based on the view expressed by this Court that the specification of the period of detention in the initial order of detention under section 3 of the amended Act before obtaining the opinion of the Advisory Board rendered the order illegal.
In the return to the rule showing cause filed on behalf of the respondent, the Under Secretary (Home) to the Govern ment explained the circumstances which led to the issue of the fresh order of detention dated 18th November, 1951.
After stating that the petitioner 's case was referred to and considered by the Advisory Board constituted under section 8 of the amended Act and that the Board reported on 30th May, 1951, that there was sufficient cause for the detention of the petitioner, the affidavit proceeded as follows: "That the Government was advised that the orders made under section 11 of the , as amended by the Preventive Detention (Amendment) Act, 1951, but carried out in the form of orders under section 3 of the said Act, should be followed by grounds of detention and, as this had not been done in most cases, the detentions were likely to be called in question.
The Government was further advised there were other technical defects which might render the detention of various detenus untenable.
In view of this, the Government decided that the cases of all dete nus should be reviewed by the District Magistrates con cerned.
Accordingly, the Punjab Government instructed the District Magistrates to review the cases and apply their minds afresh and emphasised that there must exist rational grounds with the detaining authority to justify the deten tion of a person and they were asked to report clearly in each case if the District 399 Magistrate concerned wanted the detenus to be detained.
The Punjab Government also reviewed some cases.
Accordingly all cases including the case of the petitioner were reviewed and in this case the District Magistrate was again satisfied that it was necessary that the detenu be detained with a view to prevent him from acting in a manner prejudicial to the security of the State and the maintenance of public order." And it concluded by stating "that the petitioner is detained now under the orders of the District Magistrate, Amritsar.
" The original and supplementary petitions came on in due course for hearing before Fazl Ali and Vivian Bose JJ.
on 17th December, 1951, when reliance was placed on behalf of t he petitioner on certain observations in an unreported decision of this Court in Petition No. 334 of 1951 (Naranjan Singh vs The State of Punjab) and it was claimed that in view of those observations and of the provisions of Part III of the Constitution, the decision in Basant Chandra Ghose vs King Emperor(1), on which the respondent relied.
was no longer good law.
The learned Judges thought that the matter should be considered by a Constitution bench and the case was accordingly placed before us.
It will be seen from the affidavit filed on behalf of the respondent that the case of the petitioner, along with his representation against the detention order of 17th May, 1951, was placed before the Advisory Board for its consider ation, and the Board reported on 30th May, 1951, that in its opinion there was sufficient cause for the detention of the petitioner.
It is said that, on the basis of that report, the Government decided that the petitioner should be de tained till 31st March, 1952, but while a properly framed order under section 11 should "confirm" the detention order and "continue" the detention for a specified period, the order of 17th May, 1951, was issued under a misapprehension in the form of an initial order under section 3 of the amended Act.
on the same grounds as before without any fresh communication thereof to the petitioner.
To (1) 52 400 avoid arguments based on possible defects of a technical and formal character, the said order was revoked under section 13, and on a review of the case by the District Magistrate, a fresh order of detention was issued under section 3 on 18th November, 1951, and this was followed by a formal communication of the same grounds as before as there could be no fresh grounds, the petitioner having throughout been under detention.
It is contended by the Advocate General of the Punjab that the decision reported in is clear authority in support of the validity of the aforesaid order.
On essentially similar facts the court laid down two propo sitions both of which have application here.
(1) Where an earlier order of detention is defective merely on formal grounds, there is nothing to preclude a proper order of detention being based on the pre existing grounds them selves, especially in cases in which the sufficiency of the grounds is not examinable by the courts, and (2) if at any time before the court directs the release of the detenu, a valid order directing his detention is produced, the court cannot direct his release merely on the ground that at some prior stage there was no valid cause for detention.
The question is not whether the later order validates the earli er detention but whether in the face of the later valid order the court can direct the release of the petitioner.
The learned Judges point out that the analogy of civil proceedings in which the rights of parties have ordinarily to be ascertained as on the date of the institution of the proceedings has no application to proceedings in the nature of habeas corpus where the court is concerned solely with the question whether the applicant is being lawfully de tained or not.
The petitioner 's learned counsel conceded that he could not challenge the correctness of the second proposition, but took exception to the first as being no longer tenable after the Indian Constitution came into force.
It was urged that article 22 lays down the procedure to be followed in cases of preventive detention and the said procedure must be strictly observed 401 as the only prospect of release by a court must be on the basis of technical or formal defects, a long line of deci sions having held that the scope of judicial review in matters of preventive detention is practically limited to an enquiry as to whether there has been strict compliance with the requirements of the law.
This is undoubtedly true and this Court had occasion in the recent case of Makhan Singh Tarsikka vs The State of Punjab (Petition No. 308 of 1951)(1) to observe "it cannot too often be emphasised that before a person is deprived of his personal liberty the procedure established by law must be strictly followed and must not be departed from to the disadvantage of the person affected".
This proposition, however, applied with equal force to cases of preventive detention before the commence ment of the Constitution, and it is difficult to see what difference the Constitution makes in regard to the position.
Indeed, the position is now made more clear by the express provisions of section 13 of the Act which provides that a detention order may at any time be revoked or modified and that such revocation shall not bar the making of a fresh detention order under section 3 against the same person.
Once it is conceded that in habeas corpus proceedings the court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the date of the institution of the proceeding, it is difficult to hold, in the absence of proof of bad faith, that the detaining authority cannot supersede an earlier order of detention challenged as illegal and make a fresh order wherever possible which is free from defects and duly complies with the requirements of the law in that behalf.
As regards the observations in Naranjan Singh 's case, we do not understand them as laying down any general proposi tion to the effect that no fresh order of detention could be made when once a petition challenging the validity of an earlier order has been filed in court.
The learned Judges appear to have inferred from the facts of that case that the later order was (1) Since reported as ; 402 not made bona fide on being satisfied that the petitioner 's detention was still necessary but it was "obviously to defeat the present petition".
The question of bad faith, if raised would certainly have to be decided with reference to the circumstances of each case, but the observations in one case cannot be regarded as a precedent in dealing with other cases.
We accordingly remit the case for further hearing.
This order will govern the other petitions where the same ques tion was raised.
Petitions remitted.
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In the absence of bad faith the detaining authority can supersede an earlier order of detention which has been challenged as defective on merely formal grounds and make a fresh order wherever possible which is free from defects and duly complies with the requirements of the law in that behalf.
The question of bad faith, if raised, must be decided with reference to the circumstances of each case.
In habeas corpus proceedings the Court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the date of the institution of the proceedings.
396 Basanta Chandra Ghose vs King Emperor ([1945] F.C.R. 81) followed.
Naranjan Singh vs The State of Punjab unreported) explained.
Makhan Singh Tarsikka vs The State of Punjab ([1952] S.C.R. 368) referred to.
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Here's a two-paragraph summary of the court case:
The case revolves around the preventive detention of Naranjan Singh Nathawan by the State of Punjab under the Preventive Detention Act, 1950. Singh was arrested on July 5, 1950, and detained under an order of the District Magistrate of Amritsar, citing grounds that were considered vague, false, and imaginary. However, the State Government later issued a fresh order of detention on November 18, 1951, after reviewing Singh's case and obtaining a report from the Advisory Board, which stated that there was sufficient cause for Singh's detention.
The court was asked to decide whether the fresh order of detention was valid, despite the earlier order being defective. The Advocate General of Punjab argued that the decision in Basant Chandra Ghose vs King Emperor was a clear authority in support of the validity of the fresh order. The court ultimately remitted the case for further hearing, citing the absence of proof of bad faith on the part of the detaining authority. The court also noted that the Constitution does not preclude the detaining authority from superseding an earlier order of detention and making a fresh order that complies with the requirements of the law.
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Appeal No. 395 of 1959.
Appeal by special leave from the Award dated November 25, 1957 of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 24 of 1956.
N. C. Chatterjee, D. H. Buch and K. L. Hathi, for the appellants.
M. C. Setalvad, Attorney General for India, J. B. Dadachanji and section N. Andley, for the respondent Nos. 1 and 2.
M. C. Setalvad, Attorney General for India, Dewan Chaman Lal Pandhi and I. N. Shroff, for the respondent No. 3. 1960.
November 30.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave in an industrial matter.
It appears that the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. (hereinafter called the Scindias).
Their services were transferred by way of loan to the Air Services of India Limited (hereinafter referred to as the ASI).
The ASI was formed in 1937 and was 813 purchased by the Scindias in 1943 and by 1946 was a full subsidiary of the Scindias.
Therefore from 1946 to about 1951, a large number of employees of the, Scindias were transferred to the ASI for indefinite periods.
The Scindias had a number of subsidiaries and it was usual for the Scindias to transfer their employees to their subsidiary companies and take them back whenever they found necessary to do so.
The ' appellants who were thus transferred to the ASI were to get the same scale of pay as the employees of the Scindias and the same terms and conditions of service (including bonus whenever the Scindias paid it) were to apply.
The Scindias retained the right to recall these loaned employees and it is the case of the appellants that they were entitled to go back to the Scindias if they so desired.
Thus the terms and conditions of service of these loaned employees of the ASI were different from those employees of the ASI who were recruited by the ASI itself.
This state of affairs continued till 1952 when the Government of India contemplated nationalisation of the existing air lines operating in India with effect from June 1953 or thereabouts.
When legislation for this purpose was on the anvil the appellants felt perturbed about their status in the ASI which was going to be taken over by the Indian Air Lines Corporation (hereinafter called the Corporation), which was expected to be established after the , No. XXVII of 1953, (hereinafter called the Act) came into force.
They therefore addressed a letter to the Scindias on April 6, 1953, requesting that as the Government of India intended to nationalise all the air lines in India with effect from 1 June, 1953, or subsequent thereto, they wanted to be taken back by the Scindias.
On April 24, the Scindias sent a reply to this letter in which they pointed out that all persons working in the ASI would be governed by cl. 20 of the Air Corporation Bill of 1953, when the Bill was enacted into law.
It was also pointed out that this clause would apply to all those actually working with the ASI on 103 814 the appointed day irrespective of whether they were recruited by the ASI directly or transferred to the ASI from the Scindias or other associated concerns.
It was further pointed out that if the loaned employees or others, employed under the 'ASI, did not want to join ,the proposed Corporation they would have the option not to do so under the proviso to cl.
20(1) of the 'Bill; but in case any employee of the ASI whether loaned or otherwise made the option not to join the proposed Corporation, the Scindias would treat them as having resigned from service, as the Scindias could not absorb them.
In that case such employees would be entitled only to the usual retirement benefits and would not be entitled to retrenchment compensation.
Finally, it was hoped that all those in the employ of the ASI, whether loaned or otherwise, having been guaranteed continuity of employment in the new set up would see that the Scindias would not be burdened with surplus staff, requiring consequential retrenchment of the same or more junior personnel by the Scindias.
On April 29, 1953, a reply was sent by the union on behalf of the appellants to the Scindias.
It was pointed out that the loaned staff should not be forced to go to the proposed Corporation without any consideration of their claim for re absorption into the Scindias.
It was suggested that the matter might be taken up with the Government of India and the persons directly recruited by the ASI who were with other subsidiary companies might be taken by the proposed Corporation in place of the appellants.
It seems that this suggestion was taken up with the Government of India but nothing came out of it, particularly because the persons directly recruited by the ASI.
who were employed in other subsidiary companies did not want to go back to the ASI.
In the meantime, the Scindias issued a circular on May 6,1953, to all the employees under the ASI including the loaned employees, in which they pointed out that all the persons working with the ASI would be governed by cl.
20(1) when the Bill became law and would be absorbed in the proposed Corporation, unless 815 they took advantage of the proviso to cl.
20(1).
It was also pointed out that such employees as took advantage of the proviso to el.
20(1) would be treated as having resigned from service and would be entitled to usual retirement benefits as on voluntary retirement, and to nothing more.
It was also said that their conditions of service would be the same until duly altered or amended by the proposed Corporation.
The circular then dealt with certain matters relating to provident fund with which we are however not concerned.
It appears that the Act was passed on May 28, 1953.
20(1) of the Act, with which we are concerned, is in these terms: "(1) Every officer or other employee of an existing air company (except a director, managing agent, manager or any other person entitled to manage the whole or a substantial part of the business and affairs of the company under a special agreement) employed by that company prior to the first day of July, 1952, and still in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in either of the Corporations by virtue of this Act, become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same under the existing air company if its undertaking had not vested in the Corporation and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or conditions are duly altered by the Corporation : Provided nothing contained in this section shall apply to any officer or other employee who has, by notice in writing given to the Corporation concerned prior to such date as may be fixed by the Central Government by notification in the official gazette 816 intimated his intention of not becoming an officer or other employee of the Corporation." After the Act was passed, notice was sent on June 17, 1953, to each employee of all the air companies which were being taken over by the proposed Corporation m and he was asked to inform the officer on special duty by July 10, 1953, if he desired to give the notice contemplated by the proviso to section 20(1).
A form was sent in which the notice was to be given and it was ordered that it should reach the Chairman of the Corporation by registered post by July 10.
The appellants admittedly did not give this notice as required by the proviso to section 20(1).
In the meantime on June 8, 1953, a demand was made on behalf of the appellants in which the Scindias were asked to give an assurance to them that in the event of retrenchment of any loaned staff by the proposed Corporation within the first five years without any fault, the said staff would be taken back by the Scindias.
Certain other demands were also made.
The Scindias replied to this letter on July 3 and pointed out that they could not agree to give an assurance to take back the loaned staff in case it was retrenched by the proposed Corporation within the next five years.
We are not concerned with the other demands and the replies thereto.
On July 8, a letter was written on behalf of the appellants to the Scindias in which it was said that the appellants could not accept the contention contained in the circular of May 6, 1953.
Though the appellants were carrying on this correspondence with the Scindias, they did not exercise the option which was given to them under the proviso to section 20(1) of the Act,.
by July 10, 1953.
First of August, 1953, was notified the appointed day under section 16 of the Act and from that date the undertakings of the "existing air companies" vested in the Corporation established under the Act (except the Air India International).
So on August:1, 1953, the ASI vested in the Corporation and section 20(1) of the Act came into force.
Hence as none of the appellants had exercised the option given to them under the proviso, they would also be governed by the said provision, 817 unless the contention.
raised on their behalf that they could in no case be governed by section 20(1), is accepted.
The tribunal came to the conclusion that, whatever the position of the appellants as loaned staff from the Scindias to the ASI, as they were informed on May 6, 1953, of the exact position by the Scindias and they did not ask for a reference of an industrial dispute immediately thereafter with the Scindias and as they" ' did not exercise the option given to them by the proviso to section 20(1) before July 10, 1953, they would be governed by section 20(1) of the Act.
In consequence, they became the employees.
of the Corporation as from August 1, 1953 and would thus have no right there after to claim that they were still the employees of the Scindias and had a right to revert to them.
The consequence of all this was that they were held not to be entitled to any of the benefits which they claimed in the alternative according to the order of reference.
It is this order of the tribunal rejecting the reference which has been impugned before us in the present appeal.
The main contention of Mr. Chatterjee on behalf of the appellants is that they are not governed by section 20 (1) of the Act and in any case the contract of service between the appellants and the Scindias was not assignable and transferable even by law and finally that even if section 20(1) applied, the Scindias were bound to take back the appellants.
We are of opinion that there is no force in any of these contentions.
20(1) lays down that every officer or employee of the "existing air companies" employed by them prior to the first day of July, 1952, and still in their employment immediately before the appointed day shall become as I from the appointed day an officer or employee, as the case may be, of the Corporation in which the undertakings are vested.
The object of this provision was to ensure continuity of service to the employees of the "existing air companies" which were being taken over by the Corporation and was thus for the benefit of the officers and employees concerned.
It is further provided in section 20(1) that the terms of service etc. would be the same until they are duly altered by the Corporation.
One should have thought that the employees of the air 818 companies would welcome this provision as it ensured them continuity of service on the same terms till they were duly altered.
Further there was no compulsion on the employees or the officers of the "existing air companies" to serve the Corporation if they did not want to do so.
The proviso laid down that any officer or other employee who did not want to go into the service of the Corporation could get out of service by notice in writing given to the Corporation before the date fixed, which was in this case July 10, 1953.
Therefore, even if the argument of Mr. Chatterjee that the contract of service between the appellants and their employers had been transferred or assigned by this section and that this could not be done,, be correct, it loses all its force, for the proviso made it clear that any one who did not want to join the Corporation, was free not to do so, after giving notice upto a certain date.
Mr. Chatterjee in this connection relied on Nokes vs Doncaster Amalgamated Collieries Ltd. where it was observed at p. 1018 "It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result,, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y." This observation itself shows that a contract of service may be transferred by a statutory provision; but in the present case, as we have already said, there was no compulsory transfer of the contract of service between the "existing air companies", and their officers and employees to the Corporation for each of them was given the option not to join the Corporation, if he gave notice to that effect.
The provision of section 20(1) read with the proviso is a perfectly reasonable provision and, as a matter of fact, in the interest of employees themselves.
But, Mr. Chatterjee argues that section 20(1) will only apply to those who were in the employ of the "existing air companies"; it would not (1) , 819 apply to those who might be working for the "existing air companies" on being loaned from some other company.
In other words, the argument is that the, appellants were in the employ not of the ASI but of the Scinaias and therefore section 20(1) would not apply to them and they would not become the employees of the Corporation by virtue of that provision when they failed to exercise the option given to them by the proviso.
According to him, only those employees of the ASI who were directly recruited by it, would be covered by section 20(1).
We are of opinion that this argument is fallacious.
It is true that the appellants were not originally recruited by the ASI.
They were recruited by the Scindias and were transferred on loan to the ASI on various dates from 1946 to 1951.
But for the purposes of section 20(1) we have to see two things: namely, (i) whether the officer or employee was employed by the existing air company on July 1, 1952, and (ii) whether he was still in its employment on the appointed day, (namely, August 1,1953).
Now it is not disputed that the appellants were working in fact for the ASI on July 1, 1952, and were also working for it on August 1, 1953.
But it is contended that though they were working for the ASI they were still not in its employment in law and were in the employment of the Scindias because at one time they had been loaned by the Scindias to the ASI.
Let us examine the exact position of the appellants in order to determine whether they were in the employ of the ASI or not.
It is not disputed that they were working for the ASI and were being paid by it; their hours of work as well as control over their work was all by the ASI.
From this it would naturally follow that they were the employees of the ASI, even though they might not have been directly recruited by it.
It is true that there were certain special features of their employment with the ASI.
These special features were that they were on the same terms and conditions of service as were enjoyed by the employees of the Scindias in the matter of remuneration, leave, bonus, etc.
It may also be that they could not be, dismissed by the ASI and the Scindias may have had to take action in case it was 820 desired to dismiss them.
Further it may be that they could be recalled by the Scindias and it may even be that they might have the option to go back to the Scindias.
But these are only three special terms of their employment with the ASI.
Subject to these special terms, they would for all purposes be the employees of the ASI and thus would in law be in the employment of the ASI both on July 1, 1952 and on August 1, 1953.
The existence of these special terms in the case of these appellants would not in law make them any the less employees of the ASI, for whom they were working and who were paying them, who had power of control and direction over them; who would grant them leave, fix their hours of work and so on.
There can in our opinion be no doubt that subject to these special terms the appellants were in the employ of the ASI in law.
They would therefore be in the employ of the ASI prior to July 1, 1952 and would still be in its employ immediately before August 1, 1953.
Consequently, they would clearly be governed by section 20(1).
As they did not exercise the option given to them by the proviso to section 20(1), they became the employees of the Corporation from August 1, 1953, by the terms of the statute.
The last point that has been urged is that even if section 20(1) applies, the Scindias are bound to take back the appellants.
Suffice it to say that there is no force in this contention either.
As soon as the appellants became by force of law the employees of the Corporation, as they did so become on August 1, 1953, in the circumstances of this case, they had no further right against the Scindias and could not; claim to be taken back in their employment on the ground that they were still their employees, in spite of the operation of section 20(1) of the Act.
Nor could they claim any of the alternative benefits specified in the order of reference, as from August 1, 1953, they are by operation of law only the employees of the Corporation and can have no rights whatsoever against the Scindias.
We are therefore of opinion that the tribunal 's decision is correct.
The appeal fails and is thereby dismissed.
There will be no order as to costs.
Appeal dismissed.
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Section 20(1) of the (XXVII of 1953), read with the proviso, is a perfectly reasonable provision and in the interest of the employees and it is not correct to say that it can apply only to the direct recruits of the existing air 812 companies and not at all to loaned employees working under them.
The two conditions of its applications are (i) that the officer or employee was employed by the existing air company on July 1, 1952, and (ii) that he was still in its employment on August 1, 1953, the appointed day.
In the instant case where the appellants who had been recruited by the Scindia Steam Navigation Co., Ltd., and on purchase by it of the Air Services of India Ltd., loaned to the latter, and were working under its direction and control on and between the said dates and being paid by it, Held, that in law they were the employees of the Air Ser vices of India from the appointed day, notwithstanding the existence of certain special features of their employment, and as such governed by section 20(1) of the Act and since they did not exercise the option given to them under the proviso, they became employees of the Corporation established under the Act and ceased to have any rights against the original employers.
Nokes vs Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014, considered.
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**Legal Summary of Court Case**
This is an appeal by special leave in an industrial matter, where the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. and were transferred to the Air Services of India Limited (ASI) on loan. The ASI was later taken over by the Indian Air Lines Corporation (Corporation) under the Air Corporation Act, 1953. The appellants claimed that they should be taken back by the Scindias, their original employer, when they were retrenched by the Corporation. The Industrial Tribunal, however, ruled that the appellants became employees of the Corporation under section 20(1) of the Act and lost their right to revert to their original employer.
**Court Decision**
The court held that the appellants were governed by section 20(1) of the Act, which provided that employees of the existing air companies, employed prior to July 1, 1952, and still in employment on August 1, 1953, would become employees of the Corporation. The court rejected the appellants' argument that their contract of service was not assignable and transferable even by law. The court also held that the appellants were employees of the ASI, subject to certain special terms, and therefore fell within the scope of section 20(1). As they did not exercise the option given to them by the proviso to section 20(1), they became employees of the Corporation from August 1, 1953. The court dismissed the appeal, upholding the decision of the Industrial Tribunal.
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Appeals Nos. 195 and 196 of 1959.
Appeals by special leave from the Award dated April 15, 1957, of the Third Industrial Tribunal, West Bengal, in Case No. VIII 7 of 1956.
B. Sen, P. K. Chakravarty and B. N. Ghosh, for the appellants (in C. A. No. 195 of 59) and respondents (in C. A. No. 196 of 59).
N. C. Chatterjee, D. L. Sen Gupta and B. P. Maheshwari, for the respondents (in C. A. No. 195 of 59) and appellants (in C. A. No. 196 of 59).
March 30.
The Judgment of the Court was delivered by WANCHOO, J.
These are two appeals by special leave against the same award of the Third Industrial Tribunal, West Bengal and shall be disposed of by this judgment.
Appeal No. 195 is by Messrs. Burn and Co. Limited (hereinafter called the company) and Appeal No. 196 is by the workmen of Messrs. Burn and Co. Limited (hereinafter called the workmen).
There were disputes between the company and the workmen on various matters, which were referred to the tribunal for adjudication.
Of these disputes, only two now survive in the two appeals.
The company 's appeal is with respect to that part of the award which deals with incentive bonus to the clerical and subordinate staff while the workmen 's appeal is with respect to that part of the award which appeals with the cash benefit of Annas eight per head per working day for the period the canteen was not in operation.
We shall first take up the company 's appeal.
The company has introduced incentive bonus for manual workers including Sarkars and Checkers but there is no provision for incentive bonus to the clerical and subordinate staff.
The workmen therefore claimed that these two categories should also be given incentive bonus like the manual workers and pointed out 425 that in other concerns this was done.
The company resisted the claim on two grounds: (i) that the clerical staff got what is known as the Bengal Chamber of Commerce dearness allowance, which is higher than, the dearness allowance paid to the manual workers and (ii) that the clerical staff and the subordinate staff do not actually produce anything and if they are given incentive bonus it will mean that they would be paid on the 'production of others, namely, the manual workers.
The tribunal was of the view that the fact that the clerks got the Bengal Chamber of Commerce dearness allowance was no reason for their total exclusion from the benefit of the incentive bonus scheme.
It also pointed out that the subordinate staff did not get the Bengal Chamber of Commerce dearness allowance and there was no difference between their dearness allowance and the dearness allowance of the manual workers.
Further the tribunal was conscious of the fact that the clerical staff and the subordinate staff do not directly produce goods but that in its opinion was no justification for their total exclusion, particularly when other comparable concerns like the Indian Iron and Steel Co. Ltd. at Burnpur, Bridge and Roof Co. (India) Limited, Howrah, and Tatas were paying incentive bonus to the clerical and subordinate staff also.
It therefore ordered that the company should extend the scheme of incentive bonus to the clerical and subordinate staff also and lay down the rates and conditions for the same.
The main contention of the company before us is that as the clerical staff and the subordinate staff have no part in actual production they should not be given any incentive bonus, particularly as their work does not increase at all because of the increased production.
It is, however, difficult to accept that there will be no increase in the work of the clerical staff in particular and also of the subordinate staff because of higher production, though it may be accepted that the increase may not be in proportion to the increase of production.
It is also true that the clerical staff and the subordinate staff do not directly produce goods like manual workers and that may be a reason 426 for treating them somewhat differently in the matter of incentive bonus and that is what the tribunal seems to have done, for it has directed the company to extend the scheme of incentive bonus to the clerical and subordinate staff and to lay down the rates and conditions of the same and has not said that exactly the same rates and conditions should apply, to the clerical and subordinate staff as apply to the manual workers.
But there can be no doubt that economically speaking the clerical staff and the subordinate staff also take part in the production and there is no reason therefore for excluding them altogether from the scheme of incentive bonus.
Besides, as the tribunal has pointed out, in other comparable concerns incentive bonus is being paid to the clerical and subordinate staff.
The fact that dearness allowance was paid to the clerical staff at a higher scale is also, in our opinion, no reason for depriving them altogether of the benefits of the incentive bonus scheme.
It is also urged on behalf of the company that the introduction of incentive bonus is a management function and the tribunal should not impose it on the management and reference in this connection has been made to Messrs. Titaghur Paper Mills Co. Ltd. vs Their Workmen (1).
In the present case, however, the incentive bonus scheme has already been introduced by the company for the major part of its workmen and all that is now asked for is that the benefit of the scheme should be extended to the remainder of the workmen.
This prayer is, in our opinion, very different from asking a tribunal to impose an incentive bonus scheme for the first time in a concern.
We can see no reason why where an incentive bonus is in force in a concern for the majority of its workmen, the tribunal should not be able to extend the same to the remainder of the workmen.
We therefore see no reason to interfere with the order of the tribunal in this behalf Turning now to the appeal of the workmen with respect to eight annas tiffin allowance during the period the canteen was riot working, it is enough to say that this matter was examined at length by the (1) [1959] SUPP.
2 S.C.R. 1012.
427 tribunal.
It has dealt with the history relating to this tiffin allowance and exhaustively considered all the points raised on behalf of the workmen.
Nothing has been brought to our notice which would induce us to interfere with the considered order of the tribunal in this behalf.
All the points that Sri Chatterjee has raised on behalf of the workmen have been dealt with by the tribunal and the conclusion it has reached is that halving regard to the circumstances, the workmen were not eligible to the tiffin allowance of annas eight per head per working day.
All that we need say is that the correspondence between the workmen and the company shows that though the workmen were keen on the provision of a canteen before the tiffin allowance was granted by the award dated July 24, 1953, their keenness disappeared after the award.
The company seems to have taken steps even before the award to start a canteen and pursued the matter vigorously after the award; but the workmen started objecting to the arrangements made and some of the objections were fantastic.
It seems that having been given the tiffin allowance they preferred to have it rather than go to the canteen.
In the circumstances we are of opi nion that the conclusion of the tribunal is correct and there is no reason for interference.
The appeals are hereby dismissed, but in the circumstances we pass no order as to costs.
Appeals dismissed.
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There can be no doubt from the point of view of Economics that the clerical and subordinate staff of an industry like its manual workers contribute to its production and there can, therefore, be no reason for excluding them wholly from the benefits of a scheme of incentive bonus.
The fact that the clerical staff are paid dearness allowance at a higher scale can be no reason for their exclusion.
(1)[1956] 424 Where, as in the instant case, the company had already Introduced a scheme of incentive bonus for the majority of its workmen, there could be no reason why the Industrial Tribunal should not be able to extend that scheme to the clerical and subordinate staff.
M/s. Titaghur Paper Mills Co. Ltd. vs Their Workmen, [1959] Supp. 2 S.C.R. 1012, considered.
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Here's a two-paragraph summary of the court case:
This court case refers to two appeals by special leave against the award of the Third Industrial Tribunal, West Bengal. The appeals were filed by Messrs. Burn and Co. Limited (the company) and the workmen of the company. The disputes between the company and the workmen were referred to the tribunal for adjudication, and two specific issues now survived in the appeals. The first issue concerned the incentive bonus to the clerical and subordinate staff, while the second issue related to the cash benefit of eight annas per head per working day for the period the canteen was not in operation.
The court upheld the decisions of the tribunal on both issues. In relation to the incentive bonus, the court agreed with the tribunal that the clerical and subordinate staff should also be entitled to the benefit, despite not directly producing goods like manual workers. The court also rejected the company's argument that introducing incentive bonus was a management function and that the tribunal should not impose it. On the second issue, the court agreed with the tribunal's conclusion that the workmen were not eligible to the tiffin allowance of eight annas per head per working day. The appeals were therefore dismissed, but the court passed no order as to costs.
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ivil Appeal Nos.
1186 to 201 of 1975.
Appeals by Special Leave from the Judgment and orders dated the 11th November, 1974, 6th December, 1974 and 27th November, 1974 of the Allahabad High Court in Civil Misc.
Writ Nos. 4139, 5354, 5352 5353, 5355 5357, 4065, 4912, 4326, 4212, 4218, 4545, 4328, 4543 and 4769 of 1972 respectively.
804 G. section Pathak (In CA 1186/75), section Swarup Shri Narain for the appellants (In CAs.
Nos.1186, 1194 1195 and 1196 1197/75).
V. Gupte, R. N. Bhalgotra and S.S. Khanduja for the appellants (In CA No. 1187/75).
section section Khanduja for the appellants (In CAs.
1188 1192 of 1975) .
V. J. Francis of M/s Ramamurthy & Co. for the appellants (In CA No. 1193/75).
Yogeshwar Prasad and Miss Rani Arora for the appellants (In CA No. 1198/75) and (1199/75).
N. N. Goswamy and Arvind Minocha for the appellant (In CA No. 1201/75).
The Judgment of the Court was delivered by KRISHNA IYER, J.
We should have made short shift of this batch of appeals on the brief but fatal ground that the appellants all sugar millers who had over priced this essential consumer article and had failed in their challenge of the controlled price had no moral nor legal claim to keep the huge sums which the High Court had right to directed them to disgorge.
When the price of 'levy sugar ' was pegged down by the State, these factory owners rushed to the Court impeaching the validity of the control and secured a stay of operation of the order.
Under cover of the Court 's stay order which was granted, on bank guarantee for the excess price being furnished to the court, the appellants sold sugar at free market rates, a euphemism for blackmarket racket unfortunately, with judicial sanction.
Crores of rupees were admittedly funnelled into the millers ' tills.
But, eventually, the High Court upheld the control of price and the unhappy obligation to restore the unjust enrichment arose.
The High Court, whose process kept the control price in cold storage, had to do justice by the community of consumers who were the unwitting victims of this judicially declared holiday from control which was quickly converted into a fleece as you please seller situation.
And so the Court made the following direction: "We, therefore, direct that the Registrar will take immediate steps to encash the security and recover the amount so over charged by the petitioners and pay the same to the State Government which will keep it in a separate account.
The petitioners will furnish to the State Government, within a period of six weeks of this order, a list of all such persons to whom they sold the levy sugar of 1971 72 season, together with their addresses, quantity of such sugar sold to and the amount of excess price charged from each of them.
The State Government will then refund to the persons concerned the excess amount realised from each of them, if necessary, after verifying the claim for refund of such amount made by such persons.
" 805 The reluctant millers have sought and got leave to appeal against this just direction and in the course of arguments have made some suggestions about the disposal of the moneys.
The inarticulate assumption was, presumably, that crores of rupees could remain with them until a suitable schemes for percolation of the excess prices to the ultimate small buyer could be fashioned.
Indeed, at some stage, a hesitant proposal was made that since the sugar industry has allegedly had lean years, these considerable sums 'picked ' from the pockets of a considerable number of consumers had better be allowed to be retained by the millers.
Another diffident hint was made that these several crores of rupees be used for stablising the sugar cane growers ' economic position.
The easy to see through design behind these 'developmental ' ideas was to have use of this large windfall till some distant project was evolved.
Indubitably, the appellants are in unrighteous enjoyment of colossal sums which belong to small consumers.
Not amount more can the millers keep what the Court has ordered the Registrar to collect by enforcing the bank guarantees.
Indeed, they have had dubious business use of these vast sums for a few years nearly a year, soon after the High Court 's final judgment.
Once we disenchanted them, as arguments proceeded, that the conscience of the Court would unconditionally compel the money to be called in forthwith, their interest in making fertile pro bono public.co suggestions as to how best to organise the disbursement of the small sums to the actual buyers flagged and, later in the day, Shri Dadachanji, Advocate on record in these cases, even moved that if leave had not been formally granted, the special leave petitions be allowed to be withdrawn and if leave had been already granted, Court fee exemption for these many appeals may be directed.
This shows up the public concern of these sugar manufacturers.
Anyway, the Registrar of the High Court shall take immediate steps to encash the security furnished by the appellants.
The money of the many little men gotten by the few millers by selling an essential commodity to the community at what is frankly black market price under the umbrella of Court order of stay shall get back to the scattered crowd of a small consumers as early and as inexpensively as possible.
A public injury perpetrated by calling in aid Court process must quicken judicial conscience to improvise an ad hoc procedure to restore through the Court 's authority what has been nibbled from the numerous buyers.
Innovative realism is obligated on the Court on the broad basis actus curiae neminem gravabit.
Why did the buyers pay higher prices for levy sugar ? Because, they respected the High Court 's order.
In this justice situation conventional procedures of each small claimant being left to litigate for his little sum from the miller or wholesaler is to write off the remedy and allow the ill gotten wealth to be in the coffers of the wrong doer (who got the charter to charge high, from a Court order).
Nor is the seemingly sweet suggestion, that a representative action under order 1.
r. 8 C.P.C., be instituted on be half of the class of consumers, feasible.
Who is to start? Against whom ? How is he to meet the huge litigative costs and how long (O, Lord, how long!) is he to wait with long drawn out trial procedures appeal, second appeal, special appeal" and Supreme Court appeal ? For, on the other side is the miller with the millions to be coughed up 806 The handling of small claims is probably the most deplorable feature of the administration of civil justice and yet small claims are in many respects more significant than large ones, involving large numbers and inter class disputes.
If the confidence of the community in the justice system, especially consumer protection, is to be created, radical reform of the processual law is needed now and here.
Rejecting, therefore, the recommendations for solution of the problem arising here.
as put forward by counsel for the appellants, we have to devise other measures.
We are aware of our limitations .
"The judge" even when he is free, is still not wholly free.
He is not to innovate at pleasure.
He is not a knight errant roaming at will in pursuit of his own ideal of beauty or of goodness.
He is to draw his inspiration from consecrated principles.
He is not to yield to spasmodic santiment, to value and unregulated benevolence.
He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to 'the primordial necessity of order in social life. ' Wide enough in all conscience is the field of discretion that remains.
" (1) The difficulty we face here cannot force us to abandon the inherent powers of the Court to do.
"The inherent power has its roots in necessity and its breadth is co extensive with the necessity".(2) Certainly, we cannot go against any statutory prescription.
Had India had a developed system of class actions or popular organisation taking up public interest litigation, we could have hoped for relief otherwise than by this Court 's order.
We lag in this regard" although people are poor and claims are individually trivial.
Legal aid lo the poor has a processual dimension As things stand, if each victim were remitted to an individual suit the remedy could be illusory, for the individual loss may be too small, a suit too prohibitive in time and money and the wrong would go without redress.
If there is to be relief, we must construct it here by simple legal engineering.
The Solicitor General appearing for the State of U.P. and the Union of India, informed us that legislation was about to be enacted to take care of these situations.
If it did come, it were welcome.
After all, the Legislature must show better legal concern for the small marl, as this class of consumers who are wronged or deceived are on the increase In the present case, we think that the following complex of directions will pragmatically meet the needs both of the appellants and the range of buyers from whom higher prices were charged : A.
The security by way of bank guarantee furnished by every appellant will be encashed by the Registrar.
Of the High Court and kept in short term deposit in the State Bank of India r (1) Benjamin Cardozo 's 'The Nature of the Judicial Process ' Yale university Press (1921) (2) Theoretical Basis Inherent Powers Doctrine Text material prepared by Jim R. Carrigan Publication of National College of The state Judiciary, U.S.A. 807 B. The appellants will be given complete immunity from liability to any sugar buyer, wholesaler or other" to whom sugar has been sold by the appellants at higher prices during the period covered by the High Court 's stay order.
If any exceptional case of claim were to be made by any buyer, it . . should be done by motion before the High Court which will I be justly disposed of.
The Registrar, under orders of the High Court, will directly or by making over to the State Government, receive and dispose of claims from the ultimate consumer for excess price paid on proper proof.
If the State Government is to undertake this task, a proper, easy and cheap machinery for distribution to the real, last buyers will be produced before the High Court and orders obtained.
The process should not be too expensive or too formalised.
D. Wide publicity will be given about the project and method of returning small claims and the money sent by post or otherwise.
The claims also would be received by post or otherwise and verified without delay.
The interest accruing from the bank deposits will be used for the incidentals to work out the distribution.
F. It will be open to the wholesaler to prove by vouchers the retailers and the latter in turn may prove who the ultimate , buyers are.
The High Court may devise modifications of this scheme or direct the State Government to act on any scheme subject to the moneys reaching the real small buyers from the retailers.
If any further directions in the mechanics of the scheme are felt necessary, the High Court will report to this court.
If, within one year from today, any amounts remain unclaimed they will go into a separate deposit in the High Court to be operated on application by any claimant.
If any legislation dealing with this subject were to be made before the amounts are disbursed, the legislative scheme will pro tanto prevail over the directions given above.
The court fee on these civil appeals will be exempted in the special circumstances of the case.
K. Parties will bear their own costs in this Court.
May be the procedure we have suggested above is somewhat unconventional but where public interest is involved.
"Courts of equity may, and frequently do, go much further both to give and withhold relief in furtherance of the public interest than they are accustomed to go where only 808 private interests are involved.
Accordingly, the granting or withholding of relief may properly be dependent upon considerations as of public interest . "(1) We hope the vigilant legislature will activise itself on behalf of the little men and the law and make quick moving, easily accessible and free of cost consumer protection measures.
Slogans are not law and the rule of law in a welfare oriented constitutional order demands 'poverty law none too soon; with emphasis on the delivery of legal services with distances shortened and road hazards removed.
It is not for the Court to spell out more, but it is for the State to awaken to a overlooked, but not infrequent, legal phenomenon.
P.H.P. Appeals dismissed.
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The appellants challenged the validity of fixation of price of levy the high Court.
During the pendency of the petitions, the appellants a stay order from the High Court for charging the price in eyes price fixed by the State on furnishing Bank guarantees for the excess price Ultimately, the High Court upheld the control of price and directed appellants to restore the excess money recovered from the consumer to the through the State Government.
The appellants filed the present Special Leave against the said order of the High Court and contended that since the Sugar Industry had lean year, the excess amount should be allowed to retained by the appellant or that the excess amount should be to be utilised for stabilising the sugarcane growers ' economic position alternative, it was prayed that the excess amount could remain with the appellant unite a suitable scheme for the return of the excess amount to the was made.
Dismissing the appeals, ^ HELD : 1.
The appellants had doubt business use of these crores of rupees for nearly a year even after the High Court 's final judgment.
The money of the many little men got by the few millers by selling an essential commodity to the community at what is frankly black market price under the umbrella of court order of stay shall get back to the scattered crowd of small consumers as early and as inexpensively as possible.
A public injury perpetrated by calling in aid court process must waken judicial conscience to improvise an ad hoc procedure to restore through the court 's authority what has been nibbled from the numerous buyers.
The handling of small claims is probably a must deplorable features of the administration of civil justice and yet small claims are in many respect more signification than large ones, involving large numbers and inter class disputes.
If the confidence of the community in the justice system especially consumer protection.
is to be created, radical reform of the processual law is needed now and here.
The inherent power of the court has its roots in the necessity and its breadth is co extensive with the necessity.
The Court directed that the Bank guarantees furnished by the appellants should be encashed by the Registrar and kept in short term deposit.
That he claims of the consumers should be settled by the Registrar of the High Court under the order of the High Court through an easy and cheap machinery.
That wide publicity should be given about the method of returning and that small claims might be accepted by cost and money also returned by post.
[804 C E. 806 A. D 807 BD]
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Here is a two-paragraph summary of the court case:
The Allahabad High Court had earlier ordered sugar millers to disgorge excess profits earned by selling sugar at higher prices during a period when the government had imposed a controlled price. The sugar millers had challenged the controlled price but secured a stay order from the court, which allowed them to sell sugar at higher prices. The High Court later upheld the controlled price and directed the millers to return the excess profits to the consumers. However, the millers sought leave to appeal against this direction and argued that the excess profits should be retained by them.
The Supreme Court refused to allow the millers to retain the excess profits and directed the Registrar of the High Court to encash the bank guarantees furnished by the millers. The court also ordered that the money collected from the millers should be distributed to the small consumers who had paid higher prices for sugar. To facilitate the distribution of the money, the court devised a complex of directions, including the setting up of a machinery for receiving and disposing of claims from the ultimate consumers, wide publicity about the project, and a provision for the interest accruing from the bank deposits to be used for the incidentals to work out the distribution. The court also exempted the court fee on these civil appeals and directed the parties to bear their own costs.
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Appeal No. 147 of 1951.
Appeal from the Judgment and Decree dated September 4, 1946, of the late Chief Court of Oudh (now the High Court of Judicature at Allahabad, Lucknow Bench) (Misra and Wallford JJ.) in First Civil Appeal No. 139 of 1941, arising out of the Judgment,and Decree dated October 23, 1941, of the Court of the Civil Judge, Bahraich, in Regular Suit No. I of 1941.
234 Onkar Nath Srivastava for the appellant.
Bishan Singh for the respondent.
November 7.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is on behalf of the plaintiff and is directed against a judgment and decree of the Chief Court of Avadh dated September 4, 1946, affirming, on appeal, those of the Civil Judge, Bahraich, passed in Regular Suit No. 1 of 1941.
To appreciate the controversy between the parties to this appeal it would be necessary to state a few facts.
One Raja Bisheshwar Bux Singh, the father of the plaintiff and of the defendant 's husband, was a taluqdar of Oudh, and the estate known as Gangwat Estate, to which he succeeded in 1925 on the death of the widow of the last holder, is one to which the Oudh Estates Act (I of,1869) applies.
Raja Bisheshwar died on 16th October, 1930, leaving behind him two sons, the elder of whom, Bajrang Bahadur, is the plaintiff in the present litigation, while the younger, whose name was Dhuj Singh, has died since then, being survived by his widow Bakhtraj Kuer.
who is the defendant in the suit.
Shortly before his death Raja Bisheshwar executed a will dated 11th September, 1929, by which five properties, described in lists A and B attached to the plaint, were bequeathed to Dhuj Singh, the younger son, by way of making provisions for the maintenance of the said son and his heirs.
On the death of Raja Bisheshwar,the estatement to the plaintiff as his eldest son under the provisions of the Oudh Estates Act and Dhuj Singh got only he five properties mentioned above under the terms of his father 's will.
Dhuj Singh had no issue of his own and on his death in 1940 disputes arose in respect of these properties between the plaintiff on the one land and Dhuj Singh 's widow on the other.
The plaintiff succeeded at first in having his name mutated as owner of these properties in the revenue records in place of his deceased brother, but the appellate 235 revenue authority ultimately set aside this order and directed mutation to be made in the name of the defendant.
The plaintiff thereupon commenced the suit out of which this appeal arises, praying for declaration of his title to the five properties mentioned above on the allegation that they vested in him on the death of Dhuj Singh and that the defendant could not) in law, assert any right to, the same.
It may be stated here that four out of these five properties have been described in list A to the plaint and there is no dispute that they are taluqdari properties.
The fifth item is set out in list B and admittedly this property is not taluqdari in its character.
Besides lists A and B there is a third list, viz., Catached to the plaint, which mentions two other properties as being in possession of the defendant and in the plaint a claim was made on behalf of the plaintiff in respect to these properties as well, although they were not covered by the will of Bisheshwar.
This claim, however, was abandoned in course of the trial and we are not concerned with it in the present appeal.
The plaintiff really rested his case on a two fold ground.
It was averred in the first place that Dhuj Singh hadonly a life interest in the properties bequeathed to him by Bisheshwar and on the termination of his life interest, the property vested in the plaintiff as the heir of the late Raja.
In the alternative the case put forward was that even if Dhuj Singh had an absolute interest created in his favour under the terms of his father 's will, the plaintiff was entitled to succeed to the taluqdari properties at any rate, under the provision of section 14(b) read with section 22 (5) of the Oudh Estates Act.
The defendant in her written statement resisted the plaintiff 's claim primarily on the ground that Bisheshwar Bux Singh, as the full owner of the properties, was competent to dispose of them in any way he liked and under his will it was the defendant and not the plaintiff in whom the properties vested after the death of Dhuj Singh.
The contention, in .
substance, was that the will created a life estate for Dhuj 236 Singh followed by a devise in favour of the widow as his personal heir.
The decision of the point in dispute between the parties thus hinges on the proper construction of the will left by Bisheshwar.
The trial court after an elaborate consideration of the different portions of the will, viewed in the light of surrounding circumstances, came to the conclusion that Dhuj Singh got a life interest in the devised properties but there were similar life estates created in favour of his personal heirs in succession, the ultimate remainder being given to the holder of the estate when the line of personal heirs would become extinct.
The defendant, therefore, was held entitled to the suit properties so long as she was alive and in that view the plaintiff 's suit was dismissed.
Against this decision, the plaintiff took an appeal to the Chief Court of Avadh and the Chief Court affirmed the decision of the trial judge and dismissed the appeal.
The plaintiff has now come, up to this court on the strength of a certificate granted by the High Court of Allahabad with which the Chief Court of Avadh was amalgamated sometime after the disposal of this case.
The learned counsel appearing for the appellant first of all drew our attention to the provisions contained in certain sections of the Oudh Estates Act and it was urged by him on the basis of these provisions that as Dhuj Singh, who got the suit properties under the will of his father, the late.
Taluqdar, came within the category of persons enumerated in clause (1) of section 13 A, Oudh Estates Act, he could, under section 14 of the Act, hold the properties subject to the same conditions and the same rules of succession as were applicable to the, taluqdari himself.
In these circumstances, it is said that the provisions of section 22 (5) of the Act would be attracted to the facts of this case and the plaintiff, as the brother of Dhuj Siugh, would be entitled to succeed to the properties of the latter in preference to his widow.
The argument formulated in this way does not I appear to us to be helpful to the appellant.
Section.
11 237 of the Oudh Estates Act confers very wide powers of disposition upon a taluqdar and he is competent under the section "to transfer the whole or any portion of his estate, or of his right and interest therein, during his lifetime, by sale, exchange, mortgage, lease or gift, and to bequeath by his will to any person the whole or any portion of such estate, and interest.
" Sections 13 and 13 A make certain special provisions in cases of transfers by way of gift and bequest in favour of certain specified persons and lay down the formalities which are to be complied with in such cases.
Section 14 then provides that "if any taluqdar or grantee, or his heir or legatee, shall heretofore have transferred or bequeathed, or if any taluqdar:or grantee, or his heir or legatee shall hereafter transfer or bequeath the whole or any portion of his estate (a) . . . (b) to any of the persons mentioned in clauses (1) and (2) of section.
13 A, the transferee or legatee and his heirs and legatees shall have same rights and powers in regard to the property to which he or they may have become entitled under or by virtue of such transfer or bequest, and shall hold the same subject to the same conditions and to the same rules of succession as the transferor or testator.
" It is true that Dhuj Singh being a younger son of the testator came within the purview of clause (1) of section 13 A of the Oudh Estates Act and if he became full owner of the properties under the will of his father, succession to such properties after his death would certainly be regulated by the special rules of succession laid down in the Oudh Estates Act, and not by the ordinary law of inheritance.
But section 14 would have no application if the disposition by the will did not make Dhuj Singh an absolute owner of the properties and he was given only an interest for life which was followed by subsequent interests created in favour of 31 238 It cannot also be contended that a taluqdar governed by the Oudh Estates Act cannot convey anything less than his absolute proprietary right in a property by transfer inter vivos or by will, or that 'it is not competent for him to create any limited interest or future estate.
Apart from the plenary provision contained in section 11, section 12 of the Act which makes the rule against perpetuity applicable to transfers made by a taluqdar, furnishes a clear indication that the Act does not interdict the creation of future; estates and limitations provided they do not trans gress the perpetuity rule.
The questions, therefore, which require consideration in this case are really two in number.
The first is whether Dhuj Singh got an absolute estate or an estate for life in the properties given to, him by the will of Raja Bisheshwar? If he got an absolute estate, the contention of the appellant should undoubtedly prevail with regard to the taluqdari properties specified in list A of the plaint.
If, on the other hand,, the interest was one which was to inure only for the period of his life, the further question would arise as to whether any subsequent interest was validly created by the will in favour of the widow on the strength of which she can resist the plaintiff 's claim.
If the life estate was created in favour of Dhuj Singh alone, obviously the plaintiff as the heir of the grantor would be entitled to come in as reversioner after his death .
The answers to both the questions would have to be given on a proper construction of the will left by Raja Bisheshwar.
The will has been rightly described by the trial judge as a most inartistic document with no pretension to any precision of language, and apparently it was drawn up by a man who was not acquainted with legal phraseology.
The Civil Judge himself made a translation of the document, dividing its contents into several paragraphs and this was found useful and convenient by the learned Judges of the Chief Court.
The material portions of the will, as translated by the trial judge, may be set out as follows: 239 "As I have become sufficiently old and no reliance can be placed on life, by God 's grace I have got two sons namely, Bajrang Bahadur Singh, the elder, and Dhuj Singh the younger.
After my death the elder son would according to rule, become the Raja, the younger one is simply entitled to maintenance.
Consequently with a view that after my death the younger son and his heirs and successors, generation after generation, may not feel any trouble and that there may not be any quarrel between them.
I have decided after a full consideration that I should execute a will in favour of Dhuj Singh with respect to the villages detailed below.
So that after my death Dhuj Singh may remain in possession of those villages as an absolute owner with the reservation that he will have no right of transfer.
If God forbid, Dhuj Singh may not be living a the time of my death, his son or whoever may be his male heir or widow may remain in possession of the said villages on payment of the Government revenue as an absolute owner.
The liability for the land revenue of the said villages will be with Dhuj Singh and his heirs and successors; the estate will have no concern with it.
Although Dhuj Singh and his heirs are not given: the power of transfer, they will exercise all other rights of absolute ownership that is to say, the result is that the proprietor of the estate or my other heirs and successors will not eject Dhuj Singh or his heirs or successors in any way.
Of course if Dhuj Singh or his heirs become ever heirless then the said villages will not escheat to the Government but will revert and form part of the estate.
Hence with the soundness of my mind without any force or pressure and after having fully under , stood and also having thought it proper I execute this will in favour of Dhuj Singh, my own ;on, with the above mentioned terms.
" 240 The learned counsel for the appellant naturally lays stress upon the words "absolute owner " (Malik kamil) and " 'generation after generation? ' (naslan bad naslan) used in reference to the interest which Dhuj Singh was to, take under the will.
These words, it cannot be, disputed, are descriptive of a heritable and alienable estate in the donee, and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to, be conferred.
In all such cases the true intention of the testor has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
"The object of the testator in executing the will clearly set out in the preamble to the document and in spite of the somewhat clumsy drafting that object to have been kept in view by the testator throughout, in making the provisions.
The language and tenor of the document leave no doubt in OUT minds that the dominant intention of the testator was to make provision not for Dhuj Singh alone but for the benefit of his heirs and successors, " generation after generation " as the expression has been used.
The expression " heirs" in this context obviously means and refers to the personal heirs of Dhuj Singh determined according to the, general law of inheritance and not the successors to the estate under the special provisions of the Oudh Estates Act, for paragraph 6 of the will mentioned above is expressly intended to protect the personal heirs of Dhuj Singh from eviction from the properties in question by the future holders of the estate.
Thus the beneficiaries under the will are Dhuj Singh himself and his heirs in succession and to each such heir or set of heirs the rights of malik are given but without any power of alienation.
On the total, extinction of this line of heirs the properties affected by the will are to revert to the estate.
As it was the intention of the testator that the properties should 241 remain intact till the line of Dhuj Singh was exhausted and each successor was to enjoy and hold the properties without any power of alienation, obviously what the testator wanted was to create a series of life estates one after another, the ultimate reversion being given to the parent estate when there was a complete failure of heirs.
To what extent such intention could be, given effect to by law is another matter and that we shall consider presently.
But it can be said without hesitation that it was not the intention of the testator to confer anything but a life estate upon Dhuj Singh in respect of the properties covered by the will.
The clause in the will imposing total restraint on alienation is also a pointer in the same direction.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would certainly be repelled on the ground 'of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the Will, it is a material circumstance to be relied upon for displacing the presumption of absolute ownership implied in the use of the word "malik".
We hold, therefore, that the courts below were right in holding that Dhuj Singh had only a life interest in the properties under the terms of his father 's will.
Of course this by itself gives no comfort to the defendant; she has to establish, in order that she may be able to resist the plaintiff 's claim, that the will created an independent interest in her favour following the death of Dhuj Singh.
As we have said already, the testator did intend to create successive life estates in favour of the successive heirs of Dhuj Singh.
This, it is contended by the Appellant is not permissible in law and he relies on the case of Tagore vs Tagore(1).
It is quite true that no interest could be created in favour of an unborn person but when the gift is made to a class or series of persons, some of (1) 18 Weekly Report 359.
242 whom are in existence and some are not, it does not fail in its entirety; it is valid with regard to the persons who are in existence at the time of the testator 's death and is invalid as to the rest.
The Widow, who is the next heir of Dhuj Singh, was in existence when the testator died and the life interest created in her favour should certainly take effect.
She thus acquired under the will an interest in the suit properties after the death of her husband, commensurate with the period of her own natural life and the plaintiff consequently has no present right to, possession.
The result, therefore, is that the appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant Rajinder Narain.
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The Oudh Estates Act (Act I of 1869) does not interdict the creation of future estates and limitations provided they do not transgress the rule of perpetuities and where a disposition by a will made by a taluqdar does not make the legatee an absolute owner but gives him only an interest for life which is followed by subsequent interests created in favour of other persons the rule of succession laid down in section 14 of the Act will not apply on the death of the donee and the property bequeathed to him will pass according to the will to the next person entitled to it under the will, 233 The words malik kamil (absolute owner) and naslan bad naslan (generation after generation) are descriptive of a heritable and alienable estate in the donee and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to be conferred.
In all such cases the true intention of the testator has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would be repelled on the ground of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the will, it is a material circumstance to be relied on for displacing the presumption of absolute ownership implied in the use of the word malik.
Though under the rule laid down in Tagore vs Tagore no interest could be created in favour of unborn persons, yet when a gift is made to a class or series of persons, some of whom are in existence at the time of the testator 's death and some are not, it does not fail in its entirety ; it will be valid with regard to the persons who are in existence at the time of the testator 's death and invalid as to the rest.
A will made by a taluqdar of Oudh recited that with a view that after his death his younger son D and his heirs and successors, generation after generation, may not feel any trouble or create any quarrel, D shall after the testator 's death remain in possession of certain villages as absolute owner, with the reservation that he will have no right to transfer, that if D may not be living at the time of his death D 's son or whoever may be his male heir or widow may remain in possession and that although D and his heirs are not given the power of transfer they will exercise all other rights of absolute ownership: Held, that the will did not confer an absolute estate on D and on D 's death the succession was not governed by section 14 of the Oudh Estates Act and D 's widow was entitled to succeed in preference to D 's elder brother.
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In the case of Appeal No. 147 of 1951, the plaintiff, Bajrang Bahadur Singh, sought to challenge the judgment and decree of the Chief Court of Oudh, which had dismissed his claim to the properties of the Gangwat Estate. The estate was inherited by Raja Bisheshwar Bux Singh, the father of the plaintiff and the husband of Dhuj Singh's widow, who had died in 1930. Before his death, Raja Bisheshwar had executed a will bequeathing five properties to Dhuj Singh, the younger son. The plaintiff claimed that the properties vested in him on Dhuj Singh's death in 1940, while the defendant, Dhuj Singh's widow, claimed that she was entitled to the properties under the will.
The trial court and the Chief Court found that Dhuj Singh had only a life interest in the properties under the terms of his father's will, with successive life estates created in favour of his personal heirs. The will did not create an independent interest in the defendant, but only a life interest that would expire with her own natural life. The court held that the plaintiff had no present right to possession of the properties, as the defendant had acquired an interest in them under the will.
The plaintiff appealed to the High Court, arguing that the provisions of the Oudh Estates Act should be applied to determine the succession to the properties. However, the court held that the will did not create an absolute estate in Dhuj Singh, but only a life interest, and that the subsequent interests created in favour of his personal heirs were not valid. The appeal was dismissed, with costs.
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N: Civil Appeal Nos.
1629 to 1631 of 1968.
Appeals from the judgment and order dated January 29, 1965 of the Calcutta High Court in Wealth Tax Matter No. 372 of 1961.
B. Sen, T.A. Ramachandran, R.N. Sachthey and B.D. Sharma, for the appellant (in 'all the appeals).
M.C. Chagla, R.K. Choudhury and B.P. Maheshwari, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate granted under section 29(1) of the Wealth Tax Act,1957 (hereinafter referred to as the Act) against the judgment of the Calcutta High Court dated January 29, 1965 in Wealth Tax Matter No. 372 of 1961.
The respondent is a company which is assessed to wealthtax for the assessment years 1957 58,1958 59 and 1959 60.
In computing the net wealth of the respondent on the respective valuation dates the Wealth Tax Officer proceeded under section 7(2)(a) of the Act and included the full value of the fixed assets as shown by the respondent in the respective balance sheets without any adjustment, after rejecting its contention that the fixed assets should be assessed at their written down value as computed for the purposes of income tax.
In the assessment order 791 for 1957 58 the Wealth tax Officer gave his reasons as follows : "The assessee claimed that since the full amount of depreciation which was admissible under the Incometax Act was not provided in the balance sheet the amount of depreciation not provided for earlier should now be deducted from the value of the assets in order to arrive at the net wealth.
This contention can hardly be accepted.
The depreciation allowable under the Income tax Act does not determine the market value of the assets.
The object of allowing depreciation in the income tax assess ment is quite different For the purpose of the wealth tax assessment the value of the assets as estimated by the assessee itself in its balance sheet has been accepted".
Similarly in his assessment order for 1958 59 the Wealth tax Officer stated as follows : "Excluding the value of land, the total value of the fixed assets as per balance sheet amounts to Rs. 60,53,811 whereas the assessee has shown in its return the value of the same at Rs. 7,69,435.
These values have been shown by the assessee on the basis of income tax written down value and not on the basis of the balance sheet values as required under the global system of valuation.
It is common knowledge that the values of the imported machinery has increased considerably during the last few years and, on the valuation date, I do not think that their value should be less than that provided for in the balance sheet".
On appeal the Appellate Assistant Commissioner confirmed the valuation of the fixed assets.
On further appeal the Income tax Appellate Tribunal held that it would be fair in the circumstances of the case to adopt the written down value of the assets as value thereof for all the years under appeal.
In the course of its order the Appellate Tribunal said: "The income tax assessment depreciation is calculated upon the original cost in a scientific and systematic manner with due regard to the nature of the asset.
Therefore, the written down value as determined in the income tax assessment may be taken as the fair index of the net value of the business assets in most cases . .
It cannot however be laid down as an inflexible rule of law that in every case the written down value must be taken to be the net 792 value of the business assets.
If that were so.
the Legislature would have said so in clear terms instead of indulging in the circumlocution in section 7(2)(a).
In this particular case, it appears, the assessee did not make any reserve for depreciation and the assets are old dating back from the inception of the business long ago.
In these circumstances, in our opinion, it would be fair to adopt the written down value of the assets as the value thereof for all the years under appeal . " At the instance of the Commissioner of Income tax the Appellate Tribunal stated a case to the High Court under section 27(1) of the Act on the following question of law : "Whether on the facts and in the circumstances of the case, for the purpose of determining the net value of the assets of the assessee under section 7(2) of the the Tribunal was right in directing that the written down value of the fixed assets of the assessee should be adopted as the value thereof, instead of their balance sheet value ?" By its judgment dated January 29, 1965 the High Court answered the question in the affirmative and in favour of the respondent.
Section 7 of the Act stood as follows at the material time : "(1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth tax Officer it would fetch if sold in the open market on the valuation date.
(2) Notwithstanding anything contained in subsection (1), (a) where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require.
793 In Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax, (Central) Calcutta(1) the appellant company had shown in its balance sheet for the period ending March 31, 19.57, the appreciated value on revaluation of its assets, after making certain adjustments, at Rs. 2,60,52,357 and had introduced in the capital reserve surplus a corresponding balancing figure of Rs. 1,45,87,000 representing the increase in the value of the assets upon re valuation.
For the purposes of wealth tax the officer took the sum of Rs. 2,60,52,357 as the value of the assets, whereas the company contended that an adjustment ought to be made in view of the increase in the value shown in the balance sheet on re valuation.
It was held by this Court that as no one could know better the value of the assets than the assessee himself, the Wealth tax Officer was justified in accepting the value of the assets at the vigour shown by the appellant company itself.
It was open to the appellant company to convince the authorities that that figure was inflated for acceptable reasons; but it did not make any such attempt.
It was also open to the Wealth tax Officer to reject the figure given by the appellant company and to adopt another figure if he was, for sufficient reasons, satisfied that the figure given by the appellant was wrong.
It is argued on behalf of the appellant in the present case that the High Court was not right in holding that the principle laid down by this Court in Kesoram Industries(1) case is not applicable.
In our opinion there is justification for this argument.
Under sub section (1 ) of section 7 of the Act the Wealth tax Officer is authorised to estimate for the purpose of determining the value of any asset, the price which it would fetch, if sold in the open market on the valuation date.
But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business.
The legislature has, therefore, provided in sub section (2) (a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax Officer may determine the not value of the assets of the business as a whole, having regard to the balancesheet of such business as on the valuation date and make such adjustments therein as the circumstances of the case may require.
The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true value of the assets of the business.
It is of course open to the assessee in any particular case to establish after producing relevant materials that the value given of the fixed as.sets in the balance sheet is artificially (1) ; 794 inflated.
It is also open to the assessee to establish by acceptable reasons that the written down value of any particular asset represents the proper value of the asset on the relevant valuation date.
In the absence of any material produced by the assessee to demonstrate that the written down value is the real value, the Wealth tax Officer would be justified in a normal case in taking the value given by the assessee itself to its fixed assets in its balance sheet for the relevant year as the real value of the assets for the purposes of the wealth tax.
It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets.
The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance sheet value is the true value.
If, therefore, the assessee merely claims that the written down value of the assets should be adopted but fails to produce any material to show that the written down value is the true value, the Wealth tax Officer is justified in rejecting the claims and adopting the values shown by the assessee himself in his balance sheet as the true value of his assets.
In our opinion the High Court should have based its decision on the principle of Kesoram Industries(1) case and the question of law should be answered in the manner stated by us in this judgment.
But it is necessary to give certain effective directions in this case.
Section 27(6) of the Act requires the Tribunal on receiving a copy of the judgment of the Supreme Court or the High Court as the case may be to pass such orders as are necessary to dispose of the case conformably to such judgment.
This clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light and conformably with the judgment of the Supreme Court.
Before the Tribunal passes an order disposing of the appeal there would normally be a hearing.
The scope of the hearing must of course depend upon the nature of the order passed by the Supreme Court.
If the Supreme Court agrees with the view of the Tribunal the appeal may be disposed of by a formal order.
But if the Supreme Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the Supreme Court.
If the Supreme Court has held that the judgment of the Tribunal is vitiated because it is based on no evidence or because the judgment proceeds upon a misconstruction of the statute, the Tribunal would be under a duty to dispose of the case conformably with the opinion of the Supreme Court and on the merits of the dispute and re hear the appeal.
In all cases, however, opportunity must be afforded to the parties of being heard.
In Income(l) ; 795 tax Appellate Tribunal, Bombay vs
S.C. Cambatta & Co. Ltd.(1) the Bombay High Court has explained the procedure followed in the disposal of an appeal conformably to the judgment of the High Court.
Chagla C.J. in delivering the judgment .of the Court observed : ". . when a reference is made to the High Court e her under section 66(1) or section 66(2) the decision of the Appellate Tribunal cannot be looked upon as final; in other words, the appeal is not finally disposed of.
It is only when the High Court decided the case, exercises its advisory jurisdiction, and gives directions to the Tribunal on questions of law, and the Tribunal reconsiders the matter and decides it, that the appeal finally disposed of . . it is clear that what the Appellate Tribunal is doing after the High Court has heard the case is to exercise its appellate powers under section 33 .
The shape that the appeal would ultimately take and the decision that the Appellate Tribunal would ultimately give would entirely depend upon the view taken by the High Court.
" This passage was quoted with approval by this Court in Esthuri Aswathiah vs Commissioner of Income tax(2).
In the present case, therefore, the answer we have furnished to the question in the reference means that the Appellate Tribunal must now, in conformity with the judgment of this Court, act under section 27(6) of the Act, that is to say, dispose of the case after rehearing the respondent company and the Commissioner in the light of the evidence and according to law.
There will be no order as to costs.
G.C. (1) , 120.
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The respondent company was assessed to wealth tax for the assessment years 1957 58, 1958 59 and 1959 60.
In computing the net wealth of the respondent on the respective valuation dates the Wealth Tax Officer proceeded under section 7(2)(a) of the Act and included the full value of the fixed assets as shown by the respondent in the respective balance sheets without any adjustment, after rejecting` its contention that the fixed assets should be assessed at their written down value as computed for the purposes of income tax.
The Appellate Assistant Commissioner confirmed the valuation but the Income tax Appellate Tribunal held that it would be fair in the circumstances of the case to adopt the written down value of the asset 's as value thereof for all the years under appeal.
On reference being made to it under section 27(1) of the Wealth Tax Act the High Court held in 'favour of the respondent.
The Revenue appealed, HELD: The rule of valuation on the basis of market value under section 7(1) of the Act may not yield a true estimate of the net value of the total assets in the case of a running business.
The legislature has therefore provided in sub section
(2)(a) that when the assessee is carrying on a business for which accounts are maintained by him 'regularly, the Wealth Tax Officer may determine the net value of the business as a whole, having regard to the balance sheet of such business as on the valuation date and make such adjustments therein as the circumstances of the case may require.
The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true value of the assets of the business.
It is of course open to the assessee in any particular case to establish after producing relevant materials that the value given of the fixed assets in the balance sheet is artificially inflated.
It is also open to the assessee to establish by acceptable reasons that the written down value of any particular asset represents the proper value of the asset on the relevant valuation date.
In the absence of any material produced by the assessee to demonstrate that the written down value is the real value the Wealth tax Officer would be justified in a normal case in taking the value given by the assessee itself to its fixed assets in the balance sheet for the relevant year as the real value of the assets for the purposes of the Wealth tax.
It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets.
The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance sheet value is the true value.
[793 E 794 C] 790 If, therefore, the assessee merely claims that the written down of the assets should be adopted but fails to produce any material to show that written down value is the true value, the Wealth tax Officer is justified in rejecting the claims and adopting the values shown by the assessee himself in his balance sheet as the true value of his assets.
[794 C D] Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealthtax (Central) Calcutta, ; , applied.
(ii) Section 27(6) of the Act requires the Tribunal on receiving a copy of the judgment of the Supreme Court or the High Court as the ease may be to pass such orders as are necessary to dispose of the case conformably to such judgment.
[794 E] If the Supreme Court agrees with the view of the Tribunal the appeal may be disposed of by a formal order.
But if the Supreme Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the Supreme Court.
If the Supreme Court has held that the judgment of the Tribunal is vitiated because it is based on no evidence or because the judgment proceeds upon a misconstruction of the statute, the Tribunal would be under a duty to dispose of the case conformably with the opinion of the Supreme Court and on the merits of the dispute and re hear the appeal.
In all cases, however, opportunity must be afforded to the parties of being heard.
[794 F H] Income tax Appellate Tribunal, Bombay, vs S.C. Cambatta vs Commissioner of Income tax, , applied.
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Here's a two-paragraph summary of the court case:
The case is a civil appeal brought by a respondent company against the judgment of the Calcutta High Court dated January 29, 1965, in Wealth Tax Matter No. 372 of 1961. The company is assessed to wealth tax for the assessment years 1957-58, 1958-59, and 1959-60. The Wealth Tax Officer initially valued the company's fixed assets at their full value as shown in the balance sheet, rejecting the company's contention that the assets should be valued at their written-down value as computed for income tax purposes.
The Appellate Tribunal held that it would be fair to adopt the written-down value of the assets as their value for all the years under appeal. However, the High Court answered the question in the affirmative and in favor of the respondent company, citing the principle laid down in Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax, where the Supreme Court held that the Wealth tax Officer was justified in accepting the value of the assets as shown by the assessee itself if no one could know better the value of the assets than the assessee himself. However, the Supreme Court disagreed with the High Court and held that the written-down value should not be automatically adopted without considering the circumstances of the case.
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Civil Appeal No. 2050 of 1973.
Appeal by special leave from the judgment and order dated the 14th October, 1971 of the Andhra Pradesh High Court in Writ Appeal No. 691 of 1970.
B. Parthasarthi for the Appellant.
P.N. Poddar for Respondent No. 2.
section Markakandeya for Respondent No. 6.
The Judgment of the Court was delivered by BALAKRISHNA ERADI, J.
This appeal preferred by special leave is against the judgment of the Division Bench of the Andhra Pradesh High Court setting aside the decision of a learned single judge of that Court and dismissing a writ petition filed by the present appellant.
The appellant, who was working as an officer of the Forest Department in the State of Andhra Pradesh, approached the High 161 Court challenging the provisional integrated gradation list of Forest officers of the former Andhra and Hyderabad States published under the provisions of the States Reorganization Act, as annexure to a State Government order dated January 27, 1962.
The contentions raised by the petitioner in the writ petition were mainly two fold.
Firstly, it was urged that the inter se seniority between the appellant and the 6th respondent, both of whom originally belonged to the Andhra Cadre, had been wrongly fixed in the provisional gradation list by showing the 6th respondent as senior to the appellant, whereas the appellant was legally entitled to seniority over the 6th respondent.
Secondly, it was contended that respondents Nos. 3, 4, 5, 7 and 8 who were officers allotted to the State of Andhra Pradesh from the Telengana region of the former Hyderabad State, had been erroneously assigned ranks above the appellant in the integrated gradation list in violation of the principles laid down by the Government of India for equation of posts and the fixation of inter se seniority between the persons drawn from the two sources.
By the time the writ petition came up for hearing before the learned single judge, the Central Government had already set right the appellant 's grievance concerning his ranking and the seniority in relation to respondents 3, 4, 5, 7 and 8.
It therefore became unnecessary for him to pursue the second contention aforementioned and hence he pressed before the learned single judge only the plea concerning his claim for seniority over the 6th respondent was well founded.
Accordingly, the learned single judge found that the contention put forward by the appellant that he was entitled to seniority over the 6th respondent was well founded.
Accordingly, the learned judge allowed the writ petition and issued a writ of mandamus directing the State Government and the Government of India to modify the gradation list by showing the appellant as senior to the 6th respondent.
The 6th respondent carried the matter in appeal before a Division Bench of the High Court by filing Appeal No. 691 of 1978.
The Division Bench took the view that since the prayer contained in the writ petition was for the issue of a writ of mandamus directing respondents No. 1 and 2 to forbear from implementing the provisional gradation list published along with the Government order dated January 27, 1962, and inasmuch as the petitioner had not pressed the said prayer for quashing of the list in so for as it related to the officers of Telengana region (respondents 3, 4, 5, 7 and 8), the writ petition should have been dismissed on that short ground and the question relating to inter se seniority between the petitioner and the 162 6th respondent ought not to have been decided by the learned single judge.
In this view, the Division Bench allowed the writ appeal, set aside the order passed by the learned single judge and dismissed the writ petition.
The appellant has come up to this Court questioning the legality and correctness of the aforesaid reasoning and conclusion of the Division Bench.
It is true that the writ petition contained a prayer for the quashing of the gradation list in so far as it related to the inter se ranking of the petitioner vis a vis respondents Nos. 3 to 8 and the petitioner (appellant) had also sought the issuance of a writ of mandamus directing respondents Nos. 1 and 2 to forbear from implementing or acting upon the said gradation list.
But subsequent to the institution of the writ petition, the Central Government has refixed the ranks of respondents Nos. 3, 4, 5, 7 and 8 (Telengana officers) and placed them below the appellant thereby redressing the grievance of the appellant in so far as it pertained to the ranking of the aforesaid respondents.
It therefore became unnecessary for the appellant to pursue his claim for relief with respect to the ranks assigned to those five respondents.
It was under those circumstances that the appellant submitted before the learned single judge of the High Court, at the time of final hearing of the writ petition, that he was pressing the writ petition only in so far as it related to his claim for seniority over the 6th respondent.
We fail to see how the fact that the appellant had sought in the writ petition the issuance of a writ of mandamus directing respondents 1 and 2 to forbear from implementing or acting upon the provisional gradation list will operate to preclude him from seeking a lesser relief, namely, the quashing of the list only so far as it pertains to the fixation of the inter se seniority between himself and the 6th respondent.
The material facts and circumstances had undergone a substantial change subsequent to the filing of the original petition and it was in consequence thereof that it had become unnecessary for the petitioner to pursue his original prayer for the grant of a larger relief.
Besides ignoring this crucial aspect, the Division Bench of the High Court has also lost sight of the well established principle that in an action where a party has prayed for a larger relief it is always open to the court to grant him any smaller relief that he may be found to be entitled in law and thereby render substantial justice.
The Court can undoubtedly take note of changed circumstances and suitably mould the relief to be granted to the party concerned in order to mete out justice in the case.
As far as possible the anxiety and endeavour of the Court should be to remedy an injustice when it is 163 brought to its notice rather than deny relief to an aggrieved party on purely technical and narrow procedural grounds.
We do not, therefore, find it possible to uphold the view expressed by the Division Bench of the High Court that since the writ petition was not pressed in so far as it related to the officers belonging to the Telengana region the question of inter se seniority between the writ petitioner and the 6th respondent should not have been considered by the single judge and the writ petition should have been dismissed.
Accordingly, we set aside the judgment of the Division Bench and remand the writ appeal to the High Court for fresh disposal in accordance with law.
The parties will bear their respective costs in this appeal.
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The appellant, an officer of the Forest Department challenged the provisional integrated gradation list of Forest Officers of the former Andhra and Hyderabad States published under the provisions of the States Reorganisation Act, 1947, in his writ petition, contending that (a) the inter se seniority between the appellant and the 6th respondent, both of whom originally belonged to the Andhra Cadre, had been wrongly fixed by showing the 6th respondent as senior to the appellant whereas the appellant was legally entitled to seniority over the 6th respondent, and (b) that respondent nos.
3, 4, 5, 7 and 8 officers allotted to the State of Andhra Pradesh from the Telengana region of the former Hyderabad State, had been erroneously assigned ranks above the appellant in violation of the principles laid down by the Government of India for equation of posts and fixation of inter se seniority.
During the pendency of the writ petition the Central Government set right the appellant 's grievance concerning his ranking and seniority in relation to respondents 3, 4, 5, 7 and 8.
When the writ petition came up for hearing the appellant pressed only his claim for seniority over the 6th respondent and as the contention was well founded, the learned Single Judge, allowed the writ petition and issued a writ of mandamus directing the Government of India to modify the gradation list by showing the appellant as senior to the 6th respondent.
In the appeal to the Division Bench by the 6th respondent, the Division Bench took the view that since the prayer contained in the writ the petition was for the issue of a writ of mandamus directing respondents nos.
1 and 2 to forbear from implementing the provisional gradation list published alongwith the Government Order dated January 27, 1962 and as the appellant had not pressed the prayer for quashing of the list in so far as it related to the officers of Telengana region viz. respondents 3, 4, 5, 7 and 8, the writ petition should have been dismissed on that short ground and the question relating to the inter se seniority between the appellant and the 6th respondent ought not to have been decided.
The Division Bench allowed the writ appeal, set aside the order passed by the single Judge and dismissed the writ petition.
Allowing the appeal to this Court, 160 ^ HELD: In an action where a party has prayed for a larger relief it is always open to the Court to grant him any smaller relief that he may be found to be entitled to in law and thereby render substantial justice.
The Court can take note of changed circumstances and suitably mould the relief to be granted to the party concerned in order to mete out justice.
As far as possible the anxiety and endeavour of the Court should be to remedy an in justice when it is brought to its notice rather than deny relief to an aggrieved party on purely technical and narrow procedural grounds.
[162 G 163 A] In the instant case the writ petition contained the prayer for the quashing of the gradation list in so far as it related to the inter se ranking of the appellant vis a vis respondents nos.
3 to 8 and the appellant had also sought the issuance of a writ of mandamus directing respondents nos.
1 and 2 to forbear from implementing or acting upon the said gradation list.
Subsequent to the institution of the writ petition the Central Government had refixed the ranks of respondents nos.
3, 4, 5, 7 and 8 and placed them below the appellant thereby redressing the grievance of the appellant in so far as it pertained to the ranking of the said respondents.
It, therefore, became unnecessary for the appellant to pursue his claim for relief with respect to the ranks assigned to those five respondents.
It was under those circumstances that the appellant submitted before the single Judge at the time of final hearing of the writ petition that he was pressing the writ petition only in so far as it related to his claim for seniority over the 6th respondent.
This will not operate to preclude him from seeking a lesser relief namely the quashing of the list only in so far as it pertains to the fixation of the inter se seniority between himself and the 6th respondent.
[162 B F]
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Here's a two-paragraph summary of the court case:
The case revolves around the fixation of seniority between an officer of the Forest Department, B. Parthasarthi (appellant), and another officer, the 6th respondent, who both belonged to the Andhra Cadre. The appellant challenged the provisional integrated gradation list of Forest officers, which showed the 6th respondent as senior to him. The High Court's single judge allowed the writ petition and directed the State Government and the Government of India to modify the gradation list to show the appellant as senior to the 6th respondent. However, the Division Bench of the High Court set aside this order, holding that the writ petition should have been dismissed as it did not seek to quash the gradation list in its entirety.
The Supreme Court, however, disagreed with the Division Bench's reasoning and held that the appellant's prayer for seniority over the 6th respondent was a legitimate aspect of the writ petition. Although the original petition sought the quashing of the gradation list in its entirety, the Central Government had already addressed the appellant's grievances regarding the ranking of officers from the Telengana region. The Court held that the appellant's prayer for seniority over the 6th respondent was a separate issue that could be considered, even though the petition did not specifically seek to quash the list in its entirety. The Court set aside the Division Bench's judgment and remanded the matter for fresh disposal.
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ivil Appeal No. 3284 of 1992 From the Judgement and Order dated 18.2.1992 of the Delhi High Court in Civil Writ Petition No. 2259 of 1991.
R.K. Garg, K.L. Vohra, Rajeev Sharma and D.K. Garg for the Appellants.
Arun Jaitley, V.B. Saharya, Ashok Bhan and B.K. Prasad for the Respondents.
The Judgement of the Court was delivered by SHARMA,J. Heard the learned counsel for the parties.
Special leave is granted.
The respondents in this appeal have successfully invoked the jurisdiction of the High Court under Article 226 of the Constitution for enforcement of a private right to immovable property against the appellants who are two brothers and who are resisting the claim.
The question is as to whether the writ jurisdiction in the High Court is available for the enforcement of such a right claimed by and against private individuals.
906 3.
The dispute relates to a house property in Delhi.
A suit for eviction of the appellants from the building is pending in the trial court.
According to the case of the respondent No. 1, who is the owner of the property, she had let out the same to one Shri B.K. Pandey who later illegally handed over the possession thereof to the appellant no.1.
According to the further case of the respondent, the portion of the said house property which is subject matter of the present case is beyond the purview of the pending suit.
The occasion for initiating the present proceeding with respect to this portion arose, it is said, on account of the high handedness of the appellants who illegally trespassed beyond the area which is the subject matter of the pending suit, and indulged in several illegal activities.
In other words, the appellants are trespassers and are guilty of mischievous conduct.
However, instead of filing a suit in the civil court or making an appropriate prayer for amendment of her plaint in the pending suit, she through respondent no.2 holding power of attorney, approached the High Court directly by a writ petition under Article 226 for issuance of appropriate direction restraining the appellants from disturbing the lawful possession of the respondents.
The Delhi Administration and the Commissioner of Police, Delhi, were also impleaded as parties with a prayer that appropriate order should be issued against them also and they should be directed not to register any further false and vexatious complaint against them at the instance of the appellants.
It is her case that the appellants have been getting undue police help and are being encouraged to commence frivolous criminal cases against respondent no.1 and her agent.
The appellants denied the allegations of fact made against them and also challenged the maintainability of the writ petition.
Although the fact that a suit between the parties was already pending in the civil court was known to the High Court, it proceeded to pass a short order stating: "There is already a civil suit pending between the parties.
Except the prayer in regard to access to the backyard, no other relief can be granted in this writ petition.
We direct respondents 3 and 4 to remove the grill for access 907 to the backyard in the presence of the police and representatives of the petitioners on Sunday, 23rd February 1922 at 11.00 a.m. so that the access of the petitioner to the servants quarters is not stopped." 6.
Mr. Arun Jaitley, the learned counsel appearing on behalf of respondent No. 1 has supported the impugned judgement on the ground that prayer for issuing a direction against Delhi Administration and Commissioner of Police who were respondent nos.
1 and 2 was also made.
It has to be appreciated that the present appellants were respondent nos.
3 and 4 before the High Court; and the High Court has by the impugned order, considered it fit to allow the prayer of the respondents against them for removal of the grills for access to the backyard.
According to the stand of the landlord respondent, since the police were taking a partisan attitude against her, the filing of a writ petition became necessary.
We are unable to follow this argument.
There is no doubt that the dispute is between two private persons with respect to an immovable property.
Further, a suit covering either directly a portion of the house property which is in dispute in the present case or in any event some other parts of the same property is already pending in the civil court.
The respondent justifies the step of her moving the High Court with a writ petition on the ground of some complaint made by the appellants and the action by the police taken thereon.
We do not agree that on account of this development, the respondent was entitled to maintain a writ petition before the High Court.
It has repeatedly been held by this court as also by various High Courts that a regular suit is the appropriate remedy for settlement of disputes relating to property rights between private persons and that the remedy under Article 226 of the constitution shall not be available except where violation of some statutory duty on the part of a statutory authority is alleged.
And in such a case, the court will issue appropriate direction to the authority concerned.
If the grievance of the respondent is against the initiation of criminal proceedings, and the orders passed and steps taken thereon, she must avail of the remedy under the general law constitutional jurisdiction to be used for deciding disputes, for which remedies, under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
908 The jurisdiction is special and extra ordinary and should not be exercised casually or lightly.
We, therefore, hold that the High Court was in error in issuing the impugned direction against the appellants by their judgement under appeal.
The appeal is accordingly allowed, the impugned judgement is set aside and the writ petition of the respondents filed in the High Court is dismissed.
There will be no order as to costs.
G.N. Appeals allowed.
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During the pendency of a suit for eviction of the appellants from the property of Respondent No.1, the appellants were alleged to have trespassed beyond the area which was the subject matter of the suit and indulged in several illegal activities.
Thus according to Respondents, the appellants were guilty of mischievous conduct.
The Respondents instead of filing a suit in the Civil Court or making appropriate prayer for amendment of the plaint in the pending suit field a Writ Petition before the High Court for issuance of appropriate direction retraining the appellants from disturbing the lawful possession of the respondents.
The Administration and Commissioner of Police were also impleaded as parties and a direction sought against them not to register any further false and vexatious complaints against the Respondents since undue Police help to the appellants was apprehended.
The High Court gave certain directions to the appellants as regards Respondents ' access to the backyard.
The present appeal by special leave, is against the said orders of the High Court.
On the question whether the Writ jurisdiction of High Court would be available for enforcement of a private right to immovable property claimed by and against private individuals: Allowing the appeals, this Court HELD: 1.
A regular suit is the appropriate remedy for settlement 905 of disputes relating to property rights between private persons and that the remedy under Article 226 of the Constitution shall not be available except where violation of some statutory duty on the part of statutory authority is alleged.
And in such a case, the Court will issue appropriate direction to the authority concerned.
[907 E, F] 2.
If the real grievance of Respondent No.1 is against the initiation of criminal proceeding and the orders passed and steps taken thereon, she must avail of the remedy under the general law including the Criminal Procedure Code.
The High Court cannot allow the constitutional jurisdiction to be used for deciding disputes, for which remedies under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
The jurisdiction is special and extra ordinary and should not be exercised casually or lightly, [907 F H]
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Here's a two-paragraph summary of the court case:
The case involves a dispute between two private individuals, the appellants (two brothers) and the respondents (a lady and her representative) over a house property in Delhi. The respondents claimed that the appellants had trespassed on the property and were guilty of mischievous conduct, and therefore, the High Court should issue a direction restraining the appellants from disturbing the lawful possession of the respondents. The respondents approached the High Court directly by a writ petition under Article 226 of the Constitution.
The Delhi High Court passed a short order directing the respondents to remove a grill for access to the backyard of the property. However, the Supreme Court held that the High Court was in error in issuing the impugned direction, as the dispute was between private individuals and a regular suit was the appropriate remedy for settlement of property rights disputes. The Supreme Court also held that the writ jurisdiction under Article 226 should not be exercised casually or lightly, and that the respondents should have availed of the remedy under the general law or civil or criminal law. The Supreme Court allowed the appeal, set aside the impugned order, and dismissed the writ petition.
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Appeal No. 1332 of 1966.
Appeal from the judgment and order dated August 25, 1964 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 37 D of 1964.
B. Sen, D.K. Kapur, B.P. Maheshwari and R.K. Maheshwari, for the appellant.
R.M. Mehta and S.P. Nayar, for the respondents.
The Judgment of the Court was delivered by Bachawat, J.
The appellant, M/s. Hind Trading Company, imported 1,65,000 pieces of Chinese Silver Dollars from Yatung in Tibet to Kalmnpong, via Nathula pass and Rangpo through 535 Sikkim State under two Reserve Bank import licences dated April 22, 1957.
As there were two Reserve Bank licences, the dollars were divided into two lots at Yatung.
Each lot consisted of 66 bags containing 82,500 dollars.
One lot of bags bore the mark "H.D." and serial numbers 1 to 66, and the other lot bore the mark "H.N." and srl.
1 to 66.
On May 15, 1957 the appellant made two applications bearing Nos. 32 and 34 to the officer in charge, Land Customs Station, Kalimpong, for the grant of permits for passing the goods across the frontier.
Application No. 32 related to the bags marked "H.N." Application No. 34 related to the bags marked "H.D." On May 16, the two consignments arrived at the land customs station, Kalimpong and were examined and appraised by the land customs officer in charge of the station.
On the duty being paid, the officer endorsed the two applications, certifying that the duty was paid and permitting the import of the goods.
The consignments loaded in trucks then passed out of the customs house and on the way to Siliguri were checked at the Teesta Bazar check post at.
8.45 p.m. on May 16.
On the night of May 16, they reached Siliguri and were delivered to M/s. Amalgamated Transport Co., for carriage by air to Dum Dum.
On the morning of May 17, one consignment of 82,500 dollars packed in 66 bags together with the import application No. 34 was sent by plane from the Sonapur airstrip to Dum Dum airport and on the same date the consignment reached Dum Dum and was delivered to the appellant at Calcutta.
On May 18, 1957, the Range Officer, Matidhar seized the second consignment of 82,500 dollars packed in 66 bags bearing the mark "H.D." together with the application No. 32, when they were about to be despatched by air from the sonapur airstrip.
The seizure was made under section 5 (3) of the on the Found that the mark on the bags was "H.D." whereas the accompanying import application No. 32 related to "H.N." bags.
On July 7, 1957, the Collector of Land Customs, Calcutta, issued a notice to the appellant to show cause why the dollars seized on May 18, 1957 should not be confiscated and why a penalty should not be imposed upon the appellant under sections 5(3) and 7(1) of the , and section 167(8) read with section 19 of the as made applicable by section 23A of the Foreign Exchange Regulation Act, 1947 as there was reason to believe that the goods had been imported by the appellant by land from Tibet into India on May 16, 1957 through Indo Tibet border, (i) without a valid permit under section 5 of the , and (ii) without valid permission granted by the Reserve Bank of India under notification No. F. 3(84) E.F. VII/56 dated May 4, 1956 issued under sec.
8(1) of the Foreign Exchange Regulation Act.
That notification prohibited ' the 536 import into India of silver coins current in the Tibet region of China without the permission of the Reserve Bank of India.
On July 30, 1957 the appellant showed cause against the proposed action by a letter stating that the first consignment of 82,500 dollars was packed in bags marked "H.N." that by inadvertence the carriers M/s. Amalgamated Transport Co., had sent import application No. 34 with the first consignment and had kept application No. 32 with the bags marked "H.D.", that the two consignments were covered by valid Reserve Bank licences and import passes, that the seizure of the dollars kept in "H.D." bags under section 5 (3) of the was not justified and that there was no ground for confiscating the goods or imposing any penalty.
The appellant was heard by the Collector an August 26, and December 11, 1957.
On January 10, 1958, the Collector passed an order adjudging that offences under sections 5(3) and 7(1) of the and section 167(8) of the had been committed and directing confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act.
The Collector held that (i) the goods were liable to confiscation under section 5 (3) of the as they were not covered by the accompanying import application No. 32; (ii) the appellant failed to prove that the first consignment of 66 bags bore the mark "H.N." or that by inadvertence of the carriers, application No. 34 had been sent with it and (iii) had the first consignment of 66 bags borne the mark "H.N." the Range Officer.
Matidhar and the officers at Dum Dum would have detected and rioted this fact and the appellant could have produced before the customs officials at Calcutta bags with the mark "H.N." immediately after May 18, 1957.
An appeal against this order was dismissed by the Member, Central Board of Revenue, on May 17, 1958.
A revision petition against the last order was dismissed by the Secretary to the Government of India, Ministry of Finance, Department of Revenue on January 16, 1961.
On November 16, 1962, the appellant filed a writ petition in the Punjab High Court for quashing the aforesaid decisions and for setting aside the order of confiscation of the silver dollars.
On May 14, 1964, Shamsher Bahadur, J. dismissed the petition.
He held that there was no error of law apparent on the face of the record.
The appellant filed a Letters Patent appeal against the order.
On August 25, 1964 the Divisional Bench dismissed the appeal.
It held that (1) section 5 (3) of the applied to the case; (2) the fact that the 66 bags bore the mark "H.D." and the accompanying application No. 32 related to "H.N." bags.
showed conclusively that the dollars contained in those bags were imported without proper licence and import permit and without payment of duty and (3) the finding of fact that there was no mistake on the part of the carriers with regard to the despatch 537 of the consignments and accompanying documents could not be set aside in a writ application.
If he present appeal has been filed by the appellant after obtaining a certificate from the High Court.
Mr. B. Sen for the appellant contended that the seizure and confiscation of the goods was not authorized by section 5 (3) of the , (2) the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed; and (3) the impugned orders were passed in contravention of the principles of natural justice.
These contentions were disputed by Mr. R.M. Mehta.
The provided for the levy of duties of customs on articles imported or exported by land from or to territory outside India.
The Act extended to the whole of India, (section 1 ).
Section 2 was the definition section.
Section 3 authorised the appointment of land customs collectors and officers.
The Range Officer, Matidhar, was a land customs officer working under the Collector of Land Customs, Calcutta, having jurisdiction over Sonapur where the dollars were seized.
Section 4 authorised the establishment of land customs stations and the determination of routes by which alone goods imported or exported by land could pass.
The Central Board of Revenue established Kalimpong as the land customs station and prescribed the following routes by which alone dutiable goods could pass out of Tibet into India: (a) road leading from Yatung (in Tibet) to Kalimpong via Jelapala pass and pedong through Sikkim State, (b) road leading from Yatung (in Tibet) to Kalimpong via Nathula pass and Rangpo through the Sikkim State.
Section 5 provided for permits.goods passing across frontier.
Section 6 dealt with personal baggage.
Section 7 prescribed penalties.
Section 8 prescribed certain dates and times when the goods were not to be passed.
Section 9 made applicable for the purposes of levy of land customs under the Act certain provisions of the including section 167 (8) with necessary modifications and adaptations.
Sections 18, 19 and 19A of the and the whole of the Foreign Exchange Regulation Act though not expressly incorporated in the applied their own force to goods imported or exported by land.
Duty on imports and exports by land was imposed by section 5 of the Indian Tariff Act, 1934.
The had now been repealed by the Sea .
It is necessary to read sections 4, 5 and 7(1) of the : "Section 4.Establishment of Land Customs Stations and determination of routes The Chief Customs Authority may, by notification, in the Official Gazette, 538 (a) establish land customs stations for the levy of land customs in any land customs area, and (b) prescribe the routes by which alone goods, or any class of goods specified in the notification may pass by land out of or into any foreign territory, or to or from any land customs station from or to any foreign frontier.
Section 5.
Permit for goods passing across frontier (1) Every person desiring to pass any goods, whether dutiable goods or not, by land out of or into any foreign territory shall apply in writing, in such form as the Chief Customs Authority may by notification in the Official Gazette prescribe, for a permit for the passage thereof, to the Land Customs Officer in charge of a Land Customs Station established in land customs area adjoining the foreign frontier across which the goods are to pass.
(2) When the duty on such goods has been paid or the goods have been found by the Land Customs Officer to be free of duty, the 'Land Customs Officer shall grant a permit certifying that duty has been paid on such goods or that the goods are free of duty, as the case may be: (3) Any Land Customs Officer, duly empowered by the Chief Customs Authority in this behalf, may require any person in charge of any goods which such officer has reason to believe to have been imported or to be about to be imported, by land from, or to any foreign territory to produce the permit granted for such goods; and any such goods which are dutiable and which are unaccompanied by a permit or do not correspond with the specification contained in the permit produced, shall be detained and shall be liable to confiscation; Provided that nothing in this sub section shall apply to any imported goods passing from a foreign frontier to a Land Customs Station by a route prescribed in that behalf.
(4) The Chief Customs Authority may, by notification in the Official Gazette, direct that the provisions of this section, or any specified provisions thereof, shall not, in any land customs areas specified in the notification apply in respect of goods of any class or value or specified.
Section 7.
Penalties (1) Any person who (a) in any case in which the permit referred to in section 5 is required, passes or attempts to pass any 539 goods by land out of or into any foreign territory through any land customs station without such permit, or (b) conveys or attempts to convey to or from any foreign territory or to or from any Land Customs Station any goods by a route other than the route, if any, prescribed for such passage under this Act, or (c) aids in so passing or conveying any goods, or knowing that any goods have been so passed or conveyed, keeps or conceals such goods or permits or procures them to be kept or concealed shah be liable to penalty not exceeding, where the goods are not dutiable, fifty or, where the goods or any of them are dutiable, one thousand rupees, and any dutiable goods in respect of which the offence has been committed shall be liable to confiscation.
" The scheme of sections 4, 5 and 7 (1) of the with regard to imports by land was as follows: Goods could pass by land out of foreign territory or from a foreign frontier to a land customs station by a prescribed route only, [section 4(b)].
To import goods by an unauthorised route or an attempt to do so was an offence, [section 7(1)(b)].
No permit could be obtained for importing goods by an unauthorised route.
The goods could be brought by the prescribed route from the foreign frontier to the land customs station, without a permit [proviso to section 5(3)].
Subject to exemptions, if any under section 5(4), a permit was required for the passage of goods through the land customs station.
Passing of goods through the land customs station without a permit or an attempt to so pass the goods was an offence, Is.
7 (1) (a)].
The importer was required to apply for the permit to the officer in charge of the land customs station, Is.
5(1)].
The goods were brought to the station for examination and appraisement of duty.
On the duty being paid or on its being found that the goods were free of duty, the officer issued the permit allowing the passage of the goods and certifying that the duty had been paid or the goods.
were free of duty as the case might be, Is.
5 (1) and (2)].
Dutiable goods.
in respect of which an offence was committed was liable to confiscation.
What is stated above applied mutatis mutandis to exports by land.
In this setting let us examine the provisions of section 5(3).
That sub section required that all goods imported or about to be exported must be accompanied by a permit for the passage there,of issued by the officer in charge of a land customs station.
It was an offence to take the goods through the land customs station 1.
without a permit.
A duly authorised land customs officer could enforce this requirement by asking any person in charge of the goods to produce the permit.
Dutiable goods unaccompanied by 540 a permit or not corresponding to the specifications contained in the permit produced had to be detained and was liable to confiscation.
It is to be noticed that the sub section referred to goods "unaccompanied by a permit" and to "any person in charge of any goods.
" It obviously contemplated cases where the goods should be accompanied by the permit and the person in charge of the goods was under a duty to produce the permit.
In view of sections 5 and 7 (1) it was necessary that the goods should be accompanied by a permit when they passed through the land customs station.
Rules under the Act could also prescribe that the goods must be accompanied by a permit for some time even after such passage.
In such cases section 5 (3) was infringed if the goods were not accompanied by the permit.
The Central Board of Revenue framed the Chinese Silver Dollars (import) Rules on March 29, 1958 in exercise of the powers conferred by section 9(1) of the .
Rule 6(2) provided that on its journey from the Kalimpong laud customs station to its ultimate destination, any consignment of Chinese silver dollars imported from Tibet into India must be accompanied by a permit, i.e., the importer 's copy of the relative import application bearing the endorsement of the officer in charge of the Kalimpong land customs station permitting the clearance of the consignment.
The permit must be produced at the land customs check post at Teesta Bazar, along with the consignment if the destination was Teesta Bazar or beyond also be produced on demand by any land customs officer at any time during the journey of the consignment upto its ultimate destination.
These Rules were framed on the assumption that independently of the Rules, the importer was not obliged to keep the permit with the dollars after they passed out of the Kalimpong land customs station.
The Rules were not in force on May 18, 1957 when the dollars were seized by the Range Officer, Matidhar.
There was no provision in the Act or the Rules in force on May 18, 1957 which required the appellant to keep.
the permit at Sonapur airstrip with the dollars seized on that date.
The contention of the Revenue is that section 5 (3) required that all imported goods .must always, at all times and at all places be accompanied by a permit.
We are unable to accept this contention. ' After the import, the goods became a part and parcel of the mass of other like goods in 'India.
There was No. duty to keep the permit with the consignment of imported goods for all times and at all places.
Nor was the importer under a duty to keep the consignment intact in his hands.
He could sell portions of it to different buyers and obviously he could not give the permit to every consumer.
He could import rubies from Burma by land .
:and by sea.
It was not necessary to keep any permit with the rubies imported by sea after their clearance from.
the customs 541 house.
Nor was the position different in case of rubies imported by land.
A consumer wearing a necklace made of rubies was not expected to carry the permit for the rubies in her bag.
Under the a customs clearance permit was necessary for the passage of goods imported or about to be .exported through the land customs station.
For this reason section 5(3) read with section (1)(a) required that the goods so passing through the land customs station must be accompanied by the permit.
The Rules could provide that the imported goods should be accompanied by the permit even after such passage.
As already stated.
the Rules required that imported Chinese silver dollars should be accompanied by the permit during the entire journey up to their ultimate destination.
In such cases.
section 5(3) was infringed if the permit covering the goods was not produced on demand by any land customs officer.
Except in such cases, section 5(3) did not apply, and it was not necessary to keep the permit with the goods.
We hold that section 5(3) was not infringed when the carriers did not produce the permit covering the goods at the Sonapur airstrip on May 18.
1957 and the goods could not be confiscated under section 5 (3).
Nor were the goods liable to confiscation under section 7(1) of the .
The appellant imported 1,65,000 dollars from Tibet under two Reserve Bank licences and two import permits.
There was no distinguishing mark on any dollar.
The appellant was found in possession of 1,65,000 dollars only.
No attempt was made to prove that the appellant was in possession of another consignment of 82,500 dollars.
At ' the time of import the dollars were packed in 66 bags marked "H.N." and 66 bags marked "H.D." The Range Officer seized 82.500 dollars packed in 66 bags marked "H.D." There is no evidence to.
show that the seized dollars were not covered by the permits and licences held by the appellant.
The onus was on the respondents to prove that the first consignment of 66 bags bore the mark "H.D." Application No. 34 accompanied the first consignment.
There was no noting on application No. 34 by the customs officer at Sonapur or at Dum Dum indicating that they had examined the bags or that the bags were found to bear the mark "H.D." The summary of the diary of the Range Officer Matidhar set out in the order of confiscation does not show that the officer examined the bags.
The note in the diary that the mark checked was "H.D." could have been made on the basis of the mark "H.D." shown in the accompanying application No. 34.
Before the issue of the show cause notice on July 17.
1957 the appellant had no occasion to produce before the constoms authorities any of the 66 bags marked "H.N." which had reached Calcutta.
No inference has been drawn against the appellant from their inability to produce any bags marked "H.N." after July 17, 1957.
On the materials on.
the record it is impossible to hold that the dollars seized ,on May 18.
C. 1./69 2 542 1957 were smuggled goods.
There was no noting by the customs officers at Sonapur and Dum Dum on application No. 34.
If the appellant desired to send smuggled "H.D." bags from Sonapur to Dum Dum, they could easily obtain application No. 34 from Calcutta and send it with the consignment seized at Sonapur.
Moreover, the customs officers had not put any mark or initials on the bags, and there was nothing to prevent the appellant from putting the mark "H.N." on other bags and using them for the carriage of the dollars.
The conclusion is irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No. 34 was sent with "H.N." bags and application No. 32 was kept with "H.D." bags.
No inference of smuggling could be drawn from the fact that "H.D." bags were found with application No. 32.
In the circumstances.
the finding that the appellant had smuggled the goods and was guilty of an offence under section 7 (1) of the must be characterized as perverse.
Nor was it proved that the appellant committed any offence under sections 8 (1) and section 23A of the Foreign Exchange Regulations Act read with sections 19 and 167(8) of the Sea .
An offence under those sections can be proved by circumstantial evidence, see Issardas Daulat Ram vs Union of India(1).
In the present case there was no evidence either direct or circumstantial to prove the offence.
The appellant had valid Reserve Bank licences for the import of 1,65,000 dollars.
Those licences were not examined nor seized by the customs officials and no attempt was made to prove.
the licences did not relate to the dollars seized on May 1.8, 1957.
It follows that the dollars were not liable to confiscation under any provision of law.
Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments.
In the circumstances the order of the Collector confiscating the goods is liable to be quashed by a writ of certiorari, see Halsbury 's Laws of England, 3rd ed.
II, article 19, pp. 62 63.
In Regina vs Medical Appeal Tribunal(2) the Court held that an assessment of 20% disablement must, having regard to.
the facts appearing on the record, be held to be erroneous in point of law and based upon a misconstruction of Regulation 2(5) of the National] Insurance (Industrial Injuries) (Benefits) Regulation 1948 and the award of the Medical Appeal Tribunal was therefore liable to be quashed by a writ of certiorari.
Denning, L. 1.
observed : "No reasonable person.
who had proper regard to regulation 2(5), could have come to such a conclusion.
[1962] supp.
1 S.C.R. 358.
(2) [1957] I Q.B. 574, 582.
543 It is now settled that when a tribunal come to a conclusion which could not reasonably be entertained by them if they properly understood the relevant enactment, then they fall into error in point of law: see Edwards (Inspector of Taxes) vs Bairstow, [1956] A.C. 14: When the primary facts appear on the record, an error of this kind is sufficiently apparent for it to be regarded as an or on the face of the record such as to warrant the intervention of this Court by certiorari.
" This conclusion is sufficient to dispose of the appeal.
It is therefore unnecessary to examine the contention that the impugned orders were passed in contravention of the principles of natural justice.
In the result, the appeal is allowed with costs.
The order passed by the High Court is set aside and the writ petition filed by the appellant is allowed.
The order of confiscation of the Chinese silver dollars is quashed and the respondents are directed to return them to the appellant.
G.C. Appeal allowed.
|
The appellant imported 1,65,000 pieces Chinese silver dollars from Tibet through Sikkim State under two Reserve Bank import licences.
As there were two licences the dollars were divided into two lots.
One lot bore the mark 'H.D. ' and the other 'H.N. ' The appellant made two applications hearing Nos. 32 and 34 to the Officer in charge, Land Customs Station, for the grant of permits for passing the goods across the frontier.
Application No. 32 related to the lot marked 'H.N. ' and the application No. 34 related to the lot marked 'H.D. ' On May 16, 1957 the two consignments arrived at the land customs station, Kalimpong and were examined and appraised by the land customs officer in charge of the station.
On the duty being paid, the officer endorsed the applications certifying that the duty was paid and permitting the import of the goods. 'The consignments there were then delivered at Siliguri to the carriers for carriage by air to Dum Dum.
On May 17, 1957 one consignment together with application No. 34 was sent by plane from the Sonapur airstrip and on the same date reached Dum Dum and was delivered to the appellant at Calcutta.
On May 18, 1957 the Range Officer, Matidhar seized the second consignment bearing the marks 'H.D. ' together with application No. 32 when they were about to be despatched from the Sonapur airstrip.
The seizure was made under section 5(3) of the Land Customs Act on the ground that the mark on the consignment was 'H.D. 'whereas the accompanying import application No. 32 related to the consignment marked 'H.N. ' The Collector of Land Customs, Calcutta after hearing the appellant held that offences under section 5(3) and section 7(1) of the , and section 167(8) read with of the had been committed by the appellant.
He directed confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act, 1947.
Departmental remedies having failed the appellant filed a writ petition in the High Court.
Appeal in this Court was filed by the appellant with certificate.
The questions that came up for consideration were inter alia: (i) whether the seizure and confiscation.
of the goods was authorised by section 5(3) of the , and (ii) whether the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed.
HELD: (i) Section 5(3) of the .
by itself does not require that all imported goods must always at all times, and at all places be accompanied by a permit.
After the permit the goods become a part and parcel of the mass of other like goods in India.
There is no duty 534 to keep the permit with the consignment for aH times and at all places.
Nor is the importer under a duty to keep the consignment in his hands.
He can sell portions of it to different buyers and obviously he could not give the permit to every consumer.
[540 G H] Before March 29, 1968 when the Central Board of Revenue framed the Chinese Silver Dollars (Import) Rules, there was no provision in the Act or Rules in force which required the appellants to keep the permits at Sonapur airstrip with the dollars seized on that date.
Section 5(3) was not infrinrged when the carriers did not produce the permit concerning the goods at the Sonapur airstrip on May 18, 1957, and the goods could not be confiscated under section 5(3).
[541 C] (ii) Nor were the goods liable to confiscation under section 7(1) of the .
There was no evidence to show that the seized dollars were not covered by licences.
On the materials on record the conclusion was irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No. 34 was sent with 'H.N. ' consignment and application No. 32 was kept with 'H.D. ' consignment.
No inference of smuggling could be drawn from the fact that 'H.D. ' consignment was found with application No. 32.
In the circumstances the finding that the appellant had smuggled the goods and was guilty of an offence under section 7(1) of the must be characterised as perverse.
[541 D E; 542 B C] (iii) It was also not proved that the appellant committed any offence ' under sections 8(1) and 23A of the Foreign Exchange Regulations Act read with sections 19 and 167(8) of the .
Although the offence under these sections may be proved by circumstantial evidence in the present case there was no evidence direct or circumstantial to prove the offence.
[542 D] Issardas Daulat Ram vs Union of India, [1962] Supp.1 S.C.R. 358, referred to.
(iv) Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments.
In the circumstances the order of the Collector confiscating the goods was liable to be quashed by a writ of certiorari.
[542 F] Regina vs Medical Appeal Tribunal, ; , 582, applied.
|
Here is the two-paragraph summary of the court case:
The appellant, M/s. Hind Trading Company, was charged with smuggling and other offenses under the Land Customs Act, 1962, and the Foreign Exchange Regulation Act, 1947, for importing 165,000 Chinese Silver Dollars from Tibet into India. The Customs authorities seized 82,500 dollars packed in bags marked "H.D." on May 18, 1957, on the basis that they were not accompanied by a valid permit. However, the appellant claimed that the seizure was due to a mistake by the carriers, who had interchanged the permit for the "H.N." bags with the "H.D." bags.
The court ultimately held that the seizure and confiscation of the goods were not authorized by section 5(3) of the Land Customs Act, and that the finding of the appellant's guilt was perverse and liable to be quashed. The court also held that the appellant had valid Reserve Bank licences for the import of the dollars, which were not examined or seized by the customs officials, and that there was no evidence to prove that the dollars seized were not covered by the permits and licenses. As a result, the court quashed the order of confiscation and directed the return of the seized dollars to the appellant.
|
Civil Appeal No. 1445 of 1979.
Appeal by Special Leave from the Judgment and order dated 17th October, 1978 of the Delhi High Court in Revision Petition No. 689 of 1978.
327 Mrs. Shyamala Pappu, P. H. Parekh, Rain Karanjawala and Miss Vineeta Caprihan for the Appellant.
B.D. Sharma, for the Respondents.
The following Judgment of the Court was delivered by KRISHNA IYER, J. A short but interesting point affecting the validity and propriety of an order under section 15(7) of the Delhi Rent Control Act, 1958 (for short, the Act), has been raised by counsel for the appellant.
The decision of this question is of importance and we regard it as necessary to clarify the position so that the error committed by the trial judge may not be repeated.
Rent Control laws are basically designed to protect tenants because scarcity of accommodation is a nightmare for those who own none and if evicted, will be helpless.
Even so, the legislature has provided some grounds for eviction, and the Delhi law contains an extreme provision for striking out altogether the defence of the tenant which means that even if he has excellent pleas to negative the landlord 's claim the court will not hear him.
Obviously, this is a harsh extreme and having regard to the benign scheme of the legislation this drastic power is meant for use in grossly recalcitrant situations where a tenant is guilty of disregard in paying rent.
That is why a discretion is vested, not a mandate imposed.
Section 15(7) reads thus: "If a tenant fails to make payment or deposit as required by this section, the Controller may order the defence against eviction to be struck out and proceed with the hearing of the application.
" We must adopt a socially informed perspective while construing the provisions and then it will be plain that the Controller is armed with a facultative power.
He may, or not strike out the tenant 's defence.
A judicial discretion has built in self restraint, has the scheme of the statute in mind, cannot ignore the conspectus of circumstances which are present in the case and has the brooding thought playing on the power that, in a court, striking out a party 's defence is an exceptional step, not a routine visitation of a punitive esteem following upon a mere failure to pay rent.
First of all, there must be a failure to pay rent which, in the context, indicates willful failure, deliberate default or volitional non performance.
Secondly, the Section provides no automatic weapon but prescribes a wise discretion, inscribes no mechanical consequence but invests a power to overcome intransigence.
Thus, if a tenant fails or refuses to pay or deposit rent and the court discerns a mood of defiance or gross neglect, the tenant may forfeit his right to be heard in defence.
The last resort 328 cannot be converted into the first resort; a punitive direction of court cannot be used as a booby trap to get the tenant out.
Once this teleological interpretation dawns, the mist of misconception about matter of course invocation of the power to strike out will vanish.
Farewell to the realities of a given case is playing truant with the duty under.
J lying the power.
There is no indication whatsoever in the Act to show that the exercise of the power of striking out of the defence under section 15(7) was imperative whenever the tenant failed to deposit or pay any amount as required by section 15.
The provisions contained in section 15(7) of the Act are directory and not mandatory.
It cannot be disputed that section 15(7) is a penal provision and gives to the Controller discretionary power in the matter of striking out of the defence, and that in appropriate cases, the Controller may refuse to visit upon the tenant the penalty of non payment or non deposit.
The effect of striking out of the defence under section 15(7) is that the tenant is deprived of the protection given by section 14 and, therefore, the powers under section 15(7) of the Act must be exercised with due circumspection.
It will be noted that section 15(7) of tho Act is not couched in mandatory language.
It uses the word 'may '.
The difference in the language of section 15(7) with that of section 13(5) of the repealed Act is significant and indicates that in the present Act there is a deliberate modification of law in favour of the tenant.
In this connection, it would be pertinent to refer to the observations of the Court in V. K Verma vs Radhey Shyam.(1) In that case, the Court compared section 13(5) of the Delhi Rent Control Act, 1952 which laid down that on the failure of a tenant to deposit the arrears of rent within the prescribed time, "the ' court shall order the defence against ejectment to be struck out." with section 15(7) of the Delhi Rent Control Act, 1958 which substitutes 'may ' and observed: "The change of the words from "The Court shall order the defence against ejectment to be struck out" to the words "the Controller may order the defence against eviction to be struck out" is clearly deliberate modification in law in favour of the tenant.
Under the old Act the Court had no option but to strike out the defence if the failure to pay or deposit the rent is proved; under the new Act the Controller who takes the place of the Court has a discretion in the matter, so that that in proper cases he may refuse to strike out the defence.
" 329 These observations leave no doubt that under section 15(7) of the Act, it is in the liberal discretion of the Rent Controller whether or not to strike out the defence.
We stress the need for the Court to be aware of the milieu before exercise of this extreme power because the present case is illustrative of its erroneous use.
The facts in this case cry for intervention, if one may say so.
The appellant is a working woman who has to get to office and be there between 9.00 a.m. to 5.00 p.m.
Naturally, she has a difficulty in appearing in court for every hearing and so she prudently engaged an advocate to appear on her behalf and take proper steps to protect her interests.
It is common ground that all the arrears of rent had been paid by her by cheque or in cash to her advocate.
It also transpires that the amounts received by cheque or in cash by the advocate were not deposited in court or paid to the landlord.
It is further seen that when the tenant found that the amounts were not paid to the landlord by her advocate, she made a complaint to the Bar Council of Delhi and the matter is pending inquiry.
From these circumstances, we are inclined to conclude indeed, that is the only reasonable conclusion in the circumstances that the tenant has not failed to pay and, in any case, the exercise of judicial discretion must persuade the court not to strike out the defence of the tenant but give her fresh opportunity to make deposit of the entire arrears due.
In the present case the deposit has eventually been made in this Court when it directed such deposit to be made.
The tenant did all she could by paying to the advocate the sums regularly but the latter betrayed her and perhaps helped himself.
To trust one 's advocate is not to sin deliberately.
She was innocent but her advocate was innocent.
No party can be punished because her advocate behaved unprofessionally.
The Rent Controller should have controlled himself by a plain look at the eloquent facts and not let down the helpless woman who in good faith believed in the basic ethic of a noble profession.
She did not fail to pay or deposit and, in any view, no case for punitive exercise of discretion has been made out.
The conclusion necessarily follows that the striking out of the defence was not legal and the appellant should have been given an opportunity to contest the claim of the landlord for her eviction.
A sensitized judicial appreciation was missing and, unfortunately, the High Court did not closely look at this facet of the issue.
On the other hand, the appeal was dismissed as not maintainable in view of section 25B. 330 An order striking out the defence is appealable under section 38.
So this order is appealable.
The reliance on section 25B(8) to negative an appeal is inept because this is not an order under that special section but one under section 15.
Moreover, section 25B(10)preserves the procedure except to the extent contra indicated in section 25B. Negation of the right of appeal follows from section 25B(8) only if the order for recovery is made 'in accordance with the procedure specified in this section ' (i.e. 25B).
Here the dispossession was not ordered under the special provision in section 25B but under section 15.
Nor can the theory of merger salvage ' the order because the legality of the eviction order depends on the legality of the order under section 15(7).
Once that order is found illegal what follows upon that cannot be sustained.
In the view we take of the effect of section 15(7) we allow the appeal in exercise of our jurisdiction under Article 136 and direct the case to go back to the Rent Controller.
Having regard to the fact that the landlord has not been able to make out his case of bona fide requirement for long because of the pendency of these proceedings, we direct the Rent Controller to dispose of the petition for eviction expeditiously and, as far, as possible, within four months from today.
Any further arrears, if accrued, will be paid under the directions of the Rent Controller on or before a date fixed by him.
The order for eviction passed in this case after striking out the defence must fail 13: in view of our holding that the order striking out the defence itself is , illegal.
Necessarily, the orders of the Rent Controller and of their High Court must be and are hereby set aside.
The parties will appear before the Rent Controller on 16th April, 1980.
There will be no order as to costs.
S.R. Appeal allowed.
|
The appellant tenant, a working woman engaged an advocate to appear on her behalf and take proper steps to protect her interests, as she had a difficulty in appearing in Court for every hearing.
She paid all the arrears of rent by cheque or in cash to her advocate who failed either to deposit the Court or to pay to the landlord.
The Rent Controller refused to look into this and struck off her defence under section 15(7) of the Delhi Rent Control Act, 1958.
The appeal was dismissed as not maintainable in view of section 25B of tho Act.
Hence the appeal by special leave.
Allowing the appeal, the Court.
^ HELD :1.
Rent Control laws are basically designed to protect tenants because scarcity of accommodation is a nightmare for those who own none and, if evicted, will be helpless.
Even so, the legislature has provided some grounds for eviction, and the Delhi law contains an extreme provision for striking out together the defence of the tenant which means that even if he has excellent pleas to negative the landlord 's claim the Court will not hear him.
Obviously, this is a harsh extreme and having regard to the benign scheme of the legislation this drastic power is meant for use in grossly recalcitrant situations where a tenant is guilty of disregard in paying rent.
That is why a discretion vested, not a mandate imposed in Section 15(7) of the Delhi Rent Control Act.
[327 C D] 2.
If a socially informed perspective is adopted while construing the provision of Section 15(7), then it will be plain that the Controller is armed with facultative power.
He may, or may not strike out the tenant 's defence.
A Judicial discretion has built in self restraint, has the scheme of the statute in mind, cannot ignore the conspectus of circumstances which are present in the case and has the brooding thought playing on the power, that, in a court, striking out a 6 party 's defence is an exceptional step, not a routine visitation of a punitive extreme following upon a mere failure to pay rent.
First of all, there must be failure to pay rent which, in the content, indicates willful failure, deliberate default or volitional non performance.
Secondly, the Section provides no automatic weapon but prescribes a wise discretion, inscribes no mechanical conse quence but invests a power to overcome intransigence.
Thus, if a tenant fails or refuses to pay or deposit rent and the court discerns a mood of defiance or gross neglect, the tenant may forfeit his right to be heard in defence.
A last resort cannot be converted into tho first resort a punitive direction of court 326 cannot be used as a booby trap to get the tenant out.
Once this teleological interpretation dawns, the mist of misconception about matter of course invocation of the power to strike out will vanish.
Farewell to the realities of a given case is playing truant with the duty underlying the power.
[327 F H, 328 A B] 3.
The exercise of the power of striking out of the defence under section 15(7) is not imperative whenever the tenant fails to deposit or pay any amount as required by section 15.
The provisions contained in section 15(7) of the Act are directory and not mandatory.
It cannot be disputed that s.15(7) is a penal provision and given to the Controller discretionary power in the matter of striking out of the defence, and that in appropriate cases, the Controller may refuse to visit upon the tenant the penalty of non payment or non deposit.
The effect of striking out of the defence under s.15(7) is that the tenant is deprived of the protection given by s.14 and, therefore, the powers under s.15(7) of the Act must be exercised with due circumspection.
Section 15(7) of the Act is not couched in mandatory language.
It uses the word "may".
The difference in the language of Section 15(7) with that of Section 13(5) of the repealed Act is significant and indicates that in the present Act there is a deliberate modification of law in favour of the tenant.
Under Section 15(7) of the Act, it is in the liberal discretion of the Rent Controller, whether or not to strike out the defence.
The Court should be aware of the milieu before exercise of this extreme power.
[328 B D, 329 A B] In the instant case, the tenant did all she could by paying to the advocate the sums regularly but the latter betrayed her and perhaps helped himself.
To trust one 's advocate is not to sin deliberately.
She was innocent but her advocate was innocent.
No party can be punished because her advocate behaved unprofessionally.
The Rent Controller should have controlled himself by a plain look at the eloquent facts and not let down the helpless woman who in good faith believed in the basic ethic of a noble profession.
She did not fail to pay or deposit and, in any view, no case for punitive exercise of discretion has been made out.
The conclusion necessarily follows that the striking out of the defence was not legal and the appellant should have been given an opportunity to contest the claim of the landlord for her eviction.
A sensitized judicial appreciation was missing and unfortunately, the High Court did not closely look at this facet of the issue.
[329E H] V. K. Varma vs Radhey Shyam, A.I.R. 1964 S.C. 1370, referred to.
An order striking out the defence is appealable under s.38.
So this order is appealable.
The reliance on section 25B(8) to negative an appeal is inept because this is not an order under that special section but one under section 15.
Moreover, s.25B(10) preserves the procedure except to the extent contra indicated in s.25B. Negation of a right of appeal follows from s.25B(8) only if the order for recovery is made 'in accordance with the procedure specified in this Section ' (i.e. 25B).
Here the dispossession was not ordered under the special provision in s.25B but under s.15.
Nor can the theory of merger salvage the order because the legality of the eviction order depends on the legality of the order under s.15(7).
Once that order is found illegal what follows upon that cannot be sustained.
[330 A C]
|
The Delhi Rent Control Act, 1958, provides certain grounds for eviction of tenants, including non-payment of rent. Section 15(7) of the Act states that if a tenant fails to make payment or deposit as required, the Controller may order the defense against eviction to be struck out and proceed with the hearing of the application. However, the Court held that this provision is directory and not mandatory, and the Controller has discretionary power to strike out the defense. The Court emphasized that this power should be exercised with caution and only in cases where the tenant has willfully failed to pay rent or has shown gross neglect.
In the present case, the appellant, a working woman, had paid her rent to her advocate, who failed to deposit it in court or pay it to the landlord. The Rent Controller struck out her defense, which the Court held was an erroneous exercise of discretion. The Court allowed the appeal, set aside the orders of the Rent Controller and the High Court, and directed the case to be sent back to the Rent Controller for expeditious disposal. The Court held that the order striking out the defense was illegal and that the appellant should have been given an opportunity to contest the claim of the landlord for her eviction. The Court also directed that any further arrears of rent should be paid under the directions of the Rent Controller, and that the parties should appear before the Rent Controller on a specified date.
|
Appeal No. 889 of 1971.
Appeal from the order dated December 9, 1970 of the Madhya Pradesh High Court in Miscellaneous Petition No. 267 of 1969.
L. section Baghel, Pramod Swarup and section section Khanduja, for the appellants.
R. Paniwani and section K. Gambhir, for respondent No. 1.
R. P. Kapur, for respondents Nos. 2 and 3.
The Judgment of U Court was delivered IV Hegde, J. This is an appeal by certificate.
It relates to the .elections to Municipal Council, Sidhi.
The elections were held 60 in 1969.
In that election six persons ie.
four appellants and respondents 5 and 6 in this appeal were elected.
Thereafter the first respondent herein an elector and apparently a busy body filed a petition under Article 226, of 'the Constitution in the High Court of Madhya Pradesh challenging the validity of the election of all the returned candidates on several grounds.
The High Court accepted that petition and set aside the election of all the returned candidates.
The only ground on which the election of the returned candidates was set aside is that the returned candidates in their nomination papers had merely mentioned the number of the wards for which they were candidates but had failed to mention the names of those wards.
It is not the case of the election petitioner nor is it the finding of the High Court that there was any difficulty in identifying the ward in which the concerned returned candidate wanted to seek election.
The Returning Officer did not find any such difficulty.
He accepted their nomination papers.
Admittedly every ward had a specific number in addition to having a name.
The High Court was of the opinion that the successful candi dates failure to, mention the name of the wards in their nomination papers was fatal and therefore the Returning Officer was not competent to accept their nomination.
It thought that it was mandatory for all the, candidates to mention in their nomination papers the names of the wards in which they wanted to seek election.
Further it opined that a mere mentioning of the number of the ward may lead to clerical errors and therefore the rule making authority had prescribed that the name of the ward also should be mentioned in the nomination paper.
It is nobody 's case that in the nomination papers with which we are concerned there are any errors as regard the ward numbers.
Let us now examine whether the High Court was justified in taking such a technical view of the matter.
The election to the municipal councils is regulated by Rule 13 of the Rules framed under the Madhya Pradesh Municipalities Act, 1961.
Rule 13 (1) reads "13(1)(i).
On or before the date fixed for filing nomination paper of candidates each candidate shall, either in person or by his proposer or seconder, between the hours of 11 O 'clock in the forenoon and 3 O 'clock in the afternoon, deliver to the supervising officer a nomination paper completed in For IV. and subscribed by the candidate himself as assenting to the nomination and by two duly qualified voters of the ward as proposer and seconder.
61 The relevant column in Forma IV reads "Name and number of the ward".
Going back to Rule 13 it is necessary to notice sub rule (vi) of that rule which says.
: "The supervising officer shall not reject any nomination paper on the ground of any defect which is not a substantial character.
" The question for decision is whether the non mentioning of the names of the wards in the nomination papers is a defect of a substantial character ? For deciding that question we must first find out the reason behind the rule requiring the candidates to mention the names and the number of the wards in which they want to contest.
It is obvious that the particulars in question are required to identify the constituency in which a candidate is desirous of seeking election.
That purpose will be served if either the number of the ward or its name is given unless there are more than one wards having the same name.
Once the number of the ward is mentioned in the nomination paper the identification of the constituency is complete.
The name of the ward is merely an additional piece of evidence to identify the constituency.
if the number of the ward is mentioned there will be no difficulty for the Returning Officer to find out in which constituency the candidate wants to seek election.
We have no hesitation in holding that the nomination papers of the returned candidates were rightly accepted by the Returning Officer as they substantially complied with rules.
If a nomination is accepted by the Returning Officer the presumption is that the nomination is a valid nomination.
It is for the party who challenges its validity to establish his plea by showing that there was no substantial compliance with law.
Form III in the Rules prescribes the form of notice calling for election of councillors.
That form reads : "Election of Councillor(s) for Ward(s) No. . of the .
Municipality, Tehsil District . .
This form shows that even when the authorities call upon the electors to elect councillors they do so with reference to ward numbers and not with reference to the names of the wards evidently because in the case of names of the wards more than one ward may have the same or similar names but in the case of number no such difficulty can arise.
If there is a possibility of an error creeping into numbers there is similar possibility in the case of names.
The candidates have to guard against such errors.
The question whether the failure to mention the name of the constituency, in which the candidate wants to seek election in his nomination paper per se vitiates his nomination came up for consi 62 deration before this Court in Rangilal Chowdhury vs Dahu San & ors.
That case related to a bye election for the Dhanbad assembly constituency in the Bihar State.
In his nomination paper the candidate had mentioned the constituency in which he was seeking election as 'Bihar '.
nomination paper was rejected by the Returning Officer on the ground that the candidate had not mentioned the name of the constituency in which he desires to seek election.
This Court differing from the opinion taken by the Returning Officer held that the nomination paper was valid in law.
The ground on which this Court came to.
that conclusion was that the election in question was a bye election; it pertained to only one constituency ie.
Dhanbad.
That, being so there was no difficulty for the Returning Officer to identify the constituency in which the candidate wanted to seek election.
The ratio of that decision is that so long as there is no difficulty in identifying the constituency in which the candidate wants to seek election any omission in filling the, column relating to tile constituency will be considered as unsubstantial.
A somewhat similar view was taken by this Court in Ram Awadesh Singh vs Smt.
Sumitra Devi & Ors.(2) Mr. Panjwani appearing for respondent No. 1 invited our attention to certain decisions where the courts had taken the view that the particulars mentioned in the nomination papers before them did not sufficiently comply with the rules.
That was because, that from the particulars given in the nomination papers it was not possible to definitely identify the constituency in which the concerned candidates desired to contest. 'nose decisions were rendered on the peculiar facts of those cases.
The real test as mentioned earlier is whether from the particulars given in a nomination paper the constituency from which the candidate wants to seek election can be reasonably identified.
Once it is held that test is satisfied then the requirement of the rule is met.
Any failure to give further particulars canno t be considered as substantial.
In the result this appeal is allowed and the order of the High Court is set aside and the Writ Petition is dismissed.
The first respondent will pay the costs of the appellants herein both in this court as well as the High Court.
The other respondents will bear their own costs S.C. Appeal allowed.
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According to Rule 13 framed under Madhya Pradesh Municipalities Act, 1961, a candidate for election to the Municipal Council shall deliver to the supervising officer a nomination paper completed in Form IV and the relevant column in Form IV required the candidate to mention the "name and number of the Ward".
Further, sub rule (IV) of Rule 13 provided that the 'supervising officers shall not reject any nomination paper on the ground of any defect which is not of substantial character High Court in a writ petition set aside the elections of 6 persons to the 'Municipal Council on the ground that they only mentioned the question whether the number of the wards but not their names.
On non mentioning the names of the wards in teh nomination paper was a defect of a substantial character, HELD .
: The nomination papers of the returned candidates were rightly accepted by th` Returning Officer as they substantially complied with the Rule.
The particulars in question were required to identify the constituency in which a candidate was desirous of seeking election.
That purpose was served when either the number and the ward, or its name was given unless them were, more than on a ward having the same name the identification of the constituency was complete.
The name of the ward .was merely an additional piece of evidence to identify the constitute Once the number of the ward was mentioned there was no difficulty for the Returning Officer to find out in which constituency tin candidates wanted to seek election.
[61D] Rangila Chowdhury vs Dultu Sen & Ors. ; and Rain Awadesh Singh vs Smt.
Sumitra Devi & Ors., A.I.R. , referred to.
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The appeal, Appeal No. 889 of 1971, was filed by four appellants whose election to the Municipal Council, Sidhi, was set aside by the Madhya Pradesh High Court. The High Court had accepted a petition filed by the first respondent, an elector, challenging the validity of the election of all returned candidates on the ground that they had failed to mention the names of the wards in their nomination papers. The High Court held that this was a fatal defect and that the Returning Officer was not competent to accept their nomination papers.
However, the Supreme Court, in allowing the appeal, held that the failure to mention the names of the wards in the nomination papers was not a defect of a substantial character. The Court observed that the number of the ward mentioned in the nomination paper was sufficient to identify the constituency, and the name of the ward was only an additional piece of evidence. The Court relied on the rule that a nomination paper accepted by the Returning Officer is presumed to be valid, and the party challenging its validity must establish that there was no substantial compliance with the law. The Court dismissed the writ petition and set aside the order of the High Court.
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Civil Appeal No. 3436 of 1979.
From the Judgment and order dated the 19th April, 1978 of the Madras High Court in Writ Appeal No. 224178.
M.K. Ramamurthi, and C.S. Vaidyanathan for the Appellant.
Dr. Y.S. Chitale and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
An order of pre mature retirement following close upon the heels of promotion and appointment to a coveted Selection post is bound to perplex any right thinking man and make him wonder whether the right hand knows what the left hand has done.
If in the month of May a Government servant is found to possess 'such high merit and ability, which naturally includes integrity, as to entitle him not merely to be promoted to a selection post but to be appointed to a very responsible and much desired post in that cadre, what could have happened between May and September to merit his being weeded out altogether from service in September under the rule which enables the Government to retire a Government servant in the public interest after he has attained the age of SO years or after he has completed 25 years of qualifying service.
One would expect that some grave and grim situation had developed in the interregnum to warrant the pursuit of such a drastic course.
But surprisingly, we found nothing what.
soever had happened in this case during that period.
Let us look at the totality of the facts.
77 The appellant appears to have had quite a noteworthy career.
A Starting at the lowest rung as a Lower Division Clerk in 1953, he was promoted as an Assistant Commercial Tax officer in 1954, next as a Deputy Commercial Tax officer in 1957, then as a Joint Commercial Tax officer in 1962, thereafter as a Commercial Tax officer in 1966, later as an Assistant Commissioner of Commercial Taxes in 1972 and finally as Deputy Commissioner of Commercial Taxes on 7 S 1975.
On promotion as Deputy Commissioner of Commercial Taxes he was posted as Member of the Sales Tax Appellate Tribunal in the same cadre.
On September 28,1975, he was retired under Fundamental Rule 56(d).
His Service Book shows that he had an excellent record of service.
He had earned several encomiums, commendations and appreciations.
The several promotions gained by him react his good record of service.
But there was one dark spot.
In 1969 when he was working as Commercial Tax officer it was noted in his Confidential file by the Deputy Commissioner of Commercial Taxes as follows: "This Commercial Tax officer is a very intelligent and capable officer who kept the entire district under his control in perfect discipline.
Unfortunately, his reputation is not at all good.
There were complaints that he used to threaten dealers and take money.
The entire matter is under investigation by the Vigilance and Anti Corruption Department".
There was an enquiry by the Directorate of Vigilance and Anti Corruption.
Charges were framed against the appellant by the Board of Revenue.
The explanation of the appellant was obtained.
The Full Board of Revenue then reported that the charges should be dropped.
The Government accepted the report of the Full Board and dropped the charges making the following order on 29 11 1974: "As the preliminary enquiry disclosed a prima facie case of corruption, a detailed enquiry was taken up by the Directorate of Vigilance and Anti Corruption.
Out of eleven allegations levelled against Thiru D. Ramaswami, seven allegations were not substantiated, in the enquiry made by the Directorate of Vigilance and Anti Corruption.
The Government, examined the report of the Directorate 78 and considered that there was a prima facie case in respect of certain allegations and this was sufficient to proceed against Thiru D. Ramaswami.
The Board of Revenue (CT) was therefore requested to frame charges straightaway as for a major penalty against Thiru D. Ramaswami on the basis of allegations levelled against him.
The Board accordingly framed charges against him in respect of allegations substantiated, obtained his explanation and sent its report thereon.
The Full Board considered that all the charges framed against Thiru D. Ramaswami in consequence of the detailed enquiry conducted by the Vigilance Department cannot be pursued and proved.
The Full Board has therefore expressed the view that the said charges may be dropped.
The Government accept the views of the Full Board and direct that all the charges framed against Thiru D. Ramaswami be dropped".
The effect of the order of November 29, 1974 of the Government was to grant absolution to the appellant from the repercussions of, the note of the Deputy Commissioner of Commercial Taxes, made in 1969.
If there was any ambiguity about the effect of the Government order, it was cleared by the circumstance that, within a few months, on May 7, 1975, he was promoted as Deputy Commissioner of Commercial Taxes and posted as Member, Sales Tax Appellate Tribunal, a prestigious post.
It has to be mentioned here that the post of a Deputy Commissioner of Commercial Taxes is a Selection post.
Under Rule 36(b) (i) of the Tamil Nadu Genera! Rules for the State and Subordinate Services: "Promotions in a service or class to a selection category or to a selection grade shall be made on grounds of merit and ability, seniority being considered only where merit and ability are approximately equal".
Under Rule 2(b) of the Tamil Nadu Special Rules for Commercial Taxes Service: "All promotions shall be made on grounds of merit and ability, seniority being considered only where merit and ability are approximately equal".
So, what do we have ? There was an adverse entry in the confidential file of the appellant in 1969.
The basis of the entry 79 was knocked out by the order dated November 29, 1974 of the A Government, and the effect of the entry was blotted out by the promotion of the appellant as Deputy Commissioner.
After his promotion as Deputy Commissioner there was no entry in the service Book to his discredit or hinting even remotely that he had outlived his utility as a Govt.
servant.
If there was some entry, not wholly favourable to the appellant after his promotion, one might hark back to similar or like entries in the past, read them all in conjunction and conclude that the time had arrived for the Government servant to quit Government service.
But, with nothing of the sort, it is indeed odd to retire a Government servant a few months after promoting him to a Selection post.
In the present case, we made a vain search in Service record of the appellant to find something adverse to the appellant apart from the 1969 entry.
All that we could find was some stray mildly deprecating entries such as the one in 1964 which said: "He is sincere and hardworking.
He 'manages his office very well.
He exercises adequate control over subordinates.
He maintains a cordial relationship with public.
Because of his stiff attitude some of the assessees complain about him stating that he is rude in his behaviour This perhaps is due to his unbending attitude.
With a little more tact he will be an asset to the Department".
one curious feature of the case is that while the 1969 entry noted that an enquiry was pending with the Vigilance and Anti Corruption Department in regard to the allegations against.
the appellant, the ultimate result of the enquiry which was that the charges should be dropped was nowhere noted in the personal file of the appellant.
One wonders whether the failure to note the result of the enquiry in the personal file led to the impugned order ! In the face of the promotion of the appellant just a few months earlier and nothing even mildly suggestive of ineptitude or inefficiency thereafter, it is impossible to sustain the order of the Government retiring the appellant from service.
The learned Counsel for the State of Tamil Nadu argued that the Government was entitled to take into consideration the entire history of the appellant including that part of it which was prior to his promotion, 80 We do not say that the previous history of a Government servant should be completely ignored, once he is promoted.
Sometimes, past events may help to assess present conduct.
But when there is nothing in the present conduct casting any doubt on the wisdom of the promotion, we see no justification for needless digging into the past.
The learned Counsel for the appellant relied on the decisions in Swami Saran Saksena vs State of U.P, (1) Baldev Raj Chadha vs Union of India & Ors (2) State of Punjab vs Dewan Chuni Lal, (3) while the learned counsel for respondent relied on the decision in Union of India etc.
vs M.E. Reddy & Anr.
(4) All the decisions have a been considered by us in reaching our conclusion.
The appeal is allowed.
G. O. Ms. No. 1112 dated September 19, 1975, Commercial Taxes Religious Endowments Department, Government of Tamil Nadu is quashed.
The appellant will be reinstated in service and paid the arrears of salary due to him under the rules.
He is entitled to his costs.
P.B.R. Appeal allowed.
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HELD: In the face of the appellant 's promotion a few months before his compulsory retirement under F. R. 56 (d) and nothing even mildly suggestive of ineptitude or inefficiency after his promotion, it is impossible to sustain the order of the Government retiring him from service.
[79 G] When the Government exonerated him of the charges levelled against him, the basis of the adverse entry in his confidential file was knocked out.
By reason of the promotion of the selection post of Deputy Commissioner and posting as a Member of the Sales Tax Appellate Tribunal, the effect of the entry was further blotted out.
Since then, there was no adverse entry in his service record to discredit him or hinting even remotely that he had outlived his utility as a Government servant.
Had there been another adverse entry after his promotion it would have been possible to read them all in conjunction and say that it was time for him to quit Government service.
But that was not so.
It was therefore odd that he was retired a few months after his promotion.
[79 A C] 76 All this is not to say that previous history of a Government servant should be completely ignored once he is promoted.
Sometimes past events might help to assess the present conduct, but when there was nothing in the present conduct casting any doubt on the wisdom of the promotion there was no justification for needless digging into the past.
[80 A B] Swami Saran Saksena vs State of U.P., [1980] I SCR 923; Baldev Raj Chadha vs Union of India & Ors., [1981] I SCR 430; State of Punjab vs Dewan Chuni Lal, ; ; and Union of India etc.
vs M. E. Reddy & Anr., ; ; referred to.
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The Madras High Court in Civil Appeal No. 3436 of 1979 granted relief to a government servant, D. Ramaswami, who was prematurely retired from his position as Deputy Commissioner of Commercial Taxes in 1975. The court ruled that the order of premature retirement was unjustified and quashed the government's decision. The key facts of the case are as follows: D. Ramaswami was promoted to the position of Deputy Commissioner of Commercial Taxes in May 1975, a selection post, after having been cleared of corruption charges in 1974. Prior to his promotion, there was an adverse entry in his confidential file from 1969 suggesting corruption, but this was dropped after the government accepted the findings of an inquiry.
The court found that there were no adverse entries in D. Ramaswami's service record after his promotion, and his past history was not relevant in this context. The court relied on several precedents, including Swami Saran Saksena vs State of U.P, Baldev Raj Chadha vs Union of India & Ors, State of Punjab vs Dewan Chuni Lal, and Union of India etc. vs M.E. Reddy & Anr, to conclude that the government's order was unjustified and granted relief to D. Ramaswami. The court allowed the appeal and quashed the government's decision, ordering D. Ramaswami's reinstatement in service and payment of arrears of salary due to him under the rules.
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: Civil Appeal No. 33 of 1953.
Appeal by special leave from the Judgment and Order dated the 16th May, 1951, of the High Court of Judicature at Patna in Miscellaneous Judicial Case No. 126 of 1950, arising out of the Order dated the 17th May, 1949, of the Income tax Appellate Tribunal, Calcutta Bench, Calcutta, in I.T.A. No. 147 of 1948 49.
sukumar Mitra (section N. Mukherjee with him) for the appellant.
C.K. Daphtary,.
Solicitor General for India (Porus A. Mehta, with him) for the respondent 1954.
February 9.
The Judgment of the Court was delivered by DAS J.
This is an appeal by special leave from the judgment of the Patna High Court delivered on a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Income tax Act.
The tribunal referred the following two questions for the opinion of the High Court: 769 1.
On the facts and in the circumstances of this case is the surplus of Rs. 13,05,144 arising out of the sale of the plant and machinery of the sugar factory chargeable under section 10 (2) (vii) ? 2. Was the profit of Rs. 15,882 on the sale of stores of the factory taxable under the Income tax Act in the circumstances of this case ? The reference came up for hearing before a Division Bench consisting of Shearer and Sarjoo Prasad JJ.
and after a prolonged hearing the learned Judges delivered separate judgments on the27th February.
1951, giving divergent answers to the questions, Shearer J. answering both the questions in the negative and Sarjoo Prasad J. giving an affirmative answer to both of them.
The matter thereupon was placed before a third Judge, Ramaswami J. who, after a fresh hearing delivered his judgment on the 16th May, 1951, agreeing with Sarjoo Prasad J. on the first question and with Shearer J. on the second question.
The result was that the High Court by a majority decision answered the first question in the affirmative, i.e., against the assessee, and the second question in the negative, i,e.
in favour of the assessee.
The assessee applied to the High Court for leave to appeal to this court against the High Court 's decision on the first question.
The High Court having declined to grant the necessary certificate the assessee applied for and obtained the special leave of this court to prefer the present appeal.
The department has not preferred any appeal against the High Court 's decision on the second question and nothing further need be said about that question.
The controversy arose in course of the proceedings for the assessment of Pursa Ltd. to income tax for the assessment year 1945 46, the relevant accounting year covering the period between the 1st October, 1943, to 30th September, 1944.
Pursa Ltd., was a company incorporated in 1905 under the Indian Companies Act but all its shareholders and directors were residents in the United Kingdom.
The business of the 770 company was that of growers of sugarcane, manufacturers of sugar and dealers in sugar.
It is common ground that the crushing season for the manufacture of sugar is from December to April of each year.
It appears that towards the end of 1942 an attempt was made to sell the entire business of the company but such attempt did not succeed.
It appears from the case filed by the respondent in tiffs appeal that in the middle of 1943 the directors of the company commenced negotiations for the sale of the factory and other assets of the company with the ultimate object of winding up the company.
From the correspondence, affidavit and other materials placed before the tribunal and referred to by Sarjoo Prasad J. in his judgment it appears that on the 9th August, 1943, an inventory was prepared and a firm offer was received from Dalmia lain & Company Ltd., for the purchase of the factory and stores as on that date.
This offer was on the 16th August, 1943, communicated by cable to the directors in England.
On the 20th August, 1943, the directors, asked the local managers in India to proceed with the matter in anticipation of the sanction of the shareholders which the directors expected to obtain at an extraordinary general meeting to be held very shortly.
That meeting, however, was held on the 8th October, 1943, i.e., 8 days after the accounting year had started.
, At that meeting the firm offer of Dalmia lain & Company Ltd. was accepted and a concluded agreement for sale came into existence.
Thereafter instructions were given to the solicitors to draw up the necessary documents.
On the 7th December, 1943, a written memorandum of agreement was executed whereby the company agreed to sell and demise to Dalmia Jain & Company Ltd., free from all mortgages and charges at and for the price of rupees twenty eight lacs all the lands, buildings, machinery and plant and all vats, reservoirs, cisterns, pumps, machinery, engines, boilers, plant, implements, utensils, tramways, furniture, stores, articles and things as on the ninth day of August, one thousand nine hundred and forty three (subject to subsequent use and consumption in the ordinary course 771 of business) used in connection with the said sugar factory, but excepting stocks of manufactured sugar and stocks of grain in godown on the ninth day of August, one thousand nine hundred and forty three and all stores and other articles bought or received by the company after the date.
Dalmia Jain & Company Ltd., paid the sum of rupees twenty eight lacs on the same day and on the 10th December, 1943, they got possession of the factory.
On the date of the aforesaid sale, the company possessed sugar stock valued at rupees six lacs which was excluded from the sale.
This stock of sugar the company continued to sell up to June, 1944.
It is said that the said stock of sugar was excluded because at the time it was not possible to know at what date such a sale would be concluded and the sugar produced in 1943 had to be sold by and through the exclusive selling agents of the company under a contract entered into with them.
It is, however, not disputed that between the 9th August, 1943, when the firm offer was obtained and the 10th December, 1943, when possession of the factory was made over to Dalmia Jain & Company Ltd., the company never used the machinery and plant for the purpose of manufacturing sugar or for any other purpose except that of keeping them in trim and running order.
Indeed, throughout the accounting period the machinery and plant were not used by the company.
The company went into voluntary liquidation on the 20th June, 1945.
The reason for the delay in putting the company into liquidation is said to have been caused by considerable legal difficulties with regard to the transfer of certain mokarari lands belonging to the company.
The liquidators appointed by the shareholders of the company represented the company in the matter of proceedings for assessment of the company for the assessment year 1945 46.
In the course of these assessment proceedings the Income tax Officer on the 21st February, 1947, wrote a letter to the liquidators asking for elucidation on certain points.
Amongst other things, the Income tax Officer wanted to know the liquidators ' objection why the company 's activities during the previous 772 year might not be treated as amounting to a realisation of assets on impending liquidation rather than to the carrying on of business within the meaning of the Income tax Act.
To this letter an answer was sent by the liquidators .
on the 19th March, 1947, pointing out that the company had gone into liquidation on the 20th June, 1945, and that in view of the date of liquidation the liquidators could not agree that the company was not carrying on business during the year ended 30th September, 1944, and they further pointed out that the various debits contained in the sugar factory accounts were those incurred in carrying on the company 's business.
By his letter dated the 17th May, 1947, the Income tax Officer claimed that large profits which had been made by the company on the sale of their machinery and plant were taxable under the second proviso to section 10 (2)(vii)of the Income tax Act and called upon the liquidators to retain sufficient funds and assets in their hands to meet the heavy tax liabilities that might eventually arise and also to warn the shareholders accordingly.
He also asked for certain information which, however, the liquidators did not furnish.
The liquidators, in their letter in reply dated the 22nd May, 1947, did not agree that the profits were taxable, for the profits to which reference had been made were not profits arising from a business carried on by the company but were profits arising from the company ceasing to carry on business.
The Income tax Officer, however, by his order dated the 21st June, 1947, held that the profits of the sale of machinery and plant were liable to assessment under section 10 (2)(vii)of the Act and added a sum of Rs. 13,05,144 to the profits.
The Appellate Assistant Commissioner of Income tax having dismissed the liquidators ' appeal on the 30th January, 1947, the liquidators went up on further appeal to the Income tax Appellate Tribunal.
By its order dated the 17th May, 1949, the tribunal dismissed that appeal.
Upon an application under section 66(1) of the Act the tribunal stated a case to the High Court referring the two.
questions herein before 773 set out.
The subsequent history of the matter has already been mentioned and needs no reiteration.
The relevant portion of section 10 of the Income tax Act as amended by Act VI of 1939was as follows : "10 (1) The tax shall be payable by anassessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him.
(2) Such profits or gains shall be computed after making the following allowances, namely : (i) . . . . . . . (ii) . . . . . . . (iii) . . . . . . . (iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plaint, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (v) in respect of current repairs to 'such buildings, machinery, plant, or furniture, the amount paid on account thereof; (vi) in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed: (vii) in respect of any machinery or plant which has been sold or discarded, the amount by which the written down value of the machinery or plant exceeds the. amount for which the machinery or plant is actually sold or its scrap value: Provided that such amount is actually written off in the books of the assessee: Provided further that where the amount for which any such machinery or plant is sold exceeds the written down value, the excess shall be deemed to be profits of the previous year in which the sale took place; . . . . . . . . . . . . . . . ." 774 It is necessary to bear in mind the meaning and import of the provisions of section 10 (2)(vii)in so far as they apply to the present case.
Under section 10 tax is payable by an assessee "in respect of the profits or gains of any business, profession or vocation carried on by him." "Business" is defined by section 2, sub section (4) as "including any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture.
" As pointed out by the Judicial Committee in Shaw Wallace & Co. 's case(1) the fundamental idea underlying each of these words is the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in section 10 (1)and those critical words are an essential constituent of that which is to produce the taxable income.
Therefore, it is clear that the tax is payable only in respect of the profits or gains of the business which is carried on by the assessee.
Sub section (2)permits allowances to be made before the taxable profits are ascertained.
Proviso (2)to clause (vii) of that sub section on which the income tax authorities have relied makes the excess of sale proceeds over the written down value of "any such machinery or plant" to be deemed to be profits of the previous year in which the sale took place.
Any such machinery or plant in the proviso clearly refers to the machinery or plant in respect of which the allowance is to be given under that clause.
Although the word "such" was not used in the body of clause (vii), the scheme of sub section (2) which is apparent from the other clauses of allowances e.g., (iv), (v) and (vi), clearly indicates that the machinery or plant referred to in clause (vii) must be the same as those mentioned in the earlier clauses, i.e., such machinery or plant as were "used for the purposes of the business, profession or vacation." Indeed, the position has been made clear and placed beyond any doubt by the subsequent amendment of 1946 which added the word "such" in clause (vii).
The words"used for the purposes of the business" obviously [1] L. R, 59 I.A. 206 at p. 213.
775 mean used for the purpose of enabling the owner to carry on the business and earn profits in the business.
In other words, the machinery or plant must be used for the purpose of that business which is actually carried on and the profits of which are assessable under section 10 (1).
The word "used" has been read in some of the pool cases in a wide sense so as to include a passive as well as active user.
It is not necessary, for the purposes of the present appeal, to express any opinion on that point on which the High Courts have expressed different views.
It is, however, clear that in order to attract the operation clauses (v), (vi) and (vii) the machinery and plant must be such as were used, in whatever sense that word is taken, at least for a part of the accounting year.
If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect them and the second proviso also does not come into operation.
In its statement of the case, after referring to its decision that the profits on the sale of machinery and plant were assessable under section 10 (2)(vii), the tribunal proceeded to state: "This decision was based on two considerations.
First, that as admitted by the applicant company the company had been carrying on its business up to the date of the sale of the machinery, namely, 7th December, 1943. 'The tribunal was of the opinion that as the applicant company had not ceased to carry on its business till the date of the sale of the machinery, it must be held that the sale of the 'machinery was a part of the applicant company 's carrying on of the business.
The second reason for the decision of the tribunal was that the applicant company did not sell its sugar stocks amounting to over Rs.6,00,000, on 7th December, 1943.
The applicant company s plea that the sugar stocks could not be sold as the applicant company had sole agents for the sale of sugar, was not accepted by the tribunal.
The ' Income tax Appellate Tribunal found that sugar continued to be sold for more than 6 months 776 after the sale of the machinery and substantial expenses on establishment and general charges continued to be incurred.
From this the Income tax Appellate Tribunal concluded that the sugar stocks had not been sold on 7th December; 1943, purposely in order to sell these to the best advantage later on.
This, the Income tax Appellate Tribunal held, showed that the applicant company carried on business even subsequent to the sate of machinery on '7th December, 1943." Although the High Court will not disturb or go behind the finding of fact of the tribunal, it is now well settled that where it is competent for a tribunal to make findings in fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it.
[See Lord Normand in Commissioners of Inland Revenue vs Fraser(1)].
It appears to us that the tribunal misdirected itself in law as to the meaning and import of the relevant provisions of section 10 of the Act. ]t completely overlooked the fact which is plainly in evidence on the record that the machinery and plant which were sold had not at all been used for the purposes of the business carried on in the accounting year and consequently the second proviso to section 10 (2) (vii) could have no application to the sale proceeds of such machinery and plant.
In fact the entire decision of the tribunal was vitiated by its failure to keep in view the true meaning and scope of section 10 (2) (vii) and cannot, therefore, be supported.
It further appears to us that in the statement of the case the tribunal was not merely stating something in the nature of a primary fact but was also drawing a conclusion which is to a certain extent contrary to the primary finding.
As is stated clearly in the statement of the case, the decision of the tribunal was based on (1) at p. 501.
777 two considerations.
The first consideration was rounded on an admission by the liquidators that the company had been carrying on its business up to the date of the sale of the machinery on the 7th December, 1943.
This admission is quite consistent with the case that the company was only selling its stock of sugar and not doing any business of manufacture of sugar.
Indeed, the manufacturing process does not begin until December of each year and the memorandum of agreement was made on the 7th December, 1943, and possession was delivered to the purchaser on the 10th December, 1943.
It is nobody 's case and it has not been found that the company had manufactured any sugar during the whole of the accounting year.
Therefore, this finding that the company carried on its business up to the 7th December, 1943, certainly does not indicate that the company was also carrying on any business of 'growing sugarcane or manufacturing sugar by the use of the machinery or plant in question.
The second finding that the company carried on business even after the sale of the machinery and the plant clearly indicates that that business had nothing to do with the machinery or plant.
Both the findings, therefore, are inconclusive.
The matter, however, does not rest there.
It appears to us that the findings of fact, taken literally, cannot support the decision of the tribunal.
If, as held by the tribunal, "the sale of the machinery was a part of the applicant company 's carrying on of the business" then the sale must be regarded as an ordinary operation of such business and consequently the profits arising out of such ordinary business operation would be assessable under the provisions of section 10 (1) and it would not be necessary to have recourse to the statutory fiction created by the second proviso to clause (vii)under which the excess of the sale proceeds over the written down value is to be deemed to be profits of the business.
If the profits on the sale of the machinery and plant are to be made assessable under the second proviso, as has ' been done by the tribunal, then it must be conceded that these deemed profits were not in reality the profits of the business carried on by the (2) 24 Tax Cases 498 at p. 501.
13 95 section C.I./59 778 company and, therefore, the sale transaction which brought in these profits was not in fact part of the company 's business, which conclusion again will be inconsistent with the finding of fact if the business is not understood as limited only to the selling of sugar.
For reasons stated above, it appears to us that having misdirected itself in law as to the scope and effect of the relevant portions of section 10 of the Act the tribunal did not approach the facts from a proper angle and, further, that its findings cannot, in the circumstances of this case, be given such sanctity as would exclude the same from review by the High Court or this court.
Turning to the facts to be gathered from the records it is quite clear that the intention of the company was to discontinue its business and the sale of the machinery and plant was a step in the process of the winding up of its business.
The sale of the machinery and plant was not an operation in furtherance of the business carried on by the company but was a realisation of its assets in the process of gradual winding up of its business which eventually culminated in the voluntary liquidation of the company.
Even if the sale of the stock of sugar be regarded as carrying on of business by the company and not a realisation of its assets with a view to winding up, the machinery or plant not being used during the accounting year at all and in any event not having had any connection with the carrying on of that limited business during the accounting year, section 10 (2) (vii) can have no application to the sale of any such machinery or plant.
In this view of the matter, the answer to the first question should be in the negative and we answer accordingly.
The result is that this appeal is allowed and the respondent shall pay the costs of the appellants both in this court and in the High Court.
Appeal allowed.
Agent for the appellant:B. N. Ghose.
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The fundamental idea underlying the words used in the definition of "business" in section 2(4) of the Income tax Act the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in 10(1) and those critical words are an essential constituent that which is to be produce the taxable income, and therefore the 768 tax is payable only in respect of the profits or gains of the business which is carried on by the assessee.
That under clause (vii) of section 10(2) the machinery and plant must be such as were used at least for a part of the accounting year.
As the machinery and plant of the sugar factory which were sold had not at all been used for the purpose of business during the accounting year, the second proviso to s.10.
(2) (vii) could have no application and the assessees were not liable.
Although the High Court will not disturb or go behind a finding of fact of the Tribunal, it is well settled that where it is competent for a Tribunal to make findings of fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the Tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the Tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it.
Commissioner of Income tax vs Shaw Wallace and Company (L.R. 59 I.A. 206), and Commissioners o/Inland Revenue vs Fraser (24 Tax Cases 498) referred to.
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The Civil Appeal No. 33 of 1953 was filed by Pursa Ltd. against the Income Tax Department, contesting the tax liability on the sale of machinery and plant of their sugar factory. The Department had assessed the profit from the sale of the machinery and plant under section 10 (2) (vii) of the Indian Income Tax Act, 1939, which deals with depreciation of machinery and plant used in business. The High Court of Patna, however, held that the sale of the machinery and plant was a realization of assets on impending liquidation, rather than a part of the business carried on by the company. The High Court thus answered the first question in the negative, holding that the surplus from the sale of the machinery and plant was not chargeable under section 10 (2) (vii).
The second question concerned the profit from the sale of stores of the factory. The High Court held that this profit was not taxable under the Income Tax Act in the circumstances of the case. The Appeal was allowed by the Supreme Court and the respondent was directed to pay the costs of the appellants in this court and in the High Court. The Supreme Court, however, did not disturb the High Court's decision on the second question.
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ivil Appeal Nos.
2034 2036 of 1974.
From the Judgment and Order dated 1.10.1973 of the Gujarat High Court in Wealth Tax Reference No. 16 of 1971.
Dr. Gauri Shankar, Miss A. Subhashini for the Appellant.
Harish Salve and Mrs. A.K. Verma for the Respondent.
The following Judgments of the Court were delivered: PATHAK, CJ.
These appeals by certificate granted by the Gujarat High Court are directed against the judgment of the High Court disposing of three wealth tax References.
The three trust deeds were executed by Narottam Lalbhai for the benefit of the assessee, his wife and his children and grand children The deed dated March 19.
1955 created a trust known as the Arvind Narottam Trust.
The deed dated April 9, 1955 created a trust called the Arvind Family Trust.
And the deed dated March 18, 1961 created a trust described as the Arvind Kalyan Trust.
All the three trust deeds are couched in identical terms, except in regard to the minimum amounts payable to the beneficiaries out of the income of each year.
There was one further difference in detail.
The first two deeds.
specified a period of 18 years from the date of execution as the period during which the net income could be distributed to the assessee.
his wife and children, while the third specified a period of 30 years.
The minimum annual payments to be made under the three trust deeds to the assessee by way of maintenance were Rs. 250, Rs. 150 and Rs.250 respectively.
Under each of the trust deeds the settlor specified the interest of the beneficiaries in the trusts.
The pertinent terms of one of them, the Arvind Narottam Trust Deed. may be set forth here.
Clauses 7 and 8 of that Trust Deed provide: "7(a) Whatever income by way of interest or otherwise is received each year by the trustees from the trust fund should be first applied in meeting with the expenses of the PG NO 269 management of the trust and the payment of taxes thereof.
For a period of 18 years hereafter, the trustees may pay to Arvind or if Arvind gets married during the period to Arvind, his wife and children or to one or more of these persons, such portion of the net income remaining thereafter as the trustees deem fit.
However, the trustees shall pay to Arvind, or if Arvind gets married during the period to each Arvind and his wife, at least Rs.150 every year.
After such distribution, if there remains any surplus from the income of any year, it shall be added to the corpus of the fund.
if in any year the net income accuring to the fund is less than Rs.300 the whole amount should be paid to Arvind and if Arvind gets married during the period to Arvind and his wife in equal shares.
If Arvind expires during the period of 18 years hereafter or if Arvind gets married during the period and both Arvind and his wife expire, the whole of the net income of the trust fund should be added to the corpus for a period of 18 years hereafter.
(b) Whatever may be the corpus and the accumulated balance remaining undistributed out of the income of each year, shall be paid (as capital) at the end of 18 years hereafter to Arvind, his wife and his children or survivor or such of them in such proportion as the trustees deem fit.
If the trustees are not able to decide Upon the persons to whom or the proportion in which the said corpus and accumulated balance of income is to be distributed or it is not possible legally to give effect to the decision of trustees or it is illegal to do so, then the proportion in which the distribution will be made will be an equal share for each of the persons or survivors comprising of Arvind, his wife and his children.
If none of the said persons are alive at the time of distribution then the distribution will be made to Niranjan.
his wife and children or survivors.
all or such of them and in such proportion as the trustees deem fit.
If none of the said persons are alive at the time of distribution then the corpus and the balance of income will be given over by the trustees on such conditions as they deem fit as donation to the Gujarat University or any other educational institution or an institution giving medical aid or attending to, the health of public in general.
PG NO 270 8.
If the trustees so think fit the trustees are hereby 74 to distribute as capital even before the expiry of 18 years whatever property and income is at the particular time accumulated in the trust fund to Arvind, his wife and his children or survivor or such of them in such proportion as the trustees deem fit.
If the trustees are not able to decide upon the persons to whom or the proportion in which the said corpus and accumulated balance of income is to be distributed or it is not possible legally to give effect to the decision of trustees or it is illegal to do so, then the proportion in which the distribution will be made will be an equal share for each of the persons or survivors comprising of Arvind, his wife and his children.
If none of the said persons are alive, at the time of distribution then the distribution will be made to Niranjan, his wife and his children or survivors, all or such of them and in such proportion as the trustees deem fit.
If none of the said persons are alive at the time of distribution, then the corpus and the balance of income will be given over by the trustees on such conditions as they deem fit as donation to the Gujarat University or any other educational institution or an institution giving medical aid or attending to the health of public in general.
But if Arvind and his wife are the trustees at that time then they have no right to give vote in the above matter.
But if the other trustees unanimously agree to allow them to vote then they can.
" The Wealth Tax Officer made assessment orders for the assessment years 1963 63, 1963 64 and 1964 65 under the Wealth Tax Act, the relevant valuation dates being December 31, 1961, December 31, 1962 and December 31, 1963.
He assessed the assessee under sub section
(2) of section 21 of the Wealth Tax Act on the entire value of the assets held by the trusts.
On appeal the Appellate Assistant Commissioner confined the liability of the assessee to wealth tax on the capitalised value of the minimum amounts payable under the trust deeds for his maintenance.
that is to say say Rs.250, Rs.150 and Rs.250 respectively per year.
The Appellate Tribunal, on second appeal, affirmed the view taken by the Appellate Assistant Commissioner.
At the instance of the Revenue.
the three cases were carried in reference to the High Court for its opinion in each case on the following question,n of law: "Whether, on the facts and in the circumstances of the case, the finding that it is only the capitalised value of the interest of the assessee that has to be included in the net wealth of the assessee is in law justified?" PG NO 271 The High Court answered the question in each case in the affirmative, in favour of the assessee and against the Revenue.
And now these appeals.
Admittedly, on all relevant dates of these assessment years, the assessee was a bachelor, and was alone entitled therefor to the benefit of the three trusts.
It is accepted also that the trusts are discretionary trusts.
The controversy between the parties arises on the application of section 21 of the Wealth Tax Act.
Section 21, as it stood at the relevant time provided: "section 21.
Assessment when assets are held by courts of wards, administrators general, etc. (1) In the case of assets chargeable to tax under this Act, which are held by a court of wards or an administrator general or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise (including a trustee under a valid deed of wakf), the wealth tax shall be levied upon and recoverable from the court of wards, administrator genera1, official trustee, receiver, manager or trustee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf (or for whose benefit) the assets are held, and the provisions of this Act shall apply accordingly.
(2) Nothing contained in sub section
(1) shall prevent either the direct assessment of the person on whose behalf (or for whose benefit) the assets above referred to are held.
or the recovery from such person of the tax payable in respect of such assets.
(3) xx xx xx xx (4) Notwithstanding anything contained in (the foregoing provisions of) this section, where the shares of the persons on whose behalf or for whose benefit any such assets are PG NO 272 held are indeterminate or unKnown, the wealthtax shall be levied upon and recovered from the court of wards, administrator genera1, official trustee, receiver, manager, or other person aforesaid, (as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from an individual who is a citizen of India and resident in India) for the purpose of this Act.
The contention of Dr. V. Gauri Shankar on behalf of the Revenue is that the settlor had specifically made these three trusts for the benefit of his son, Arvind, the assesee, and has declared unequivocally that the settlement is for the benefit of the assessee, and on the asses see 's marriage, also for the benefit of his wife and children.
It is urged that the High Court has erred in failing to collect the real intention of the settlor from the entire document and has erroneously confined itself to paragraph 7 of the deed.
According to learned counsel, what the High Court should have done was to ascertain the state of affairs existing on the relevant valuation date.
It should not have been influenced by what could possibly happen in the indefinite future on the happening of certain contingencies.
The submission is that on the valuation dates there was only one beneficiary, the assessee, his share was determined and known, and it extended to the entire interest in the trust properties.
It is urged that in the case of a discretionary trust the interest of the beneficiary extends not only to the actual share paid to him but to his right to be considered as a potential recipient of the net income remaining after defraying the managment expenses and paying the taxes.
It extends, he says, to an interest in the Trust accumulation both before or after the expiry of the stipulated period when the Trustees are empowered to distribute the accumulated balance as capital.
Learned counsel urges that the whole deed of settlement in each case should be read and understood comprehensively and only thereupon can a true answer be returned to the question framed in the reference.
Considerable emphasis has been on the submission that the capital value of the contingent intereset in the entire property must be kept in view.
I have no difficulty in accepting the submission of Dr. Gauri Shankar that for a proper understanding of a case before us we must consider the entire deed of settlement.
That, however, does not lead to the conclusion which learned counsel wishes us to accept.
What is the interest of the assessee under the deed of settlement on the relevant valuation date? We are concerned with the capital value of that interest.
It is apparent that the assessee was entitled only to the minimum prescribed in each of the deeds of settlement.
Whether or not be received any further amount PG NO 273 out of the net income of the Trust Fund was left entirely in the discretion of the Trustees.
There was no right in the assessee to any portion of the net income in excess of the minimum guaranteed to him.
It is the minimum alone which he could claim as his property.
So also, on the distribution of the accumulated balance as capital at the end of the stipulated period there was no right in him to receive any part thereof.
It was open to the Trustees to ignore him altogether and they could pay it to such other members of the family as they chose.
In support of the proposition that the expression 'property ' is a term of the widest amplitude and that every possible interest is includible therein we are referred to Ahmed G.H. Ariff 'and Others vs Commissioner of Wealth Tax, Calcutta, I have no doubt that the expression 'property ' must bear a comprehensive import.
The question remains whether what is conveyed under the three deeds of settlement to the assessee is a right to anything more than the prescribed minimum under each deed.
I may reiterate that the interest extends to no more than that minimum.
It is contended on behalf of the Revenue that the fact that a beneficiary may change on the happening of certain contingencies will not make the share of the beneficiary un determined or unknown.
and reliance has been placed on Padmavati Jaykrishna Trust & Another vs Commissioner of Wealth Tax, Gujarat [l966] ; Commissioner of Wealth Tax, Bombay vs Trustees of Mrs. Hansbai Tribhuwandas Trust, [l968] ; Commissioner of Wealth Tax, A. P. vs Trustees of H.E.H. Nizam 's Family (Remainder Wealth) Trust.
and Commissioner of Wealth Tax, A.P. vs Trustees of H.E.H.
The Nizam 's Sahebzadi Anwar Begum Trust, These cases can be of no assistance to us, for, unlike the facts in each of those cases, the instant case is one where beyond the specified minimum the assessee was not entitled to anything more.
There must be a right, present or contingent, before it can be said that an assessee has an interest, and I am supported in this by what was said by the House of Lords in Gartside & Anr.
vs Inland Revenue Commissioners.
LR 1968 Appeal Cases 553 where it was also observed that a mere right to be considered for distribution of the income or of the corpus of the Trust Fund cannot be regarded as an `interest ' since it was not capable of valuation.
Dr. Gauri Shankar relies on Leedale (Inspector of Taxes) vs Lewis., [l982] 3 All E.R. 808.
But the decision in that case turned on the principle language of the English Statute, where an approximation of the value is permitted by the "just and reasonable" clause and by the words "as near as may be" in section 42(2) of the Finance Act.
PG NO 274 It is vehemently urged by Dr. Gauri Shankar that the approach to be adopted in this case is not that which finds favour under the Income tax law, and different considerations prevail under the Wealth Tax Act.
As I am proceeding on the basis of the true construction of the Deeds of Settlement, I fail to see any substance in that contention.
Reliance war also placed by learned counsel for the Revenue on McDowell and Co. Ltd. vs Commercial Tax Officer, That decision cannot advance the case of the Revenue because the language of the deeds of settlement is plain and admits of no ambiguity.
In the result I endorse the view taken by the High Court and dismiss these appeals with costs.
SABYASACHI MUKHARJI, J.
I agree with the judgment of the learned Chief Justice.
There is, however, one aspect of the matter on which some arguments were advanced at the time of hearing of this case, to which I would like to advert.
Dr. V. Gauri Shankar appearing on behalf of the revenue made an appeal before us stating that we should really construe the three Trust Deeds together and see 'the game of the hidden purpose ' behind these Trust Deeds which were, in fact, for the sole and exclusive benefit of the assessee.
He drew our attention to the observations of Justice Chinnappa Reddy, with which other learned Judges of the Full Bench agreed in McDowell & Co. Ltd. vs Commercial Tax Officer, He invited us to hold that having regard to the taxing Statute the tax avoidance device should be exposed.
Justice Chinnappa Reddy has noticed the change in judicial attitude to the tax avoidance devices.
Justice Reddy mentioned that in the country of its birth the principles of Westminister of condoning tax avoidance have been given a decent burial.
In that very country the phrase 'taxavoidance ' is no longer condoned or looked upon with sympathy.
It is true that tax avoidance in an under developed developing economy should not be encouraged on practical as well as ideological grounds.
One would wish, as noted by Reddy, J. that one could get the enthusiasm of Justice Holmes that taxes are the price of civilization and one would like to pay that price to buy civilization.
But the question which many ordinary tax payers very often in a country of shortages with ostentious consumption and PG NO 275 deprivation for the large masses ask, is does he with taxes buy civilization or does he facilitate the wastes and ostentiousness of the few.
Unless wastes and ostentiousness in Government 's spendings are avoided or eschewed, no amount of moral sermons would change people 's attitude to tax avoidance.
In any event, however, where the true effect on the construction of the Deeds is clear, as in this case, the appeal to discourage tax avoidance is not a relevant consideration.
But since it was made it has to be noted and rejected.
With these observations I agree.
H.L.C. Appeals dismissed.
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The respondent who was entitled to minimum annual payments of specified amounts under the three trust deeds in question was assessed to tax under sub section
(2) of section 21 of the Wealth Tax Act, on the entire value of the assets held by the trusts.
On appeal, the Appellate Assistant Commissioner confined the liability of the assessee to wealth tax on the capitalised value of the minimum amounts payable under the trust deeds, and his decision was affirmed, on second appeal, by the Appellate Tribunal.
At the instance of the Revenue, the opinion of the High Court was sought on the question whether the finding that it was only the capitalised value of the interest of the assessee that had to be included in the net wealth of the assessee was 5justified.
The High Court answered the question in the affirmative, in favour of the assessee and against the Revenue.
Dismissing the appeals, HELD: A mere right to be considered for distribution of the income or of the corpus of the Trust Fund cannot be regarded as an 'interest ' since it is not capable of valuation.
There must be a right, present or contingent, before it can be said that an assessee has an interest.
The instant case is one where beyond the specified minimum the assessee was not entitled to anything more.
[273F GI Gartside & Anr.
vs Inland Revenue Commissioners, LR,[1968] Appeal Cases 553, relied on.
Padmavati Jaykrishna Trust & Another vs Commissioner of Wealth Tax, Gujarat, [1966] 61 I.T. R. 66; Commissioner of Wealth Tax Bombay vs Trustees of Mrs. Hansbai Tribhuwandas Trust, [l968] ; Commissioner of Wealth Tax, A. P. vs Trustees of H. E.H. PG NO 266 PG NO 267 Nizam 's Family (Remainder Wealth) Trust, ; Commissioner of Wealth tax A.P. vs Trustees of H.E.H.
The Nizam 's Sahabzadi Anwar Begum Trust, ; Leedale (Inspector of ' Taxes] vs Lewis, and McDowell and Co. Ltd. vs Commercial Tax Officer, , distinguished.
There is no doubt that the expression 'property ' must bear a comprehensive import.
The question remains whether what is conveyed under the three deeds of settlement to the assessee is a right to anything more than the prescribed minimum under each deed.
It is apparent that the assessee was entitled only to the minimum prescribed in each of the deeds of settlement.
Whether or not he received any further amount out of the net income of the Trust Fund was left entirely in the discretion of the Trustees.
There was no right in the assessee to any portion of the net income in excess of the minimum guaranteed to him.
It is the minimum alone which he could claim as his property.
So also, on the distribution of the accumulated balance as capital at the end of the stipulated period there was no right in him to receive any part thereof.
It was open to the Trustees to ignore him altogether and they could pay it to such other members of the family as they chose.
[272H; 273.A B] Ahmed G.H. Arriff and Others vs Commissioner of Wealth tax Calcutta referred to.
Per Suhyusuchi Mnkhurji.
On behalf of the Revenue an appeal was made before us that we should really construe the three Trust Deeds together and see 'the game of the hidden purpose ' behind these Trust Deeds which were.
in fact.
for the sole and exclusive benefit of the assessee.
It is true that tax avoidance an under developed developing economy should not be encouraged on practical as well as ideological grounds.
One would wish, that one could get the enthusiasm of Justice Holmes that taxes are the price of civilization and one would like to pay that price to buy civillzation.
But the question which many ordinary tax payers very often in a country of shortages with ostentious consumption and deprivation for the large masses ask, is does he with taxes buy civilization or does he facilitate the wastes and ostentiousness of the few.
Unless waste and ostentiousness in Government 's spendings are avoided or eschewed, no amount of moral sermons would change people 's attitude to tax avoidance.
In any event, however, where the true effect on the construction of the Deeds is clear, as in this case, the appeal to discourage tax avoidance is not a relevant consideration.
[274E H; 275A C] PG NO 268 McDowell & Company Limited vs Commercial Tax Office, [l985] referred to.
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Here is a two-paragraph summary of the court case:
The Gujarat High Court referred three wealth tax cases to the Supreme Court for its opinion on whether the assessee, Dr. Gauri Shankar, was liable to pay wealth tax on the entire value of the assets held by three trusts created for his benefit, his wife, and his children. The trusts were executed by Narottam Lalbhai and provided for the distribution of income and corpus to the beneficiaries. The Wealth Tax Officer had assessed the assessee under section 21(2) of the Wealth Tax Act, but the Appellate Assistant Commissioner and the Appellate Tribunal held that the liability of the assessee was confined to the capitalised value of the minimum amounts payable under the trust deeds for his maintenance.
The Supreme Court, in its judgment, held that the interest of the assessee under the deed of settlement on the relevant valuation date was limited to the minimum prescribed in each of the deeds of settlement, and he had no right to any portion of the net income in excess of that minimum. The Court also rejected the Revenue's contentions that the fact that a beneficiary may change on the happening of certain contingencies would not make the share of the beneficiary undetermined or unknown. The Court ultimately dismissed the appeals, upholding the High Court's decision that the assessee's liability was confined to the capitalised value of the minimum amounts payable under the trust deeds.
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ivil Appeal No. 943 Of 1986.
From the Judgment and Order dated 4th July, 1985 of the Appellate Tribunal in Appeal No. 244 of 1985 D. L.M. Singhvi and K.K. Bhaduri for the appellant.
A Subba Rao and Ms. section Relan for the Respondent.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
This appeal is directed against a judgment of the Customs, Excise and Gold Control Appellate Tribunal in regard to the manner and sequence in which certain notifications under Rule 8 Sub rule (1) of the Central Excise Rules granting exemptions from duty have to be worked out.
By a notification dated August 1974 the Central Government, in exercise of its powers under subrule(1) of Rule 8 of the Central Excise Rules exempted.
"Tyres for motor vehicles failing under sub item(1) of Item No. 16 of the First Schedule to the Central Excise and Salt Act, 1944(1 of 1944) from so much of the duty of excise leviable thereon as is in excess of fifty five per cent Ad valorem".
200 Thereafter on June 16, 1977 another notification was issued in the following terms: "In exercise of the powers conferred by sub rule (1) of Rule 8 of the Central Excise Rules, 1944 the Central Government hereby exempts all excisable goods (hereinafter referred to as the "said goods") on which the duty of excise is leviable and in the manufac ture of which any goods falling under Item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944) (hereinafter referred to as the inputs) have been used, from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs.
Notification No. 205/77 dated 28.9.77, subject to the condi tions that the manufacturer furnishes to the proper Officer a statement showing the quanti ty of the inputs used in the manufacture of every unit of the said goods.
Provided that where the duty of excise levi able on the said goods is less than the amount of duty of excise paid on the inputs the extent of exemption shall be restricted to the duty of excise on the said goods." A Further notification was issued on July 14, 1978 and this was in the following terms: "In exercise of the powers conferred by sub rule(1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts tyres and tubes excluding flaps failing under Item No. 16(1) and 18(3) of the First Schedule to the (1 of 1944) (hereinafter referred to as the specified goods) from so much of the duty of excise leviable thereon (read with any rele vant notification issued under the said sub rule(1) of rule 8 and in force for the time being) as is in excess of (a) eighty seven and a half per cent, of such duty, if produced in any factory which com menced production of the specified goods for the first time earlier than the 1st day of April 1976: and (b) Seventy five per cent of such duty, if produced in any factory which commenced pro duction of the specified 201 goods for the first time on or after the 1st day of April, 1976, subject to the conditions that: There is no controversy regarding evaluation According to the assessee as well as the department effect has first to be given to the notification dated August 1, 1974 and the duty calculated in terms of that notification.
There is also no controversy at this stage.
The controversy begining thereafter.
According to the dapartment, thereafter, effect has to be given first to the notification dated June 16, 1977 and then to the notification dated July 14, 1978 where as according to the assessee effect has to be given, in the first instance, to the notification dated July 14, 1978 and then to the notification dated 16, 1977.
The Department 's contention was accepted by the Tribunal.
In this appeal, Dr. L.M. Singhvi, learned counsel for the appellant argued that on principle the effective duty has to be first determina tion by applying the notification dated July 14, 1978 first and the duty paid on the inputs should be set off under the notification dated June 16, 1977 against the duty determined as payable after applying the notification dated July 14, 1978.
In support of his argument, the learned counsel relied upon a recent judgment of this court in Assistant Collector of Central Excise v, Madras Rubber Factory limited, Civil Appeal No. 3195 of 1979 etc.
We are afraid that in the face of the language of the notifications, it is not possible to agree with the submission of Dr. Singhvi.
We have already extracted the notification dated June 16, 1977 and July 14, 1978.
The notification dated July 14, 1978, it is to be noticed, has super added the words "read with any relevant notification issued under the said sub rule(1) of Rule 8 and in force for the time being." These super added words show conclusively that the notification dealing with exemption to the extent of the duty paid on the inputs, which was already in force, had to be given effect before giving effect to the notification dated July 14, 1978.
This was the submission of Shri A. Subba Rao, learned counsel for the department and it is difficult to see any escape from it.
The case upon which reliance was placed by Dr. Singhvi does not appear to have any relevance to the question at issue.
There, the court was concerned with the determination of the assessable value and not with the present question relating to the order of priority in which the notifications granting 202 exemption from duty had to be applied.
There, what the court decided was that Excise Duty cannot be computed without proper determination of the assessable value namely assessa ble value exclusive of permissible deductions.
That princi ple cannot come in aid of the question involved in this appeal.
The learned counsel also argued that to give effect first to the notification dealing with exemption to the extent of the duty paid on inputs and thereafter to the notification dated July 14, 1978 would mean that the asses see would not be getting full credit for the entire duty paid on the inputs but only to a percentage of it and that there would, therefore, be double taxation atleast to that extent.
There is no general principle that there can be no 'double taxation ' in the levy of Excise Duty.
The court may lean in favour of a construction which will avoid double taxation but in the present case there does not appear to be any lean question of construction at all.
On the language of the notification dated July 14, 1978 only one result can follow.
That is the view taken by the Tribunal in the order under appeal.
We agree with that view of the matter.
The appeal is dismissed with costs.
P.S.S. Appeal dismissed.
|
By a notification dated August 1, 1974 the Central Government in exercise of its powers under sub rule(1) of Rule 8 of the Central Excise Rules, exempted automobile tyres from excise duty leviable thereon as was in excess of fifty five per cent ad valorem.
Another notification issued on June 16, 1977 exempted all excisable goods from duty to the extent of the duty already paid on the inputs.
A further notification dated July 14, 1978 exempted tyres and tubes from so much of the duty leviable thereon (read with any relevant notification issued under the said subrule(1) of Rule 8 in force for the time being) as was in excess of eightyseven and a half per cent of such duty if produced in any factory which commenced production for the first time earlier than the 1st day of April 1976, and seventy five per cent of such duty if produced in any factory which commenced production for the first time on or after the 1st day of April, 1976.
A dispute arosse in respect of the latter two notifica tion as to which of them was first to be given effect to.
The Tribunal accepted the Department 's contention that effect had to be given in the first instance to the notifi cation dated June 16, 1977, and then to the notification dated July 14, 1978.
In this appeal, it was contended for the appellant that to give effect to the second notification and thereafter to the third notification would mean that the assessee would not be getting full credit for the entire duty paid on the inputs but only a percentage of it and that there would, therefore, be double taxation at least to that extent.
Dismissing the appeal, the Court, 199 HELD: 1.
The Tribunal was right in taking the view that effect had to be given first to the notification dated June 16, 1977 and then to the notification dated July 14, 1978.
The words "read with any relevant notification issued under the said sub rule (1) of Rule 8 in force for the time being" super added by the latter notification show conclusively that the earlier notification dealing with exemption to the extent of the duty paid on the inputs which was already in force had first to be given effect to.
[201E G] Assistant Collector of Central Excise vs Madras Rubber Factory Limited, Civil Appeal No. 3195 of 1979, distin guished.
There is no general principle that there can be no 'double taxation ' in the levy of excise duty.
The Court may lean in favour of a construction which will avoid double taxation, but in the instant case there does not appear to be any lean question of construction at all.
[202B C]
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Here's a two-paragraph summary of the legal case:
This civil appeal (No. 943 of 1986) is directed against the judgment of the Customs, Excise and Gold Control Appellate Tribunal regarding the sequence of notifications under Rule 8 Sub-rule (1) of the Central Excise Rules granting exemptions from duty. The dispute arises from three notifications issued by the Central Government between 1974 and 1978, which exempted certain excisable goods from duty. The controversy centers around the order of priority in which these notifications should be applied.
The Appellant, represented by Dr. L.M. Singhvi, argued that effect should be given to the notification dated July 14, 1978, first, and then to the notification dated June 16, 1977. However, the Tribunal accepted the Department's contention that effect should be given to the notification dated June 16, 1977, first, and then to the notification dated July 14, 1978. The Supreme Court agreed with the Tribunal's view, holding that the notification dealing with exemption to the extent of the duty paid on inputs, which was already in force, had to be given effect before giving effect to the notification dated July 14, 1978. The appeal was dismissed with costs.
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Civil Appeal Nos.
1584 1588 of 1973.
Appeals by Special Leave from the Judgment and Order dated 6th August, 1973 of the Madras High Court in Writ Appeal Nos.
13 to 17 of 1973.
AND 158 Writ Petition Nos.
357 of 1979 and 4367 of 1978.
(Under Article 32 of the Constitution) K. Parasaran, Soli.
General, N. Nettar and Miss A. Subhashini for the Appellants in all appeals.
T.S. Krishnamurthy Iyer, H. B. Dattar, A. K.Srivastava and T. P. Sunderarajan for the Petitioners in WPs.
4367 of 1978 & 357 of 1979.
T.S. Krishnamurthy Iyer, Vineet Kumar and A.K. Srivastava for the Respondents.
The Judgment of the Court was delivered by PATHAK, J.
These appeals, by special leave, raise the question whether the respondents are entitled to claim fixation of their seniority in the Subordinate Accounts Service after taking into account their length of service as Upper Division Clerks.
The respondents entered service in the Office of the Accountant General, Tamil Nadu as Upper Division Clerks.
They appeared in the Subordinate Accounts Service Examination but it was only after a number of attempts that they succeeded in passing.
They passed the examination held in November, 1969 and were promoted shortly thereafter.
They claimed seniority on the basis that their length of service in the inferior post should be taken into account, and rested their claim on paragraph 143 of the Manual of Standing Orders issued by the Comptroller and Auditor General as it stood before its amendment by a correction slip of 27th July, 1956.
The correction slip removed the factor of weightage on the basis of length of service in the determination of seniority.
The claim was rejected by the Comptroller and Auditor General.
A writ petition filed by them in the High Court of Madras was allowed by a learned Single Judge, and his judgment was affirmed by an appellate Bench, of the High Court.
Against the judgment of the appellate Bench, the Accountant General, Tamil Nadu and the Comptroller and Auditor General have appealed to this Court, and those appeals are pending as Civil Appeals Nos. 1584 to 1588 of 1973.
During the pendency of those appeals the President enacted the Indian Audit and Accounts Department (Subordinate Accounts Service & Subordinate Railway Audit Service) Service Rules, 1974 (referred to hereinafter as "the Rules of 1974").
The Rules of 1974 purport to give statutory recognition to the amendment of paragraph 143 by the Comptroller and Auditor General.
The validity of the Rules of 1974 and the amendment made in paragraph 143 are assailed by the respondents in the instant appeals.
159 The Rules of 1974 have been enacted by the President.
They are deemed to have come into force on 27th July, 1956, which has been defined, for the purposes of the Rules as the "appointed day".
The Subordinate Accounts Service (the "Service") includes members appointed to it before the appointed day as well as persons recruited to it in or before that day.
Rule 5 provides that recruitment shall be made by direct recruitment in accordance with, the orders or directions issued by the Comptroller and Auditor General from time to time and also by promotion.
Rule 6 provides: "6.
Appointments: Appointments to the Service shall be made from the list prepared in accordance with the orders and instructions issued by the Comptroller and Auditor General from time to time and applicable at the time of appointment to the Service.
" Rule 7 deals with seniority, and declares: "7.
Seniority: (1) The seniority inter se of the persons appointed to the service before the appointed day shall be regulated by the orders or instructions issued by the Comptroller and Auditor General as were in force at the relevant time before such day.
(2) The seniority inter se of the persons appointed to the Service on or after the appointed day shall be in the order in which the appointments are made to the service in accordance with rule 6.
Provided that a direct recruit shall on appointment to the Service rank senior to all officiating persons in the service (excluding a direct recruit) passing in the same departmental examination or subsequent departmental examinations.
Provided further that the seniority of a person who had declined the appointment to the Service but who is subsequently appointed to the Service shall be determined with reference to the date on which he assumed charge of the post in the cadre.
" By virtue of Rule 9, in matters not specifically provided for in the Rules, every person appointed to the Service is governed by the rules, regulations, orders or instructions made or issued in respect of the Central Civil Services as applicable to the Indian Audit and Accounts 160 Department.
Rule 10 empowers the Comptroller and Auditor General to issue, from time to time, such general or special instructions or orders as he may consider necessary or expedient for the purpose of giving, effect to the Rules.
The respondents have raised two contentions.
The first is that the Rules are invalid as clause (5) of article 148 to which alone, it is said, they must be ascribed, does not permit the retrospective enactment of rules made thereunder.
The other contention is that the specific rules affecting the seniority of the respondents are in valid be cause in entrusting power to the Comptroller and Auditor General to issue orders and instructions in his discretion the doctrine against excessive delegation of legislative power has been violated Taking the first contention first, it may be noted that the Rules of 1974 purport, according to the recital in the Notification dated 4th November, 1974 publishing them, to have been made by the President "in exercise of the powers conferred by the proviso to article 309 and clause (5) of article 148 of the Constitution and after consultation with the Comptroller and Auditor General of India".
The respondents say that the only provision of the Constitution under which those Rules could be made is clause (5) of article 148, and we should ignore reference to the proviso to article 309.
If that is done, they urge, there will be no justification for holding that the Rules of 1974 can be given retrospective operation.
Unlike the proviso to article 309, it is pointed out, clause (5) of article 148 does not permit the enactment of retrospectively operating rules.
We think that the respondents are right.
Article 309 provides for legislation by the appropriate Legislature to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or of any State, and the proviso to article 309 declares that until such legislation is enacted by the appropriate Legislature the President is empowered in the case of services and posts in connection with the affairs of the Union, and the Governor of a State in the case of services and posts in connection with the affairs of a State, to make rules regulating the recruitment and the conditions of service of persons appointed to such services and posts.
There is a clear dichotomy in the power conferred by article 309, a division of power between the Parliament or President, as the case may be, on the one side and the State Legislature or Governor on the other.
The division is marked by the circumstance that under Art 309, services and posts in connection with the affairs of the Union are dealt with by a separate authority from the services and 161 posts in connection with the affairs of a State.
That dichotomy it seems, is not possible in the power employed for appointing persons in the Indian Audit and Accounts Department and for prescribing their conditions of service.
The Comptroller and Auditor General of India, who is the head of that department, is a constitutional functionary holding a special position under the Constitution.
Under article 149, he performs duties and exercises powers in relation to the accounts of the Union and also of the States.
Clause (1) of article 151 requires him to submit a report relating to the accounts of the Union to the President, who causes them to be laid before each House of Parliament.
Likewise, clause (2) of article 151 requires him to submit a report relating to the accounts of a State to the Governor of the State, who causes them to be laid before the Legislature of the State.
It cannot be said, in the circumstances, that the persons serving in the Indian Audit and Accounts Department are holding office in connection with the affairs of the Union exclusively.
It may be pointed out that when the Constitutional Adviser prepared the Draft Constitution for consideration by the Constituent Assembly the document contained separate provisions for the appointment of the Auditor General of the Federation and Auditors General for the Provinces.
The Auditor General for the Federation was to be appointed by the President and his functions extended to the accounts of the Federation as well as of the Provinces.
But it was open to a Provincial Legislature to provide by law for the appointment of an Auditor General for the Province and the appointment to that office was to be made by the Governor.
The Expert Committee on the financial provisions of the Union Constitution favoured the continuance of a single Auditor General for the Government of India as well as for the Provincial Governments and hoped that the Provincial Governments would refrain from using their power of appointing separate Auditors General of their own.
When the matter came before the Drafting Committee, it decided that the persons performing the functions of the Auditor General in a State should be designated Auditor in Chief in order to distinguish him from the Auditor General of India, and that the salaries and allowances of the staff of these officers should be fixed by the Auditor General of India and the Auditor in Chief in consultation with the President and the Governor respectively.
Thereafter, the Drafting Committee reconsidered the desirability of permitting a multiplicity of audit authorities, one for the Union and one for each State.
On 1st August, 1949 Shri T.T. Krishnamachari moved an amendment deleting the draft articles enabling the State Legislatures to create their own Auditors in Chief.
He pointed out that since the Constituent Assembly had already adopted articles whereby the auditing and accounting would become "one institution, so to say, under the authority of the 162 Comptroller and Auditor General", it was not necessary to have separate provision for the States.
Accordingly, he proposed the addition of a new article now clause (2) of article 151] about the Comptroller and Auditor General, requiring him to submit the reports of the accounts of a State to the Governor for being laid before the State Legislature.
These amendments were adopted by the Constituent Assembly.
It is evident that the authority vested in the Comptroller and Auditor General ranges over functions associated with the affairs of the Union as well as over functions associated with the affairs of the States.
It is a single office, and the Indian Audit and Accounts Department, which it heads, is a single department.
They cannot be said to be concerned with the affairs of the Union exclusively.
Consequently, the regulation of the recruitment and conditions of service of persons serving in the Indian Audit and Accounts Department cannot be regarded as a matter falling with the domain of the President within the terms of the proviso to article 309.
A special provision was necessary to entrust the President with that power, and that provision is clause (5) of Art, 148.
The power contained in clause (5) of article 148 is not related to the power under the proviso to article 309.
The two powers are separate and distinct from each other and are not complementary to one another.
In our opinion, the reference to the proviso under article 309 in the recital of the Notification publishing the Rules of 1974 is meaningless and must be ignored.
The next question is whether clause (5) of article 148 permits the enactment of rules having retrospective operation.
It is settled law that unless a statute conferring the power to make rules provides for the making of rules with retrospective operation, the rules made pursuant to that power can have prospective operation only.
An exception, however, is the proviso to article 309.
In B. section Vadera vs Union of India & Ors.
this Court held that the rules framed under the proviso to article 309 of the Constitution could have retrospective operation.
The conclusion followed from the circumstance that the power conferred under the porviso to article 309 was intended to fill a hiatus that is to say, until Parliament or a State Legislature enacted a law on the subject matter of article 309.
The rules framed under the proviso to article 309 were transient in character and were to do duty only until legislation was enacted.
As interim substitutes for such legislation it was clearly intended that the rules should have the same range of operation as an Act 163 of Parliament or of the State Legislature.
The intent was reinforced by the declaration in the proviso to article 309 that "any rules so made shall have effect subject to the provisions of any such Act".
Those features are absent in clause (5) of article 148.
There is nothing in the language of that clause to indicate that the rules framed therein were intended to serve until Parliamentary legislation was enacted.
All that the clause says is that the rules framed would be subject to the provisions of the Constitution and of any law made by Parliament.
We are satisfied that clause (5) of article 148 confers power on the President to frame rules operating prospectively only.
Clearly then.
the rules of 1974 cannot have retrospective operation, and therefore sub rule (2) of rule 1, which declares that they will be deemed to have come into force on 27th July, 1956 must be held ultra vires.
If the Rules of 1974 do not cover the case of the respondents then admittedly the only question which remains in regard to them is whether the amendment intended by the Comptroller and Auditor General in 1956 to paragraph 143 of the Manual of Standing Orders results in amending that paragraph.
The amendment is in the form of a correction slip which, it is not disputed, possesses the status of an administrative instruction.
The contention on behalf of the respondents is that paragraph 143 possesses the status of a statutory rule and, therefore, the amendment attempted by the correction slip has no legal effect on it.
The High Court held that paragraph 143 was a statutory rule and it proceeded to hold so on the basis of affidavits filed before it.
But the matter has been more carefully researched since, and the relevant material is now set out in the special leave petition, which has given rise to this appeal.
It appears that in 1921 the Auditor General, as the administrative head of the Indian Audit Department, inserted article 1666A by a circular No. 1757 E/1129 dated 18th April, 1921 giving weight to the length of service in the fixation of seniority.
In the Audit Code prepared subsequently, Art, 1666A appeared as article 52.
Thereafter, in the Manual of Standing Orders issued by the Auditor General in 1938, article 52 found expression as paragraph 143.
The provision never acquired statutory force under the Government of India Act, 1919.
Learned counsel for the respondents urges that it acquired statutory force under sub section
(2) of section 252.
Government of India Act, 1935.
Sub sections
(1) and (2) of section 252 provide: "252.
(1) All persons who immediately before the commencement of Part III of this Act were members of the staff of the High Commissioner for India, or members of the staff of the Auditor of the accounts of the Secretary 164 of State in Council, shall continue to be, or shall become, members of the staff of the High Commissioner for India or, as the case may be, of the Auditor of Indian Home Accounts.
(2) All such persons aforesaid shall hold their offices or posts subject to like conditions of service as to remuneration, pensions or otherwise, as therefore, or not less favourable conditions, and shall be entitled to reckon for purposes of pension any service which they would have been, entitled to reckon if this Act had not been passed.
* * * * *" Sub section
(2) of section 252 does not help the respondents.
Firstly, the guarantee conferred by it covered those persons who held offices or posts on the staff of the Auditor of the accounts of the Secretary of State in Council and on the staff of the Indian Home Accounts immediately before the commencement of Part III of the Act.
The respondents are clearly not such persons.
Secondly, even if it be assumed that the benefit of sub section
(2) can be extended to the respondents, sub section
(2) merely protects the conditions of service enjoyed by them as they existed before.
The sub section does not enlarge or improve on the quality of those conditions of service.
If seniority was determined by a departmental instruction, sub section
(2) did not give that provision the higher status of a statutory rule.
It remained what it always was, a departmental instruction.
We were also referred to article 313 of the Constitution, but that provision also does not result in converting a departmental instruction into a statutory rule.
Plainly, paragraph 143 in the Manual of Standing Orders remained throughout a departmental instruction and, therefore, could be amended by the departmental instruction contained in the correction slip issued by the Comptroller and Auditor General in 1956.
On that conclusion being reached, the claim of the respondents must fail.
The appeals have to be allowed.
In the connected writ petition No. 357 of 1979 there are 15 petitioners.
The first ten passed the Subordinate Accounts Service Examination and were promoted to the service after 1956 and before the enactment of the Rules of 1974.
They will be governed by the legal position enunciated in the aforesaid appeals.
The eleventh, twelfth and thirteenth petitioners passed the examination immediately before the enactment of the Rules of 1974 but were promoted after the Rules were enacted.
The remaining petitioners appeared at the examination and were promoted after the enactment of the Rules.
In the case of the last two categories the Rules of 165 1974 will apply.
Having regard to the provision determining the fixation of seniority under the Rules of 1974 and the position obtaining thereafter, none of the petitioners can claim the benefit of weigtage on the basis of length of service.
But these petitioners rely on the second of the two contentions concerning the validity of the Rules of 1974.
They assail specifically the validity of Rule 7(2) which provides for fixation of seniority.
The argument is that the fixation of seniority has been made by Rule 7(2) to depend on the order in which appointments to the service are made under Rule 6, and that, it is pointed out, depends on an arbitrary power conferred on the Comptroller and Auditor General to pass orders and instructions.
We see no force in the contention.
The Comptroller and Auditor General is a high ranking constitutional authority, and can be expected to act according to the needs of the service and without arbitrariness.
He is the constitutional head of one of the most important departments of the State, and is expected to know what the department requires and how best to fulfil those requirements.
We are unable to hold that the power conferred on him under the Rules violates the principle against excessive delegation.
The writ petition No. 4367 of 1978 must also be treated on the basis that the petitioners are not, in the fixation of their seniority, entitled to weightage with reference to their length of service.
Both writ petitions must, therefore, be dismissed.
Civil Appeals Nos.
1584 1588 of 1973 are allowed, the judgment and order of the Madras High Court is set aside and the writ petition is dismissed.
Writ Petition Nos.
357 of 1979 and 4367 of 1978 are also dismissed.
In the circumstances, there is no order as to costs.
N.V.K. Appeals allowed and Petitions dismissed.
|
In 1921 the Auditor General, as the administrative head of the Indian Audit Department, inserted Article 1666A by a circular No. 1757 E/1129 dated 18th April 1921 giving weight to the length of service as Upper Division Clerks in the fixation of seniority in the Subordinate Accounts Service.
In the Audit Code prepared subsequently, Article 1666A appeared as Article 52.
Thereafter, in the Manual of Standing Orders issued by the Auditor General in 1938, Article 52 found expression as paragraph 143.
By a correction slip dated 27th July, 1956, the Comptroller and Auditor General removed the factor of weightage on the basis of length of service in the determination of seniority.
The respondents in the appeals, who had entered service in the Office of the Accountant General, as Upper Division Clerks, appeared in the Subordinate Accounts Service Examination and passed the examination held in November 1969, and were promoted shortly thereafter.
They claimed seniority on the basis that their length of service in the inferior post should be taken into account, and rested their claim on paragraph 143 of the Manual of Standing Orders as it stood prior to its amendment by the correction slip of 27th July 1956.
The claim was rejected by the Comptroller and Auditor General A writ petition filed by them in the High Court was allowed by a Single Judge and the judgment was affirmed by the Appellate Bench of the High Court.
The Accountant General and the Comptroller and Auditor General appealed to this Court.
During the pendency of the appeals, the President enacted 156 the Indian Audit and Accounts Department (Subordinate Accounts Service & Subordinate Railway Audit Service) Service Rules, 1974.
They were deemed to have come into force on 27th July, 1956.
These rules purported to give statutory recognition to the amendment of paragraph 143 by the Comptroller and Auditor General.
Rule 6 provided for appointments to the service and Rule 7 dealt with seniority.
Rule 9 provided that in matters not specifically provided for the rules, regulations, orders or instructions of the Central Civil Services as applicable to the Indian Audit and Accounts Department would be applicable.
Rule 10 empowered the Comptroller and Auditor General to issue general or special instructions for giving effect to the Rules.
In the appeals, the respondents assailed the validity of the Rules of 1974 and the amendment made in paragraph 143, contending that the Rules are invalid as clause (5) of Article 148 does not permit the retrospective enactment of rules made thereunder, that the specific rules affecting the seniority of the respondents are invalid because in entrusting power to the Comptroller and Auditor General to issue orders and instructions in his discretion the doctrine against excessive delegation of legislative power has been violated, and that paragraph 143 possesses the status of a statutory rule and, therefore, the amendment attempted by the correction slip has no legal effect upon it.
In the connected writ petitions, the petitioners who had passed the Subordinate Accounts Service Examination were promoted to the Service after 1956 some before the enactment of the Rules of 1974 and some thereafter.
It was contended on their behalf that the fixation of seniority having been made by Rule 7(2) to depend on the order in which appointments to the service were made under Rule 6 depends on an arbitrary power conferred on the Comptroller and Auditor General to pass orders and instructions.
On the question whether the respondents are entitled to claim fixation of their seniority in the Subordinate Accounts Service after taking into account their length of service as Upper Division Clerks.
Allowing the appeals and dismissing the writ petitions, ^ HELD: 1.
There is nothing in the language of clause (5) of Article 148, to indicate that the rules framed therein were intended to serve until Parliamentary legislation was enacted.
All that the clause says is that the rules framed would be subject to the provisions of the Constitution and of any law made by Parliament.
Clause (5) of Article 148 confers power on the President to frame rules operating prospectively only.
The rules of 1974 cannot have retrospective operation.
Sub rule (2) of rule 1, which declares that they will be deemed to have come into force on 27th July, 1956 is therefore ultra vires.
[163B C] B.S. Vadera vs Union of India & Ors.
[1968] 3 S.C.R. 575 referred to. 2.
The Comptroller and Auditor General is a high ranking constitutional authority, and can be expected to act according to the needs of the service and without arbitrariness.
He is the constitutional head of one of the most important departments of the State, and is expected to know what the depart 157 ment requires and how best to fulfil those requirements.
The power conferred on him under the Rules does not violate the principle against excessive delegation.
[165C D] 3.
Paragraph 143 in the Manual of Standing Orders remained throughout a departmental instruction and, therefore, could be amended by the departmental instruction contained in the correction slip issued by the Comptroller and Auditor General in 1956.
[164F] 4.
There is a clear dichotomy in the power conferred by Article 309, a division of power between the Parliament or President, as the case may be, on the one side and the State Legislature or Governor on the other.
The division is marked by the circumstance that under Article 309 services and posts in connection with the affairs of the Union are dealt with by a separate authority from the services and posts in connection with the affairs of a State.
That dichotomy is not possible in the power employed for appointing persons in the Indian Audit and Accounts Department and for prescribing their conditions of service.
[160H 161A] 5.
The authority vested in the Comptroller and Auditor General ranges over functions associated with the affairs of the States.
It is a single office, and the Indian Audit and Accounts Department, which it heads, is a single department.
They cannot be said to be concerned with the affairs of the Union exclusively.
Consequently, the regulation of the recruitment and conditions of service of persons serving in the Indian Audit and Accounts Department cannot be regarded as a matter falling within the domain of the President within the terms of the proviso to Article 309.
[162 C] B. Shiva Rao, "The Framing of India 's Constitution: A Study" [1968] Chap.
12, pp.
414 417 referred to.
It cannot be said that persons serving in the Indian Audit and Accounts Department are holding office in connection with the affairs of the Union exclusively.
[161 C] 7.
The power contained in clause (5) of Article 148 is not related to the power under the proviso to Article 309.
The two powers are separate and distinct from each other and are not complementary to one another.
The reference to the proviso under Article 309 in the recital of the Notification publishing the Rules of 1974 is meaningless and must be ignored.
[162D E] 8.
Having regard to the provision determining the fixation of seniority under the Rules of 1974 and the position obtaining thereafter, none of the petitioners in the writ petitions can claim the benefit of weightage on the basis of length of service.
[165A]
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Here is a 2-paragraph summary of the court case:
The court case involves the validity of the Seniority Rules 1974, which regulate the seniority of employees in the Indian Audit and Accounts Department. The rules were enacted by the President under clause (5) of article 148 of the Constitution, which allows the President to make rules for the regulation of recruitment and conditions of service of persons serving in the Indian Audit and Accounts Department. However, the court held that the rules cannot have retrospective operation, as clause (5) of article 148 only permits the framing of rules with prospective effect. The court also held that the amendment made to paragraph 143 of the Manual of Standing Orders in 1956 by the Comptroller and Auditor General is valid, as paragraph 143 is a departmental instruction that can be amended by a departmental instruction.
The court's decision affects the seniority claims of several employees who were promoted to the Subordinate Accounts Service after 1956. The court held that the rules of seniority under the Seniority Rules 1974 will apply to employees who were promoted after the rules came into effect, and those employees will not be entitled to weightage on the basis of their length of service. The court also rejected the contention that the power conferred on the Comptroller and Auditor General to determine seniority is arbitrary, as the Comptroller and Auditor General is a high-ranking constitutional authority who can be expected to act in the best interests of the service. The court therefore dismissed the writ petitions filed by the employees, allowing the appeals filed by the respondents.
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Appeal No.396 of 1957.
Appeal from the Judgment and Order dated the 21st February, 1956, of the Bombay High Court in Income tax Reference No. 32 of 1954.
, R. J. Kolah, J. B. Dadachanji and section N. Andley, for the appellants.
K. N. Rajagopal Sastri and D. Gupta, for the respondent.
May 5.
The Judgment of the Court was delivered by DAS, C. J.
This is an appeal brought on a certificate granted on September 19, 1956, by the High Court of Bombay under section 66(A)(2) of the Indian Income Tax Act (hereinafter referred to as " the said Act ") against its order dated February 21, 1956, in Income tax Reference No. 32 of 1954 answering in the negative two questions of law referred to it under section 66(1) of the said Act at the instance of the appellants.
The appellants are the trustees of a charity fund known as " The Charity Fund Founded by Sir Sassoon David, Baronet of Bombay ".
The said Sir Sassoon David, Bart.
and four other persons, who were holding certain securities of the value of Rs. 24,25,000 for the purpose of charity and had been applying the same for and towards charitable purposes, executed, on June 8, 1922, a Deed of Declaration of Trust declaring that the said trust fund would be held by them on trusts more specifically therein mentioned.
Clause 13 of the said deed, on the true construction of which depends the answer to the referred questions, runs as follows: " 13.
The Trust Fund shall be held by the Trustees upon the Trusts to apply the net income thereof 926 after providing for all necessary expenses in relation to the management of the Trust Funds for all or any of the following purposes, that is to say, (a) the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and clothes and/or lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or. . (b) the institution maintenance and support of hospitals and schools, colleges or other educational institutions or. . . (c) the relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other such calamity or. . . . . (d) the care and protection of animals useful to mankind or. . . (e) the advancement of religion or. . . . (f) other purposes beneficial to the community not falling under any of the foregoing purposes. . . . Provided always that in applying the income as aforesaid the Trustees shall give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart., including therein distant and collateral relations; provided further that in the application of the income of the said Charitable Trust Fund the said Trustees for the time being shall observe the following proportions, viz.: that not less than half the income of the said funds shall at all times be applied for the benefit of the members of the Jewish Community of Bombay only (including the relations of Sir Sassoon David, Bart.
as aforesaid) and Jewish objects and particularly in giving donations to the members of the Jewish Community of Bombay on the anniversary of the death of the said Sir Sassoon David, Bart.
and his wife Lady Hannah David which falls on the Twenty second day of June and the remaining income for the benefit of all persons and objects including Jewish persons and objects and in 927 such proportions as the said Trustees may think proper.
Provided further that if the income of the Trust Funds for any year shall not be wholly applied during that year on the Trusts aforesaid such surplus income may be carried forward to the subsequent year or years and be applied as the income arising during that year or years.
Provided also that during the life time of Sir Sassoon David, Bart., in the application of the said income the Trustees shall have regard to the wishes of the said Sir Sassoon David, Bart., who shall also be entitled to direct if he so desires that the income of the time being of the Trust Funds or any part thereof may be applied to such charitable object or objects as the said Sir Sassoon David, Bart., shall direct and in such case the Trustees shall so apply the income ".
This Deed of Declaration of Trust was, on June 4, 1953, registered under the Bombay Public Trusts Act, 1950.
The Trust fund had been invested by the trustees in inter alia 3 1/2% Government Securities.
In the year 1930 a certificate was issued by the Income tax Officer, A Ward, Bombay, whereby the Reserve Bank of India was authorised not to deduct at source the tax on the interest on the said securities so held by the trustees.
It was mentioned in the said certificate that it was to enure till its cancellation.
In 1946 the 3 1/2% Government Securities were redeemed by the Government of India and were converted into 3% Con version Loan, 1946.
Accordingly in February, 1948, the said certificate of exemption was cancelled, as the securities covered thereby had been redeemed by the Government.
The trustees thereupon asked for a fresh certificate of exemption from the Income tax Officer, Bombay Refund Circle in respect of the 3% Conversion Loan, 1946.
But the said Income tax Officer refused to issue such certificate on the ground that the income from the trust fund in question was not exempt from taxation under section 4(3)(i) of the said Act which, at the material time, was as follows: "4(1). . . . . . . . . . 928 (2) . . . . . . (3) Any income, profits or gains falling with in the following classes shall not be included in total income of the person receiving them: (i) Any income, derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto: Upon the fact of the withholding of the certificate by the Income tax Officer, Refund Circle, being intimated to the Income tax Officer, A V Ward, Bombay, the latter Officer started proceedings against the appellants under section 34 of the said Act in respect of the assessment years 1944 45 to 1947 48.
He also started regular proceedings for the assessment year 1948 49 and the succeeding years up to 1952 53.
In the assessment proceedings for those nine years the Income tax Officer took the view that the income from the trust fund was not exempt from taxation under section 4(3)(i) and accordingly he assessed the appellants for the first four assessment years (1944 45 to 1947 48) on the ground that the income for those years had escaped assessment.
He also assessed the appellants to tax for the subsequent five years (194849 to 1952 53).
On appeal the Appellate Assistant Commissioner confirmed the said assessments.
On further appeal by the appellants, the Income tax Appellate Tribunal set aside the assessments for the first four years (1944 45 to 1947 48) holding that section 34 had been wrongly invoked, for it was only a case of difference of opinion of one Income tax Officer from his predecessor on the same set of facts.
The department did not take any further steps in the matter and accepted that view of the Tribunal as regards the assessments of those years and we are not in this appeal concerned with them.
As regards the assessments for the five years (1948 49 to 1952 53) the Tribunal upheld the decision of the Appellate Assistant 929 Commissioner who had confirmed the assessments made by the Income tax Officer.
On application being made by the appellants, under section 66(1) of the said Act, the Tribunal drew up a statement of case and referred two questions of law arising out of its order to the High Court for its opinion.
The said questions are as follows : (1) Whether the Trust property is held wholly for religious or charitable purposes within the meaning of section 4(3)(i) of the Indian Income tax Act ? (2) If the answer to question (1) is in the negative, whether the trust property is held in part only for religious or charitable purposes ? The said reference came up for hearing before the said High Court and both the referred questions were answered in the negative.
The High Court, however, gave the appellants a certificate of fitness for appeal to this Court and the present appeal has been filed on the strength of such certificate.
A perusal of cl. 13 of the deed shows that the trust fund is declared to be held by the trustees upon trusts to apply the net income thereof for all or any of the six purposes enumerated therein.
It was conceded before the High Court and it has not been disputed before us that if there was nothing else in this clause, then each of these six purposes would have to be upheld as a charitable purpose involving an element of public utility and consequently within the protection of section 4(3)(i).
The fact that the trustees could expend the net income on any of the six purposes to the exclusion of the other five purposes would not, it is also conceded, have made the slightest difference in the matter of such exemption from income tax.
For instance, if the trustees spent the net income solely and wholly for the purposes mentioned under sub cl.
(a) to the exclusion of those mentioned in sub cls.
(b) to (f)such income would still be exempt from taxation under section 4(3)(i).
The High Court, however, took the view that cl. 13 should be read as a whole along with the provisos and that so read the trust is primarily for the benefit of the relations or members of the family 117 930 of Sir Sassoon David, Bart.
It is pointed out that in applying the net income for the purposes mentioned in sub cl.
(a), the trustees are bound, under the first proviso, to give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart.
including therein distant and collateral relations.
The second proviso, it is urged, makes it further clear that in the application of the income for the said purpose, the trustees are enjoined to apply not less than half the income for the benefit of the members of the Jewish community of Bombay only " including the relations of Sir Sassoon David, Bart.
, as aforesaid " and the Jewish objects.
Emphasis is laid on the words not less than half " as indicating that it is permissible for the trustees to spend more than half and indeed the whole of the net income for the benefit of the said relations or members of the family of the said Sassoon David, Bart.
It is also pointed out that, although the remaining income, if any, has to be spent for the benefit of all persons and objects including Jewish persons and objects, the trustees could, if they so wished, spend the same also for the relations or members of the family of Sir Sassoon David, Bart.
as Jewish persons.
The argument, which found favour with the High Court, is that the provisos impose a mandatory obligation on the trustees (i) to give preference to the poor and indigent relations or members of the family of Sir Sassoon David, Bart.
and (ii) to spend not less than half the income, which may extend to the entire income, for the benefit of the relations or members of the family of Sir Sassoon David, Bart.
The High Court points out that in view of the language of el. 13 of the deed read as a whole, it is open to the trustees, without being guilty of any breach of trust, to spend the entire net income of the trust fund for the purpose of giving relief to the poor and indigent relations or members of the family of the said Sir Sassoon David, Bart., including therein the distant and collateral relations and such being the position, the High Court came to the conclusion that it could not be said that the property was held wholly or partly for religious or 931 charitable purposes involving an element of public utility.
The High Court accordingly held that the income from the trust fund was not exempt from taxation under section 4(3)(i) and answered both the questions in the negative.
The problem before us is whether the High Court was right in so answering the questions.
In coming to the decision that it did, the High Court relied on its own earlier decision in the case of Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax (Central), Bombay (1).
The facts in that case, however, were somewhat different from the facts now before us.
In that case the trust was significantly enough described as " Gordhandas Govindram Family Charitable Trust ".
Clause 2 of that trust deed provided for the application of tile net income in giving help or relief to such poor Vaishyas and other Hindoos as the trustees might consider deserving of help in the manner and to the extent specified in the said trust deed and subject to the conditions and directions stated in the next following clauses.
Sub clause (a) of cl. 3 provided that Vaishya Hindoos who were members of Seksaria family should be preferred to poor Vaishyas not belonging to the said family.
Maintenance had to be provided under sub cl.
(b) for the poor male descendants of the settlor and under sub cl.
(c) for the poor female descendants of the settlor.
Marriage expenses were provided under sub el.
(d) for the poor male descendants and under sub cl.
(e) for the poor female descendants of the settlers There were other subclauses providing for payment of money to the poor male or female descendants of the other members of the Seksaria family.
In the present judgment now under appeal, the High Court recognises that the particular trust they were dealing with in the earlier case " was a fairly blatant illustration of a settlor trying to benefit his own family and his own relations " and states that in the earlier case it had pointed out " that the benefit to the public was too remote and too illusory and accordingly held that was (1) 932 not a trust which had for its object a general public utility ".
Such, however, cannot be said of the provisions of the present Deed of Declaration of Trust.
Under el. 13 the trustees are at liberty to hold the trust fund and to apply the net income thereof for all or any of the six purposes mentioned therein.
The relations or members of the family of the said Sir Sassoon David, Bart., including therein distant and collateral relations do not figure as direct recipients of any benefit under sub cls.
(b) to (f) and, therefore, in so far as those purposes are concerned the trust certainly involves an element of public utility.
We are not unminaful of the fact that it is open to the trustees to spend the net income entirely for the purpose referred to in sub cl.
(a) to the exclusion of the other clauses.
But the very fact that the relations or members of the family do not come in directly under any of those latter sub clauses cannot be ignored, for they certainly have some bearing on the question as to who or what were the primary objects of the trust as a whole.
In the next place, the purpose of sub cl.
(a) is the "relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world ".
It is conceded by learned counsel that this sub clause clearly expresses a general charitable intention involving an element of public utility.
It follows, therefore, that sub cl.(a) constitutes a valid public charitable trust having as its beneficiaries the several classes of persons referred to therein.
This is the first position.
We then pass on to the provisos.
The first proviso opens with the words " in applying the income as aforesaid ".
This takes us back to sub cl.
The meaning of the proviso obviously is that in applying the income for the purpose of sub el.
(a), the trustees shall give preference to the poor and indigent relations or members of the family of Sir Sassoon David, Bart.
The proviso does not operate independently but comes into play only " in applying the income as aforesaid".
The provision for giving preference involves the idea of selection of some persons out of a bigger class envisaged in subel.
The poor and indigent relations or members of 933 the family can claim to participate in the benefits under the trust only if they come within one of the several classes enumerated in sub el.
To take an extreme example: If a poor and indigent relation of Sir Sassoon David, Bart.
abjures the faith held by the Jewish community and does not adopt any other faith and thus ceases to be a member of the Jewish community but does not become a member of any other community, he will certainly not be entitled to the benefits of sub el.
(a) although he is a poor and indigent relation or member of the family of Sir Sassoon David, Bart.
within the meaning of the first proviso.
In other words, sub cl.
(a) prescribes the primary class of beneficiaries out of which the actual beneficiaries are to be selected by the application of the provisions of the provisos, that is to say, by giving preference to the relations or members of the family of the said Sir Sassoon David, Bart.
The case of In re Koettgan 's Will Trusts (1) appears to us, on the facts, to be more in point than the case of Gordhandas Govindram Family Charity Trust case (2) relied on by the High Court.
In the last mentioned English case the testatrix bequeathed her residuary estate upon trust for the promotion and furtherance of commercial educa tion.
The persons eligible as beneficiaries under the fund were stated to be ,persons of either sex who are British born subjects and who are desirous of educating themselves or obtaining tuition for a higher commercial career but whose means are insufficient or will not allow of their obtaining such education or tuition at their own expense. " The testatrix further directed that in selecting the beneficiaries " it is my wish that the . trustees shall give preference to any employees of John Batt & Co. (London) Ltd. or any members of the families of such employees; failing a sufficient number of beneficiaries under such description then the persons eligible shall be any persons of British birth as the trustees may select provided that the total income to be available for benefiting the pre ferred beneficiaries shall not in anyone year be more than 75% of the total available income for that (1) , 257.
(2) 934 year".
It was held, on a construction of the will, that the gift to the primary class from which the trustees could select the beneficiaries contained the necessary element of benefit to the public and that it was when that class was ascertained that the validity of the trust had to be determined, so that the subsequent direction to prefer, as to the 75% of the income, a limited class did not affect the validity of the trust which was accordingly a valid and effective charitable trust.
Referring to the first part of the will Upjohn, J., at p. 257 said: " If the will concluded there, the trust would clearly be a valid charitable trust, having regard to the admission that a gift for commercial education is for the advancement of education.
" Then after stating that the next task was to make a selection from that primary class of eligible persons, the learned Judge continued: " It is only when one comes to make a selection from that primary class that the employees of John Batt & Co. and the members of their families come into consideration, and the question is, does that direction as to selection invalidate the primary trust ? In my judgment it does not do so.
" Further down he said: "In my judgment it is at the stage when the primary class of eligible persons is ascertained that the question of the public nature of the trust arises and falls to be decided, and it seems to me that the will satisfies that requirement and that the trust is of a sufficiently public nature.
" The learned Judge then concluded: " If, when selecting from that primary class the trustees are directed to give a preference to the employees of the company and members of their families, that cannot affect the validity of the primary trust, it being quite uncertain whether such persons will exhaust in any year 75%.
On the true construction of this will, that is not (as to 75%) primarily a trust for persons connected with John Batt & Co., and the class of persons to benefit is not " confined " to them, and in my judgment the trust contained in clauses 7 935 and 8 of the will of the testatrix is a valid charitable trust.
" It is true that this is a judgment of a Single Judge but it does not appear to have been departed from or over ruled in any subsequent case and appears to us to be based on sound principle.
Applying this test, there can be no question indeed it has been conceded that the earlier part of el. 13, omitting the provisos, constitutes a valid public charitable trust.
The circumstance that in selecting the beneficiaries under subel.
(a) preference has to be given, under the provisos, to the relations or members of the family of Sir Sasoon David, Bart., cannot affect that public charitable trust.
In our judgment, the facts of this case come nearer to the facts of the English case referred to above than to the facts of the earlier decision of the Bombay High Court in Gordhandas Govindram Family Charity Trust case (1).
As we have already stated the relations of members of the family are clearly not the primary object contemplated by sub cls.
(b) to (f).
The first part of sub cl.
(a), omitting the provisos, is not said to be too wide or vague and unenforceable.
The provision for giving preference to the poor and indigent relations or the members of the family of Sir Sassoon David, Bart., cannot affect the public charitable trust constituted under sub cl.
In our opinion the income from the trust properties comes within the scope of section 4(3)(i) and is, therefore, entitled to exemption.
Therefore the negative answer given by the High Court to question No. I cannot be supported and that question should be answered in the affirmative.
In this view of the matter, question No. 2 does not arise and needs no answer.
The result is that this appeal must be allowed and the question No. I must be answered in the affirmative.
The appellants will have the costs of the reference in the High Court and of this appeal in this Court.
Appeal allowed.
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The appellants were the trustees of a charity fund known as The Charity Fund founded by Sir Sassoon David, Baronet of Bombay ".
Clause 13 Of the deed of trust, after declaring that the trustees should apply the net income for all or any of the following purposes, namely, (a) the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and 924 clothes and/or lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or (b) the institution maintenance and support of hospitals and schools, colleges or other educational institutions or (c) the relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other such calamity or (d) the care and protection of animals useful to mankind or (e) the advancement of religion or (f) other purposes beneficial to the community not falling under any of the foregoing purposes I added by way of provisos (i) that in applying the net income for the purposes mentioned in sub cl.
(a) the trustees must give preference to the poor and indigent relations or members of the family of Sir Sassoon David, including distant and collateral relatives, (2) that for the said purpose the trustees must apply not less than half of the income for the benefit of the members of the Jewish community of Bombay only, including the said relatives of Sir Sassoon David and Jewish objects.
The question for determination was whether the income from the trust fund was exempt from taxation under section 4(3)(i) Of the Indian Income tax Act.
The High Court came to the conclusion that the trust fund could nut be said to be held, wholly or partly, for religious or charitable purposes involving an element of public utility and answered the question in the negative.
Held, that there could be no doubt that each one of the pri mary purposes mentioned in the deed of trust, including the one mentioned in sub cl.
(a), properly construed, involved an element of public utility and thus they constituted a valid charitable trust.
Although it was open to the trustees to spend the entire income for the purpose mentioned in sub cl.
(a), that could not detract from the validity of the trust since the relations or family members of the founder did not come in directly under any of the other purposes and could do so only under sub cl.
(a) as preferential beneficiaries to be selected from out of the class of primary beneficiaries prescribed by it, in terms of the provisos.
The test of the validity of such a public charitable deed of trust should be whether or not at the primary stage of eligibility it could be said to possess that character.
In re Koettgan 's Will Trusts, , applied.
Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax (Central), Bombay, [1952]21 I.T.R.231, distinguished and held inapplicable.
The circumstance that in selecting the actual beneficiaries 925 from the primary class of beneficiaries under sub cl.
(a), the trustees had to give preference under the provisos, to the relations or members of the family of Sir Sassoon David, could not therefore affect the public charitable trust constituted under sub cl.
(a) and the income from the trust properties was entitled to exemption under section 4(3)(i) Of the Indian Income tax Act.
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Here is a two-paragraph summary of the court case:
The appellants, the trustees of the "Charity Fund Founded by Sir Sassoon David, Baronet of Bombay", appealed to the Supreme Court against the judgment of the Bombay High Court. The High Court had ruled that the income from the trust fund was not exempt from taxation under section 4(3)(i) of the Indian Income Tax Act, as it was not held wholly or partly for religious or charitable purposes. The trust fund was established to apply its net income for various charitable purposes, including relief of the poor and indigent members of the Jewish community, and other purposes beneficial to the community.
On appeal, the Supreme Court held that the trust fund was indeed held for charitable purposes, and that the provisos in the trust deed, which gave preference to the poor and indigent relations or members of the family of Sir Sassoon David, Bart., did not affect the public charitable nature of the trust. The Court relied on the principle enunciated in the English case of In re Koettgan's Will Trusts, and held that the trust was a valid charitable trust, with the relations or members of the family being selected from a primary class of beneficiaries, namely, the poor and indigent members of the Jewish community. The Court accordingly allowed the appeal and held that the income from the trust fund was exempt from taxation under section 4(3)(i).
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Civil Appeal No. 2860 of 1987.
From the Judgment and order dated 8.7.1987 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 1311 of 1983 and Suppl.
A. No. 1798 of 1987 BI.
Soli J. Sorabjee, S.R. Grover and K.J. John for the Appellant.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a statutory appeal from the decision and order of the Customs Excise and Gold (Control) Appellate Tribunal (briefly referred to as 'CEGAT ') under section 35L of the Central Excise and Salt Act, 1944 (hereinafter called 'the Act ').
It appears that the appellant is a manufacturer of Hospital and Pharmaceutical Appliances and Heavy Duty Industrial Canteen Equipment.
The following 14 items were classified by him under Tariff Item No. 68 of the said Act in his Classification List No. 106 dated 27:3.1979: "(1) Storage Tank, (2) Cooking Range (Electric opera 734 tion and gas operated), (3) Baking oven, (4) Deep Fat Fryer, (5) Bain Mafie, (6) Sterilizing Sink, (7) Expresso Coffee Machine, (8) Steam Jacketed Vessel (Steam operated), (9) Bread Toaster, (10) Bulk Cooker & Fryer, (11) Chappatty Plate/Chappatty Puffer and Chappatty Plate/Puffer, (12) Dish Washing Machine, (13) Potato Pooler and (14) Masala Grinder.
" The Assistant Collector held the view that products 2 to 14 were classifiable under Tariff Item No. 33C in view of the Explanation thereof.
After giving notice the Assistant Collector demanded differential duty amounting to Rs.1,91,622.20 for the period Ist of March, 1979 to 30th June, 1980.
The Assistant Collector confirmed the demand except in respect of Item No. 8, namely, Steam Jacketed Vessel.
Being aggrieved from these orders, the appellant filed appeals before the Collector.
The Collector accepted the appellant 's contentions and came to the conclusion that these were to be classified under Tariff Item No. 68 and not under Tariff Item No. 33C. Tariff Item 33C at the relevant time contained the Explanation I, which is as follows: "Explanation I 'Domestic electrical appliances ' means electrical appliances normally used in the household and similar appliances used in hotels, restaurants, hostels.
offices, educational institutions, hospitals, train kitchens.
aircraft or ship 's pantries, canteens, tailoring establish ments, laundary shops and hair dressing saloons".
The revenue went up in appeal before the CEGAT.
The Tribunal noted that the equipments in question were used in industrial canteens, Five Star Hotels, big hospitals etc.
The nature of the items such as deep fat fryer, Expresso coffee machine, bread toaster, chap patty plate, etc.
were all electrically operated machines.
The Tribunal further noted that Tariff Item 33C was in respect of "domestic electrical appliances not elsewhere specified".
According to the Tribunal the intention of the legislature in respect of "domestic electrical appliances" was clear from the Explanation.
It is apparent that the above named items are specially designed for use in big canteens attached to industrial units, big hotels, hospitals etc.
where food in bulk quantity for hundreds of people is required to be prepared and served.
These required electric power exceeding 230 volts in order to have considerable capacity for preparing and serving food.
Their prices ranged from 735 Rs.7,000 to Rs.1.5 lakhs.
It was submitted that these are important and relevant factors for distinguishing the said items as distinct and different from those appliances which are used normally in the household.
It was submitted that these heavy duty items fall outside the purview of Tariff Item No. 33C. The Tribunal was of the view that though considerable space is required for these items but space was not any criteria for determining this question.
According to the Tribunal that these items could not be classified under Tariff Item No. 68.
We are of the opinion that the Tribunal is right.
It is manifest that these equipments were electrical appliances.
There was no dispute on that.
It is also clear that these are normally used in household and similar appliances are used in hotels etc.
The expression "similar" is a significant expression.
It does not mean identical but it means corresponding to or resembling to in many respects; somewhat like; or having a general likeness.
The statute does not contemplate that goods classed under the words of 'similar description ' shall be in all respects the same.
If it did these words would be unnecessary.
These were intended to embrace goods but not identical with those goods.
If the items were similar appliances which are normally used in the household, these will be taxable under Tariff Item No. 33C.
It appears that the Gujarat High Court in the case of Viswa & Co. vs The State of Gujarat, (17 Sales Tax Cases 581) had occasion to consider whether electric fans are domestic electrical appliances for the purpose of Bombay Sales Tax Act, 1953.
Bhagwati, J. as the learned Chief Justice then was, speaking for the Gujarat High Court observed as follows: "A domestic electrical appliance, in our opinion, would be an electrical appliance of a kind generally used for domestic purposes.
It may also be used at places other than the home or the house, but that would not destroy the character of a domestic electrical appliance which attaches to it by reason of its being a kind of an electrical appliance generally used for the household.
There are several electrical appliances which are generally used in the household, such as electric irons, electrical sewing machines and electrical cooking ranges which are also used in other establishments.
But these electrical appliances do not therefore cease to be domestic electrical appliances.
It is of course not necessary that an electrical appliance, in order to 736 satisfy the description of a domestic electrical appliance, must be actually used in the home or the house.
What is necessary is that it must be of a kind which is generally used for household purposes and if that test is applied, there is no doubt that electric fans are domestic electrical appliances and the Tribunal was therefore right in holding that they fall within entry 52 of Schedule B." We agree that it is not necessary to be a domestic electrical appliance that it must be actually used in the home or the house.
It must be of a kind which is generally used for household purposes.
It appears to us that the types of items concerned in this appeal are generally used for household purposes and that is sufficiently good test for classification in the light of the explanation to Tariff Item No. 33C.
In view of the fact that the Tribunal recognised that the appellant had set out all the details in the classification list and the revenue had assessed him under Tariff Item 68, the Tribunal came to the conclusion that there was no intention to evade payment of duty.
Therefore, the Tribunal directed that the modification of the classification list could only be prospective and not retrospective.
The Tribunal was just and right in so doing.
The Tribunal was also right in holding that in the absence of any proof of suppression of fact, section 11 A of the said Act would not be applicable.
The show cause notice raising a demand of duty was issued on 8th of September, 1980 and the Tribunal sustained the demand for the period 9th March, 1980 to 30th June, 1980 in respect of items 3 to 7 and 9 to 14.
We are of the opinion that the Tribunal was right and the decision of the Tribunal therefore, does not call for interference.
In that view of the matter the appeal is rejected.
There will be no order as to costs N.P.V. Appeal dismissed.
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% Words and Phrases: 'Similar description ' meaning of.
The appellant, manufacturer of Hospital and Pharmaceutical Appliances and Heavy Duty Industrial Canteen Equipment, classified certain items like cooking range, deep fat fryer, express coffee machine, bread toaster etc.
, numbering 14, under Tariff Item No. 68 of the Central Excise and Salt Act, 1944.
The Assistant Collector held that products 2 to 14 were classifiable under Tariff Item No. 33C, in view of the Explanation thereof, and demanded differential duty for the period of 1st March, 1979 to 30th June, 1980.
The Collector, on appeal, held that these items were to be classified under Tariff item No. 68 and not under Tariff item 33C .
On appeal by the Revenue, the Central Customs Excise and Gold (Control) Appellate Tribunal, while noting that the equipment in question, some of which were electrically operated machines, were used in industrial canteens, five star hotels, big hospitals, etc.
held that the intention of the Legislature was clear from the Explanation to Tariff Item No. 33C, and the items in question could not be classified under Tariff Item No. 68.
Dismissing the appeal by the manufacturer.
^ HELD: The statute does not contemplate that goods classed under the words of "similar description" shall be in all respects the same.
If it did, these words would be unnecessary.
These were intended to embrace goods but not identical with those goods.
If the items were 732 similar appliances which are normally used in household, these will be taxable under Tariff Item No. 33C. [73CD] It is not necessary, to be a domestic appliance, that it must be actually used in the home or the house.
It must be of a kind that they are generally used for household purposes.
[736B] The types of items concerned in the instant case are generally used for household purposes and that is sufficiently good test for classification in the light of explanation to tariff item No. 33C.
The Tribunal was.
therefore, right in holding that these items could not be classified under Item 68.
[736C] Since the appellant had set out all the details and the Revenue had assessed the appellant under Tariff Item No. 68, the Tribunal was right in holding that there was no intention to evade payment of duty and in directing that the modification of the classification list could only be prospective and not retrospective.
In the absence of any proof of suppression of fact, it was also right in holding that section l 1 A of the Act would not be applicable.
[736D E]
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Here's a two-paragraph summary of the court case:
The appellant, a manufacturer of hospital and pharmaceutical appliances, was assessed by the Assistant Collector for differential duty amounting to Rs.1,91,622.20 for the period from 1st March 1979 to 30th June 1980. The Assistant Collector had classified 14 items under Tariff Item No. 33C, which pertains to "domestic electrical appliances", whereas the appellant claimed they should be classified under Tariff Item No. 68. The matter went up to the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT), which upheld the Assistant Collector's decision.
The CEGAT held that the items in question, such as deep fat fryers, expresso coffee machines, and bread toasters, were similar appliances to those used in households and hence fell under Tariff Item No. 33C. The Tribunal relied on the Gujarat High Court's judgment in Viswa & Co. vs The State of Gujarat, which held that an electrical appliance is considered domestic if it is generally used for household purposes, even if it is also used in other establishments. The Supreme Court agreed with the CEGAT's decision and dismissed the appeal, upholding the Tribunal's ruling that the modification of the classification list could only be prospective and not retrospective.
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ivil Appeal No. 2697 & 2698 of 1989.
From the Judgment and Order dated 24.3.87 & 1.7.87 of the Andhra Pradesh High Court in Writ Petition No. 105 & 8737 of 1987.
N.A. Palkhivala, P.A.S. Rao, D.N. Mishara, Ranganatha Chari and Ms. Rubi Anand for the Petitioners.
S.C. Manchanda, Ms. A. Subhashini and B.B. Ahuja for the Respondents.
These appeals by Special Leave are directed against the dismissal by the Andhra Pradesh High Court of Writ Petitions filed by the appellant.
The appellant, Messrs Electronics Corporation of India Limited, entered into a memorandum of understanding with a Norwegian company at Paris.
This was followed by an agree ment dated 2 May, 1986 executed at Hyderabad.
Under that agreement the Norwegian company was to provide technical know how and technical services, including facilities for the training of personnel, to the appellant in connection with the manufacture of computers.
The consideration for the technical know how and technical services was represented by Norwegian currency NOK 32 Millions equivalent to about Rs.575 lakhs.
Eighty five per cent of the consideration was to be paid from credit provided by Norwegian authorities and the balance fifteen per cent was to be paid out of free foreign exchange made available by the State Bank of India, London Branch.
It is not in dispute that the agreement had received the careful consideration of the Reserve Bank of India and of the Central Government.
The appellant approached the Income Tax Officer for the grant of a 'No Objection Certificate ' as contemplated under section 195(2) of the 997 Income Tax Act, 1961, to enable it to remit the instalments due without any obligation to deduct any income tax at source, but the request was denied.
On 23 December, 1986 the appellant made an application to the Commissioner of Income Tax for a direction to the Income tax Officer, but the Commissioner rejected the application.
The Commissioner took the view that having regard to Section 9(1)(vii) and Section 195 of the Income Tax Act, 1961, the payment constituted income which was deemed to accrue or arise in India and was liable to deduction of tax at source.
The appellant filed a Writ Petition against the order of the Commissioner, and assailed the constitutional validity of Section 9(1)(vii) of the Act.
It was urged before the High Court that Parliament was not competent to enact Sec tion 9(1)(vii) of the Act inasmuch as the provision possess es as extra territorial operation without any nexus between the person sought to be taxed and the country seeking to tax.
It was further contended that even after the introduc tion of Section 9(1)(vii) by the Finance Act of 1976 with effect from 1 June, 1976, the requirement of a business connection of a foreign Company was required, and the case was governed by CORBORANDUM CO.
vs C.I.T., [1977] 108 I.T.R. 335.
It was also urged that after the introduction of the Explanation by the Finance Act of 1977 with effect from 1 April, 1977 Section 9(1)(vii) creates an invidious discrimi nation among companies which had entered into a foreign collaboration agreement prior to 1 April, 1976 and those who have done so after that date, and that therefore Article 14 was violated.
The High Court repelled all the contentions of the appellant and dismissed the Writ Petition.
A similar Writ Petition was filed by the appellant against an order of the Commissioner of Income tax declining to direct the grant of a 'No Objection Certificate, in relation to disbursement made under a licence agreement with Messrs Control Data Indo Asia Company, U.S.A., and the Writ Petition was dis missed by the High Court for the reasons which had found favour with it in the earlier case.
It is contended by learned counsel for the appellant that section 9(1)(vii) of the Income Tax Act is ultra vires inasmuch as it enables the levy of income tax on the Norwegian company in the one case and the American company in the other in circumstances which appear to show that the statute operates extra territorially without the need for any nexus between anything done in India and the person sought to be taxed.
section 9(1)(vii) declares: "9(1) The following incomes shall be deemed to accrue or 998 arise in India (i). . . . . . . . . . . . . . . . (vii) income by way of fees for technical services payable by (a) the Government; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non resident, where the fees are payable in respect of services uti lised in a business or profession carried on by such person in India or for the purposes of making or earning any 'income from any source in India; Explanation.
For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of tech nical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".
It seems that the Revenue is proceeding on the basis that the foreign company is liable to tax and that therefore the petitioner is obliged to deduct at source the tax pay able by the foreign company.
We are informed that the serv ices are rendered by the foreign company in the nature of training abroad to personnel belonging to the appellant, and that payment to the foreign company is also effected abroad.
The Revenue rests its case on section 9(1)(vii)(b) of the Act, and the question is whether on the terms in which the provi sion is couched it is ultra vires.
Now it is perfectly clear that it is envisaged under our constitutional scheme that Parliament in India may make laws which operate 999 extra territorially.
article 245(1) of the Constitution pre scribes the extent of laws made by Parliament.
They may be made for the whole or any part of the territory of India.
article 245(2) declares that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation.
Therefore, a Parliamentary statute having extra territorial operation cannot be ruled out from contemplation.
The operation of the law can extend to persons, things and acts outside the territory of India.
The general principle, flowing from the sovereignty of States, is that laws made by one State can have no operation in another State.
The apparent opposition between the two positions is reconciled by the statement found in British Columbia Electric Railway Company Limited vs The King, "A legislature which passes a law having extra territorial operation may find that what it has enacted cannot be directly enforced, but the Act is not invalid on that account, and the courts of its country must enforce the law with the machinery available to them.
" In other words, while the enforcement of the law cannot be contemplated in a foreign State, it can, nonetheless, be enforced by the courts of the enacting State to the degree that is permissible with the machinery available to them.
They will not be regarded by such courts as invalid on the ground of such extra territoriality.
But the question is whether a nexus with something in India is necessary.
It seems to us that unless such nexus exists Parliament will have no competence to make the law.
It will be noted that Article 245(1) empowers Parliament to enact law for the whole or any part of the territory of India.
The provocation for the law must be found within India itself.
Such a law may have extra territorial opera tion in order to subserve the object, and that object must be related to something in India.
It is inconceivable that a law should be made by Parliament in India which has no relationship with anything in India.
The only question is then whether the ingredients in terms of the impugned provi sion indicate a nexus.
The question is one of substantial importance, specially as it concerns collaboration agree ments with foreign companies and other such arrangements for the better development of industry and commerce in India.
In view of the great public importance of the question, we think it desirable to refer these cases to a Constitution Bench, and we do so order.
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The appellant company entered into an agreement with a Norwegian Company under which the latter was to provide technical knowhow and technical services including facili ties for the training of personnel of the appellant company in connection with the manufacture of computers for a con sideration of NOK 32 Millions, Norwegian Currency, equiva lent to Rs.575 lakhs.
The appellant company applied to the Income Tax Officer for 'No Objection Certificate ' under Section 195(2) of the Income Tax, 1961 in order to remit the instalments due under the agreement without deducting the tax at source but the same was refused.
The application of the appellant company to the Commis sioner of Income Tax seeking a direction to the Income Tax Officer was also rejected on the ground that having regard to Sections 9(1)(vii) and 195 of the Income Tax Act, 1961 the payment to the foreign company constituted deemed accru al of Income in India and therefore the appellant was obliged to deduct at source the tax payable by the foreign company.
A writ petition filed by the appellant against the order of the Commissioner and assailing the constitutional validity of Section 9(1)(vii) of the 995 Income tax Act, 1961 was dismissed by the High Court of Andhra Pradesh.
A similar writ petition filed against the order of refusal of 'No Objection Certificate ' by the Com missioner of Income Tax in relation to disbursement made under an agreement with a U.S. Company was also dismissed by the High Court.
Against the decision of the High Court appeals were filed in this Court challenging the vires of Section 9(1)(vii) of the Income Tax Act, 1961 contending that (i) it was extra territorial in operation, and (ii) there was no nexus between anything done in India and the persons sought to be taxed.
Referring the matter to a Constitution Bench, HELD: 1.
It is envisaged under our constitutional scheme that Parliament in India may make laws which operate extra territorially.
Article 245(2) declares that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation.
Therefore, a Parliamentary statute having extra territorial operation cannot be ruled out from contemplation.
The operation of the law can extend to persons, things and acts outside the territory of India.
The general principle, flowing from the sovereignty of States, is that laws made by one State can have no operation in another State.
But while the enforce ment of the law cannot be contemplated in a foreign State, it can, nonetheless, be enforced by the courts of the enact ing State to the degree that is permissible with the machin ery available to them.
They will not be regarded by such courts as invalid on the ground of such extra territoriali ty.
[998H, 999A B, D] British Columbia Electric Railway Company Limited vs The King, , applied.
But unless nexus exists Parliament will have no competence to make the law.
Article 245(1) empowers Parlia ment to enact law for the whole or any part of the territory of India.
The provocation for the law must be found within India itself.
Such a law may have extra territorial opera tion in order to subserve the object, and that object must be related to something in India.
It is inconceivable that a law should be made by Parliament in India which has no relationship with anything in India.
[999E F] 2.1 In view of the great public importance of the ques tion, whether the ingredients of the impugned provision indicate a nexus 996 these cases are referred to a Constitution Bench.
[999H] Corborandum Co. vs C.I.T., ; referred to.
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Here is a two-paragraph summary of the legal case:
The Electronics Corporation of India Limited (ECIL) entered into an agreement with a Norwegian company to provide technical services for the manufacture of computers. ECIL approached the Income Tax Officer for a 'No Objection Certificate' to remit the instalments due without deducting any income tax at source, but the request was denied. ECIL filed a Writ Petition against the order of the Commissioner of Income Tax, assailing the constitutional validity of Section 9(1)(vii) of the Income Tax Act, 1961, which deems income by way of fees for technical services payable by a non-resident to accrue or arise in India.
The High Court dismissed the Writ Petition, ruling that Parliament has the competence to enact laws with extra-territorial operation under Article 245(1) of the Constitution, provided there is a nexus with something in India. The Court held that for a law to be valid, it must have a relationship with something in India, and the provocation for the law must be found within India itself. The case was referred to a Constitution Bench due to its great public importance, as it concerns collaboration agreements with foreign companies and their impact on the development of industry and commerce in India.
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Appeal No. 301 of 1960.
Appeal from the judgment and decree dated September 24, 1958, of the Allahabad High Court (Lucknow Bench) at Lucknow in First Execution of Decree Appeal No. 8 of 1953.
C. B. Agarwala, Shankar Prasad and C. P. Lal, for the appellant.
Iqbal Ahmed, N. C. Chatterjee, D. N. Mukherjee and B. N. Ghosh, for the respondent.
April 27.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the Allahabad High Court.
The brief facts necessary for present purposes are these.
The appellant 's father Rana Umanath Bakshsingh was the Talukdar of Khajurgaon.
On July 13, 1914, Rana Umanath Bakshsingh executed a simple mortgage in favour of the Allahabad Bank Limited (hereinafter called the respondent).
The mortgage was for a sum of Rs. 6,00,000 and the property mortgaged consisted of sixty seven villages.
In May 1924, the respondent filed a suit for the recovery of the balance of the unpaid mortgage money by the sale of the mortgaged property.
In January 1925 a preliminary decree for the recovery of rupees four lacs and odd was passed, which was made final in July 1926 and directed the sale of the mortgaged property, namely, the proprietary rights of Rana Umanath Bakshsingh in the sixty seven villages.
Then followed execution applications with which we are not concerned.
In 1934, the U. P. 443 Agriculturists ' Relief Act was passed and thereupon an application was made by the judgment debtor for the amendment of the decree under that Act.
On October 19, 1936, the decree was amended under the provisions of that Act and thereafter the pending execution proceedings were dropped as installments had been fixed.
Eventually, the respondent applied for execution on May 25, 1940.
Objection was taken to this application on the ground that it was barred by time; but this matter was decided against the judgment debtor and thereafter the execution has been proceeding uptil now on this application.
On July 1, 1952, the U. P. Zamindari Abolition and Land Reforms Act, 1950 (1 of 1951), hereinafter called the Act, came into force.
As a consequence of this enactment, the zamindari rights of the judgment debtor were abolished and it was no longer possible to sell these rights in the sixty seven villages.
Consequently, on September 29, 1952, the respondent made an application that as the zamindari rights could not be sold, only such rights of the judgment debtor as remained in him after the coming into force of the Act might be sold, namely, the rights in trees and wells in abadi and buildings situate in various villages under sale.
It was also prayed that the judgment debtor 's proprietary rights in grove land and sir and khudkashat land had been continued under section 18 of the Act and these constituted substituted security in place of the proprietary rights mortgaged with the respondent and they should also be sold Finally it was prayed that compensation money payable to the judgment debtor on the acquisition of the proprietary rights by the State might be treated as substituted security.
The appellant objected to these applications on various grounds.
The execution court held that the buildings, trees and wells situated in the abadi were liable to be sold in execution of the decree.
It further held that the respondent was entitled to compensation amount granted by the State to the appellant in lieu of zamindari rights as substituted security.
Finally, it held that the bhumidari rights acquired by the 444 appellants under section 18 of the Act could also be sold in execution of the decree.
The appellant then took the matter in appeal to the High Court, and the two points urged before the High Court were (i) that the bhumidari rights created by section 18 (i) of the Act could not be sold in execution of the decree, and (ii) that the application dated September 20, 1952, was a fresh application for execution and as it was filed over 12 years after the date of the amended decree it was barred by time.
The High Court repelled both these contentions, and held that execution could proceed against the bhumidari rights created in favour of the appellant under section 18 of the Act and further that the application dated September 20, 1952, was within time as it was not a fresh application and the decree holder was only seeking to execute the decree in respect of the property for the sale of which he had already applied within time allowed by law.
The High Court therefore dismissed the appeal.
The appellant then obtained a certificate to appeal to this Court; and that is how the matter has come up before us.
The main point urged on behalf of the appellant is that the decision of the High Court that bhumidari rights created under section 18 of the Act can also be sold in execution of the decree, is not correct.
Under the mortgage deed, the property mortgaged consisted of the property forming part of the Talukdari of Khajurgaon detailed at the foot of the mortgage, namely, the sixty seven villages.
Thus the mortgage consisted of the proprietary interests only of the mortgagor in the sixty seven villages, and as it was a simple mortgage, possession of no part of the property was given to the mortgagee.
it is therefore contended by Mr. Aggarwala on behalf of the appellant that as the proprietary right in the sixty seven villages vested in the State under the Act, the respondent who was only entitled to get the proprietary rights sold under the mortgage can now fall back only on compensation payable to the appellant under the Act, and reliance in particular is placed on section 6 (h) of the Act in this connection.
On the other hand, the contention on 445 behalf of the respondent is that bhumidari rights arising under section 18 of the Act are liable to be sold as they represented the proprietary rights which were mortgaged and in any case they can be sold as substituted security in place of the property mortgaged.
We have therefore to look into the scheme of the Act in order to decide between the rival contentions.
It is not in dispute that the Taluka of Khajurgaon was an estate within the meaning of the Act.
It may be mentioned that the judgment debtor had certain sir and khudkashat lands and zamindar 's grove in the sixty seven villages comprised within the Talukdari estate.
Section 4 of the Act provides for vesting of an estate in the State on the making of a notification thereunder and the Taluka of Khajurgaon has vested in the State by virtue of such a notification made under section 4.
Section 6 prescribes the consequences of the vesting arising under section 4 and we may refer to section 6(a) (i) as that will show in what the interests of the judgment debtor ceased and became vested in the State: "(a) all rights, title and interest of all the intermediaries (i) in every estate in such area including land (cultivable or barren), grove land, forests whether within or outside village boundaries, trees (other than trees in village abadi, holding or grove), fisheries, tanks, ponds, water channels, ferries, pathways, abadi sites hats, bazars or melas (other than hats, bazars, melas held upon land to which clauses (a) to (c) of sub section (1) of section 18 apply), and .
. . . . . . . .
shall cease and be vested in the State of Uttar Pradesh free from all encumbrances.
" Clause (h) of section 6 is also material and is in these terms: "(h) no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in section 73 of the , be enforceable against his interest in the estate.
" 57 446 All lands therefore whether cultivable or barren or grove lands vested in the State on the notification under section 4 having been made save as otherwise provided in this Act.
Therefore, proprietary rights in Sir and khudkashat land and grove land would vest in the State on the coming into force of the notification under section 4 unless there was some provision otherwise in the Act.
The contention of the respondent therefore that sir and khudkashat land and grove land continued to be the property of the appellant and would therefore remain liable to be sold in execution proceedings would fail in view of the notification under section 4, unless of course there is a provision otherwise in the Act.
The only provisions otherwise on which the respondent relies are sections 9 and 18 of the Act.
So far as section 9 is concerned, it is certainly a provision otherwise and it provides as follows: "All wells or trees in abadi, and all buildings situate within the limits of an estate, belonging to or held by an intermediary or tenant or other person, whether residing in the village or not, shall continue to belong to or be held by such intermediary, tenant or person, as the case may be, and the site of the wells or the buildings with the area appurtenant thereto shall be deemed to be settled with him by the State Government on such terms and conditions as may be prescribed.
" This provision clearly creates an exception to the property which vests in the State on the making of a notification under section 4.
The exception is in favour of all wells and trees in abadi and all buildings and it is significant to note that these things will continue to belong to the intermediary, though the further provision shows that the site of the wells, and buildings with the area appurtenant thereto would vest in the Government and would be deemed to be settled with the intermediary on such conditions and terms as may be prescribed.
The effect therefore of section 9 is that wells, trees in abadi and buildings apart from the land under them continue to belong to the intermediary (and the appellant is undoubtedly an intermediary within the meaning of the Act); but even here the 447 land on which the buildings and the wells stand vest in the State and it is deemed settled with the intermediary on terms and conditions to be prescribed.
So far therefore as wells and trees in abadi and all buildings are concerned, these continue to belong to the appellant and if they are covered by the mortgage they would be liable to sale.
As we have already pointed out, there was no dispute before the High Court with respect to wells, and trees in abadi and buildings and it was conceded there that these were liable to be sold, the only dispute being with respect to bhumidari rights created under section 18.
Let us now turn to section 18 and see whether it is also a provision otherwise like section 9.
The relevant part of section 18 for our purposes is in these terms: "(1) Subject to the provisions of sections 10, 15, 16 and 17, all lands (a) in possession of or held or deemed to be held by an intermediary as sir, khudkashat or an intermediary 's grove, on the date immediately preceding the date of vesting shall be deemed to be settled by the State Government with such intermediary, lessee, or tenant, grantee or grove holder, as the case may be, who shall subject to the provisions of this Act be entitled to take or retain possession as a bhumidar thereof.
" It is well to contrast the language of this section with the language of section 9.
Section 9 lays down that trees and wells in abadi and buildings shall continue to belong to the intermediary and that shows that it was a provision otherwise excepting these three items from vesting in the State by virtue of the notification under section 4 and its consequence under section 6; but there is no provision in section 18 of the Act to the effect that sir and khudkashat land and intermediary 's grove shall continue to belong to the intermediary.
Therefore, sir and khudkashat land and grove land would vest in the State by virtue of section 6 (a) (i) for there is no provision otherwise in section 18 in that behalf.
In this connection we may refer for comparison to section 23 of the 448 Rajasthan Land Reforms and Resumption of Jagirs Act, No. VI of 1952 (hereinafter called the Rajasthan Act) which provides that "notwithstanding anything contained in the last preceding section (i.e. section 22, which refers to consequences of resumption), all khudkashat lands of a Jagirdar etc.
shall continue to belong to or be held by such jagirdar or other person".
If the intention of the Act Was not to vest sir and khudkashat land and grove land in the State we would have found an exception similar to that found in the Rajasthan Act.
Section 9 itself shows in what manner the legislature was making an exception when it did not intend that a particular property should vest in the State.
If the intention were that sir and khudkashat land and grove land should not vest in the State, section 18 would have been worded in the same way as section 9.
Further the way in which section 18 is worded, (namely that khudkashat and sir land and an intermediary 's grove shall be deemed to be settled with the intermediary and he would have bhumidari rights therein) shows that these three kinds of property vested in the State under section 6(a)(1) and were then resettled with the intermediary on a new tenure and not in the same right, which he had in them before the vesting.
The legislature was therefore creating a new right under section 18 and the old proprietary right in sir and khudkashat land and any intermediary 's grove land had already vested under section 6 in the State.
Therefore, it cannot be said that section 18 is an exception to the consequences provided in section 6 and therefore sir and khudkashat land and grove land continue to be the property of the judgment debtor in this case in the same manner as they were his property at the time of the mortgage and would therefore be available in execution of the decree as the proprietary rights mortgaged.
We are of opinion that the proprietary rights in sir and khudkashat land and in grove land have vested in the State and what is conferred on the intermediary by section 18 is a new right altogether which he never had and which could not therefore have been mortgaged in 1914.
Our attention in this connection was drawn to the 449 compensation sections in the Act, and it was urged that what was given to the intermediary under section 18 was really his old right because no compensation was to be paid to him with respect to what was left to him under section 18.
The first section to be considered in this connection is section 39 which deals with gross assets of a mahal.
In these gross assets the amount computed at the rates applicable to the ex proprietary tenants of similar land for land in the personal cultivation of or held as intermediary 's grove, Khudkashat or sir by all the intermediaries in the estate was to be included subject to certain exceptions which are immaterial for our purposes.
The very fact that in the gross assets the rents of these lands in which the bhumidari rights were created under section 18 were taken into consideration shows that these lands also vested in the State; if that were not so there was no necessity for including these assets in the gross assets for the purposes of compensation.
Here again we may refer to a similar provision in the Rajasthan Act for purposes of comparison.
The second Schedule to that Act provides how gross income is to be calculated and in calculating the gross income the income from khudkashat land has not been taken into account because it was excepted from the consequence of resumption under section 23 of that Act.
It is true that under section 44 of the Act when calculating net assets, the income from sir and khudkashat land and grove land has been excluded on the ground that bhumidari rights have been conferred therein under section 18 of the Act.
That is however for the purposes of calculating what should, be paid to the intermediary as compensation and in that connection it was necessary to take into account the fact that the legislature was creating a new right in the intermediary with respect to certain lands and therefore it was not necessary to give money as compensation.
That would not however make any difference in our view as to the legal effect of the notification under section 4 and under the notification sir and khudkashat land and grove land would vest in the State and would not be an exception to the consequences of vesting in section 6 and therefore the proprietary right in sir 450 and khudkashat land and grove land which were mortgaged would be extinguished and the bhumidari right which is created by section 18 would be a new right altogether and would not therefore be considered to be included under the mortgage in this case.
This brings us to a consideration of section 6(h) of the Act.
That lays down that "no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in section 73 of the , be enforceable against his interest in the estate".
This provision has in our opinion a, two fold effect.
In the first place, it makes it impossible for the mortgagee to follow the proprietary right after it vests in the State.
Secondly, it provides that the only way in which the mortgagee can recover his none advanced on the security of the property which vested in the State by virtue of the notification under section 4 and the consequences thereof under section 6 is to follow the procedure under section 73 of the .
Section 73(2) provides that "where the mortgaged property or any part thereof or any interest therein is acquired under the Land Acquisition Act, 1894 (1 of 1894), or any other enactment for the time being in force providing for the compulsory acquisition of immovable property, the mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part, out of the amount due to the mortgagor as compensation".
There is no doubt that the property mortgaged has been compulsorily acquired in this case by the State under the Act.
Therefore, section 6 (h) read with section 73 directs that the mortgagee shall proceed in the manner provided in section 73, namely, follow the compensation money, and there is no other way possible for him in view of section 6(h) with respect to the property which has been acquired under the Act.
We have held that sir and khudkashat land and grove land have been acquired under the Act and have vested in the State; therefore the mortgagee is relegated to enforce his rights against the mortgagor in the manner provided in section 73 of the 451 and in no other way.
What we say here does not affect that property which is not acquired by the State, for example, property excepted under section 9 of the Act; but where the property has vested in the State by virtue of a notification under section 4 and its consequences under section 6, the only course open to the mortgagee is to follow the compensation money under section 6(h).
The bhumidari rights created under section 18 are not compensation; they are special rights conferred on the intermediary by virtue of his cultivatory possession of the lands comprised therein.
The respondent therefore cannot enforce his rights under the mortgage by sale of the bhumidari rights created in favour of the appellant under section 18 so far as his sir and khudkashat land and grove land are concerned; it can only follow the compensation money as provided in section 6(h).
The argument that bhumidari rights can 'be followed as substituted security must therefore equally fail.
Our attention in this connection was drawn to section 8(2) of the U. P. Zamindars Debt Reduction Act, No. XV of 1953.
That Act provides for scaling down of debts of zamindars whose estates have been acquired under the Act.
It also provides that the debts due shall be realisable from the compensation and rehabilitation grant, and in particular section 8(2) provides that "notwithstanding anything in any law the reduced amount found in the case of a mortgagor or judgment debtor as the case may be, under section 3 or 4 as respects mortgaged estates shall not be legally recoverable otherwise than out of the compensation and rehabilitation grant payable to such mortgagor or judgment debtor in respect of such estates".
We have not been able to understand how the provisions of the U. P. Zamindars Debt Reduction Act can affect the con struction of section 6(h) of the Act read with other provisions of the Act.
It is not necessary for us therefore to construe section 8(2) of the U. P. Zamindars Debt Reduction Act, for we are clear on the provisions of section 6 (h) and the other provisions of the Act that bhumidari rights created in favour of the appellant cannot be sold in execution of the decree held against him by the respondent under the mortgage of 1914.
452 This brings us to the question of limitation.
Mr. Aggarwala conceded that if the appellant succeeds on the first point it would not be necessary for us to consider the question of limitation.
Therefore, as the appellant succeeds on the first point we need not consider whether the application for execution by sale of bhumidari rights created under section 18 is barred by limitation.
We therefore allow the appeal and direct that the execution of the decree by the respondent will not be levied against the bhumidari rights created in favour of the appellant under section 18 of the Act.
The appellant will get his costs of this court and of the High Court.
Costs of the execution court will be at the discretion of that Court.
Appeal allowed.
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The appellant 's father, a Talukdar of the Estate of Khajur gaon, executed a simple mortgage of his proprietary interest in the estate consisting of sixty seven villages to the Allahabad Bank Ltd. While execution proceedings were pending, the U. P. Zamindari Abolition and Land Reforms Act, 1950, came into force from July 1952.
As a result, the Zamindari rights of the appellant judgment debtor were abolished and it was no longer possible to sell these rights in the 67 villages.
The respondent Bank made an application before the executing court that as the Zamindari rights could not be sold, only such rights of the judgment debtor as remained in him after coming into force of the Act might be sold along with certain other rights.
Objections were taken and finally the matter came up by appeal to the High Court and it, inter alia, upheld the view of the executing court that the execution could proceed against the Bhumidari rights created in favour of the appellant under section 18 of the Act.
The question was whether the Bhumidari rights created under section 18 of the Act could also be sold in execution of the decree in view of the fact that the proprietary rights bad vested in the State.
Held, that the intention of the U. P. Zamindari Abolition and Land Reforms Act was to vest the proprietary rights in the Sir and Khudkast land and grove land in the Estate by virtue of section 6(a)(i) and resettle it on the intermediary not as compensation but by virtue of his cultivatory possession of lands comprised therein and on a new tenure and confer upon the intermediary a new and special right of Bhumidari, which he Dever had before, by section 18 of the Act.
The proprietary rights in Sir, Khudkast land and grove land which were mortgaged were extinguished, and the Bhumidari right which was altogether a new right could not be con sidered to be included under the mortgage.
442 The mortgagee could only enforce his rights against the mortgagor in the manner as provided by section 6(h) of the Act read with section 73 of the Transfer of Property Act and follow the compensation money; and so far as the Sir, Khudkast land and grove land were concerned, he could not enforce his rights under the mortgage by the sale of the Bhumidari rights created in favour of the mortgagor against them as a substituted security.
In the instant case the Bhumidari rights created in favour of the appellant could not be sold in execution of the decree held against him by the respondent under the mortgage Of 1914.
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Here is a two-paragraph summary of the court case:
The case revolves around an appeal by the appellant against a decree of execution in a mortgage matter. The original mortgage was executed by Rana Umanath Bakshsingh's father in favour of the Allahabad Bank Limited in 1914, for a sum of Rs. 6,00,000. The mortgaged property consisted of sixty-seven villages. The decree was amended in 1936 under the U. P. Agriculturists' Relief Act, and subsequent execution proceedings were dropped. However, in 1952, the U. P. Zamindari Abolition and Land Reforms Act came into force, which abolished the zamindari rights of the judgment debtor and made it impossible to sell the rights in the sixty-seven villages.
The issue in the appeal was whether the bhumidari rights created under Section 18 of the Act could be sold in execution of the decree. The High Court had held that the bhumidari rights could be sold, but the Supreme Court, in allowing the appeal, held that the proprietary rights in sir and khudkashat land and grove land had vested in the State and what was conferred on the intermediary by Section 18 was a new right altogether, which could not be considered to be included under the mortgage. The Court also held that the mortgagee could not follow the bhumidari rights as substituted security and could only follow the compensation money provided for in Section 6(h) of the Act.
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Appeal Nos.
685 to 690 of 1970.
Appeals by certificate from the judgment and order dated 27th June 1968 by the Madras High Court at Madras in Tax case ' No,.
308 of 1964.
M. C. Setalvad and T. A. Ramachandran, for the appellant.
N. D. Karkhanis, section P. Nayar and R. N. Sachthey, for the respondents.
The Judgment of the Court was, delivered by HEGDE, J.
These are connected appeals by certificate.
They are directed against the decision of the High Court of Madras in a Reference under Section 66(1) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the Act).
The question of law referred for ascertaining the opinion of the High Court was : "Whether on the facts and in the circumstances of the case, the Department was justified in assessing the assessee in the status of an Association of Persons ?" In this case we are concerned with the assessment of the assessee for the assessment years 1957 1958 to 1962 63.
In all these years the assessees were assessed as an 'Association of the persons '.
The contention of the assessees is that in the years, in question, they should have been assessed as 'individuals, ' and not as an 'Association of Persons '.
Therefore, the only question that calls for decision is as to the status of the assessee during the relevant assessment years.
For deciding the question formulated above, it is necessary to divide the assessment years into two groups.
For the assessment years 1957 58 and 1958 59 the assessees themselves submitted their return in the status of 'Association of Persons ', but for the later years, they submitted their returns as 'individuals '.
In their returns for the assessment years 1959 60, they stated that they have divided their interest in the shares and therefore they should be thereafter assessed as 'individuals '.
It is necessary to mention one other circumstance before we proceed to set out the relevant facts.
The income in which we are concerned in this case arises under two heads.
Part of the income arises from house property 517 and the remaining 'income arises from dividends from shares.
So far as the income from house property is concerned, the High.
Court has answered the question in favour of the assessee the Revenue has not appealed against that decision.
Hence we need not go into that aspect.
All that we have to, decide in the present case is whether the dividend income which is the subject matter cf these appeals should be assessed in the hands of the appellants.
as an 'Association of Persons ' or as 'individuals '.
Now, we shall refer to the material facts as could be gathered ' from the case stated, by that Tribunal.
One Sinnamani Nadar(who will be hereinafter referred to as 'Nadar ') and his son Ganesan partitioned their family properties on December 4, 1940.
Thereafter, Nadar started a firm of his own on June 27, 1955.
Later Nadar executed a settlement deed in favour of his four grandsons, namely, G. Murugesan, G. Kathiresan, G. Raja Shankar and G. Vettrivel.
The property covered by the said settlement deed included a house property, which had been let cut.
Under this settlement deed, the donees are to enjoy during the life time the properties gifted and thereafter the same was to devolve on their children.
Sometime thereafter Nadar purchased a number of shares in Joint Stock Companies in the.
name of 'G. Murugesan & Brothers '.
For each of such purchase, a debit entry was made in the books of the firm.
The share applications addressed to.
the companies for the transfer of the shares from the, prior owners to the name of G. Murugesan and Brothers were, signed by Padamavathy Ammal, the mother of donees as their guardian.
The donees were minors at the time most of these transactions; took place.
Murugesan be came a major on March 3, 1955.
After 1959, Murugesan himself signed all transfer applications both on his behalf as well as on behalf of his brothers.
The youngest of the brothers became a major on 15th December, 1.962.
The income from the house property and the dividend income from shares were credited to an account called "G. Murugesan & Brothers" in the books of Nadar 's Firm.
In those books.
there are separate account$ for G. Murugesan ' G. Kathiresan, G. Raja Shankar and G. Vetrivel.
Private income and expenses of these persons were credited or debited to these individual accounts.
At the end of each year the balance in the account of G. Murugesan & Brothers is transferred in equal proportion to the individual accounts of the four persons mentioned above.
There was a partition between Ganesan and his 'sons on 3rd February 1958, but that does not include the house property or the shares gifted by Nadar to his grandsons.
As mentioned earlier for the assessment years 1957 58 and 1958 59, the assessees submitted their returns in the status of 'Association of Persons ' and thereafter they submitted their returns as individuals.
518 On the basis of the above facts, the Income Tax Officer assessed the assessee during all the years mentioned earlier in the status of 'Association of Persons '.
His orders were confirmed by the Appellate Assistant Commissioner.
But on a further appeal to the Appellate Tribunal, the Tribunal held that the assessee ,should be assessed as 'individuals ' and not as 'Association of Persons '.
At the instance of the Commissioner, the question set out earlier was referred to the High Court.
The High Court answered that question in the affirmative and in favour of the Revenue.
The High Court was of the opinion that because of the fact that the shares were purchased jointly in the name of G. Murugesan & Brothers, the transfer applications were filed by Padmayathy acting as guardian of all the assessees, and further, after Murugesan became ' major, he collected the dividends jointly on behalf of the assessees , the assessees should be considered to have acted as an 'Association of Persons '. 'That conclusion is challenged before us by Mr. Setalvad, appearing on behalf of the assessees.
,Counsel urges that the facts that a joint gift of shares was made in favour of more than one persons or those shares were regis tered jointly in their names or even the fact that the dividend was realised together do not go to, show that the shareholders or the beneficiaries did act as an 'Association of Persons '.
On the other hand, it is contended on behalf of the Revenue by Mr. Karkhanis that the facts proved in this case clearly establish that the assessee functioned as an 'Association of Persons '.
The expression 'Association of Persons ' is not a term of article That expression has come up for consideration before this Court in more than one case.
In Commissioner of Income tax, Bombay, North, Kutch and Saurashtra vs Indra Balkrishna , this Court after referring to the various judgments, observed thus : "It is enough for our purpose to refer to three decisions : In re.
B. section Elias ; Commissioner of Income tax vs Laxmidas Devidas ; and In re Dwark anath Harishchandra Pitale In re B. N. Elias Derbyshire, C.J., rightly pointed out that the word "associate" means, according to the Oxford Dictionary, "to join in common purpose, or to join in an action.
Therefore, an association of persons, must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains.
This was the view expressed by Beaumont, C.J., in Com missioner of income tax vs Lakshmidas Devidas, at page 589 (1937) 5 I.T.R., and also In re: Dwarkanath Harishchandra.
519 Pitale.
In re : B. N. Elias, Costello, J., put the test in more forceful language.
He said : "It may well be that the intention of, the Legislature was to hit combinations of individuals who were engaged together in same joint enterprise but did not in law constitute partnerships . when we find that there is a combination of persons formed for the promotion of a joint enterprise then I think no difficulty arises whatever in the way of saying that . these persons did constitute an association. . ".
We think that the aforesaid decision correctly lay down the crucial test for determing what is an 'Association persons within the meaning of section 3 of the Income tax Act, and they have been accepted and followed in a number of later decisions of different High Courts to all of which it is unnecessary to call intention.
It is, however, necessary to add some words of caution here.
There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a Conclusion that there is an association of persons within the meaning of section 3; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not.
" In the course of that judgment, this Court also observed "With regard to the shares, dividends, and interest on deposits there was no finding of any act of joint management.
Indeed, the main item consists of the dividends and it is difficult to understand what act of management the windows performed in respect thereof which produced or helped to produce income.
" For forming an 'Association of Persons ', the members of the association must join together for the purpose of producing an income.
An 'Association of Persons ' can be formed only when two or more individuals voluntarily combine together for a certain purpose.
Hence volition on the part of the member of the association is an essential ingredient.
It is true that even a minor can join an 'Association of Persons ' if his lawful guardian gives his consent.
In the case of receiving dividends from shares, where there is no question of any management, it is, difficult to; draw an inference that two more shareholders functioned as an 'Association of Persons ' from the mere fact that they jointly own one or more shares, and jointly receive the dividends declared.
Those circumstances do not by themselves go to show that they acted as an 'Association of Persons '.
But unfortunately for the assessee for the assessment years 1957 58 and 1958 59, they themselves had submitted their returns in the status of 'Association of Persons '.
Those returns were 520 niether withdrawn nor did they file fresh returns as 'individuals".
It was for the first time in the appeal it was argued on their behalf that they should not have been assessed as 'Association of Persons '. 'The question whether the assessees function as on 'Association of Persons ' during those years was best known to them.
Their admission in that regard is an important piece of evidence.
They have made no attempt to show that the said admission was made under erroneous impression of law or is otherwise vitiated.
Hence for those years they were rightly assessed as an 'Association of Persons '.
But so far as the other assessment years are concerned, the same result does not follow.
They themselves have specifically stated that they are no more functioning as 'Association of PerSons '.
In the case of 'association of persons ' it is always open to its members to withdraw from the same.
No one can be compelled to continue as a member of an association.
For withdrawing from an association there is no particular form need be observed.
As seen earlier, herein we are concerned only with the realisation of dividends.
If the individual members of the association choose to realise their dividends as individuals, there is an end of the association.
The assessee 's assertion that they have realised their dividends in their individual capacity remains un rebutted.
There is nothing to disprove that claim.
None of the facts proved can be said to be inconsistent with the claim made by them.
For the reasons mentioned above, we are unable to agree with the High Court that during the assessment years 1959 60 to 1962 63, the assessees should be held, as having functioned as an 'association of persons '.
Mr. Karkhanis in support of the contention of Revenue relied on the decision of the Bombay High Court in section C. Gambatta vs Commissioner of Income tax, Bombay Therein, the only question was whether when an action is taken by an Income tax Officer under Section 23A, should the dividend deemed to have been declared to the shareholders must be considered has been taken by a husband and wife who were the joint holders of a share as an 'Association of Persons ' or by the husband alone who under the Articles of Association was to act on behalf of the joint holders.
The contention of the Revenue was that the husband alone was the shareholder.
On the other hand the contention of the assessee was that they were an 'Association of Persons ' and that contention was accepted by the 521 Court.
The ratio of that decision has no bearing on the point in issue in the present case.
We are also not able to agree with Mt. Karkhanis that the decision of this Court in N. V. Shanmugham & Co. vs Commissioner of Income Tax, Madras lends any support for the contention of the Revenue.
On the other hand, therein this Court relied upon the decision of this Court in Commissioner of Income tax, Bombay North, Kutch & Saurashtra vs Indra Balkrishna In the result, Civil Appeals Nos. 685 & 686 of 1970 are dis missed with no order as to costs.
Civil Appeals Nos.
687 690 of 1970 are allowed with costs one hearing fee.
Consequently the answer given by the High Court in those four appeals is discharged and in its place, we answer the question, in the negative and in favour of the assessee.
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For the years 1957 58 to 1962 63 the assessees were assesed by the Income tax Officer as an 'Association of Persons. ' They had filed their returns for the first two of these years as 'Association of persons but in 1959 60 they claimed that they had divided their interest in the shares held by them and therefore in respect of them they should be thereafter assessed as 'Individuals '.
The Appellate Assistant Commissioner upheld the order of the Income ' tax Officer.
The Tribunal however held that the assesseess should be assessed as 'Individuals ' and not as Association of Persons '.
The High Court in reference answered in favour of the Revenue.
In appeal by certificate it was urged on behalf of the assessees appellants that the facts that a joint gift of shares was made in favour of more than one person or those shares were registered jointly in their names or even the fact that the dividend was realised together did not go to show that the shareholders or the beneficiaries did act as an 'Association of Persons. ' HELD : (i) For forming an 'Association of Persons ' the members ,of the association must join together for the purpose of producing income.
An 'Association of Persons ' can be formed only when two or more individuals voluntarily combine together for a certain purpose.
Hence volition on the, part of the members of the association is an essential ingredient.
[519F G] In the case of receiving dividends from shares where there is no question of any management, it is difficult to draw an inference that two or more shareholders functioned as an 'Association of Persons ', from the mere fact that they jointly own one or more shares and jointly receive the dividends declared.
These circumstances do not by themselves go to show that they acted as an 'Association of Persons '.
[519G H] (ii)For the years 1957 58 and 1958 59, the assessees were rightly assessed as an 'Association of Persons ' because of their own admission which was an import ant piece of evidence.
[519,H; 520A B] (iii)For the years 1959 60 and 1962 63 they had specifically stated that they were no more functioning as an 'Association of Persons '.
In the case of an 'Association of Persons '.
It is always open to its members to withdraw from the same.
No one can be compelled to continue as a member of an association.
For withdrawing from an association no particular form need be observed.
[520C D] In the present ease the question related only to realisation of dividends.
If the individual members of the association choose to realise their dividends as individuals there is an end of the association.
The assesees ' assertion that they bad realised their dividends in their individual capacity remained unrebutted.
There was nothing to disprove their claim.
None of 516 the facts proved could be said to be inconsistent with the claim made by them.
[520D E] The answer, therefore, in respect of the years 1959 60 to 1962 63 must be in favour of the assessees.
[521C D]
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Here's a two-paragraph summary of the court case:
This court case revolves around the question of whether the assessee, G. Murugesan & Brothers, should be assessed as an 'Association of Persons' or as 'individuals' for the assessment years 1957-58 to 1962-63. The assessee is comprised of four individuals: G. Murugesan, G. Kathiresan, G. Raja Shankar, and G. Vettrivel. They were assessed as an 'Association of Persons' for the initial two years, but thereafter submitted their returns as individuals. The dispute arises from the fact that the shares were jointly purchased and the dividend income was received jointly, leading the Revenue to argue that the assessee functioned as an 'Association of Persons'.
The court held that the assessee should be assessed as 'individuals' for the years 1959-60 to 1962-63. The court relied on the definition of an 'Association of Persons' as a group of individuals who voluntarily combine together for a certain purpose, and found that the facts did not support the existence of such an association. The court noted that the assessee's admission in the initial years that they functioned as an 'Association of Persons' was an important piece of evidence, but that this admission was not made under an erroneous impression of law. The court therefore allowed the appeals for the years 1959-60 to 1962-63, but dismissed the appeals for the initial two years.
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Civil Appeal No. 174 of 1976.
Appeal by Special Leave from the Judgment and order dated 1 11 1974 of the Delhi High Court in L.P.A. No. 19/71.
P. P. Rao, A. K. Ganguli and R. Venkataramani for the Appellant.
T. A. Francis and Miss A. Subhashini for the Respondents.
Admittedly he was appointed by the Comptroller and Auditor General.
The only point that arises or, at any rate, we are concerned with is, as to whether the retirement order is in conformity with Rule 2(a) of the C.C.S. (C.C.A.) Rules 1965.
The appointing 555 authority according to Rule 56(j) is the competent authority.
Who then, is the appointing authority in the context of this case? The answer is to be sought under Rule 2(a) which reads thus: "In these rules, unless the context otherwise, requires 2 (a) appointing authority in relation to a Government servant means (i) the authority empowered to make appointments to the Service of which the Government servant is for the time being a member or to the grade of the Service in which the Government servant is for the time being included, or (ii) the authority, empowered to make appointments to the post which the Government servant for the time being holds, or (iii) the authority which appointed the Government servant to such Service, grade or post, as the case may be, or (iv) where the Government servant having been a permanent member of any other service of having substantively held any other permanent post, has been in continuous employment of the Government the authority which appointed him to that service or to any grade in that service or to that post.
whichever authority is the highest authority.
" The most significant part of the rule states, after setting out alternative authorities, that the appointing authority is one out of these four categories who is the highest.
This is emphatically brought out by the expression "whichever authority is the highest".
There is no doubt that among the four classes of authorities listed under Rule 2(a), the one falling under sub rule (iii) viz. Comptroller and Auditor general (in the present case) is the highest.
It evidently follows that the order of retirement to be legal, must be issued by the Comptroller and Auditor General, but actually the impugned order of retirement was issued by the Director of Commercial Audit.
In fact the order of retirement runs thus: "Whereas the Director of Commercial Audit is of the opinion that it is in the public interest to to do so. " Obviously the Director of Commercial Audit is a lesser official.
The conclusion is, therefore, inescapable that the compulsory retirement is contrary to law.
556 The High Court, in its extensive judgment, considered the scheme of the rules and, indeed, referred to the point mentioned above but after highlighting this question as one most emphasised by the appellant, has slurred over the point and proceeded to discussion of other issues.
We are concerned with the vital perhaps the fatal aspect of the order which has not received due attention at the hands of the High Court.
In this view, on account of the contravention of F.R. 56(j) read with Rule 2(a) of the (C.C.A.), we are constrained to come to the conclusion that the retirement is illegal.
The appellant has already become suparannuated and therefore, he will be eligible to his salary (by which we mean to include other allowances automatically admissible and going with salary) for the period between the date of compulsory retirement and the date of actual superannuation at the age of 58.
It is unfortunate that this legal flaw has proved fatal.
Administrative law is a course necessary for administrative officers at the highest levels so that such flaws may not vitiate orders they pass.
Eventually Government is put to considerable loss for no fault of it except that no proper legal training in this branch of the law for the concerned officers had been given by it.
With these observations we allow the appeal, but parties will bear their costs.
V.D.K. Appeal allowed.
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Allowing the appeal by special leave, the Court, ^ HELD.
Rule 2(a) of the C.C.S. (C.C.A.) Rules, 1965 states, after setting out alternative authorities, that the appointing authority is one out of four categories who is the highest, by using the expression "whichever authority is the highest".
There is no doubt that of the four classes of authorities listed under Rule 2(a), the one falling under sub rule (iii) viz. Comptroller & Auditor General (in the present case) is the highest.
Therefore the order of the retirement to be legal must be issued by the Comptroller & Auditor General.
The impugned order of retirement issued by the Director of the Commercial Audit who is a lesser official is contrary to law.
On account of the contravention of F.R. 56(j) read with rule 2(a) of the C.C.S. (C.C.A.) Rules, 1965, the retirement is illegal.
[555 E G, 556 B] Observation: Administrative law is a course necessary for administrative officers at the highest levels so that such flaws may not vitiate orders they pass.
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Here's a two-paragraph summary of the court case:
The appeal, Civil Appeal No. 174 of 1976, was filed against the judgment of the Delhi High Court, dated November 1, 1974, which upheld the compulsory retirement order of a Government servant. The Government servant was appointed by the Comptroller and Auditor General (CAG), but the order of retirement was issued by the Director of Commercial Audit, a lesser official. The court had to determine whether the retirement order complied with Rule 2(a) of the C.C.S. (C.C.A.) Rules 1965, which defines the appointing authority.
The court held that the retirement order was illegal as it was issued by the wrong authority. According to Rule 2(a), the appointing authority is the highest authority among the four categories listed, which includes the authority that appointed the Government servant to the service or post. In this case, the CAG, who had appointed the Government servant, was the highest authority. The court allowed the appeal, setting aside the retirement order, and directed the Government to pay the Government servant's salary and allowances for the period between the date of retirement and the date of actual superannuation at the age of 58.
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Appeal No. 61 of 1968.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated August 21, 1967 of the Andhra Pradesh High Court in Election Petition No. 3 of 1967.
993 P. Ram Reddy and A.V.V. Nair, for the appellant.
R.K. Garg, D.P. Singh, S.C. Agarwal and Asif Ansari, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This appeal arises from the decision of the Andhra Pradesh High Court dated August 21, 1967 by which an election petition filed by the present appellant Goka Ramalingam to question the election of the answering respondent Boddu Abraham was dismissed.
The matter concerns the Cheriyal (Scheduled Caste) constituency in the election to the Andhra Pradesh Legislative Assembly held in February, 1967.
Three candidates had offered themselves for election.
Two of them we have already named, the third is one Devadanam.
The answering respondent obtained 15000 and odd, the appellant election petitioner 12000 and odd and Devadanam 7000 and odd votes.
The election petition was based only on one issue, namely, that the respondents who had stood for a scheduled caste Reserved seat had "converted themselves into Christianity long time back and they continue to profess the said religion Christianity even today.
" Under the Constitution (Scheduled Castes) Order, 1950, it is provided as follows: "(2) Subject to the provisions of this Order, the castes, races or tribes or parts of, or groups within, castes or tribes, specified in Parts I to XIII of the Schedule to this Order shall, in relation to the States to which those parts respectively relate, be deemed to be Scheduled Castes so far as regards members thereof resident in the localities specified in relation to them in those Pans of that Schedule.
(3) Notwithstanding anything contained ' in paragraph 2, no person who professes a religion different from the Hindu or the Sikh religion shall be deemed to be a member of a Scheduled Caste.
" It would therefore appear that if the answering respondent and Devadanam were not members of a named scheduled caste (in this case the Madiga caste) they were not eligible to stand for election for the Reserved Seat.
The case as put forward in the High Court was that these two candidates had themselves got converted into Christianity a long time ago and that they did not therefore profess Hindu religion although in the plea it is stated affirmatively that they profess Christian religion.
The case went to trial on this plea and the issues framed were as follows: "1.
Whether the respondents who admittedly once belonged to 'Madiga ' community embraced Christianity 994 and professed the religion of Christianity at the time of election and hence respondent No. 1 was not qualified to be chosen to fill the seat in the Assembly of the State as per section 5(a) read with Rule (3) of the Consittution (Scheduled Castes) Order, 1950 (C.O. 19 dated 10 8 59) ? 2.
Whether the nomination papers of both the respondents were improperly received and as a result thereof the result of the election has been materially affected? 3.
What is the effect of admission of respondent 2 in his W.S. as to his status on this election petition?" Evidence was led to prove that the answering respondent was converted to Christianity.
This evidence was not accepted by the High Court.
As regards the other respondent, he went out of the fight admitting that he was a Christian and nothing more need be said of him.
It appears that while this case was going on, the learned Judge was informed that a Register of all converted Christians was maintained by the church.
He accordingly sent for the Register and marked it as exhibit C 1.
In the judgment the learned Judge gives his order pertaining to this action.
It reads as follows: "I may mention here that since it came out in the evidence of R.W. 2 that the names of all converts to Christianity within the jurisdiction of Hanumakonda Baptist Mission would be entered in the General Record of the Field Association, Hanumakonda, and that register was flied as an exhibit in a suit pending in the District Court at Warangal, I summoned it and marked it as exhibit C 1.
I gave opportunity for the lawyers appearing on both sides to inspect the register and make their submissions.
The entries relating to Dharmasangaram village are to be found in pages 50 to 52 and 182.
It is true that the name of the 1st respondent is not found in this Record; but since this register does not appear to be an exhaustive and complete record of all the Christians in that area, I do not propose to rely on the entries in this register for any purpose." The Register was inspected by the parties.
They went into it with a view to finding out whether the answering respondent and his wife Chinna Mariamma had been converted or not.
There was no entry showing that they had been so converted.
It appears, however, that the Register did contain two entries show 995 ing the conversion of Boddu Kumaraiah and China Buchamma who are now said to be the father and mother of answering respondent.
An affidavit has also been filed from the Pastor of the Church in which it is stated that these entries refer to the parents of the answering respondent.
Even though the Register was in court and was open to inspection of the parties, care was not taken to discover these two names, with the result that the case was fought on the original plea and issue that the answering respondent was converted to Christianity.
That apparently was not a fact, because if he was born of Christian parents he did not need conversion.
The fact, however, is only alleged now before us and has not been subjected to proof.
The question therefore is whether in view of this fresh evidence, we should allow this appeal.
On a proper consideration of the entire matter we are of opinion that we cannot.
An application was made to us asking for amendment of the plea of conversion of the answering respondent into one of conversion of his parents to Christianity.
We have been unable to allow that petition, because it changes the nature of the case requiring fresh evidence to be taken and is filed also beyond the period of limitation prescribed for filing of election petitions.
That it does change the entire nature of the case is obvious, because instead of the plea that the answering respondent was converted to Christianity, it is now sought to be substituted a plea that the parents were converted to Christianity.
We should have understood such an application being made in the Court of trial when the Register was produced, because that might have been a matter not within the knowledge of the election petitioner till the register was produced.
But after the Register had been produced and it lay in the Court for nearly an year and had been inspected by the answering respondent, it does not lie in his mouth to say that he had no notice of the true facts.
He had notice of them because he had the register with him and the names of the alleged parents of the answering respondent are clearly mentioned therein.
In fact the register seems to be a well kept document written extremely legibly and there was no danger of any name having been overlooked.
Therefore we must consider this as a belated plea and reject it on the two grounds already mentioned by us.
Once the application for amendment is out the way, the question is whether the appeal of the election petitioner can be otherwise sustained.
Mr. Ram Reddy contended that under el.
(3) of the Presidential Order, it is sufficient to prove that if a person professes religion other than Hinduism or Sikhism it disentitles him to contest for a reserved seat.
He says that for whatever reason the answering respondent be regarded as a 986 Christian today or at any rate at the time he filed his nomination paper, he would be incompetent to stand for the election from the reserved seat if he professed a religion other than Hinduism " or Sikhism.
In other words, 'he wants to extract from the plea and the issue a very much narrower field for enquiry, namely, that the answering respondent was not a Hindu on that date.
This would have been a proper plea to take in the first instance.
It is because of clumsy blundering that the petitioner undertook a much greater burden than the law required him to take.
He should have pleaded only that the returned candidate was a Christian on the date he filed his nomination paper and therefore was not ,a Hindu and was not competent to stand for the Reserved Seat.
Instead he proceeded to demonstrate through his plea and his evidence that the returned candidate was himself converted to Christianity and failed.
In this view of the matter we do not think that we should allow him to change his front and narrow the field of enquiry to one which he should have adopted in the first instance.
Not having done so, we think that it is too late for him to change his case now.
For these reasons, we are constrained to dismiss the appeal.
We may say that it is an odd situation, because probably a Christian occupies a Reserved Seat, but this is the result of the vagaries of litigation which have to be carried on according to rules.
The rules do not permit us to give relief where the party himself is at fault in making a wrong plea and in not making the right plea in time.
But in the circumstances of the case, we think that the parties should be directed to bear their costs throughout.
V.P.S. Appeal dismissed.
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The appellant and respondents were contestants for a reserved seat from 'a scheduled caste constituency for election to the State Legislative Assembly, and the first respondent was elected.
The election was challenged by the appellant on the ground that the respondent was not a member of scheduled caste because, he embraced Christianity and professed the Christian religion, and therefore, was not eligible to stand for election for the reserved seat.
During the trial, the High Court summoned a Register, containing the names of all converted Christians of the locality, which was maintained by the local church.
There was no entry showing that the first respondent was converted to Christianity.
On the issue whether the first respondent was converted to Christianity, the High Court, on a consideration of the entire evidence held that there were no proof of such conversion and dismissed the petition.
In appeal to this Court, a petition was flied alleging that the Register contained entries showing that the parents of the first respondent were converted to Christianity and it was prayed that the case should proceed on the plea of conversion to Christianity of the parents of the first respondent, in place of the original plea that the first respondent himself was so converted.
HELD: The prayer in the petition could not be granted because: (a) The plea changed the entire nature of t e case and required fresh evidence, (b) it was belated and beyond the period of limitation prescribed for filing of election petitions; and (c) the application should have been filed in the High Court itself, for, the Register was produced in the High Court and it was inspected by the parties who had thus ample opportunity to discover the basis for the new plea.
[995 D F] Under cl.
(3) of the Constitution (Scheduled Castes) Order, 1950, it would have been sufficient if the appellant pleaded and proved that the first respondent was a Christian that therefore he was not a Hindu and was not competent to stand for the reserved seat; but he chose to establish that the first respondent was himself converted to Christianity and failed to do so.
[996 B C]
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Here's a two-paragraph summary of the court case:
The appeal case before the court is related to an election petition filed by Goka Ramalingam, who contested for a Scheduled Caste Reserved seat in the Andhra Pradesh Legislative Assembly in 1967. The petition challenged the election of Boddu Abraham, who obtained 15,000 votes, on the grounds that both Boddu Abraham and Devadanam, another candidate, had converted to Christianity and thereby became ineligible to stand for election for a Reserved Seat. The issue was framed in the High Court, and evidence was led to prove that Boddu Abraham had been converted to Christianity.
However, the High Court did not accept this evidence. In the trial, a Register of all converted Christians was produced, but it did not mention Boddu Abraham's name. Instead, it showed that his parents, Boddu Kumaraiah and China Buchamma, had been converted to Christianity. The election petitioner's appeal to the court to amend the plea to take into account the parents' conversion was rejected, and the court held that it was a belated plea filed beyond the period of limitation prescribed for filing of election petitions. As a result, the court dismissed the appeal, but directed both parties to bear their costs throughout.
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(C) No. 1269 of 1989.
2 (Under Article 32 of the Constitution of India).
K.M. Sharma petitioner in person.
Soli J. Sorabjee, Attorney General, Santosh Hegde, Additional Solicitor General, A.K. Sen, Manbir Singh, Girish Chandra and Ms. A. Subhashini for the Respondents.
The Court delivered the following order: ORDER Two contentions were raised by the petitioner in this writ petition challenging the appointment of Respondent No. 1, Shri Devi Lal as Deputy Prime Minister of India: (i) that the oath administered to him as Deputy Prime Minister was not the oath in accordance with the prescrip tion of the Constitution; and (ii) he was still functioning as the Chief Minister of Haryana when the oath of office of his new assignment was administered to him.
Pursuant to notice, two affidavits have been filed one by the Respondent No. 1 and the other on behalf of the Union of India.
In the affidavit of Respondent No. 1 certain precedents have been relied upon and the practice which has been followed eversince the Constitution came into force has been referred to.
Learned Attorney General appearing on behalf of the Union of India has stated that the form prescribed in the Third Schedule pursuant to the requirement of Article 75(4) of the Constitution is only for a Minister of the Union and there is no separate form even for the Prime Minister.
Since the Prime Minister is also a member of the Council of Minis ters, he takes the same oath as the other ministers are required to take.
He maintains that yet in view of the fact that the Constitution describes him as the Prime Minister, while being sworn into office, he describes himself as Prime Minister and this practice is in vogue eversince 1950.
The oath register is by the incumbent signed as Prime Minister and all other ministers sign as Ministers.
He further indi cates that describing Shri Devi Lal as Deputy Prime Minister is descriptive only and for all purposes he is a Minister and there is no 3 constitutional sanction for the post of Deputy Prime Minis ter as such.
Relying on a bench decision of this Court in the case of Virji Ram Sutaria vs Nathalal Premji Bhavadia & Ors., , learned Attorney General further contends that the prescribed oath should be divided into two parts, one which is descriptive and the other which contains the sub stantial part.
And according to him, as long as the substantial part is properly followed, a mere mistake or error in the descriptive part would not vitiate the oath.
This Court in the reported decision said: "In this case, as we have already noted, the essential requirement of Article 173 read with Form VII A was that the person taking the oath or making the affirmation would bear true faith and allegiance to the Constitution and uphold the sovereignty and integrity of India.
The words which precede this portion are merely descriptive of the person and of his nomination as a candidate.
" In view of the clear statement.
made by the learned Attorney General that Respondent No. 1 is just a Minister like other members of the Council of Ministers though he has been described as Deputy Prime Minister but the description of him as Deputy Prime Minister does not confer on him any powers of the Prime Minister, along with his other submis sions, we think the first contention raised by the petition er has no force.
So far as the second contention is con cerned, the petitioner himself does not press it.
We accordingly reject the writ petition for the reasons indicated above.
No costs.
P.S. S Petition dismissed.
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The petitioner challenged the appointment of Respondent No. 1 as Deputy Prime Minister of India on the ground that the oath administered to him as such was not the oath in accordance with the prescription of the Constitution.
The petition was contested by Respondent No. 1 and the Union of India.
It was contended for the latter that de scribing Respondent No. 1 as Deputy Prime Minister was descriptive and for all purposes he was a Minister, that the form of oath prescribed in the Third Schedule pursuant to the requirement of Article 75(4) of the Constitution is only for a Minister of the Union, and that there was no separate form even for the Prime Minister.
It was further submitted that the prescribed oath is susceptible of division into two parts, descriptive and substantial, and as long as the substantial part is properly followed, as in the instant case, a mere mistake or error in the descriptive part would not vitiate the oath.
Dismissing the writ petition, HELD: Respondent No. 1 is just a Minister like other Members of the Council of Ministers though he has been described as Deputy Prime Minister.
The description of him as Deputy Prime Minister does not confer on him any power of Prime Minister.
It cannot, therefore, be said that the oath administered to him as Deputy Prime Minister was not the oath in accordance with the prescription of the Constitution.
[3E, 2D]
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The petitioner, K.M. Sharma, filed a writ petition challenging the appointment of Shri Devi Lal as the Deputy Prime Minister of India. The petitioner raised two contentions: (i) that the oath administered to Devi Lal as Deputy Prime Minister was not in accordance with the provisions of the Constitution, and (ii) that Devi Lal was still functioning as the Chief Minister of Haryana when the oath of office was administered to him.
The court rejected the petitioner's contentions. The Attorney General for the Union of India argued that the form prescribed in the Third Schedule of the Constitution is only for a Minister of the Union and that there is no separate form for the Prime Minister. The court also relied on a previous bench decision in Virji Ram Sutaria vs Nathalal Premji Bhavadia & Ors., which held that a mere mistake or error in the descriptive part of the oath does not vitiate it, as long as the substantial part of the oath is properly followed. Based on this, the court held that the appointment of Devi Lal as Deputy Prime Minister was valid, and the writ petition was dismissed.
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ions Nos. 130 & 133 of 1962.
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
section K. Venkatarangaiengar and R. Gopalakrishnan, for the Petitioners (In both the Petitions).
P. D. Menon, for the Respondents (In both the Petitions).
November 5.
The judgment of the Court, was delivered by GAJENDRAGADKAR,J. These two writ petitions Nos.130 of 1962 and 133 of 1962 have been filed by Heggade.
Janardhan Subbarye and Ravindra Prabhu respectively (hereinafter called the petitioners) under article 32 of the Constitution, challenging the validity of the orders issued by respondent No. 1, the State of ' Mysore, under article 15(4) of the Constitution on July 10, 1961 and July 31, 1962, respectively.
Both the petitioners had applied for admission to the pre Professional Class in Medicine in the Karnatak Medical College, Hubli, and the applications had been submitted to respondent No. 2, the Selection Committee appointed in that behalf by respondent No. 1.
According to the petitioners, they would have secured admission to the said Medical College but for the reservation directed to be made by the two impugned orders.
They alleged that the orders were ultra vires, and so, they prayed for an appropriate writ or order restraining the respondents from giving effect to the said orders and requiring, them to deal.
with the petitioners ' 'applications on the merits.
477 The points raised by the present petitions are covered by the decision of this Court in the case of M.R. Balaji vs State of Mysore(1) and so, it is common ground that the petitioners are entitled to an appropriate writ or order as claimed by them.
Learned counsel for the respondents however, drew our attention to the fact that as a result of the decision of this Court in the case of M. R. Balaji (1) respondent No. 1 was feeling some doubt as to whether the reservation made by the impugned orders in respect of the Scheduled Castes and the Scheduled Tribes was also struck down by this Court.
As the judgment shows, respondent No. 1 has consistently fixed the percentage of reservation in respect of the Scheduled Castes and the Scheduled Tribes at 15% and 3% respectively.
Five orders have been passed by respondent No. 1 one after the other under article 15(4), but the reservation fixed for the Scheduled Castes and the Scheduled Tribes has always remained the same.
It is true that the judgment of this Court does not expressly say that the validity of the said reservation was not assailed before this Court and cannot, therefore, be deemed to have been affected by the decision.
However, as the judgment shows, the only attack against the validity of the impugned orders was directed against the additional reservation made in favour of the socially and educationally Backward Classes of citizens in the State.
The petitions filed in the said cases were confined to the said reservation and during the course of the arguments before this Court, it was not suggested by the petitioners ' learned counsel that the reservation made in favour of the Scheduled Castes and Tribes was in any manner irregular or not justified by article 15(4).
This position is not disputed by the petitioners ' learned counsel before us.
Therefore, we think that in order to avoid any doubt in the matter it is necessary to make it clear that our judgment in that case does not affect the (1) (1963) supp.
1 section C. R. 439.
478 validity of the said reservation which is distinct and separate from, and independent of, the other reservation which was challenged.
The said reservation continues to be operative and the fact that the impugned orders have been quashed does not alter that position.
The said orders have been quashed solely by reference to the additional reservation made by the impugned orders in regard to the socially and educationally Backward Classes, and so, respondent No. 1 would be justified in giving effect to the reservation made in respect of the Scheduled Castes and Scheduled Tribes.
In the result, we allowed the petitions and direct that an appropriate writ or order should be issued ' restraining the respondents from giving effect to the two impugned orders.
In the circumstances of these cases, we direct that the petitioners should get from the respondents costs incurred by them, except the hearing fee.
Petitions allowed.
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The petitioners challenged the validity of the orders issued by the State of Mysore under article 13(4) of the Constitution on July 10, 1961, and July 31, 1962.
The petitioners contended that they had applied for admission to the Pre Professional Class in Medicine in the Karnatak Medical College, Hubli and they would have secured admission to the said medical college but for the reservation directed to be made by the orders mentioned above.
They contended that the above mentioned orders were ultra vires.
They prayed for an appropriate writ or order restraining the respondents from giving effect to those orders and requiring them to deal with their applications for admission on merits.
Held, that the petitioners were entitled to an appropriate writ or order as claimed by them and the respondents were restrained from giving effect to the above mentioned orders.
M. R. Balaji vs State of Mysore [1963] Supp. 1 S.C.R. 439, followed.
The impugned orders we quashed only with reference to the additional reservation made in favour of the socially and 476 educationally backward classes and so the respondents were at liberty to give effect to the reservation made in favour of the ' Scheduled Castes and Scheduled Tribes, which was not challenged at all.
The said reservation continues to be operative.
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**Summary of the Court Case**
This court case involves two writ petitions (Nos. 130 & 133 of 1962) filed under Article 32 of the Constitution of India, challenging the validity of orders issued by the State of Mysore under Article 15(4) of the Constitution. The petitioners, Janardhan Subbarye and Ravindra Prabhu, had applied for admission to the pre-professional class in Medicine at the Karnatak Medical College, Hubli, but were denied admission due to the reservation directed by the impugned orders.
The Court held that the reservation made in favor of the Scheduled Castes and Scheduled Tribes was not challenged in the case of M.R. Balaji vs State of Mysore, and therefore, continued to be operative. The Court allowed the petitions and directed the respondents to issue an appropriate writ or order restraining them from giving effect to the impugned orders, and ordered the petitioners to receive costs incurred by them. The Court's decision did not affect the validity of the reservation made in favor of the Scheduled Castes and Scheduled Tribes.
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rit Petition No. 1032 of 1986.
(Under Article 32 of the Constitution of India).
Soli J. Sorabjee, Ms. section Ralhan, S.C. Dhande and Ms. Rekha Pandey for the petitioners.
770 V.S. Desai, A.S. Bhasme and Khanwilkar for the respondents.
The Judgment of the Court was delivered by PATHAK, C.J.
The petitioners manufacture electronic goods, including television sets, television cameras and television monitors.
The factories are located at Delhi, and the goods are sold through sales organisations spread all over India, including the State of Gujarat.
Section 7 of the Gujarat Sales Tax, Act, 1969 provides for the levy of sales tax on the turnover of sales of goods specified in Part A Sch.
II appended to the Act.
Entry 80A(a) of Part A of Sch.
II specifies the rate of tax applicable to the turnover of television sets.
The rate was 15% originally upto 1981, the Entry applied to all television sets, whether manufactured and sold within the State of Gujarat or imported from outside the State.
No distinction was made between the goods on the basis of the place of manufacture.
Sub section
(2) of section 49 of the Act empowers the State Government to exempt, in the public interest, any specified class of sales from payment of the whole or any part of the tax payable under the Act.
In 1981, while the rate for electronic goods entering the State for sale therein was maintained at 15%, the rate in respect of locally manufactured goods was reduced to 6% by Notification No. (GHN 51) GST 1081 (section 49)(109) TH issued under sub section
(2) of section 49 of the Act.
The Notification introduced a new entry in the Schedule dealing specifically with electronic goods manufactured in the State of Gujarat.
Thereafter in 1986 the rate of sales tax in respect of television sets imported from outside the State was reduced from 15% to 10% and for goods manufactured within the State of sales tax was reduced to 1% by Notification No. (GHN 22) GST 1086/(S. 49)(173) TH dated 29 March, 1986.
The petitioner contends that by lowering the rate of tax in respect of goods manufactured within the State, the State Government has created an invidious discrimination which is adversely affecting the free flow of inter state Trade and commerce, resulting in a contravention of Article 301 of the Constitution.
It is pointed out that a purchaser buying a television set manufactured within the State of Gujarat pays about Rs.250 to 300 less for a black and white model and Rs.750 to Rs.1,000 for a colour model.
It is said that the sales of electronic goods manufactured by the petitioner have been prejudicially affected within the State of Gujarat.
article 301 of the Constitution declares that subject to the provi 771 sions of Part XIII "trade, commerce and intercourse throughout the territory of India shall be free".
Clause (1) of article 303 prohibits "the legislature of a State from making any law giving, or authorising the giving of, any preference to one State or another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule".
The terms of the prohibition are subject to article 304, which provides: "Notwithstanding anything in article 301 or article 303, Legislature of a State may by law: (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
" It is apparent that while a State Legislature may enact a law imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State the imposition must not be such as to discriminate between goods so imported and goods so manufactured.
In the Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr., [1963] Suppl.
2 S.C.R. 435 this Court was called upon to consider the validity of Rule 16 of the Madras General Sales Tax Rules under which tanned hides and skin imported from outside the State of Madras were subject to a higher rate of tax then the tax imposed on hides and skins tanned and sold within the State.
Referring to its earlier decisions in Atiabari Tea Co. Ltd. vs The State of Assam and Ors.
,[1961] 1 S.C.R. 809 and The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan & Ors., [1963] 1 S.C.R. 491 where the scope and significance of article 301 were explained, it proceeded to observe: "It is therefore now well settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulatory measures.
772 Sales tax, of the kind under consideration here, cannot be said to be a measure regulating any trade or a compensatory tax levied for the use of trading facilities.
Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free flow of trade and it will then offend against article 301 and will be valid only if it comes within the terms of article 304(a).
article 304(a) enables the Legislature of a State to make laws affecting trade, commerce and intercourse.
It enables the imposition of taxes on goods from other States if similar goods in the State are subjected to similar taxes, so as not to discriminate between the goods manufactured or produced in that State and the goods which are imported from other States.
This means that if the effect of the sales tax on tanned hides or skins imported from outside is that the latter becomes subject to a higher tax by the application of the proviso to sub rule of r. 16 of the Rules, then the tax is discriminatory and unconstitutional and must be struck down." So also in H. Anraj vs Government of Tamil Nadu and Dipak Dhar & Ors.
vs State of West Bengal & Anr., this Court struck down the levy of tax imposed by the State of Tamil Nadu on lottery tickets issued by other States and sold within the State of Tamil Nadu while exempting from such levy lottery tickets issued by the Government of Tamil Nadu.
In answer to the writ petition, the respondents point out that the rate of tax was reduced in the case of goods manufactured locally in order to provide an incentive for encouraging local manufacturing units.
Reference is made to cl.(b) and (c) of article 39 of the Constitution.
We do not think that any support can be derived from the two clauses of article 39.
(a) of article 304 is clear in meaning.
An exception to the mandate declared in article 301 and the prohibition contained in Cl.
(1) of article 303 can be sustained on the basis of cl.
(a) of article 304 only if the conditions contained in the latter provision are satisfied.
In the result, the discrimination effected by applying different rates of tax between goods imported into the State of Gujarat and goods manufactured within that State must be struck down.
The next question is whether, for the purpose of ensuring the 773 same rate of tax between the petitioners and the local manufacturers, the levy of the higher rate of tax suffered by the petitioners should be quashed and they be held entitled to the levy of the lower rate applied to the local manufacturers or should the higher rate imposed on the petitioners be maintained and the notifications imposing the lower rate on local manufacturers be quashed.
A perusal of the record shows that the grievance of the petitioners has arisen only because the local manufacturers have been favoured by a lower rate of tax.
So long as the higher rate of tax imposed on the petitioners was also suffered by the local manufacturers, no complaint was voiced by the petitioners.
It is the levy of the lower rate on local manufacturers that constitutes the substance of the grievance.
That is borne out by the terms of the relief specifically claimed by the petitioners, that the notifications specifying a lower rate for local manufacturers should be quashed.
Moreover, the rate levied on the petitioners is the rate prescribed under section 7 of the Act.
That is the rate applied generally.
It represents the normal standard of levy.
The lower rate applied to local manufacturers has been applied by invoking sub section
(2) of section 49 of the Act.
It represents a departure from, or exception to, the general norm.
In cases such as this, the Court should, when granting relief, choose the alternative which would give effect to the statutory intention.
And, therefore, in this case what is called for is the quashing of the impugned notifications reserving a lower rate of tax for local manufacturers.
Accordingly, the writ petition is allowed and the Notifications No. (GHN 51) GST 1081 (section 49)(109) TH dated 23 July, 1981 and No. (GHN 22) GST 1086/(S.49)(173) TH dated 29 March, 1986 prescribing a lower rate of tax for local manufacturers in respect of television sets and other electronic goods are quashed.
The petitioners are entitled to their costs.
H.L.C. Petition allowed.
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By availing of its powers under sub section
(2) of section 49 of the Gujarat Sales Tax Act, 1969 to exempt, in the public interest, any specified class of sales from payment of the whole or any part of the tax payable under the Act, the Government of Gujarat issued two notifications prescribing a lower rate of tax for goods manufactured within the State as compared to similar goods imported from outside the State.
The petitioners, who are manufacturing electronic goods, including television sets etc., in factories located outside the State, challenged the validity of these notifications as violative of article 301 of the Constitution.
The State Government contended that the rate of tax was reduced in order to provide as incentive for encouraging local manufacturing units and sought to draw support for its action from clauses (b) and (c) of article 39.
Allowing the Petition and quashing the notifications aforesaid, ^ HELD: article 301 declares that subject to the provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free.
Clause (1) of article 303 prohibits the legislature of a State from making any law giving, or authorising the giving of, any preference to one State or another, or making, or authorising the making of, any discrimination between one State and another.
The terms of the prohibition are subject to article 304.
Clause (a) of article 304 provides that the legislature of a State may, by law, impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject so, however, as not to discriminate between goods so imported and goods so manufactured or produced.
It is apparent that while a State Legislature may enact a law 769 imposing a tax on goods imported from other States, as is levied on similar goods manufactured in that State, the imposition must not be such as to discriminate between goods so imported and goods so manufactured.
We do not think any support can be derived from the two clauses of article 39 to justify the reduction in the rate of tax in the case of goods manufactured locally.
Clause (a) of article 304 is clear in meaning.
An exception to the mandate declared in article 301 and the prohibition contained in cl.
(1) of article 303 can be sustained on the basis of cl.
(a) of article 304 only if the conditions contained in the latter provision are satisfied.
[770H;771A B,772F G] Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr., [1963] Suppl.
2 S.C.R. 435; Atiabari Tea Co. Ltd. vs The State of Assam and Ors.
, ; ; The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan & Ors., [1963] 1 S.C.R. 491 and H. Anraj etc.
vs Government of Tamil Nadu etc., , relied on.
(ii) The next question is whether, for the purpose of ensuring the same rate of tax between the petitioners and the local manufacturers, the levy of the higher rate of tax suffered by the petitioners should be quashed and they be held entitled to the levy of the lower rate applied to the local manufacturers, or, should the higher rate imposed on the petitioners be maintained and the notifications imposing the lower rate on local manufacturers be quashed.
The grievance of the petitioners has arisen only because the local manufacturers have been favoured by a lower rate of tax.
The rate levied on the petitioners is the rate prescribed under section 7 of the Act.
That is the rate applied generally.
It represents the normal standard of levy.
The lower rate applied to local manufacturers has been applied by invoking sub section
(2) of section 49 of the Act.
It represents a departure from, or exception to, the general norm.
In cases such as this, the Court should, when granting relief, choose the alternative which would give effect to the statutory intention.
And, therefore, in this case what is called for is the quashing of the impugned notifications reserving a lower rate of tax for local manufacturers.
[772H; 773A E]
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**Case Summary**
The case of Rit Petition No. 1032 of 1986 was an appeal under Article 32 of the Constitution of India, filed by the petitioners, manufacturers of electronic goods, against the State of Gujarat. The petitioners challenged the State Government's decision to lower the rate of sales tax on goods manufactured within the State, while maintaining the higher rate on goods imported from outside the State. This discriminatory tax rate was allegedly affecting the free flow of inter-state trade and commerce.
The Court held that the State Government's decision to apply different tax rates on imported and locally manufactured goods was a contravention of Article 301 of the Constitution, which declares that trade, commerce, and intercourse throughout the territory of India shall be free. The Court also relied on the decision in Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr., where it was held that sales tax which discriminates between goods from one State and another affects the free flow of trade and is unconstitutional.
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Criminal Appeal No. 323 of 1978.
1098 From the Judgment and Order dated 9.3.1976 of the Orissa High Court in Criminal Appeal No. 1 of 1974.
N.K. Agarwal for the Appellant.
Ms. Mona Mehta and R.K. Mehta for the Respondent.
The Judgment of the Court was delivered by OZA, J.
This appeal has been filed after obtaining leave from this Court by the appellant against his conviction under Section 302 and sentence of imprisonment for life awarded by Sessions Judge, Mayurbharj, Kenjhar, Baripada by his order dated 8th December 1973 and maintained by High Court of Orissa by its judgment dated 9th March, 1976.
The prosecution case in short was that the deceased Bhatal Majhi had some land dispute with Jitrai Majhi and his brothers.
It is alleged that Jitrai Majhi did away with the deceased through the instrumentality of the present appel lant.
The incident is alleged to be at the night intervening between 13th and 14th December 1968.
Bhatal Majhi was found dead in the morning of 14th December, 1968 by the road side near a weekly market known as Joka Hata with his throat cut.
Bishnu Majhi the brother in law of the deceased P.W. 1 identified the dead body and lodged the information to Bangriposi Police Station the same day Ext.
The assailant was reported to be unknown.
P.W. 10, the Second Officer attached to the said Police Station investigated into the case, held an inquest, des patched the dead body for post morten examination seized certain incriminating articles and finally arrested the appellant on 15.12.68 at 11 a.m The same day 3 a.m. he arrested accused Jitrai Majhi.
The weapon of offence a razor M.O. IV was produced by accused Jitrai Majhi which was seized under Ext.
5 Investigating Officer, P.W. 10 forwarded both the accused Jitrai Majhi and Kansa Behera, present appellant, in custody to Court, the appellant escaped as the lock up was defective and he,could not be traced.
Finally a charge sheet was submitted against both Jitrai and Kansa indicating the appellant as absconder.
Jitrai was discharged by the Sub Divisional Magistrate, Baripada vide his order dated 27.2.1970 for want of prima facie case as against him.
So the case as against him needs no consideration.
Later, after the apprehension of the appellant on 22.8.72, he was committed to the Court of Sessions on 28.6.
1099 The prosecution examined 10 witnesses and nobody was examined in defence.
There is no eye witness of the inci dent.
The learned courts below convicted the appellant on the basis of circumstantial evidence.
The circumstances established against the appellant are: i) that he was last seen with the deceased on the evening of 13th Dec. 1968 when it is alleged that he and deceased took liquor together; ii) that a dhoti and shirt were recovered from the possession of the appellant when he was arrested on 15.12.68 and these articles were found to be stained with human blood; and iii) that P.Ws 7 and 8 have deposed to about an extra judicial confession made by this appellant when he was ultimately arrested after absconding in Bihar.
So far as the first circumstance that the appellant was seen with the deceased on the evening preceding the night when the deceased is alleged to have been killed is not in dispute.
This fact has been established by the evidence of PWs 3 and 4 and the appellant himself in his statement also admitted that he was there although his case was that the deceased throat was cut by Jitrai Majhi who also was an accused and was discharged on the basis of police papers by the Sub , Divisional Magistrate.
It is clear that only on the basis of this circumstances the appellant could not have been convicted and as this circumstance is not in dispute, in our opinion, it is not necessary to go into this ques tion.
Learned counsel appearing for the appellant contended that the circumstances appearing in evidence indicate that the deceased and Jitrai Mejhi had some trouble about land.
It is alleged that the deceased land was pledged with Jitrai and the possession of the land was given to him.
When the deceased offered him to repay the loan so that he may get back his land, it is alleged that Jitrai refused to give possession on the plea that the land was purchased by him.
Ultimately it is alleged that the deceased took forcible possession of the land from Jitrai and therefore Jitrai bore a grudge against the deceased.
It was also contended that the razor, the alleged instrument of offence was recovered at the instance of Jitrai when he was arrested and that was also found stained with blood.
It was contended by learned counsel that in fact the appellant 's case is that it was Jitrai who cut the throat of the deceased and this also is born out from a circumstance that next morning the appellant went to the wife of the deceased and informed her that their husband was lying dead at the place of occurrence.
It was also contended by learned counsel that the two witnesses who deposed about the dying declaration are P.Ws 7 and 8 but in fact 1100 P.W. 8 in cross examination has gone back on that statement.
It contended that even otherwise the dying declaration is a weak piece of evidence.
As regards the recovery of a shirt and dhoti which are alleged to be stained with human blood, it was contended that there is no clear evidence to indicate that the appel lant was wearing dhoti at the time of the incident.
As regards shirt it was Contended that although the serologist report indicate that it is stained with human blood but blood grouping is not there.
In this view of the matter the presence of some stains of human blood after sometime could not be a circumstance on the basis of which any conclusive inference could be drawn.
It was therefore contended that in view of these circumstances it could not be held that the circumstances point to the only conclusion of the guilt of the appellant.
It is significant that the wife of the deceased who has been examined as a witness deposed that next morning the appellant went to her and told her that her husband was lying dead, but she did not believe him and later Phudan Majhi came and told her that her husband was ill and wanted her to accompany him without taking food and she stated that she went alongwith him and found her husband lying dead with his throat cut.
It is interesting that this Phudan Majhi who came and told her a false story has not been examined.
The three circumstances on the basis of which the appel lant has been convicted have to be considered.
The last one i,e.
the extra judicial confession is proved by P.Ws 7 and 8.
A perusal of the evidence of P.W. 8 discloses that this witness in cross examination went back and denied any con fession having been made by the appellant.
The other witness is P.W. 7 who no doubt has spoken about an extra judicial confession made by the appellant.
This is after a long lapse of time as admittedly this appellant absconded after his arrest on 15.12.68 and was later arrested on 22.8.72 and this extra judicial confession therefore appears to have been made after a long lapse of time.
The circumstances .in which this appellant was apprehended and this statement is alleged to have been made also is rather interesting.
In Bihar this appellant was apprehended for having committed theft and that he was produced before the Mukhiya of the Village P.W. 7 and the Mukhia wanted him to be handed over to the police.
That it is alleged that the appellant said that I am wanted in connection with a murder case and I am hiding from the police and therefore requested not to be handed over to the police and in this background it is alleged that he made a statement that he has killed one Bhatal Majhi.
1101 Such an extra judicial confession for proving which two witnesses were produced.
One of these witnesses has gone back on that statement and this statement is alleged to have been made after a long lapse of time, in our opinion, is a piece of evidence on which no reliance could be placed and under these circumstances, in our opinion, this piece of evidence has to be left out of consideration.
As regards the recovery of a shirt or a dhoti with blood stains which according to the serologist report were stained with human blood but there is no evidence in the report of the serologist about the group of the blood and therefore it could not positively be connected with the deceased.
In the evidence of the Investigating Officer or in the report, it is not clearly mentioned as to what were the dimensions of the stains of blood.
Few small blood stains on the cloths of a person may even be of his own blood especially if it is a villager putting on these clothes and living in villages.
The evidence about the blood group is only conclusive to connect the blood stains with the deceased.
That evidence is absent and in this view of the matter, in our opinion, even this is not a circumstance on the basis of which any infer ence could be drawn.
So far as the appellant being with the deceased in the evening is concerned, it is not in dispute.
But it is also significant that the instrument of the offence was recovered at the instance of one Jitrai Majhi who has been discharged and under these circumstances therefore the evidence about the appellant having been seen in the evening with the deceased also is of no consequence.
It is a settled rule of circumstantial evidence that each one of the circumstances have to be established beyond doubt and all the circum stances put together must lead to the only one inference and that is of the guilt of the accused.
As discussed above the only circumstance which could be said to have been estab lished is of his being with the deceased in the evening and on that circumstance alone the inference of guilt could not be drawn especially in the circumstances of the case where one another accused person from whom an instrument of of fence was recovered, who had a grudge against the deceased has been let off.
In the light of the discussions above therefore, in our opinion, the courts below were wrong in convicting the appellant on these facts.
The appeal is therefore allowed, the conviction and sentence passed against the appellant are set aside.
It is reported that he is in custody.
He shall be set at liberty forthwith.
N.P.V. Appeal allowed.
|
The prosecution alleged that the deceased had some land dispute with one of the accused and his two brothers, that the deceased was done away through the instrumentality of the appellant and that his body with the throat cut was found by the road side.
The brother in law of the deceased identified the dead body and lodged information with the police.
After investigation, the appellant and the other accused were arrested.
The weapon of offence was produced by the other accused.
Both the accused were remanded to judi cial custody for the alleged murder of the deceased.
The appellant escaped and was declared as absconder.
The other accused was discharged for want of prima facie case against him.
After a long lapse of time, the appellant was apprehend ed and was committed to sessions.
On the basis of circum stantial evidence that the appellant was seen with the deceased on the evening preceding the day on which the deceased was found dead, that a dhoti and shirt, stained with human blood, were recovered from his possession when he was arrested and that an extra judicial confession was made by him when he was arrested after absconding, he was con victed under Section 302 of the Indian Penal Code and sen tenced to imprisonment for life.
The High Court having confirmed the conviction and sentence, the appellant ap pealed to this Court.
Allowing the appeal by special leave, 1097 HELD: 1.
It is a settled rule of circumstantial evidence that each one of the circumstances has to be established beyond doubt and all the circumstances put together must lead to the only inference and that is of the guilt of the accused.
[1101E] 2.1(a) It is not in dispute that the appellant was seen with the deceased on the evening preceding the night when the deceased is alleged to have been killed.
This fact has been established by the evidence of P.Ws. 3 and 4 and the appellant himself has admitted it, even though his caSe Was that the throat of the deceased was cut by the other ac cused.
Even the wife of the deceased has deposed that the appellant had told her that her husband was lying dead.
It is clear that only on the basis of this circumstance the appellant could not have been convicted.
[1099C D] 2.1(b) As regards recovery of a shirt and dhoti with blood stains, there is no evidence in the report of the Serologist about the blood group and, therefore, the evi dence could not positively be connected with the deceased.
The evidence of blood group is only conclusive to connect the blood stains with the deceased.
In the absence of such evidence, this could not be a circumstance on the basis of which any inference could be drawn.
[110lB D] 2.1(c) Regarding the extra judicial confession by the appellant, made after a long lapse of time, no reliance could be placed on it, especially in view of the circum stances in which the appellant was apprehended and the statement made, and also because of the denial by one of the two witnesses that the appellant had made by confession.
[1100F 1101A] 2.2 The only circumstances which could be said to have been established is of the appellant being with the deceased in the evening and on that circumstance alone the inference of guilt could not be drawn especially in the circumstances of the case where another accused person from whom an in strument of offence was recovered and who had a grudge against the deceased, had been let off.
[1101F] 3.
The conviction and sentence passed against the appel lant are set aside.
[1101G]
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Here is a two-paragraph summary of the court case:
The appellant, Kansa Behera, was convicted under Section 302 of the Indian Penal Code for the murder of Bhatal Majhi. The prosecution's case relied on circumstantial evidence, including the fact that the appellant was seen with the deceased on the evening of December 13, 1968, and that a shirt and dhoti recovered from the appellant's possession were stained with human blood. However, the appellant's defense was that Jitrai Majhi, who was also an accused, was the one who killed the deceased with a razor that was recovered from Jitrai's possession.
The court of appeal held that the prosecution had failed to establish a chain of circumstances that led to the guilt of the appellant beyond reasonable doubt. The court found that the evidence of the appellant's extra-judicial confession was unreliable, and that the bloodstained shirt and dhoti could not be conclusively linked to the deceased. The court also noted that one of the accused, Jitrai Majhi, had been discharged due to lack of prima facie evidence against him. In light of these findings, the court set aside the conviction and sentence of the appellant and ordered his release from custody.
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tion (Criminal) No. 421 of 1989.
(Under Article 32 of the Constitution of India).
Vishal Jeet petitioner in person.
V.C. Mahajan, A.S. Nambiar, R.B. Misra, Ms. A. Subha shini, T.V.S.N. Chari, Prabir Choudhary, D. Goburdhan, M.N. Shroff, K.R. Nambiar, Uma Nath Singh, N.N. Johri, V. Krish namurthy, V.N. Patil, A.S. Bhasme, P.R. Ramasesh, M. Veerap pa, R.K. Mehta, R.S. Suri, B.D. Sharma, D. Bhandari, Amal Dalla, D.K. Sinha, J.R. Das, S.K. Bhattacharya, S.K. Nandi, Mahabir Singh, I. Makwana, N.K. Sharma, A. Subba Rao, Ms. Kamini Jaiswal, P.K. Manohar and Mrs. Shanta Vasudevan for the Respondents.
The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J.
This writ petition under Article 32 of the Constitution of India at the instance of an Advo cate is filed by way of a Public Interest Litigation seeking issuance of certain directions, directing the Central Bureau of Investigation (1) to institute an enquiry against those police officers under whose jurisdiction Red Light areas as well Devadasi and Jogin traditions are flourishing and to take necessary action against such erring police officers and law breakers; (2) to bring all the inmates of the red light areas and also those who are engaged in 'flesh trade ' to protective homes of the respective States and to provide them with proper medical aid, shelter, education and train ing in various disciplines of life so as to enable them to choose a more dignified way of life and (3) to bring the children of those prostitutes and other children found begging in streets and also the girls pushed into 'flesh trade ' to protective homes and then to rehabilitate them.
The averments made in the writ petition on the basis of which these directions are prayed for can be summarised thus: Many unfortunate teen aged female children (hereinafter refer 864 red to as 'the children ') and girls in full bloom are being sold in various parts of the country, for paltry sum even by their parents finding themselves unable to maintain their children on account of acute poverty and unbearable miseries and hoping that their children would be engaged only in household duties or manual labour.
But those who are acting as pimps or brokers in the 'flesh trade ' and brothel keepers who hunt for these teenaged children and young girls to make money either purchase or kidnap them by deceitful means and unjustly and forcibly inveigle them into 'flesh trade '.
Once these unfortunate victims are taken to the dens of prosti tutes and sold to brothel keepers, they are shockingly and brutally treated and confined in complete seclusion in a tiny claustrophobic room for several days without food until they succumb to the vicious desires of the brothel keepers and enter into the unethical and squalid business of prosti tution.
These victims though unwilling to lead this obnox ious way of life have no other way except to surrender themselves retreating into silence and submitting their bodies to a11 the dirty customers including even sexagenar ians with plastic smile.
The petitioner has cited certain lurid tales of sex with sickening details alleged to have been confessed by some children and girls either escaped or rescued from such abodes of ill fame.
After giving a brief note on Devadasi system and Jogin tradition, the petitioner states that this system and tradition which are still prevailing in some parts of the country should be put to an end.
The ultimate plea of the petitioner is that the young children and girls forcibly pushed into 'flesh trade ' should be rescued and rehabilitated.
With this petition, the petitioner has filed 9 affidavits said to have been sworn by 9 girls who claim to be living in the brothel houses, pleading for rescue and a list of names of 9 girls who are mortally afraid to swear the affidavits.
Be it noted that no counter has been filed by any one of the respondents.
The matter is one of great importance warranting a comprehensive and searching analysis and requiring a human istic rather than a purely legalistic approach from differ ent angles.
The questions involved cause considerable anxie ty to the Court in reaching a satisfactory solution in eradicating such sexual exploitation of children.
We shall now examine this problem and address ourselves to the merits of the prayers.
No denying the fact that prostitution always remains as a running sore in the body of civilisation and destroys all moral values.
The causes and evil effects of prostitution maligning the society are so 865 notorious and frightful that none can gainsay it.
This malignity is daily and hourly threatening the community at large slowly but steadily making its way onwards leaving a track marked with broken hopes.
Therefore, the necessity for appropriate and drastic action to eradicate this evil has become apparent but its successful consummation ultimately rests with the public at large.
It is highly deplorable and heart rending to note that many poverty stricken children and girls in the prime of youth are taken to 'flesh market ' and forcibly pushed into the 'flesh trade ' which is being carried on in utter viola tion of all cannons of morality, decency and dignity of humankind.
There cannot be two opinions indeed there is none that this obnoxious and abominable crime committed with all kinds of unthinkable vulgarity should be eradicated at all levels by drastic steps.
Article 23 which relates to Fundamental Rights in Part of the Constitution and which has been put under the caption 'Right against exploitation ' prohibits 'traffic in human beings and begat and other similar forms of labour ' and provides that any contravention of Article 23(1) shall be an offence punishable in accordance with law.
The expres sion 'traffic in human beings ' is evidently a very wide expression including the prohibition of traffic in women for immoral or other purposes.
Article 35(a)(ii) of the Consti tution reads that notwithstanding anything in this Constitu tion, Parliament shall have, and the legislature of a State shall not have, power to make laws for prescribing punish ment for those acts which are declared to be offences under this part.
The power of legislation, under this article, is given to the Parliament exclusively, for, otherwise the laws relating to fundamental rights would not have been uniform throughout the country.
The power is specifically denied to the state legislatures.
In implementation of the principles underlying Article 23(1) the Suppression of Immoral Traffic in Women & Girls Act, 1956 (SITA for short) has been enacted under Article 35 with the object of inhibiting or abolishing the immoral traffic in women and girls.
In this connection, it is significant to refer Article 39 which relates to 'Directive Principles of State Policy ' under Part IV of the Constitution.
Article 39 particularises certain objectives.
Clause (f) of Article 39 was substituted by Forty Second Amendment Act, 1976.
Among the objectives mentioned under Clauses (e) and (f) of Article 39, we will confine ourselves only to certain relevant objectives under those two clauses which are sufficient for the purpose of this case.
One 866 of the objectives under clause (e) of Article 39 is that the State should, in particular, direct its policy towards securing that the tender age of children are not abused.
One of the objectives under clause (f) is that the State should, in particular, direct its policy towards securing that childhood and youth are protected against exploitation and against moral and material abandonment.
These objectives reflect the great anxiety of the Constitution makers to protect and safeguard the interests and welfare of the children of our country.
The Government of India has also, in pursuance of these constitutional provisions of clauses (e) and (f) of Article 39, evolved a national policy for the welfare of the children.
It will be apposite to make reference to one of the principles, namely, principle No. (9) formulated by the Declaration of the Rights of the Child adopted by the Gener al Assembly of the United Nations on November 20, 1959.
The said principle reads thus: 'The child shall be protected against all forms of neglect, cruelty and exploitation.
He shall not be the subject of traffic, in any form.
" Before the adoption of SITA, there were enactments in some of the states for suppression of immoral traffic, but they were not uniform nor were they found to be adequately effective.
Some states did not have any law on the subject.
With the growing danger in society to healthy and decent living with morality, the world public opinion congregated at New York in a convention for suppression of traffic in persons for exploitation for immoral purposes.
Pursuant to the signing of that convention on May 9, 1950, our Parlia ment has passed an Act called "Suppression of Immoral Traf fic in Women and Girls Act, 1956 which is now changed as "The Immoral Traffic (Prevention) Act, 1956" to which cer tain drastic amendments are introduced by the Amendment Acts of 46 of 1978 and 44 of 1986.
This Act aims at suppressing the evils of prostitution in women and girls and achieving a public purpose viz. to rescue the fallen women and girls and to stamp out the evils of prostitution and also to provide an opportunity to these fallen victims so that they could become decent members of the society.
Besides the above Act, :here are various provisions in the Indian Penal Code such as Sections 866 A (dealing with procuration of minor girl), 366 B (dealing with offence of importation of girl from foreign country), 372 (dealing with selling of minor for purposes of prostitution etc. ) and 373 (dealing with 867 the offence of buying minor for purposes of prostitution etc.).
The Juvenile Justice Act, 1986 which provides for the care, protection, treatment, development and rehabilitaton of neglected or deliquent juveniles contains a specific provision namely Section 13 which empowers a police officer or any other person or organisation authorised by the State Government in this behalf to take charge of any neglected juveniles and bring them before the Board constituted under this Act which Board under section 15 has to hold an enquiry and make such orders in relation to the neglected juveniles as it may deem fit.
Inspite of the above stringent and rehabilitative provi sions of law under various Acts, it cannot be said that the desired result has been achieved.
It cannot be gainsaid that a remarkable degree of ignorance or callousness or culpable indifference is manifested in uprooting this cancerous growth despite the fact that the day has arrived imperiously demanding an objective multi dimensional study and a search ing investigation into the matter relating to the causes and effects of this evil and requiting most rational measures to weed out the vices of illicit trafficking.
This malady is not only a social but also a socioeconomic problem and, therefore, the measures to be taken in that regard should be more preventive rather than punitive.
In our view, it is neither practicable and possible nor desirable to make a roving enquiry through the CBI through out the length and breadth of this country and no useful purpose will be served by issuing any such direction, as requested by the petitioner.
Further, this malignity cannot be eradicated either by banishing, branding, scourging or inflicting severe punishment on these helpless and hapless victims most of whom are unwilling participants and involun tary victims of compelled circumstances and who, finding no way to escape, are weeping or wailing throughout.
This devastating malady can be suppressed and eradicated only if the law enforcing authorities in that regard take very severe and speedy legal action against all the erring persons such as pimps, brokers and brothel keepers.
The Courts in such cases have to always take a serious view of this matter and inflict consign punishment on proof of such offences.
Apart from legal action, both the Central and the State Government who have got an obligation to safeguard the interest and welfare of the children and girls of this country have to evaluate various measures and implement them in the right direction.
868 Bhagwati, J. (as he then was) in Lakshmi Kant Pandey vs Union of India, while emphasizing the importance of children has expressed his view thus: "It is obvious that in a civilized society the importance of child welfare cannot be over emphasized, because the welfare of the entire community, its growth and development, depend on the health and well being of its children.
Children are a 'supremely important national asset ' and the future well being of the nation depends on how its children grow and develop.
" We, after bestowing our deep and anxious consideration on this matter feel that it would be appropriate if certain directions are given in this regard.
Accordingly, we make the following directions: 1.
All the State Governments and the Governments of Union Territories should direct their concerned law enforcing authorities to take appropriate and speedy action under the existing laws in eradicating child prostitution without giving room for any complaint of remissness or culpable indifference.
The State Governments and the Governments of Union Terri tories should set up a separate Advisory Committee within their respective zones consisting of the secretary of the Social Welfare Department or Board, the Secretary of the Law Department, sociologists, criminologists, members of the women 's organisations, members of Indian Council of Child Welfare and Indian Council of Social Welfare as well the members of various voluntary social organisations and asso ciations etc., the main objects of the Advisory Committee being to make suggestions of: (a) the measures to be taken in eradicating the child pros titution, and (b) the social welfare programmes to be implemented for the care, protection, treatment, development and rehabilitation of the young fallen victims namely the children and girls rescued either from the brothel houses or from the vices of prostitution.
All the State Governments and the Governments of Union Territories should take steps in providing adequate and 869 rehabilitative homes manned by well qualified trained social workers, psychiatarists and doctors.
The Union Government should set up a committee of its own in the line, we have suggested under direction No.(2) the main object of which is to evolve welfare programmes to be implemented on the national level for the care, protection, rehabilitation etc.
of the young fallen victims namely the children and girls and to make suggestions of amendments to the existing laws or for enactment of any new law, if so warranted for the prevention of sexual exploitation of children.
The Central Government and the Governments of States and Union Territories should devise a machinery of its own for ensuring the proper implementation of the suggestions that would be made by the respective committees.
The Advisory Committee can also go deep into devadasi system and Jogin tradition and give their valuable advice and suggestions as to what best the Government could do in that regard.
The copies of the affidavits and the list containing the names of 9 girls are directed to be forwarded to the Commis sioner of Police, Delhi for necessary action.
We may add that we are not giving an exhaustive list of the members for the constitution of the committee.
There fore, it is open to the concerned Government to include any member or members in the committee as it deems necessary.
We hope and trust that he directions given by us will go a long way towards eradicating the malady of child prostitu tion, Tevadasi system and Jogin tradition and will also at the same time protect and safeguard the interests of the children by preventing of the sexual abuse and exploitation.
So far as the remaining prayer regarding rehabilitation of the children of prostitutes is concerned, we understand that a similar issue is raised in a separate writ petition bearing W.P. No. 824/88 pending before this Court and this Court is seized of the matter and also has given an interim direction on 15.11.1989 for setting up a committee to 870 go into the question from various angles of the problems taking into consideration the different laws relevant to the matter and to submit its report.
(Vide Gaurav Jain vs Union of India and Others, ; Therefore, we are not expressing any opinion on this prayer regarding the rehabil itation of the children of prostitutes.
With the above directions, the Writ Petition is dis posed of.
T.N.A. Petition disposed of.
|
The petitioner filed a writ petition in this Court under Article 32 of the Constitution of India by way of public interest litigation seeking directions for (i) inquiry against police officials under whose jurisdiction the malady of forced prostitution, Devdasi system and Jogin traditions were flourishing and (ii) for rehabilitiation of the victims of this malady.
Disposing the writ petition, this Court.
HELD: 1.
The malady of prostitution is not only a social but also a socio economic problem and, therefore, the meas ures to be taken in that regard should be more preventive rather than punitive.
This cannot be 862 eradicated either by banishing, branding, scourging or inflicting severe punishment on the helpless and hapless victims most of whom are unwilling participants, and invol untary victims of compelled circumstances and who, finding no way to escape, are weeping or wailing throughout.
This devastating malady can be suppressed and eradicated only if the law enforcing authorities in that regard take very severe and speedy action against all the erring persons such as pimps, brokers and brothel keepers.
[867D; E G] 2.
In spite of the stringent and rehabilitative provi sions of law contained in Constitution of India, 1950, the Immoral Traffic (Prevention) Act, 1956, Indian Penal Code, 1860 and the Juvenile Justice Act, 1986, it cannot be said that the desired result has been achieved.
It cannot be gainsaid that a remarkable degree of ignorance or callous ness or culpable indifference is manifested in uprooting this cancerous growth despite the fact that the day has arrived imperiously demanding an objective multi dimensional study and a searching investigation into the matter relating to the causes and effects of this evil and requiring the most rational measures to weed out the vices of illicit trafficking.
[867C D] 3.
The Courts also in such cases have to always take a serious view of this matter and inflict consign punishment on proof of such offences.
However, it is neither practica ble and possible nor desirable to make a roving enquiry through the C.B.I. throughout the length and breadth of the country.
and no useful purpose will be served by issuing any such direction.
[867G; 867E] 4.
Apart from legal action, both the Central and the State Governments have got an obligation to safeguard the interest and welfare of the children and girls of this country.
[867H] Lakshmi Kant Pandey vs Union of India, and Guarav Jain vs Union of India & Ors.
, ; , referred to.
All the State Governments and the Governments of Union Territories should direct their concerned law enforc ing authorities to take appropriate and speedy action under the existing laws in eradicating child prostitution without giving room for any complaint of remissness or culpable indifference.
They should also set up separate Advisory Committees for making suggestions for eradication of prosti tution, implementation of the social welfare programmes for the care, protection, treatment, development and rehabilita tion of the victims, and for 863 amendments of the existing law, or for enactment of any new law for prevention of sexual exploitation of the children.
These Governments should also devise a machinery for ensur ing proper implementation of the suggestions of their re spective committees.
[868D H; 869A E]
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Here is a two-paragraph summary of the court case:
The petitioner, Vishal Jeet, filed a writ petition under Article 32 of the Constitution of India seeking the Central Bureau of Investigation (CBI) to investigate police officers who allow red-light areas and Devadasi and Jogin traditions to flourish. The petitioner also sought directions to bring all inmates of the red-light areas into protective homes, provide medical aid and shelter, and educate them to choose a more dignified way of life. The petition highlighted the exploitation of young girls and children in the flesh trade, where they are sold, kidnapped, and forced into prostitution.
The Supreme Court observed that the causes of prostitution are notorious and frightful, and its eradication is necessary. The Court noted that despite existing laws such as the Suppression of Immoral Traffic in Women and Girls Act, 1956, and the Juvenile Justice Act, 1986, the desired result of eradicating child prostitution has not been achieved. The Court directed the State Governments and Union Territories to take speedy action under existing laws to eradicate child prostitution. It also suggested the formation of an Advisory Committee to make suggestions on measures to be taken to eradicate child prostitution and provide social welfare programs for the care and rehabilitation of young fallen victims.
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Civil Appeal No. 94 of 1959.
Appeal by special leave from the judgment and decree dated May 7, 1957, of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision Application No. 144 D of 1957.
Bishan Narain R. Mahalingier and B. C. Misra for the appellants.
935 Gurbachan Singh and Harbans Singh, for the respondent.
December 5.
The Judgment of Sinha, C.J., Hidayatullah and Shah, JJ., was delivered by Hidayatullah, J. Kapur, J. delivered a separate judgment.
HIDAYATULLAH, J.
The appellants (in this appeal by special leave) are the sons of one Gauri Shankar, who owned a bungalow known as 5, Haily Road, New Delhi.
This bungalow was given to the respondent by Gauri Shankar on a monthly rent of Rs. 234 6 0, excluding taxes.
The suit, out of which this appeal arises, was brought by the appellants against the respondent, Rao Girdhari Lal Chowdhury, for his eviction on the ground (among others) that he had sub let a portion of the bungalow after the commencement of the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952) to one, Dr. Mohani Jain, without obtaining the consent in writing of the landlord, as required by section 13(1)(b)(i) of the Act.
The defence was that the original contract of tenancy was entered into sometime in 1940 and a term in the contract gave the tenant right to sub let.
It was alleged that a letter written by the tenant which embodied the terms of the tenancy was in the possession of the landlord and a demand was made for its production.
The case of the tenant was that the sub tenancy commenced in the year 1951, that is to say, before the passing of the Act of 1952, and the tenant was not required to obtain the written consent of the landlord to sublet Admittedly, in this case, no written consent was proved.
We need not mention the other allegations and counter allegations which are usual in proceedings between landlords and tenants, the most important of them being about the arrears of rent, which the tenant under permission of the Court ultimately deposited in Court.
936 The issue on which the decisions below have differed was framed by the Sub Judge, First Class, Delhi, in the following terms: "Did the plaintiff consent to the sub letting of parts of the demised premises by the defendant ? If so, when and to what effect.
" The trial Judge found that there was no evidence that the landlord was ever consulted before a portion of the bungalow was sublet to Dr. Mohani Jain, and further that the sub tenancy was created after June 9, 1952, the date on which the Act came into force.
In reaching the latter conclusion, the trial Judge made a reference to a dispute between the tenant and Dr. Mohani Jain for fixation of standard rent before the Rent Control authorities.
In those proceedings, Dr. Mohani Jain had alleged that she was living as a sub tenant from the end of 1951, but the tenant had denied this fact.
The proceedings before the Rent Control authorities ended in a compromise, but the admission of the tenant was relied upon to support the conclusion that the sub tenancy commenced after the Act.
The trial Judge decreed the suit.
The decision of the trial Judge was confirmed on appeal by the Additional District Judge, Delhi.
Though Dr. Mohani Jain gave oral evidence in this case that her sub tenancy commenced in December 1951, the Additional District Judge found categorically that the sub tenancy commenced sometime after the coming into force of the Act.
He held that even if Dr. Mohani Jain was living there even from before it was a guest and not as a sub tenant.
Against the order of the Additional District Judge, a revision was filed under section 35 (1) of the Act.
That section reads as follows: "The High Court may, at any time, call for the record of any case under this Act for the purpose of satisfying itself that a decision 937 made therein is according to law and may pass such order in relation thereto as it thinks fit.
" Acting in accordance with a decision of the Punjab High Court as to the ambit of this section, the learned single Judge, who heard the revision application, thought that it was competent for him to reconsider the concurrent findings about the time when the sub tenancy commenced.
He held that Dr. Mohani Jain 's statement showed that the sub tenancy commenced prior to the passing of the Act, and that the landlord 's consent in writing was not necessary.
In reaching this conclusion, the learned Judge was of opinion that all the evidence was not considered by the two Courts below, and that he was entitled, in view of the interpretation placed upon the section above quoted, to go into the matter afresh, and decide the question of fact.
It may be pointed out that while the suit was pending before the Subordinate Judge, an application was made for the production of the letter referred to in the written statement of the tenant, to which a passing reference has already been made.
A letter was produced, and it is exhibit D 1.
That letter does not disclose all the terms of the tenancy and it would appear, therefore, that the terms of the original tenancy have not been proved in this case, and there is no material on which it can be said either way as to whether a right to sublet was conferred upon the tenant.
The defendant did not insist in the Court of first instance that there was yet another letter, and the argument to that effect in this Court cannot be entertained.
In reaching the conclusion that all the evidence pertinent to the issue was not considered, the learned Judge of the High Court stated that Ex.
P 19, which was the petition filed by Dr. Mohani Jain under section 8 of the Act to get the standard rent fixed was not taken into account by the Additional District Judge.
That petition contained an averment 938 that her sub tenancy commenced on December 1, 1951 with a rent of Rs. 100/ per month, and that a cheque for Rs. 1,800/ as advance rent for 18 months was given by her in the name of the daughter of the tenant, because the tenant represented that he had no account in the bank and therefore a cheque should be given in the name of his daughter.
This, the learned Judge felt, adequately supported the statement of Dr. Mohani Jain to the same effect as a witness in this case.
The learned Judge was in error in thinking that exhibit P 19 was not taken into account by the Additional District Judge.
The latter had, in fact, considered exhibit P 19, the petition of Dr. Mohani Jain, before the Rent Control authorities.
exhibit P 20, the reply of the tenant to that petition and Ex.
P 21, the petition of compromise; but he cited Exs.
P 20 and P 21 only.
There is internal evidence to show that exhibit P 19 was, in fact, considered, because after mentioning the two Exhibits, the learned Additional District Judge goes on to say as follows: "The first of these is the written statement of the present appellant which he had filed in a case brought by Dr. Mohani Jain against him for the fixation of fair rent.
There he had completely denied somewhere in the year 1953 that Dr. Mohani Jain was his subtenant and could not sue for fixation of rent.
This was enough to show that right up to the year 1953 the appellant himself did not regard Dr. Mohani Jain as a sub tenant.
" This clearly shows that the learned Additional District Judge was weighing exhibit P 19 as against exhibit P20 and was acting on exhibit P 20, which contained a material admission by the tenant before the present dispute had begun.
The learned single Judge was, therefore, in error in departing from a concurrent finding of fact on a wrong supposition.
939 But the question that arises in this appeal is one deeper than a mere appraisal of the evidence.
It is whether the High Court in the exercise of its revisional power is entitled to re assess the value of the evidence and to substitute its own conclusions of fact in place of those reached by the Court below.
This question requires an examination of the powers of revision conferred on the High Court by section 35 of the Act.
That question is one of common occurrence in Acts dealing with some special kinds of rights and remedies to enforce them.
Section 35 is undoubtedly worded in general terms, but it does not create right to have the case reheard, as was supposed by the learned Judge.
Section 35 follows section 34, where a right of appeal is conferred; but the second sub section of that section says that no second appeal shall lie.
The distinction between an appeal and a revision is a real one.
A right of appeal carries with it a right of rehearing on law as well as fact, unless the statute conferring the right of appeal limits the rehearing in some way as, we find, has been done is second appeals arising under the Code of Civil Procedure.
The power to hear a revision is generally given to a superior Court so that it may satisfy itself that a particular case has been decided according to law.
Under section 115 of the Code of Civil Procedure.
the High Court 's power are limited to see whether in a case decided, there has been an assumption of jurisdiction where none existed, or a refusal of jurisdiction where it did, or there has been material irregularity or illegality in the exercise of that jurisdiction.
The right there is confined to jurisdiction and jurisdiction alone.
In other acts, the power is not so limited, and the High Court is enabled to call for the record of a case to satisfy itself that the decision therein is according to law and to pass such orders in relation to the case, as it thinks fit.
The phrase "according to law" refers to the decision as a whole, and is not to be equated to 940 errors of law or of fact simpliciter.
It refers to the overall decision, which must be according to law which it would not be, if there is a miscarriage of justice due to a mistake of law.
The section is thus framed to confer larger powers than the power to correct error of jurisdiction to which section 115 is limited.
But it must not be overlooked that the section in spite of its apparent width of language where it confers a power on the High Court to pass such order as the High Court might think fit is controlled by the opening words, where it says that the High Court may send for the record of the case to satisfy itself that the decision is "according to law".
It stands to reason that if it was considered necessary that there should be a rehearing, a right of appeal would be a more appropriate remedy, but the Act says that there is to be no further appeal.
The section we are dealing with, is almost the same as section 25 of the Provincial Small Cause Courts Act.
That section has been considered by the High Courts in numerous cases and diverse interpretations have been given.
The powers that it is said to confer would make a broad spectrum commencing, at one end, with the view that only substantial errors of law can be corrected under it, and ending, at the other with a power of interference a little better than what an appeal gives.
It is useless to discuss those cases in some of which the observations were probably made under compulsion of certain unusual facts.
It is sufficient to say that we consider that the most accurate exposition of the meaning of such sections is that of Beaumont, C.J. (as he then was) in Bell & Co. Ltd. vs Waman Hemraj (1) where the learned Chief Justice, dealing with section 25 of the Provincial Small Cause Courts Act, observed: "The object of section 25 is to enable the High Court to see that there has been no miscarriage of justice, that the decision was given according to law.
The section does not enumerate 941 the cases in which the Court may interfere in revision, as does s.115 of the Code of Civil Procedure, and I certainly do not propose to attempt an exhaustive definition of the circumstances which may justify such interference; but instances which readily occur to the mind are cases in which the Court which made the order had no jurisdiction or in which the Court has based its decision on evidence which should not have been admitted, or cases where the unsuccessful party has not been given a proper opportunity of being heard, or the burden of proof has been placed on the wrong shoulders.
Wherever the court comes to the conclusion that the unsuccessful party has not had a proper trial according to law, then the Court can interfere.
But, in my opinion, the Court ought not to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court would not have arrived at.
" This observation has our full concurrence.
What the learned Chief Justice has said applies to section 35 of the Act, with which we are concerned.
Judged from this point of view, the learned single Judge was not justified in interfering with a plan finding of fact and more so, because he himself proceeded on a wrong assumption.
The appeal thus succeeds, and is allowed with costs.
The order under appeal is set aside, and that of the Additional District Judge restored.
As regards eviction, the respondent has given an undertaking that he would vacate the house on or before April 25, 1962, and this has been accepted by the appellants.
KAPUR J.
I agree that the appeal should be allowed and that the High Court was in error in interfering with the finding of fact, but in my 942 opinion the power of revision under section 35(1) of the Delhi & Ajmer Rent Control Act is not so restricted as was held by Beaumont, C. J., in Bell & Co. Ltd. vs Waman Hemraj(1), a case under section 25 of the Provincial Small Cause Courts Act.
The section provides that the order passed should be in accordance with law and if it does not then the High Court can pass such order as it thinks fit.
The language used in section 35(1) of the Act is almost identical with the words of the proviso to s.75(1) of the Provincial Insolvency Act.
The power under that proviso has been thus commented upon by Mulla in his Law of Insolvency at page 787 of 2nd Edition: "The power given to the High Court by this proviso is very wide.
In the exercise of this power the High Court may set aside any order if it is not `according to law '.
" The power under the Insolvency Act has not, by the Courts in India, been considered to be do restricted as the observations of Beaumont, C. J. in Bell & Co. Ltd. vs Waman Hemraj(1) seem to suggest in regard to section 25 of the Small Cause Courts Act.
This power of interference by the High Court is not, in my opinion, restricted to proper trial according to law or error in regard to onus of proof or proper opportunity of being heard.
It is very much wider than that.
When, in the opinion of the High Court, the decision is erroneous on a question of law which affects the merits of the case or decision is manifestly unjust the High Court is entitled to interfere.
The error may not necessarily be as to the interpretation of a provision of law, it may be in regard to evidence on the record.
Thus when material evidence on the record is ignored or a finding is such that on the evidence taken as a whole no tribunal could, as a matter of legitimate inference arrive at.
It is neither possible nor desirable to enumerate all 943 cases which would fall within the jurisdiction of the High Court under section 35(1) of the Act but it is not to be narrowly interpreted nor to be so widely interpreted as to convert the revision into an appeal on facts.
Appeal allowed.
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In an ejectment suit under the Delhi & Ajmer Rent Control Act, 1952, the trial Judge decreed the suit and on appeal under s.34 of the Act the Additional District Judge confirmed 934 the decision.
The Act did not provide for a second appeal, and under section 35 (1) a revision was filed against the Order of the Additional District Judge The single Judge of the Punjab High Court following a previous decision of the same High Court, was of opinion that in assessment as all the evidence was not considered it was competent for him to reconsider the concurrent findings of the courts below.
The question is whether the High Court in exercise of its revisional powers is entitled to re assess the value of the evidence and to substitute its own conclusions of facts in place of those reached by the courts below.
^ Held, (per Sinha, C. J., Hidayatullah and shah, JJ, that though section 35 of the Delhi and Ajmer Rent Control Act is worded in general terms, but it does not create a right to have the case re heard.
The distinction between an appeal and revision is a real one.
A right to appeal carries with it right of re hearing on law as well as fact, unless the statute conferring the right to appeal limits the re hearing in some way.
The power to hear a revision is generally given to a superior court so that it may satisfy, itself that a particular case decided according to law.
The phrase "according to law" in section 35 of the Act refers to the decision as a whole, and is not to be equated to errors of law or of fact simplicitor.
All that the High Court can see is that these has been no miscarriage of justice and that the decision is according to law in the sense mentioned.
per Kapur, J.
The power under section 35 (1) of the Act of interference by the High Court, is not restricted to a proper trial according to law or error in regard to onus of proof or proper opportunity of being heard.
It is very much wider than that when in the question of the High Court the decision is erroneous on a question of law which affects the merits of the case or decision is manifestly unjust the High Court is entitled to interfere.
Bell and Co. Ltd. vs Waman Hemraj approved.
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Here is a two-paragraph summary of the court case:
The appellants, sons of Gauri Shankar, brought a suit against the respondent, Rao Girdhari Lal Chowdhury, for eviction from a bungalow on Haily Road, New Delhi. The appellants claimed that the respondent had sublet a portion of the bungalow to Dr. Mohani Jain without obtaining their consent in writing, as required by the Delhi and Ajmer Rent Control Act, 1952. The respondent denied the allegation, stating that the original contract of tenancy gave him the right to sublet and that the subtenancy commenced before the Act came into force.
The trial court found in favor of the appellants, and the decision was confirmed on appeal by the Additional District Judge. However, the High Court, in exercise of its revisional power under section 35 of the Act, departed from the concurrent findings of fact and held that the subtenancy commenced prior to the passing of the Act. The High Court's decision was set aside by the Supreme Court, which held that the High Court exceeded its powers of revision and that its interference with the finding of fact was unwarranted. The Supreme Court allowed the appeal and restored the order of the Additional District Judge.
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Appeal No. 717 of 1961.
Appeal by special leave from the judgment and order dated April 10, 1961 of the Assam High Court in Civil Revision No. 10 of 1961.
D. R. Prem, P. D. Menon for R. N. Sachthey, for the appellants.
The respondent did not appear.
626 1963.
May 7.
The judgment of the Court was delivered by RAGHUBAR DAYAL J.
This appeal, by special leave, is directed against the order of the High Court of Assam rejecting the revision application, under section 115 of the Code of Civil Procedure, hereinafter called the Code, of the appellants against the order of the Additional Subordinate, Judge, Gauhati, in a money suit to the effect that he had jurisdiction to try the suit.
The contention of the appellants is that this view of the Subordinate judge, confirmed by the High Court, is wrong.
To appreciate the contention for the appellants, the facts of the case may be stated.
The suit was instituted by the plaintiff respondent against the Union of India and the Northern Frontier Railway represented by the General Manager, having its headquarters at Pandu.
It related to a claim for recovery of a sum of Rs. 8,250/ on account of nondelivery of the goods which had been consigned to the plaintiff 's firm run tinder the name and style of M/s. Ladu Lal Jain.
The consignment consisted of 134 bags of rice and was booked from Kalyanganj station of defendant No. 2 for carriage to Kanki station of the same defendant on April 13, 1958.
The goods consigned were no, delivered to the plaintiff and hence the suit, after serving a notice under section 77 of the Indian Railways Act on the defendant railway and also serving a notice tinder section 80 of the Code.
It was alleged in the plaint that the cause of action arose at Pandu within the jurisdiction of the Court at Gauhati, the place where notice under section 80 of the Code was duly served upon the defendant railway and that the suit was filed in the Court within the jurisdiction of which the defendant railway had 627 its principal place of business by virtue of its held quarters being at Pandu.
The two defendants filed a joint written statement.
Kalyanganj is in West Bengal and Kanki is in the State of Bihar.
Gauhati is in the State of Assam.
It was contended inter alia that Gauhati Court had no territorial jurisdiction to try the suit as neither of the aforesaid railway stations was within its jurisdiction and that the consignment never travelled within any part of the State of Assam and therefore the cause of action could not arise within the jurisdiction of any Court in Assam It was further contended that mere service of notice, which was not admitted, on the defendants at a place within the jurisdiction of the Court, could not vest territorial jurisdiction on it and that defendant No. 1, the Union of India, had no principal place of business at Pandu or any other place within the jurisdiction of the Court, its head quarters office being at New Delhi.
It was also stated that defendant No. 2 is owned and managed by defendant No. 1, that the office of defendant No. 2 at Pandu was also owned and controlled by defendant No. 1 and that the office at Pandu was a branch office of the Union of India which was controlled by defendant No. I from New Delhi.
Relying on the case reported as P.C. Biswas vs Union of India (1), the Trial Court decided the preliminary issue about jurisdiction against the defendants holding that the principal place from which the railway administrator in a particular area is carried on is the principal place of business for the purpose of section 20 of the (ode.
The single judge of the High Court rejected the revision also on the basis of the same decision of his Court.
The territorial jurisdiction of a Court is in general determined by the provisions of section 20 of the Code which reads : "Subject to the limitations aforesaid, ever suit 628 shall be instituted in a Court within the local limits of whose jurisdiction (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides,.
or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution ; or (c) the cause of action, wholly or in part, arises.
Explanation I : Where a person has a permanent dwelling at one place and also temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he hag such temporary residence.
Explanation 11 : A corporation shall be deemed to carry on business at its sole or principal office in India or in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
" The principle behind the provisions of clauses (a) and (b) of section 20 is that the suit be instituted at a place 629 where the defendant be able to defend the suit without undue trouble.
The expression 'voluntarily resides or personally works for gain ' cannot be appropriately applied to the case of the Government.
The Government can however carry on business.
The mere fact that the expression 'carries on business ' is used along with the other expressions, does not mean that it would apply only to such persons to whom the other two expires ions regarding residence or of personally working for gain would apply.
The sole contention raised for the appellants in this Court is that the running of railways by the Union of India cannot be said to amount to its carrying on business and that therefore the fact that the headquarters of the Northern Frontier Railway Administration is at Pandu within the jurisdiction of the Court at Gauhati does not give the Court jurisdiction under section 20 of the Code.
The contention is based on the reasoning that any undertaking run by the Government, even if it amounts to the carrying on of a business when run by a private individual, would not be the carrying on of business by the Government if there was no element of profit making in it.
There is no allegation in the written statement that the Government is not running railways for profit.
No issue was framed about it.
The Court below recorded no decision on the point.
It cannot be presumed that the Government is not making a profit from its running the railways in the country or is not running it with a profit motive.
The fact that the Government runs the railways for providing quick and cheap transport for people and goods and for strategic reasons will not convert what amounts to the carrying on of a business into an activity of the State as a sovereign body.
630 Article 298 of the Constitution provides that the executive power of the Union and of each State shall extend to the carrying on of any trade or business and cl.
(6) of article 19 provides that nothing in sub cl.
section (g) of cl.
(1) of that Article shall prevent the State from making any law relating to the carrying on by the State or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
These provisions clearly indicate that the State can carry on business and can even exclude citizens completely or partially from carrying on that business.
Running of railways is a business.
that is not denied.
Private companies and individuals carried on the business of running railways, prior to the State taking them over.
The only question then is whether the running of railways ,ceases to be a business when they are run by Government.
There appears to be no good reason to hold that it is so.
It is the nature of the activity which defines its character.
Running of railways is such an activity which comes within the expression 'business '.
The fact as to who runs it and with what motive cannot affect it.
This Court bad occasions to detemine the nature of certain activities of Government.
The rationale of those cases is a good guide for determining the point before us.
In State of Bombay vs The Hospital Mozdoor Sabha(1) ' the question was whether the relevant provisions of the , applied to the group of hospitals run by the State of Bombay and whether they are 'industry ' within the meaning of that Act.
The decision of the question depended on the interpretation of the definition of 'industry ' prescribed by section 2 (j) of the Act.
This section provides that industry means any business, trade, undertaking etc., of employers.
In considering the question it became necessary to enquire whether that activity, i.e., the running of the (1) 631 hospitals, would be an undertaking if it is carried on by a private citizen or a group of private citizens.
It was field that if a hospital is run by private citizens for profit, it would be an undertaking very much like the trade or business in their conventional sense.
It was observed at p. 878 : "Thus the character of the activity involved in running a hospital brings the institution of the hospital within section 2.(j).
Does it make any difference that the hospital is run by the Government in the interpretation of the word undertaking ' in section 2 (j) ? In our opinion, the answer to this question must be in the negative.
It is the character of the activity which decides the question as to whether the activity in question attracts the provision of section 2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference " To similar effect were the observations in The Corporation of the City of Nagpur vs Its employees where it was said : "If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation.
" It was earlier said at p. 960 "Monetary considerations for service is, therefore, not an essential characteristic of industry in a modern State." "Barring the regal functions of a municipality, if such other activities of it, if undertaken by an individual, would be industry, then they would equally be industry in the hands of a municipality, (1) [1960] a S.C.R. 942, 962, 632 Lastly, in Satya Narain vs District Engineer, P.W.D. (1), the question for determination was whether plying motor buses by the Government by way of commercial activity amounts to its running it on a public service.
In determining this question, this Court observed at p. 1163: "It is undoubtedly not easy to define what is "Public service ' and each activity has to be considered by itself for deciding whether it is carried on as a public service or not.
Certain activities will undoubtedly be regarded as public services, as for instance, those undertaken in the exercise of the sovereign power of the State or of governmental functions.
About these there can be no doubt.
Similarly a pure business undertaking though run by the Government cannot be classified as public service.
But where a particular activity concerns a public utility a question may arise whether it falls in the first or the second category.
The mere fact that that activity may be useful to the public would not necessarily render it public service.
An activity however beneficial to the people and however useful cannot, in our opinion, be reasonably regarded as public service if it is of a type which may be carried on by private individuals and is carried on by government with a distinct profit motive.
It may be that plying stage carriage buses even though for hire is an activity undertaken by the Government for ensuring the people a cheap, regular and reliable mode of transport and is in that sense beneficial to the public.
It does not, however, cease to be a commercial activity if it is run with profit motive.
Indeed even private operators in order to attract custom are also interested in providing the same facilities to the public as the Government undertaking provides.
Since that is so, it is difficult (1) A, I, R. 633 to see what difference there is between the activity carried on by private individuals and that carried on by Government.
By reason of the fact that a commercial undertaking is owned and run by the State it does not ipso facto become a "public service '.
" This case simply held that commercial activity carried on with profit motive cannot be held to be 'public service '.
It does not hold that such activity carried on by Government will not be "business ' if conducted without profit motive.
We are of opinion that 'profit element ' is not a necessary ingredient of carrying on business, though usually business is carried on for profit.
It is to be presumed that the Railways are run on a profit basis, though it may be that occasionally they are run at a loss.
The case reported as Director of Rationing & Distribution vs The Corporation of Calcutta (1), relied on for the appellants is really of no help to them.
It was in connection with the sovereign activities of the State that it was said that the State was not bound by any statute unless the statute provided to that effect in express terms or by necessary implication.
The contention that the Government could not get the benefit of this law in connection with its business activities was neither repelled nor considered.
It was held to have no foundation as there was nothing on the record that the Food Department of the Government of West Bengal by undertaking rationing and distribution of food on a rational basis had embarked upon any trade or business and, in the absence of any such indication, it appeared that the department was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available foodstuffs with a view to maintaining peace and good government.
(1) [1961] I. &.C.
A? 158, 634 In view of what we have said above, we hold that the, Union of India carries on the business of running railways and can be sued in the Court of the Subordinate Judge of Gauhati within whose territorial jurisdiction the headquarters of one of the railways run by the Union is situated.
We accor dingly dismiss the appeal with costs.
Appeal dismissed.
|
The plaintiff respondent instituted a suit in the court of the Additional Subordinate Judge, Gauhati, against the Union of India and the Northern Frontier Railway represented by the General Manager, having its headquarters at Pandu.
Pandu is within the jurisdiction of the Subordinate judge.
The claim was for the recovery of a sum of Rs. 8,250/ on account of nondelivery of the goods which had been consigned to the plaintiffs firms, The consignment was booked from Kalyanganj station of defendant No. 2 fair carriage to Kanki, a station of the same defendant.
It was alleged in the plaint that the cause of action arose at Pandu within the jurisdiction of the Court, where the defendant railway had its principal place of business by virtue of its headquarters being at Pandu.
The suit was resisted by the defendants on the ground that the court bad no jurisdiction to entertain the suit.
Relying on the decision of the Assam High Court in P. C. Biswas vs Union of India, A. I. R. , the court of first instance held that the principal place from which the railway administration in a particular area is carried on is the principal place of business for the purpose of jurisdiction under section 20 of the Code of Civil Procedure, 1908, and decided the issue in favour of the plaintiff.
The revision petition filed by the appellants was rejected by the High Court.
The present appeal was filed with special leave granted by this Court.
It was contended in the appeal by the appellants that the running of the railway by the Union of lndia could not be said to amount to carrying on of business and that therefore the fact that the headquarters of Northern Frontier Railway Administration was at Pandu within the jurisdiction of the 625 Court at Gauhati did not give the Court jurisdiction under section 20 of the Code of Civil Procedure.
Held that articles 19 (6) and 298 of the Constitution clearly indicate that the State can carry on business and can even exclude citizens completely or partially from carrying on that business.
The running of railways which is a business when carried on by private companies or individuals does not cease to be a business when they are run by the Government.
It is the nature of the activity which determines the character of an activity.
The fact as to who runs it and with what motive cannot affect it. 'Profit element ' is not a necessary ingredient of carrying on of business, though usually business is carried on for profit.
The fact that the Government runs the railways for providing cheap transport for the people and goods and for strategic reasons will not convert what amounts to carrying on of business into an activity of the State as a sovereign body.
The Union of India carries on the business of running railways and can be sued in the court of the Subordinate judge of Gauhati within whose territorial jurisdiction the headquarters of one of the railways run by the Union is situated.
Case Law reviewed.
State of Bombay vs Hospital Mazdoor Sabha [1960] 2 S.C.R. 866, The Corporation of the City of Nagpur vs Ito Employees, ; and Satya Narain vs District Engineer, P. W. D., A. I. R.
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Here is a two-paragraph summary of the court case:
The Union of India and the Northern Frontier Railway were sued by a plaintiff for the recovery of Rs. 8,250 on account of nondelivery of goods. The suit was instituted in the Court at Gauhati, which the defendants contested, arguing that the Court had no territorial jurisdiction to try the suit. The defendants contended that neither of the railway stations was within the jurisdiction of the Gauhati Court and that the consignment never travelled within any part of the State of Assam.
The issue before the court was whether the Union of India carries on the business of running railways and can be sued in the Court of the Subordinate Judge of Gauhati. The court held that the Union of India carries on the business of running railways and can be sued in the Court of the Subordinate Judge of Gauhati, as the headquarters of one of the railways run by the Union is situated within the territorial jurisdiction of the Gauhati Court. The court rejected the opinion that any undertaking run by the Government, even if it amounts to the carrying on of a business when run by a private individual, would not be the carrying on of business by the Government if there was no element of profit making in it.
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N: Criminal Appeal No. 401 of 1976.
Appeal by Special leave from the Judgment and Order dated the 26th September, 1976 of the Gauhati High Court in Criminal Appeal No. 18 of 1975.
S.K. Nandy and Krishna Prasad for the Appellant.
D. Goburdhan for the Respondent.
The Judgment of the Court was delivered by MISRA, J.
The present appeal by special leave has been filed by the State of Assam against the judgment of the Gauhati High 243 Court dated 25th of September, 1975 whereby it set aside the conviction of the respondent Mafizuddin Ahmed and acquitted him of the charge of murder.
The prosecution case as unfolded in the first information report and the evidence is that the respondent Mafizuddin Ahmed was a sub Inspector of Police posted at Gauhati.
His wife and children lived at his village home at Bholagaon within the Palashbari Police Station.
The respondent had first married Jaygun Bibi and had one son and two daughters from her.
Later on he married another lady Smt.
Lal Bari and thereafter he started maltreating Jaygun Bibi.
On 10th of April 1973 he went to his village home and at about 2 p.m. he poured kerosene oil on his wife Jaygun Bibi and set fire to her body with the help of a match box.
When she screamed the accused gagged her mouth and then wrapped her with a quilt and threw her on the floor.
In so doing the respondent himself received some burn injuries on his hands.
The village people hearing the cries came there and they took Jaygun Bibi as well as the respondent accused to the Gauhati Medical College Hospital where they were admitted for treatment.
Alimuddin Ahmed was the uncle of Jaygun Bibi and lived at a distance of 6 miles from the house of the respondent.
He received a news that the house of the respondent had burnt and that Mafizuddin and Jaygun Bibi had sustained burn injuries.
A few days thereafter Alimuddin Ahmed 's brother developed tetanus.
He got him admitted in the Isolation Hospital at Kalapahar, Gauhati.
From there he went to Gauhati Medical College Hospital on 18th April, 1973 to see how Jaygun Bibi was faring.
He met Jaygun Bibi and asked her how it happened and then she told that her husband had poured kerosene oil on her body and set fire.
He, thereupon went to the Sadar Police Station and made a report (exhibit 3).
On receipt of the report police arranged for recording the dying declaration of Jaygun Bibi by a Magistrate as her condition was considered precarious.
Shri A.C. Bhuyan (PW 2) recorded the dying declaration of Jaygun Bibi.
Eventually Jaygun Bibi succumbed to her injuries on that very day.
The accused pleaded not guilty to the charge.
His plea was one of denial.
He, however, admitted that on 10th of April, 1973 his wife received serious burn injuries and later died as a result of her injuries at the Gauhati Medical College Hospital.
His case was that on 10th April, 1973 his house at Bholagaon caught fire and at that 244 time his wife wearing garments also accidently caught fire.
Having seen this he tried to extinguish the fire on her body by covering her with a quilt and in doing so he himself received some burn injuries.
He flately denied that he poured kerosene oil on her body and then set fire as alleged.
The only eye witness in the case is Mantaz Ali the son of the deceased Jaygun Bibi and the accused respondent.
He was of only 5 years and odd at the time of occurrence and of 7 years and odd at the time of his deposition.
The other material evidence relied upon by the prosecution are the two dying declarations, one being oral made to Alimuddin Ahmed, the uncle, and the other being written dying declaration recorded by the Magistrate Shri A.C. Bhuyan, PW 2.
The Sessions Judge on a consideration of the evidence adduced by the prosecution found that the charge under section 302 IPC was fully brought home to the accused and accordingly convicted him thereunder and sentenced him to life imprisonment.
On appeal, the High Court set aside the order of conviction and acquitted the respondent of the charge.
The State of Assam has, as stated earlier, filed the above appeal by obtaining a special leave.
The contention raised before the High Court on behalf of the respondent was that the evidence was too meagre and unreliable to sustain the conviction and the learned Sessions Judge failed to properly appreciate the same.
The evidence which has been relied upon by the Sessions Judge for convicting the respondent was the evidence of the eye witness Mantaz Ali, the child witness, and the two dying declarations, one oral and the other written for convicting the respondent.
The High Court, however, did not find it safe to convict the respondent on the basis of dying declaration and the statement of PW 7.
It has been contended for the State of Assam that the conviction could be based upon the dying declaration even if there is no other corroborating evidence on the record and reference was made to Tarachand Damu Sutar vs The State of Maharashtra(1) and Maniappan vs The State of Madras.(2) Mr. Goverdhan, counsel for the respondent accused, on the other hand contends that the dying 245 declaration alone without corroboration cannot be made the basis of convicting the respondent and referred to Madhoprasad vs The State of Madhya Pradesh(1).
This Court has consistently taken the view that conviction can be based upon the dying declaration alone.
In Maniappan 's case (supra) the dying declaration was a completed statement which was categorical in character and there was nothing to show that the victim had anything more to say.
This Court held that the dying declaration needed no corroboration and could be relied upon.
In Khushal Rao vs State of Bombay(2) this Court held : ". in our opinion, there is no absolute rule of law, or even a rule of prudence which has ripened into a rule of law, that a dying declaration unless corroborated by other independent evidence, is not fit to be acted upon, and made the basis of a conviction." The Court referred to the following observation made in Madho Prasad 's case (supra) : "It is settled law that it is not safe to convict an accused person merely on the evidence furnished by a dying declaration without further corroboration because such a statement is not made on oath and is not subject to cross examination and because the maker of it might be mentally and physically in a state of confusion and might well be drawing upon his imagination while he was making the declaration.
It is in this light that the different dying declarations made by the deceased and sought to be proved in the case have to be considered." and observed that they were in the nature of obiter dicta.
In Lallubhai Devechand Shah & Ors.
vs State of Gujarat(3) dealing with a dying declaration this Court laid down : "The law with regard to dying declarations is very clear.
A dying declaration must be closely scrutinised as to its truthfulness like any other important piece of 246 evidence in the light of the surrounding facts and circumstances of the case, bearing in mind on the one hand, that the statement is by a person who has not been examined in court on oath and, on the other hand, that the dying man is normally not likely to implicate innocent person falsely." Thus, the law is now well settled that there can be conviction on the basis of dying declaration and it is not at all necessary to have a corroboration provided the Court is satisfied that the dying declaration is a truthful dying declaration and not vitiated in any other manner.
We, therefore, find considerable force in the contention of the counsel for the State of Assam that there can be a conviction on the basis of dying declaration even in the absence of other corroborating evidence but before doing so, the Court has to be satisfied about the truthfulness of the dying declaration.
In the instant case, the occurrence took place on the 10th of April, 1973.
The deceased was alive upto 18th of April 1973.
She did not disclose earlier to anyone she met in the hospital that her husband sprinkled kerosene oil and set her on fire.
She met so many people after the occurrence she met the village people who appeared on the scene just after the occurrence and who took her to hospital.
She did not disclose the story to the doctor or the nurse attending on her.
There is no evidence of the doctor on the record that she was not in a position to speak or that she had become unconscious between 10th of April and 18th of April.
It is only when her uncle met her on the 18th of April that she made an oral dying declaration to him and later to the Magistrate who recorded her statement.
This throws doubt on the dying declaration made by Jaygun Bibi and this circumstance weighed with the High Court in discarding the dying declaration of the deceased.
The High Court discarded the dying declaration on yet another ground that the name of the husband of the deceased given in the dying declaration was Mohsin Ali not Mafizuddin Ahmed and, therefore, the identity of the lady Jaygun Bibi was itself doubtful.
Dr. Ramananda Das, Registrar of the Surgical Unit No. 1 of the Gauhati Medical College Hospital, PW 6, in whose presence the statement was recorded, has not stated that the declarant was Jaygun Bibi.
He has simply stated that the Magistrate recorded the statement of a patient of his unit who received burn injuries.
247 Further, the Magistrate, Shri A.C. Bhuyan, who recorded the dying declaration of the Jaygun Bibi stated that the daroga and a constable were present nearby when the statement was recorded.
Coupled with these in the absence of the thumb impression of the deceased on the declaration.
The cumulative effect of all the circumstances which weighed with the High Court is that they cast doubt about the truthfulness of the dying declaration.
It is not outside the realm of probability that her statement may have been inspired by her uncle and, therefore, it will not be safe to base the conviction of respondent on such a dying declaration.
The other direct evidence is the deposition of PW 7, the son of the deceased, a lad of 7 years.
The High Court has observed in its judgment : ". the evidence of a child witness is always dangerous unless it is available immediately after the occurrence and before there were any possibility of coaching and tutoring." A bare perusal of the deposition of PW 7 convinces us that he was vacillating throughout and has deposed as he was asked to depose either by his nana or by his own uncle.
It is true that we cannot expect much consistency in the deposition of this witness who was only a lad of 7 years.
But from the tenor of his deposition it is evident that he was not a free agent and has been tutored at all stages by someone or the other.
He had told the police that he was in the mango grove at the time of occurrence.
If this be a fact then he could not be an eye witness of the occurrence but when he came to depose before the Court he said : "Ahmed is my father 's brother.
He was not at home at the time of the occurrence.
He came later.
He taught me to tell police that I had been in the mango grove at the time of occurrence.
That is why I told police so.
Later, in company with my maternal grand father, Alimuddin I said what I had seen." Again, the first thing that he uttered when the house caught fire is "Gharat Jui Lagil" (the house has caught fire).
This statement is 248 more in consonance with the defence theory.
His mother was more important for him and if it was a fact that his father had set fire to his mother by sprinkling kerosene oil to which he was a witness he would not have omitted to say so.
In the next breath he deposed that his father poured scented oil on his mother 's body and not kerosene oil.
The fact that he was tutored is fully borne out by his own statement, as will be clear from the following portion of his deposition: " "Nana" accompanied me when I came to depose in the lower court, but stayed outside.
I stated in that court that I had stated what "Nana" asked me to.
The day before I came to depose, I had told "Nana" what I would say.
" It is also clear from the materials on the record that on the advice of the police Alimuddin Ahmed, the nana of PW 7 applied for his custody during the enquiry proceedings but the Magistrate instead of giving custody to the nana gave the custody of PW 7 to his nani, who was no other than the wife of Alimuddin.
So to all intents and purposes the custody of the boy remained with Alimuddin Ahmed, the nana.
Indeed, he took the boy for giving evidence in court.
P.W. 7 was in the full control of the nana and deposed as he was asked to depose.
In this setting the observation made by the High Court is fully justified.
There are two other circumstances which also cannot be lost sight of.
Covering the burning body of the Jaygun Bibi with quilt will help in extinguishing the fire.
That will stop the passing of oxygen to the fire and the fire will automatically extinguish.
The further fact that in so doing the husband also got burns on his hands goes a long way to support the defence version.
For the reasons given above the appeal must fail.
It is accordingly dismissed.
P.B.R. Appeal dismissed.
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The prosecution case against the respondent was that after marrying for a second time he started ill treating his first wife, the deceased, and that on the day of the occurrence (10th April, 1983) he poured kerosene oil on her and set fire to her body.
When the deceased started screaming he gagged her and wrapped her with a quilt and threw her on the floor and in the process he himself received burn injuries on his hands.
A week later on the 18th April, 1973 when the uncle of the deceased called on her at the hospital and enquired as to how it happened, she told him that her husband poured kerosene oil and set fire to her body.
He then reported the matter to the police.
Since her condition was precarious, a Magistrate recorded her dying declaration.
The respondent 's case on the other hand was that on the day of the occurrence when his wife 's garments accidentally caught fire when his house caught fire he attempted to extinguish the fire by covering her with a quilt and in the process he himself had received burn injuries.
Believing the evidence of the son of the deceased, a boy of 7 years, and the dying declarations made to her uncle and the Magistrate, the Sessions Judge held that the charge under section 302 I.P.C. was established.
But the High Court did not find it safe to convict him on the basis of the dying declarations and the statement of the child witness and acquitted him of the charge.
In appeal to this Court, it was contended on behalf of the State that even if there was no evidence on record to corroborate the dying declarations the respondent 's conviction could be based on the dying declaration.
Dismissing the appeal, ^ HELD: It is well settled that, even in the absence of other corroborating evidence, there can be a conviction on the basis of a dying declaration provided that the Court is satisfied about the truthfulness of the dying declaration and that it is not vitiated in any other manner.
[246 B C] 242 Maniappan vs The State of Madras, ; , Khushal Rao vs State of Bombay, ; , and Lallubhai Devechand Shah & Ors.
vs State of Gujarat, A.I.R. referred to.
In the instant case even though the occurrence took place on 10th April and the deceased was alive till 18th April, she did not disclose either to the villagers who visited her or to the doctor or the nurse attending on her that her husband sprinkled kerosene oil and set her on fire.
There was no evidence that she was not in a position to speak or that she was unconscious between 10th April and 18th April.
It was only on the 18th April that she made an or dying declaration for the first time to her uncle and later to the Magistrate.
And secondly the name of the husband of the deceased in the dying declaration was shown as Mohain Ali and not the real name Mafijuddin Ahmed.
The doctor, in whose presence the dying declaration was recorded, did not state that the declarant was the deceased; he only stated that the Magistrate recorded the statement of a patient of his unit who had received the burn injury.
Therefore the probability of her statement being inspired by her uncle cannot be weeded out.
The aforesaid circumstances do cast doubt on the truthfulness of the dying declaration.
[246 D H, 247 A C] From the tenor of the evidence of the son of the deceased, a boy of about 7 years, it is evident that he was vacillating throughout and that he was not a free agent but he had been tutored.
He said that he was in the mango grove at the time of the occurrence; that his uncle taught him to tell the police that he was in the grove at the time of occurrence; that it was the house that caught fire first; that his father poured kerosene oil on his mother and set fire to her.
He also said that his father poured sented oil on his mother 's body and not kerosene oil.
On the application of Alimuddin Ahmed the son of the accused was kept in the custody of his wife and thus to all intents and purposes the custody of the boy remained with the uncle of the deceased and his wife.
[247 E H, 248 A, D E] The fact that the respondent covered the deceased with quilt to extinguish the fire and in the process had himself got burn injuries on his hands also lend support to the defence version.
[248F]
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Here is a two-paragraph summary of the court case:
The State of Assam filed an appeal against the acquittal of Mafizuddin Ahmed, a sub-inspector of police, by the Gauhati High Court in a murder case. The High Court had set aside the conviction of Ahmed on the grounds that the evidence was too meager and unreliable to sustain the conviction. The prosecution case was based on the dying declaration of the deceased, Jaygun Bibi, and the statement of Mantaz Ali, a child witness. However, the High Court discarded the dying declaration due to several factors, including the uncertainty of the declarant's identity and the possibility that her statement may have been inspired by her uncle.
The Supreme Court, however, held that conviction can be based on the dying declaration alone, even in the absence of other corroborating evidence, provided the Court is satisfied about the truthfulness of the dying declaration. However, in this case, the Court found that the dying declaration was not reliable due to the uncertainty of the declarant's identity and the possibility of tutoring. Additionally, the Court found that the statement of the child witness, PW 7, was also unreliable due to the possibility of coaching and tutoring. Therefore, the Court dismissed the appeal against the acquittal of Ahmed, accepting the findings of the High Court that the evidence was not sufficient to sustain the conviction.
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ION: Criminal Appeal No. 15 of 1955.
Appeal by special leave from the judgment and order dated the 24th March, 1953 of the Calcutta High Court in Criminal Appeal No. 94 of 1952 arising out of the Judgment and order dated the 22nd April 1952 373 of the Court of Sessions Judge, Murshidabad in Sessions Trial No. 1 of 1952.
Jai Gopal Sethi, (C. F. Ali and P. K. Ghosh, with him) for the appellants.
B.Sen, (I. N. Shroff, for P. K. Bose, with them) for the respondent.
April 18.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by special leave against the judgment of the High Court of Calcutta confirming the conviction and sentence of each of the two appellants before us, by the Sessions Judge of Murshidabad.
The appellants were tried on a charge under section 302/34 of the Indian Penal Code by the Sessions Judge with a jury.
The jury returned a unanimous verdict of guilty against each under the first part of section 304 read with section 34 of the Indian Penal Code.
The learned Judge accepted the verdict and convicted them accordingly and sentenced each of the appellants to rigorous imprisonment for ten years.
In order to appreciate the points raised before us, it is desirable to give a brief account of the prosecution case.
The two appellants jointly made a murderous assault on one Saurindra Gopal Roy at about 6 30 p.m. on the 3rd November, 1951.
There was, owing to litigation, previous enmity between the deceased and the appellants.
All of them belonged to a village called Mirzapur which is within the police station Beldanga, district Murshidabad.
The deceased along with two friends of his, of the same village, examined as P.Ws. 1 and 2, attended a foot ball match that evening at Beldanga.
The match was over by 5 p.m. and all the three of them were returning together to their village.
In the course of the return they were passing at about 6 30 p.m. through a field, nearly half a mile away from the village.
The two appellants each having a lathi and a Hashua (sickle) in his hand, emerged from a bush nearby and rushed towards the deceased and his companions.
P.W. 1 49 374 was first struck with a lathi and thereupon both P.Ws. 1 and 2 moved away to a distance.
The appellants assaulted the deceased and inflicted on him a number of serious injuries.
The two companions of the deceased, P.Ws. 1 and 2, ran towards the village and shouted for help whereupon a number of people from the village came and collected at the spot.
Information was also carried to the son as well as to the brother of the deceased.
They also came on the scene.
The brother, by name Radhashyam, proceeded at once to the Beldanga police station and lodged the first information report at about 7 30 p.m.
The police officer came to the scene and recorded a statement from the deceased who was then still alive.
He was thereafter taken to the hospital at Beldanga.
At the hospital the Medical Officer also took a statement from him (exhibit 4).
He died some time thereafter.
P.Ws. 1 and 2, the companions of the deceased, were the only eye witnesses to the murderous assault.
The prosecution relied also on certain statements said to have been made by the deceased after the assault.
The deceased is said to have stated to P.W. 7 one of the villagers who first came on the scene, after hearing the shouts of P. Ws. 1 and 2, that the two appellants were his assailants.
A little later, when his son and his brother, P.W. 3 came there, he is also said to have stated to P.W. 3 that the two appellants were the assailants.
Accordingly the first information report gave the names of the two appellants as the assailants.
Similar statements are said to have been made by the deceased to the police officer when he came on the spot and later to the Medical Officer when he was taken to the hospital.
The evidence, therefore, in support of the prosecution case was mainly, that of the two eye witnesses, P.Ws. 1 and 2, and of the four dying declarations, two of them oral and two written.
There was considerable scope for criticism about the evidence of the two eye witnesses.
The evidence relating to the dying declarations was also open to attack in view of the nature of the injuries inflicted on the deceased.
These included incised wounds on the occipital region and an incised wound 375 in the brain from out of which a piece of metal was removed on dissection.
This, as was urged, indicated the likelihood of the deceased having lost his consciousness almost immediately and hence the improbability of any statements by the deceased.
But the medical evidence on this point was indecisive.
There can be no doubt however that the reliability of the prosecution evidence was open to serious challenge in many respects.
But learned counsel for the appellants has not been able to raise either before the High Court or before us any objection to the verdict, on the ground of misdirection or non direction, of a material nature, in the charge to the jury by the Sessions Judge. 'On the other band, the charge brought out every point in favour of the appellants and against the prosecution evidence.
It erred, if at all.
in that the learned Judge involved himself in a great deal of elaboration.
The only flaw in the charge which, learned counsel for the appellants could attempt to make out, was that the exposition therein of the legal concept underlying section 34 of the Indian Penal Code was obscure and that it would not have been correctly appreciated by the jurors.
It may be that this could have been expressed in more lucid terms.
But we are unable to find that there was any misdirection or non direction therein.
Nor do we see any reason to think that the jury has been misled.
Thus there was no real attack either in the High Court or here as against the learned Judge 's charge to the jury.
Accordingly, the only points urged before us are the following.
1.The circumstances of the case and the nature of the charge to the jury made it incumbent on the learned Judge to disagree with the jury and to refer the case to the High Court under section 307 of the Code of Criminal Procedure.
2.In the alternative, the learned Sessions Judge having expressed himself in his charge to the jury, definitely for acquittal, he should not have accepted its verdict, though unanimous, without giving satisfactory reasons for such acceptance.
The learned Judge having, in his charge speci 376 fically cautioned the jury against communal prejudice in the following terms "your deliberations and verdict should not be influenced by any communal considerations,", should have refused to accept the verdict as having been vitiated by communal bias.
It may be stated that all the jurors were Hindus and that the accused were both Muhammadans.
The suggestion is that in view of the fact that thescene Of occurrence was near the border between West and East Bengal, it should have been appreciated that communal bias was, at the time, almost inevitable.
4.There has been virtually no examination of the accused by the Sessions Judge under section 342 of the Code of Criminal Procedure and the trial has been vitiated thereby.
In advancing the first two of the above contentions learned counsel for the appellants assumes and asserts that the Sessions Judge in his charge to the jury was unequivocally of the opinion that there was no reliable evidence on which the conviction could be based and that the appellants should be acquitted.
On this assumption, he urges that, when in the circumstances the jury gave a unanimous verdict of guilty, his obvious duty was either to express his dis agreement with the verdict of the jury and refer the whole case for the consideration of the High Court under section 307 of the Code of Criminal Procedure, or, at the least, to have placed on record his reasons why in spite of his clear opinion against the prosecution case, he did not consider it necessary to disagree from the verdict of the jury.
In order to substantiate this point of view, learned counsel took us through various portions of the charge to the jury and we have ourselves perused carefully the entirety of it.
As already stated, the learned Judge undoubtedly pointed out in his charge all the weaknesses of the prosecution evidence in great detail.
It is also likely that be was inclined for an acquittal.
But we are not satisfied that he came to a definite and positive conclusion that there should be acquittal.
While pointing out the weakness of the prosecution evidence with a leaning against its reliability he has not specifically 377 rejected every important item of the prosecution evidence.
It was only in some places that he stated categorically that he would not accept a particular item of evidence and would advise the jurors to reject it.
In other places, while pointing out the infirmities of the evidence, he was not so categorical and positive, as to what his own opinion on that item of evidence was.
For instance, out of the two eye witnesses, P.Ws. 1 and 2, the learned Judge said, so far as P.W. 2 is concerned, as follows: "Personally speaking I am not satisfied with the evidence of recognition of the accused persons as the assailants of Sourindra Gopal furnished by P.W. 2, Satyapada.
You will be advised, gentlemen, not to rely upon the evidence of P.W. 2".
As regards the evidence of the other eye witness, P.W. 1, however he summed it up as follows: "You should take a comprehensive view of all matters and then decide whether you should act upon the evidence of recognition of the accused persons as the assailants of Sourindra furnished by P.W. 1, Bhupati".
There was similar difference in the expression of his opinions with reference to the evidence of the dying declarations of the deceased.
It may be recalled that the evidence of the oral dying declarations is of statements to P.W. 7, Phani, and P.W. 3, Radhashyam.
The evidence of statement to P.W. 7 was given by a number of witnesses, viz. P.Ws. 6, 7, 8, 9, 10, 11) 12 and 13.
Out of these so far as the evidence of P. W. 9 is concerned, the learned Judge specifically stated as follows: "I should tell you that you should not believe P.W. 9 when he stated on being questioned by Phani, Sourindra mentioned Moseb and Sattar as his assailants".
But he did not rule out the evidence of the others on this item in the same manner.
Then again, when he dealt with the question whether the slip of paper, exhibit 4, is genuine the learned Judge noticed that the said paper was shown to have been taken from the medical officer P.W. 17 into the possession of the In 378 vestigating Officer, P.W. 35, about a month later and commented on it as follows: "Personally speaking I see no reasonable explanation as to why the I.O. should not have seized exhibit 4 from P.W. 17 immediately after it was recorded, if it was recorded on 3rd November, 1951, and sent it to the Magistrate forthwith".
All the same, the learned Judge also remarked thus: "You will consider very seriously whether you have any reason to disbelieve the evidence of P. Ws. 17, 32 and 33".
P.Ws. 32 and 33 are witnesses who spoke to the statement of the deceased said to have been taken by the Doctor, P. W. 17.
Taking the charge to the jury, therefore, comprehensively we are unable to find that the learned Judge rejected the prosecution evidence and arrived at a clear and categorical conclusion in his own mind that the appellants were not guilty.
We are, therefore, unable to accept the assumption of learned counsel for the appellants that the Judge agreed with the unanimous verdict of the jury against his own personal conviction, as to the guilt of the accused.
It appears to us, therefore, that there is no foundation, as a fact, for the argument that the learned Judge should have made a reference to the High Court under section 307 of the Code of Criminal Procedure or that, in any case, he should have placed on record his reasons for agreeing with the verdict of the jury notwithstanding his own personal opinion to the contrary.
Assuming however that the charge to the jury in this case can be read as being indicative of a definite opinion reached by the Sessions Judge in favour of the appellants, it does not follow that merely on that account he is obliged to make a reference under section 307 of the Code of Criminal Procedure.
What is required under that section is not merely disagreement with the verdict of the jury but the additional factor that the learned Sessions Judge "is clearly of opinion that it is necessary for the ends of justice to submit the case to the High Court".
It is now well settled, since the decision of the Privy Council in 379 Ramnugrah Singh vs King Emperor(1) that under section 307 of the Code of Criminal Procedure a Session,, Judge, even if he disagrees with the verdict of the jury must normally give effect to that verdict unless he is prepared to hold the further and clear opinion "that no reasonable body of men could have given the verdict which the jury did".
We are certainly not prepared to say that the present case satisfies that test or that the charge to the jury indicated any such clear conclusion.
Indeed it is to be noticed that on intimation by the jury of its unanimous verdict, the learned Judge has recorded that he "agreed with and accepted the verdict".
We have no doubt that it was perfectly competent for him to do so.
Learned counsel urges that this acceptance is a judicial act and that having regard to the whole tenor of the Judge 's charge to the jury, he was at least under a duty to himself and to the appellate court to record his reasons for acceptance of the verdict of the jury.
We are unable to agree with this contention.
It may be that in a case where a Judge in his charge to the jury has clearly and definitely expressed himself for acquittal, it would be very desirable, though not imperative, that he should give his reasons why be changed his view and accepted the verdict of the jury.
But we can find no basis for any such contention in this case.
The two further contentions that remain which are enumerated above as 3 and 4, were not raised before the High Court.
We are reluctant to allow any such contentions to be raised on special leave.
The point relating to the possibility of the verdict having been the result of bias has no serious basis.
It appears to us that the learned Sessions Judge had no justification in this case for imagining the possibility of such bias and giving a warning to the jury in this behalf.
This is not a case which arose out of any incident involving communal tension.
The likelihood of any such bias is not to be assumed merely from the fact of the appellants being Mubammadans and the jurors being Hindus.
Nor is it right to take it (1) [1946] L.R. 73 I.A. 174.
380 for granted merely from the fact of proximity of the place of trial to the border between West and East Bengal.
On the other hand, it is not without some relevance that when the jury was empanelled at the commencement of the trial, there was absolutely no such objection taken.
Nor was the right of challenge to the jurors exercised.
Learned counsel for the appellants has very strenuously argued before us, the point relating to the inadequacy of the examination of the appellants under section 342 of the Code of Criminal Procedure.
Now, it is true that the examination in this case was absolutely perfunctory.
The only questions put to each of the accused in the Sessions Court, and the answers thereto were the following: "Q. You have heard the charges made and the evidence adduced against you.
Now say, what is your defence? What have you got to say? A.
I am innocent.
Will you say anything more? A. No. Q. Will you adduce any evidence in defence? A. No." There can be no doubt that this is very inadequate compliance with the salutary provisions of section 342 of the Code of Criminal Procedure.
It is regrettable that there has occurred in this case such a serious lacuna in procedure notwithstanding repeated insistence of this Court , in various decisions commencing Tara Singh 's case(1) on a due and fair compliance with the terms of section 342 of the Code of Criminal Procedure.
But it is also well recognised that a judgment is not to be set aside merely by reason of inadequate compliance with section 342 of the Code of Criminal Procedure.
It is settled that clear prejudice must be shown.
This court has clarified the position, in relation to cases where accused is represented by counsel at the trial and in appeal.
It is up to the accused or his counsel in such cases to satisfy the Court that such inadequate examination has resulted in miscarriage of justice.
This Court in its judgment (1)[1951] S.C.R. 729.
381 in the latest case on this matter, viz. K. C. Mathew and Others vs The State of Travancore Cochin(1) (delivered on the 15th December, 1955) has laid down that "if the counsel was unable to say that his client had in fact been prejudiced and if all that he could urge was that there was a possibility of prejudice, that was not enough".
Learned counsel could not, before us, make out any clear prejudice.
All that learned counsel for the appellants urges is, that this might be so in a case where the trial was with the assessors and the Judge 's view on the evidence was the main determining factor.
But he contends that the same would not be the case where the trial is with the aid of a jury.
Learned counsel urges that a full and clear questioning in a jury trial does not serve the mere purpose of enabling the accused to put forward his defence or offer his explanation, which may be considered along with the entire evidence in the case.
The jury would, he suggests also, have the opportunity of being impressed one way or the other by the method and the manner of the accused, when giving the explanation and answering the questions and that the same might turn the scale.
Learned counsel urges, therefore, that the non examination or inadequate examination under section 342 of the Code of Criminal Procedure in a jury trial must be presumed to cause prejudice and that a conviction in a jury trial should be set aside and retrial ordered, if there is no adequate examination under section 342 of the Code of Criminal Procedure.
We are not prepared to accept this contention as a matter of law.
The question of prejudice is ultimately one of inference from all the facts and circumstances of each case.
The fact of the trial being with the jury may possibly also be an additional circumstance for consideration in an appropriate case.
But we see no reason to think that in the present case this would have made any difference.
We are, therefore, not Prepared to accept the argument of the learned counsel for the appellants in this behalf.
In any case, an argument of this kind which would, if accepted, (1)[1955] 2 S.C.R. 1057.
50 382 necessitate a retrial, is one that ought to be put forward at the earliest stage and at any rate at the time of the regular appeal in the High Court.
This cannot be entertained for the first time in an appeal on special leave.
For all the above reasons this appeal is dismissed.
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A Sessions Judge, even if he disagrees with the verdict of the Jury, must normally give effect to that verdict unless he is clearly of opinion that no reasonable body of men could have given the verdict which the Jury did.
Ramnugrah Singh vs King Emperor, ([1946] L.R. 73 I.A. 174), relied on.
A Sessions Judge need not record his reasons for accepting the verdict of the Jury.
In a case where a Judge in his charge to the Jury, has clearly and definitely expressed himself for acquittal, it would be desirable though not imperative, that he should give his reasons why he changed his view and accepted the verdict of the Jury finding the accused guilty.
Even where the examination of the accused under section 342 Cr.
P.C. is perfunctory the judgment cannot be set aside unless clear prejudice is shown.
Tara Singh 's case, ([1951] S.C.R. 729), referred to.
K.C. Mathew and Others vs The State of Travanore Cochin, ([1955] 2 S.C.R. 1057), relied on.
Prejudice cannot be presumed from the fact that the trial is by a jury though that is a circumstance which may be taken into consideration.
An argument which would, if accepted, necessitate a retrial, ought to be put forward at the earliest stage and at any rate before the High Court in appeal and cannot be entertained for the first time in an appeal on special leave.
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Here is a two-paragraph summary of the court case:
The appeal was filed by two accused, Jai Gopal Sethi and another, against their conviction and sentence of rigorous imprisonment for ten years each under Section 302/34 of the Indian Penal Code. The trial was held by a Sessions Judge with a jury, and the jury returned a unanimous verdict of guilty against each of the accused. The Sessions Judge accepted the verdict and convicted the accused accordingly. The accused's lawyers raised several contentions, including the alleged misdirection of the charge to the jury, the failure of the Sessions Judge to disagree with the verdict and refer the case to the High Court, and the inadequacy of the examination of the accused under Section 342 of the Code of Criminal Procedure.
The court observed that the Sessions Judge's charge to the jury was not free from criticism, but it was not shown that it was such as to vitiate the trial. The court also noted that the Sessions Judge did not explicitly state that the accused were not guilty, and that he accepted the verdict of the jury. The court held that it was not necessary for the Sessions Judge to record his reasons for accepting the verdict, and that the absence of adequate examination of the accused under Section 342 of the Code of Criminal Procedure did not necessarily result in prejudice to the accused. The court ultimately dismissed the appeal, holding that there was no merit in the contentions raised by the accused's lawyers.
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(CRL.) No. 369 of 1986.
Under Article 32 of the Constitution of India.
633 Govind Mukhoty, Ms. Nandita Haksar and L.R. Singh for the Petitioners.
D. Goburdhan for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
Peoples ' Union for Democratic Rights, an organisation said to be committed to the uphold ing.
of fundamental rights of citizens has filed this appli cation under Article 32 of the Constitution.
It is alleged that on 19th April, 1986, 600 to 700 poor peasants and landless people mostly belonging to the backward classes had collected for holding a peaceful meeting within the compound of Gandhi Library in Arwal, a place within the District of Gaya in the State of Bihar.
Without any previous warning by the police or any provocation on the part of the people who had so collected, the Superintendent of Police, Respondent No. 3 herein, reached the spot with police force, surrounded the gathering and opened fire as a result which several people were injured and at least 21 persons including chil dren died.
The petitioner alleged that separate unofficial inquiries have been held into the atrocity and the reports indicated that the number of deaths was much more than 21 and there was no justification for the firing.
It appears that there was a dispute relating to possession of 26 deci mals of low lying land adjacent to the canal at Arwal and to such dispute members of a rich Rajak family on one side and members of nine poor families on the other were parties.
Even though several people died and many more were injured by the ruthless and unwarranted firing resorted to by the police, to give a cover to the atrocities, the police start ed a false case being Arwal P.S. Case No. 59 of 1986 and therein implicated several innocent people including even some of the people who had been killed in the firing.
Three specific prayers were made in the writ petition, namely: (1) To issue an appropriate writ or make an order or direction in the matter of payment of full and proper compensation to the vic tims relations of the dead and to the people who were injured by police firing; (2) For a direction to withdraw the police case referred to above; and (3) For a direction to Respondent No. 1 to settle the land in dispute with the nine poor families.
634 During the hearing of the matter, an additional relief was pressed, namely, this Court should give a direction for instituting a judicial inquiry into the alleged atrocity.
It may be pointed out that during the pendency of this writ application the State Government in response to the growing demand for a judicial inquiry into the matter di rected an inquiry therein by Shri Vinod Kumar, Member, Board of Revenue, Bihar.
The said inquiry has been completed and the report has already been furnished to the Government.
On the orders of the Court, the report has been produced before this Court with a claim of privilege against disclosure thereof.
The incident drew a lot of publicity and attention both within the State as also outside.
Coming to know about it, Shri B.D. Sharma, Assistant Commissioner for Scheduled Castes and Scheduled Tribes visited the locality and made a report.
At the instance of the petitioner, that document was summoned and has been produced.
In respect thereof the Union Government has also claimed privilege.
In the affidavits in opposition filed on behalf of the respondents the factual assertions raised in the writ peti tion have been disputed.
It has also been brought to our notice that a writ petition has been filed before the Patna High Court prior to filing of this application under Article 32 before this Court and the writ petition in the High Court is still pending.
Once this fact was brought to our notice, Mr. Mukhoty for the petitioners submitted that we should direct transfer of the writ petition pending in the High Court to this Court so that both the matters can be heard together.
We are of the view that it would be appropriate that the matter is examined by the High Court.
It would be convenient to the parties to produce material before the High Court on account of proximity; the High Court will be in a position to call for documents and, if necessary, affidavits of parties concerned as and when necessary while dealing with the matter; and without notice and without affording a reasonable opportunity to the parties in the writ petition before the High Court an order of transfer may not be appropriate.
In these circumstances, we have not thought it proper to have the writ petition in the High Court transferred to this Court.
On the other hand, we have considered it expedient and proper in the interest of jus tice to dispose of some aspects of the matter now and leave it open to the petitioner to canvass the other aspects by getting itself impleaded before the High Court in the pend ing writ petition or by the filing of an independent appli cation.
635 There has been no dispute that as a result of the police firing 21 people died and several others were injured.
The heirs and relations of a few of the dead people had been compensated by the State to the tune of Rupees ten thousand as found from the record.
No justification has been indicat ed as to why the said compensation has not been given in every case of death or injury.
It is a normal feature of which judicial notice can be taken that when such unfortu nate consequences emerge even in police firing, the State comes forward to give compensation.
Mr. Jaya Narayan, for the State candidly stated before us that it is not the intention of the State to deprive the relatives of some of the victims who succumbed to the injuries sustained by police firing from benefits of compensation.
Ordinarily in the case of death compensation of Rupees twenty thousand is paid and we see no reason as to why the quantum of compensa tion should be limited to rupees ten thousand.
We may not be taken to suggest that in the case of death the liability of the wrong doer is absolved when compensation of Rupees twenty thousand is paid.
But as a working principle and for convenience and with a view to rehabilitating the dependants of the deceased such compensation is being paid.
We direct that: (1) Without prejudice to any just claim for compensation that may be advanced by the relations of the victims who have died or by the injured persons themselves, for every case of death compensation of Rupees twenty thou sand and for every injured person compensation of Rupees five thousand shall be paid.
Where some compensation has already been paid, the same may be adjusted when the amount now directed is being paid.
These payments be made within two months hence.
(2) In case the petitioner gets implead ed in the pending writ petition before the High Court or filed a separate writ petition and presses for disclosure of the Report of Mr. Kumar, the High Court may examine the question as to whether the report will be made public and in the event of privilege being claimed, the question of privilege will also be examined by the High Court.
(3) We have read the report furnished by the Assistant Commissioner of Scheduled Castes and Scheduled Tribes and since the report is not relevant to the point in issue, it is not necessary to ask the High Court to call for the Report.
We direct that the report to be returned 636 to the appropriate Ministry from where it has been brought.
(4) The investigation of the pending police case shall be completed within three months from now.
In case chargesheet is sub mitted, it would be open to the petitioner or any other aggrieved party to challenge the maintainability of the charges in accordance with law.
The writ petition is disposed of with the aforesaid directions.
The parties shall bear their own costs.
M.L.A. Petition dis posed of.
|
The petitioner an organisation, said to be committed to the upholding of fundamental rights of citizens, filed an application under Article 32 of the Constitution alleging that there was a dispute relating to possession of 26 deci mals of low lying land at Arwal between members of a rich Rajak family on one side and members of nine poor families on the other; and that on April 19, 1986, the members of one community mostly belonging to the backward classes assembled in the compound of Gandhi library at Arwal for holding a peaceful meeting.
At that time, the Superintendent of Police reached the spot with police force, surrounded the gathering and without any warning or provocation opened fire, as a result of which several people were injured and at least 21 persons including children died.
The police, it was also alleged, started a false case implicating several innocent people to cover up the aforesaid atrocities.
The petitioner in the writ petition prayed: (i) Full and proper compensation should be awarded to the victims rela tions of the dead and to those injured by the police firing; (ii) A direction be given for withdrawal of the police case; (iii) Direction for settlement of the land in dispute with the nine poor families; and (iv) transfer of the writ peti tion pending in the Patna High Court to this Court for hearing.
During the pendency of the Writ Petition, the State Government held a judicial inquiry into the aforesaid inci dent by a Member of the Board of Revenue, and, awarded compensation to the heirs and relations of a few of the dead people to the tune of Rs. 10,000 each.
Disposing of the writ petition, this Court, HELD: I.
It would be appropriate that the matter is examined by 632 the High Court.
It would be convenient to the parties to produce material before the High Court on account of proxim ity; the High Court will be in a position to call for docu ments and if necessary, affidavits of parties concerned as and when necessary while dealing with the matter.
Without notice and without affording a reasonable opportunity to the parties in the writ petition before the High Court an order of transfer may not be appropriate.
It would not be proper therefore to have the writ petition in the High Court trans ferred to this Court.
However, the petitioner is at liberty to get itself impleaded before the High Court in the pending writ petition or by filing an independent application.
[634F H] 2.
It is a normal feature that when such unfortunate consequences emerge in police firing, the State comes for ward to give compensation.
No justification has been indi cated as to why the said compensation has not been given in every case of death or injury.
Ordinarily in the case of death compensation of Rs.20,000 is paid and there is no reason as to why the quantum of compensation should be limited to Rs.10,000.
However, in the case of death the liability of the wrong doer is not absolved when compensa tion of Rs.20,000 is paid.
[635B D] 3.(a) Without prejudice to any just claim for compensa tion that may be advanced by the relations of the victims who have died or by the injured persons themselves, for every case of death compensation of Rs.20,000 and for every injured person compensation of Rs.5,000 shall be paid.
Where some compensation has already been paid, the same may be adjusted when the amount now directed is being paid.
[635D F] (b) In case the petitioner presses for disclosure of the report submitted by the Member, Board of Revenue, the High Court may examine the question as to whether the report will be made public and in the event of privilege being claimed the question of privilege will also be examined by the High Court.
[635F G] (c) The investigation of the pending police case shall be completed within three months.
In case charge sheet is submitted, it would be open to the petitioner or any other aggrieved party to challenge the maintainability of the charges in accordance with law.
[636B]
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Here is a two-paragraph summary of the court case:
The Peoples' Union for Democratic Rights (PUDR) filed an application under Article 32 of the Constitution of India against the State of Bihar, alleging that on April 19, 1986, police forces fired on a gathering of 600-700 poor peasants and landless people in Arwal, resulting in the deaths of at least 21 people, including children, and injuring several others. The petitioners alleged that the police firing was unwarranted and unjustified, and that the police had implicated several innocent people in a false case to cover up the atrocities.
The Court, after hearing the matter, directed the State to pay compensation of Rs. 20,000 to the relations of each deceased person and Rs. 5,000 to each injured person, to be paid within two months. The Court also directed the completion of the investigation into the pending police case within three months and allowed the petitioner to pursue further claims, including the disclosure of a report on the incident, in the pending writ petition before the Patna High Court. The Court disposed of the writ petition with the aforesaid directions and ordered the parties to bear their own costs.
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: Special Leave Petition (Crl. ) No. 419 of 1987.
From the Judgment and order dated 11.12.1986 of the Punjab and Haryana High Court in Criminal Miscellaneous No. 7421 M of 1 986 .
R.K. Garg, Ms. Suman Kapoor and R.P. Singh for the Petitioner.
P.N. Puri, R.S. Sodhi and R.S. Suri for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a petition for leave to appeal under Article 136 of the Constitution against the judgment and order of the High Court of Punjab and Haryana dated 11th of December, 1986.
By the order the High Court has dismissed the applica 452 tion under section 482 of the Code of Criminal Procedure praying that further that proceedings be stayed in Sessions Case No. 1 of 25th of March, 1985 under sections 148/302/325/323/149/120 B of the I.P.C.
The High Court dismissed this petition because it found no merit in the same.
The petitioner, herein alongwith 14 more persons were charged by an order dated 30th of May, 1986 under sections 148/302/149/325/149 and under sections 323/149 of the I.P.C. for allegedly causing death of one Ajit Singh and for causing hurt to Smt.
Gurmej Kaur, the complainant.
The case was committed to the Court of Sessions by the Judicial Magistrate 1st Class, Kapurthala vide order dated 20.2.1985.
As per the case set up by the complainant Smt.
Gujmej Kaur, her son Ajit Singh since deceased was involved in a murder case pertaining to the murder of head constable Bagga Singh of Police Station Dhilwan.
That case was registered in police station Bhogpur, District Jalandhar and Ajit Singh was tried alongwith other persons and was sentenced by the Additional Sessions Judge but he was acquitted by the High Court.
The complainant further states that Ajit Singh was also involved by the police in a case of dacoity of police station Kotwali Kapurthala and police station Dhilwan during investigation of the murder case in question.
Ajit Singh was also convicted in those cases but acquitted by the High Court.
It is the case of the complainant that Ajit Singh was allegedly involved in some other murder and dacoity case by the police which was tried in Himachal Pradesh and Ajit Singh was acquitted by the Himachal Pradesh High Court.
Mohinder Singh and Des Raj also co accused in this case allegedly investigated cases of Kapurthala and Ajit Singh was tortured by Des Raj and the leg of Ajit Singh was broken.
Ajit Singh then filed complaint against Des Raj (also accused in this case) and he was summoned by the Judicial Magistrate 1st p Class, Kapurthala and thus the relation between Ajit Singh and Kapurthala Police Station had become very strained.
Ajit Singh had then settled in U.P., according to the allegations in the complaint, out of fear of the police.
It is stated that on or about 7th of April, 1983 at about 3 p.m. all the accused including present petitioner went to village Bhandal Bet.
They went to the house of the complaint where she was present alongwith her sons Ajit Singh and Manjit Singh and other members of the family.
Manjit Singh and Ajit Singh, it was alleged, were surrounded by the police officials and Manjit Singh and Ajit Singh protested against this.
Then Bakshish Singh accused, petitioner, directed his companions to arrest Ajit Singh and Manjit Singh and tie them with ropes and put them in the truck for the purpose of throwing them in the river Beas.
It was further alleged that Manjit 453 Singh and Ajit Singh ran to save themselves but they were attacked by the police officials.
The complainant also received injuries in the A course of this occurrence when she was given dang blows.
Ajit Singh and Manjit Singh were given blows by the police officals on the asking of the appellant herein Bakhshish Singh Brar, who is the Deputy Superintendent of Police.
A hue and cry was raised.
Other persons came, Ajit Singh and Manjit Singh became unconscious and then they were taken away in the truck for the purpose of throwing them in the river, according to the complaint.
The case of the complainant further was that Ajit Singh and Manjit Singh were then got admitted by the police in Civil Hospital, Kapurthala as indoor patients and Ajit Singh died as a result of injuries on 8th of March, 1983.
It was further alleged that the accused who are the police officials fabricated false evidence in order to make out a defence and registered two false cases one under section 61(1)(a) of the Punjab Excise Act, F.I.R. No. 70 dated 7th of April 1983 and the other under section 307, I.P.C. F.I.R. No. l 1 dated 7th April, 1983.
On the other hand, the case of the respondents was that the police party headed by the petitioner including 13 of his subordinates went to the Haveli of Jit Singh alias Jita, situated in village Bhandel Bet in connection with raid on secret information to the effect that he is indulging in illicit liquor and unlicenced arms.
There were two First Information Reports one under section 61(1)(14) of the Punjab Excise Act and the other under section 25(54)(59) of the Arms act were recorded in Police Station Dhilwan.
That on the same date the police party raided the Haveli of Jit Singh alias Jita, where Manjit Singh, Jasbir Singh, Balwant Singh, Chhinda and Majwi, residence of village Bullowal and Gurdev Singh resident of village Ucha were present there.
It is further alleged that seeing the police party, Jasbir Singh fired at Ajit Singh, who saved himself by hiding himself behind a wall.
The other persons armed with dangs and dhope attacked the police party.
There are rival versions involved in this case.
The question was whether without the sanction under section 197 of the Code of Criminal Procedure the proceedings could go on.
It is quite apparent that as a result of the alleged search and raid, which was conducted by the petitioner in discharge of his official duties certain injuries, which are described as grievous, injuries had been inflicted on the complainant and one of the alleged offenders had died.
In this case, admittedly, the petitioner is a Government servant.
Admittedly, there was no sanction under section 197 of the Cr.
P.C. had been taken.
The trial in this case H 454 is one of the offences mentioned under section 196 of the Cr.
The A contention of the petitioner was that under section 196 of the Cr.
P.C. the cognizance of the offence could not be taken nor the trial proceeded without the sanction of the appropriate authorities.
The learned Additional Sessions Judge, Kapurthala after consideration of the facts and circumstances of the case in view of the observations of this Court in Pukhraj vs State of Rajasthan and another, that unless cognizance is taken and the facts and in the circumstances and the nature of the allegations involved in this case are gone into the question whether the raiding party exceeded its limits or power while acting in the official duties cannot be determined.
The learned Judge observed after gathering the materials and some evidence, it would be possible to determine whether the petitioner while acting in the discharge of his duties as a police officer had exceeded the limit of his official capacity in inflicting grievous injuries on the accused and causing death to the other accused.
This Court in the aforesaid decision had occasion to consider this aspect.
The case is instructive and illustrative how a balance has to be struck between the need for speedier trial of criminal offenders and at the same time protecting public servants or police officials in the discharge of their duties without obstructions.
There the appellant had filed a complaint against his superior officer, in the Postal Department under sections 323 and 502 of I.P.C. alleging that when the appellant went with a certain complaint to the second respondent, the said respondent kicked him in his abdomen and absued him by saying "Sale, gunde, badmash . " The said respondent filed an application under section 197 of the Cr.
P.C. praying that the Court should not take cognizance of the offence without the sanction of the Government, as required by section 197 of the Cr.
It was further contended that the alleged acts, if at all done by the accused were done while discharging his duties as a public servant.
The trial Magistrate dismissed the application.
The High Court allowed the revision application of the said respondent.
This Court on appeal held that at that stage, the Court was concerned only with one point, viz., whether on facts alleged in the complaint, it could be said that the acts were done in purported exercise of his duties.
Applying the test laid down in the decisions of the Federal Court and this Court to acts complained of, viz., kicking the complainant and abusing, could not be said to have been done in the course of the performance of the duty by the said respondent.
The facts subsequently coming to light during the course of the judicial enquiry or during the course of the prosecution evidence at the trial might establish the necessity for sanction, it was observed.
This Court noted that it might be possible for the said respondent to 455 place materials on record during the course of the trial for showing what his duties were and also that the acts complained of were so interrelated with his official duty, so as to attract the protection afforded by section 197 of the Cr.
This Court reiterated that the question whether sanction was necessary or not might have to depend upon from stage to stage having regard to the facts and circumstances of the case.
This Court allowed the appeal and allowed the trial to proceed without the sanction.
In the instant case, it is alleged that grievous injuries were inflicted upon the complainant and as a result of injuries one of the alleged accused had died.
The question is while investigating and performing his duties as a police officer was it necessary for the petitioner to conduct himself in such a manner which would result in such consequences.
It is necessary to protect the public servant in the discharge of their duties.
They must be made immune from being harassed in criminal proceedings and prosecution, that is the rationale behind section 196 and section 197 of the Cr.
But it is equally important to emphasise that rights of the citizens should be protected and no excesses should be permitted.
"Encounter death" has become too common.
In the facts and circumstance of each case protection of public officers and public servants functioning in discharge of official duties and protection of private citizens have to be balanced by finding out as to what extent and how far is a public servant working in discharge of his duties or purported discharge of his duties, and whether the public servant has exceeded his limit.
It is true that section 196 states that no cognizance can be taken and even after cognizance having been taken if facts come to light that the acts complained of were done in the discharge of the official duties then the trial may have to be stayed unless sanction is obtained.
But at the same time it has to be emphasised that criminal trials should not be stayed in all cases at the preliminary stage because that will cause great damage to the evidence.
In that view of the matter we are of the opinion that the order passed by the learned Additional Sessions Judge, Kapurthala, in the facts of this case, was proper and the High Court was right in not interfering with the same.
We, therefore, dismiss this petition.
G We, however, direct that the trial should proceed as expeditiously as possible.
We further record that if necessary the question of sanction under section 197 of the Cr.
P.C. may be agitated after some evidence have been noted by the learned Additional Sessions Judge.
P.S.S. Petition dismissed.
|
The petitioner, a police officer, was charged by the Judicial Magistrate under sections 148/302/149/325/149 and under sections 323/149 of the Indian Penal Code for allegedly causing grievous injuries to the complainant and death of one of the alleged offenders during a raid and search for illicit liquor and unlicenced arms, and committed to the Court of Sessions for trial.
His contention was that under section 196 of the Code of Criminal Procedure the cognizance of the offence could not be taken nor the trial proceeded with without the sanction of the appropriate authorities under section 197 of that Code.
The Sessions Court took the view that unless cognizance was taken and the facts and the circumstances and the nature of the allegations involved in the case were gone into, it would not be possible to determine whether or not the raiding party exceeded its limits or power while acting in the discharge official duties.
The High Court dismissed the application under section 482 of the Code of Criminal Procedure for staying further proceedings in the Sessions Court.
In the special leave petition to this Court on the question: Whether without the sanction under section 197 of the Code of Criminal Procedure the proceedings could go on.
Dismissing the special leave petition, ^ HELD: l.
The order passed by the Sessions Court was proper and the High Court was right in not interfering with the same.
[455G] 2.
Criminal trials should not be stayed in all cases at the prelimi 451 nary stage because that will cause great damage to the evidence.
It is necessary to protect the public servants in the discharge of their duties.
They must be made immune from being harassed in criminal proceedings and prosecution, that is the rationale behind sections 196 and 197 of the Criminal Procedure Code.
But it is equally important that rights of the citizens should be protected and no excesses should be committed.
In the facts and circumstances of each case protection of public officers and public servants functioning in discharge of official duties and protection of private citizens have, therefore, to be balanced by finding out as to what extent and how far is a public servant working in discharge of his duties or purported discharge of his duties, and whether the public servant has exceeded his limit.
[455F,C E] Pukhraj vs State of Rajasthan and Anr., [1974] 1 S.C.R. 559, referred to In the instant case, it is alleged that grievous injuries were inflicted upon the complainant and as a result of injuries one of the alleged accused had died.
The question is while investigating and performing his duties as a police officer was it necessary for the petitioner to conduct himself in such a manner which would result in such consequences.
Therefore, the trial should proceed.
If necessary the question of sanction under section 197 of the Criminal Procedure Code may be agitated after some evidence have been noted by the Sessions Court.
[455C, H]
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Here's a two-paragraph summary of the court case:
The case involves a petition for special leave to appeal against the judgment of the Punjab and Haryana High Court dated 11th December, 1986, in a case where the petitioner, Bakhshish Singh, a Deputy Superintendent of Police, and 14 other persons were charged with murder and other offenses under the Indian Penal Code. The case against them was filed by the complainant, Smt. Gurmej Kaur, who alleged that they had caused her son Ajit Singh's death and injured her while attempting to arrest him and his brother Manjit Singh.
The High Court had dismissed the petition filed by the petitioner under section 482 of the Code of Criminal Procedure, praying that further proceedings be stayed in the Sessions Case. The petitioner had argued that the proceedings against him and other police officials could not proceed without the sanction of the appropriate authorities under section 197 of the CrPC. However, the High Court held that the order passed by the learned Additional Sessions Judge, Kapurthala, allowing the trial to proceed, was proper, and the trial should proceed as expeditiously as possible. The Supreme Court dismissed the petition, agreeing with the High Court's decision.
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Appeal Nos.
1769 to 1771 of 1967.
Appeals from the judgment and order dated December 17, 1963 of the Mysore High Court in I.T.R.C. Nos.
6 of 1959 and 3 of 1960.
C.K. Daphtary, Attorney General, V.A. Seyid Muhammad, R.N. Sachthey and B.D. Sharma, for the appellant (in all the appeals ).
S.T. Desai, Bhuvanesh Kumari and Ravinder Narain, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Grover, J.
These appeals are by certificate from the common judgment of the Mysore High Court on the following questions of law which were referred by the Income tax Appellate Tribunal under section 66(1) of the Income tax Act, 1922, hereinafter called the Act. "( 1 ) Whether, on the facts and circumstances of the case, the income of the assessee did not arise in Bangalore (Mysore State) in respect of sales effected by the assessee to the Burma Teak Trading Co., Ltd., Colombo ? (2) If the answer to.
the above question is in favour of the assessee, then whether, on the facts and circumstances of the case, the assessee is entitled to the concession under Part B States (Taxation Concessions) Order, 1950 ? and (3 ) Whether, on the facts and circumstances of the case, the apportionment of profits of business is called for pursuant to assessee 's trading activities in Bangalore (Mysore State) ?" The assessee is a firm carrying on business in Bangalore in Mysore State.
It was appointed as the sole selling agent for Ceylon except Jaffina Peninsula and the town of Trincomalee for the purpose of marketing, selling or distributing Lotus Brand tiles and ridges manufactured by M/s. Modern Tile & Clay Works of Feroke.
According to.
an agreement dated August 10, 1949 between the parties all prices quoted by the manufacturer were to Be F.O.B. Beypore Fort and for loading into country crafts; the right to charter or engage vessels was to be with the agents.
Beypore is in the taxable territory as also Feroke where the tiles manufacturers carried on their business.
One of the employees 57 of the assessee stayed at Calicut during the season to supervise the operation of delivery of articles and to.
engage vessels.
The bills of lading were obtained by the assessee 's representative at Beypore and sent to Bangalore where the hundis together with the invoices and shipping documents were handed over by the assessee to the Indian Overseas Bank Ltd., Bangalore.
Pursuant to the letter of credit opened by the Burma Teak Trading Co. Ltd., Colombo, which was the purchaser, payments were made by the aforesaid bank to the assessee.
It is unnecessary to state the details about the profits which the assessee made during the relevant assessment years 1951 52, 1952 53 & 1953 54.
The assessee claimed that since its registered office was in Bangalore and as the agency agreement with the purchaser at Colombo was entered into in Bangalore the entire income should be treated as income accruing or arising in Part B State and concession regarding rates and allowances as provided in Part B States (Taxation Concessions) Order, 1950, hereinafter called the "Order", should be allowed to it.
The income tax authorities as also the Appellate Tribunal decided against the assessee.
It was held that hardly any activity took place at Bangalore in the matter of earning the profits from the transactions in question.
The High Court was of the view that since the profits were received in Part B State, namely, Bangalore, it could not be said that the entire profit accrued or arose within the meaning of cl.
(a) of sub section
(1) of 'section 4 of the Act in the taxable territories other than Part B State.
After referring to section 42(3) of the Act and certain decisions of this Court it was observed that the business operations which produced profits were carried out at three different places i.e., Bangalore, Feroke and Ceylon.
Therefore the portion of these profits must be held to have accrued in all these places.
The only profits which could be deemed to have accrued in the taxable territories other than Part B State were those that could be said to have accrued at Feroke.
The profits that could be attributed to the business operations at Bangalore could not be deemed to have accrued in the taxable territories other than the Part B State nor could it be said that the profits that had accrued at Ceylon could be deemed to have accrued in the taxable territories other than Part B State.
The answers which were 'returned to the questions were as follows: "(1) The profits of the assessee in respect of sales effected by it to Burma Teak Trading Co., Colombo did not entirely arise in Bangalore (then a Part B State), it arose in Bangalore, Feroke and.
Ceylon.
(2) The assessee was entitled to the concession under the Order in respect of the profits that could be Sup.
CI/69 5 58 attributed towards business operations conducted in Bangalore and Ceylon. ' (4) Apportionment of profits of business was called for pursuant to the assessee 's trading profits.
The sole point which has been raised before us by the learned Attorney General who appears for the appellant is that hardly any activity took place of such a nature as could be said to give rise to accrual of profits in Bangalore.
It is pointed out that admittedly the manufacturing concern from where the tiles had to be sent to Colombo was in Feroke in British India and that the goods were also delivered F.O.R., Beypore which was in British India.
The assessee 's agent resided in British India and supervised all the operations there.
Our attention has been invited to the findings of the tribunal which inter alia were that the assessee purchased the goods at places outside Bangalore and the sales were also effected in Ceylon; the assessee continued to retain its title to the goods till they were delivered to the Ceylonese buyers on theft accepting the documents and bills of exchange forwarded through the Bank in that country.
The sale operations were carried out in Ceylon and the profits attributable to those transactions accrued and arose only in Ceylon which was outside the taxable territories.
The essential question, according to the learned Attorney General is, whether any part 0 income accrued or arose at Bangalore.
According to the learned counsel for the respondent it was clear that the profits accrued at Bangalore where the assessee 's registered office was situate and where the contracts were entered into by the assessee for the sale and purchase of the goods and where moneys were received.
At any rate the profit producing operations could not be said to have been confined only to places in the taxable territories because without the contracts no further steps could be taken in carrying out the transactions and the contracts indisputably were entered into at Bangalore.
It is urged that the assessee 's business activity came within the scope and ambit of paragraph 4(1) (iii) of the Order and therefore it was entitled to the concessions provided in paragraphs 6, 6A and 7 of that Order.
Section 42(3) of the Act lays.
down that when profits accrue or arise from a business all the operations of which are not carried out within the taxable territories those profits must be deemed to have accrued or arisen in several places where the business operations were carried out and the total profits earned will have to be apportioned on reasonable basis amongst the several operations and tax should be levied only on that portion of the profits which are deemed to have accrued or arisen within the taxable territories.
If it be held, as indeed it must be held, that the making of contracts pursuant to which all the subsequent activity in respect 59 of the execution of those contracts took place resulting in profits to the assessee, is an integral part of the entire selling operations, there can be no escape from the conclusion at which the High Court arrived.
The appeals consequently fail and they are dismissed with costs.
(one hearing fee).
Y.P. Appeals dismissed.
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The assessee firm carried on business at Bangalore in the State of Mysore, which at the relevant time was a Part B State.
It was appointed as the sole selling agent for certain areas in Ceylon in respect of tiles and ridges manufactured by the principal at Feroke in British India.
According to the agreement between the parties all prices quoted by the manufacturer were to be F.O.B. Beypore Port situated in taxable territory.
Chartering and loading of vessels was done by one of the employees stationed at Calicut.
The bills of lading were obtained by the assessee 's representative at Beypore and sent to Bangalore when the hundis together with the invoices and shipping documents were handed over by the assessee to a bank at Bangalore.
Pursuant to the letter of credit opened ' by the purchaser in Ceylon, payments were made by the aforesaid bank to the assessee.
In income tax proceedings for the assessment years 1951 52, 1952 53, and 1953 54 the assessee claimed that since its registered office was in Bangalore and as the agency agreement with the purchaser at Colombo was entered into in Bangalore the entire come should be treated as income accruing or 'arising in Part B State and concession regarding rates and allowances as provided in Part States (Taxation Concessions) Order, 1950 should be allowed to it.
The income tax authorities and the Tribunal decided against the assessee.
The High Court however held that since the profits were received in Part State at Bangalore, it could not be said that the entire profit accrued or arose within the meaning of el.
(a) of sub section
(1) of section 4 of the Income tax Act, 1922 in the taxable territories other than Part B State.
According to the High Court the profits arose at Bangalore, Feroke, and Ceylon, of which only Feroke was in the taxable territories, and therefore, the assessee was entitled to the concession under the order in respect of the profits that could be apportioned under section 42(3) of the Act to the business operations conducted in Bangalore and Ceylon.
The Revenue appealed to this Court contending that hardly any activity took place of such a nature as could be said to give rise to accrual of profits at Bangalore.
HELD: The conclusion which the High Court arrived at must be upheld.
The making of contracts pursuant to which all the subsequent activity in respect of the execution of those.
contracts took place resulting in profits to the assessee was an integral part of the entire selling operations.
The contracts in the present case having been entered into at Bangalore it could not be said that no part of the business activity which produced the profits took place there.
[53 H] 56
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Here is a two-paragraph summary of the court case:
The case involved a firm that was the sole selling agent for Ceylon (except Jaffina Peninsula and the town of Trincomalee) for a specific brand of tiles and ridges manufactured by Modern Tile & Clay Works of Feroke. The firm was located in Bangalore, Mysore State, and entered into agreements with the Burma Teak Trading Co., Ltd. of Colombo for the sale of these tiles and ridges. The firm claimed that all the profits from these sales arose in Bangalore, whereas the income tax authorities and the Appellate Tribunal decided that the profits arose in Bangalore, Feroke, and Ceylon.
The High Court ultimately agreed with the Tribunal's decision, ruling that the profits of the firm did not entirely arise in Bangalore, but in several places, including Bangalore, Feroke, and Ceylon. The Court also held that the firm was entitled to a concession under the Part B States (Taxation Concessions) Order, 1950, in respect of the profits that could be attributed to business operations conducted in Bangalore and Ceylon. The appeals filed by the firm against the Tribunal's decision were dismissed with costs.
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Appeal No. 1554 of 1970.
Appeal.
by Special Leave from the Judgment & Order dated the 19th August, 1968 of the Madras High Court in Tax Case No. 18 of 1 965.
G. B. Pai, A. G. Manessea, D. C. Mathur and K. K. John, for appellant.
B. B. Ahuja and section P. Nayar, for the respondent.
807 The Judgment of the Court was delivered by GUPTA, J.
This is an appeal by special leave from a judgment of the Madras High Court in a reference under section 66(1) of the Income Tax Act, 1922.
The appellant, Nonsuch Estate Limited, is a public limited company incorporated in the 'year 1924 under the Companies Act, 1913.
The appellant, referred to hereinafter as the Company, derives its income from tea grown in its estate for which it is assessed to income tax.
M/s. Harrisons and Crosfield Limited have been the managing agents of the Company from the beginning.
The following question relating to the assessment year 1959 60 was referred to the High Court : "Whether on the facts and in the circumstances of the case, the sum of Rs. 97,188/ representing the Managing Agency remuneration for the period 1 4 1956 to 30 6 1957 was deductible in the computation of the income of previous year ending on 30th June 1958, relevant for the assessment year 1959 60.
" The relevant facts leading to the reference are these.
The managing agents of the Company were entitled to commission at the rate of 11 per cent on all sales of tea and other produces of the Company and a further sum of Rs. 12,000/ per annum for secratarial work.
There was, however, no written.
agreement embodying the terms.
After the came into force on April 1, 1956 it was decided that there should be a fresh managing agency agreement between the Company and its managing agents in conformity with the provisions of the said Act.
A fresh agreement drawn up and submitted by the managing agents was approved by the Company.
The new agreement proposed the reappointment of M/s. Harrisons & Crosfield Limited as the managing agents of the Company for a period of 10 years on a remuneration of 5 per cent commission on the net profits of the Company computed in the manner laid down in sections 349 to 351 of the subject to a minimum remuneration of Rs. 12,000/ per annum.
The revised terms were to take effect from April 1, 1956.
As required by sec.
326 of the , the new agreement was sent to the Central Government for approval by a communication dated august 3, 1957 enclosing a formal application for the purpose in Form 25, On September 2, 1957 by a letter addressed to the Company the Government conveyed its approval to "the appointment of M/s. Harrisons & Crosfields Ltd. as the Managing agents. . for a period of 10 years with effect from 1st April 1956, on a remuneration of 5 per cent commission on the net profits of the Company computed in the manner as laid down in Sections 349 to 351 of the subject to a minimum remuneration of Rs. 12,000/ (Rupees twelve thousand only) per annum payable to the Managing Agents, in the event of absence or inadequacy of profits in any financial year.
" On receipt of the approval, the Company by a resolution adopted at an extraordinary general meeting of its shareholders held on October 4, 1957 reappointed M/s. Harrisons & Crosfield Limited on the terms stated above.
In terms of the new agreement the existing agency agreement between the parties stood cancelled with the expiry of March 31, 1956.
808 The Company follows the mercantile system of accounting.
For the period April 1, 1956 to June 30, 1956, the Company credited a sum of Rs. 9320/ to the account of the managing agents as their remuneration in accordance with the terms of the proposed new agreement.
This was disclosed in the published accounts of the Company for the year July 1, 1955 to June 30, 1956 relevant to the assessment year 1957 58.
For the purpose of assessment of income tax, however, the Company added back the said sum of Rs. 9,320/ to its taxable income.
In the next accounting year ending on June 30, 1957 relevant to the assessment year 1958 59 the same process was followed with regard to the remuneration payable to the managing agents.
For the assessment year 1959 60 for which the previous year was July 1, 1957 to June 30, 1958, a total sum of Rs. 97,188/ was shown as managing agents ' remuneration payable during that year.
This amount was made up as under Amount .lm15 " Proportionate remuneration for 3 months at 5 per cent on the net profits for the period ending on 30 6 1956 paid during the year ending on 30 6 1958 9,320 Remuneration at 5 per cent on the net profit of the year ending on 30th June 1957 paid during the year ending on 30 6 1958 71,368 Managing Agents expenses for the year ending 30th June 1957 recouped during the year ending on 30th June 1958.13,200 Proportionate Managing Agent 's expenses for the year ending on 30th June 1956 recouped during the year ending on 30 6 19583,300 97,188.
Though this sum did not pertain to the previous year relevant to the assessment year 1959 60, the Company claimed it as deductible expenditure for that year on the ground that the sum became payable only during that year when the Government accorded its approval to the new 'agreement.
The Income tax Officer rejected this claim on the view that the approval of the Central Government was necessary only for actual payment and "the assessee should have ascertained the liability for each year and claimed it on the mercantile basis which was the system adopted by the assessee company.
" The Appellate Assistant Commissioner and the Tribunal also took the same view.
The High Court answered the question referred to it against the assessee on the following reasoning : ". .
There was undoubtedly an understanding between the managing agency and the assessee as to the new terms of remuneration which actually were given effect to by making debit entries in the remuneration account then and there.
It is true that at the time the debit entries were made, approval of the Central Government had not come.
But when it came actually later, it gave legal effect to the debit 809 entries, not from the date of the approval but from April 1, 1956.
That being the case, the refusal of the deduction, in our opinion was right.
" In our judgment the High Court was in error in answering the question referred to it against the assessee.
It appears that the Income tax authorities, the Tribunal and the.
High Court all laid special emphasis on the fact that the Company followed the mercantile system of accounting.
The distinction between the two methods of accounting, one on the cash basis and the other on the mercantile basis is well known.
In Commissioner of Income tax, Madras vs A. Gajapathy Naidu(1), this Court explained the difference between the two methods quoting with approval an extract from a Judgment of the, Allahabad High Court in Commissioner of Income tax vs Singari Bai(2).
In Gajapathy Naidu 's(1) case this Court said: " It is commonplace that there are two principal methods of accounting for the income, profits and gains of a business one is the cash basis and the other, the mercantile basis.
The latter system of accountancy "brings into credit what is due immediately it becomes legally due and before it is actually received; and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed"." However, even an assessee following the mercantile system of accounting is not entitled to claim a deduction until liability for the sum for which deduction is claimed has accrued.
The reasons given by the High Court overlook the plain terms of sec.
326 of the .
326 so far it is material for the question involved in this case, is in these terms : "Sec.
326.)1) In respect of any company. . (a). . (b) unless the approval of the Central Government has been obtained for such appointment or re appointment.
(2) The Central Government shall not accord its approval under sub section (1) in any case, unless it is satisfied (a) that it is not against the public interest to allow the company to have a managing agent; (b) that the managing agent proposed is, in the opinion, a fit and proper person to be appoi nted or re appointed as such, and that the conditions of the managing agency agreement proposed are fair and reasonable; and (c) that the managing agent proposed has fulfilled any conditions which the Central Government requires him to fulfil.
" (1) (2) 810 Section 326 prohibits the appointment or re appointment of a managing agent unless the Central Government approved such appointment or re appointment.
The Central Government would not accord its approval unless the requirements specified in clauses (a), (b) and (c) of sub section (2) of the section have been fulfilled.
Therefore, it cannot be assumed that the Central Government will approve every proposed appointment or reappointment of a managing agent.
Thus in the instant case it is only when the Central Government conveyed its approval to the appointment of M/s. Harrisons and Crosfield Limited as managing agents by its letter dated September 2, 1957 that the appointment became effective and the Company 's liability to pay the remuneration of the managing agents accrued.
The position here is not that the liability had arisen earlier and its quantification only depended on the approval of the Central Government.
It is true that the liability became effective from April 1, 1956, a date anterior to the relevant previous year, but 'that is because the Central Government chose to give its approval retrospective operation.
The liability in these circumstances cannot be said to have arisen from any date prior to September, 2, 1957 when the approval was given as sec.
326 contains an absolute prohibition against the appointment or re appointment of a managing agent before the approval of the Central Government was obtained.
In our opinion, the position is quite clear from the terms of sec.
326 and we do not consider it necessary to refer to the authorities cited by the learned counsel for either side.
The appeal is accordingly allowed, the answer given by the High Court to the question referred to it is discharged and the question is answered in the affirmative and in favour of the assessee.
The appellantwill be entitled to its costs in this Court and in the High Court.
P.E.R. Appeal allowed.
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The assessee who followed the mercantile system of accounting debited in its account books certain sums of money as remuneration of the managing agents for the assessment years 1957 58 to 1959 60.
For the purpose of income tax the company added back the sum to its taxable income and claimed the whole sum as a deductible expenditure in the assessment year 1959 60 on the ground that the sum became payable only during that year when the Government accorded its approval to the new managing agency agreement.
The income tax Officer rejected the claim holding that the approval of the Central Government was necessary only for actual payment and the assessee should have ascertained the liability for each year and claimed it since he followed the mercantile system of accounting.
This view was upheld by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal.
The High Court held that although at the time the debit entries were made in the account books of the assessee, approval of the Central Government had not been received, when it came later, it gave legal effect to the debit entries with retrospective effect from April 1. 1956 and that the refusal of deduction by the Income tax Officer was right.
Allowing the appeal to this Court, HELD : The High Court was in error in answering the question against the assessee.
Even an assessee following the mercantile system of accounting is not entitled to claim a deduction until liability for the sum for which deduction is claimed has accrued.
The High Court overlooked the plain terms of s.326 of the under which it could not be assumed that the Central Government would approve every proposed appointment or re appointment of managing agent.
[809A; D; 810A] In the instant case it is only when the Central Government conveyed its approval to the appointment of managing agents by its letter dated September 2, 1957 that the appointment became effective and the Company 's liability to pay the remuneration of the managing agents accrued.
The liability became effective from April 1, 1956 because the Central Government chose to give its approval retrospective operation.
The liability could not be said to had &risen from any date prior to September 2, 1957 when the approval was given.
Section 326 of the contains an absolute prohibition against the appointment or re appointment of a managing agent before the approval of Central Government was obtained.
[810B C]
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The case, Nonsuch Estate Limited vs. Commissioner of Income Tax, involves a dispute over the deduction of managing agency remuneration from the income of the company, Nonsuch Estate Limited. The company had entered into a new managing agency agreement with M/s. Harrisons and Crosfield Limited, which was approved by the Central Government on September 2, 1957. The company claimed deduction of the remuneration for the period from April 1, 1956, to June 30, 1958, in the assessment year 1959-60. However, the Income Tax authorities, the Tribunal, and the Madras High Court refused the claim, holding that the liability for the remuneration had not arisen until the approval of the Central Government was given.
The Supreme Court allowed the appeal, holding that the liability for the remuneration arose only when the Central Government gave its approval on September 2, 1957. The Court relied on Section 326 of the Companies Act, 1956, which prohibits the appointment or reappointment of a managing agent unless the Central Government approves such appointment or reappointment. The Court held that the approval of the Central Government was necessary to make the appointment effective and to create a liability for the remuneration. Therefore, the company was entitled to deduct the managing agency remuneration for the period from April 1, 1956, to June 30, 1958, in the assessment year 1959-60.
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Civil Appeal No. 1464 of 1971.
From the Judgment and order dated 18 3 71 of the Kerala High Court in Writ Appeal No. 126 of 1971.
K. R. Sudhakaran and N. Sudhakara and P. K. Pillai for the Appellants.
K. T. Harindranath and K. M. K. Nair for Respondent.
The Judgment of the Court was delivered by BEG, J.
The appellants before us, by certification of the case, had filed a petition to quash revenue recovery proceedings started against them for realisation of the remainder of the amounts due on account of their bids at auction sales of some toddy shops for the period 1st April, 1967, to 31st March, 1969, by the Government of Kerala.
The amounts at which the shops were knocked down were: 1.
Shop No. 1 = 84,000/ 2.
Shop No. 4 = 46,500/ 3.
Shop No. 8 = 56,100/ 4.
Shop No. 11 = 1,50,000/ .
The notified conditions of the auction sales made it incumbent upon the bidder to pay immediately 10% of the amount due and to provide personal security for the rest.
There was no assurance or guarantee given there that prohibition will not be removed in future by the Government in any area in the State or about any other matter of future policy of the Government relating to intoxicants.
According to notified conditions, the successful bidders had to deposit 30% of the total amount payable on demand by the Assistant Commissioner and also to execute agreements before getting the necessary licences.
The petitioners had deposited the necessary amounts on demand.
They were also allowed to start the business of running their toddy shops even before the licences were issued in their favour.
The petitioners ' case is that, at the time of bidding, there was an understanding that the respondent State will not remove prohibition so that they expected adequate profits.
As observed above, there is nothing in the notified conditions to indicate this.
It appears that in April, 1967, the respondent State announced removal of prohibition from 1st May, 1967.
The appellants allege that they suffered heavy losses due to this policy of the State and were unable to make the remainder of the payments which were sought to be recovered under section 28 of the Abkari Act (hereinafter referred to as `the Act ').
It is difficult to see what the removal of prohibition had to do with alleged 782 losses to the appellants.
Abandonment of Prohibition either totally or partially, should, ordinarily, not diminish sales of liquor.
One should expect such a development to increase sales of liquor.
The appellants contend that, as no agreement was executed between them and the Govt.
in the manner prescribed by Article 299 of the Constitution, they are not liable to pay the amounts sought to be recovered.
This is their main contention.
A learned Judge of the Kerala High Court who heard the petition held that the notification in persuance of which the shops in question were auctioned provided that, if the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold.
Thus, non execution of the contract due to the unwillingness or inability of a bidder to pay was not a contingency outside the notification for auction the validity of which is not challenged.
The notification did not lay down that, in that case, the payment of the remainder will be remitted.
On the other hand, the condition was that the whole amount due could, in such an event, be "forfeited".
The Kerala High Court held that, despite the absence of a contract executed in accordance with the provisions of Article 299 of the Constitution, the amounts due could be recovered under Section 28 of the Act which reads as follows: "28 Recovery of duties.
All duties, taxes, fines and fees payable to the Government direct under any of the foregoing provisions of this Act or of any licence or permit issued under it, and all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue may be recovered from the person primarily liable to pay the same or from his surety (if any) as if they were arrears of Land Revenue, and, in case of default made by a grantee of a privilege or by a farmer the Commissioner may take grant or farm under management at the risk of the defaulter or may declare the grant or farm forfeited, and re sell it at the risk and loss of the defaulter.
When a grant or farm is under management under this section, the Commissioner may recover any moneys due to the defaulter by any lessee or assignee as if they were arrears of Land Revenue.
" The appellants submit that they had not become "grantee" of any privilege without the execution of contracts complying with the requirements of Article 299 of the Constitution.
The learned Judge of the Kerala High Court relied on Madhavan vs Assistant Excise Commissioner, Palghat, affirmed by a Division Bench in Damodaran vs State of Kerala.
It appears that, although the Division Bench did not specifically consider whether a bidder at an auction of the kind before us was the "grantee" of a privilege within the meaning of Section 26 of the Act, yet, it held that the liability to satisfy the dues arising out of a bid was enforceable under Section 28 of the Act quite 783 apart from any contractual liability.
Reference was also made, in this connection, to the decision of this Court in Union of India vs A. L. Ralia Ram, for contending that the absence of a formal contract is not fatal in all cases so as to make the whole transaction null and void ab initio.
Statutory duties and liabilities may be enforced in accordance with statutory provisions.
Equitable obligations may also arise and be enforced by decrees of Courts quite apart from the requirements of article 299 of the Constitution.
Mulamchand vs State of Madhya Pradesh(2) affords an instance where on a claim for compensation or restitution under Section 70 of the Contract Act, this Court relied upon the principle stated, in Nelson vs Harbolt(3) as follows (at p. 222) : "It is no longer appropriate to draw a distinction between law and equity.
Principles have now to be stated in the light of their combined effect.
Nor is it necessary to convass the niceties of the old forms of action.
Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework.
The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the Court orders restitution if the justice of the case so requires".
In the case before us, we are concerned really with the legality of proceedings under Section 28 quoted above of the Act.
It is evident that these proceedings can be taken in respect of "all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue".
It is clear that dues may also be "recovered from the person primarily liable to pay the same or from his surety (if any)".
It is not a condition precedent to recovery of an amount due and recoverable that it should be due under a formally drawn up and executed contract.
Section 18 of the Act shows that the exclusive or other privilege of selling liquor by retail may be granted on payment of rental in in consideration of the grant.
The appellants made all the initial payments of rent.
We do not think that acquisition of the status of a grantee, for the purposes of Section 18A, need await the actual receipt of a licence.
The conditions of the grant are to be laid down by the Government.
The amount of rental "may be settled by auction, negotiation or by any other method as may be determined by by the Government, from time to time".
The amounts due "may be collected to the exclusion of, or in addition to, the duty or tax leviable under Sections 17 and 18.
Section 18A(2) lays down that "no grantee of any privilege made sub section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner".
It will be seen that this provision contemplates the statutory status of a "grantee" even before 784 he becomes entitled, as of right, to exercise the privileges of a grantee on the receipt of a licence.
What is noticeable is that even before he receives his licence he is described as a "grantee".
The successful bidders, in the case before us, had been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of receipt of licences, to exercise the privileges of grantees.
They were thus treated as grantees in anticipation of execution of contracts and grants of licences.
Grantees under Section 29 of the Act are those who have received the privilege and not necessarily only those who have received the written contracts and licences.
The word "grantee" used there seems to us to carry this wider connotation with it.
In Madhavan 's case (supra) K. K. Mathew, J., repelled the contention that the execution of an agreement in accordance with the provisions of Article 299 of the Constitution was a condition precedent to the creation of a liability to be proceeded against under Section 28 of the Act for recovery of the balance of the rentals due.
He said (at p. 94) : "It was contended on behalf of the petitioners in some of these cases that no agreements were executed by them, and therefore, the Government are not entitled to recover any amount by way of rental.
Reliance was placed upon the decisions of the Supreme Court in H. P. Chowdhry vs State of M.P. (AIR and Mulamchand vs State of M.P. (1969(II) S.C.W.R. 397), for the proposition that unless there is an agreement executed in accordance with the provisions of Article 299 of the Constitution, the petitioners in the case where no agreements have been executed, would not be liable to pay rental.
The argument was that the liability to pay rental arises only out of the agreement, and if there is no agreement, then there is no liability to be enforced.
As I have indicated the liability to pay the rental arises not only by virtue of the agreement but also by the provisions of section 28 of the Act.
The decision of the Supreme Court in H. P. Chowdhry vs State of M.P. would make it clear that if there are provisions in the Act, the liability to pay the rental can be enforced.
I think that even if no agreement has been executed, there was the liability under section 28 of the Act, and that the liability could be enforced under the provisions of the Revenue Recovery Act.
(See Sections 6 and 62 of the T.C.Act)".
The appellants became entitled to get licences from the Government which had to perform its duty to execute written agreements and grant licences as soon as the appellants fulfilled required conditions by paying up the remainder of the amounts due.
The Government had performed its part of the bargain and even allowed the appellants to start selling liquor.
The appellants also became liable and bound to perform their corresponding obligations under the 785 conditions of the auctions imposed in pursuance of statutory provisions.
This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity.
Consequently, we affirm the view of the Kerala High Court and dismiss this appeal.
Parties will bear their own costs throughout.
V.P.S. Appeal dismissed.
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The appellants bid at auction sales of some toddy shops.
The conditions of the sales, notified in pursuance of the statutory provisions, were: (a) It was incumbent upon the bidder to pay immediately 10% of the amount due; (b) The successful bidder had to deposit 30% of the amount payable, on demand by the Assistant Commissioner, and to execute agreements before getting the necessary licences; and (c) If the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold.
The appellants deposited the necessary amounts on demand and were allowed to start business even before agreements were executed or licences were issued.
But the appellants failed to pay the balance due to the State.
The amounts were sought to be recovered under section 28, and the proceedings were challenged, but the High Court held against the appellants.
In appeal to this Court, the appellants contended that as no agreement was executed between the appellants and the Government in the manner prescribed by article 299 of the Constitution, the appellants had not become the `grantees ' of any privilege and hence were not liable to pay the amounts sought to be recovered Dismissing the appeal, ^ HELD : The Government had to perform its duty of granting licences as soon as the appellants fulfilled the conditions by paying up the remainder of the amounts due.
In the present case, Government had performed its part by allowing the appellants to start selling liquor even before execution of the agreements and the grant of licences.
The appellants, therefore, became liable and bound to perform their corresponding obligations.
This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity.
[784G 785B] (1) It is not a condition precedent to recovery of an amount due and recoverable under the Act that it should be due under a formally drawn up and executed contract.
Under the notification, in the event of the non execution of a contract, even if due to the unwillingness or inability of a bidder to pay, the whole amount due could be forfeited.
[782C; 783E F] 2(a) The acquisition of the status of a grantee for the purpose of section 18A, does not depend on the actual receipt of a licence.
Section 18A(2) lays down that no grantee of any privilege under sub section
(I) shall exercise it until the has received a licence.
This provision contemplates the statutory status of a `grantee ' even before the successful bidder becomes entitled, as of right, to exercise the privileges of a grantee on receipt of a licence even before he receives his licence he is described as a grantee.
[783F G, H 784A] 781 (b) The word `grantee ' used in section 28 carries this wider connotation of persons who have been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of the receipt of licences, to exercise the privileges of grantees, and not necessarily only those who have executed the written contracts and received licences.
[784A C] Madhavan vs Assistant Excise Commissioner, Palghat I.L.R. [1969] 2 Kerala 71, approved.
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Here is a two-paragraph summary of the court case:
The appellants (K. R. Sudhakaran and others) filed a petition to quash revenue recovery proceedings initiated against them for realising the remaining amounts due from their bids at auction sales of toddy shops for the period 1st April 1967 to 31st March 1969. The petitioners contended that they were not liable to pay the amounts as there was no agreement executed between them and the Government in accordance with Article 299 of the Constitution. They also claimed that the removal of prohibition in April 1967 led to heavy losses, making it impossible for them to make the remainder of the payments.
The Kerala High Court rejected the petitioners' arguments, holding that the amounts due could be recovered under Section 28 of the Abkari Act, which provides for the recovery of duties, taxes, fines, and fees payable to the Government. The court relied on the decisions in Madhavan vs Assistant Excise Commissioner and Damodaran vs State of Kerala, which held that the liability to satisfy dues arising out of a bid was enforceable under Section 28 of the Act. The Supreme Court also affirmed the view of the Kerala High Court, holding that the petitioners' rights as grantees under Section 18A of the Act vested in them even before they received the licences, and that the amounts due could be recovered under Section 28 of the Act.
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Appeals Nos. 1957 and 1958 of 1966.
Appeal by special leave ,from the judgment and order dated September 6, 1965 of the Allahabad High Court, Lucknow Bench in First Civil Appeals Nos. 62 and 71 of 1957.
H.R. Gakhale, M.M. Kshatriya and G.S. Chatterjee, for the.
appellant (in both the appeals).
M.C. Chagla, A.K. Verma, B. Datta and 1.
B. Dadachanli, for the respondents (in both the appeals).
The Judgment of the Court was delivered by Shah, J.
Ranjit Singh was a director of Ranjit Singh & Sons.
Ltd. which acted as a Managing Agent of Shri Vikram Cotton Mills Ltd. Shri Vikram Cotton Mills Ltd. hereinafter called the Company, opened a cash credit account with the Punjab National Bank, and to secure repayment of the balance due at the foot of the account on June 27, 1953 four documents were executed three by the Managing Agents on behalf of the Company and one by Ranjit Singh.
The three: documents executed by the Managing Agents were (i) promissory note for Rs. 13,00,000/ payable with interest at the rate of 21/2% over the Reserve Bank of India rate with a minimum rate of 6% per annum until payment; (ii) a deed of hypothecation of goods described in the Schedule annexed to the document; (iii) a letter to the Bank agreeing that during the continuance of the agreement evidenced by the letter of hypothecation, the Company will remain solely responsible for all loss, damage or deterioration of the securities delivered to the Bank caused by theft, fire, rain, robbery.
464 dacoity or by any other cause whatsoever.
Ranjit Singh executed a deed called an "agreement of guarantee" agreeing to pay on demand all monies which may be due as "ultimate balance" from the Company to the Bank.
In December 1953 the Company closed its business.
The stocks pledged were disposed of by the Bank and the amount realised was credited in the account of the Company.
The Bank claimed that an amount of Rs. 2,56,877/12/6 remained due at the foot of the account.
Some creditors of the Company had in the meantime filed petition in the High Court of Allahabad for an order winding up the Company.
On February 22, 1956, a scheme of composition was settled among the creditors that the total liability of the Company was Rs. 34,45,197 11 2 and the total assets of the Company were Rs. 5,00,000, that the Company was desirous of confirming "a lease agreement" and that in order to safeguard the rights and interests of the Company and its unsecured creditors the Company had entered into an agreement with the lessee.
The scheme was sanctioned by order of the High Court of Allahabad dated May 21, 1956 under section 391 of the Indian after rejecting the opposition of the Bank, The Bank then filed a suit in the Court of the Civil Judge.
Malihabad, Lucknow, against the Company and Ranjit Singh for a declaration that on the date of the suit a sum of Rs. 2,56,877 12 6 was due against the Company and for a decree for payment of that amount against Ranjit Singh with costs and interest pendente lite.
In a joint written statement it was contended, inter alia, that Ranjit Singh was "only a guarantor and not a co debtor" and that he could be made liable only in case of default by the Company, and since the Company had made no default the suit against Ranjit Singh was not maintainable.
Certain preliminary issues were raised by the Trial Judge at the hearing of the suit out of which the following are relevant: "(1) Whether the plaintiff (Bank) is not entitled to file this suit as against the defendant No. 1 (the Company) without obtaining the leave of the Company Judge as alleged ? If so, its effect '? (2) Whether the Court has no jurisdiction to decide on the merits of the plaintiff 's claim in view of the facts as alleged in para 12(A) of the written statement ? If so, its effect ? (3) Whether the suit against defendant No. 2 (Ranjit Singh is not maintainable as pleaded under Paras 7, 13 and 14 of the written statement ?" 465 The Trial Court held that the suit was not maintainable against the Company without obtaining leave of the Company Judge, and also that the Court had No. jurisdiction to adjudicate upon the merits of the Bank 's claim, for under the scheme the Board of Trustees were to scrutinise the claim and their decision was final.
In dealing with the claim against Ranjit Singh the Court head that he had not made any default in payment of the dues and under the terms of guarantee the suit was premature against him as well.
The Court accordingly dismissed ' the suit.
Two appeals were preferred to the High Court of Allahabad against the judgments in the suit.
The High Court held that a scheme of composition between the Company and its creditors confirmed by the Court had statutory operation and was binding on all creditors regardless of the fact whether any of them agreed or not; that according to the scheme the Bank became an unsecured creditor for the amount remaining due after sale of the pledged goods, that under cl. 12 of the Scheme the amount payable to the unsecured creditors shall be the principal amount due to them determined by the Board of Trustees, that it was for the, Board of Trustees to determine the amount that remained payable to the Bank, that though under cI. 16 of the scheme a creditor may file suits and take appropriate steps, for the limited purpose of establishing their claims the suit had to be filed with the leave of the; Court, and that the suit of the Company without obtaining leave of the Court was not maintainable.
The High Court further held that Ranjit Singh had executed an indemnity bond, and that even assuming that Ranjit Singh was a surety it was expressly provided by the terms of the: bond executed by him that the guarantee was only for ensuring payment of the "ultimate balance" remaining due to the Bank on such cashcredit account upto the specified limit, and therefore Ranjit Singh was only to pay "the ultimate balance" which might be found due against the Company after "taking into account all dividends, compositions and payments etc as payments in gross towards the debt", that the Bank 's dues could be recovered from Ranjit Singh upon default in payment by the Company of the ultimate balance after scrutiny by the Board of Trustees, and that the "proper stage for commencing a suit against Ranjit Singh was after the ultimate liability of the Company was determined by the Board of Trustees and the Company committed default in payment".
The High Court accordingly confirmed the decree of the Trial Court even in favour of Ranjit Singh With special leave granted by this Court, these two appeals have been preferred by the Bank.
The Bank claimed a mere declaration against the Company and not a decree for payment of the amount due Section 391 of the , insofar as it is material provides: "(1 ) Where a compromise or arrangement is proposed 466 (a) between a company and its creditors or an class of them; or (b) between a company and its members or any class of them; the Court may, on the application of the Company or of any creditor or member of the Company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs.
(2) If a majority in number representing threefourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed 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, all the creditors of the class, as the case may be, and also on the, company, or, in the case of a company which is being wound up, on the liquidator and contributories of the company: Section 392(1) provides: "Where a High Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it (a) shall have power to supervise the carrying out of the compromise or arrangement; and (b ) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement.
" In the present case a meeting of creditors of the Company was held in which a majority in number representing three fourths in value of the creditors agreed to the scheme of composition and the court rejected objection raised by the Bank and sanctioned the scheme The scheme was binding upon the Bank and the rights and obligations of the Bank had to be worked out under the scheme.
467 In reaching its conclusion that the bond executed by Ranjit Singh in favour of the Bank was of the nature of a contract of ' indemnity and not a contract of guarantee, the High Court was impressed by the circumstance that the Company was not a party to the bond, and that the bond was only a bilateral agreement between the Bank and Ranjit Singh Section 124 of the Indian Contract Act defines a "contract of indemnity" A contract by which one party promises to save the other from loss caused to him by the conduct of the promiser himself, or by the conduct of any other person, is called a "contract of indemnity".
Section 126 defines a "contract of guarantee".
It states: "A 'contract of guarantee ' is a contract to perform the promise, or discharge the liability, of a third person in case of his default.
The person who gives the guarantee is called the 'surety ': the person in respect of whose default the guarantee is given is called the 'principal debtor ', and the person to whom the guarantee is given is called the 'creditor '.
A guarantee may be either oral or written".
A promise to be primarily and independently liable for another person 's conduct may amount to a contract of indemnity A contract of guarantee requires concurrence of three persons the principal debtor, the surety and the creditor the surety undertaking an obligation at the request express or implied of the principal debtor.
The obligation of the surety depends sub ' stantially on the principal debtor 's default; under a contract of indemnity liability arises from loss caused to the promisee by the conduct of the promisor himself or by the conduct of another person In the present case the Company did not execute the bond But the bond executed by Ranjit Singh was one of four documents executed on June 27, 1953 It was part of the scheme to ensure payment of the amount due at the foot of the cash credit account in favour of the Bank The Company executed by its managing agents (i) a promissory note; (ii) a deed of hypothecation; and (iii) a letter assuring the Bank that the Company shall remain solely responsible for all loss, damage or deterioration to the stocks hypothecated with the Bank.
The Bank also insisted upon a promise by some other person to pay the debt, and as a part of the same arrangement Ranjit Singh executed the bond on which the suit is field.
The bond was expressly called an "agreement of guarantee": it was also recited therein that Ranjit Singh guaranteed to the Bank, payment on demand of all monies which may at any time be due to the Bank from the Company on the general balance of that account with the Bank, 468 that the guarantee was to be a continuing guarantee for the ultimate balance which shall remain due to the Bank on such cashcredit account.
In the written statement it was admitted that Raniit Singh was a guarantor.
The bond, it is true, did not expressly recite that the Company was the principal debtor; it is also true and the Company did not execute the bond.
But a contract of guarantee may be wholly written, may be wholly oral, or may be partly written and partly oral.
The documents which secured repayment of the Bank 's claim at the foot of the cashcredit account were executed simultaneously: the bond executed by Ranjit Singh was one of them and the conduct of Ranjit Singh and the Company indicates that Ranjit Singh agreed to guarantee payment of the debt due by the Company.
We hold, therefore, that the Bank, the Company and Ranjit Singh were parties to the agreement under which for the dues of the Company, Ranjit Singh became a surety.
The extent of the liability of Ranjit Singh under the terms of the bond must, therefore, be determined.
Section 128 of the Indian Contract Act provides that the liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided by the contract.
It is necessary, therefore, to consider whether in the terms of the bond there is anything which shows that the liability of the surety is not co extensive with that of the principal debtor.
Certain clauses of the bond are relevant: "( 1 ) In consideration of your Bank at my request allowing an accommodation by way of cash credit and D/D limits to M/s. S.V. Cotton Mills Ltd , at Lucknow Branch, I, in my personal capacity hereby guarantee to you the payment on demand of all monies which may at any time be due to you from M/s. S.V. Cotton Mills Ltd., on the general balance of that account with your Bank.
(2) I declare that this guarantee shall be continuing guarantee and shall not be considered as cancelled or in any way affected by the fact that at any time the said cash credit and D/D account may show no liability against the borrower, or may even show a credit in favour of the borrower, but shall continue in operation in respect of subsequent transactions". "(4) I further declare that all dividends, compositions, payments received by you from the said borrower or any other person or persons liable or his or their representatives shall be taken and applied as payment in gross without any right 469 on the part of myself or my representative to stand in your place in respect of or to claim the benefit of any such dividends, compositions or payments, until full amount of all your claims against the said borrower or his/their representatives which are covered by this, guarantee shall have been paid and that this guarantee shall apply to and secure ultimate balance which shall remain due to you on such cash credit account upto the extent of Rs. 13,00,000. "(8) I also agree that the Bank shall be entitled to recover its entire dues under the said cash credit account from my person or property upon default in payment by the said borrower".
By clause 4 it is expressly stipulated that the bond secured "the ultimate balance" remaining due to the Bank.
Therefore, unless and until the ultimate balance is determined no liability on Ranjit Singh to pay the amount arises, and it is common ground that the ultimate balance due is not determined.
The suit was for a decree for Rs. 2,56,877/12/6, but the claim against Ranjit Singh could be decreed only for the amount remaining due as the ultimate balance under cls.
4 and 5 of the bond.
We are, however, unable to agree with the High Court that the suit filed was premature.
The Bank was under the terms of the bond executed by Ranjit Singh entitled to, claim at any time the money due from the Company as well as Ranjit Singh under the promissory note and the bond.
The suit could not, therefore, be said to be premature.
The High Court instead of dismissing the suit should have stayed it till "the ultimate balance" due to the Bank from the Company was determined.
We deem it necessary to observe that a binding obligation created under a composition under section 391 of the Companies.
Act, 1956, between the; Company and its creditors does not affect the liability of the surety unless the contract of suretyship otherwise provides.
As observed in Halsbury 'section Laws of England, Vol. 6, 3rd Edn., article 1555 at p. 771: "A scheme need not expressly reserve the rights of any creditors against sureties for debts; of the company, as such rights are unaffected by a scheme".
It was held in Re. Garner 's Motors Ltd.(1) that the scheme when sanctioned by the Court has a statutory operation and the scheme does not release other persons not parties.
to the scheme from their obligations. ' (1) up.
CI/70 18 470 The High Court, in our judgment, should have stayed the suit and after "the ultimate balance" due by the Company was determined the Court should have proceeded to decree the claim according to the provisions of cl. 4 of the bond.
We accordingly modify the decree passed by the Trial Court and declare that the rights of the Bank against the Company are governed by the scheme: sanctioned by the High Court of Aliahabad in Company Case No. 16 of 1956 by their judgment dated May 21, 1956.
Liability of Ranjit Singh being only for payment the ultimate balance ' which remains due on the cash credit account with the Bank in favour of the Company.
The Court will, when such ultimate balance is determined, proceed to pass a decree in favour of the Bank.
Ranjit Singh has filed an affidavit in this Court that in accordance with the scheme the total amount due to the Bank was determined at Rs. 41,536/7/3 as the ultimate balance and a cheque for Rs. 35,721 was sent to the Bank on October 6, 1956 being 25% plus the other pro rate payments allowed 'by the Trustees to creditors, but the Bank did not cash the cheque.
Thereafter by letter dated 'October 28, 1966, the Bank requested that a fresh cheque be issued to them.
Accordingly a fresh cheque for Rs. 38,047 46 was issued to the Bank on November 5, 1966, comprising Rs. 35,721 on the basis of the old cheque plus Rs. 2,326 46 sanctioned for pro rate payment to the Bank by the Trustees on November 3, 1966 at the rate of 50% of the then balance due.
Thereafter another cheque for Rs. 1,744.50 being 50% of the amount then due to the Bank was also forwarded to the Bank on January 29, 1968, in pursuance of another pro rate payment resolution passed by the Trustees and the balance now due to the Bank out of the original amount is Rs. 1,744.09 only.
We are unable to investigate the correctness of these averments.
The decree passed by the High Court is set aside and the suit be remanded to the Trial Court to be disposed of in the light of the observations made in this judgment.
There will be no order as to costs in the High Court and in this Court.
Costs in the Trial Court will be costs in the suit.
R.K.P.S. Suit remanded.
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The first respondent company opened a cash credit account with the appellant bank and on June 7, 1953 to secure repayment of the balance due at the foot of the account the first respondent company executed three documents through its managing agents i.e. a promissory note, a deed of hypothecation and a letter assuring the appellant bank that the company would remain solely responsible for all loss, damage or deterioration of the stocks hypothecated with the bank.
On the same day R a Director of the managing agents executed a bond called "agreement of guarantee ' agreeing to pay on demand all monies which may be due as the "ultimate balance" from the company to the bank.
In December, 1953 the company closed its business.
The stocks pledged were disposed of by the bank and the amount realised was credited in the company 's account.
A balance of approximately Rs. 2.56 lakhs remained due at the foot of the account.
Some creditors of the company in the meantime filed a petition for winding up the company.
On February 22, 1956 a scheme of composition was settled among the creditors and was later sanctioned by the High Court On May 21, 1956 under section 391 of the after rejecting the opposition of the appellant bank.
The bank then filed a suit against the company and R for a declaration that on the date of the suit a sum of over Rs. 2.56 lakhs was due against the company and for a decree for payment of the amount against R.
The trial court dismissed the suit and on appeals filed by both the parties the High Court held that the scheme having been confirmed by the court, had statutory operation and was binding on all creditors including the bank; the bank had become an unsecured creditor for the amount remaining due after sale of the pledged goods and it was for the board of trustees under the Scheme to determine the amount for payment to the bank.
The court also held that the suit against the company without obtaining leave of the court was not maintainable.
It further held that R had executed an indemnity bond and that even assuming he was a surety under the terms of the bond he was only responsible for ensuring payment of the "ultimate balance" which still had to be determined.
The High Court accordingly confirmed the decree of the trial court and held that the suit against R was premature.
On appeal to this Court, HELD: (i) The suit must be remanded to the trial court to determine "the ultimate balance" and for disposal according to law.
463 The appellant bank was entitled to claim at any time the money due from the company as well as from R. under the promissory note and the bond.
The suit could not therefore be said to be premature.
The High Court instead of dismissing the suit should have stayed it till "the ultimate balance" due to the bank from the company was determined.
[471 E F] (ii) The binding obligation created under a composition under section 391 of the , 'between the company and its creditors does not affect the liability of the surety unless the contract of suretyship otherwise provides.
[471 F G] Halsbury 's Laws of England, Vol.
63 rd.
Edn., article 1555 at p. 771; Re.
Garner 's Motors Lid,. ; referred to.
(iii) The bond executed by R was one of the four documents executed on the same day and was part of the scheme to ensure payment of the amount found due to the Bank.
Although the bond was not also executed by the company, the 'fact that it was executed simultaneously with the other documents and the conduct of R as well as the company indicated that R agreed to guarantee payment of the debt due by the company.
It must be held, therefore that the Bank, the company and R were parties to the agreement under which for the dues of the company, R became a surety.
[470 A C]
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**Summary of the Court Case:**
The present case is an appeal by the Bank against the judgment of the Allahabad High Court, Lucknow Bench, in a suit filed by the Bank against Ranjit Singh and the Shri Vikram Cotton Mills Ltd. (the Company) for a declaration that a sum of Rs. 2,56,877/12/6 was due against the Company and for a decree for payment of that amount against Ranjit Singh with costs and interest pendente lite. The High Court held that the bond executed by Ranjit Singh in favour of the Bank was a contract of indemnity, not a contract of guarantee, and that the Bank's dues could be recovered from Ranjit Singh upon default in payment by the Company of the ultimate balance after scrutiny by the Board of Trustees.
**Key Holding of the Supreme Court:**
The Supreme Court held that the bond executed by Ranjit Singh was indeed a contract of guarantee, not a contract of indemnity, and that the liability of Ranjit Singh was co-extensive with that of the principal debtor (the Company). The Court further held that the suit filed by the Bank against Ranjit Singh was not premature, but that the Court should have stayed the suit till the ultimate balance due to the Bank from the Company was determined. The Court modified the decree passed by the Trial Court and declared that the rights of the Bank against the Company were governed by the scheme sanctioned by the High Court of Allahabad, and that the liability of Ranjit Singh was only for payment of the ultimate balance remaining due on the cash credit account with the Bank in favour of the Company.
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201 of 1952) under article 32 of the Constitution for the enforcement of fundamental rights.
B. K. Varma.and G. C. Mathur for the petitioner.
M.C. Setalvad, Attorney General for India, (Porus A. Mehta, with him) for the respondent.
March 13.
The Judgment of the Court was delivered by BOSE J.
This is a petition under article 32 of the Constitution in which the petitioner seeks redress for what, according to him, is a breach of his fundamental rights under articles 14 and 16(1) of the Constitution.
It was argued at considerable length by the petitioner in person.
Then, when our judgment was nearly ready, he put in a petition asking for a rehearing and for permission to file some fresh papers.
When that was refused he came again on another,day and asked for leave to engage an agent and appear through counsel as he felt he had not been able to do justice to his case in person.
(It may be mentioned that though he had originally engaged an agent he dismissed him before the hearing when he appeared in person.) We granted his request and counsel reargued the case for him but has not carried the matter any further.
The facts are these.
657 In October,1945, the petitioner was employed by the Government of India on a five year contracting, the Directorate General of Resettlement and Employment of the Ministry of Labour.
This was after selection by the Federal Public Service Commission.
After a short period of practical training, he was posted in January, 1946, at Jabalpur as the Manager of the Sub Regional Employment Exchange and was later confirmed in this appointment.
This contract of service was due to expire in 1950.
Shortly before its expiration the Government of India made him a new offer, embodied in its letter dated the 30th June, 1950, to continue him in service on the expiry of his contract on the terms specified in that letter.
Among them were the following: (3) Other conditions of service: On the termination of your contract you will be allowed to continue in your post temporarily for the period of the Resettlement and Employment Organisation and will be governed by the Central Civil Services (Temporary Service) Rules, 1949, unless you are a permanent Government servant.
" He was asked in the letter to intimate to the Ministry of Labour whether he was willing to continue in service on those terms and he admits that he accepted the offer and continued in service, He was not a permanent Government servant though it was contended in argument that he was, for he was on a five year contract and the work for which he was employed, namely Resettlement and Employment, was itself only of a temporary character.
Therefore, the Temporary Service Rules applied.
On those rules, ' rule 5 is material.
It runs as follows: 5 (a) The service of a temporary Government servant who is not in quasi permanent service shall be liable to termination at any time by notice in writing given either by the Government servant to the appointing authority, or by the appointing authority to the Government servant.
658 (b) The period of such notice shall be one month, unless otherwise agreed to by the Government and by the Government servant.
" Quasi permanent service is defined in the rules and it is clear that the petitioner does not come within that class.
It is also an undisputed fact that there was no agreement between the petitioner and Government regarding the period of the notice.
Therefore, according to this rule, which was a term in the petitioner 's contract of further service, his services were liable to termination at any time by ' one month 's notice in writing.
This notice was given on 25th November, 1950, and he was told that his services would terminate on the expiry of one month from 1st December, 1950.
A large field was covered in the course of the arguments, and had the matter not been re argued we would, for the petitioner 's satisfaction, have dealt with the contentions raised more fully than will be necessary now that counsel has appeared.
The petition is under article 32(1) of the Constitution and so it must be shown that a fundamental right has been infringed.
It was argued that the rights infringed are the ones conferred by articles 14 and 16(1).
Taking article 14 first, it must be shown that the ,petitioner has been discriminated against in the exercise or enjoyment of some legal right which is open to others who are similarly situated.
The rights which he says have been infringed are those confered by article 31 1.
He says he has either been dismissed or removed from service without the safeguards which that article confers.
In our opinion, article 31 1 has no application because this is neither a dismissal nor a removal from service, nor is it a reduction in rank.
It is an ordinary case of a contract being termi nated by notice under one of its clauses.
The services in India have long been afforded certain statutory guarantees and safeguards against arbitrary dismissal or reduction in rank Under 659 section 240 of the Government of India Act, 1935, the safeguards were limited to those two cases.
Under.
the present Constitution, a third was added, namely removal from service.
In order to understand the difference between "dismissal" and "removal" from service, it will be necessary to turn to the Rule,; which governed, and with modifications still govern, the "services" in India because of article 313 of the Constitution.
Part XII of the Civil Services (Classification, Control and Appeal) Rules relating to Conduct and Discipline includes rule 49 which sets out the various penalties to which a member of the services can be subjected for indiscipline and misconduct.
They are seven in number and include censure, suspension, reduction in rank, removal from service and dismissal from service.
The Act of 1935 selected only two of these possible penalties as serious enough to merit statutory safeguards, namely reduction in rank and dismissal from service. 'The Constitution has added a third to the list.
The distinction which is drawn between the two is explained in rule 49.
There is first removal from service "which does not disqualify from future employment " and there is next dismissal from service "which ordinarily disqualifies from future employment.
" Then follows an Explanation: The discharge (c) of a person engaged under contract, in accordance with the terms of his contract, does not amount to removal or dismissal within the meaning of this rule.
" These terms are used in the same sense in article 3ll.
It follows that the article has no application here and so no question of discrimination arises, for the "law" whose protection the petitioner seeks has no application to him.
There was no compulsion on the petitioner to enter into the contract he did.
He was as free under the law as any other person to accept or to reject the 660 offer which was made to him.
Having accepted, he still has open to him all the right , and remedies available to other persons similarly situated to enforce any rights under his contract which have been denied to him, assuming there are any, and to pursue in the ordinary courts of the land such remedies for a breach as are open to him to exactly the same extent as other persons similarly situated.
He has not been discriminated against and he has not been denied the protection of any laws which others similarly situated could claim.
The remedy of a writ is misconceived.
Article 16(1) is equally inapplicable.
The whole matter rests in contract.
When the petitioner 's first contract (the five year one) came to an end, he was not a permanent Government servant and Government was not bound either to re employ him or to continue him in service.
On the other hand, it was open to Government to make him the offer it did of a continuation of his employment on a temporary and contractual basis.
Though the employment was continued, it was in point of fact, and in the eyes of the law, under a new and fresh contract which was quite separate and distinct from the old even though many of its terms were the same.
Article 16(1) deals with equality of opportunity in all matters relating to employment or appointment to any office under the State.
The petitioner has not been denied any opportunity of employment or of appointment.
He has been treated just like any other person to whom an offer of temporary employment under these conditions was made.
His grievance, when analysed, is not one of personal differentiation but is against an offer of temporary employment on special terms as opposed to permanent employment.
But of course the State can enter into contracts of temporary employment and impose special terms in each case, provided they are not inconsistent with the Constitution, and those who choose to accept those terms and enter into the contract are bound by them, even as the State is bound.
When the employment is permanent there are certain statutory guarantees but in the absence of 661 any such limitations government is, subject to the qualification mentioned above, as free to make special, contracts of, service with temporary employees, engaged in, works of a temporary nature, as any other employer.
Various matters relating to the merits of the case were referred to but we express no opinion about whether the petitioner has other rights which he can enforce in other ways.
We are dealing here with a writ under article 32 to enforce a fundamental right and the only point we decide is that no fundamental right has been infringed.
When the matter was first argued we had decided not to make any order about costs but now that the petitioner has persisted in reopening the case and calling the learned Attorney General here for a second time, we have no alternative but to dismiss the petition with costs.
Petition dismissed.
Agent for the petitioner: Bajinder Narain.
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The petitioner was employed by the Government of India on a five year contract in the Resettlement and Employment Directorate of the Ministry of Labour.
When his contract was due to expire the Government made him a new offer to continue him in service in his post temporarily for the period of the Resettlement and Employment Organisation on the condition that he will be governed by the Central Civil Services (Temporary Service) Rules, 1949, which provided for termination of the contract by month 's notice on either side.
He accepted the offer and continued in service, but subsequently his services were terminated after giving him one month 's notice, The petitioner applied for relief under article 32 (1) of the Constitution alleging that his funda mental rights under articles 311, 14 and 16 (1) of the Constitution were infringed: Held, (i) that article 311 had no application as this was not a case of dismissal or removal from service nor a reduction in rank but only an ordinary case of a contract being terminated by notice under one of its clauses, the difference between dismissal and 656 removal being that the former ordinarily disqualifies from future employment but not the latter; (ii) article 14 had no application as he had not been discriminated against and had not been denied the protection of any laws which others similarly situated could claim; (iii) article 16 was equally inapplicable as the petitioner was not denied equal opportunity in a matter relating to appointment or employment but had been treated just like any other person to whom an offer of temporary employment under these conditions was made.
The State can enter into contracts of temporary employment and impose special terms in each case, provided they are not inconsistent with the Constitution, and those who choose to accept those terms and enter into the contract are bound by them, even as the State is bound.
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Here's a two-paragraph summary of the court case:
The petitioner, an employee of the Directorate General of Resettlement and Employment of the Ministry of Labour, filed a petition under Article 32 of the Constitution for the enforcement of fundamental rights. The petitioner claimed that his contract of service was terminated without the safeguards provided under Article 311 of the Constitution. However, the court held that the termination of the contract was in accordance with the terms of the Temporary Service Rules, 1949, and that the petitioner had accepted the offer of continuation of service on a temporary and contractual basis. The court further held that the petitioner was not a permanent government servant and therefore not entitled to the safeguards under Article 311.
The court also held that the petitioner's rights under Article 16(1) were not infringed as he was treated equally with other persons to whom an offer of temporary employment under similar conditions was made. The court noted that the petitioner's grievance was not one of personal differentiation but against the offer of temporary employment on special terms as opposed to permanent employment. The court dismissed the petition with costs, observing that the petitioner had persisted in reopening the case and calling the learned Attorney General for a second time.
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Appeal No. 135 of 1955.
Appeal by special leave from the judgment and order dated October 30, 1952, of the Labour Appellate Tribunal of India, Allahabad, in Misc.
Case No. C 146 of 1952.
R. R. Biswas, for the appellant.
Sukumar Ghose (amicus curiae), for the respondents.
November 28.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated October 30, 1952.
The relevant facts are these.
The Banaras Ice Factory Limited, the appellant before us, was incorporated on September 13, 1949, as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras though its registered office was in Calcutta.
The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times.
These workmen were employed from the month of March to the month of September 145 year.
The appellant company got into financial difficulties on account of trade depression, rise in the price, of materials and increase in the wages and emoluments of workmen.
It tried to secure a loan of Rs. 10,000/ from a Bank but met with no success.
Thereupon, it decided to close down the factory and on January 15, 1952, a notice was given to its workmen saying that the factory would be closed down with effect from January 17, 1952, and the services of the workmen would not be necessary for two months from that date.
The work.
men received their wages up to January 16, 1952.
On March 18, 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from January 17, 1952.
The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication.
In the meantime, that is, on June 6, 1952, the workmen gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on June 12, 1952.
A settlement was, however, arrived at between the parties on June 15, 1952, at the house of the Collector of Banaras.
The terms of that settlement, inter alia, were: (1) the management would withdraw its notice of closure dated June 12, 1952 ; (2) the workmen would withdraw their strike notice dated June 6, 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from June 16, 1952, and would report for duty on July 16, 1952, at 8 A.M. and (4) after the workers had resumed their duty on July 16, 1952, the appellant would not terminate the services of any workmen or lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.
On June 28, 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its work , men with regard to the alleged wrongful laying off of the workmen from January 17, 1952, to March 18, 1952, 19 146 referred to above.
By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question.
On July 16, 1952, none of the workmen reported for duty in accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to the effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from July 16, 1952.
The workmen, it is stated, accepted the notice and took their pay for one month (from July 16 to August 15, 1952) without any protest.
Against the award of the Regional Conciliation Officer dated June 28, 1952, the appellant filed an appeal to the Labour Appellate Tribunal on July 25, 1952.
On August 31, 1952, a complaint was made on behalf of the workmen to the Labour Appellate Tribunal under section 23 of the Industrial _ Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act.
The gravamen of the complaint was that the appellant had contravened the provisions of section 22 of the Act.
because the appellant had discharged all the workmen with effect from August 15, 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on July 25, 1952, against the award of the Regional Conciliation Officer.
The Labour Appellate Tribunal dealt with this complaint by its order dated October 30, 1952.
Before the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of a. 22, because on July 16, 1952, when the notice of discharge was given by the appellant, no appeal was pending before it, the appellant 's appeal having been filed several days later, namely, on July 25, 1952.
This contention was not accepted by the Labour Appellate Tribunal on the ground that though the notice of discharge was given on July 16, 1952, the termination of service was to come into operation after one month, that is, from August 15, 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending.
As learned counsel for the 147 appellant has not again pressed this point before us, it is not necessary to say anything more about it.
A second point uroed before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory.
The agreement of June 15, 1952, did not stand in the appellant 's way, as the workmen themselves did not report for duty on July 16, 1952.
The closure being a bona fide closure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of section 22 of the Act.
The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure.
It referred to the agreement of June 15, 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl.
(b) of section 22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from August 16, 1952, to October 30, 1952.
Relying on the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (1), learned counsel for the appellant has urged three points before us.
His first point is that the termination of the services of all workmen on a real and bona fide closure of business is not 'discharge ' within the meaning of cl.
(b) of section 22 of the Act.
His second point is that if the word 'discharge ' in cl.
(b) aforesaid includes termination of services of all workmen on bona fide closure of business, then the clause is an unreasonable restriction on the fundamental right guaranteed in el.
(g) of article 19 (1) of the Constitution.
His third point is that, in any view, the Labour Appellate Tribunal, was not entitled to grant compensation to the workmen, because section 23 of the Act did not in terms entitle the Labour (1) A.I.R. 1956 All.
148 Appellate Tribunal to pass an order of compensation.
We may state here that if the appellant succeeds on the first point, it becomes unnecessary to decide the other two points.
For a consideration of the first point, we must first read sections 22 and 23 of the Act.
Section 22: " During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act, no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal.
" Section 23: " Where, an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee, aggrieved by such contravention, may make a complaint in writing, in the prescribed manner, to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly." The short question before us is whether the word 'discharge ' occurring in cl.
(b) of section 22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer.
It is true that the word 'discharge ' is not qualified by any limitation in cl.
We must, however, take the enactment as a whole and consider section 22 with reference to the provisions of the , (XIV of 1947) which is in pari materia with the Act under our consideration.
We have had occasion to consider recently in two cases the general scheme and 149 scope of the .
In Burn & Co., Calcutta vs Their Employees(1) this Court observed that the object of all labour legislation was ' firstly, to ensure fair terms to the workmen and secondly, to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer.
In Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union (2) it was observed " The objects mentioned above can have their fulfilment only in an existing and not a dead industry.
" We accepted the view expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal(3) and K. M. Padmanabha Ayyar vs The State Of Madras (4) that the provisions of the , applied to an existing industry and not a dead industry.
The same view was reiterated in Hariprasad Shivshankar Shukla vs A. D. Divikar (5) where we held that 'retrenchment ' in cl.
(oo) of section 2 and section 25F did not include termination of the services of workmen on bona fide closure of business.
Turning now to section 22 of the Act, it is clear enough that el.
(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.
The alteration referred to in cl.
(a) must therefore be an alteration in the conditions of service to the prejudice of the workmen concerned, in an existing or running industry.
Similarly, the second part of cl.
(b) relating to punishment can have application to a running or existing industry only.
When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise.
We are then left with the word 'discharge '.
Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope of the .
Our attention has been drawn to (1) ; (4) (2) 2.
(5) [1957] S.C. R.121.
(3) A.I. R. 150 the definition of 'workman ' in cl.
(s) of a. 2, which says ". for the purposes of any proceeding under this Act in relation to an industrial dispute, (the definition) includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute.
" In the said definition clause also, the word 'discharge ' means discharge of a person in a running or continuing business not discharge of all workmen when the industry itself ceases to exist on a bona fide closure of business.
The true scope and effect of sections 22 and 23 of the Act were explained in The Automobile Products of India Ltd. vs Rukmaji Bala (1).
It was pointed out there that the object of section 22 was " to protect the workmen concerned in disputes which formed the subject matter of pending proceedings against victimisation " and the further object was " to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of these proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen.
" Those objects are capable of fulfilment in a running or continuing industry only, and not a dead industry.
There is hardly any occasion for praying for permission to lift the ban imposed by section 22, when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist.
If there is no real closure but a mere pretence of a closure or it is mala fide, there Is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under a.23 of the Act.
For these reasons, we must uphold the first point taken before us on behalf of the appellant.
The Appellate Tribunal was in error in holding that the (1) ; 151 appellant had contravened cl.
(b) of section 22 of the Act.
The Appellate Tribunal did not find that the closure of the appellants business was not bona fide; on the ' contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it.
As to the agreement of June 15, 1952, the workmen themselves did not abide by it and the appellant 's right cannot be defeated on that ground.
In view of our decision on the first point, it becomes unnecessary to decide the other two points.
On the point of construction of section 22 of the Act,, we approve of the decision of the Allahabad High Court in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (supra) but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have expressed our assent, contrary to the opinion expressed by us in the case of The Automobile Product8 of India Ltd. (supra) to the view that under section 23 of the Act, it is not open to an industrial Tribunal to award compensation in an appropriate case.
In the result, the appeal is allowed and the decision of the Labour Appellate Tribunal dated the 30th October 1952 is set aside.
As the workmen did not appear before us, there will be no order for costs.
We are indebted to Mr. Sukumar Ghosh for presenting before us the case of the workmen as amicus curiae.
Appeal allowed.
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Clause (b) Of section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 provides that during the pendency of any appeal under the Act no employer shall discharge any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal, and section 23 enables any employee to make a complaint in writing to such Appellate Tribunal, if the employer contravenes the provisions Of section 22 during the pendency of proceedings before the said Tribunal.
144 During the pendency of an appeal filed before the Labour, Appellate Tribunal the appellant company finding it difficult to run the factory decided to close it down and gave notice to all the workmen that their services would be terminated upon the expiry of thirty days from July 16, 1952.
On August 31, 1952, a complaint was made on behalf of the workmen to the Tribunal under section 23 Of the Act that the appellant had discharged them without the permission in writing of the Tribunal and had thereby contravened the provisions of section 22 of the Act.
It was found that the closure of the appellant 's business was bona fide.
Held, that section 22 of the Act is applicable only to an existing or running industry and that the termination of the services of all workmen, on a real and bona fide closure of business, is not 'discharge ' within the meaning of section 22(b) of the Act.
J. K. Hosiery Factory vs Labour Appellate Tribunal of India (A.I.R. 1956 All. 498), approved on the point of construction of section 22 of the Act.
Pipraich Sugar Mills Ltd. vs The Pipraich Sugar Mills Mazdoor Union followed.
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The Banaras Ice Factory Limited (the appellant) employed about 25 workmen from March to September every year. However, due to financial difficulties, the company decided to close the factory and gave a notice to the workmen on January 15, 1952. The workmen received their wages up to January 16, 1952, and were taken back into service on March 18, 1952. An industrial dispute arose, and the workmen claimed that they were wrongfully laid off.
The Labour Appellate Tribunal held that the appellant had contravened section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, by discharging the workmen without permission. However, the Supreme Court of India, in a judgment delivered on November 28, 1955, allowed the appeal filed by the appellant. The Court held that the termination of services of all workmen on a bona fide closure of business is not "discharge" within the meaning of section 22 of the Act, and therefore, the appellant did not contravene the provisions of the Act.
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ivil Appeal No. 1387 of 1987.
From the Judgment and Order dated 25.9.1986 of the Andhra Pradesh High Court in C.W. Appeal No. 1027 of 1986.
A.K. Sen, K. Srinivasamurthy and Kailash Vasdev for the Appellants.
M.K. Ramamurthi and M.A. Krishna Murthy, for the Re spondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The State Bank of India and two of its officers have filed this appeal by special leave against the judgment of a Division Bench of the High Court of Andhra Pradesh in Writ Appeal No. 1027 of 1986 dated 25.9.1986 affirming the judgment dated 28.3.
1986 of the learned Single Judge in Writ Petition No. 5133 of 1984 issuing a direction to the appellants to promote the respondent, Mohd. Mynuddin to the Middle Management Grade Scale III.
The respondent who was holding the post of the Manager, S.I.B. Division, State Bank of India, Vijayawada (Andhra Pradesh) which was a post in Middle Management Grade Scale II filed the above writ petition before the High Court in the year 1984 complaining that he had been wrongly denied promotion to the Middle Management Grade Scale III along with some others who belonged to his batch 535 without any reasonable ground, even though he was fully eligible for such promotion.
On the above basis he prayed for the issue of a direction to the management to promote him to the higher post with effect from 1979.
According to the appellants his case was not considered in the year 1979 on account of inadequacy of material regarding his eligibil ity but when it was brought to the notice of the management that he had necessary eligibility for the post, his case was considered in 1982 for the vacancies of 1980 and 1981 but he was not selected.
Again his case for promotion was consid ered on 13.8.1983.
Then again he was found not fit for promotion and, therefore, he was not promoted.
The main contention of the respondent before the High Court was that since there were no adverse remarks in any of his confidential reports, he should have been promoted to the higher post.
The learned Single Judge noticed that in the confidential reports relating to the respondent it had been recorded that his service was 'satisfactory ' in the years 1977 78, 1979 80 and 1980 81 and that there were no adverse remarks against the respondent.
The learned Single Judge, therefore.
found that on the material placed before the Court there was nothing which disentitled the respondent to the promotion in question and that the action of the management in not promoting him was arbitrary.
The learned Single Judge accordingly allowed the writ petition and issued a direction to the appellants to promote the respond ent to the post of Middle Management Grade Scale III with effect from 1.8.
1979 when his batch mates were promoted and that he should be given all consequential benefits.
Ag grieved by the judgment of the learned Single Judge the appellants filed an appeal before the Division Bench of the High Court which, as stated earlier.
dismissed the appeal affirming the judgment of the learned Single Judge by its order dated 25.9.
against which this appeal by special leave is filed.
It is admitted that the posts in the Middle Management Grade Scale III in the State Bank of India are posts to which appointments are made by selection.
The State Bank of India stated before the High Court that the promotion to Middle Management Grade Scale I11 posts depended not merely upon the eligibility but on merit and such promotion was accorded only after a proper evaluation of the service records, performance appraisal and potentiality of the officer concerned to assume higher responsibilities.
The evaluation was done by the Selection Committee.
which was expected to go into several aspects including the merits and demerits or all the candidates who were eligible.
It was further pleaded that the mere absence of adverse remarks did not entitle an employee to promotion to the next higher 536 grade automatically when promotion was by selection.
It was further pleaded that after applying the relevant tests laid down by several circulars issued by the Management embodying the guidelines in respect of the selection of officers for promotion to the Middle Management Grade Scale III it was found from time to time that the respondent was not entitled to be promoted.
It was further pleaded before us that in any event the High Court was not right in issuing a direction to the management to promote the respondent to the higher post particularly in the absence of any plea of mala fides.
The learned counsel for the appellants, however, has very fairly stated that even now the management is willing to consider the case of the respondent for promotion on a proper ap praisal of the relevant material by the Selection Committee.
Whenever promotion to a higher post is to be made on the basis of merit no officer can claim promotion to the higher post as a matter of right by virtue of seniority alone with effect from the date on which his juniors are promoted.
It is not sufficient that in his confidential reports it is recorded that his services are 'satisfactory '.
An officer may be capable of discharging the duties of the post held by him satisfactorily but he may not be fit for the higher post.
Before any such promotion can be effected it is the duty of the management to consider the case of the officer concerned on the basis of the relevant materials.
If promo tion has been denied arbitrarily or without any reason ordinarily the Court can issue a direction to the management to consider the case of the officer concerned for promotion but it cannot issue a direction to promote the officer concerned to the higher post without giving an opportunity to the management to consider the question of promotion.
There is good reason for taking this view.
The Court is not by its very nature competent to appreciate the abilities, qualities or attributes necessary for the task, office or duty of every kind of post in the modern world and it would be hazardous for it to undertake the responsibility of assessing whether a person is fit for being promoted to a higher post which is to be filled up by selection.
The duties of such posts may need skills of different kinds scientific, technical, financial, industrial.
commer cial, administrative, educational etc.
The methods of evalu ation of the abilities or the competence of persons to be selected for such posts have also become nowadays very much refined and sophisticated and such evaluation should, there fore, in the public interest ordinarily be left to be done by the individual or a committee consisting of persons who have the knowledge of the requirements of a given post, to be nominated by the employer.
Of course.
the process of selection adopted by them should always be 537 honest and fair.
It is only when the process of selection is vitiated on the ground of bias, mala fides or any other similar vitiating circumstance other considerations will arise.
The nature of the writ that can be issued in cases like the one before us has been considered by this Court in the State of Mysore and Anr.
vs Syed Mahmood and Ors.
, [ ; In that case rule 43(b) of the Mysore State Civil Services General Recruitment Rules, 1957 re quired promotion to be made by selection on the basis of seniority cum merit, that is seniority subject to the fit ness of the candidate to discharge the duties of the post from among persons eligible for promotion.
While making selections for promotions to the posts of senior statistical assistants from the cadre of junior statistical assistants, the State Government did not consider the case of the re spondents therein who were junior statistical assistants, and published a list promoting persons ranking below them in point of seniority.
The respondents therein filed writ petition before the High Court.
The High Court while refus ing to quash the seniority list directed the appellant State to promote the respondents as from the dates on which their juniors were promoted and treat their promotion as effective from that date.
In the appeal filed against the judgment of the High Court this Court observed that while making selec tions for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants, in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted.
Since the promotions were irregularly made the respondents therein were entitled to ask the State Government to reconsider their case.
In the circumstances.
this Court observed, that the High Court could only issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniori ty and fitness, the respondents should have been promoted on the relevant dates when officers junior to them were promot ed and that instead of issuing such a writ the High Court had wrongly issued a writ directing the State Government to promote them with retrospective effect.
This Court further observed that the High Court ought not to have issued such a writ without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959.
The ratio of the above decision is that where the State Government or a statutory authority is under an obli gation to promote an employee to a higher post which has to be filled up by selection the State Government or the statu tory authority alone should be directed to consider the question whether the employee is entitled to be so promoted and that the Court should not ordinarily issue a writ to the Government or the statutory authority to promote an officer straightaway.
The principle enunciated in the above decision 538 is equally applicable to the case on hand.
It is seen that the Selection Committee constituted by the State Bank of India has considered the case of the respondent for promotion to the vacancies of the years 1980 and 1981 and for the subsequent period from time to time.
The Selection Committee did not find the respondent fit for promotion on all such occasions.
There is no allegation of bias or mala fides urged against the members of the Selec tion Committee or the management.
On the material placed before us we hold that at all relevant times the case of the promotion of respondent has been considered in accordance with law.
No other contention is urged before us.
On the facts and in the circumstances of the case we do not find any error committed by the appellants.
The High Court was not.
therefore, right in directing the appellants to promote the respondent with effect from 1979.
As mentioned earlier.
the learned counsel for the appellants has submitted that the Selection Committee constituted by the appellants would again consider the case of the respondent for promotion on a proper appraisal of the relevant material.
In the circumstances, we feel that the direction issued by the High Court should be set aside and we accordingly do so.
The appellants are, however, directed to consider the case of the respondent for promotion within four months from today and if on an assessment of the relevant material the State Bank of India finds that the respondent is fit to be promoted, he shall be promoted forthwith.
This appeal is accordingly disposed of.
There will.
however be no order as to costs.
P.S.S. Appeal allowed.
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The respondent holding a Middle Management Grade Scale II post in the appellant Bank was found not fit for promo tion to Grade Scale III by the Selection Committee in the year 1979 and superseded.
His case was again considered in the years 1980, 1981 and 1983 but denied promotion.
He filed a writ petition in the High Court in 1984 for the issue of a direction to the management to promote him to the higher post with effect from 1979 with the assertion that he was fully eligible for such promotion.
The Single Judge noticed that in respondent 's confiden tial reports for the years 1977 78, 1979 80 and 1980 81 it had been recorded that his service was 'satisfactory ' and that there were no adverse remarks against him.
He, there fore, took the view that there was nothing which disentitled the respondent to promotion and that the action of the management in not promoting him was arbitrary, and accord ingly issued a direction to the appellants to promote the respondent with effect from 1.8.1979 when his batch mates were promoted.
The Division Bench dismissed the appeal filed by the appellants.
In this appeal by special leave it was contended for the appellants that the promotion to Middle Management Grade Scale III posts depended not merely upon the eligibility but on merit and such promotion was accorded only after a proper evaluation by the Selection Committee of the service re cords, performance appraisal and potentiality of the officer concerned to assume higher responsibilities, that the mere 533 absence of adverse remarks did not entitle an employee to promotion to the next higher grade automatically when promo tion was by selection.
that after applying the relevant tests laid down by the management for promotion to the Middle Management Grade Scale III it was found from time to time that the respondent was not entitled to be promoted, and that in any event the High Court was not right in issu ing a direction to the management to promote the respondent to the higher post particularly in the absence of any plea of mala fides.
Allowing the appeal, HELD: The High Court was not right in directing the appellants to promote the respondent to the Middle Manage ment Grade Scale 111 with effect from 1979.
[538C] If promotion has been denied arbitrarily or without any reason ordinarily the Court can issue a direction to the management to consider the case of the officer concerned for promotion but it cannot issue a direction to promote the officer concerned to the higher post without giving an opportunity to the management to consider the question of promotion.
This is because the Court is not by its very nature competent to appreciate the abilities, qualities or attributes necessary for the task, office or duty of every kind of post which is to be filled up by selection.
The duties of such posts may need skills of different kinds scientific.
technical, financial, industrial, commercial, administrative, educational etc.
The evaluation of the abilities should, therefore, in the public interest ordi narily be left to be done by the individual or a committee consisting of persons who have the knowledge of the require ments of a given post.
[536E H] Whenever promotion to a higher post is to be made on the basis of merit no officer can claim promotion to the higher post as a matter of right by virtue of seniority alone with effect from the date on which his juniors are promoted.
It is not sufficient that in his confidential reports it is recorded that his services are 'satisfactory '.
An officer may be capable of discharging the duties of the post held by him satisfactorily but he may not be fit for the higher post.
Before any such promotion can be effected it is the duty of the management to consider the case of the officer concerned on the basis of the relevant materials.
Of course, the process of selection adopted by them should always he honest and fair.
It is only when the process of selection is vitiated on the ground of bias, mala fides or any other similar vitiating circumstances other considerations will arise.
[536C E; H; 537A] 534 State of Mysore and Anr.
vs Syed Mohmood and ors.
, [1968]3 S.C.R. 363, applied.
In the instant case at all relevant times the case of the promotion of respondent has been considered in accord ance with law by the selection committee constituted by the appellant Bank and it did not find him fit for promotion on all such occasions.
There is no allegation of bias or mala fides urged against the members of the selection committee or the management.
The appellants, therefore, cannot be said to have committed any error is not promoting the respondent. ]538B C] The appellants are directed to consider the case of the respondent for promotion within four months from the date of the judgment.
and if found fit to promote him forthwith.
[538E]
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Here is a two-paragraph summary of the legal case:
Civil Appeal No. 1387 of 1987 was filed by the State Bank of India and two of its officers against the judgment of the Andhra Pradesh High Court in Writ Appeal No. 1027 of 1986. The High Court had directed the bank to promote the respondent, Mohd. Mynuddin, to the Middle Management Grade Scale III, with effect from 1979. The respondent had filed a writ petition in 1984, claiming that he had been wrongly denied promotion and was eligible for the higher post.
The Appellate Court, however, held that the High Court's direction to promote the respondent was not appropriate. The court noted that promotion to the Middle Management Grade Scale III posts was by selection and not merely based on seniority. The Selection Committee had considered the respondent's case for promotion on several occasions, but had not found him fit for promotion. The court held that the Selection Committee was competent to assess the respondent's eligibility for promotion and that the Court should not issue a direction to promote the respondent without giving the management an opportunity to consider his case. The court allowed the appeal, set aside the High Court's direction, and directed the bank to consider the respondent's case for promotion within four months.
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N: Criminal Appeal Nos.
66 67 of 1980.
Appeals by Special Leave from the Judgment and order dated 30/8/1979 of the Delhi High Court in Criminal Revision Nos.
65 66 of 1979.
N. section Das Bahl for the Appellant.
M. N. Shroff for the Respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
The common appellant in both these appeals is a teen aged student turned criminal adventurer in the elitist area of car lifting and scooter poaching current in our fashionable cities, including Delhi.
While he was a college student and but 19 years old, the appellant tried his hand at stealing a scooter way back in 1971.
He was arrested but bailed out and while on bail was accused of committing a car theft.
Both these cases were tried and he was found guilty.
The 864 scooter offence resulted in a sentence of two years ' imprisonment and a fine of Rs. 2,000.
The car theft case got converted into an offence under Section 411 I.P.C. and, consequently, a reduced sentence of imprisonment for six months and a fine of Rs. 500.
The convictions being concurrent and no substantial infirmity being present, we have confined leave to appeal to the question of sentence only.
But sentencing the cutting edge of the judicial process is the crucial strategy of the criminal law in achieving social defence and delinquent rehabilitation.
So we have to consider the totality of factors bearing on the offence and the offender and fix a punishment which will promote effectively the punitive objective of the law deterrence and habilitation.
We do not deem it necessary to set out elaborately all the socio legal facts which have been discussed at the bar.
All that we need say is that the offence took place in 1971 and we are now in 1980.
A long protracted litigation is some deterrent for a young man in his twenties.
The accused was nineteen when the offences were committed and his youthful age is a factor which deserves consideration.
A long period of incarceration in the present condition of prisons may brutalise the boy and blunt his finer sensibilities so that the end product may perhaps be more criminal than the one at the point of entry.
Not that all prison terms are not deterrent but some cases prove to be counter productive especially when the delinquent is young.
It may be interesting to recall Lord Soper 's observations in the House of Lords in a debate on British Prisons, where he said: "Now as to reform.
I was a prison chaplain for 30 years.
I cannot remember a single man who was reformed by being in prison not one.
I can remember those who, serving very short sentences, were for a time, perhaps, brought to recognise something of the gravity of what they had been doing; but I am completely convinced that the longer a man stays in prison, the longer he stays in that kind of incarceration, the less is the prospect of reform and the more certain is the process of decay.
That is why I have consistently tried to say that any man who is imprisoned in one particular set of circumstances for more than five years is probably dead for life.
It is highly unlikely that those who have endured that kind of monotonous deadening will be able to recover in the real world what they have lost in the artificial element and environment of prison life.
There has been, I think, in my time, a considerable increase 865 in the amelioration of conditions in prison; but, to refer again for a moment to the artificiality of it, the longer a man stays in prison the less capable he will be of recovering his place and establishing his position back in the real world to which he is increasingly made alien by the very processes which he undergoes." Moreover, the appellant has already suffered nearly six months ' imprisonment and it is a well known fact for criminologists that the initial few months of jail life are the most painful and, therefore, the most deterrent.
In the present case the offender having served a term of nearly six months must well have realised that the game of crime does not pay.
The fines of Rs. 2,000 and Rs. 500 imposed on the appellant should remain without interference.
Payment of fine brings home the sense for responsibility in a surer fashion than even short terms of imprisonment in some cases.
We, therefore, decline to reduce the fine and reject counsel 's plea in this behalf.
More important than these circumstances is the social urgency of making this student offender a non offender.
There are two circumstances which weigh in our mind.
The young man has married and has three children.
This is a measure of assurance that he will not play recklessly with his freedom.
Family life is ordinarily an insurance against a career of crime.
We have also insisted on the uncle of the appellant undertaking to assure the good behaviour of the nephew who is the delinquent in question.
The uncle Shri Kohli has filed an affidavit dated 10 12 1979 in this Court making the necessary undertaking to guarantee the good behaviour of his nephew.
Thoughtless parents and guardians leaving a free hand for their wards account for flippant criminality of the type we come across in middle class society.
The undertaking given by the uncle has, therefore, considerable relevance.
We make a breach of the conditions in the affidavit actionable on the motion of the State.
It is a tragic reflection that affluent criminality should become so pervasive among the student community.
It is uncomplimentary to the character building component of the system of education in the prestigious institutions of our cities.
We hope the State will take better care to instil a sense of values in the college campuses than it does now.
We allow the appeals to the extent of reducing the sentence of the appellant to the period undergone, but maintain the sentences of fine and the alternative period of imprisonment in case of default.
P.B.R. Appeals allowed.
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The appellant was convicted and sentenced to two years ' imprisonment and fine of Rs. 2,000 and imprisonment for six months and fine of Rs. 500 for car lifting and scooter poaching.
On the question of sentence.
Allowing the appeals, ^ HELD : (a) The sentence of imprisonment is reduced to the extent of the period already undergone; but the sentences of fine and the alternative period of imprisonment in case of default are maintained.
[865 H] (b) The long protracted litigation from 1971 onwards is some deterrent for a young man in his 20s.
The youthful age of the offender is a factor which deserve consideration.
A long period of incarceration may brutalise a boy and blunt his finer sensibilities so that the incarceration may perhaps be more criminal than the one at the point of entry.
The offender having served a term of nearly six months must have realised that the game of crime does not pay.
[864 D, 865 C] (c) Payment of fine brings home the sense of responsibility in a surer fashion than even short terms of imprisonment in some cases.
[865 C]
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Here is a two-paragraph summary of the court case:
The present case involves a 19-year-old college student who was convicted of scooter theft and car theft. He was initially sentenced to two years' imprisonment and a fine of Rs. 2,000 for the scooter theft, and six months' imprisonment and a fine of Rs. 500 for the car theft. The total sentence was concurrent, so the convict had to serve a term of nearly six months.
The convict's appeal was heard by the court, and it was decided to reduce his sentence to the period already undergone, while maintaining the sentences of fine and the alternative period of imprisonment in case of default. The court took into account the convict's youth, the time already served, and the fact that he had a family with three children, which was seen as a measure of assurance that he would not engage in further crime. The court also accepted an undertaking by the convict's uncle to guarantee his good behavior.
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ivil Appeal No. 859 of 1987.
Shankar Ghosh and L.P.Aggarwal for the Appellants From the Judgment and order dated 8.8.
1985 of the Calcutta High Court in Appeal No. 329 of 1982.
V.C. Mahajan, B. Parthasarhti and C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave is confined solely to the question of interest.
In other words, the entitlement of interest on the amount awarded by Arbi trator for the requisition of the premises under the Requi sitioning and Acquisition of Immovable Property Act 1952 is the issue.
The principles upon which the compensation on this aspect is payable are by now well settled.
In Satinder Singh & Ors.
vs Amrao Singh & Ors., ; this Court reiterated the principles at page 694 of the report as follows: "In Inglewood Pulp and Paper Co. Ltd. vs New Burnswick Electric Power Commission it was held by the Privy Council that "upon the expropriation of land under statuto ry power, whether for the purpose of private gain or of good to the public at large, the owner is entitled to interest upon the princi pal sum awarded from the date when possession was taken, unless the statute clearly shows a contrary intention. ": Dealing with the argu ment that the expropriation with which the Privy Council was concerned was not effected for private gain, but for the good of the public at large, it observed "but for all that, the owner is 1047 deprived of his property in this case as much as in the other, and the rule has long been accepted in the interpretation of statutes that they are not to be held to deprive indi viduals of property without compensation unless the intention to do so is made quite clear.
The right to receive the interest takes the place of the right to retain posses sion and is within the rule".
It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it, he is entitled to claim interest in place of right to retain possession.
The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that section 5(3) of the Act makes section 23(1) of the Land Acquisition Act, 1894 applicable we cannot reasonably infer that the Act intends to exclude the applica tion of this general rule in the matter of the payment of interest.
That is the view which the Punjab High Court has taken in Surjan Singh vs The East Punjab Government, (AIR 1957 Punj.
265) and we think rightly.
" The same principle was reaffirmed not in the context of Acquisition of Immovable Property, which Mr. Mahajan, learned counsel for the respondents tried to make a point before us, was highlighted in National Insurance Co. Ltd. Calcutta vs Life Insurance Corporation of India, [1963] Supp. 2 SCR 971.
at 992 where speaking for the court Mr. Justice Hidayatullah, as learned Chief Justice of India then was observed: "The reason of the rule was stated a long time ago by Lord St. Leonard L.C. Birch vs Joy, [1852] III H.L.C. 565:10 E.R. 222 as follows: "The parties change characters, the property remains at law just where it was, the purchas er has the money in his pocket, and the seller still has the estate vested in him; but they exchange characters in a Court of Equity, the seller becomes the owner of the money and the purchaser becomes the owner of the estate." On entering possession the purchaser becomes entitled to the rents but if he has not paid the price, interest in equity is deemed pay able by him on the purchase price which 1048 belongs to the seller.
This principle was applied by the House of Lords in cases of compulsory purchases.
In Swift & Co. vs Board of Trade, Viscount Cave L.C. gave the reason that the practice rests upon the principle that the taking of possession is an implied agreement to pay interest which was stated by Sir William Grant M.R. in Fludyer vs Cocker; , This principle was further extended by the Privy Council to the compulsory taking over of a business as a going concern in International Railway Co. vs Niagara Parks Commission, [1944] A.C. 328.
It was noted by Justice Hidayatullah that this principle has also been accepted by this Court in Satinder Singh vs Amrao Singh (supra).
The principle stated was followed in Hirachand Kothari (dead) through Lrs.
vs State of Rajasthan & Anr., [1985] Suppl.
1 SCR 644 where this court noted the principle at page 655 of the report.
In the light of the aforesaid decision we are of the opinion that the appellants herein are entitled to the interest for the period from March 1975 to 31st July, 1987 when principal amount of compensation had been paid and or when the premises in question had been de requisitioned and handed back to the owner, on the amount awarded.
As to how the interest would vary, but the right of interest was well avered and also should have been considered in the light of the observations of Privy Council in Inglewood Pulp and Paper Co. Ltd. vs New Burnswick Electric Power Commission, AIR 1928 Privy Council 287.
We are of the opinion that from the period from March 7, 1975 to February 28, 1985 being the date on which the judgment of the High Court was pronounced in this case the appellants are entitled to the interest on the amount awarded at the rate of 6% per annum and from the period from August 87 1985 to July 31, 1987 and for that period only at the rate of 12% per annum.
Interest will be payable only on the balance amount which remained to be payable to the appellants i.e. the amount due minus what has been paid from the respective dates.
The appellants are entitled to the costs of this appeal.
The amount is directed to be paid within three months from this date by the respondents.
In case, there is any difficulty in calculating the amount, the parties will be at liberty to apply to the High Court of Calcutta.
The appel lants are entitled to costs of this appeal.
The appeal is thus disposed of.
S.L. Appeal dis posed of.
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This appeal by special leave was confined solely to the question of entitlement of interest on the amount awarded by the Arbitrator for the requisition of the premises under the .
Disposing of the appeal, the Court, HELD: The principles upon which the compensation on this aspect is payable are by now well settled.
This Court reit erated the principles in Satinder Singh and Ors.
vs Amrao Singh and Ors., ; at 694; National Insurance Co. Ltd. Calcutta vs Life Insurance Corporation of India [1963] Supp.
2 SCR 971 at 992 and Hirachand Kothari (dead) through Lrs.
vs State of Rajasthan & Anr., [1985] Suppl.1 SCR 644 at 655.
[1046F; 1048C] In the light of the aforesaid decisions, the Court was of the opinion that the appellants herein were entitled to the interest for the period from March 1975 to the 31st July, 1987, when the principal amount of compensation had been paid and/or when the premises in question had been de requisitioned and handed back to the owner, on the amount awarded.
The Court was of the opinion that for the period from March 7, 1975 to February 28, 1985 being the date on which the judgment of the High Court was pronounced in this case, the appellants were entitled to the interest on the amount awarded at the rate of 6 per cent per annum, and for the period from August 8, 1985 to July 31, 1987 for that period only at the rate of 12 per cent per annum.
The interest would be payable only on the balance amount which remained to be paid to the appellants i.e. the amount due minus what had been paid from the respective dates.
The Court directed that the amount be paid by the respondents within three months from the date of this judgment, and that in case there was any difficulty in calculating the amount, the 1046 parties would be at liberty to apply to the High Court.
[1048C H] Satinder Singh & Ors.
vs Amrao Singh & Ors., ; ; National Insurance Co. Ltd. Calcutta vs Life Insurance Corporation of India, [1963] Supp. 2 S.C.R. 971 at 992; Hirachand Kothari (dead) through Lrs. vs State of Rajasthan & Ors., [1985] Supp. 1 S.C.R. 644 and Inglewood Pulp and Paper Co. Ltd. vs New Burnswick Electric Power Commission, A.I.R. 1928 Privy Council 287, referred tO.
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Here is a two-paragraph summary of the court case:
The court case, Civil Appeal No. 859 of 1987, revolves around the question of interest entitlement on the amount awarded as compensation for the requisition of premises under the Requisitioning and Acquisition of Immovable Property Act 1952. The Appellants, represented by Shankar Ghosh and L.P. Aggarwal, claimed interest on the principal sum from the date when possession was taken. The Respondents, represented by V.C. Mahajan, B. Parthasarathi, and C.V. Subba Rao, argued that the Act of 1948 excludes the application of the general rule of interest payment.
The court, delivered by Justice Sabyasachi Mukharji, relied on the well-settled principles from various cases, including Satinder Singh & Ors. vs Amrao Singh & Ors., [ AIR 1967 SC 1046] and National Insurance Co. Ltd. Calcutta vs Life Insurance Corporation of India, [ 1963 Supp 2 SCR 971]. The court held that the Appellants are entitled to interest from the date when possession was taken, at the rate of 6% per annum from March 1975 to February 28, 1985, and at the rate of 12% per annum from August 1985 to July 31, 1987. The amount is to be paid within three months from the date of the judgment, and the Appellants are entitled to costs of the appeal.
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N: Criminal Appeal No. 238 of 1988.
From the Judgment and Order dated 4.8.1986 of the Punjab and Haryana High Court in Criminal Appeal No. 329 DB of 1986 and Murder Reference No. 2 of 1986.
Mrs. Urmila Kapoor and Ms. section Janani for the Appellant.
R. section Suri for the Respondent.
The Judgment of the Court was delivered by OJA, J.
This appeal has come to this Court on grant of leave against the conviction of the appellant under Section 302 and sentence of death and also his conviction under Section 201 IPC and sentence of 7 years rigorous imprisonment and fine of Rs.200 awarded by Sessions Judge, Ferozepur and confirmed by the High Court of Punjab & Haryana.
The appellant is convicted for having committed the murder of his father and son.
It is alleged that deceased Banta Singh father of the present appellant owned 4 5 killas of land situated at Ferozepur Road where a tube well was also installed by the side of a samll kotha where he alongwith his grandson Seva Singh used to live away from the house where the appellant resided.
It is alleged that Seva Singh was crippled and used to move about on a tricycle Banta Singh and Seva Singh used to go to Gurudwara of their village to render services.
Banta Singh had only one son i.e. present appellant whereas the appellant had a son Seva Singh the deceased from his first wife (since deceased).
Later he married second time and had two children, but she also died.
At present he has the third wife and with her, he has two sons.
616 It was alleged, as motive for the offence, that the appellant used to quarrel with his father and son in connection with land owned by father as the latter wanted to transfer his land in the name of Seva Singh who used to live with the grandfather.
According to the prosecution a day prior to Amawasaya of Chet 1985 (May 1985) when Nihal Singh (PW 2) was rendering services with Banta Singh and Seva Singh at Gurudwara at about 5 p.m. the appellant went to the Gurudwara and told his father and son that in the evening a truck of Car Seva would come from Fazilka and that they would go to Amritsar to take the holy bath.
On this representation, appellant took Banta Singh and Seva Singh from the Gurudwara.
It is alleged that on the same day at about 10 p.m. when Nihal Singh was proceeding to his fields for guarding his tubewell he met the accused on the way and found carrying dang with him.
On being questioned by Nihal Singh as to why he was there and why he did not go to Amritsar, the appellant replied that Banta Singh and Seva Singh were sent to Amritsar by him in a truck of Car Seva.
It is further alleged that when Nihal Singh did not see for sometime Banta Singh and Seva Singh he felt suspicious and lodged a report dated 10 October 1985 in the Police Station Mamdot.
That became the FIR (exhibit PG).
S.I. Puran Singh who recorded the statement of Nihal Singh raided the house of the appellant who it is alleged was not present.
On 13 of August 1985, it is alleged that the appellant made an extra judicial confession to one Amrik Singh and Amrik Singh produced the appellant before the Police.
On 15 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 the dead bodies of Banta Singh and Seva Singh were recovered from a field.
It is also alleged that at that time there was a Jhinjan crop standing in the field.
The dead bodies were identified by one Channan Singh who was a Panch witness.
The tricycle and other articles were recovered from the Kotha at the instance of the appellant.
On the basis of this evidence, the courts below convicted the present appellant.
The circumstances which have been found against the appellant are: (i) Last seen with the deceased at the Gurudwara by.
Nihal Sing (ii) extra judicial confession made to Amrik Singh (iii) the statement under Section 27 leading to discovery of dead bodies and (iv) recovery of tricycle and other articles from the Kotha where the two deceased used to reside and the motive alleged against the appellant.
617 Learned counsel for the appellant contended that as against the motive is concerned.
the appellant at the trial had produced a will A executed by deceased Banta Singh wherein he has given away all his lands to the appellant.
In the cross examination of prosecution witnesses it was suggested that . that his brother in law Manjit Singh was interested in getting the property transferred in his name or in his wife 's name.
It was also argued that extra judicial confession even otherwise is a very weak piece of evidence and in this case it is strange that the appellant chose this Amrik Singh to make an extra judicial confession and the reasons suggested by Amrik Singh also do not appear to be justifiable.
Similarly it was said that the recovery of dead bodies and the memorandum of the statement leading to the discovery are of no consequence as even according to the Investigating officer he had learnt from Amrik Singh that the dead bodies were in the field but he felt that the information he had got was not sufficient and therefore he recorded the information under Section 27 given by the appellant.
In our opinion, these contentions are well founded and must be accepted as correct.
The field where the bodies were recovered is an open place.
It is alleged that there was Jhinjan crop standing in the field and prosecution has not led any evidence to indicate as to who was in possession of the field and who cultivated the crop which was standing at that time.
We will discuss this part of the case in detail a little later.
It is very significant to note that 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 has gone to such an extent 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 Banta Singh or the son in law Manjit Singh to identify the dead bodies although it has appeared in evidence that during the trial Manjit Singh was present in the Court.
As to the extra judicial confession, it may be noted that Nihal Singh claims to be a person who had seen the deceased Banta Singh and Seva Singh alongwith the appellant in the month of May in the Gurudwara.
On the same night he again met the appellant and enquired about them.
The witness also stated that when he did not see the old man for some time, he became suspicious about the missing of those two persons.
This witness in order to justify his meeting with the appellant at 10 P.M.
On that day said that although his own land was at 618 a distance, he had taken some land on lease which was adjacent to the land of the appellant and so he had to go near the appellant 's house.
But in cross examination he had to admit that for the lease he had no document to support.
The prosecution has suggested that the appellant did not search for his father, but according to the appellant, the deceased had been taken away by Manjit Singh to their place on the pretext that Manjit Singh 's wife i.e. the appellant 's sister was not well and this was also put in cross examination to Nihal Singh.
In the absence of evidence of Manjit Singh, the suggestion of the appellant cannot be brushed aside.
On 10 August, 1985 F.I.R. was lodged by Nihal Singh (PW 2)1 and on 13.8.85 the appellant went to Amrik Singh (PW 3) to make an extra judicial confession.
Amrik Singh 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 harrased.
There is nothing to indicate that this Amrik Singh was a person having some influence with the Police or a person of some status to protect the appellant from harrassment.
In his cross examination he admits that he is neither the Lumbardar or Sarpanch nor a person who is frequently visiting the Police Station.
He further admits that when he produced the appellant there was a crowd of 10 to 12 persons.
There is no other corroborative evidence about the extra judicial confession.
As rightly conceded by the learned counsel for the State that extra judicial confession is a very weak piece of evidence and is hardly of any consequence.
The council however, mainly relied on motive, the evidence of last seen, the evidence of recovery of dead bodies and the conduct of the appellant in not making a report about the missing father and son.
As regards the motive the will in question is sufficient to dislodge it.
An attempt was made by the learned counsel for the State to suggest that even after the will the appellant could have done away with the old man to avoid changing the will.
But the will was executed on 31 December, 1984 and it is a figment of imagination that the murder was committed apprehending that the will 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.
In fact Nihal Singh was asked in cross examination as to whether there was any dispute between the father and son? He had to admit that there was no dispute or difference.
As regards the evidence of last seen it was the case of appellant 619 that Manjit Singh had taken Banta Singh and Seva Singh to his place on the pretext that the wife of Manjit Singh was not well.
There is no evidence led by the prosecution to negative this stand of the appellant.
Manjit Singh has not been examined although it has come in evidence that he was present in the Court when Nihal Singh was examined.
The sister of appellant was also not examined and in the absence of any such evidence to negative this stand of the appellant it could not be said that the prosecution has proved that suggestion was false.
In these circumstances, the presence of deceased Banta Singh and Seva Singh along with the appellant at the Gurudwara on the Amawasaya day in Chet could not be said to be the last seen before the murder in question.
May be, Nihal Singh saw them on that day but it is significant that no other person connected with the deceased has been produced to suggest that he was not seen thereafter.
Therefore, the evidence as to last seen also can not be considered as a piece of circumstantial evidence against the appellant.
Then we are left with the recovery of the dead bodies.
Investigating officer S.I. Puran Singh (PW 8) admitted in cross examination that after recording the statement of Amrik Singh he could not know the correct place where the bodies and other articles were kept buried and concealed.
This clearly indicates that he could get some information from the statement of Amrik Singh.
As seen earlier, the field is an open place surrounded by other fields and according to Nihal Singh the adjacent field is his own as he had taken it on lease and therefore it cannot be said that any one else could not have known about the bodies being buried in the field.
The Investigating officer himself admitted that after recording the statement of Amrik Singh he knew that the bodies were buried in the field but he felt that information was not sufficient.
It cannot therefore, be said that the place from where the bodies were recovered was such a place about which knowledge could only be attributed to the appellant and none alse.
Since the exclusive knowledge to the appellant cannot be attributed, the evidence under Section 27 also cannot be said to be a circumstances against the appellant.
As regards the recovery made from the Kotha where the deceased Banta Singh and Seva Singh used to reside there is nothing significant.
The tricycle and other belongings of the deceased were bound to be there and on that basis no inference could be drawn against the appellant.
620 In view of all these circumstances, the charge against the appellant cannot be said to have been proved beyond doubt and the conviction of the appellant Therefore cannot be sustained.
The appeal is therefore allowed.
Conviction and sentence passed against the appellant are set aside.
He is in custody.
He be set at liberty forthwith if not wanted in connection with any other case.
P.S.S. Appeal allowed.
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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]
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The following is a two-paragraph summary of the court case:
The appellant was convicted of murdering his father, Banta Singh, and his son, Seva Singh, and was sentenced to death. The prosecution alleged that the appellant was motivated by a desire to acquire his father's land, which he wanted to transfer in the name of his son Seva Singh. However, the trial court found that the prosecution's evidence was not sufficient to prove the appellant's guilt beyond a reasonable doubt. The court noted that the prosecution's key witnesses, Nihal Singh and Amrik Singh, had made statements that were inconsistent and lacked corroboration.
The court also found that the prosecution's evidence was inherently weak, including the extra-judicial confession made by the appellant to Amrik Singh, which was considered a very weak piece of evidence. The court further noted that the recovery of the dead bodies was not exclusive to the appellant and that other individuals could have known about their presence in the field. In view of these findings, the court allowed the appeal and set aside the conviction and sentence of the appellant, ordering that he be released from custody if not required for any other case.
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Civil Appeals Nos.
228 to 230 of 1958.
Appeals from the judgment and decree dated July 2, 1957, of the Patna High Court in Misc.
Judicial Case No. 640 of 1955.
59 N. A. Palkhivala, Thakur Prasad and R. C. Prasad for the appellant.
C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and D. Gupta, for the respondent.
February 22.
The Judgment of the Court was delivered by KAPUR, J.
The appellant is a. Bank registered under the Co operative Societies Act, 1912 (Act II of 1912) and is deemed to be registered under the Bihar & Orissa Co operative Societies Act, 1935 (Bihar Act VI of 1935) which in Bihar has replaced.
the Cooperative Societies Act of 1912.
It was carrying on banking business in the State of Bihar.
One of the objects of the Bank is to carry on general business of banking not repugnant to the provisions of the Bihar Act and rules framed thereunder for the time being in force (Bye Law 3(a)vi).
In the calendar years 1945, 1946 and 1947, the appellant Bank received by way of interest on deposits with the Imperial Bank of India the sums of Rs. 7,192, Rs. 20,250 and Rs. 22,600 respectively.
It is these sums which are the subject matter of dispute in these three appeals which relate to the respective assessment years 1946 47, 1947 48 and 1948 49.
These sums were not assessed when assessment was made under section 23(3) of the Income tax Act, but subsequently under section 34 they were assessed as being 'income ' under the head " other sources '.
This order was upheld by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
A case was then stated to the High Court under section 66(1) of the Act, but was decided against the appellant.
The appellant brought three appeals in this Court in regard to the three assessment years.
In each one of them the respondent is the Commissioner of Income tax, Bihar & Orissa.
As the appeals involve a common question of law they were consolidated and can conveniently be disposed of by one judgment.
In its return the appellant showed these various sums as I other sources ', but nothing turns on the manner in which the appellant chose to show this income in its return.
The Income tax Officer, however, assessed the interest for these three years 60 under section 12 of the Income tax Act, as income from I other sources '.
The appellant took an appeal to the Appellate Assistant Commissioner where it was contended that as the business of the appellant Bank consisted of lending money and the deposits had been made not for the purpose of investment but for that business and thereby fulfilling the purpose for which the Co operative Bank was constituted, these various sums of interest were not subject to income tax because of the Notification issued by the Central Government under section 60 of the Income tax Act.
The relevant portion of that Notification, C.B.R. Notification No. 35 dated October 20, 1934, and No. 33 dated August 18, 1945, was : " The following classes of income shall be exempt from the tax payable under the said Act, but shall be taken into account in determining the total income of an assessee for the purpose of the said Act : (2) The profits of any Co operative Society other than the Sanikatta Salt Owners ' Society in the Bombay Presidency for the time being registered under the (Act II of 1912), the Bombay Co operative Societies Act, 1925 (Bombay Act VII of 1925), or the Madras Cooperative Societies Act, 1932 (Madras Act VI of 1932), or the dividends or other payments received by the members of any such Society out of such profits.
Explanation:For this purpose the profits of a Co operative Society shall not be deemed to include any income, profits or gains from : (1) Investments in (a) securities of the nature referred to in section 8 of the Indian Income tax Act; or (b) property of the nature referred to in section 9 of that Act; (2) dividends, or (3) the 'other sources ' referred to in section 12 of the Indian Income tax Act ".
The Appellate Assistant Commissioner, however, repelled the contention of the appellant.
He held that the business of the appellant consisted of I lend 61 ing money, and selling agricultural and other products to its constituents ' which could be planned ahead and required no provision for extraordinary claims.
He remarked that it appeared from the balance sheets that in the accounting year 1945 the Bank invested Rs. 13,50,000 as fixed deposits, which, in the following year was raised to Rs. 15,00,000 and it was only in the accounting year 1947 that the fixed deposits ` were realised on maturity with interest '.
He was also of the opinion that the length of the period during which this money I was kept locked in this way ' showed clearly that I not the exigencies of pressing necessities, but the motives of investment of surplus fund had actuated the deposits '.
He therefore held that the fixed deposits with the Imperial Bank were held as an investment quite apart from the business of the appellant and the interest from these deposits was not exempt from income tax.
He further held that the exemption as to the profit of a Co operative Society extended to its sphere of co operative activities and therefore interest from investments was no part of the appellant 's business profits exempt from taxation.
Against this order an appeal was 'taken to the Income tax Appellate Tribunal and it was there contended that the Bank did not make the deposits as investments, but in order that cash might be available to the appellant 'continuously ' for the carrying on of the purposes of its business, and that the deposits were intimately connected with the business of the appellant and therefore the interest should have been held to be profits arising from the business activities of the Bank, and that the finding that the short term deposits in the Imperial Bank were separate from the appellant 's banking business was erroneous.
The Income tax Appellate Tribunal, by its order dated April 11, 1955, held: " (1) That the interest was an income rightly to be included under the head of I other sources '.
(2) The profits of a Co operative Society indicates the profit derived from the business which can be truly called the business of the Co operative 62 Society.
Investments by the society either in securities or in shares or in bank fixed deposits are made out of surplus funds.
The interest or dividend derived from such investment cannot be regarded as part of the profits of the business (sic) qua such bank and therefore, it is not exempt from income tax (Vide Hoshiarvur Central Co operative Bank vs Commissioner of Income tax (1),) " Against this order a case was stated at the instance of the appellant under section 66(1) of the Act, and the following two questions of law were referred for the opinion of the High Court; (1) Whether, in the facts and circumstances of this case, the receipt of interest on fixed deposits was an income under the head of I other sources ': and (2) Whether in the facts and circumstances of this case, the receipt of interest from the fixed deposits was an income not exempt from taxation under the C. B. R. Notification No. 35 dated 20th October, 1934 and No. 33 dated the 18th August, 1945.
In the High Court the appellant 's contention was that the fixed deposits were made with the Imperial Bank of India not with the idea of making investments, but for the reason that cash should be available to the appellant is and when it was needed for the purposes of its business.
It was also contended that the deposits were short term deposits and that the Bank could not carry on its business without such short term deposits.
In other words, the contention was that making deposits with the Imperial Bank was intimately connected with the business activities of the appellant Bank and that the interest received on the deposits was profit attributable to its business activities.
But the High Court did not accept this contention.
It held that if the income derived by a Co operative Society was from the business of the Co operative Society as such, it fell within the exemption, but if it arose out of the business with third parties as in the case of investment of surplus assets, the exemption was inapplicable because the (1) 350. 63 investment of fluid assets was not a part of the business of the Co operative Bank and the reason for the Notification was to exempt profits accruing to a Cooperative Society from ` carrying on business of a mutual co operative society and upon the ground that a man cannot make profit or loss out of himself.
The ground of mutuality was not relied upon before us by the learned Solicitor General who appeared for the respondent.
So the sole question for determination is whether the investment by a Cooperative Bank of its assets in fixed deposits in the manner that the appellant Bank had deposited its moneys falls within the term I business ' and is there fore assessable under section 10 of the Income tax Act, or it is an investment the interest from which would fall under the term I other sources ' and therefore within section 12 of the Income tax Act.
It was contended by the learned Solicitor General that the finding of the Appellate Tribunal as to the nature of these deposits was one of fact.
This contention is not sustainable.
It has not been treated as a finding of fact either by the Appellate Tribunal or by the High Court.
They have both treated it as a question of law and it is on that basis that the reference was made.
The decision of the question depends on what is comprised within the ordinary business of a bank and whether the business of the appellant bank is in any way different.
Relying upon the decision of the Privy Council in The Punjab Co operative Bank Ltd vs The Commissioner of Income tax, Punjab (1), counsel for the appellant submitted that the business of a bank is one of dealing in money and credit and that laying out moneys in deposit with other banks is just as much a mode of conducting business as lending moneys to borrowers whether members of the society or to other co operative societies, and is therefore a part of the appellant 's business.
Therefore, where out of moneys in deposit with a bank a portion is put away or laid out in securities or in deposits with another banker, two objects are served: (1) the moneys which are not immediately required do not remain idle but (1) (1940] 64 earn interest; and (2) if and when money is required to meet any demand, the investment i. e. the deposits as well as the securities provide a source from which these requirements can easily be met.
Thus the credit of the bank remains unimpaired and its moneys continue to earn interest.
Counsel for the respondent argued that where moneys are so laid out they cannot be termed ` carrying on business of the bank ' and therefore any sums coming in from such investments cannot be termed profits arising from business, but they are income from I others sources,.
In support of this argument reliance was placed by counsel on The Madras Central Urban Bank Ltd. vs Commissioner of lncome Tax (1); The Madras Provincial Co operative Bank Ltd., Madras vs Commissioner of Income Tax, Madras (2) ; Commissioner of Income Tax, Burma vs Bengalee Urban Co operative Credit Society Ltd. (3) ; Commissioner of Income Tax, Madras V. Madras Provincial Co operative Bank Ltd. (4); Hoshiarpur Central Co aperative Bank Ltd. vs Commissioner of Income Tax, Simla (5); Cochin Cottage Industries Cooperative Marketing Society Ltd. vs Commissioner of Income Tax, Mysore &C. (6).
But none of these cases supports the argument raised on behalf of the respondent.
In the Madras Central Urban Bank case (1) the society was required to invest 40 per cent.
of its total liability under call deposits in a liquid or fluid form and the society invested it in Government securities which produced interest.
It was held that interest from securities was not part of the profits of the business of the society as it was not obliged to invest in such securities.
Similarly in the Madras Provincial Co operative Bank Case (2) also the income which was the subject matter of dispute was interest received by the bank from its investments in Government securities and it was held that it was not part of the income derived from its business.
The Rangoon case, Commissioner of Income tax, Burma vs Bengalee Urban Co operative Credit Society (3) was also a case relating (1) I.L.R. F.B. (2) I.L.R. F.B. (3) (4) I.L.R. (5) (6) (1956] 65 to income derived from interest on capital invested in Government securities.
At p. 128, Page, C. J., said: from securities nor income derived from CO property are I profits ' within the meaning of that term as used in the notification. . . .
It Cc may be that investment of capital in properties or securities is part of the business of an assessee, and in such a case, in my opinion, the net income accruing from such investments would be, and be chargeable as, profits of the business ".
(As the matter had not been considered from this point of view the case was sent back for doing so).
These cases before the amendment of the Notification show that the income which was exempted was profit from business and not income from sources which fell under sections 8 and 9 of the Income tax Act.
The Commissioner of Income tax, Madras vs The Madras Provincial Co operative Bank Ltd. (1) was a case where moneys had been invested in debentures and for reasons similar to the ones given in the cases above mentioned,, it was held that interest derived therefrom was not profits of the business.
Counsel for the respondent relied on a judgment of the Punjab High Court in Hoshiarpur Central Cooperative Bank vs Commissioner of Income tax, Simla (2).
In that case the Government authorised the Bank to deal in sugar, oil and standard cloth and it made profit thereform.
Those activities were neither its business under the bye laws nor within its objects.
The question was whether this profit was exempt from income tax on account of its being profits of a co operative society and it was held that the decided cases showed that where income was derived by a co operative society, the profits were within the exemption, but not if the business was of the nature not covered by the objects of the society.
This line of reasoning has not formed part of the respondent 's argument in this Court and the case therefore has no application to the facts of the present case.
The decision in Cochin Cottage Industries Co operative (1) I.L.R. (2) 9 66 Marketing Society Ltd. vs Commissioner of Income tax, Mysore & c. (1) proceeded on the same ground.
In that case the profit which was held not to be exempt under the Notification was the apportioned profit of the society from its dealings with non members.
In the Surat Peoples ' Co operative Bank Ltd. vs The Commissioner of Income tax, Ahmedabad (2) the profit arose during the course of banking business out of the sale of Government securities which formed part of the stock in trade and as it was a co operative bank the profits made from such sales were held to be exempt from taxation under the Notification.
In the instant case the co operative society (the appellant) is a Bank.
One of its objects is to carry on the general business of banking.
Like other banks money is its stock in trade or circulating capital and its normal business is to deal in money and credit.
It cannot be said that the business of such a Bank consists only in receiving deposits and lending money to its members or such other societies as are mentioned in the objects and that when it lays out its moneys so that they may be readily available to meet the demand of its depositors if and when they arise, it is not a legitimate mode of carrying on of its banking business.
The Privy Council in The Punjab Cooperative Bank Ltd. vs The Commissioner of Incometax, Lahore (3) where the profites arose from the sale of Government securities pointed out at p. 645 that in the ordinary cases the business of a Bank essentially consists of dealing with money and credit.
Depositors put their money in the Bank at a small rate of interest and in order to meet their demands if and when they arise the Bank has always to keep suffi cient cash or easily realizable securities.
That is a normal step in the carrying on of the banking business.
In other words I that is an act done in what is truly the carrying on or carrying out of a business '.
It may be added that another mode of conducting business of a Bank is to place its funds in deposit with other banks and that also is to meet demands which may be made on it.
It was however argued (1) (2) (3) 67 that in the instant case the moneys had been deposited with the Imperial Bank on long term deposits inasmuch as they were deposited for one year and were renewed from time to time also for a year; but as is shown by the accounts these deposits fell due at short intervals and would have been available to the appellant had any need arisen.
Stress was laid on the use of the word I surplus ' both by the tribunal as well as by the High Court and it was also contended before us that in the byelaws under the heading I business of the bank ' it was provided that the bank could I invest surplus funds when not required for the business of the bank in one or more ways specified in section 19 of the Bihar Act (Cl.
4 111(i) of the Bye Laws).
Whether funds invested as provided in section 19 of the Bihar Act would be surplus or not does not arise for decision in this case, but it has not been shown that the moneys which were in deposit with other banks were I surplus ' within that bye law so as to take it out of banking business.
As we have pointed out above, it is a normal mode of carrying on banking business to invest moneys in a manner that they are readily available and that is just as much a part of the mode of conducting a Bank 's business as receiving deposits or lending moneys or discounting hundies or issuing demand drafts.
That is how the circulating capital is employed and that is the normal course of business of a bank.
The moneys laid out in the form of deposits as in the instant case would not cease to be a part of the circulating capital of the appellant nor would they cease to form part of its banking business.
The returns flowing from them would form part of its profits from its business.
In a commercial sense the directors of the company owe it to the bank to make investments which earn them interest instead of letting moneys lie idle.
It cannot be said that the funds of the Bank which were not lent to borrowers but were laid out in the form of deposits in another bank to add to the profit instead of lying idle necessarily ceased to be a part of the stock in trade of the bank, or that the interest arising therefrom did not form part of its business profits.
Under the bye laws 68 one of the objects of the appellant bank is to carry on the general business of banking and therefore subject to the Co operative Societies Act, it has to carry on its business in the manner that ordinary banks do.
It may be added that the various heads under section 6 of the Income Tax Act 'and the provisions of that Act applicable to these various heads are mutually exclusive.
Section 12 is a residuary section and does not come into operation until the preceding heads are excluded.
Commissioner of Income tax vs Basant Rai Takhat Singh (1).
In our opinion, the High Court was in error in treating interest derived from deposits as not arising from the business of the Bank and therefore not falling within the income exempted under the Notification.
The appeal must therefore be allowed and the judgment and order of the High Court set aside.
The appellant will have its costs in this Court and in the Court below.
Appeal allowed.
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The Appellant Bank which was registered under the Co operative Societies 'Act, 1922, received, in the relevant account years, by way of interest on deposits with the Imperial Bank of India certain sums of money.
The Income tax Officer assessed the aforesaid sums under section 12 of the Indian Income tax Act 1922, as income from other sources, but the appellant claimed that the deposits were made not with the idea of making investments but for the purpose of carrying on its business as a bank and that as the interest received on the deposits was profit attributable to its business activities it was not subject to incometax because of the Notification issued by the Central Government under section 6o of the Act.
Under the Notification profits of any Co operative Society are exempt from the tax payable under the Act but not income derived from "other sources" referred to in section 12 of the Act.
Held, that the interest from deposits received by the Appel lant Bank in the present case arose out of a transaction entered into for the purpose of carrying on its banking business and fell within the income exempted under the Notification.
The Punjab Co operative Bank Ltd. vs The Commissioner of Income tax, Punjab, , relied on.
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**Summary of the Court Case:**
This is a civil appeal case (No. 228 to 230 of 1958) where the appellant, a cooperative bank, challenged the assessment of interest income from deposits made with the Imperial Bank of India. The bank claimed that the interest income was exempt from taxation under a Central Board of Revenue (CBR) Notification, which exempted profits of cooperative societies from taxation. The respondent, the Commissioner of Income Tax, Bihar & Orissa, assessed the interest income as "other sources" under Section 12 of the Income Tax Act. The case involved the interpretation of the CBR Notification and the definition of "profits of a cooperative society" under the Notification.
The High Court had held that the interest income was not exempt from taxation, and the Appellate Tribunal had also upheld this decision. However, the bank argued that the interest income was part of its business profits, which were exempt under the Notification. The bank relied on the decision of the Privy Council in The Punjab Cooperative Bank Ltd. v. Commissioner of Income Tax, Lahore, which held that the business of a bank essentially consists of dealing with money and credit.
**Key Judgment and Outcome:**
The Supreme Court allowed the appeal and set aside the judgment and order of the High Court. The court held that the interest income from deposits was part of the bank's business profits, which were exempt under the Notification. The court relied on the decision of the Privy Council and emphasized that the business of a bank involves dealing with money and credit, and that investing moneys in deposits to meet demands is a normal mode of conducting banking business. The court also observed that the moneys laid out in the form of deposits did not cease to be a part of the circulating capital of the bank, and that the returns flowing from them formed part of its profits from its business.
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Criminal Appeal No. 653 of 1986 From the Judgment and Order dated 31.1.1983 of the Karnataka High Court in Crl.
A. No. 451 of 1981 D.N. Diwede, M. Veerappa and Ashok Kumar Sharma for the Appellant.
R. Satish for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
The light hearted and casual manner of disposal of the case against the respondent in C.C. No. 442 of 1980 (P.R. No. 198/80) on the file of his court by the Additional Munsif cum Additional Judicial Magistrate (First Class) Madhugiri and the refusal of the High Court of Karna taka to enhance the sentence of the respondent in exercise of its powers under Section 377 Criminal Procedure Code in Criminal Appeal No. 451/81 preferred by the State has com pelled the State of Karnataka to approach this Court under Article 136 1105 of the Constitution to file this Appeal by Special Leave.
The respondent has entered appearance but has not con tested the appeal.
The respondent was charged under Sections 279,337, and 304 A Indian Penal Code and Sections 89(a) and 89(b) of the Motor Vehicles Act for having driven an Express bus bearing Registration No. MYT 30(36 in a rash and negligent manner at about 8.30 P.M. on 30.4.80 on the Madhugiri Hosakere Road and hitting a bullock cart as a result of which one of the persons travelling in the cart Rangappa alias Veeramallapa sustained fatal injuries and another passenger sustained simple injuries.
After the accident the respondent failed to secure medical assistance to the injured persons and also failed to report the accident to the police authorities.
The respondent pleaded guilty to all the charges and was accordingly convicted.
However, in awarding sentences to the respondent for the several convictions, the Magistrate imposed trivial amounts of fines which had the effect of making the trial and the convictions a mere farce.
The sentences awarded are as follows: Offence Sentence provided under Sentence Awarded I.P.C./M.V. Act 1.
Sec.279 IPC (Punishable with imprisonment Fine of Rs.25/ of either description for a i/d to undergo term which may extend to six S.I. for one months or with fine which week.
may extend to one thousand rupees or with both) 2.
Sec.337 IPC (Punishable with imprison Fine of Rs.50/ ment of either description i/d to undergo for a term which may extend S.I. for twenty to six months or with fine five days.
which may extend to five hundred rupees or with both. ) 3.
Sec.304 A (Punishable with imprisonment Fine of Rs.250/ IPC of either description for a i/d to undergo term which may extend to two S.I. for one years or with fine or with month.
both. ) 1106 4.
Sec.89(a) r/w (Punishable with fine which Fine of Rs.10/ Sec.
112 Moto may extend to one hundred in default to Vehicles Act rupees) undergo S.I. for five days.
Sec.89(b) r/w (Same as for Section 89(a)) Same sentence Sec.
112 Motor as above.
Vehicles Act Perturbed and shocked by the callous manner in which the Magistrate had dealt with the case, the State preferred an appeal under Section 377 Cr.
P.C. to the High Court of Karna taka for enhancement of sentence.
The High Court, we regret to note has declined to interfere with the sentence on the grounds which have no basis or relevance.
The High Court was alive to the trivial nature of the sentences awarded by the Magistrate and has observed: "The sentence imposed appears to be a lenient one." Nevertheless, the High Court has declined to exercise its powers under Section 377 Cr.
P.C. and the strange reasons given by it are as follows: "The judgment of conviction and sentence has been delivered on January 30, 1981.
We are today at the fag end of January, 1983.
The award has been hanging over the head of the accused for a very long time.
Which should have made him undergo a lot of mental agony and torture.
It is no doubt true that one death has taken place and injuries have been caused to one person.
The sentence imposed appears to be a lenient one.
Therefore, con sidering the fact the appeal is pending for a long time and it must have caused the accused a lot of mental anxiety, we think that the appeal should be dismissed with an observation that in such serious cases the court is expected to take a serious view of the matter and not to be lenient in such matters.
With this observation the appeal is dismissed.
" The utter disregard shown by the Magistrate to the nature of the offences, particularly the one under Section 304 A I.P.C., and the sentences provided for them under the Indian Penal Code and Motor Vehicles Act, by imposing what may be termed as 'flea bite ' sentences on the respondent, should have spurred the High Court to not only pass appro priate strictures against the Magistrate but also to set right matters by enhancing the sentence at least for the conviction under Section 304 A I.P.C. to a conscionable level in exercise of its powers under Section 377 I.P.C. 1107 The High Court has failed to comprehend that the re spondent has been let off with a total fine of Rs.345 for his convictions under all the five charges relating to the death of one person and the sustainment of injuries by another due to his rash and negligent driving besides his failure to secure medical assistance to the victims as well as his failure to make a report to the authorities about the accident.
The reasons given by the High Court are really non existent as well as irrelevant ones.
It is not as if the respondent had been charged or convicted for a grave offence punishable with death or imprisonment for life and his fate had remained in suspense for a long time and as a conse quence thereof, he had undergone mental agony and torment for a long period of time.
Here was a case where the re spondent had not only driven his bus in a reckless manner and caused the death of one person and injuries to another but he had also attempted to escape prosecution by failing to report the accident to the police authorities.
Considera tions of undue sympathy in such cases will not only lead to miscarriage of justice but will also undermine the confi dence of the public in the efficacy of the criminal judicial system.
It need be hardly pointed out that the imposition of a sentence of fine of Rs.250 on the driver of a Motor Vehi cle for an offence under Section 304 A I.P.C. and that too without any extenuating or mitigating circumstance is bound to shock the conscience of any one and will unmistakably leave the impression that the trial was a mockery of jus tice.
We are, therefore, constrained to do what the High Court should have done but failed to do viz. enhance the sentence in the interests of justice.
We, however, feel that the ends of justice would be met by enhancing the sentence for the most serious of the charges for which the respondent has been convicted viz. the charge under Section 304 A I.P.C.
Accordingly we enhance the sentence for the conviction under Section 304 A I.P.C. to six months R.I. and fine of Rs. 1,000 in default to undergo R.I. for two months.
We leave undisturbed the other convictions and sentences.
To the extent indicated above the appeal will stand allowed.
The respondent shall forthwith be taken into custo dy to serve out the sentence.
A.P.J. Appeal allowed.
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The respondent was charged under sections 279, 337, 304 A IPC and Sections 89(a) and 89(b) of the Motor Vehicles Act for having driven an Express Bus in a rash and negligent manner hitting a bullock cart as a result of which one of the persons traveling in the cart sustained fatal injuries and the other person sustained simple injuries.
After the accident the respondent failed to secure medical assistance to the injured person and also failed to report the accident to the police authorities.
The respondent pleaded guilty to all the charges and was convicted and sentenced to pay a total fine of Rs. 345 under all the five charges.
In the appeal preferred by the State for enhancement of sentence, the High Court declined to interfere with the sentence.
Allowing the appeal of the State, HELD: (1) The Magistrate in utter disregard to the nature of offences, particularly the one under Section 304 A IPC and the sentences provided for them under the ' IPC and the Motor Vehicles Act, imposed 'flea bite ' sentences on the respondent.
This should have spurred the High Court to not only pass appropriate strictures against the Magistrate but also to set right the matter by enhancing the sentence at least for the conviction under Section 304 A IPC in exercise of its powers under Section 377 Cr.
P.C. [1106G H] 1104 (2) The High Court has failed to comprehend that the respondent has been let off with a total fine of Rs. 345 for his convictions under all the five charges.
The reasons given by the High Court are really nonexistent as well as irrelevant ones.
Here was a case where the respondent had not only driven his bus in a reckless manner and caused the death of one person and injuries to another but he had also attempted to escape prosecution by failing to report the accident to the police authorities.
[1107A B] (3) Consideration of undue sympathy will not only lead to miscarriage of justice but will also undermine the effi cacy of the criminal judicial system.
The imposition of a sentence of fine of Rs. 250 on the driver in such a case and that too without any extenuating or mitigating circumstances is bound to shock the conscience of any one and will unmis takably leave the impression that the trial was a mockery of justice.
[1107C E] (4) The ends of justice would be met by enhancing the sentence for the most serious of the charges namely under Section 304 A IPC to six months R.I. and fine of Rs.1000 in default to undergo R.I. for two months.
[1107.E F]
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The Karnataka High Court declined to enhance the sentence of a respondent who was convicted under various sections of the Indian Penal Code (IPC) and Motor Vehicles Act for causing a fatal accident while driving a bus rashly and negligently. The respondent was initially fined trivial amounts, which the State felt was unjust and appealed to the Supreme Court under Article 136 of the Constitution, seeking enhancement of the sentence.
The Supreme Court found the High Court's decision to be unjust and enhanced the sentence of the respondent for the conviction under Section 304 A IPC, which pertained to causing death due to rash and negligent driving. The court increased the sentence to six months rigorous imprisonment and a fine of Rs. 1,000, with the option to serve two months in jail in case of default. The court left the other convictions and sentences unaffected.
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ivil Appeal No. 1045 of 1972.
From the Judgment and Order dated 7.2.1972 of the Madras High Court in Appeal No. 549 of 1963.
K. Ramkumar for the Appellants.
K. Raj Choudhary, B.R. Agarwal and Ms. Sushma Manchanda for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal by Special Leave against a judgment of a Division Bench of the Madras High Court deliv ered on February 7, 1972.
Respondents Nos.
1 to 5 along with one other person filed a representative suit on behalf of themselves and other members of the Thousand Yadhava Community residing in Ramayanachavadi Street and the other adjoining lanes in North Masi Street, Madurai Town and adjoining villages against original appellant No. 1 herein, for an order 3 directing him to render true and proper accounts of the management of the properties of the Thousand Yadhava Commu nity including the Sri Ramasami Sri Navaneetha Krishnasami Devasthanam Temples and their properties and to pay to the plaintiffs the amount ascertained as payable on such rendi tion of accounts with interest and other reliefs.
Original appellant No. 1 herein was the trustee of the said temples.
He died during the pendency of the appeal before us and his two sons have been joined as appellants Nos. 1(i) to 1(ii) in this appeal.
We propose to refer to the parties by their descriptions in the suit for the sake of convenience.
Very briefly stated, according to the plaintiffs, the said temples were private religious trusts and the defendant had committed several acts of mismanagement in respect of the properties of the said trusts.
The defendant denied these allegations.
He, inter alia, contended that the suit as framed was not maintainable in law, in view of the provi sions of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959 (hereinafter referred to as "the said Act.").
The Trial Court dismissed the suit on the ground that it was barred by the provisions of the said Act.
The Trial Court held that the said temples were not private temples belonging to the aforesaid community, namely, Thou sand Yadhava Community.
The Trial Court took the view that the Thousand Yadhava Community must be regarded as a section of the Hindu Community and in that case both the temples would be covered by the provisions of section 6(20) of the said Act.
Sub section (20) of section 6 defines the meaning of the word 'temple ' for the purpose of the said Act and, very briefly stated, lays down that it is a place used as a place of public religious worship and dedicated to or for the benefit of the Hindu Community or any section thereof, as a place of public religious worship.
The Trial Court took the view that, although this question could be decided primarily only by the Endowment Board and Civil Court has no jurisdiction to go into it, it could go into that question incidentally as was done by the Trial Court.
As a conse quence of this conclusion, the Trial Court held that the suit was barred by the provisions of the said Act and was not maintainable at law.
The plaintiffs preferred an appeal against this decision to the Madras High Court.
A Division Bench of the Madras High Court after examining the provi sions of the said Act held that the Trial Court was not right in dismissing the suit in toto even with regard to the relief of accounting.
The High Court held that defendant No. 1 (original appellant before us) admitted that he was elect ed in 1949 as the trustee of the said temples at a meeting of the members of the community.
The 4 said Act does not contain any provision for rendition of accounts.
A party seeking relief of accounting cannot ap proach the Deputy Commissioner or any other authority under the said Act and hence, the Civil Court is not barred either expressly or by necessary implication from entertaining a suit in so far as it was for the relief of accounting.
Following upon this reasoning, the court allowed the appeal and passed a preliminary decree against defendant No. 1 for rendition of accounts while dismissing the suit in all other respects.
The High Court did not decide as to whether the said temples were private temples or could be regarded as public religious endowments falling within the definition of the term 'temple ' as defined in sub section (20) of section 6 of the said Act.
Defendant No. 1 along with some others filed a petition for Special Leave before this Court and by an order dated April 24, 1972.
Special Leave was granted by this Court but was confined to the question whether it was within the power of the Civil Court to direct accounts to be taken without deciding the question whether the temple is a public temple or a private temple.
At the hearing of the appeal before us, Mr. Ram Kumar, learned Counsel for the appellants conceded that if the said temples were private temples as contended by the plaintiffs in the said suit, the defendant as the trustee was liable to render accounts of his management of the said trust to them as beneficiaries.
It was, however, submitted by him that in case the said temples were not private temples but were temples as defined in sub section (20) of section 6 of the said Act to which we have already referred earlier, the suit for rendition of accounts was not maintainable in view of the provisions of the said Act and hence, it was not open to the High Court to have passed a decree for rendition of accounts without deciding whether the said temples were public temples or private temples.
He drew our attention to sub section (20) of section 6 of the said Act which defines the term 'temple ' for the purpose of the said Act.
We have already referred to that definition of the said term 'tem ple ' earlier.
Suffice it to state here that under that definition only public temples of the nature stated earlier could be regarded as temples.
Sub section (17) of section 6 defines the term 'religious endowment ' or 'endowment ' and it is sufficient for the purpose of this appeal to note that it means property belonging to or given or endowed for the support of maths or temples for the purposes set out there in.
Section 108 of the said Act runs as follows.
5 "108.
Bar of suits in respect of administra tion or management of religious institutions etc.
No suit or other legal proceeding in respect of the administration or management of a religious institution or any other matter or dispute for determining or deciding which provision is made in this Act shall be insti tuted in any.
Court of law, except under, and in confirmity with, the provisions of this Act.
" Section 63 of the said Act deals with the power of the Deputy Commissioner to hold inquiries into and decide the disputes and matters set out therein.
It inter alia confers on him the power to hold inquiries in connection with the property and funds of the temples within the meaning of the said Act.
Against the order of the Deputy Commissioner, an appeal is provided under section 69 to the Commissioner and section 70 lays down that a person aggrieved by an order passed by the Commissioner under the provisions set out in clauses (i) and (ii) of sub section (1) thereof can file a suit in a Civil Court.
Sub section (2) of section 70 pro vides that an appeal shall lie to the High Court against the decree of the Civil Court under sub section (1) of section 70.
Chapter VIII of the said Act deals with the topic of Budgets, Accounts and Audit.
Section 87 of the said Act provides that the trustee of every religious institution shall keep regular accounts of all receipts and disburse ments and provides that these accounts have to be audited by the auditors appointed in a prescribed manner.
After the audit is completed, the auditor is required under section 88 to send a report to the Commissioner or the Deputy Commis sioner or the Assistant Commissioner as provided therein.
Section 90 deals with the rectification of defects disclosed in the audit and order of surcharge against trustee etc.
It is.interesting to note that sub section (6) of section 90 provides that an order of surcharge under this section against a trustee shall not bar a suit for accounts against him except in respect of the matters finally dealt with by such order.
In the appeal before us a perusal of the plaint shows that the suit was filed not on behalf of any particular beneficiary or group of beneficiaries but by a certain persons claiming to belong to the beneficiary community, namely, the Thousand Yadhava Community, and the suit was a representative suit instituted on behalf of themselves and other members of the community.
There is no doubt that in respect of a public trust, beneficiaries as a class can file a suit against the trustee for rendition of accounts, sub ject to the bar imposed by.
6 section 92 of the Code of Civil Procedure, 1908.
It was with a view to prevent ' reckless and harassing suits being brought against the trustees of public trusts that section 92 was enacted requiring that two or more persons having interest in the suit could institute such a suit only with the consent in writing of the Advocate General.
However, we find that in view of the provisions of section 5 of the said Act, sections 92 and 93 of tile Code of Civil Procedure have ceased to apply to the Hindu Religious and Charitable Endow ments in the concerned State.
Hence the ' bar, if any, to .the institution of a suit like this has to be found only in the provisions of the Act.
We have already set out earli er the provisions of section 108 of the said Act which is analogous to section 93 of the Madras Hindu Religious and Charitable Endowments Act, 1951 (hereinafter referred to as "the said Act of 1951") which was repealed by the said Act.
Many of the powers of the Deputy Commissioner under the said Act to which we have already referred earlier are similar to the powers conferred by section 57 of the said Act of 1951.
Sections 63 and 64 of the said Act which deal with the powers of the Deputy Commissioner are in pari materia with the provisions of sections 57 and 58 of the said Act of 1951.
Section 90(6) of the said Act provides that an order of surcharge under this section made against the trustee shall not bar a suit for accounts against him and we find a similar provision in sub section (7) of section 74 of the said Act of 1951.
The schemes of the two Acts are largely similar.
In Sri Vedagiri Laxmi Narasimha Swami Temple vs Induru Pattabhirami Reddy; , a question arose before this Court as to whether a suit by the present trus tee against the previous trustee of a temple was barred by reason of the provisions of the said Act of 1951.
It was argued in that case that the Act in question provides a complete machinery for deciding disputes in regard to ac counts and, therefore, no suit for accounting against an ex trustee can be filed at all in a Civil Court.
After analysing the scheme of the said Act of 1951, and the provi sions of the relevant sections of that Act, which we have referred to earlier that argument was rejected by a Division Bench of this Court.
It was pointed out by Subba Rao, C.J., who delivered the judgment of this Court that the scope of the auditor 's investigation is limited.
It is only an effec tive substitute for the trustee himself furnishing an audit ed account.
It was held that Chapter VII of the said Act of 1951 only provides for a strict supervision of the financial side of the administration.
Chapter VII does not provide for determining a dispute in respect of rendition of account and does not bar a suit for that relief.
Section 74(7) of the said Act of 1951 was not a bar to the maintainability of such a suit.
The same reasoning applies to the case before us.
In our opinion, Chapter VIII of the said Act has no bearing on the ques 7 tion of the liability of a trustee to render accounts to the beneficiaries as a group or class and it does not provide for determining or deciding a dispute in respect of such rendition of accounts and hence, section 108 of the said Act does not bar a suit like the one filed by respondent No. 1 before us.
We are of the view that the High Court did not commit any error in passing a decree for rendition of ac counts without deciding the question whether a temple was a public or private trust.
In the result, the appeal fails and is dismissed with costs fixed at Rs.2,000 to be divided between the respond ents equally.
Y. Lal Appeal dis missed.
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This is defendant 's appeal by Special Leave.
Respondents 1 to 5 alongwith one other person filed a representative suit on behalf of themselves and other members of Thousand Yadhava Community against the appellant No. 1 Defendant for an order directing him to render true accounts of the management of the properties of the Thou sand Yadhava Community including the Sri Ramasami Sri Navneetha Krishnasami Devasthanam Temples and their proper ties and pay to them the amount ascertained as payable on such rendition of accounts.
The appellant was the Trustee of the said temples.
The case of the plaintiffs respondents was that the said temples were private religious trusts and the appellant as trustee had committed several acts of misman agement in respect of the properties.
The appellant defendant denied those allegations and contended that the suit as framed was not maintainable in view of the provisions of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959.
The Trial Court dismissed the suit.
It held that the said temples were not private temples belonging to the said community, and that both the temples were covered by the provisions of section 6(20) of the Act, and as such the suit was barred by the provisions of the Act and thus not main tainable.
The plaintiffs preferred appeal to the High Court against the order of the Trial Court.
The High Court allowed the plaintiffs appeal and passed a preliminary decree against the appellant No. 1 defendant for rendition of accounts while dismissing the suit in other respects.
The High Court took the view that a party seeking relief of accounting cannot approach the Deputy Commissioner or any other authority under the Act and hence the Civil Court was not barred either expressly or by necessary implication from entertaining the suit so far 2 as it was for accounting.
However the High Court did not decide the question as to whether the Temples were private temples or could be regarded as public religious endowments.
Defendant No. 1 filed the appeal, by special leave.
Dismissing the appeal, this Court, HELD: There is no doubt that in respect of a public trust, beneficiaries as a class can file a suit against the Trustee for rendition of accounts subject to the bar imposed by Section 92 of the Code of Civil Procedure 1908.
[5H; 6A] Chapter VIII of the Act has no bearing on the question of the liability of a trustee to render accounts to the beneficiaries as a group or class and it does not provide for determining or deciding a dispute in respect of such rendition of accounts and hence, Section 108 of the said Act does not bar a suit like the one filed by Respondent No. 1.
[6H; 7A B] Sri Vedagiri Laxmi Narasimha Swami Temple vs Induru Pattabhirami Reddy, ; , referred to.
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Here's a two-paragraph summary of the court case:
This is an appeal case (Civil Appeal No. 1045 of 1972) where the original appellant, a trustee of two temples, was accused by the Thousand Yadhava Community of mismanagement of the properties of the temples. The plaintiffs sought an order for the trustee to render true and proper accounts of the management and pay the amount ascertained as payable with interest. The case involved the interpretation of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959, and whether the Civil Court had jurisdiction to direct the accounts to be taken.
The Madras High Court allowed the appeal and passed a preliminary decree against the defendant for rendition of accounts, while dismissing the suit in all other respects. The High Court did not decide whether the temples were public or private temples. The appellant argued that the suit was not maintainable in view of the provisions of the Act, but the Court held that it was within the power of the Civil Court to direct accounts to be taken without deciding the question of whether the temples were public or private temples. The Court also referred to a previous judgment of the Supreme Court in Sri Vedagiri Laxmi Narasimha Swami Temple vs Induru Pattabhirami Reddy, which held that Chapter VII of the Act only provided for a strict supervision of the financial side of the administration and did not bar a suit for accounts. The appeal was dismissed with costs.
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ivil Appeal Nos.
2366 67 of 1988 etc.
From the Judgment and order dated 21.2.1985 of the Punjab and Haryana High Court in C.W.P. No. 5353 of 1984.
Pankaj Kalra, B.S. Gupta, P.C. Kapur and section Mitter for the Appellants.
Rajinder Sachar, D.K. Garg, Mahabir Singh and A.K. Goel for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
Special leave to appeal is granted in both the special leave petitions.
The petitioners are teachers employed in various recognised aided private schools in the State of Haryana.
The schools are maintained under private management.
They receive financial aid from the State Government.
The petitioners have come to Court alleging that teachers employed in Government aided private schools are entitled to parity with the teachers employed in Government schools in the matter of pay scales and other emoluments such as Dearness Allowance, House Rent Allowance, City Compensatory Allowance, 684 Medical Reimbursement and Gratuity, etc.
It appears that prior to A 1967 there was considerable disparity in the emoluments of teachers employed in the same State, and the Government of India appointed the Kothari Commission to examine the conditions of service of teachers with the object of improving the standards of education in the country.
Among other things, the Kothari Commission recommended 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.
Almost all the States, including the State of Haryana, decided to implement the recommendations of the Kothari Commission.
The State of Haryana declared in January, 1968 that the revised rates suggested by the Kothari Commission would be made effective from 1 December, 1967, and that the grades of teachers of privately managed schools would be revised on the pattern of the grades of teachers working in Government schools.
As the deficit between the original grades and the revised grades was found too burden some 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 petitioners allege that the salary and other emoluments paid to the teachers of aided schools have fallen far behind the emoluments paid to the teachers in Government schools and this Court should interfere in order to remove such discrimination.
We are told that there are about sixty thousand teachers in Government schools while a mere four thousand teachers are employed in aided schools.
According to the petitioners, to provide education in schools is the constitutional responsibility of the Government, and this is reflected in the deep and pervasive control exercised by the Government over the running of aided schools.
It is pointed out that the control is exercised over almost all areas of management.
The Committee of management has to be approved by the State Government, so have the strength of the teaching and the other staff as well as the qualifications and other conditions of eligibility for appointment to the staff.
The mode of selection and the determination of seniority are subject to the directions of the State Government and teachers cannot be dismissed, removed or reduced in rank without the prior approval of the State authorities.
The tuition fee, as well as free ships, concession and scholarships are fixed by the State Government, which is also empowered to give instructions in 685 regard to the time table, working hours, pupil ratio, attendance and workload.
The financial resources and the heads of income and expenditure are indicated by the State Government.
We have heard learned counsel for the parties at considerable length, and we find general agreement between the parties that there is no reason for discrimination between the teachers employed in aided schools and those employed in Government schools so far as the salaries and Additional Dearness Allowances are concerned.
The State Government does not accept the claim to parity in respect of other heads of allowance put forward by the petitioners.
We were at one time disposed to ruling on the question whether the responsibility for providing education in schools belongs to the State Government, and therefore whether there is a corresponding responsibility on the State Government to ensure that in aided schools the teachers are entitled to the same emoluments as are provided for teachers in Government schools.
We do not, however, propose to enter upon this question in these cases as we are satisfied from the developments which have followed after the hearing on the merits that it would be more appropriate to dispose of these cases by a short order.
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.
It appears that the grant in aid given by the State Government to these aided schools covers the deficit to the extent of seventy five per cent of the approved expenditure.
The approved expenditure extends to the salaries paid to the teaching and non teaching staff, which includes the Pay and Dearness Allowance and Interim Relief before 1 April, 1981 and the Pay and Additional Dearness Allowance beyond 1 April, 1981, the deficit expenditure minus income and certain other items, but does not include House Rent Allowance, Medical Allowance, City Compensatory Allowance and the other heads claimed by the petitioners.
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.
The State Government meets the Dearness Allowance liability to the extent of seventy five per cent of the amount.
Ten instalments representing the State Government 's liability shall be paid by the State Government in two equal parts, the first part being payable within three months from today and the remaining part being pay 686 able by 31 March, 1989.
The State Government shall also pay the remaining twenty five instalments, the entire amount being payable in five equal parts, each part being paid every six months, the first such part being payable by 30 September, 1989.
The State Government shall not be liable to pay for the period covered by these 35 instalments any amount on account of House Rent Allowance, City Compensatory Allowance and the other allowances claimed by the petitioners.
The State Government will also take up with the managements of the aided schools the question of bringing about parity between the teachers of aided schools and the teachers of Government schools for the period following that to which the aforesaid thirty five instalments relate, so that a scheme for payment may be evolved after having regard to the different allowances claimed by the petitioners.
In the case of teachers who have retired or who have died in service during the pendency of these cases, payment of the first ten instalments shall be made to the retired teachers and to the legal representatives of the deceased teachers within three months from today.
The appeals and the writ petitions are disposed of accordingly.
H.L.C. Appeals & Petitions disposed of.
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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]
|
Here's a two-paragraph summary of the court case:
The Punjab and Haryana High Court delivered a judgment in 1985 in a case involving teachers employed in aided private schools in Haryana. The petitioners, teachers of these schools, claimed parity with their counterparts in government schools in terms of pay scales, emoluments, and other benefits. They argued that as the state government provides financial aid to these schools and exercises significant control over their management, it has a responsibility to ensure that teachers in aided schools are treated on par with those in government schools.
The court, while agreeing that teachers in aided schools should be paid the same pay scale and Dearness Allowance as those in government schools, also held that the state government should not be liable for additional allowances such as House Rent Allowance and City Compensatory Allowance. The court ordered the state government to reimburse the payment of 35 instalments of Additional Dearness Allowance, to be paid in two equal parts within three months and by 31 March, 1989, respectively. The court also directed the state government to take up the issue of bringing about parity between teachers of aided schools and those in government schools for the period following 1989.
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Appeals Nos. 240 and 241 of 1969.
Appeals from the judgment and decree dated December 18, 1968 of the Allahabad High Court in Civil Misc.
Writ No. 4697 of 1968.
J. P. Goyal and Sobhag Mal Jain, for the appellant (in both the appeals).
L. M. Singhvi and O. P. Rana, for the respondents ( in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These are appeals by certificate.
They are by the same appellant and they raise common question of law.
Hence they are considered together.
Two questions of law were urged on behalf of the appellant in support of the appeals.
The first contention urged was that 147 Section 3 D(1) of the U.P. Sales Tax Act, 1948 (to be hereinafter referred to as the Act) is ultra vires the Constitution, firstly because that under that section excessive legislative power had been delegated to the State Government and secondly on the. ground that it discriminates between the registered dealers who made their purchases through licensed dealers and the registered .
dealers who made their purchases through dealers who are not licensed.
The second contention taken was that notification No. ST 7122/X 900(16)64 dated October 1, 1964 issued under section 3 D(1) of the Act imposing purchase tax on oil seeds is invalidas it contravenes section 3AA of the Act.
We have considered the first ground of attack in Civil Appeals, Nos. 362 and 1692 of 1969 (Mls.
Sita Ram Bishambhar Dayal etc.
vs State of U.P.) in which we have delivered judgment just now.
For the reasons mentioned therein, the contention that section 3 D(1) is ultra vires the Constitution fails.
The only surviving question is whether the notification re ferred to earlier is violative of section 3AA of the Act.
Before examining that contention, it is necessary to set out the, relevant facts.
The appellant is a partnership firm.
It carries on business as dealers in roundnuts, oil seeds and Arhar.
For the assessment years 1965 66, 1966 67, the Sales tax Officer, Rampur assessed ' the appellant to sales tax on the turnover of the groundnuts oil manufactured by the appellant and to purchase tax on the turnover of the oil seeds and foodgrains.
The appellant unsuccessfully appealed against the assessment orders.
Thereafter it took up the matter in revision before the revising authority.
There, again it substantially failed.
Aggrieved by that decision, he moved ' the High Court of Allahabad for a writ of certiorari quashing the levy of purchase tax imposed on him in respect of his purchases of oil seeds.
The High Court rejected those petitions.
Hence these appeals.
We shall now extract the impugned notification to the extent,: it is material for the purpose of this appeal.
It reads thus: "Not.
No. ST 7122/X 99(16)64 dated October 1, 1964.
In exercise of the powers under sub section (1) of section 3 D of the Uttar Pradesh Sales Tax Act, 1948 (U.P. Act No. XV of 1948), the Governor of Uttar Pradesh is pleased to notify that with effect from October 1, 1964, the turnover of first purchases in respect 148 of goods mentioned below shall be liable to tax under Section 3 D of the said Act.
Name of goods Rate of tax.
Foodgrains including cereals and pulses1 .5 paisa per rupee 2.
Gur 3 paisa per rupee 3.
Oilseeds 2 paisa per rupee As per this notification a purchase tax of 2 paise per rupee ,,on the turnover of the first purchase of oil seeds is leviable.
It is contended that this notification violates section 3AA of the Act.
Section 3AA says: "Notwithstanding anything contained in section 3 or 3A, the turnover in respect of the following goods shall not be liable to tax except at the point of sale by a dealer to the consumer, and the rate of tax shall be such, not exceeding the maximum rate for the time being specified in section 15 of the , as may be declared by the State Government by notification in the Official Gazette: (i). . (ii). . (iii). . (iv). . (v). . (vi) oil seeds, that is to say, seeds yielding non volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soap and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like.
Unless the dealer proves otherwise, every sale 'by a dealer shall, for the purposes of sub section (1) be presumed to be to a consumer.
Explanation.
A sale of any of the goods specified in sub section
(1) to a registered dealer who does not purchase them for resale in the same condition in which he has purchased them, or to an unregistered dealer shall, for pur poses of this section, be deemed to be a sale to the consumer.
" 149 This section was incorporated into the Act on April 1, 1956.
Under this section, on the goods specified therein, sales tax not, exceeding the maximum rate for the time being specified in section 15 of the can be levied by the StateGovernment on the turnover in respect of sales by dealers to the consumers.
From an analysis of this provision, we get the following: 1.
that tax to be levied is a sales tax; 2. levy in question is a single point levy; 3.
the point of levy is the sale by the dealer to the consumer and 4.
the rate to be fixed by the State Government is not to exceed the maxi mum rate for the time being specified in section 15 of the .
If we hold that provisions contained in section 3AA continue to be in force in respect of dealing in oil seeds then the appellant 'section contention that the impugned levy is an invalid levy succeeds, But the question is whether that contention is correct.
This takes us to section 3 D.
That section reads: "1.
Except as provided in sub section (2), there shall be levied and paid, food each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a pur chasing agent in respect of such goods or class of goods, and at such rates, not exceeding two paisa per rupee in the case of foodgrains, including cereals and pulses, and pulses, and five paisa per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by the State Government in this behalf.
Explanation.
In the case of a purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer shall be deemed to be the first purchaser, and in every other case of a first purchase, made through the, agency of a dealer, the dealer who is the agent shall be deemed to be the first purchaser.
x x x x 3.
x x x x 150 4.
On the issue of a notification under this section no tax shall be levied under any other section in respect of the goods so notified.
The provisions of the second and third proviso to Section 3 and of Section 18, shall mutatis mutandis apply in relation to the tax payable under this Section.
x x x x 7.
Unless the dealer proves otherwise to the satisfaction of the assessing authority, every purchase by or through a dealer shall, for the purposes of sub section (1), be presumed to be the first purchase by such dealer and every sale through a dealer shall, for the purposes of sub section (2), be presumed to be sale to a first purchaser.
" For our present purpose, it is not necessary to refer to the second and third provisos to section 3 and section 18.
It may be noted that section 3 D was incorporated into the, Act on August 1, 1958.
The contention on behalf of the appellant was that section 3AA is a special provision regarding certain specified class of goods including oil seeds whereas section 3 D is a general provision.
Hence dealings in respect of oil seeds must be held to be governed exclusively by section 3AA.
In support of his contention, the learned ,Counsel for the appellant called into, aid the rule of construction that a special provision excludes the application of a general provision.
On the other hand, it was contended on behalf of the Revenue that power was conferred on the State Government to levy purchase tax in place of sales tax in respect of any goods ' that may be notified under section 3 D(1) subject only to the conditions mentioned therein.
According to Dr. Singhvi, learned 'Counsel for the Revenue, the legislature left the questions whether in respect of a class of goods, the appropriate levy is sales tax or purchase tax as well as what is the appropriate point of levy, to the State Government because a decision on that question has to be taken on an assessment of various factors, some of which are not constant.
According to him in view of the language employed in sub section
(4) of section 3 D, it is not possible to apply the rule of construction that special legislation in respect of any particular topic should exclude the application of general legislation.
It may be noted that section 3 D was incorporated into the Act much later than section 3AA.
As seen earlier section 3AA was incorpo rated into the Act on April 1, 1956 whereas section 3 D was added 151 on August 1, 1958.
At the time the legislature incorporated into the Act section 3 D, it must have been aware of the existence of section 3AA but yet in sub section
(4) of section 3 D, it declared that on the issue of a notification under that section, no tax shall be levied under any other section in respect of the goods so notified.
The ambit of this provision is very wide and it clearly takes in goods mentioned in section 3AA.
Now turning to section 3AA, it is important to note that it begins by saying "notwithstanding anything contained in section 3 or 3 A".
The non obstante clause does not take in section 3 D.
If the legislature intended to exclude the operation of section 3 D, in respect of matters covered by section 3AA, nothing would have been easier than to say so.
It could have said "notwithstanding anything contained in section 3, 3 A and section 3 D".
But it did not choose to do that.
Therefore there are no grounds to cut down the amplitude of the power conferred on the State Government under sub section
(4) of section 3 D.
The High Court of Allahabad has consistently taken the view that it is open to the State Government to levy purchase tax in exercise of its powers under section 3 D even in respect of goods covered by section 3AA.
We are in agreement with that view.
In the result these appeals fail and they are dismissed with costs.
One set.
K.B.N. Appeals dismissed.
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Under section 3AA of the Uttar Pradesh Sales Tax Act, 1948 "not withstanding anything contained in section 3 or 3A" tax on the turnover of the goods specified therein was not leviable except at the point of sale by a dealer to the consumer.
Section 3D, incorporated into the Act later, authorised the imposition of a tax on the turnover of first purchase and on the issue of a notification under the section no tax could be levied under any other section in respect of the goods so notified.
On the question whether the notification dated October 1, 1964 imposing a purchase tax on oil seeds was invalid for the reason that it contravened section 3AA of the Act, HELD : It is open to the State Government to levy purchase tax, in exercise of its powers under section 3D, in respect of goods covered by section 3AA.
At the time the legislature incorporated into the Act section 3D it must have been aware of the existence of section 3AA, yet, in sub section
(4) of section 3D it declared that on the issue of a notification under the section, no tax shall be levied under any other section in respect of the goods so notified.
The ambit of this provision is very wide and it clearly takes in goods mentioned in section 3AA.
Further, the non obstante clause does not take in section 3D, and if the legislature intended to exclude the operation of section 3D, in respect of matters covered by section 3AA nothing would have been easier than to say so.
Therefore, there are no grounds to cut down the amplitude of the power conferred on the State Government under sub section
(4) of section 3 D. [150 H 151 D]
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Here is a two-paragraph summary of the court case:
The court case involved a dispute between a partnership firm (appellant) and the State of Uttar Pradesh (respondent) regarding the imposition of purchase tax on oil seeds under the U.P. Sales Tax Act, 1948. The appellant, a dealer in oil seeds, contended that the notification imposing purchase tax on oil seeds was invalid as it contravened Section 3AA of the Act, which provides for a single point levy of sales tax on specified goods, including oil seeds, at the point of sale by a dealer to a consumer. The appellant argued that the notification issued under Section 3D(1) of the Act, which levied purchase tax on oil seeds, was ultra vires the Constitution and discriminated against registered dealers who made purchases through licensed dealers.
The court ultimately dismissed the appeals, upholding the view of the High Court of Allahabad that it was open to the State Government to levy purchase tax in exercise of its powers under Section 3D even in respect of goods covered by Section 3AA. The court held that the special provision of Section 3AA did not exclude the application of the general provision of Section 3D, which conferred power on the State Government to levy purchase tax in place of sales tax in respect of any goods notified under Section 3D(1). The court also noted that the legislature had specifically declared in sub-section (4) of Section 3D that on the issue of a notification under that section, no tax shall be levied under any other section in respect of the goods so notified.
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Civil Appeal No. 577 of 1975.
Appeal by Special Leave from the Judgment and order dated the 4 11 74 of the orissa High Court in M.A. No. 75 of 1970.
G. section Pathak, Santosh Chatterjee and G. section Chatterjee for the Appellant.
Sachin Chowdhury (Respondent No. 2) and Vinoo Bhagat for the Respondent No. 1.
The Judgment of the Court was delivered by SHlNGHAL J.
, Maguni Charan Dwivedi, the appellant, filed a title suit in the Court of Munsif, Sundargarh against the State of orissa, for declaration of his title and recovery of possession of plot No. 99 meaguring 3.80 acres in khata No. 89 of village Mahulpali claiming it as his "ganju bhogra" land.
The suit was decreed on October 14, 1958, in respect of 3.45 acres.
The defendant State of orissa, did not file an appeal and the decree became final.
Decree holder Dwivedi applied for its execution.
The case was transferred to the court of the Subordinate Judge of Sundargarh.
An objection was taken there by the Notified Area Council, Rourkela, respondent No. 2, hereinafter referred to as the Council, under sections 37 and 38 and order XXI rule 58 of the Code of Civil Procedure on the ground that it was in actual physical possession of the land.
The objection application was however rejected by the execution court on March 31, 1965.
The Council applied for revision or the order of rejection, but its application was dismissed with the observation that the Council might file a regular suit for adjudication of its right if it so desired.
No suit was filed by the Council and decreeholder Dwivedi filed an application on September S, 1966 for proceeding with the execution of his decree.
The Council and the State then 77 made an application under section 47 of the Code of Civil Procedure stating A that the decree was not executable because the orissa Merged Territories (Village offices Abolition) Act, 1963, hereinafter referred to as the Act, had come into force in the area on April 1, 1966, and the "bhogra land" in question had vested in the State free from all encumbrances.
The Subordinate Judge upheld that objection and dismissed the execution application.
Decree holder Dwivedi felt aggrieved, and filed an appeal which was heard by Additional District Judge, Sundargarh, who held by his order dated May 2, 1970 that the decree was executable.
He therefore set aside the order of the execution court, and the State of orissa and the Council went up in appeal to the High Court.
The High Court held that as the decree holder was not in actual physical possession of the land, the tenure had vested in the State free from all encumbrances C under section 3 of the Act, the decree was "rendered non est", and the Collector could not settle the land with him under section S of the Act.
It therefore allowed the appeal by its impugned judgment dated November 4, 1974, and ordered that the decree holder could not execute the decree.
He applied for and obtained special leave, and has filed the present appeal.
It is not in dispute before us that the appellant held the "village office" within the meaning of section 2(j) of the Act.
It is also not in dispute that it was in that capacity that he held the "bhogra land" in question by way of emoluments of his office.
Moreover it is not in dispute that the appellant 's village office stood abolished in accordance with the provisions of section 3(a) of the Act.
The consequences of the abolition, have been stated in cls.
(a) to (g) of section 3.
It will be sufficient for us to say, for purposes of the present controversy, that as a result of the abolition of the office, all incidents of the appellant 's service tenure, e.g., the right to hold the "bhogra land", stood extinguished by virtue of the provisions of cl.
(b) of section 3, and all settlements, sanads and all grants in pursuance of which the tenure was being held by the appellant stood cancelled under section 3(c).
The right of the appellant to receive the emoluments was also deemed to have been terminated under cl.
(d), and by virtue of cl.
(f) his "bhogra land" stood resumed and "vested absolutely in the State Government free from all encumbrances.
" Section 3 of the Act in fact expressly provided that this would be the result, notwithstanding anything in any law, usage, settlement, grant, sanad or order or "in any judgment, decree or order of a Court.
" All these consequences therefore ensued with effect from April 1, 1966 when, as has been stated, the Act came into force in the area with which we are concerned.
There can be no doubt therefore that from that date appellant Dwivedi suffered from these and the other disabilities enumerated in section 3 of the Act; the "bhogra land" in respect of which he obtained the decree dated October 14, 1958 declaring his title and upholding his right to possession, was therefore lost to him as it vested "absolutely" in the State Government free from all encumbrances.
The decree for possession also thus lost its efficacy by virtue of the express provisions of the Act referred to above, and there is nothing wrong if the High rt has held that it was rendered incapable of execution by operation of the law.
78 Section S of the Act deals with the settlement of the resumed "bhogra land" and has been the subject matter of controversy before us.
It provides as follows: "5.
Settlement of Bhogra lands: (1) All Bhogra lands resumed under the provisions of this Act shall subject to the provisions of sub section (2) be settled with rights of occupancy therein on a fair and equitable rent with the holder of the Village office or with him and all those other persons, if any, who may be in the enjoyment of the land or any part thereof as his co sharers or as tenants under him or under such co sharer to the extent that each such person was in separate and actual cultivating possession of the same immediately before the appointed date.
(2) The total area of such land in possession of each such person shall be subject to a reservation of a certain fraction thereof in favour of the Grama Sasan within whose limits the land is situate and the extent of such reservation shall be determined in the following manner, namely: Land in possession Extent of reservation For the first 10 acres Nil For the next 20 acres 5 per cent For the next 70 acres 10 per cent For the next 100 acres 30 per cent For the remaining 40 per cent: Provided that the area reserved shall, as far as practicable be in compact block or blocks of one acre or more." (Emphasis added) .
It would appear that once a "bhogra land" stood resumed and vested absolutely in the State Government to the exclusion of the village officer concerned, it was required to be "settled", with rights of occupancy thereunder, with the erstwhile holder of the village office, or with him and all those other persons, if any, who may be in enjoyment of the land or any Part thereof as his co sharer to the extent that each such person was in separate and actual cultivating possession of the same immediately before the date appointed for the coming into force of the Act.
The settlement of the land contemplated by section 5 had therefore to be with the holder of the village office and the other persons who were enjoying it (or part of it) as his co sharers or as tenants under him or his co sharers, but that was to be so on the condition that "each such person" namely, the holder of the village office, and his co sharers, or the tenants under the holder of the office or his co sharers, was in "separate and actual cultivating possession" of the land immediately before April 1, .1966.
There is nothing in sub section (1) of section S to justify the argument of Mr. Pathak that we should so interpret the words "each such person" as to exclude the holder of the village office from its purview.
In fact the same words occur in sub section
(2) of section S as well, which deals with the question of reservation of a fraction of the "bhogra land" in favour of Grama Sasan, and Mr. Pathak has not found it possible to argue that the land in possession of the holder of 79 the village office was immune from the liability to such fractional reservation.
We have no doubt therefore that in order to be entitled to the settlement contemplated by sub section (1) of section S, the village officer or the other persons mentioned in the sub section had to be in "separate and actual cultivating possession" immediately before the appointed date.
It has also been argued by Mr. Pathak that the provisions of section 3 of the Act were subject to the provisions of section 5, and that the High Court committee an error in losing sight of that requirement of the law.
He has urged that if section 3 had been read as suggested by him, it would have been found that, in spite of the resumption and vesting of the "bhogra land" under section 3, the appellant 's right to possess the "bhogra land" in question continued to subsist so long as it was not converted into a right of occupancy under sub section
(1) of section 5.
Counsel has gone on to argue that the appellant was therefore entitled to ignore any trespass on his possession of the "bhogra land", and to ask for execution of the decree for possession against the respondents as they were mere trespassers and were not co sharers or tenants within the meaning of sub section
(1) of s.5.
Reference in this connection has been made to Maxwell on Interpretation of Statutes, twelfth edition, p. 86, where it has been stated that it is necessary to interpret the words of the statute so as to give the meaning "which best suits the scope and object of the statute.
" It has been argued that grave injustice would otherwise result for, by a mere act of trespass committed on the eve of the coming into force of the Act, a village officer would lose the right of settlement of his "bhogra land" under sub section (1) of s.5.
It has also been argued that the words "each such person" occurring in that sub section do not include the holder of the village office himself, so that it was not necessary for him to show that he was in separate and actual cultivating possession of his "bhogra land".
Reliance for this proposition has been placed on a bench decision of the High Court of Orissa in State of Orissa vs Rameswar Patabisi (Civil Revision Petition No. 257 of 1974 decided on June 27,1975) and on Meharaban Singh and others vs Naresh Singh and others(1).
As will appear, there is no force in this argument.
Section 3 of the Act expressly provides for the abolition of village offices under the Act, and the consequences of such abolition.
We have made a reference to cls.
(a) (b) (c) (d) and (f) of that section, and we have no doubt that the consequences stated in the section in regard to the abolition of village offices, the extinction of the incidents of the service tenures, cancellation of the settlements and sanads etc.
creating those office, termination of the right to receive any emoluments for the offices, the resumption and vesting of the "bhogra lands" free from all encumbrances ensued "with effect from and on the appointed date" and were not put off until after the settlement provided for in sub section (1) of section 5 had been made.
Section 3 in fact expressly made provision for those consequences and there is no justification for the argument that they remained suspended or were put off until occupancy rights were settled on the persons concerned.
As has been (1) 80 stated, sub section (1) of section S deals with the settlement of such lands, with rights of occupancy, with the holder of the village office or with him and the other persons, if any, referred to in the sub section, but such settlement was required to be made as a result of the consequences referred to in section 3 and not otherwise.
It is therefore futile to contend that the appellant did not suffer from those consequences merely because the "bhogra land" claimed by him had not been settled with rights of occupancy under sub section
(1) of section 5 because it was the subject matter of the decree which had not been executed.
We have gone through the decision in State of Orissa vs Rameshwar Patabisi (supra) and it has no doubt been held there that actual cultivating possession of the village officer was not necessary for purposes of sub section
(1) of section S, but, as has been shown, we have no doubt that the words "each such person" occurring in sub section
(1) of section 5 include the holder of the village office, so that in order to be eligible for settlement of the land with occupancy rights, he must also be in separate and actual cultivating possession of the "bhogra land" immediately before the appointed date.
It appears that the earlier bench decision to the contrary, which is the subject matter of the present appeal, was not brought to the notice of the Bench which decided Rameswar Patabisi 's case.
We have gone through Maharabansingh 's(1) case also but that was quite a different case which was decided in accordance with the provisions of a different Act.
It has next been argued by Mr. Pathak that the High Court lost sight of the provisions of section 9 of the Act which provided for submission of records and delivery of possession of other land but did not require delivery of possession of the "bhogra land" even after its resumption.
The argument is however untenable because section 9 was meant to serve quite a different purpose inasmuch as it made provision for the delivery of all records maintained by the village officer in respect of the land or village held by him in relation to his office, the rendering of all accounts appertaining to his office in respect of the dues payable by and to him, and the delivery of possession of all abandoned and surrendered holdings etc.
The section did not therefore have any bearing on the question of the vesting of the "bhogra land" absolutely in the State Government and the extinction of the right of the village officer to hold it.
That had in fact been.
expressly provided in those clauses of section 3 to which reference has been made by us already.
As it is, section 9 did not deal with the question of delivery of possession of the "bhogra land" and its provisions could not justify the argument that the village officer was entitled to continue his possession of the "bhogra land" under that section in spite of the fact that the land stood resumed and vested absolutely in the State Government free from all encumbrances under section 3.
It may be mentioned that Mr. Pathak has argued further that as the application which had been filed by the Council under order XXI r. 58 C.P.C. had been rejected on March 31, 1965 and the Council did not file a suit to establish its right to the "bhogra land", the decree in favour of the appellant became final and could not be challenged for 81 any reason whatsoever, and the High Court committed an error in A taking the view that it was rendered inexecutable merely because of the coming into force of the Act.
It will be sufficient for us to say in this connection that whatever might have been the consequences of the rejection of the Council 's application under order XXI r. 58 C.P.C. and the failure to institute a suit thereafter, those normal consequences were rendered nugatory by the express provisions of the Act to which reference has been made above.
The question of executability of the decree has therefore been rightly decided with reference to the Act.
It may be mentioned that in a given case there may be no "bhogra land" to be settled with a village officer, or a village officer may feel aggrieved on the ground that the Act provides for the acquisition of property by the State, but we find that provision has been made in the Act for the payment of solatium or compensation under sections 8 and 10 in such cases and it cannot be said that they have been left without a remedy.
For the reasons mentioned above, we find no force in the arguments which have been advanced on behalf of the appellant.
It however appears to us that there is justification for the other argument of Mr. Pathak that there was really no occasion for the High Court to express the view that the appellant "had no possession of the land" so as to claim its settlement under section 5(1) of the Act, and that the Collector could not settle the land with him.
As is obvious, that was clearly a matter for the authorities concerned to examine and decide under section 5 and it was, at any rate, outside the purview of the question relating to the executability of the decree which was the subject matter of the appeal in the High Court.
While therefore the appeal fails and is dismissed, the observation of the High Court that the decree holder had no possession of the land and the Collector could not settle the land with him, is set aside, and it is left to the authorities concerned to examine the question of settlement of the land under section 5(1).
The appellant may rely on such matters as may be open applellant the law.
In the circumstances of this case, we leave the parties to pay and bear their own costs.
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In the execution proceedings to satisfy a decree dated 14 10 1958 for title and recovery of possession of certain "ganju Bhogra lands" obtained by the appellant against the State, the Notified Area Council.
Rourkela claimed the suit lands by an application u/o XXI Rule 58 r/w sections 37 and 38 Code of Civil Procedure.
The said application was rejected.
A revision against it was also dismissed with the observation that the council was free to file a regular suit for adjudication of its rights.
When the appellant took out a fresh application for execution u/s 47 of the Code` of Civil Procedure, the Council which never filed any suit, and the respondent State which never appealed against the original decree, opposed the execution application on the ground that the decree became infructuous by virtue of section 3 of the orissa Merged Territories (Village offices Abolition) Act, 1963.
The Executing court upheld the objection and dismissed the execution petitition.
On appeal the Additional District Judge, by his order dated 2 5 1970, held that the decree was executable resulting in a second appeal to the High court by the respondent State.
The High Court allowed the appeal by its order dated 4 11 1974 holding that as the decree holder was not in actual physical possession of the land, the tenure has vested in the State free from all encumbrances u/s 3 of the Act and the decree was rendered "non est".
Dismissing the appeal by special leave, the Court, ^ HELD: (1) As a result of the abolition of the village office under section 3 of the OMTA, all incidents of the appellant 's service tenure, e.g., the right to hold the "bhogra land" stood extinguished by virtue of the provision of clause (b) of section 3, and ail settlements, sanads and all grants in pursuance of which the tenure was being held by the appellant, stood cancelled under section 3(c).
The right of the appellant to receive emoluments was also deemed to have been terminated under Cl.
(d) and by virtue of Cl.
(f), his bhogra land stood resumed and "vested absolutely" in the State free from all encumbrances.
Section 3 of the Act, in fact, expressly provided that this would be the result, notwithstanding anything in law, usage, settlement, grant, sanad, order or "in any judgment, decree or order of a court.
" All these consequences ensued with effect from April 1, 1966 the date of coming into force of the orissa Merged territories (Village offices Abolition) Act, 1963.
From that date, the appellant suffered from these and other disabilities enumerated in section 3 of the Act, the "bhogra land" in respect of which he obtained the decree dated October 14, 1958 declaring his title and upholding his right to possession was, therefore, lost to him as it vested "absolutely" in the State Government free from all encumbrances.
The decree for possession also thus lost its efficacy by virtue of the express provisions of the Act and there is nothing wrong in holding that the decree was rendered incapable of execution by operation of law.
[77 D H] (2) Under sec.
5 of orissa Merged Territoies ((Village offices Abolition) Act, 1963, once a "bhogra land" stood resumed and vested absolutely in the State Government to the exclusion of the village officer concerned, it was required to be "settled" with rights of occupancy thereunder.
The settlement of the land contemplated by sec.
S had to be with the holder of the village office and the other persons who were enjoying it (or part of it) and as his co sharers, as tenants under him or his co sharers, but that was to be so on the condition 76 that "each such person, namely, the holder of the village office and his cosharers or the tenants under the holder of the office or his co sharers was in separate and actual cultivating possession" of the land immediately before April, 1966.
The words "each such person" occurring in sub section I of Sec. 5 include the holder of the village office so that in order to be eligible for settlement of the land with occupancy rights, he must also be in separate and cultivating possession of the "bhogra land" immediately before April 1, 1966.
There is nothing in sub section I of Sec. 5 to justify the argument that the interpretation of the words "each such person" should be such as to exclude the holder of v the village office from its purview.
[78 E, F H] State of orissa vs Rameswar Patabisi (Civil Revision Petition No. 257 of 1974) decided on 27 6 1975 (orissa High Court) over ruled; Meharabansingh and Ors.
vs Nareshaingh and ors.
(held not applicable).
(3) The provisions of sec.
9 do not justify the argument that the village officer was entitled to continue his possession of the "bhogra land" under that section in spite of the fact that the land.
stood resumed and vested absolutely in the State Government free from all encumbrances.
[80 E] (4) The normal consequences arising out of the rejection of the application under o. XXI, r. 58, Civil Procedure Code and the failure to institute the suit thereafter, were rendered nugatory by the express provisions of section 3 of the orissa Merged Territories (Village offices Abolition) Act, 1963.
The question of executability of the decree did not arise.
[81 A B] [The Court left open to the authorities concerned to examine the question of settlement of the land under section 5(1) of the orissa Merged Territories (Village Dr offices Abolition) Act, 1963, with liberty to the village officer to rely upon such matters as may be available according to law.]
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Here is a two-paragraph summary of the court case:
Civil Appeal No. 577 of 1975 was a case filed by Maguni Charan Dwivedi against the State of Orissa and Notified Area Council, Rourkela, regarding the execution of a decree for possession of a plot of land, known as "bhogra land", which was part of his emoluments as a village officer. The decree was originally issued in 1958, but the State of Orissa and the Council challenged its executability on the ground that the Orissa Merged Territories (Village Offices Abolition) Act, 1963, had vested the land absolutely in the State Government, free from all encumbrances. The High Court held that the decree was "rendered non est" and not executable.
The Supreme Court of India upheld the judgment of the High Court, holding that the abolition of the village office, as per the Act, had extinguished all incidents of the service tenure, including the right to hold the "bhogra land", and that the land had vested absolutely in the State Government. The Court also held that the settlement of the land with rights of occupancy, as provided in Section 5 of the Act, required the holder of the village office to be in separate and actual cultivating possession of the land immediately before the appointed date. The Court dismissed the appeal, but set aside the observation of the High Court regarding the decree holder's possession of the land and left it to the authorities concerned to examine the question of settlement of the land under Section 5(1) of the Act.
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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.
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Here is a two-paragraph summary of the court case:
The present appeal has been filed by the State Government against the judgment of the Nagpur High Court, which held that ottas and chabutras in the bazar area of the village Bhivapur, along with the land appurtenant to them, must be settled with the respondent (the ex-proprietor) under section 5(a) of the Madhya Pradesh Abolition of Proprietary Rights Act, 1950. The respondent had claimed that the entire area of Khasra No. 61/1, which measures 12.85 acres, should be settled with him, but the High Court modified its judgment to direct the Government to settle only the land covered by the structures, including the appurtenant land.
The question before the court was whether ottas and chabutras can be regarded as buildings within the meaning of section 5(a) of the Act. The court held that the word "buildings" should be given its literal meaning as something which is built, and that uncovered ottas and chabutras fall within the term "building" as used in section 5(a) of the Act. The court also rejected the argument that the structures should be settled only to the extent of 2.85 acres, as the respondent had conceded that he was only entitled to that amount of land. The appeal was dismissed with costs, with a direction to the Government to settle with the respondent the whole of the land covered by the structures and the land appurtenant to those structures from out of Khasra No. 61/1.
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Civil Appeal No. 851 of 1966.
Appeal by special leave from the judgment and order dated December 20, 1963 of the Allahabad High Court, Lucknow Bench in First Civil Appeal No. 28 of 1954.
Jagdish Swarup, Solicitor General, Yogeshwar Prasad, C.M. Kohli and G.R. Chopra, for the appellant.
L.M. Singhvi and S.P. Nayar, for the respondent.
C.J. Maula Bux hereinafter called the plaintiff entered into a contract No. C/74 with the Government of India on February 20, 1947, to supply potatoes at the Military Headquarters, U.P. Area, and deposited an amount of Rs. 10,000 as security for due performance of the contract.
He entered into another contract with Government of India on March 4, 1947 No. C/120 to supply at the same place poultry, eggs and fish for one year and deposited an amount of Rs. 8,500/ for due performance of the contract.
Clause 8 of the contract ran as follows: "The officer sanctioning the contract may rescind his contract by notice to me/us in writing : (i) (ii) (iii) (iv) If I/we decline, neglect or delay to comply with any demand or requisition or in any other way fail to.
perform or observe any condition of the contract.
(v) (vi) In ease of such rescission, my/our security deposit (or such portion thereof as the officer sanctioning the contract shall consider fit or adequate) shall stand forfeited and be absolutely at the disposal of Government, without prejudice to any other remedy or action that the Government may have to take. 930 In the case of such rescission, the Government shall be entitled to recover from me/us on demand any extra expense the Government may be put to in obtaining supplies/services hereby agreed to be supplied, from elsewhere in any manner mentioned in clause 7(ii) hereof, for the remainder of the period for which this contract was entered into, without prejudice to any other remedy the Government may have.
" The plaintiff having made persistent default in making "regular and full supplies" of the commodities agreed to be supplied, the Government of India rescinded the contracts the first on November 23, 1947, and the second on December 2,1947, and forfeited the amounts deposited by the plaintiff.
The plaintiff commenced an action against the Union of India in the Court of the Civil Judge, Lucknow, for a decree for Rs. 20,000/ being the amounts deposited with the Government of India for due performance of the contracts and interest thereon at the rate of 6 per cent.
per annum.
The Trial Court decreed the suit.
The Court held that the Government of India was justified in rescinding the contracts, but they could not for left the amounts of deposit, for they had not suffered any loss in consequence of the default committed by the plaintiff.
The High Court of Allahabad in appeal modified the decree, and awarded Rs. 416.25 only with interest at the rate of 3 per cent from the date of the suit.
The plaintiff has appealed to this Court with 'special leave.
The trial Court found in decreeing the plaintiff 's suit that there was no evidence at all to prove that loss, if any, was suffered by the Government of India in consequence of the plaintiff 's default, and on that account amounts deposited as security were not liable to be forfeited.
In the view of the High Court, to for feature of a sum deposited by way of security for due performance of a contract, where the amount forfeited is not unreasonable, section 74 of the Contract Act has no application.
The Court observed that the decision of this Court in Fateh Chand vs Balkishan Dass(1) did not purport to overrule the previous "trend of authorities" to the effect that earnest money deposited by way of security for the due performance of a contract does not constitute penalty contemplated under section 74 of the Indian Contract Act, that even if it be held that the security deposited in the case was a stipulation by way of penalty, the Government was entitled to receive from the plaintiff reasonable compensation not exceeding that amount, whether or not actual damage or loss was proved to have been caused, and that even in the absence of evidence to prove the actual damage or loss caused to the Govern ; 931 ment "there were circumstances in the case with indicated that the amount of Rs. 10,000 in the case of potato contract and Rs. 8,500/ in the case of poultry contract may be taken as not exceeding the reasonable compensation for the breach of contract by the plaintiff.
" The High Court further observed that the contract was for supply of large quantities of potatoes, poultry and fish, which would not ordinarily be available in the market, and "had to be procured in case of breach of contract everyday with great inconvenience," and in the circumstances the Court "could take judicial notice of the fact that 1947 48 was the period when the prices were rising and it would not have been easy to procure the supplies at the rates contracted for".
The High Court concluded: " . taking into consideration the amount of inconvenience and the difficulties and the rising rate of prices, it would not be unfair if in case of such breach for the supply of such huge amounts of potatoes and poultry, we consider an amount of Rs. 18,500/. by way of damages as being not unreasonable." Under the terms of the agreements the amounts deposited by the plaintiff as security for due performance of the contracts were to stand forfeited in case the plaintiff neglected to perform his part of the contract.
The High Court observed that the deposits so made may be regarded as earnest money.
But that view cannot be accepted.
According to Earl Jowitt in "The Dictionary of English Law" at p. 689: "Giving an earnest or earnest money is a mode of signifying assent to a contract of sale or the like, by giving to the vendor a nominal sum (e.g. a shilling) as a token that the parties are in earnest or have made up their minds.
" As observed by the Judicial Committee in Kunwar Chiranjit Singh vs Har Swarup(1): "Earnest money is part of the purchase price when the transaction goes forward: it is forfeited when the transaction falls through, by reason of the fault or failure of the vandee.
" In the present case the deposit was made not of a sum of money by the purchaser to be applied towards part payment of the price when the contract was completed and till then as evidencing an intention on the part of the purchaser to buy property or goods.
Here the plaintiff had deposited the amounts claimed as security for guaranteeing due performance of the contracts.
Such deposits cannot be regarded as earnest money.
Section 74 of the Contract Act provides: "When a contract has been broken, if a sum is named in the contract as the amount to be paid in case (1) A.I.R. 1926 P.C. 1 932 of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. . . . . . " There is authority, no doubt coloured by the view which was taken in English cases, that section 74 of the Contract Act has no application to cases of deposit for due performance of a contract which is stipulated to be forfeited for breach: Natesa Aiyar vs Appavu Padayachi(1); Singer Manufacturing Company vs Raja Prosad(2); Manian Patter vs The Madras Railway Company(a).
But this view is no longer good law in view of the judgment of this Court in Fateh Chand 's case(4).
This Court observed at p. 526: "Section 74 of the Indian Contract Act deals with the measure of damages in two classes of cases (i) where the contract names a sum to be paid in case of breach, and (ii) where the contract contains any other stipulation by way of penalty.
The measure of damages in the case of breach of 'a stipulation by Way of penalty is by section 74 reasonable compensation not exceeding the penalty stipulated for.
" The Court also observed: "It was urged that the section deals in terms with the right to receive from the party who has broken the contract reasonable compensation and not the right to forfeit what has already been received by the party aggrieved.
There is however no warrant for the assumption made by some of the High Courts in India, that section 74 applies only to cases where the aggrieved party is seeking to receive some amount on breach of contract and not to cases whereupon breach of contract an amount received under the contract is sought to be forfeited.
In our judgment the expression "the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered.
Duty not to enforce the penalty clause but (1) [1913] LL.R. 38 Mad.
(2) Cal.
(3) Mad.
(4) ; 933 only to award reasonable compensation is statutorily imposed upon courts by section 74.
In all cases,.
there fore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of contract which expressly provides for forfeiture, the court has jurisdiction to award such sum only as it considers reasonable but not exceeding the amount specified in the contract as liable to.
forfeiture.", and that, "There is No. ground for holding that the expression "contract contains any other stipulation by way of penalty" is limited to cases of stipulation in the nature of an agreement to.
pay money or deliver property on breach and does not comprehend covenants under which amounts paid or property delivered under the contract, which by the terms of the contract expressly or by clear implication are liable to be forfeited.
" Forfeiture of earnest money under a contract for sale of property movable or immovable if the amount is reasonable, does not fall within section 74.
That has been decided in several cases: Kunwar Chiranjit Singh vs Hat Swarup (t); Roshan Lal vs The Delhi Cloth and General Mills Company Ltd., Delhi(2); Muhammad Habibullah vs Muhammad Shafi(3); Bishan Chand vs Radha Kishan Das(4); These cases are easily explained, for forfeiture of a reasonable amount paid as earnest money does not amount to.
imposing a penalty.
But if forfeiture is of the nature of penalty, section 74 applies.
Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty.
Counsel for the Union, however, urged that in the present case Rs. 10,000/ in respect of the potato contract and Rs. 8,500 in respect of the poultry contract were genuine preestimates of damages which the Union was likely to suffer as a result of breach of contract, and the plaintiff was not entitled to any relief against forfeiture.
Reliance in support of this contention was placed upon the expression (used in section 74 of the Contract Act), "the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused there by, to receive from the party who has broken the contract reasonable compensation".
It is true that in every case of breach of contract the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree, and the Court is competent to award reasonable compensation in (1) A.I.R. 1926 P.C. 1.
(2) I.L.R. 33 All.
(3) I.L.R. 41 All.
490. 934 case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract.
But the expression "whether or not actual damage or loss is proved to have been caused thereby" is intended to cover different classes of contracts which come before the Courts.
In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules.
Where the Court is unable to assess the compensation, the sum named by the parties if it be regarded as a genuine preestimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty.
Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him.
In the present case, it was possible for the Government of India to lead evidence to prove the rates at which potatoes, poultry, eggs and fish were purchased by them when the plaintiff failed to deliver "regularly and fully" the quantities stipulated under the terms of the contracts and after the contracts were terminated.
They could have proved the rates at which they had to be purchased and also the other incidental charges incurred by them in procuring the goods contracted for.
But no such attempt was made.
Counsel for the Union, however, contended that in the Trial Court the true position in law was not appreciated and the parties proceeded to trial on the question whether the Government was entitled in the circumstances of the case to forfeit under cl. 8 the terms of the contracts the deposits made for securing due performance of the contracts.
Since there was no pleading and no issue on the question of reasonable compensation, an opportunity should be given to the parties to lead evidence on this point.
But with the suit out of which this appeal arises was tried another suit filed by the plaintiff Maula Bux against the Union for a decree for Rs. 53,000 odd being the price of goods supplied under the terms of another contract with the Government of India.
In that suit the Union claimed that it had set off the amount due to the plaintiff, amounts which the plaintiff was liable to pay as compensation to the Union for loss suffered because of the plaintiff 's failure to carry out the terms of the contracts C/74 and C/120.
The Trial Court held in that case that the Union failed to prove that any loss was suffered by it in consequence of the default by Maula Bux to supply potatoes, poultry, eggs and fish as stipulated by him.
Against the judgment of that Court Appeal No. 2001 of 1966 is filed in this Court and is decided today.
The High Court of Allahabad having confirmed the decree passed by the Trial Court, no useful purpose will be served by directing a fresh enquiry into the question whether the Union 935 of India is entitled to recover from the plaintiff any reasonable compensation for breach of contracts and whether that compensation is equal to or exceeds the amounts deposited.
Evidence on that question has already been led and findings have been recorded.
In dealing with the Appeal No. 2001 of 1966 we have held that the Union has failed to establish by evidence that any damage or loss was suffered by them which arose out of the default committed by the plaintiff.
We decline therefore to afford another opportunity for leading the evidence as to the loss suffered by the Union on account of the failure on the part of the plaintiff to carry out the contracts.
On the view taken by us it must be held that the High Court was in error in disallowing the plaintiff 's case.
The High Court has held that the plaintiff is not entitled to any interest prior to the date of the suit.
No argument has been advanced before us challenging that view.
Since interest was not recoverable under any contract or usage or under the provisions of the Interest Act, 1838 the High Court allowed interest at the rate of 3% per annum on Rs. 416.25 from the date of the suit, the rate of interest allowed on the claim decreed also should not exceed 3 per cent per annum.
We set aside the decree passed by the High Court and substitute the following decree: "The Union of India do pay to the plaintiff Rs. 18,500/ with interest at the rate of 3% per annum from the date of the suit till payment.
" The plaintiff was guilty of breach of the contracts.
Considerable inconvenience was caused to the Military authorities because of the failure on the part of the plaintiff to supply the food stuff contracted to be supplied.
Even though there is no evidence of the rates at which the goods were purchased, we are of the view, having regard to the circumstances of the case, that the fairest order is that each party do bear its own costs throughout.
Appeal allowed.
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The appellant entered into a contract with the respondent to supply some goods and deposited a certain amount as security for due performance of the contract.
It was stipulated that the amounts we 're to stand forfeited in case the appellant neglected to perform his part of the con tract.
When the appellant made defaults in the supply, the respondent rescinded the contract and forfeited the amount deposited.
The appellant filed a suit for recovery of the amount with interest.
The trial court decreed the suit, holding that the respondent was justified in rescinding the contracts, but could not 'forfeit the deposit, for, it had not suffered any loss in consequence of the default committed by the appellant.
The High Court modified the decree and awarded the 'respondent a major portion of the amount deposited as damages.
The High Court took the view that the forfeiture of a sum deposited by way of security for due performance of a contract, where the amount forfeited was not unreasonable section 74 of the Contract Act had No. application and that the deposits so made could be regarded as earnest money.
HELD: The High Court was., in error in disallowing the appellant 's claim.
(i) Earnest money is a deposit made by a purchaser to be applied towards part payment of the price when the contract is completed and till then as evidencing an intention on the part of the purchaser to buy property or goods.
Forfeiture of earnest money under a contract for sale of property, if the amount is reasonable, does not fall within section 74 of the Contract Act.
[933 D].
Kunwar Chiranjit Singh vs Har Swarup, A.I.R. 1926 P.C. 1, relied on.
(ii) Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is in the nature of a penalty and, section 74 applied thereto.
[933 E F] Fateh Chand vs Balkishan Dass, ; , relied on.
Contrary view in Natesa Aiyar vs Appavu Padayachi, (1913) LL.R. 38 Mad.
178, Singer Manufacturing Co. vs Raja Prosad, Cal.
960 and Manian Patter vs Madras Railway Company, Mad. 188, disapproved.
The expression "whether or not actual damage or loss is proved to have been caused thereby" in section 74 is intended to cover different classes of contracts which come before the courts.
In ease of breach of some contracts.
it may be impossible for the court to assess compensation arising from breach, while in other cases, compensation can be calculated in 929 accordance with established rules.
Where the court is unable to assess the compensation, the sum named by the parties, if it be regarded as a genuine preestimate, may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty.
[934 A C] In the present case it was possible for the respondent Government to lead evidence to prove the loss suffered but it did not attempt to do so.
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Here is a two-paragraph summary of the court case:
The case involved a contract dispute between the plaintiff, C.J. Maula Bux, and the Government of India. Maula Bux had entered into two contracts with the government to supply potatoes and poultry, eggs, and fish to the military headquarters in U.P. Area. However, he made persistent default in making full supplies, and the government rescinded the contracts, forfeiting the amounts deposited by Maula Bux as security. Maula Bux claimed a decree for Rs. 20,000, being the amounts deposited with the government, plus interest.
The High Court modified the decree, awarding Rs. 416.25 with interest at 3% per annum. The Supreme Court allowed the plaintiff's appeal, holding that the High Court was in error in disallowing the plaintiff's case. The Court held that the amounts deposited by Maula Bux as security were not liable to be forfeited without reasonable compensation. Considering the inconvenience and difficulties caused to the government due to the breach of contracts, the Court awarded Rs. 18,500 as reasonable compensation, with interest at 3% per annum from the date of the suit.
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Appeal No. 614 of 1961.
APpeal by special leave from the judgment and decree dated December 22, 1959, of the Andhra Pradesh High Court, Hyderabad in Second Appeal No. 428 of 1959.
A. V. Viswanatha Sastri and T.V.R. Tatachari, for the appellants.
A.Ranganadham Chetty and P. D. Menon, for the respondent No. 1. 1962.
September 26.
S.K. DAs.
J. This is an appeal by special leave and the short question for decision is the true scope and effect of section 4 of the Madras Irrigation Tanks (Improvement) Act, 1949 (Mad. XIX of 1949), hereinafter referred to as the Act.
The section is in these terms : "No Court shall entertain any suit or appli cation for the issue of an injunction to restrain 310 the exercise of any powers conferred on the Government by section 3.
" The courts below have dismissed the suit brought by the appellants, holding on a preliminary issue that section 4 aforesaid applies and the suit cannot be entertained.
The question before us is, whether this finding is correct.
We must first state the relevant facts.
The appellants were the plaintiffs in the first court.
They brought the suit in a representative capacity on behalf of the roots of several villages whose lands are irrigated by what is locally known as the "Gudur anicut system".
There is a stream or small river known as Venkatagiri river which flows west to east and then takes a turn to the south.
It passes by or near villages Chennur, Gudur, etc.
The case of the appellants was that from time immemorial their lands were irrigated from four tanks; three of the tanks received their supply of water from the Venkatagiri river through a channel emanating from the Gudur anicut at a place called Ananthamadugu.
The fourth tank also received its supply of water from the 'same river through a channel emanating from near the "Pumbaleru anicut" further down the river.
In addition, a separate channel from the "Pumbaleru anicut" directly irrigated about Ac.
600 00 of land.
It was stated that on the whole, about Ac.
4000 00 of the land of the appellants were irrigated in the manner indicated above under the "Gudur anicut system".
The ryots of Chennur" a village situate higher up the river, had also a tank for irrigating their lands.
These ryots made several attempts to secure a portion of the water of Venkatagiri river by having an anicut constructed over the river at a place called Gollapalli, about one mile up the river, in order to get supply of water to Chennur tank by means of a supply channel emanating from near the place of the proposed Gollapalli anicut.
These attempts failed in 1929 1930.
But they renewed their attempts 311 and in 1935, the Madras Government passed an order (G. O. No. 2241/1 dated October 16, 1935) directing the construction of an anicut at Gollapalli for supply of water to the Chennur tank with certain safeguards to ensure that the supply to the "Gudur anicut system" was not adversely affected and to utilise only the excess water going to waste during the flood season for the Chennur tank.
The appellants objected to the scheme of G.O. No. 2241/1 dated October 16 1935 and the matter was further investigated by Government.
Finally, G.O. No. 1161 dated May 6, 1939, was issued modifying the earlier order in some respects.
In pursuance of that order, a masonry anicut known as the Chennur anicut was constructed in 1944, the details whereof were stated in exhibit A 6 and summarised in paragraph 11 of the plaint.
With those details we are not at present concerned, except merely to state that the anicut consisted of two portions : a 'free ' portion 61 feet long on the west and a 'fixed ' portion about 11.
4 feet long, the free portion to be kept fully planked only when the river was in flood with a view to divert surplus water to Chennur tank and was not to be planked until the Gudur anicut was "surplusing".
The appellants alleged that the Chennur ryots did not stick to the arrangements made as a result of G. O No. 1161 dated May 6, 1939, but renewed their attempts for getting a larger supply of water from Venkatagiri river and the appellants came to know that behind their back and without notice to them, the State Government passed another order in 1952 in which they directed (i) the extension of the Chennur anicut by another 46 feet.
, (ii) removal of the dam stones and planks altogether and the construction of a permanent masonry wall over the crest of the anicut to the entire length of 175 feet, (iii) raising the height of the wall by 3 feet more, and (iv) installation of three vents with screw gearing shutters for the flow of water down the Chennur anicut.
The appellants alleged that this would seriously affect their accustomed right to the supply of water from 312 Venkatagiri river under the "Gudur anicut system" and practically deprive them of water during the low supply and spring periods.
They, therefore, prayed for a decree (a) declaring that the defendant has no right in the circumstances stated above to alter or extend or add to the Chennur anicut over Venkatagiri river at Gollapalli in any manner whatsoever; (b) for costs of the suit ; and (c) and for such other and further reliefs as in the circumstances the court may deem fit and proper in the circumstances.
They specifically said in the plaint that it was not necessary to ask for a permanent injunction "as the defendant (meaning the State of Andhra Pradesh) was bound and certain to give effect to the declaration granted by the court".
At first, the State of Andhra Pradesh was the only defendant.
Certain other defendants, presumably ryots of Chennur, were made parties defendants on a later date.
We have given above a summary of the case of the appellants as alleged in the plaint.
A written statement was filed by the State of Andhra Pradesh, as also by the 4th defendant, in which it was averred that the proposed alterations to the Chennur anicut would not injuriously affect the rights of the appellants and certain details were given as to the flow of water in the river at different times.
As we are no deciding this case on merits, we are not proposing to enter into those details.
By a supplemental written statement the defendant State, respondent before us, took the plea that section 4 of the Act was a bar to the entertainment of the suit.
This plea was taken up for trial as a preliminary issue.
The trial court held in favour of the State.
An appeal to the District 313 judge failed and so also a Second Appeal to the High Court.
The points which have been urged on behalf of the appellants are these : (1)The provisions of section 3 (1) of the Act are restricted to effecting improvements to a tank as defined in s.2 (d), and such improvement covers, for example, raising the height or increasing the width of the band, or lengthening the wear, or extending the bed of the tat*; it may even extend to improving the supply channel but does not go any further ; the State Government in proposing the alterations in the Chennur anicut arc proposing to do something which is in excess of the powers given by section 3 (1) and, therefore, section 4 does not bar the entertainment of the suit of the appellants.
(2)On any view, section 4 bars the entertainment of a suit for the issue of an injunction to restrain the exercise of powers conferred on the Government by section 3 (1); the present suit is not a suit for injunction and the appellants have specifically said that they do not ask for an injunction; therefore, section 4 is no bar.
(3)The State Government did not purport to act under section 3 (1) when they passed G. O. Ms. 53 F. and A (F.P.) dated February 15, 1952, and as they did not issue a notice as required by r. 5 of the Madras Irrigation Tanks (Improvement) Rules, 1050, the action proposed to be taken by them cannot come under section 3 (1); therefore, section 4 does not apply.
(4)Section 3 (1) is ultra vires the Constitution and section 4 must fall within s.3.
We shall now proceed to consider these points one by one.
Earlier in this judgment, we have read section 4 of the Act.
That section is closely connected 314 with sub section
(1) of s._3 and we may now set out that sub section.
"section 3 (1) Notwithstanding anything contained in any other law for the time being in force, the Government shall have power to raise the full tank level of any tank or to take any other measures for increasing its capacity or efficiency, wherever it may be situated and whether in a ryotwari, zamindari, inamdari or other area.
" It will be useful if we briefly refer here to the preamble and some of the other provisions of the Act in order to show what is the object or purpose of the Act.
The long title of the Act shows that it is an Act "to empower the State Government to increase the capacity and efficiency of irrigation tanks in the State of Madras.
" The preamble also states : "Whereas it is expedient to empower the State Government to increase the capacity and effi ciency of irrigation tanks in the State of Madras;. " Section 2(d) of the Act defines a tank to mean an irrigation tank in the State of Madras.
Then come ss.3 and 4 which we have already quoted.
Section 5 deals with the payment of compensation where, in consequence of anything done in pursuance of section 3, the owner of any land or property sustains loss or damage including any diminution of the supply of water to any land or any tank or other source from which water is supplied.
The compensation is to be determined in the manner laid down in s.5.
Section 6 provides for an appeal against the Order of the Collector under section 5 to the Subordinate Judge 's court having jurisdic tion over the area in which the land or property for the damage to which compensation is to be paid is situated.
Section 7 deals with the power to make rules and one of the rules, viz., rule 5 of the Madras Irrigation Tanks (Improvement) Rules, 1950, made in pursuance of that power will be considered by us later.
315 Very briefly put, the object of the Act is to increase the capacity and efficiency of irrigation tanks in the State of Madras and section 3 (1) gives the State Government power to take measures for the purpose of increasing the capacity or efficiency of irrigation tanks, whether the irrigation tanks be situated in a ryotwari, zamindari, inamdari or other area.
Obviously, the purpose is to increase facilities for irrigation of agricultural lands from irrigation tanks.
Now,, there is no dispute before us that the Chennur tank as well as the four tanks from which the appellants get a supply of water for irrigating their lands are irrigation tanks within the meaning of the Act.
The controversy before us has centered round the expression "to take any other measures for increasing its capacity or efficiency.
" The expression "its capacity or efficiency" undoubtedly means the capacity or efficiency of the irrigation tank in ques tion which, in this case, is the Chennur tank.
The word 'capacity ' in its ordinary dictionary sense means "holding power" or "receiving power" and must, we think, depend on the cubic content of the tank.
Learned counsel for the respondent State has conceded before us that the proposed alterations in the Chennur anicut do not increase the capacity of the Chennur tank.
He has however very strongly contended that the proposed alterations in the Chennur anicut will increase the efficiency of the Chennur tank by making a larger supply of water available within the holding power of the tank.
He has also contended that there is no reason why a narrow interpretation should be put on section 3 (1) so as to restrict the improvement measures to the width, breadth or depth of the tank or its supply channel only.
He has submitted that if by the proposed 'alterations in the Chennur anicut there is a, larger supply of water to the Chennur tank through its supply channel, then the measures which 'the State Government are proposing to take are undoubtedly measures 'for increasing the efficiency of 'the Chennur tank.
Learned counsel for the appellants, 316 on the other hand, has submitted that the word `efficiency ' read in the context of the definition clause in section 2 (d), means only efficiency in the distribution of water from the tank itself.
The same contentions were urged in the High Court also and, dealing with these contentions, the learned Chief justice said : ""The efficiency of a tank depends in a large measure upon the quantity of Water that is available for irrigation purpose.
Without sufficient volume of water, a tank could not fulfill the purpose for which it was dug.
Therefore, it should have sufficient quantity of water to maintain 'its efficiency '.
To construe it in the manner suggested by the counsel for the appellants is to deprive these words of a part of their content.
" We are in agreement with the view thus expressed by the learned Chief justice.
Learned counsel for the appellants has submitted that the Chennur tank and its supply channel only can be the objects of improvement measures by the State Government, but not the Chennur anicut on the Venkatagiri river.
We are unable to agree and see no reason why such a narrow construction should be put on sub section
(1) of section 3.
The supply channel to the Chennur tank takes off water from the Venkatagiri river and it starts from near the Chennur anicut.
It is obvious that if the supply channel does not supply sufficient water to the tank, then the tank loses its efficiency.
If the supply of water is increased, then the efficiency of the tank is also increased.
The proposed alterations in the Chennur anicut are intended to increase the volume of water which will go through the supply channel to the Chennur tank and in that sense, the measures proposed to be taken are measures to improve the efficiency of the Chennur tank.
A question was mooted before us as to how far the State Government can go up the river in order to improve the Chennur tank.
Perhaps, the answer to that question is that 317 the improvement measures proposed to be taken must have a direct and proximate relation to the tank, the efficiency of which is ' to be increased.
The State Government cannot go up the river to a distance of several miles and take measures which have no direct or proximate relation to the tank in question.
In the case before us, however, the supply channel to the Chennur tank emanates from the very place where the Chennur anicut has been made.
Obviously, therefore, the Chennur anicut is meant for the purpose of feeding the supply channel to the Chennur tank.
The connection is both direct and proximate.
We are, therefore, of the opinion that the view concurrently taken by the courts below is the correct view and the measures which the State Government are proposing to take in the matter of improving the Chennur anicut are measures which come within section 3 (1) of the Act.
The first contention urged on behalf of the appellants must therefore be overruled.
counsel for the appellants wished to read from the speeches made by some of the members of the State legislature and the answers given by the Minister piloting the Bill, in order to show that section 3 (1) was not intended to cover alterations to an 'anicut '.
It is, however, well settled and this court has so ruled in more than one decision, that legislative proceedings cannot be referred to for the purpose of construing an Act or its provisions, though such proceedings may be relevant for the proper understanding of circumstances under which the legislation was passed and the reasons which necessitated it.
Learned counsel for the appellants has also referred to the provisions of the Madras Irrigation Works (Repairs, Improvement and Construction) Act, 1943 (Mad. XVII of 1943) and submitted that those provisions authorised the Government to repair or improve irrigation works or construct new irrigation works.
This contention was also considered by the learned Chief Justice, and he 318 rightly pointed out that the scope of the two statutes was different : one dealt with private irrigation works and the other with improvement of irrigation tanks situate in a ryotwari, zamindari, inamdari, or other area and furthermore, the proposed alterations in the Chennur 'anicut ' would not amount to improvement of any irrigation work within the scope of the 1943 Act.
We proceed now to a consideration of the second point.
Here again, we think that the courts below are right.
It is indeed true that the appellants did not formally ask for an injunction; but , in effect, what they asked for was a declaration which they said the State Government must obey and. would be thus restrained from exercising the powers conferred on it by section 3 (1).
We agree with the courts below that having regard to the pleadings and the reliefs asked for, the suit was in reality a suit for restraining the State Government from exercising its powers under section 3, though framed in such a manner as to give the appearance of a suit for mere declaration.
In our opinion, it would be a circumvention of section 4 to entertain a suit of this nature.
Under section 42 of the Specific Relief Act, any person entitled to any right as to any property may institute a suit against a person denying such right, and the court may, in its discretion, make therein a declaration that he is so entitled; but no court shall make a declaration which would be futile, assuming that by reason of section 4 of the Act the appellants are prohibited by law from asking for an injunction.
If, on the contrary, the State Government be bound by the declaration asked for (if granted by the Court) as is pleaded by the appellants, then the effect would be to restrain the State Government from exercising its powers under section 3(1) of the Act.
If that be the true nature of the reliefs asked for by the appellants, section 4 would undoubtedly apply and the entertainment of the suit would be barred under that section.
Learned counsel for the 319 respondents suggested an alternative submission for our consideration.
He attempted to construe section 4 in such a way as would, in his view, bar even a suit for declaration against the State Government.
This construction introduced into the section a number of words which do not occur there and dissected 'the section in a way not warranted by the plain words used therein.
We have come to the conclusion that the somewhat novel reconstruction of section 4 attempted by learned counsel for the respondent State does not merit any further examination and we prefer to rest our decision as to the second point on the finding concurrently arrived at by the courts below.
As to the third point, it may be disposed of on a very short ground.
The High Court has rightly pointed out that the order dated February 15, 1952, (exhibit B 1) was based on the communication of the Board of Revenue dated April 8, 1950 (exhibit B 10) and that communication states clearly enough that Government was advised that it could take action under section 3 (1) of the Act.
Obviously., therefore, it is not correct to say that Government did not purport to exercise its powers under section 3(1) as the order (exhibit B 1) did not mention it.
If the entire proceeding is considered, it is clear that Government was purporting to act under the powers given to it by section 3 (1).
Rule 5 of the Madras Irrigation Tanks (Improvement) Rules, 1950 states: " 'A notice specifying the nature of the improvement to be effected under section 3 and the probable cost thereof, according to the technical plan and estimate, shall, in all cases, be polished or caused to be published by the Collector of the district.
The notice shall be in form B. Such publication shall be (1) in the District Gazette; 320 (2) by affixture at the site of the proposed work; (3) by affixture in the village Chavadi in the village or villages where the lands under ayacut of the tank and the lands proposed to be benefitted under the work are situated; and (4) by beat of tom tom in the said village or villages.
" The argument based on this rule is that the notice required by it in not having been published, it must be held that the State Government.
did not purport to act under section 3; secondly, the rule being mandatory in nature, failure to publish the notice as required by the, rule invalidates the order of the State Government dated February 15, 1952, (exhibit B 1).
We are unable to accept either of these two contentions as correct.
We have already pointed out earlier that exhibit B 10 on which exhibit B 1 is based, shows that the State Government was proposing to exercise its powers under section 3 (1) and asked the Board of Revenue "to get suitable rules and regulations made.
" Secondly, the High Court rightly pointed out that the proposed action had not been taken when the appellants filed their suit and there was still time for the State Government to publish the notice under r. 5.
In this view of the matter, it is unnecessary to determine at this stage whether r.5 is mandatory or merely directory, and we do not think that non publication of the notice in the circumstances can stand in the way of the application of section 4 of the Act.
As to the fourth and last point, it is sufficient to point out that the validity of section 3(1) was not challenged in any of the courts below and in an appeal by special leave, counsel for the appellants cannot be allowed to take a point which was not urged before.
321 For the reasons given above, we would dismiss this appeal with costs.
We may, however, point out that Narasimham, J., in the course of his judgment made some observations regarding the merits of the claim of the appellants which were not justified and may prejudice the appellants in subsequent proceedings.
The learned judge said that it was not correct to say that the appellants would suffer diminution of water supply by reason of the proposed alterations in the Chennur anicut; and furthermore that the proposed measures would augment the supply of water to both Chennur ryots and Gudur ryots.
Perhaps, the learned judge forgot that he was not dealing with the case on merits.
The only point before him was whether section 4 barred the entertainment of the suit.
We must therefore say that the learned Judge 's observations on the merits of the claim of either party were premature and not necessary for determination of the only issue which was before the court.
Appeal dismissed.
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The lands of village Gudur were irrigated by tanks which received water from the Venkatagiri river through the "Gudur anicut system".
The Government proposed to make alterations in the Chennur anicut up the river for supplying water to the Chennur tank for irrigating lands of village Chennur.
The residents of village Gudur filed a suit for a declaration that the Government had no right to alter or extend or add to the Chennur anicut over the river, and stated in the plaint that it was not necessary to ask for a permanent injunction as the Government was bound to give effect to the declaration granted by the Court.
Held, that the suit was barred by section 4 of the Madras irrigation Tanks (Improvement) Act, 1949.
Section 4 provided 309 that no court shall entertain any suit for an injunction to restrain the exercise of any powers conferred on Government by section 3.
Section 3 empowered the Governtnent to "raise the full tank level of any tank or to take any other measures for increasing its capacity or efficiency".
The proposed alterations were within section 3 as they would increase the efficiency of the Chennur tank by making a larger supply of water available within the holding power of the tank.
It was not correct to say that section 3 only authorised improvements in the tank itself or in the supply channels from the tank but not in the anicut.
Though the plaintiffs did not formally ask for an injunction, the suit, in effect, was one for an injunction to restrain the Government from exercising its powers under section 3.
It is clear that the action proposed to be taken by Govern ment was under the powers given under s.3.
The mere fact that no notice as required by r. 5 specifying the nature of the improvement, its cost etc.
was issued did not indicate that the action was not under section 3 nor did it invalidate the order proposing the improvement.
The proposed action had not been taken when the suit was filed and there was still time to publish the notice.
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**Court Case Summary**
The Andhra Pradesh High Court, Hyderabad, in Second Appeal No. 428 of 1959, had dismissed a suit brought by the appellants, A.V. Viswanatha Sastri and T.V.R. Tatachari, against the State of Andhra Pradesh and others, regarding the proposed alterations to the Chennur anicut on the Venkatagiri river. The appellants alleged that the alterations would affect their accustomed right to the supply of water from the river under the "Gudur anicut system". The State Government had passed an order, G.O. No. 1161 dated May 6, 1939, to construct a masonry anicut, and later, another order, G.O. Ms. 53 F. and A (F.P.) dated February 15, 1952, to extend and modify the anicut.
The appellants contended that the proposed alterations did not come within the powers granted by Section 3(1) of the Madras Irrigation Tanks (Improvement) Act, 1949, and that Section 4 of the Act barred the entertainment of the suit. However, the courts below held that the proposed alterations were measures to improve the efficiency of the Chennur tank and came within the powers granted by Section 3(1). The Supreme Court also agreed with this view and held that the proposed alterations were measures to improve the efficiency of the Chennur tank.
**Judgment and Decision**
The Supreme Court dismissed the appeal of the appellants with costs, holding that the proposed alterations to the Chennur anicut were within the powers granted by Section 3(1) of the Madras Irrigation Tanks (Improvement) Act, 1949. The Court also held that Section 4 of the Act barred the entertainment of the suit, as the suit was essentially a suit for restraining the State Government from exercising its powers under Section 3(1).
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Civil Appeal No. 2150 of 1968.
(Appeal by Special Leave from the Judgment and Order dated 5.9.1968 of the Punjab & Haryana High Court in L.P.A. No. 458/68).
V.C. Mahajan, Hardev Singh and R.S. Sodhi, for the appel lant.
O.P. Sharma, for the respondents 1 and 2.
K.R. Nagaraja and P.N. Puri, for respondent No. 3.
The Judgment of the Court was delivered by BEG, C.J.
This appeal under Article 136 of the Consti tution is directed against a very detailed Judgment of the Punjab & Haryana High Court on a Writ Petition No. 1875 of 1965 filed under Articles 226 and 227 of the Constitution, assailing an order of the Additional Director, Consolidation of Holdings, passed on 8 June, 1965.
A perusal of that order, together with the earlier order of 4 May, 1965, and the application for restoration dated 15 May, 1965, filed by Gurdev Singh, respondent No. 3, shows: Gurdev Singh, who had 370 some complaint against the Consolidation Scheme, was not present so that his petition was ordered to be filed by the Additional Director, Consolidation on 4 May, 1965.
Gurdev Singh, soon thereafter i.e. on 15 May, 1965, filed an appli cation for restoration supported by an affidavit, attribut ing his absence on 4 May, 1965, to his illness.
The. order dated 8 June, 1965, of the Additional Director, shows that the applicant Gurdev Singh 's assertion that he could not attend due to illness, over which he had no control, was accepted by the Additional Director, who proceeded to exer cise his powers under section 42 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (hereinafter referred to as the Act) and to set right the grievance of the applicant, Gurdev Singh, after going into all the relevant records.
The learned Judge of the High Court, who heard the petition also went through the records very carefully, came to the conclusion that an assertion of rights by the petitioner/ appellant, a member of the Sanjam Group, merely because of some report contained in the "Fard Badar," could not take away the effect of entries in the revenue records.
The learned Judge held that no injustice was caused to the petitioner/appellant also, there was no ground for interference under Article 226 of the Constitu tion.
The learned counsel for the appellant has relied upon the case of Harbhajan Singh vs Karam Singh& Ors.
reported in ; , where this Court held that the Addl.
Director exercising the powers of the State Government has no jurisdiction under section 42 of the Act to review his previous order.
Section 42 of the Act runs as follows: "The State Government may at any time for the purpose of satisfying itself as to the legality or propriety of any order passed, scheme prepared or confirmed or repartition made by any officer under this Act, call for and examine the record of any case pending before or disposed of by such officer and may pass such order in reference thereto.
as it thinks fit: Provided that no order or scheme or repar tition shall be varied or reserved without giving the parties interested notice to appear and opportunity to.
be heard except in case where the State Government is satisfied that the proceedings have been vitiated by unlawful consideration.
" The proviso to Section 42 lays down that notice to interested parties to appear and opportunity to be heard are conditions precedent to passing of an order under Section 42.
The fact that the Additional Director was satisfied that the respondent, Gurdev Singh, did not have an opportu nity of being ,heard due to his illness, seems to us to amount to a finding that the proviso.
could not be complied with so that the previous order could not be held to be an order duly passed under Section 42 of the Act.
It could be ignored as "non est.
" The view taken in Harbhajan Singh 's case (supra) would not apply to the 371 instant case although Section 42 of the Act does not contain a power of review.
Orders which are 'non est ' can be ignored at any stage.
On the facts and circumstances of this case, we think that this is not a fit case for interference under Article 136 of the Constitution.
The appellant, if he has acquired any rights by reason of long possession, can assert them whenever any proceedings are taken before a competent au thority to dispossess him.
What we have held here or whatever has been held by the High Court will not affect such other rights, if any, as the Appellant may have ac quired by reason of possession.
We do not know and refrain from deciding who is actually in possession and for how long and in what capacity.
This appeal is dismissed.
Parties will bear their own costs.
_ P.H.P. Appeal dismissed.
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Gurdev Singh had certain complaints about the Consolida tion Scheme.
He was not present when his application was being considered.
Therefore, the application was dis missed by the Additional Director, Consolidation.
Thereaf ter, Gurdev Singh respondent No. 3 filed an application for restoration supported by an affidavit attributing his ab sence to his illness.
The Additional Director accepted the ground of respondent No. 3 about illness and granted necessary relief to him.
The appellant filed a writ.peti tion in the High Court under Articles 226 and 227 of the Constitution.
The High Court held that the assertion of rights by the appellant merely because of some report con tained in the "Fard Badar" could not take away the effect of the entries in the revenue records The High Court also held that no injustice was caused to the appellant and, there fore, there was no ground for interference under Article 226.
In an appeal by Special Leave, the appellant contended that the Additional Director had no power to review his previous order.
The power to review conferred by section 42 of the Act has to be exercised only after hearing the interested parties.
Since respondent No. 3 was not given an opportunity of being heard on account of his illness, it shows that the order passed was non est and can be ignored at any stage.
The court dismissed the appeal on the ground that this was not a fit case for interference under Article 136.
the Court, however, observed that if the appellant has any right on account of long possession or otherwise he can assert them by adopting proper proceedings and that his rights would not be affected by whatever is stated m the Judgment of this Court as well as the High Court.
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Here's a two-paragraph summary of the court case:
The Punjab & Haryana High Court, in a writ petition filed under Articles 226 and 227 of the Constitution, had held that an order passed by the Additional Director, Consolidation of Holdings, setting right a grievance of one Gurdev Singh, was valid. Gurdev Singh had filed a complaint against a consolidation scheme but was absent on the day of the hearing due to illness. He later submitted an affidavit attributing his absence to illness and the Additional Director accepted his assertion and exercised his powers under Section 42 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948.
The High Court's decision was upheld by the Supreme Court in this appeal, despite the appellant, a member of the Sanjam Group, relying on a previous case, Harbhajan Singh vs Karam Singh & Ors., which held that the Additional Director has no jurisdiction to review his previous order under Section 42 of the Act. The Supreme Court found that the proviso to Section 42, which requires notice to be given to interested parties and an opportunity to be heard, was not complied with in this case due to Gurdev Singh's illness, making the previous order "non est" which can be ignored at any stage. The appeal was dismissed and the parties were ordered to bear their own costs.
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Petitions (Civil) Nos.
5117/ 81, 7340/81, 3656 84/82, 6381 82, 6951 52/82, 8010 19/82, 8108 11/82, 90 19 20/82, 5241 60/83, 1734 35/83 and 559 560/83.
(Under Article 32 of the Constitution of India).
B. Kanta Rao for the Petitioners.
C. Seetharamiah, T.V.S.N. Chari, Ms. Vrinda Grover, Ch.
Badri Nath, A.K. Sanghi, G.S. Chatterjee P.N. Mishra, A.V Rangam, Pramod Swarup, D. Goburdhan and M.N. Shroff for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
W.P.
Nos: 5117/81, 3656 84/82, 5241 5260/83.
& 7340/81 These four batches of Writ Petitions challenge the imposition of sales tax on bread, rusk and bun under the A.P. Sales Tax Act 1957 as illegal.
The main and the first contention was that the bread and biscuits belong to one homogeneous class but these have been differently treated for taxation under Schedule I, Item No. 117 and Schedule I, Item No. 129 of the said Act.
In other words, the contention of the petitioners is that the bread and biscuits are the same, they should not be differently taxed.
The purchasers and sellers of bread and biscuits have been differently taxed In support of this contention reliance was placed on certain decisions of this Court, namely: State of Andhra Pradesh & Anr.
vs Nalla Raja Reddy & Ors., ; ; New Manek Chowk Spinning and Weaving Mills Co. Ltd. and Ors.
vs Municipal Corporation of the City of Ahmedabad and others; , We do not find any proposition in those decisions in support of this contention of the petitioners.
The decision of the Allahabad High Court in Annapurna Biscuit (Mfg.) Co. and Another vs The State of U.P. and Another, [1975] 35 S.T.C. 9 127 does not deal with this contention at all.
A The second contention sought to be raised was that the multiple point tax violates Article 19(1)(g) of the Constitution.
The petitioners being Bakeries, this contention is not open to the petitioners.
The third contention sought to be raised was that excise duty and sales tax are imposed on the same items.
This also does not arise in the case of the petitioners who are Bakeries.
Apart from that the taxable events in these two impositions are different.
So this contention cannot in any event be raised.
The fourth contention sought to be raised was the surcharge.
This point in our opinion does not arise.
Furthermore this point is concluded by the observations of this Court in the case of Hoechst Pharmaceuticals Ltd and Another Etc.
vs State of Bihar and others, [1983] 3 S.C.R. 130.
Indeed all these contentions raised on behalf of the petitioners have been negatived by this Court in the aforesaid decision.
We reiterate that the economic wisdom of a tax or lack of it are within the exclusive domain of the legislature.
The only question for the Court to consider it whether there is rationality in that behalf of the legislature that capacity to pay the tax increases by and large with an increase of receipts.
From any point of view there is rationality in this proposition.
It is sound commonsense.
It is in consonance with social justice to which we are committed by our Constitution.
In that view of the matter the challenge to the imposition under Article 14 as well as Article 19(1)(g) of the Constitution are not sustainable.
These Writ Petitions must fail and are dismissed accordingly.
There will be no order as to costs.
Interim orders, if any, are vacated W.P. Nos.
6381 82/82, 6951 52/82, 8010 19/82 8108 11/82, 9019 20/ 82, 1734 35/83 & 559 560/83.
In view of the Judgment in W.P. Nos. 5117/81, 3656 84/82, 524 1 5260/83 and 7340/8 1, these petitions must also fail and are accordingly dismissed.
There will be no order as to costs.
N.P.V. Petitions dismissed.
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% In a batch of Writ Petitions filed in this Court the petitioners challenged the imposition of sales tax and surcharge on bread, rusk and bun under the A.P. Sales Tax Act, 1957 as illegal, contending that bread and biscuits belonged to one homogeneous class but had been treated differently for purposes of taxation under Schedule 1, Item No. 117 and Item No. 129 of the Act, that the purchasers and sellers of bread and biscuits had been differently taxed, and that the multiple point tax violated Article 19(1)(g) of the Constitution.
Dismissing the writ petitions, ^ HELD: The economic wisdom of a tax or lack of it are within the exclusive domain of the legislature.
The only question for the Court to consider is whether there is rationality in that behalf of the legislature that capacity to pay the tax increased by and large with the increase of receipts.
From any point of view, there is rationality in this proposition.
It is sound commonsense and is in consonance with social justice.
Therefore, the challenge to the imposition, under Article 14 as well as Article 19(1)(g) of the Constitution is not sustainable.
[9D F] State of Andhra Pradesh & Anr.
vs Nalla Raja Reddy & Ors. ; ; New Menek Chowk Spinning and Weaving Mills Co. 8 Ltd. and Ors.
vs Municipal Corporation of the City of Ahmedabad and others.
; , ; Annapurna Biscuit (Mfg.) Co. and Another vs The State of U.P. and Another, [1975] 35 S.T.C 127 and Hoechst Pharmaceuticals Ltd. and Another Etc.
vs State of Bihar and others, , referred to.
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In this case, the petitioners (bakeries and biscuit manufacturers) challenged the imposition of sales tax on bread, rusk, and buns under the Andhra Pradesh Sales Tax Act, 1957. They argued that bread and biscuits are part of a homogeneous class and should not be taxed differently. However, the court rejected this contention, citing that the decisions of the Supreme Court did not support this argument and that the Allahabad High Court's decision in Annapurna Biscuit (Mfg.) Co. vs State of U.P. did not address this issue.
The court also considered the petitioners' additional contentions, including that the multiple point tax and excise duty violate Article 19(1)(g) of the Constitution, but ruled that these contentions are not open to the petitioners who are bakeries. Furthermore, the court found that there is rationality in taxing bread and biscuits differently, as the capacity to pay tax increases with an increase in receipts. Therefore, the court dismissed the writ petitions, holding that the imposition of sales tax on bread, rusk, and buns under the Andhra Pradesh Sales Tax Act, 1957 is constitutional and valid.
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Appeal No. 812 of 1973.
From the Judgment and Order dated 18.2.1970 of the Allahabad High Court in Spl.
Appeal No. 1032 of 1968.
G.L. Sanghi, K.K. Jain, Pramod Dayal, A.D. Sangar and Bishambar , Lal for the Appellant.
Gopal Subramanium and Mrs. Shobha Dikshit for the Respond ents.
The Judgment of the Court was delivered by THAKKAR, J.
The appellant invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution of India in order to challenge the order passed by the respondent U.P. Electricity Board levying a sur charge of 5.5 paise per unit of electricity drawn by the appellant in excess of the permissible 70 per cent autho rised by the State Government.
State Government had imposed a ban on drawing electricity in excess of 70% per cent of the consumption in exercise of powers under Section 22B of the of 1910 having regard to the fact that on account of short fall of rain the generation of electricity had been adversely affected and it was not possible to supply electricity to the consumers as per the demand.
The learned Single Judge of the High Court dismissed the Writ Petition inter alia on the 333 ground that the equities were against the appellant (writ petitioner) in view of the fact that the respondent Board had purchased electricity from the Damodar Valley Corpora tion (D.V.C.) at the rate of 4.57 per unit in order to make available the electricity as per the demand of the appellant and other industrial units at their request.
Says the learned Single Judge: "It appears to me that there are no equities in favour of the petitioner, and on this ground also, the petitioner is not entitled to any relief.
The petitioner factory and other industries had requested the State Government and the Board to augment supply of electrical energy by obtaining it from the Damodar Valley Corporation and other sources and has offered to pay additional expenses which the State Government or the Board might have to incur for it.
In order to accommodate the petitioner factory and other industries the State Gov ernment and the Board did not exercise the power to disconnect their connections and obtained electrical energy from the Damodar Valley Corporation and had to pay certain sums of money therefore.
They were certainly enti tled to recover those amounts from the peti tioner factory and other 'industries.
It does not lie in the mouth of the petitioner now to say that the Board is not entitled to levy a surcharge for recovery of the amount which they have spent in obtaining extra electrical energy from the Damodar Valley Corporation".
The Division Bench has confirmed the decision of the learned Single Judge.
Two contentions have been urged in support of this appeal.
The first contention is that the Electricity Board had no authority to charge 5.5 paise per unit in excess of the agreed rate without giving one month 's notice as contem plated by the agreement.
The second contention is that the levy of the surcharge resulted in a retrospective levy and therefore, it was not in accordance with law.
So for as the principal contention is concerned we are unable to accede to the submission that the Board had no legal authority to levy 5.5 paise surcharge in respect of the supply in excess of the 70 per cent authorised by the, State Government.
The agreement itself does not envision the supply of electricity in violation of the ban imposed by the State Government in exercise of the power under section 22 B of the .
Nor does the agreement stipulate the rate at which such supply should be charged if not withstanding the ban against the supply, a consumer draws electricity in excess of the 334 permissible quantity.
Thus the agreement is silent on this aspect.
Therefore, the Board was justified in invoking its power under section 49(3) of the Electricity Supply Act, 1948 which authorises a Board to supply electricity by charging a different tariff having regard to the geographi cal position of the area, the nature of the supply, purpose for which the supply is required and 'any other relevant factors: Section 49 (3) of the Act is wide enough to cover a situation where electricity in excess of the authorised quantum is drawn in disregard of the ban imposed in view of the shortage of the supply position in the face of the ban imposed under Section 22 B of the as also to cover a situation where at the express request of the appellant (as per the averment contained in the affidavit filed on behalf of the respondent) electricity is purchased from some other authority (in the present ease from D.V.C.) and is supplied to the consumers.
We are, therefore, of the view that the electricity Board had the legal authority to levy and collect surcharge of 5.5 paise per unit from the appellant in regard to the supply in excess of the 70 per cent authorised in the context of section 22 B of the .
We are buttressed in this view by a decision of this Court in Adoni Cotton Mills etc.
vs The Andhra Pradesh State Electricity Board & Ors., [1977] 1 S.C.R. page 133.
In Adoni Cotton Mills 'case the view has been taken that the power to enhance the tariff is included in section 49 of the 1948 Act and that section 49(3) authorises a Board to fix different tariffs for the supply of electricity having regard to the geographical position etc and any other relevant factors.
The expression 'any other relevant factors ' is not to be construed ejusdern generis and that the combined effect of Section 49 and the terms and conditions of supply is that having regard to the nature of supply and other relevant factors particularly when there is shortage of electricity the Board has the power to enhance the rates.
If there is shortage of electricity there is to be restriction on supply and the Board can disconnect supply if the quota is exceed ed.
The Board can also impose higher rates if the quota is exceeded.
The imposition of higher rates is only to "sanc tion the rigour of ration by making persons who exceed the quota liable to pay higher rates.
" We are, therefore, of the opinion that so far as the first point is concerned the view taken by the High Court cannot be taken exception to.
With regard to the retrospective effect argument, the electricity was supplied from November, 1966 till February 20, 1967 on which date the notification imposing the levy was issued.
It was, therefore, urged that so far as the period anterior to February 20, 1967 is concerned the effect of the levy would be retrospective.
The High Court 'has taken the view that it does not amount to making the tariff retrospective but the effect of the notification is to recover the surcharge in respect of the energy which was supplied in excess of the permissible quota.
It was also urged on behalf of the re spondents that in so far as the period anterior to February 20, 1967 was concerned the appellant was not entitled to make the recovery as it would amount to altering the tariff.
This argument was advanced in the context of the stipulation in the agreement that 335 one month 's notice would be given before increasing the tariff.
Since we are of the view that the Board had the statutory authority to impose the surcharge in respect of the electricity supplied in excess of the permissible quota and having regard to the fact that the supply was made after obtaining it from the D.V.C. at a higher rate and having further regard to the fact that the impost of the surcharge is construed as having been made under the statutory author ity the stipulation in the agreement does not come into play.
Under the circumstances, we do not see any good ground to disturb the findings recorded by the High Court.
The appeal therefore, fails and is dismissed.
There will be no order as to costs.
A.P.J. Appeal dismissed.
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The Appellant Company, in a writ petition, challenged the order passed by the respondent Electricity Board levy ing surcharge of 5.5 paise per unit on electricity drawn by the Company in excess of the permissible 70% authorised by the State Government.
The writ petition having been dis missed by a Single Judge of the High Court and the Division Bench having confirmed the decision, the appellant appealed to this Court.
In the appeal, it was contended; (i) that the Electrici ty Board had no authority to charge 5.5 paise per unit in excess of the agreed rate without giving one month 's notice as contemplated by the agreement; and (ii) that the levy of the surcharge resulted in retrospective levy and was there fore not in accordance with law.
Dismissing the appeal, HELD: 1.
The Electricity Board had the legal authority to levy and collect surcharge of 5.5 paise per unit from the appellant in regard to the supply of electricity in excess of the 70% authorised in the context of section 22 B of the .
[334 C] 2.
The agreement itself does not envision the supply of electricity in violation of the ban imposed by the State Government in exercise of the power under section 22B of the Act.
[333 G H] 3.1 Section 49(3) of the Electricity Supply Act autho rises a Board to supply electricity by charging different tariff having regard to the geographical position of the area, the nature of the supply, purpose for which the supply is required and any other relevant factors, and is wide enough to cover a situation where electricity in excess of the authorised quantum is drawn in disregard of the ban imposed in view of the shortage of the supply under section 22 B of the as also to cover a situation where at the express request of 332 the consumer electricity is purchased from some other au thority and is supplied.
[334 D, B] 3.2 The combined effect of s.49 and the terms and condi tions of supply is that having regard to the nature of supply and other relevant factors particularly when there is shortage of electricity the Board has the power to enhance the rates.
If there is shortage of electricity there is justification to impose restriction on supply.
The Board can also impose higher rates by way of sanction if the quota is exceeded.
[334 E] Adoni Cotton Mills etc.
vs The Andhra Pradesh State Electricity Board and Others, ; , relied upon.
In the instant case, having regard to the fact that the supply was made after obtaining it from the Damodar Valley Corporation at a higher rate and having further regard to the fact that the impost of the surcharge is construed as having been made under the statutory authority, the stipula tion in the agreement does not come into play.
[335 A B]
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Here's a two-paragraph summary of the court case:
The Allahabad High Court dismissed a writ petition filed by the appellant, challenging the surcharge of 5.5 paise per unit of electricity levied by the U.P. Electricity Board in excess of the 70% authorized by the State Government. The Board had imposed this ban due to a shortfall in electricity generation caused by lack of rain. The Single Judge and the Division Bench of the High Court held that the equities were against the appellant, as the Board had obtained electricity from another source at a higher rate and supplied it to the appellant and other industrial units at their request.
The Supreme Court, in dismissing the appeal, upheld the decision of the High Court. It held that the Electricity Board had the statutory authority to impose the surcharge under Section 49(3) of the Electricity Supply Act, 1948, which authorized the Board to fix different tariffs for the supply of electricity having regard to geographical position, nature of supply, and other relevant factors. The Court also rejected the argument that the surcharge was retrospective, as it was only a recovery of the higher rate paid for the excess electricity supplied to the appellant.
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vil Appeal No. 10030 of 1983.
From the Judgment and Order dated 6.9.1983 of the Madhya Pradesh High Court in S.A. No. 475 of 1977.
A.B. Rohtagi and S.K. Gambhir for the Appellant.
V.M. Tarkunde and S.V. Deshpandey for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
This appeal is directed against the decree of the Madhya Pradesh High Court for eviction of the appellant from a house after holding him to be the respondents ' ten ant.
The appellant denied the title of the plaintiffs and their case that he has been in possession of the property as their tenant.
The trial court accepted the plaintiffs ' case and passed a decree in their favour, which was set aside on appeal by the first appellate court.
The decision was re versed by the High Court in second appeal by the impugned judgment.
Admittedly the house which was in possession of the defendant 's father Misri Lal as a tenant belonged to one Smt.
Raj Rani who sold the same on 11.8.1952 to the plain tiffs ' predecessor ininterest, Navinchand Dalchand.
In 1959 a suit for his eviction was filed by Navinchand, which was resisted on the ground that Smt.
Raj Rani had earlier trans ferred the house to a trust and she, therefore, could not later convey any title to Navinchand.
The trial court re jected the defence and passed a decree against which Misri Lal filed an appeal.
During the pendency of the appeal the parties resolved their dispute amicably.
Misri Lal accepted the title of Navinchand and a deed, Ext.
P. 20, creating a fresh lease in favour of Misri Lal under Navinchand as lessor, was executed with effect from 1.12.1962.
The appeal was disposed of by recording this fact and stating further that the arrears of rent had been paid off.
The compromise petition and the decree have been marked in the present suit as Ext.
P 21 and Ext.
Misri Lal continued to occupy the house till he died in 1972 leaving behind his son, the present appellant, as his heir and legal representative.
Navinchand sold the suit property to the plaintiffs respond ents on 4.1.1973, who sent a notice to the appellant on 14.3.1973.
Since the 538 appellant refused to recognise them as owners of the house, another notice terminating the tenancy was served in January 1976 and the present suit was filed in June of the same year.
The appellant resisted the claim in the plaint on the same old plea which his father Misri Lal had unsuccessfully taken in the earlier suit, namely, that Smt.
Raj Rani having transferred the disputed house to a trust in 1936 was not competent to re transfer it to Navinchand Dalchand, the vendor of the plaintiffs respondents.
The trial court disbe lieved the defence version holding that although Smt.
Raj Rani had executed a trust deed in 1936, but the same was not acted upon and the trust does not appear to have come into existence.
On appeal the first appellate court reversed the finding and further held that the defendant could not be estopped from challenging the title of the plaintiffs.
It has been the case of the appellant that the con sent of Misri Lal to the compromise in the earlier suit was obtained by force, but the plea was not substantiated by any evidence, and it has been pointed out by the High Court that the appellant admitted in his deposition that to his knowl edge no force had been used against Misri Lal.
The High Court further rightly rejected the argument that the decree, Ext.
P. 22, would not bind the parties since it was founded on a compromise and not on an adjudication by the court on the question of title.
The court also observed that the statements made in the compromise petition, Ext.
P. 21, in the earlier suit support the case of the plaintiffs inde pendently of the compromise decree, and further, the defence plea has to be rejected in view of the deed, Ext.
P. 20, creating a fresh lease.
These findings were sufficient for the disposal of the appeal but the High Court proceeded to consider the question whether Smt.
Raj Rani had in fact transferred the suit house in favour of a trust, and decided the issue against the appellant.
The grievance of Mr. Rohatagi, the learned counsel for the appellant, that in view of the limited scope of a second appeal under section 100 of the Code of Civil Procedure, the High Court was not justified in setting aside the find ing of the first appellate court on the question as to whether the property had been alienated in 1936 in favour of the trust or not is well founded.
After the court reached a conclusion against the defendant on the basis of the lease deed, Ext.
P. 20, the compromise petition, Ext.
P. 21, and the compromise decree, Ext.
P. 22, it should not have pro ceeded to decide the dispute relating to title on merits on the basis of the evidence.
However, this error cannot help 539 the appellant unless he is able to successfully meet the effect of Ext.
P. 20, Ext.
P. 21 and Ext.
P. 22.
It has been strenuously contended by Mr. Rohatagi that the principle that a tenant is estopped from challeng ing the title of his landlord is not available to the land lord 's transferee in absence of attornment by the tenant.
Reliance was placed on Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd., and Others, A.I.R. 1937 P.C. 252; Mangat Ram and Another vs Sardar Meharban Singh and Others, ; D. Satyanarayana vs P. Jagdish, [ ; and Tej Bhan Madan vs 11 Addl.
District Judge and Others, ; , and a passage from Halsbury 's Laws of England 4th Edn.
16, Paragraph 1628.
The learned counsel strenuously contended that the appellant tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them.
He relied upon the comments of Sarkar on section 116 in his book on the . 7.
It is true that the doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plaintiff.
Where the landlord has not himself inducted the tenant in the disputed property and his right, are founded on a derivative title, for example, as an assignee, donee, vendee, heir, etc., the position is a little different.
A tenant already in possession can challenge the plaintiff 's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by section 116 of the Evidence Act.
The section does not permit the tenant, during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenancy a title to the property.
The rule is not confined in its application to cases where the original landlord brings an action for eviction.
A transferee from such a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in.
So far claim of having derived a good title from the original landlord is concerned, the same does not come under the protection of the doctrine of estoppel, and is vulnerable to a challenge.
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason, which renders the transfer to be non existent in the eye of law.
By way of an illustration one may refer to a case where the original landlord had the fight of possession and was, therefore, entitled to induct a tenant in the property but did not have any power of disposition.
the tenant in such a case can attack the derivative title of the transferee plaintiff but not on 540 the ground that the transferor landlord who had initially inducted him in possession did not have the right to do so.
Further since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced, he is forbidden to plead that subsequently the landlord lost this right.
These exceptions, however, do not relieve the tenant of his duty to respect the title of the original landlord at the time of the begin ning of the tenancy.
Coming to the facts of the present case, it may be recalled that fresh tenancy had been created in favour of Misri Lal, father of the present appellant, under Navinchand by deed Ext.
P. 20, and this fact was fully established by the decree, Ext.
P. 22.
The appellant, in the shoes of his father, is as much bound by these documents as Misri Lal was, and he cannot be allowed to deny the relationship of landlord and tenant between Navinchand and himself.
It has not been the case of the appellant that Navinchand later lost the title or that he had transferred the same to anoth er person, nor does the appellant say that there has been any defect in the sale deed executed in favour of the present plaintiffs.
In other words, the acquisition of title by the plaintiffs from Navinchand, if he be presumed to be the rightful owner, is not impugned, that is, the derivative title of the plaintiffs is not under challenge.
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which is not entitled to do.
None of the decisions relied upon by Mr. Rohtagi assists him.
On the other hand, the judgments in Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd. and Others, AIR 1937 PC 25 1 and Tej Bhan Madan vs Addl.
District Judge and Others, ; , demonstrate that the plea of estoppel of the plaintiffs is well founded.
The Privy Council Case arose out of a suit for realisation of royalties due on Coal raised by the lessee defendant company.
The original lease was granted by the father of the plaintiff, the Raja of Panchkote, in favour of one Radha Ballav Mukherjee.
The defendant was sued as assignee.
The original lease contained a clause giving the lessor a charge for royalties upon the collieries and its plant which was sought to be enforced.
Since there was some dispute about the ownership of the colliery, the defendant company by way of abundant caution obtained a second assignment from anoth er source, being the Official Assignee.
The plaintiff 's claim was denied by the company on the grounds that (i) his father the Raja was not the owner of the colliery and the company was in possession of the colliery as a lessee on the strength of the other assignment from the Official Assignee, 541 and (ii) the company, being merely a transferee from the original lessee Radha Ballav Mukherjee and not being itself the original lessee, could not be estopped from challenging the Raja 's or his son 's title.
While rejecting the defend ant 's stand the Privy Council observed thus: "What all such persons are precluded from denying is that the lessor had a title at the date of the lease and there is no exception even for the case where the lease itself dis closes the defect of title.
The principle does not apply to disentitle a tenant to dispute the derivative title of one who claims to have since become entitled to the reversion, though in such cases there may be other grounds of estoppel, e.g., by attornment, acceptance of rent, etc.
In this sense it is true enough that the principle only applies to the title of the landlord who "let the tenant in" 'as distinct from any other person claiming to be reversioner.
Nor does the principle apply to prevent a tenant from pleading that the title of the original lessor has since come to an end.
" The expression "derivative title" was referrable to the plaintiff, and the Privy Council concluded by observing that the case did not raise any difficulty as there was "no dispute as to the plaintiff 's derivative title".
While rejecting the argument on the basis that the company was not the original lessee and being merely an assignee was free to challenge the lessor 's title, it was said that "the tenancy under section 116 does not begin afresh every time the interest of the tenant or of the landlord devolves upon a new indi vidual by succession or assignment.
" The circumstances in the case before us are similar.
The appellant does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plaintiffs.
His defence is that Navinchand did not own the property at all at any point of time, and this he cannot be allowed to do.
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext.
P. 20. 10.
In Tej Bhan Madan vs 11 Addl.
District Judge and Others, ; , the question was whether there was a disclaimer of the landlord 's title on the part of the appellant tenant so as to incur forfeiture of the tenancy.
The premises in question originally belonged to one Shamb hoolal Jain, who died leaving behind his wife, two sons and a daughter by the name of Mainawati.
The property was sold in execution of a money decree and was purchased by Maina wati in 1956.
Mainawati conveyed the property to one Gopi nath Agarwal and the 542 appellant who was in possession as tenant attorned the tenancy in his favour.
Subsequently Gopinath sold the same in favour of the third respondent, Chhaya Gupta, and both Gopinath and Chhaya Gupta asked the appellant to attorn the tenancy in favour of Chhaya Gupta.
The appellant declined to do so and challenged not only the title of Chhaya Gupta but also the validity of the sale in favour of Gopinath.
This led to the filing of the case for his eviction on the ground of disclaimer.
It is significant to note that the foundation of the proceeding for ejectment was the appellant 's denial of the title of Gopinath in whose favour he had earlier attorned the tenancy, and not the challenge of the deriva tive title of the third respondent.
Overruling the objec tions of the appellant, a decree for eviction was passed against him and his writ petition before the High Court was dismissed.
In this background he came to this Court and made an argument similar to the one pressed in the case before us.
Rejecting the appellant 's point, this Court observed thus: "The stance of the appellant against the third respondent 's title was not on the ground of any infirmity or defect in the flow of title from Gopinath, but on the ground that the latter 's vendor Mainawati herself had no title.
The derivative title of the third respondent is not denied on any ground other than the one that the vendor, Gopinath to whom appellant had attorned had himself no title, the implication of which is that if appellant could not have denied Gopinath 's title by virtue of the inhibitions of the attornment, he could not question third re spondent 's title either.
Appellant did himself no service by this stand.
" The case is clearly against the appellant.
The above passage as also the last sentence in paragraph 4 of the judgment which is mentioned below also indicates as to what can be termed as a derivative title which a tenant may be free to challenge: "But the appellant tenant declined to do so and assailed not only the derivative title of the third respondent to the property but also the validity of the sale in favour of Gopinath himself.
In D. Satyanarayana vs P. Jagdish, ; , the Court was dealing with one of the exceptions to the rule of estoppel which permitted a sub tenent: 543 "to show that since the date of the tenancy the title of the landlord came to an end or that he was evicted by a paramount title holder or that even though there was no actual eviction or dispossession from the property, under a threat of eviction he had attorned to the paramount title holder.
The facts were that the appellant was a sub tenant of the tenantrespondent and the landlord served a notice on him terminating the tenancy of the tenant respondent on the ground of unlawful subletting.
The appellant thereupon attorned in favour of the paramount title holder and started paying the rent directly to him.
The tenantrespondent, thereafter, commenced the eviction proceeding and a decree was passed which was challenged before this Court by the appellant tenant.
After enunciating the general rule of estoppel under section 116 of the Evidence Act the Court pointed out the exception where a tenant is evicted by the paramount title holder and is thereafter reinducted by him under a fresh lease.
Extending this exception to the tenant 's ap peal, it was held that the rule applied where the tenant can show: "That even though there was no actual eviction or dispossession from the property, under a threat of eviction he had attorned to the paramount title holder.
" The decision is patently not applicable to the case before us.
In Mangat Ram and Another vs Sardar Meharban Singh and Others, , the principle decided was stated in the following words: "The estoppel contemplated by section 116 is re stricted to the denial of title at the com mencement of the tenancy and by implication it follows that a tenant is not estopped from contending that the title to the lessor had since come to an end.
" The Lahore case is also clearly distinguishable.
After the death of the lessor her daughters claimed rent from the tenants.
The tenants disputed their derivative title and the court held that though the tenants would not dispute the title of the mother at the commencement of the lease, they were entitled to challenge the derivative title of the plaintiffs and that the daughters had to prove that the property was Sridhan of their mother which they inherited under the Hindu Law.
The principle was correctly enunciated there, but that does not help 544 the appellant at all.
To the same effect are the following observations in Halsbury 's Laws of England 4th Edn., Vol.
16, paragraph 1628 relied upon by Mr. Rohatgi: "Thus although an assignee of the lessor is to all intents and purposes in the same situation as the lessor, and takes the benefit of and is bound by a lease by estoppel, the lessee is not estopped from showing that the lessor had no such title as he could pass to the assign ee, or that the person claiming to be the assignee is not in fact the true assignee." (emphasis supplied) The significance of the words which have been underlined above has to be appreciated for correctly understanding the principle enunciated.
For the reasons mentioned above, we hold that the appeal has no merit and is accordingly dismissed with costs.
N.V.K. Appeal dis missed.
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The respondents claimed to be the owners of the suit property by virtue of a registered sale deed in their favour by one Navinchand, who had purchased the property from his predecessor in interest Smt.
Raj Rani on 11.8.1952.
The appellant 's father Misri Lal was her tenant.
In 1959 a suit was filed by Navinchand for eviction of Misri Lal, which was resisted by the tenant on the ground that Smt.
Raj Rani had earlier transferred the house to a Trust and as such she could not later convey any title to Navinchand.
The Trial Court rejected the defence, and passed a decree against Misri Lal.
Misri Lal filed an appeal.
During its pendency, the parties resolved their dispute, by entering into a compromise.
A deed Ext.
P. 20 creating a fresh lease in favour of Misri Lal under Navinchand as lessor, was executed w.e.f. 1.12.1962.
A compromise petition exhibit P. 21 was filed and the case decreed in terms of the compromise exhibit P. 22 Misri Lal continued to occupy the house till he died in 1972 leaving behind his son, the appellant.
A fresh dispute started after Navinchand sold the suit property to the respondents plaintiffs on 4.1.73, who gave notice of the sale to the appellant on 14.3.73.
As the appellants refused to recognise them as owners, the respond ents terminated the tenancy and filed a suit for ejectment against the appellants.
This suit was resisted on the same old plea that Smt.
Raj Rani having transferred the suit property to a Trust was not competent to retransfer the property to Navinchand the vendor of the respondents.
The trial court disbelieved the defence version holding that although Smt.
Raj Rani had executed a trust deed in 1936, but the same was not acted upon and that the trust did not appear to have come into existence.
The suit was accordingly decreed.
535 On appeal, the first appellate court reversed the above finding and held that the defendant could not be estopped from challenging the title of the plaintiffs.
In second appeal, the High Court reversed the decree of the First Appellate Court, and held that the defendants were estopped from challenging the decree, Ext.
P. 22 which would bind the parties since it was founded on a compromise, and not on an adjudication by the court on the question of title.
It also observed that the statement made in the compromise petition exhibit P. 21 in the earlier suit supported the case of the plaintiffs independently of the compromise decree and that the defence plea had to be rejected in view of the deed Ext.
P. 20 creating a fresh lease.
In the appeal to this Court, it was contended on behalf of the appellant that having regard to the limited scope of a second appeal under section 100 C.P.C., the High Court was not justified in setting aside the finding of the Appellate court on the question whether the property had been alienat ed in 1936 in favour of the trust or not, that having reached a conclusion against the defendant on the basis of the lease deed exhibit P. 20, the compromise petition exhibit P. 21 and the compromise decree Ext.
P. 22, it should not have proceeded to decide the dispute relating to title on merits on the basis of evidence.
It was further contended that the appellant/tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them.
Dismissing the appeal, the Court, HELD: 1.
The doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plain tiff.
Where the landlord had not himself inducted the tenant into the disputed property and his rights are founded on a derivative title, for example, as an assignee, donee, vend ee, heir, etc., the position is a little different.
[539D] 2.
A tenant already in possession can challenge the plaintiff 's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by section 116 of the Evidence Act, which does not permit the tenant during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenan cy a title to the property.
The rule is not confined in its application to cases where the original landlord brings on action for eviction.
[539E] 536 3.
A transferee from such a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in.
So far as claim of having derived a good title from the original landlord is concerned, the same does not come under the protection of the doctrine of estoppel and is vulnerable to a challenge.
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason, which renders the transfer to be non existent in the eye of law.
[539F G] 4.
In a case where the original landlord had the right of possession and was, therefore, entitled to induct a tenant in the property but did not have any power of dispo sition, the tenant can attack the derivative title of the transferee plaintiff but not on the ground that the trans feror landlord who had initially inducted him in possession did not have the right to do so.
Since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced, he is not forbidden to plead that subsequently the landlord lost this right.
These exceptions, however, do not relieve the tenant of his duty to respect the title of the original landlord at the time of the beginning of the tenancy.
[539H; 540A B] 5.
The tenancy under section 116 does not begin afresh every time the interest of the tenancy or of the landlord devolves upon a new individual by succession or assignment.
[541E] 6.
In the instant case, the acquisition of title by the plaintiffs from Navinchand, if he be presumed to be the rightful owner, is not impugned, that is, the derivative title of the plaintiffs is not under challenge.
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which he is not entitled to do.
[540D] 7.
The appellant in the instant case does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plain tiffs.
His defence is that Navinchand did not own the property at all at any point of time, and this he cannot be allowed to do.
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext.
P. 20.
[541F] Kumar Krishna Prasad Lal Singha Deo vs Baraboni Coal Concern Ltd. & Ors., ; Mangat Ram and Another vs Sardar Meharban Singh and Others, ; D. Satyanara 537 yana vs
P. Jagdish; , and Tej Bhan Madan vs 11 Addl.
District Judge & Ors., ; , distin guished.
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Here is a two-paragraph summary of the court case:
The present appeal is directed against the decree of the Madhya Pradesh High Court for eviction of the appellant from a house. The appellant denied the title of the plaintiffs and their case that he has been in possession of the property as their tenant. The High Court dismissed the appeal, holding that the appellant cannot deny the relationship of landlord and tenant between Navinchand and himself. The court also observed that the acquisition of title by the plaintiffs from Navinchand is not impugned, and the appellant cannot challenge the title of the plaintiffs by denying the title of their vendor Navinchand.
The appellant relied on several judgments, including Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd. and Others, and Tej Bhan Madan vs Addl. District Judge and Others, to argue that he cannot be estopped from challenging the derivative title of the plaintiffs. However, the court held that these judgments do not apply to the present case. The court observed that the principle of estoppel does not apply to disentitle a tenant to dispute the derivative title of one who claims to have since become entitled to the reversion, as long as the tenant does not challenge the title of the original landlord at the time of the commencement of the tenancy. The court held that the appeal has no merit and is accordingly dismissed with costs.
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Appeal Nos. 182 and 183 of 1993.
From the Judgment and Order dated 6.6.86 of the Central Ad ministrative Tribunal, Chandigarh in O.A./T.A. Nos.49 & 102 of 1986.
Raj Birbal for the Appellant.
Rajinder Sachher, Mahabir Singh and A.K Mahajan for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Kamlesh Baboo and V.K. Bhardwaj were promoted as Executive Engineer (Civil) with effect from January 21, 1986 in the Engineering Department of the Chandigarh Administration.
The promotion was made on the basis of merit and suitability as determined under the provisions of the Punjab Service of Engineers, Class I (Buildings and Road Branch) Rules, 1960 (Rules) as applicable to the Chandigarh Administration.
Both of them approached the Central Administrative 123 Tribunal, Chandigarh Bench seeking a direction to the effect that their 'seniority in the cadre of Executive Engineers be determined from the date when they became eligible to be considered for promotion under the Rules.
In other words, they claimed January 1, 1985 the eligibility date as the date of their promotion to the post of Executive Engineer instead of January 21, 1986 when they were actually promoted.
The Tribunal by its order dated June 6, 1986 granted the relief asked for by Kamlesh Baboo and V.K. Bhardwaj in the following terms: "In view of the above discussion, we direct that the applicant, who was promoted as Executive Engineer from 21.1.1986 (vide Office Order dated 20.1.1986 and 2.5.1986) shall be continued as Executive Engineer even if the approval of the U.P.S.C. is not received within six months from the date of his promotion.
For the purposes of seniority, the applicant shall be considered from the date when he became eligible.
The promotion of the applicant as Executive Engineer, shall however, be subject to the approval by the U.P.S.C. and without prejudice to the decision of the competent court in the matter of seniority, which is in dispute.
" These two appeals by the Chandigarh Administration are against the order of the Tribunal.
Kamlesh Baboo joined service as Section Officer under the Chandigarh Administration on March 8, 1971.
He was promoted to the post of Sub Divisional Engineer on December 29, 1976 and was confirmed as such on August 13, 1985.
The service particulars of V.K. Bhardwaj are identical.
The conditions of service of the respondents are governed by the Rules.
Rules 6(b) and 8 (1)(3)(4)(8)(9)(10)(11) which are relevant are reproduced hereunder: "6 (b) in the case of an appointment by promotion from Class 11 Service has 8 years completed service, in that class and has passed the departmental examination, as provided in rule 15; 8(1) A committee consisting of the Chairman of the Public 124 Service Commission or where the Chairman is unable to attend, any other member of the Commission representing it, the Secretary, P.W.D. (Buildings and Roads Branch), and the Chief Engineers, Punjab, P.W.D. Buildings and Roads Branch, shall be constituted.
(3)The Committee shall meet at intervals, ordinarily not exceeding one year, and consider the cases of all eligible officers for promotion to the senior scale of the Service, as on the first day of January of that year.
(4)The Committee shall prepare a list of officers suitable for promotion to the senior scale of the Service.
The selection for inclusion in such list shall be based on merit and suitability in all respects with due regard to seniority.
(8)The fist prepared or revised in accordance with subrules (4), (5) and (6) shall then be forwarded to the Commission by Government along with (i) the records of all officers included in the list; (ii) records of all officers proposed to be superseded as a result of the recommendations made by the Committee; (iii)the reasons, if any, recorded by the Committee for the proposed supersession of any officer; (iv) the observations, if any of the State Government on the recommendation of the Committee.
(9) The Commission shall consider the list prepared by the Committee along with other documents received from the State Government and,unless it considers any change necessary, approve the list.
(10) If the Commission considers it necessary to make any, changes in the list received from Government, the 'Commission shall make the changes it proposes and forward the list it considers suitable to the State Government.
125 (11) Appointments to the Service shall be made by Government from this list in the order in which names have been placed by the Commission.
" It is not disputed that the respondents in these two appeals completed eight years of service in Class 11 cadre, by the end of December 1984 and as such they were eligible to be considered for promotion to the post of Executive Engineer on January 1, 1985.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Rules, reproduced above.
Rule 8 of the Rules envisages a Selection Committee presided over by Chairman/Member of the Public Service Commission.
The Committee considers the cases of eligible officers on the basis of merit and suitability, the list of the selected officers is sent to the Commission for final approval and thereafter the appointments are made out of the approved list in accordance with the merit assigned therein.
It is thus obvious that eligibility under Rule 6(b) of the Rules by, itself does not give a right to a member of Class II service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class 11 officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
The question of Assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
Both the respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in class I service keeping in view the date of their appointments as January 21, 1986.
The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules and cannot be sustained.
Even otherwise both Kamlesh Baboo and V.K. Bhardwaj were working as 126 Sub Divisional Engineer on January 1, 1985 and as such treating them to have been appointed to Class I service from that date and giving them benefit towards seniority on that basis would be wholly erroneous.
The question as to whether the deputationists from Punjab and Haryana should be permitted to continue to serve the Chandigarh Administration has no relevance to the controversy involved in these appeals.
That is a matter of policy between the States of Punjab, Haryana and Union Territory of Chandigarh.
The Tribunal was wholly unjustified in seeking support from the non existent fact that because of the presence of many deputationists the respondents in these appeals were not being considered for promotion.
As a matter of fact the respondents got their promotion at the earliest possible opportunity.
They became eligible on January 1, 1985 and thereafter within a period of one year the procedure under Rule 8 was completed and they were promoted with effect from January 21, 1986.
We allow the appeals, set aside the order of the Tribunal dated June 6, 1986 and dismiss the applications filed by respondents Kamlesh Baboo and V.K. Bhardwaj before the Tribunal.
No costs.
V.P.R. Appeals allowed.
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The respondent in C.A. No.182 of 1993 joined service as Section Officer under the appellant on 83.1971.
On 29.12.1976 he was promoted to the post of Sub Divisional Engineer and was confirmed on 13.8.1985.
With effect from 21.1.1986, the.
respondent was promoted as Executive Engineer (Civil).
The service particulars of the respondent in C.A. No.183 of 1993 were identical.
The respondents approached the Central Administrative Tribunal to determine their seniority in the cadre of Executive Engineers from the date of eligibility, ie.
1.1.1985 and not from 21.1.1986.
The Tribunal allowed the applications of the respondents, against which the present appeals were riled by the Administration.
Allowing the appeals, this Court, HELD:1.01.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Punjab Service of Engineers, Class I (Buildings and Roads Branch) Rules 1960.
Eligibility under Rule 6(b) of the Rules by itself does not give a right to a member of Class 11 service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim 122 promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class II officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
[125C E] 1.02.
The question of assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
[125F] 1.03.
The respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in Class I service keeping in view the date of their appointments as January 21, 1986.
[125F G] 1.04 The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the Respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules.
[125G H]
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Here's a two-paragraph summary of the court case:
The Central Administrative Tribunal, Chandigarh, had made an order on June 6, 1986, in favor of Kamlesh Baboo and V.K. Bhardwaj, who had been promoted to the post of Executive Engineer (Civil) in the Chandigarh Administration. The order directed the administration to continue their promotion, despite the lack of approval from the Union Public Service Commission (UPSC), and to determine their seniority in the cadre from the date when they became eligible for promotion. This eligibility date was January 1, 1985, which is when they completed eight years of service in Class 11 cadre.
However, the Chandigarh Administration appealed against this order to the court. The court held that the respondents were not entitled to seniority from January 1, 1985, as they had not been selected for promotion in accordance with the procedure laid down under Rule 8 of the Punjab Service of Engineers, Class I (Buildings and Road Branch) Rules, 1960. The court also rejected the argument that the respondents were not considered for promotion due to the presence of deputationists from Punjab and Haryana. The court allowed the appeals, set aside the order of the Tribunal, and dismissed the applications filed by the respondents.
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Civil Appeal No. 1037 of 1988.
589 From the order dated 14.12.1987 of the Customs Excise and Gold (Control) Appellate Tribunal New Delhi in Appeal No. 469/87A order No. 807/87 A S.N. Kackar, R.K. Habbu, P.G. Gokhale, Ms. Sushma Manchanda and B.R. Agarwal for the Appellant.
The Judgment or the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L of the (hereinafter called 'the Act ').
The Superintendent of Central Excise returned the price list of the appellant with a covering letter satating that the price should include all the cost of packing and packing charges in terms of section 4(4)(d)(i) of the Act.
The appellant, a private limited company, manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
According to the appellant, it sold to the customers on wholesale basis the glass bottles manufactured by it, packed in gunny bags and cartons which it purchases from the market.
According to the appellant further, it has been paying duty on the value of the glass bottles including the cost of gunny bags or the cartons in which these are packed at the time of sale.
It appears, therefore, according to the appellant, that it has been paying duty on glass bottles on the basis of the assessable value which included the costs of packing material, namely, the gunny bags and the cartons.
The case of the appellant further is that the glass bottles are normally sold by it in the packing consisting of gunny bags which are durable and returnable and in several cases the gunny bags are returned by the buyers and are used by the appellant again for packing the glass bottles.
It is only when the customers specifically ask for delivered in cartons instead of in gunny bags that the appellant delivered the glass bottles packed in cartons which are also durable and returnable.
Towards the end of 1977 and early 1978 the appellant submitted price list in regard to the glass bottles manufactured by it for approval by showing separately the price at which such goods were actually sold in the course of "wholesale trade" and "the cost of packing".
By his letter dated 10th January, 1978, the Superintendent of Central Excise returned to the appellant the price list duly approved but nothing therein that the price should be inclusive of the cost of packing and packing charges in terms of section 4(4)(d) of the Act.
Section 4(4)(d)(i) as it stood read as follows: 590 "(4) For the purposes of this section: (a) `assessee ' means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) 'place of removal ' means (i) & (ii) x x x (c) xxx (d) 'value ', in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation: In this sub clause, 'packing ' means the wrapper, container, bobbin, pirn, spool, reel or wrap beam or any other thing in which or on which the excisable goods are wrapped, contained or wound," Since then the appellant has been paying duty on the cost of packing under protest and lodging claims of refund.
The appellant, however, did not receive any refund nor any intimation that the claims of refund are or were being rejected.
Various representations made by the appellant were in vain.
The Assistant Collector of Central Excise wrote a letter dated 8th March, 1980 advising the appellant to file an appeal before the Appellate Collector if the appellant felt aggrieved.
Feeling aggrieved, the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay.
The High Court passed an interim order on 18th July, 1984 remanding the case back to the Assistant Collector of Central Excise and to decide the matter after giving the appellant fair and adequate opportunity to adduce evidence.
After considering the written statements filed by the appellant, the Assistant Collector passed an order on 29th April, 1986 rejecting the appellant 's refund claim for about Rs.17 lakhs for the period from 1st January, 1978 to 31st December, 1980 and demanding duty for the period 6th January, 1981 to 31st December, 1985 in terms of the bank guarantees executed by the appellant.
There was an appeal before the 591 Collector of Central Excise (Appeals).
The Collector on 21st January, 1987 rejected the appeal and upheld the order of the Assistant Collector.
The appellant filed an appeal before the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'CEGAT ').
CEGAT dismissed the appeal.
Aggrieved thereby the appellant filed the appeal in this Court.
The Tribunal noted that the appellant manufactured glass bottles.
It delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings hl cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
The appellant 's case was that these packings were also returnable and in many cases they were actually returned and re used by the appellant.
There were no evidence about the durability of the cartons and gunny bags but nothing to show that these were returnable.
The position seems to be as follows.
The Tribunal has rightly applied the returnability test.
In K. Radha Krishnaiah vs Inspector of Central Excise and others, , this Court observed that it cannot be said that the packing is returnable by the buyer to the assessee unless there Is an arrangement between them that it shall be returned.
Therefore, such arrangement has been established.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case after examining the facts, the Tribunal found that there was no clause about returnability of the cartons and gunny bags.
The appellant invited the attention of the Tribunal to the following clause in their standard contractor.
It reads as follows: "6.
All packing cases, other than such as may be supplied or paid for by buyer, shall be returnable in good order and condition within 30 days after receipt. " The Tribunal was of the view that the above clause related to cases".
It could have meant only the crates which belonged to the appellant and for which the customers had not paid anything.
The 592 property in the crates having remained with the appellant all along, the buyers were naturally obliged to return them to their rightful owners.
But that was not the case with the cartons and gunny bags.
The buyers pay for these and the property in these pass on to the buyers.
They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free.
No such contract or agreement was forthcoming.
The Tribunal was not convinced that in the normal course of business anyone could be asked to part with its property, and in addition incur return freight therefor too for nothing.
In those circumstances, the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term.
The Tribunal further noted that since the statute insisted on the packing being returnable, in addition to being durable, the authorities are bound to see whether the transaction fulfilled the tests of returnability as per the Supreme Court and High Court judgments.
In that view of the matter, the Tribunal dismissed the appeal.
As noted above, this Court has considered the meaning of the expression "returnable" in the Section in K. Kadha Krishnaiah 's case (supra).
This Court held that so far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is return able.
While interpreting this word, we must bear in mind that what section 4(4)(d)(i) excludes from computation is cost of packing which is of a durable nature and is "returnable by the buyer to the assessee".
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
In that view of the matter we are of the opinion that in the facts found and the expressions used in section 4(4)(d)(i) of the Act which have been set out hereinbefore, there being no evidence of the agreement that the cartons and gunny bags were returnable, we are of the opinion that the Tribunal came to the correct conclusion.
This appeal fails and is rejected accordingly.
G.N. Appeal dismissed.
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The appellant manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
It sold the glass bottles to the customers on wholesale basis packed in gunny bags and cartons which were durable and returnable.
According to the appellant it has been paying duty on glass bottles on the basis of the assessable value which included the cost of packing material, namely, the gunny bags and cartons.
The returned gunny bags and cartons were re used by the appellant.
The appellant submitted for approval, price list in regard to the glass bottles manufactured by it showing separately the price at which the goods were actually sold and the cost of packing.
Returning the price list duly approved, the Superintendent of Central Excise noted therein that the price should be inclusive of the cost of packing and packing charges in terms of Section 4(4)(d) of the Act.
The appellant was paying duty on the cost of packing under protest and lodged claims of refund.
As the appellant did not receive either the refund or any intimation rejecting the claim for refund, it filed a writ petition before the High Court which remanded the case back to the Assistant Collector for deciding the matter after giving the appellant fair and adequate opportunity to adduce evidence.
The Assistant Collector, after considering the written statements filed by the appellant rejected the appellant 's claim for refund and demanded duty for the subsequent period.
The appellant filed an appeal before the Collector of Central Excise (Appeals) which was rejected.
The appeal filed before the Customs Excise and Gold (Control) Appellate Tribunal was also dismissed.
This appeal under Section 35L of the Act is against the Tribunal 's judgment.
588 Dismissing the appeal, ^ HELD: 1.
In view of the facts of the case, and the expressions used in Section 4(4)(d)(i) of the Act, there being no evidence of the agreement that the cartons and gunny bags were returnable, the Tribunal was right in coming to the conclusion that the cartons and gunny bags were not returnable in the accepted sense of the term.
[592G, B C] 2.1 The appellant manufactured glass bottles and delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings in cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
It cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case there was no clause about returnability of the cartons and gunny bags.
[591B F] 2.2.
So far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
What Section 4(4)(d)(i) excludes from computation in cost of packing which is of a durable nature and is returnable by the buyer to the assessee.
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
[592D F K. Radhakrishnaiah vs Inspector of Central Excise and others, referred to.
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Here is a two-paragraph summary of the court case:
The appellant, a private limited company, filed an appeal against the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT) order, which had dismissed the appellant's claim for a refund of duty paid on the cost of packing glass bottles manufactured by the company. The appellant had been paying duty on the cost of packing under protest, claiming that the packing materials were returnable and of a durable nature. However, the CEGAT held that the packing materials, specifically cartons and gunny bags, were not returnable as there was no agreement between the buyer and the seller to return them.
The Supreme Court upheld the CEGAT's decision, relying on its earlier judgment in K. Radha Krishnaiah vs Inspector of Central Excise and others, which held that the packing must be returnable under an arrangement between the buyer and the seller, not just physically capable of being returned. The Court found that there was no evidence of such an agreement between the buyer and the seller in this case, and therefore, the cost of packing the cartons and gunny bags was not excludable from the assessable value. As a result, the Supreme Court dismissed the appellant's appeal.
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N: Criminal Appeal No. 221 of 1981.
Appeal by Special Leave from the Judgment and Order dated 23.10.1979 of the Madras High Court in Criminal Appeal No. 759/79 (Referred Trial No. 9/79).
A.T.M. Sampath and P.N. Ramalingam for the Appellant.
A.V. Rangam for the Respondent.
272 The Judgment of the Court was delivered by, CHANDRACHUD C. J.
The appellant, Muniappan, was convicted by the learned Sessions Judge, Dharmapuri under section 302 of the Penal Code and sentenced to death on the charge that he had committed the murder of his mother 's brother also called Muniappan and his son Chinnaswamy.
The conviction for murder and the sentence of death having been confirmed by the High Court of Madras by a Judgment dated October 23, 1979, this appeal has been filed by the accused by special leave.
The leave is limited to the question of sentence.
The judgments of the High Court and the Sessions Court, in so far as the sentence is concerned, leave much to be desired.
In the first place, the Sessions Court overlooked the provision, contained in section 354(3) of the Code of Criminal Procedure, 1973, which provides, in so far as is relevant, that when the conviction is for an offence punishable with death, the judgment shall in the case of sentence of death state special reasons for such sentence.
The learned Sessions Judge, in a very brief paragraph consisting of two sentences, has this to say on the question of sentence: "When the accused was asked on the question of sentence, he did not say anything.
The accused has committed terrific double murder and so no sympathy can be shown to him.
" The judgment of the Sessions Judge is in Tamil but we understand from the learned counsel, who appear in the case and both of whom understand Tamil well enough, that the Tamil word "Bhayankaram" has been rightly translated as "terrific".
We plead our inability to understand what is meant by a "terrific" murder because all murders are terrific and if the fact of the murder being terrific is an adequate reason for imposing the death sentence, then every murder shall have to be visited with that sentence.
In that event, death sentence will become the rule, not an exception and section 354(3) will become a dead letter.
We are also not satisfied that the learned Sessions Judge made any serious effort to elicit from the accused what he wanted to say on the question of sentence.
All that the learned Judge says is that "when the accused was asked on the question of sentence, he did not say anything".
The obligation to hear the accused on the question of sentence which is imposed by section 235(2) of the Criminal Procedure Code is not discharged by putting a formal question to the accused as to what he has to say on the 273 question of sentence.
The Judge must make a genuine effort to elicit from the accused all information which will eventually bear on the question of sentence.
All admissible evidence is before the Judge but that evidence itself often furnishes a clue to the genesis of the crime and the motivation of the criminal.
It is the bounden duty of the Judge to cast aside the formalities of the Court scene and approach the question of sentence from a broad sociological point of view.
The occasion to apply the provisions of section 235 (2) arises only after the conviction is recorded.
What then remains is the question of sentence in which not merely the accused but the whole society has a stake.
Questions which the Judge can put to the accused under section 235 (2) and the answers which the accused makes to those questions are beyond the narrow constraints of the Evidence Act.
The Court, while on the question of sentence, is in an altogether different domain in which facts and factors which operate are of an entirely different order than those which come into play on the question of conviction.
The Sessions Judge, in the instant case, complied with the form and letter of the obligation which Section 235(2) imposes, forgetting the spirit and substance of that obligation.
The High Court condemned the murders in terms equally strong by calling them "cold blooded" and thought that its duty to consider the propriety of the death sentence began and ended with that assertion.
Its failure to see the failings of the Sessions Court in the matter of sentencing led to an unexamined confirmation of the death sentence.
Coming to the judgement of the High Court itself, there are certain features of it which need a close reflection.
One of the questions before the High Court was as to the time when the double murder was committed because, upon that circumstance depended the veracity of the eye witnesses.
The doctor who performed the post mortem examination stated in his evidence that the deceased must have taken their food about four or five hours before their death.
The case of the prosecution was that the murders were committed at about 9.00 p.m. P.W. 1, who is the son of the deceased Muniappan, stated in his evidence that the deceased had taken their food at 8.30 p.m.
This was a very important aspect of the case to which the High Court should have applied its mind with care.
Instead, it took an extempore expedient by saying: "Both the deceased might have died a couple of hours after they substained the injuries at 9.00 p.m.".
It is impossible to appreciate how, after being shot in the chest and receiving the kind of injuries 274 which are described in the post mortem report, the deceased could have survived for a couple of hours after they were shot.
Yet another question which had an important bearing on the case was as to the delay caused in filing the F.I.R. The case of the prosecution is that P.W. 1 went to the Police Station promptly but the solitary police constable who was present there directed him to go to the village Munsif to have his complaint recorded.
Now, the record of the Police Station shows that a Sub Inspector of Police was also present at the Police Station which falsifies the evidence that only a police constable was present at the Police Station at the material time and, therefore, the F.I.R. could not be recorded.
The High Court has dealt with this aspect of the matter thus: "In passing, we may mention that this is a grave dereliction of duty on the part of the policeman who was in charge of the police station at that time and is a matter that ought to be enquired into by the higher authorities.
We hope that suitable directions will be issued to subordinate officers in this district to prevent a recurrence of such lapses on the part of policemen when reports of cognizable offences are given.
" The High Court added that the Inspector of Police was not on good terms with the Sub Inspector and, therefore, the former made a false entry that the latter was present at the police station, which, according to the High Court, was a serious matter which required to be probed by the Senior Officers.
We are not quite sure whether there is credible evidence on record to show any enmity between the Inspector and the Sub Inspector and whether the High Court merely relied on the statement made by counsel for the State that the relations between the two Police Officers were cordial.
Whatever that may be, we do not think that the High Court has explained satisfactorily why the F.I.R. was not recorded at the police station when P.W.1 went there.
The ex parte strictures passed by the High Court are likely to involve the two Police Officers or at least one of them into grave consequences.
They should have been given an opportunity to explain themselves before the High Court persuaded itself to make such scathing criticism on their conduct.
There is one more aspect of the Judgment of the High Court, which, with great respect, we are unable to appreciate.
A question arose before the High Court as to whether a "muchilikka" bears the signature of the appellant.
The High Court compared the 275 admitted signatures of the appellant with the disputed signature and came to the conclusion that the disputed signature was of the appellant himself.
The High Court castigated the Public Prosecutor who conducted the prosecution in the Sessions Court by saying that he had not followed the cross examination of P.W.1 "with attention, and not chosen to bring to the notice of P.W. 1 that the accused had signed the muchilikka, exhibit P. 1.
We do not know how the High Court came to know that the Public Prosecutor was not following the cross examination of the witness with attention, but we can guess why the High Court made that observation.
It added in parenthesis: "such lapses on the part of this Public Prosecutor have become frequent and have been commented upon by us, and we hope that at least hereafter he will take some interest in the cases which he is conducting.
" It is not the normal function of the High Court to pass judgment on the conduct of lawyers who appear before the lower courts.
One should understand if the High Court were to make its guarded observation on the conduct of lawyers appearing before it.
But how the learned Judges of the High Court had, in their capacity as Judges of the High Court, come to know that "such lapses on the part of this Public Prosecutor have become frequent. ," we are unable to understand.
These various matters make it unsafe to confirm the sentence of death imposed upon the appellant.
The reasons given by the learned Sessions Judge for imposing the death sentence are not special reasons within the meaning of section 354(3) of the Criminal Procedure Code and we are not sure whether, if he were cognisant of his high responsibility under that provision, he would have necessarily imposed the death sentence.
Accordingly, we set aside the sentence of death and sentence the appellant to imprisonment for life.
N.V.K. Appeal allowed.
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The Code of Criminal Procedure, 1973 by section 354(3) provides that when the conviction is for an offence punishable with death, the judgment shall in the case of sentence of death state 'special reasons ' for such sentence.
The appellant was charged under section 302 of the Penal Code for having committed the murder of his maternal uncle and his son.
The Sessions Judge convicted the appellant for murder and being of the opinion that it was "a terrific double murder" sentenced the appellant to death, The High Court condemned the murders as "cold blooded" and confirmed the conviction and sentence.
Allowing the appeal to this Court, limited to the question of sentence.
^ HELD: 1.
The sentence of death imposed on the appellant is set aside and he is sentenced to imprisonment for life.
[275 F] 2.
The reasons given by the Sessions Judge for imposing the death sentence are not 'special reasons ' within the meaning of section 354(3) of the Criminal Procedure Code.
It is not certain if he were cognizant of his high responsibility under that provision, that he would have imposed the death sentence.
[275 E] 3.
It is not understood what is meant by "a terrific murder" as suggested by the Sessions Judge.
All murders are terrific and if the fact of the murder being 271 terrific is an adequate reason for imposing the death sentence then every murder shall have to be visited with that sentence.
Death sentence will then become the rule, not an exception and section 354(3) would become a dead letter.
[272 F G] 4(i).
On the question of sentence it is not merely the accused but the whole society which has a stake.
[273 B] (ii) After the conviction is recorded, the occasion to apply the provisions of section 235(2) of the Criminal Procedure Code arises.
The obligation under this section to hear the accused on the question of sentence is not discharged by putting a formal question to the accused as to what he has to say on the question of sentence.
The Judge must make a genuine effort to elicit from the accused all information which will eventually bear on the question of sentence.
All admissible evidence is before the Judge but that evidence itself often furnishes a clue to the genesis of the crime and the motivation of the criminal.
It is the bounden duty of the Judge to cast aside the formalities of the Court scene and approach the question of sentence from a broad sociological point of view.
Questions which the Judge can put to the accused under section 235(2) and the answers which the accused makes are beyond the narrow constraints of the Evidence Act.
The Court, while on the question of sentence, is in an altogether different domain in which facts and factors of an entirely different order operate.
[273 B; 272 H 273 A; 273 C] In the instant case, the Sessions Judge complied with the form and letter of the obligation which section 235(2) imposes, forgetting the spirit and substance of that obligation.
[273 D] 5.
It is not possible to appreciate how, after being shot in the chest and receiving the injuries described in the post mortem report, the deceased could have survived for a couple of hours thereafter.
There is also no explanation as to why the F.I.R. was not recorded at the Police Station when P.W. 1 went there.
It is therefore unsafe to confirm the sentence of death imposed upon the appellant.
[273 H. E] 6.
It is not the normal function of the High Court to pass judgment on the conduct of lawyers who appear before the lower courts.
[275 C] 7.
The High Court should have given an opportunity to the two police officers to explain their conduct before making criticism on it.
[274 G]
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Here is a two-paragraph summary of the court case:
The case of Muniappan v. The State of Tamil Nadu (Criminal Appeal No. 221 of 1981) involved an appeal by special leave from the Madras High Court's judgment confirming the death sentence imposed on Muniappan for the murder of his mother's brother and his son. The Supreme Court held that the reasons given by the Sessions Court for imposing the death sentence were not special reasons as required by section 354(3) of the Code of Criminal Procedure, 1973. The Sessions Court's judgment was criticized for being inadequate, as it failed to elicit sufficient information from the accused on the question of sentence and did not make a genuine effort to understand the accused's perspective.
The Supreme Court also criticized the Madras High Court's judgment for several reasons, including its failure to consider the veracity of the eye witnesses' testimonies regarding the time of the murder, its harsh criticism of the police officers without giving them an opportunity to explain themselves, and its passing of judgment on the conduct of a Public Prosecutor. The Supreme Court ultimately set aside the death sentence and sentenced Muniappan to imprisonment for life, holding that it was unsafe to confirm the sentence of death due to the inadequacies in the reasoning and process followed by the lower courts.
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Appeal from a judgment and decree of the High Court of Judicature at Patna dated 14th February, 1946, in Appeal from Original Decree No. 117 of 1942 arising out of Title Suit No. 9 of 1939: Civil Appeal No. 40 of 1950.
S.C. Misra for the appellant.
N.C. Chatterjee (P. B. Gangoli, with him) for the re spondent.
154 1951.
February 5.
The judgment of the Court was deliv ered by MAHAJAN J.
This appeal arises out of Suit No. 9 of 1939 instituted in the Court of the Subordinate Judge of Palamau by the appellants against the respondents for a number of declarations in respect to the title to certain lands and for an injunction restraining the respondents from proceed ing with a rent suit.
The suit was decreed by the Subordi nate Judge but on appeal this decision was reversed by the High Court of Judicature at Patna and the appellants ' suit was dismissed.
The salient facts of the case are as follows: Village Darha belonged to a family of Pathaks as their ancestral lakhraj.
Over a hundred years ago the Pathaks granted the entire village in mokarrari to the ancestors of the family of Singhas (defendants ' first and second parties) at an annual jams of Rs. 24.
The mokarrari interest eventually devolved on three branches of the Singha family, each branch getting in the following proportions: Parameshwar Dayal and others, defendants ' first party, to the extent of six annas; Bisheswar Dayal Singh, defendants ' second party, to the extent of eight annas; and Madho Saran Singh, to the extent of two annas.
Subsequently, the two anna share of Madho Saran Singh was purchased by Hiranand Jha, father of the plaintiffs, jointly with.
Durganand Jha and Dharam Dayal.
Dharam Dayal was a mere benamidar for Hiranand Jha.
On the 5th June, 1916, Bisheshwar Dayal Singh purchased six anna share in the lakhraj interest from Deolal Pathak and others and on the 9th February, 1917, he purchased another two anna share from Mandil Pathak.
By virtue of these purchases he came to own the lakhraj interest to the extent of eight anna share.
He already held the mokarrari interest to the same extent which had devolved on him by inheritance.
Some time in the year 1917 or 1918 Hiranand Jha and Durganand Jha, who had acquired by purchase two anna mokar rari interest of Madho Saran Singh, 155 purchased in execution of a rent decree the raiyati interest in the whole village and came into possession of it.
They thus became mokarraridars of two anna share and raiyats of sixteen annas of the village lands.
In the year 1918, Title Suit No. 59 of 1918 was insti tuted in the court of the Subordinate Judge of Palamau for partition of the lands situate in several villages and belonging to the family of the defendants ' first and second parties.
The Jhas were impleaded as defendants in ' the suit, being co sharers in part of the property in suit.
This suit was decreed in the year 1921, and in the final partition an allotment of two annas share in Darha village was made in their favour.
The remaining fourteen anna share excluding khatian 1, 3 and 6 was allotted to the defendants ' first party.
These three khatians were allotted to Bisheshwar Dayal Singh and in exchange for the remaining portions of his interest in that village he was given some property in village Holeya.
The result of the partition proceedings was that the defendants ' first party came to hold fourteen anna mokarrari interest in village 'Darha, Bisheshwar Dayal Singh 's interest was limited to three khatians only, and the Jhas got a separate allotment for their two anna share in the mokarrari.
It appears that some time about the year 1926 the lakhraj interest holders, i.e., the Pathaks and Bisheshwar Dayal Singh, were in default in the payment of the cess due to Government.
On the 17th August, 1926, pro ceedings were taken against them for recovery of the cess and their interest was sold in execution of a certificate on the 18th October, 1927, to one Bijainandan Sahay.
The sale obviously was of the lakhraj interest.
This was confirmed on the 19th December, 1927, and a sale certificate was issued on the both March, 1928.
This was followed by deliv ery of possession on 15th July, 1928.
Possession was ob tained by one Kamta Prasad who had acquired this interest from Bijainandan Sahay on the 20th April, 1928.
On the 1st May, 1933, Kamta Prasad transferred his interest in the village to the plaintiffs who thus became proprietors of sixteen anna share in the village and mokarraridars as to two anna 156 share and raiyats of the entire sixteen annas in the whole village.
On the 21st September, 1934, the defendants ' first party as mokarraridars brought a suit against the plaintiffs for arrears of raiyati rent for the years 1338 39 F. to the extent of six annas share and for the years 134041 F. to the extent of fourteen anna share claiming that under the parti tion decree they got a fourteen anna share in the mokarrari interest in the village.
Plaintiffs contested the suit alleging that Bisheshwar 's mokarrari interest had merged in the lakhraj interest that was purchased by him from the Pathaks in the years 1916 17, and that by the sale under the Government 's certificate his whole eight anna interest in the village including both the lakhraj and the mokarrari had passed on to the plaintiffs and that the defendants ' first party could only claim rent from them to the extent of the six anna share in the mokarrari.
This plea was disallowed and the defendants ' first party 's claim for rent was decreed in full.
The decree was upheld on appeal and second appeal.
The question of title was, however, left open.
In the year 1938 another suit for rent was filed by the defendants ' first party as mokarraridars to recover fourteen anna share of the rent for the years subsequent to fasli 1341.
As a result of this suit, the plaintiffs brought the present suit for declaration and injunction on the allegation that the eight anna mokarrari interest of Bisheshwar Dayal Singh had merged in his lakhraj interest, that by the certificate sale Bisheshwar Dayal Singh lost all his interest in the village both lakhraj and mokarrari by reason of merger, that the partition decree of the year 1921 was illegal and in any case, under that decree the defendants ' first party got only six anna mokarrari interest and were entitled to realize rents from the tenants only to that extent.
An injunction was also claimed restraining the defendants from proceeding with the rent suit.
In the plaint, it was alleged that there was a private partition between the mokarraridars by virtue of which the lands of village Darha were divided between the three sets of mokarraridars, each set being 157 in separate possession of its own separate and defined shares.
It was also pleaded that there was another parti tion between the proprietors of the lakhrai interest, that is, between Bisheshwar Dayal Singh on the one hand and Deolal Pathak, Neman Pathak and Surajnath Pathak on the other, by virtue of which the lands that were in mokarrari patties of Parmeshwar Dayal Singh and others and Hiranand Jha and Durganand Jha fell in the patti of Deolal Pathak and others, while, the lands that were in the mokarrari patti of the defendants ' second party fell in his proprietary lakhraj patti and that as a result of these partitions the mokarrari interest of the defendants ' second party merged in his lakhraj interest and under a certificate sale the whole of his interest passed to the plaintiffs.
The trial Judge held that both the partitions alleged by the plaintiffs in paragraphs 5 and 8 of their plaint were proved and that the mokarrari interest of Bisheshwar Dayal Singh merged in his lakhraj interest and that at the certif icate sale the purchaser acquired his complete interest both lakhraj and mokarrari along with the eight anna lakhraj interest of the Pathaks and that the defendants ' first party were mokarraridars of six anna interest in the village and to that extent were entitled to a decree in their rent suit and could not claim a decree for rent to the extent of fourteen anna share.
The High Court in appeal held that none of the partitions alleged by the plaintiffs were proved and that the mokarrari interest of eight annas could not merge in the lakhrai interest of sixteen annas held jointly by Bisheshwar Dayal Singh with the Pathaks.
As a result of this decision the plaintiffs ' suit was dismissed.
In this appeal it was contended by the learned counsel for the appellants that the High Court had erroneously held that the two partitions set up by the plaintiffs in para graphs 5 and 8 had not been proved.
It was argued that the evidence on the record, both documentary and oral, fully established the fact of the two partitions and that in view of these partitions it should have been held that Bisheshwar Dayal Singh 158 became separate owner of eight anna lakhraj interest and in that interest his mokarrari interest of eight annas merged, and that under the certificate sale the whole of this inter est passed on to the purchaser in execution and that being so, the defendants ' first party could only maintain a suit for recovery of rent from the raiyats to the extent of their six anna mokarrari interest.
In our opinion, this appeal can be disposed of on a short point without taking into consideration the respective contentions of the parties raised before us or urged in the two courts below.
The plaintiffs ' case rests solely on the allegation of merger of the eight anna lakhraj interest of Bisheshwar Dayal Singh with his mokarrari interest to the same extent.
It, however, seems to us that there was no scope for the application of the doctrine of merger to the facts disclosed by the plaintiffs in their plaint.
If the lessor purchases the lessee 's interest, the lease no doubt is extinguished as the same man cannot at the same time be both a landlord and a tenant, but there is no extinction of the lease if one of the several lessees purchases only a part of the lessor 's interest.
In such a case the leasehold and the reversion cannot be said to coincide.
It was the plaintiffs ' case that mauza Darha was orginally granted in mokarrari under a single contract of lease and it was by inheritance that the lessee 's interest devolved on three branches of the family, Bisheshwar Dayal Singh getting an interest of eight annas in the whole of the leasehold.
He then purchased a six anna interest in the entire reversion in the year 1916 and another two anna interest in it in the year 1917.
By these purchases he became a joint owner in the entire lakhraj holding to the extent of a moiety.
He, however, never came to own the entire lakhraj interest in the village or the entire mokarrari interest therein.
There was thus no coalescence of the interest of the lessor and the lessee in the whole of the estate which was subject to lakhraj and mokarrari interests and that being so, the mokarrari interest of Bisheshwar Dayal Singh did not merge in his lakhrai interest.
159 Mere purchase by Bisheshwar Dayal Singh of portions of the lakhrai interest could not bring about an extinction of the lease or break its integrity as he was only one of the several joint holders of the mokarrari interest.
An inter se partition of the mokarrari interest amongst the mokarrari dars as alleged by the plaintiffs could not affect their liability qua the lessor for the payment of the whole rent, as several tenants of a tenancy in law constitute but a single tenant, and qua the landlord they constitute one person, each constituent part of which possesses certain common rights in the whole and is liable to discharge common obligations in its entirety.
In the words of Lord Halsbury in White vs Tyndall(1), the parties to whom a demise is made hold as tenants in common but what they covenant to pay is one rent, not two rents and not each to pay half a rent but one rent.
There is a privity of the estate between the tenant and the landlord in the whole of the leasehold and he is liable for all the covenants running with the land.
In law, therefore, an inter se partition of the mokarrari interest could not affect the integrity of the lease and it could not be said that Bisheshwar Dayal Singh under the alleged partition became a mokarraridar under another con tract of lease.
Such partitions amongst several lessees inter se are usually made for convenience of enjoyment of the leasehold but they do not in any way affect the integri ty of the tenancy or make each holder of an interest in it as a separate holder of a different tenancy.
In the present case there was not even an allegation that the tenancy was severed and the several tenancies came into existence as a result of the partition qua the landlord.
Similarly the allegation of partition inter se among the several owners of the lakhraj holding could not in any way affect the integri ty of the lease in the absence of an allegation of a fresh contract between the split up owners of the holding and the different owners in the mokarrari interest.
The lakhraj holding in the village still remains a single holding and it was not alleged that it was split up in different holdings. 'All owners (1) 13 App.
263 21 160 of the lakhraj interest are jointly responsible for payment of the cess to Government and it was because of their de fault in payment of the cess that the whole lakhraj interest was sold in the certificate sale.
In this situation none of the conditions necessary for the application of the doctrine of merger can be said to have been made out by the allega tions made in the plaint.
On the plaintiffs ' own case the lease is still a live one in respect of the six anna inter est of the defendants ' first party and in these circum stances it is not possible to hold that it has become ex tinct to the extent of eight anna interest of Bisheshwar Dayal Singh in the absence of any allegation that any fresh contract, express or implied, was arrived at between the parties.
The leasehold has not in any way been drowned in the reversion and both lakhraj and mokarrari interest are still intact.
For the reasons given above we agree with the decision of the High Court that Bisheshwar Dayal Singh 's interest in the mokarrari did not merge in his lakhraj interest and that under the certificate sale it did not pass to the execution purchaser; on the other hand, it vested in the defendants ' first party by reason of the family partition and they became entitled as mokarraridars to recover rent from the plaintiffs ' raiyats to the extent of fourteen annas share.
All that passed at the certificate sale to the execu tion purchaser and subsequently to the plaintiffs was merely the lakhraj interest of the Pathaks and of Bisheshwar Dayal Singh and it could not be that at this sale qua one judg ment debtor a larger interest passed to the execution pur chaser than in respect of the other debtor.
In view of our decision that the doctrine of merger has no application to the facts of the case, the plaintiffs ' case is bound to fail.
We accordingly hold that there is no substance in this appeal and we dismiss it with costs.
Appeal dismissed.
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If a lessor purchases the whole of the lessee 's interest, the lease is extinguished by merger, but there can be no merger or extinction where one of several joint holders of the mokarrari interest purchases portion of the lakhraj interest.
A partition inter se amongst several mokarraridars does not in any way affect the integrity of the tenancy or make each holder of an interest in it a separate holder of a different tenancy, and notwithstanding such partition the mokarraridars remain liable qua the lessor for the payment of the whole rent as one tenant.
White vs Tyndall (13 App.
Cas. 263) referred to.
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The High Court at Patna had previously dismissed the suit filed by the appellants, seeking declarations related to the title to certain lands in village Darha, and an injunction to restrain the respondents from proceeding with a rent suit. The dispute centered around the ownership of a village granted to three branches of the Singha family, with Bisheshwar Dayal Singh holding an eight-anna share in the mokarrari interest. However, he purchased the lakhraj interest in 1917, leading to a claim by the respondents that his mokarrari interest had merged with his lakhraj interest.
The High Court's decision was upheld by the Supreme Court, which concluded that the doctrine of merger did not apply to the facts of the case. According to the court, the leasehold and reversion cannot be said to coincide since Bisheshwar Dayal Singh only purchased a part of the lessor's interest, not the entire reversion. The court also held that an inter se partition of the mokarrari interest amongst the mokarrari dars did not affect their liability qua the landlord for the payment of the whole rent. As a result, the Supreme Court dismissed the appeal of the appellants, upholding the High Court's decision that the respondents' claim for rent was valid to the extent of 14 annas share.
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ivil Appeal No. 1800(N) of 1974 From the Judgment and Order dated 2.11.73 of the Delhi High Court in C.W. No. 906 of 1973.
S.N. Mehta for the Appellant.
G. Ramaswamy, Additional Solicitor General, G. Venkatesh Rao and A.V. Rangam for the Respondents.
652 The Judgment of the Court was delivered by OZA, J.
This is an appeal on leave under Article 136 of the Constitution.
The appellant is a transporter and it is alleged that he brought goods into the limits of Delhi and were seized within the Union Territory as it was alleged that they were brought in without the payment of terminal tax.
A penalty of ten times of the amount of the terminal tax was also demanded from the appellant and he was informed that if the terminal tax alongwith the penalty is not paid within four days the goods will be sold at his risk.
By a writ petition the appellant challenged this demand before the High Court of Delhi and by the impugned judgment the Delhi High Court dismissed the writ petition and hence the present appeal.
The High Court has considered the law of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the 'Act ') coupled with the provisions contained in the imposition of terminal tax and also examined the legislative competence of the Parliament to enact the law and ultimately came to the conclusion that the law was applicable in the territory.
There was also some controversy raised before the High Court in respect of the facts as to whether the cylin ders on which the duty was demanded were empty or were full and as to whether the appellant stopped its vehicle at the post and was allowed to go and later on he was stopped by the Squad or he got into the territory without payment of tax and was therefore caught but all these controversial questions of facts the High Court refused to consider as the appellant had an opportunity to pursue the remedy under the law where these facts could be investigated and therefore as that was not done and it was a writ petition filed before the High Court, the High Court rightly did not go into the disputed questions of facts.
The only question which was canvassed before the High Court and was considered is the question as to whether this penalty imposed under Section 464 of the Act could be imposed by the taxing authority without a prosecution having been filed before a competent magistrate and the High Court in its judgment dismissed the petition upholding the contention of the Delhi Municipal Corporation and the learned counsel appearing for the appel lant also canvassed that question alone as it was the ques tion on which High Court held against the appellant.
It was contended by learned counsel for the appellant that Sections 463 and 464 both fall in the Chapter "Offences and Penalties".
By referring to the language of Section 464, he contended that in the body of this Section language indicate that what is levied against the appellant is de scribed as "fine".
He also referred to Sections 469 and 470 and contended that according to the scheme of this Chapter, the 653 punishment provided in Section 463 and the penalty (or fine) provided in Section 464 could only be imposed by a Magis trate after a proper trial.
He also contended that the learned Judges of the High Court placing reliance on Section 59 and the notification delegating the functions by the Commissioner to the terminal tax authority came to the conclusion that under Section 464 it is the tax authority who has the jurisdiction to impose the penalty but according to the learned counsel the residuary powers of the Commis sioners under Section 59 are only administrative powers and according to him the High Court was not right in placing reliance on that The main emphasis by the learned counsel was that impo sition of penalty as provided in Section 464 where a wide discretion is given to impose penalty upto ten times of the tax payable itself indicates that the functions of the authority who is expected to exercise the jurisdiction under Section 464 is in the nature of judicial function and there fore it could not have been left to the executive authority of the Commissioner or a delegate to whom the powers may have been delegated.
According to the learned counsel the penalty was not imposed by the competent authority.
Learned counsel for the respondent on the other hand contended that the language used at the heading of the Chapter which starts with Section 461 itself indicates that this Chapter deals with .two types of matters (i) where offences are alleged to have been committed and (ii) where only penalties could be imposed and the scheme of this Chapter indicates that wher ever the offences are alleged to have been committed it has been provided that they will be tried by a competent magis trate and the punishment could only be inflicted by the competent magistrate on conviction of the person for the offences alleged against him.
Whereas wherever penalties are provided it has been provided that where the facts attract the relevant provisions pertaining to penalty the tax plus penalty could be imposed and these penalty provisions nei ther talk of any offence nor talk of conviction before a competent court of a Magistrate.
It was contended that on the basis of this distinction, if the two sections 463 and 464 which are relevant are examined it is clear that Section 464 do not pertain to any offence and therefore the penalty thus imposed under this Section is not a punishment which could only be inflicted under Section 463 after conviction and therefore for imposition of penalty under Section 464 the prosecution of the appellant before a competent magis trate is not at all necessary.
Learned counsel also contend ed that even reading the provisions of Section 470 or 469 do not indicate contrary.
As regards the authority of the tax authority to impose this pen 654 alty, learned counsel referred to the notifications which have been relied on by the High Court and contended that Section 59 confers very wide powers on the Commissioner of Municipal Corporation and he is also authorised to delegate the functions and in accordance with the provisions of law by a notification the functions have been delegated.
The Commissioner had the authority as regards the authority of the tax authority to impose this penalty under Section 464 and it is in this delegated authority that the terminal tax authority has imposed this penalty against the appellant as has been held by this Court.
The only question which arises in this appeal is as to whether penalty as provided in Section 464 of the Act could be imposed by the terminal tax authority or it could not be imposed unless the appellant is convicted and found guilty by a competent Magistrate as is contemplated in Section 463 of the Act.
Section 463 reads: 463: Punishment for offences relating to terminal tax.
"Whoever brings within the Union Territory of Delhi any goods liable to terminal tax without the payment of such tax shall, on conviction, be punishable with imprisonment for a term which may extend to six months or with the fine which may extend to one thousand rupees or with both, and the court trying an offence under this section may, on such conviction, also confiscate the goods in respect of which the offence has been committed.
" Sec. 464 reads: Penalty for evasion of terminal tax: "Where any goods imported into Delhi are liable to the payment of terminal tax, any person, with the intention of evading payment of the tax introduces or attempts to introduce or causes or abets introduction of any such goods within the Union Territory of Delhi, upon which payment of terminal tax due on such introduction, has neither been made nor ten dered, shall be punishable with fine which may extend to ten times the amount of such termi nal tax.
" It is significant that in Sections 463 and 464 the language used is that "a 655 person who brings the goods into the Union Territory of Delhi liable to terminal tax without the payment of tax shall on conviction be punishable." Whereas in Section 464 the Section talks of bringing the goods into the Union Territory on which terminal tax is due and is not tendered or paid a fine which may extend to ten times the amount of terminal tax could be levied.
This different phraseology used in the two Sections clearly go to show that where the ingredients of Section 463 are not in doubt it is open to the corporation authorities to launch a prosecution against the person who introduces the goods without payment of terminal tax and in this event the person on conviction only can be punished but the pun ishment is also imprisonment but the highest limit of fine is limited to Rs. 1,000 whereas under Section 464 neither there is any reference to a conviction nor any reference to the Court of a Magistrate and the only penalty provided is monetary which may extend to ten times.
It is therefore clear that Section 463 refers to a criminal offence if committed, could only be tried by a competent criminal court and on conviction alone the punishment could be imposed but Section 464 is in the nature of a revenue provision where non payment of tax could be remedied by imposition of penal ty and the limit of penalty has been prescribed at ten times of the tax which is payable.
In view of different language used in the two sections and also the language used in the marginal note it is clear that the two can not be said to be same or similar.
Even the heading of the Chapter talks of "Offences and Penalties".
It therefore clearly appears that this chapter deals with two categories of matters; (i) 'offences ' and the other 'penalties ' and the scheme of this Chapter indicates that so far as offences are concerned they could only be tried by a competent criminal court and punishment could only be awarded after conviction whereas so far as penalties are concerned they could be imposed by the taxing authority itself.
Even the language or Sections 470 or 469 does not help the appellant in any manner.
It is no doubt true that as regards the offences, a specific provision has been made in Section 469 for appoint ment of a Municipal Magistrate but in respect of penalties there is no specific provision authorising any officer or authority to exercise jurisdiction under the Section where for evasion of tax, penalty could be levied, like Section 464 but it could not be doubted that Section 59 gives a very wide power to the Municipal Commissioner either to exercise these powers himself 656 or to delegate.
It is not in dispute that in exercise of power under Section 59 the Municipal Commissioner had the authority and exercising the powers under Section 491 of the Act by notification dated September 17, 1973 he delegated the functions under Section 464 to the taxing authorities and it is the conclusion that the taxing authorities were competent under the scheme of this Act to impose the penalty to the tune of ten times of the tax which is payable.
Section 59 of the Act reads: 59: Functions of the Commissioner; "Save as otherwise provided in this Act, the entire executive power for the purpose of carrying out the provisions of this Act other than those pertaining to the Delhi Electric Supply Undertaking and of any other Act for the time being in force which confers, any power or imposes any duty on the Corporation, shall vest in the Commissioner who shall also (a) exercise all the powers and perform all the duties specifically conferred or imposed upon him by this Act or by any other law for the time being in force; (b) prescribe the duties of, and exercise supervision and control over the acts and proceedings of, all municipal officers and other municipal employees other than the Municipal Secretary and the Municipal Chief Auditor and the municipal officers and other municipal employees immediately subordinate to them and subject to any regulation that may be made in this behalf, dispose of all questions relating to the service of the said officers and other employees their pay, privileges, allowances and other conditions of service; (c) on the occurrence or threatened occurrence of any sudden accident or any unforeseen event or natural calamity involving or likely to involve extensive damage to any property of the Corporation, or danger to human fife, take such immediate action as he considers necessary and made a report forth with to the Standing Committee and the Corpo ration of the action he has taken and the reasons for the same as also of the amount of cost, if any, incurred or 657 likely to be incurred in consequence of such action, which is not covered by a budget grant; (d) exercise the powers and perform the duties conferred or imposed by or under this Act upon the General Manager (Electrici ty) in this absence or on failure by him to exercise or perform the same." This Section clearly shows that the Municipal Commissioner had wide powers and he could therefore exercise powers to impose the penalty as contemplated under Section 464.
Sec tion 491 of the Act reads: 491: Power to delegate functions of Commissioner: "The Commissioner may by order direct that any power conferred or any duty imposed on him by or under this Act shall, in such circumstances and under such conditions, if any, as may be specified in the order, be exercised and performed also by any municipal officer or other municipal employee specified in the order." This Section authorises the Commissioner to delegate the authority vested in him and it is in exercise of these powers that in fact he had delegated the authority to the tax officer to exercise powers under Section 464.
Under these circumstances therefore the contention advanced by the learned counsel for the appellant that the penalty under Section 464 could not be imposed without a conviction by a criminal court is not sustainable in law.
We therefore see no reason to entertain this appeal.
It is therefore dismissed.
In the circumstances of the case par ties are directed to bear their own costs.
G.N. Appeal dis missed.
|
The appellant, a transporter, brought some goods to Delhi without paying terminal tax.
Under Section 464 of the Delhi Municipal Corporation Act, 1957, a penalty of ten times the amount of terminal tax was demanded from the appellant.
The demand was challenged before the High Court by way of a Writ Petition.
The High Court considered the question as to whether the penalty imposed under section 464 of the Act could be imposed by the taxing authority without a prosecution having been filed before a competent magis trate, and answered it in the affirmative.
This appeal by special leave is against the High Court 's judgment.
On behalf of the appellant, it was contended that Sec tion 464 of the Act gives a wide discretion to impose penal ty upto ten times of the tax payable and as such is a judi cial function which cannot be left to the executive authori ty and hence the authority who imposed the penalty was not competent to do so.
The respondents contended that Section 464 does not pertain to any offence and penalty levied under this section is not punishment; that section 463 provides for punishment after conviction and so, for imposition of penalty under Section 464, the prosecution of the appellant before a competent magistrate is not at all necessary.
It was also contended that Section 59 confers very wide powers on the Commissioner and he is also authorised to delegate the functions, and under such delegated authority the penalty has been imposed under Section 464.
Dismissing the appeal, HELD: 1. Penalty under Section 464 of the Delhi Munici pal Corporation Act, 1957 could be imposed without a convic tion by a 651 criminal court.
The different phraseology used in sections 463 and 464 clearly go to show that where the ingredients of Section 463 are not in doubt it is open to the corporation authorities to launch a prosecution against the person who introduces the goods without payment of terminal tax and in this event the person, on conviction only, can be punished and the punishment is also imprisonment, but the highest limit of fine is limited to Rs.1,000 whereas under Section 464 neither there is any reference to a conviction nor any reference to the Court of a Magistrate and the only penalty provided is monetary which may extend to ten times.
It is therefore clear that Section 463 refers to a criminal of fence if committed, could only be tried by a competent criminal court and on conviction alone the punishment could be imposed but Section 464 is in the nature of a revenue provision where non payment of tax could be remedied by imposition of penalty and the limit of penalty has been prescribed at ten times of the tax which is payable.
In view of different language used in the two sections and also the language used in the marginal note it is clear that the two cannot be said to be same or similar.
It is no doubt true that as regards the offences, a specific provision has been made in Section 469 for appoint ment of a Municipal Magistrate but in respect of penalties there is no specific provision authorising any officer or authority to exercise jurisdiction under the section where for evasion of tax, penalty could be levied, like Section 464, but it could not be doubted that Section 59 gives a very wide power to the Municipal Commissioner either to exercise these powers himself or to delegate.
It is not in dispute that in exercise of powers under Section 59 the Municipal Commissioner had the authority, and exercising the powers under Section 491 of the Act, by notification dated September 17, 1973 he delegated the functions under Section 464 to the taxing authorities.
Hence the taxing authorities were competent under the scheme of this Act to impose the penalty to the tune of ten times of the tax which is pay able.
[655G H; 656A, B]
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This is a civil appeal case (Civil Appeal No. 1800(N) of 1974) before the Delhi High Court, where the appellant, a transporter, challenged the demand of terminal tax and penalty by the Delhi Municipal Corporation. The High Court dismissed the writ petition, upholding the contention of the Corporation. The appellant then appealed to the Supreme Court. The Supreme Court examined the law of the Delhi Municipal Corporation Act, 1957, and the provisions of the imposition of terminal tax, and concluded that the law was applicable in the territory. The only question before the Supreme Court was whether the penalty under Section 464 of the Act could be imposed by the terminal tax authority without a prosecution having been filed before a competent magistrate.
The Supreme Court held that Section 464 does not pertain to any offence, and therefore, the penalty imposed under this section is not a punishment that could only be inflicted after conviction. The Court also held that the taxing authority, having been delegated the power by the Commissioner under Section 491 of the Act, was competent to impose the penalty to the tune of ten times the tax payable. Therefore, the Supreme Court dismissed the appeal and directed the parties to bear their own costs.
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ivil Appeal No. 1837 of 1990.
From the Judgment and Order dated 17.1.1989 of the Patna High Court in C.W.J.C. No. 4276 of 1988, A. Sharan for the Appellants.
Pankaj Kalra and Pramod Swarup for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
Delay condoned.
Special leave granted.
This appeal arises out of the decision of the Patna High Court 470 whereby it struck down the selection made for appointments in the junior teaching posts in medical colleges in the State and directed a fresh selection list to be prepared after shifting the last date for receipt of applications to 30th June, 1988.
The facts giving rise to this appeal, briefly stated, are as under.
The State of Bihar published an advertisement inviting applications for appointment to the posts of (i) Assistant Professor (clinical subject); (ii) Registrar; (iii) Assist ant Clinical Pathologist; (iv) Anesthetist; (v) Resident Medical Officer and (vi) Demonstrator (Tutor) in non clini cal subject for different Medical Colleges and Medical College Hospitals in the State of Bihar.
For the post of Assistant Professor only such officers who had worked as Resident or Registrar in Medical Hospital recognised for imparting M.B.B.S. studies by the Medical Council of India and having three years experience of such post were consid ered eligible.
The last date for receipt of the application was fixed as 31st January, 1988.
Pursuant to the said adver tisement applications were received from eligible candidates and the select list or panel was prepared for appointments to the respective posts.
The respondents and some interven ors who held appointments as junior teachers in one or the other Medical Colleges in the State questioned the validity of the State 's action of inviting applications for prepara tion of a list for appointments to the advertised posts mainly on the ground that the last date for receipt of applications fixed as 31st January, 1988 (hereinafter called 'the cut off date ') deprived them of the opportunity to compete for the posts as they did not complete the requisite experience criterion of three years by that time.
It was contended that this cut off date was arbitrarily fixed and was, therefore, violative of Article 14 of the Constitution.
The High Court took the view that the State Government had deviated from its usual practice of fixing the cut off date as 30th of June of the relevant year.
This is clear from the following observation made by the High Court: " . . advertisement in the past including one in the year 1983 (Annexure 1) always fixed 31st June as the date " . (Emphasis supplied) The use of the word 'always ' indicates that the High Court was under the impression that in the past the cut off date was always fixed as 31st June (it should be 30th June) for the preparation of the panel for appointments to the posts in question.
Elsewhere also in the judgment there are obser vations which disclose that the High Court laboured 471 under the belief that the cut off date was always fixed as 30th of June of the relevant year.
This becomes obvious from the following criticism also: "If the State is determined to achieve such a goal and is ready to make its activity predictable it is a welcome sign but such desired predictability can equally be achieved by adhering to the schedule of the past and maintaining 30th June of the years as the last date for the application.
If they had not followed any rule in the past and they propose to follow a rule in this regard in future, they can do so without causing any violation to any legal right of any incumbent by at least showing adherence to the reckoning date which until now had been the last date of the month of June of the year." (Emphasis supplied) On this line of reasoning the High Court came to the conclu sion 'that the State Govermnent had acted arbitrarily in fixing the last date fox receipt of applications as 31st January, 1988 under the advertisement published on 29th December, 1987.
The High Court while upholding the conten tion based on Article 14 further observed "we would have ignored the arbitrariness in taking 31st January of the year as the reckoning date had we not taken notice of recalci trance of the, respondents in taking no step in the years intervening the selection in the year 1983 and the present selection".
The High Court, therefore, felt satisfied that there was no rationale in departing from the past practice and selecting 31st January, 1988 as the last date.
It is felt that in all fairness 30th of June of the year would be 'the .preferable date ' for reckoning the eligibility of the candidates.
The State Government was, therefore, directed to shift the last date for receipt of the applications from 3 1st January 1988 to 30th June, 1988 and to prepare a fresh panel thereafter and make appointments to the posts in question therefrom.
The State of Bihar feeling aggrieved by this order has approached this Court by special leave.
The learned counsel for the State submitted that the decision of the High Court was based on an erroneous premise that the cut off date for eligibility purposes was 'always ' fixed as 30th of June of the relevant year in the past.
In order to dispel this assumption made by the High Court without examining the past advertisements the State Government has placed before us the advertisements issued from 1974 to 1980 which shows that different cut off dates were fixed under these different advertisements and at no time in the past between 1974 and 1980 was 30th of June fixed as the 472 relevant date.
It is true that the High Court did not have the benefit of the earlier advertisements but it is equally true that there was no material on the record of the High Court for concluding that in the past the cut off date was 'always ' fixed as 30th of June of the relevant year.
From the copies of the advertisements from 1974 to 1980 it tran spires that generally the cut off date was fixed between one to one and a half months after the date of issuance of the advertisement.
In the year 1983 for the first time the cut off date was fixed as 30th June, 1983.
On some occasions in the past the cut off date was extended, depending on the facts and circumstances obtaining at the relevant point of time.
It, therefore, becomes obvious from this documentary evidence that the factual premise on which the High Court has based its judgment is clearly erroneous.
The High Court was in error in thinking that in the past the cut off date was always fixed as 30th of June of the relevant year.
In fact except for a solitary occasion in 1983 when the cut off date was fixed as 30th June, 1983, at no other time in the past was that date fixed as the last date for receipt of the applications.
No advertisements were admittedly issued after 1983 and before the advertisement in question.
The present advertisement was published on 29th December, 1987 and the last date for receipt of applications was fixed thereunder as 3 ist January, 1988 leaving a time gap of a little over a month.
As pointed out earlier, on a perusal of the adver tisements issued from 1974 to 1980 it becomes obvious that normally the cut off date was fixed one or one and a half months after the date of advertisement.
It was, therefore, not the uniform practice of the State Government to fix the cut off date for eligibility purposes as 30th of June of the relevant year as was assumed by the High Court.
Once it is found that the High Court has based its decision on an erroneous assumption of fact, the decision cannot be allowed to stand.
It was, however, argued by the learned counsel for the respondents that the State Government should not be permit ted to introduce new facts in the form of advertisements issued from 1974 to 1980.
We do not think that such a tech nical approach would be justified for the simple reason that the assumption of fact made by the High Court is not borne out from record.
No material was placed before the High Court to justify the conclusion that 30th of June of the relevant year was 'always ' fixed as the cut off date in the past.
The High Court 's assumption of fact is, therefore, based on no evidence at all.
We have, therefore, thought it fit to permit the State Government to place material on record to justify its contention that the High Court had committed a grave error in assuming that in the past the cut off date was always fixed as 30th of June of the rele vant year.
473 It was next contended that this Court should not inter fere in exercise of its extra ordinary Jurisdiction under Article 136 of the Constitution.
In support of this conten tion reliance was placed on the observations of this Court in Municipal Board.
Pratabgarh & Anr.
vs Mahendra Singh Chawla & Ors., wherein this Court while correcting an error of law refused to interfere with the decision of the High Court directing reinstatement of the workman on the finding that the termination order was in valid.
That was, however, a case where the Court came to the conclusion that the employee was a capable hand and his services were actually needed by the appellant Municipal Board.
It was in those special circumstances that this Court while correcting the error refused to interfere with the order of reinstatement.
The decision, therefore, turned on the special facts of that case.
The appellant invited our attention to two decisions of this Court, namely, Union of India & Anr.
vs M/s. Pararnes waran Match Works & Ors., [1975]1 SCC 305 and Uttar Pradesh Mahavidyalaya Tadarth Shikshak Niyamitikaran Abhiyan Samiti, Varanasi vs State of U.P. & Ors.
in sup port of its contention that the High Court was in error in holding that the State had acted arbitrarily in fixing the cut off date.
In the first mentioned case by Notification No. 162 dated 21st July, 1967, which superseded the earlier notifications, provision was made that if a manufacturer gave a declaration that the total clearance from the factory will not exceed 75 million matches during a financial year, he would be entitled to a concessional rate of duty.
This Notification was amended by Notification No.205 dated 4th September, 1967, clause (b) whereof confined the concession, inter alia to factories whose total clearance of matches during the financial year 1967 68, as per declaration made by the manufacturer before 4th September, 1967, was not estimated to exceed 75 million matches.
Thus, the conces sional rate of duty could be availed of only by those who made the declaration before 4th September, 1967.
The re spondent was not a manufacturer before 4th September, 1967 as he had sought for a licence on 5th September, 1967 and was therefore, in no position to made the declaration before 4th September, 1967.
The respondent, therefore, challenged the cut off date of 4th September, 1967 as arbitrary.
Deal ing with the contention, this Court observed as under: "In the matter of granting concession or exemption from tax, the Government has a wide latitude of discretion.
1t need not give exemption or concession to everyone in order 474 that it may grant the same to some.
As we said, the object of granting the concessional rate of duty was to protect the smaller units in the industry from the competition by the larger ones and that object would have been frustrated, if, by adopting the device of fragmentation, the larger units could become the ultimate beneficiaries of the bounty.
" While pointing out that a classification could be rounded on a particular date and yet be reasonable, this Court observed that the choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless the circum stances show it to be capricious or whimsical.
When it is necessary for the legislature or the authorities to fix a line or a date and there is no mathematical or logical way of fixing it precisely, the decision of the legislature or authority must be accepted unless it is shown to be capri cious or whimsical or wide off the reasonable mark.
In the second mentioned case this Court, while upholding the con stitutional validity of section 31 B of the U.P.Higher Educational Service Commission Act, 1980, answered two contentions, namely, (1) adoption of the cut off date in the said section as 3rd January, 1984 for the purposes of regu larisation of the services of ad hoc teachers appointed by the management of the affiliated colleges was arbitrary and irrational and violative of Article 14 inasmuch as equals were treated as unequals, and (ii) the Legislature could not arbitrarily adopt 3rd January, 1984 as the cut off date for regularisation of the services of ad hoc teachers merely because that was the date on which the 1983 order expired.
Agreeing with the High Court that the fixation of the date for the purposes of regularisation was not arbitrary or irrational, this Court observed that the object of section 3 I B was to regularise the services of ad hoc teachers ap pointed under the 1983 order till 3rd January, 1984.Ad hoc teachers who had been appointed prior to that date had legal sanction and therefore they constituted a distinct class.
This Court, therefore, felt that the legislature could not have adopted any other basis for purposes of regularisation and refused to interfere with the High Court 's order.
In the present case as pointed out earlier the past practice was to fix the last date for receipt of applica tions a month or one and a half months after the date of actual publication of the advertisement.
Following the past practice the State Government fixed the last date for re ceipt of applications as 31st January 1988.
Those who had . the required experience of three years by that date were, therefore, eligible to apply for the posts in question.
The respondents and some 475 of the intervenors who were not completing the required experience by that date, therefore, challenged the fixation of the last date as arbitrary and violative of Article 14 of the Constitution.
It is obvious that in fixing the last date as 31st January, 1988 the State Government had only followed the past practice and if the High Court 's attention had been invited to this fact it would perhaps have refused to inter fere since its interference is based on the erroneous belief that the past practice was to fix 30th of June of the rele vant year as the last date for receipt of applications.
Except for leaning on a past practice the High Court has not assigned any reasons for its choice of the date.
As pointed out by this Court the choice of date cannot be dubbed as arbitrary even if no particular reason is forthcoming for the same unless it is shown to be capricious or whimsical or wide off the reasonable mark.
The choice of the date for advertising the posts had to depend on several factors, e.g., the number of vacancies in different disciplines, the need to fill up the posts, the availability of candidates, etc.
It is not the case of any one that experienced candi dates were not available in sufficient numbers on the cut off date.
Merely because the respondents and some others would qualify for appointment if the last date for receipt of applications is shifted from 31st January, 1988 to 30th June, 1988 is no reason for dubbing the earlier date as arbitrary or irrational.
We are, therefore, of the opinion that the High Court was clearly in error in striking down the Government 's action of fixing the last date for receipt of applications as 31st January, 1988 as arbitrary.
It was lastly contended that the State Government had given an undertaking to the High Court that 'no appointment shall be made from any previous panel and that, as decided by this Court, if the panel, which is likely to be prepared pursuant to the advertisement in question, is allowed, appointments shall be made from the same panel or if that panel is not allowed and a new panel is required to be prepared, as directed by this Court, appointments shall be made from the same panel '.
This undertaking, in our opinion, cannot preclude the State from challenging the decision of the High Court.
In the result, this appeal succeeds.
The impugned deci sion of the High Court is set aside and the Writ Petition which has given rise to this appeal will stand dismissed with no order as to costs throughout.
Y. Lal Appeal allowed.
|
The State of Bihar published an advertisement inviting applications for appointments to the junior teaching posts in medical colleges in the State of Bihar.
For the post of Assistant Professor.
only such officers who had worked as Resident or Registrar in Medical Hospitals recognised for imparting M.B.B.S. studies by the Medical Council of India and having three years experience of such post were consid ered eligible.
The last date for receipt of applications was fixed as 31st January 1988.
Pursuant to the said advertise ment.
applications from eligible candidates were received and a select list or panel was prepared for appointments to the respective posts.
The respondents and some other inter venors who were working then in the Medical colleges as junior teachers challenged the State action in fixing the 3 1st of January 1988 as the cut off date for receipt of applications for the advertised posts.
as they had by then not completed three years which was prescribed as the requi site experience.
It was contended by them that the cut off date was arbitrarily fixed and was therefore violative of Article 14 of the Constitution.
The High Court took the view that the State Government in fixing the 31st January 1988 as the cut off date.
had deviated from its usual practice of fixing the cut off date as 30th of June of the relevant year.
Hence this appeal by the State of Bihar by special leave.
It is contended by the State that the decision of the High Court was based on an erroneous premise that the cut off date for eligibility purposes was 'always ' fixed as 30th of June of the relevant year in the past.
Allowing the appeal, this Court.
HELD: The past practice was to fix the last date for receipt of applications a month or one and a half months after the date of actual publication of the advertisement.
Following the past practice the State 469 Government fixed the last date for receipt of applications as 31st January 1988.
These who had completed the required experience of three years by that date were.
therefore.
eligible to apply for the posts in question.
[474G H] The choice of date cannot be dubbed as arbitrary even if no particular reason is forth coming for the same unless it is shown to be capricious or whimsical or wide off the reasonable mark.
The choice of 'the date for advertising the post had to depend on several factors, e.g. the number of vacancies in different disciplines.
the need to fill up the posts.
the availability of candidates etc., [475C D] Merely because the respondents and some others would qualify for appointment if the last date for receipt of applications is shifted from 31st January 1988 to 30th June 1988.
is no reason for dubbing the earlier date as arbitrary or irrational.
[475D] The High Court was clearly in error in striking down the Government 's action of fixing the last date for receipt of application as 31st January 1988 as arbitrary.
[475E] Municipal Board, Pratabgarh & Anr.
vs Mahendra Singh Chawla & Ors., ; Union of India & Anr.
vs M/s. Parameswaran Match Works & Ors., ; and Uttar Pradesh Mahavidyalaya Tadarth Shikshak Niyamitika ran Abhiyan Samiti, Varanasi vs State of Uttar Pradesh & Ors., , referred to.
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Here's a two-paragraph summary of the court case:
The State of Bihar invited applications for appointments to junior teaching posts in medical colleges. The last date for receipt of applications was fixed as 31st January, 1988. The respondents, who held appointments as junior teachers in medical colleges, challenged the validity of the State's action, alleging that the last date for receipt of applications deprived them of the opportunity to compete for the posts. The Patna High Court struck down the selection made for appointments and directed a fresh selection list to be prepared after shifting the last date for receipt of applications to 30th June, 1988.
However, the Supreme Court allowed the State's appeal, holding that the High Court was in error in striking down the Government's action of fixing the last date for receipt of applications as 31st January, 1988 as arbitrary. The Court observed that the choice of date could not be dubbed as arbitrary unless it is shown to be capricious or whimsical. The State Government had followed the past practice of fixing the last date for receipt of applications a month or one and a half months after the date of publication of the advertisement. The Court, therefore, set aside the impugned decision of the High Court and dismissed the Writ Petition with no order as to costs throughout.
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Appeal No. 175 of 1951.
Appeal by Special Leave from the Order and Decree dated the 30th March, 1951, of the High Court of Judicature at Patna (Ramaswami and Rai JJ.) in Miscellaneous Appeal No. 19 of 1951 arising out of the Order dated the 18th December, 1950, of the 'Court of the Additional Sub Judge Second at Gaya in Title Suit No. 47 of 1950.
N. C. Chatterjee (Rameshwar Nath, with him) for the appellant.
M. C. Setalvad Attorney General for India, and Mahabir Prasad, Advocate General of Bihar (B. J. Umrigar with them) for the respondent.
February 3.
The Judgment of the Court was delivered by MAHAJAN J.
This appeal by special leave arises out of an application made by the State of Bihar against the Gaya Electric Supply Co. Ltd. under section 34 of the Indian Arbitration Act for stay of proceedings in a suit filed by the company on 28th September, 1950.
The facts relevant to this enquiry are these.
574 A licence of or the supply of electric energy in the town of Gaya was obtained by one Khandelwal in the year 1928 under the .
With the required sanction of the Government the licence was transferred to the company in 1932.
By a notification dated 23rd June, 1949, the licence was revoked by the Government with effect from 9th July, 1949.
Thereupon the company filed a suit against the State for a declaration that the revocation of the licence was arbitrary, mala fide and ultra vires.
During the pendency of the suit negotiations started between the company and the State for a settlement of the dispute and ultimately on 28th October, 1949, a deed of agreement was arrived at between them.
The effect of the agreement and the correspondence referred to therein was substantially as; follows : (a) That the company would withdraw the suit No. 58 of 1949 unconditionally on 25th October, 1949.
(b) That within three days of the withdrawal of ,the suit the State of Bihar would make an advance payment of rupees five lakhs to the company, and, simultaneously the company would formally hand over the possession of the undertaking to an authorized officer of the Government.
(c) That both parties will make their respective valuations within three months of talking over the undertaking and any balance of money found due to the company as per Government valuation will be paid to the company and in case of overpayment the excess paid to the company on account of the " on account payment " of rupees five lakhs will be refunded to the, Government.
(d) That in the case of any difference or dispute between,the parties over the payment of the balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator who should be a high government officer of the provincial government of rank equal to or higher than a Divisional Commissioner and his award shall be binding and final on both parties.
575 The arbitration clause is contained in a letter dated 13th October, 1949, and was substantially accepted by the company in its letter dated 17th October, 1949.
As set out by the State Government in its application under section 34, it runs as follows " In the case of any difference or dispute between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of 20 % shall be referred to arbitration. " In pursuance of the agreement the respondent took over the undertaking on 28th October, 1949, and also made a payment of rupees five lakhs to the company.
On the 19th January, 1950, the company sent a statement of valuation of the assets amounting to RS.
22,06,072, to the Chief Electrical Engineer, Bihar.
The Chief Electrical Engineer characterized the valuation of 22 lakhs by the company as fantastic and stated that according to a rough valuation the amount would be ' approximately five lakhs and that the final valuation would be settled after the company had furnished a detailed history of the plants and machineries.
The company declined to give any further details and stated that time was of the essence of the. contract and it would be extended from 28th January, to 15th February, 1950 On 6th April, 1950, the Chief Electrical Engineer intimated that the 'valuation amounted to Rs. 6,56,221.
No reply to this letter was received and the State Government intimated to the company that as difference and dispute had arisen relating to valuation, Mr. M. section Rao, I.C.S. was being appointed as sole arbitrator to decide the dispute.
On 28th September, 1950, the company instituted the suit, the subject matter the application for stay, after necessary notice under section 80 of the Code of Civil Procedure.
In the plaint it was alleged ,that as the State Government had failed and neglected to make its valuation or to make payment to the 576 company by the 15th March, 1950, it committed a breach of the agreement and by reason of this breach the company had rescinded the agreement and had forfeited the sum of five lakhs paid as advance by the State.
The company prayed inter alia for the reliefs of declaration that the, electrical undertaking belonged to them, for damages, for appointment of receiver and for injunction.
On the 9th October, 1950, the State Government filed the present appli cation under section 34, of the Indian Arbitration Act.
It was stated therein that the company had with a, dishonest and mala fide motive and with a view to avoid the decision of the matter in dispute in arbitration instituted the suit on incorrect and false allegations.
that the arbitration agreement was still subsisting and valid and binding on the parties and could not be taken as having been rescinded as alleged by the company, that the cause of action as alleged in the plaint being noncompliance with the agreement the suit arose out of and related to the agreement and was covered by the arbitration clause and that the State Government was ready and willing to have the dispute settled by arbitration.
The company denied the allegations of mala fides and pleaded that the arbitration clause was no longer in existence and that even assuming it to be in existence, the suit was in no way connected with the 'same and it was contended that the suit should not be stayed.
The subordinate judge held that the suit was no in respect of any matter agreed to be referred, and that the court had no ' jurisdiction to stay the proceedings.
In the result the stay application was dismissed.
Against this order the State Government appealed to the High Court.
The High Court held that the dispute in the suit was one which arose out of or was in respect of the agreement and that the question in the suit was directly within the scope of the arbitration clause.
By an order of this court dated 22nd May, 1951, the company was granted special leave ' under article 136(1) of the Constitution. ' 577 Section 34 of, the Indian Arbitration Act runs thus "Where any party to an arbitration comment Cost any legal proceedings against any other party to the agreement in respect of any matter agreed to be ,referred, any party to such legal proceedings may, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at ,the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of 'the arbitration, such authority may make an order staying the proceedings.
" From the language of the section it is quite clear that the legal proceeding which is sought to be stayed must be in respect of a matter which the parties have agreed to refer and which comes within the ambit of the arbitration agreement.
Where, however, a suit is commenced as to a matter which lies outside the submission, the court is bound to refuse a stay.
In the words of Viscount Simona L. C. in Heyman vs Daruins Ltd ' (1).
the answer to the question whether a dispute falls within an arbitration clause in a contract must depend on (a) what is the dispute, and (b) what disputes the arbitration clause covers.
If the arbitration agreement is broad and comprehensive and embraces any dispute between the parties "in respect of" the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself. ' Where, however, the party soaks to avoid the contract for reasons dehors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract.
In other words, a party cannot rely on a term of the contract (1) , 578 to repudiate it and still say the arbitration clause should not apply.
If he relies upon a contract, be must, rely on it for all purposes .
Where, however, an arbitration clause is not so comprehensive and is not drafted in the broad language which was, used in the House of Lords,case, namely ' "in respect of" any agreement, or in respect of something, arising out of it", that proposition does not hold good.
The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made.
Now as regards the first question, viz., what is the present dispute about, the answer is to be gathered from paragraphs 14 to 17 of the plaint.
It is averred therein that the Government of Bihar committed breach of the agreement and failed to make any, valuation of the undertaking or pay the balance of the compensation money, that time being of the essence of the contract, the defendant failed and neglected to complete the valuation within the time originally fixed or the extended time, and that by reason of the breach of contract the plaintiff rescinded the agreement and forfeited the sum of rupees five lakhs and that it is entitled to compensation for the wrongful deprivation of the use of its property.
No claim has been made in the plaint for the valuation of the undertaking or for the payment of any compensation for the undertaking; on the other hand, the claim in the suit is founded on the rescission of the agreement containing the arbitration clause and on a breach of that agreement.
These are matters which may well be said to arise out of the agreement and if the arbitration clause was broadly worded and stated that all disputes arising out of the agreement would be referred to arbitration, it could then probably have been said that the scope of the suit was within the ambit of the arbitration clause, but the clause here is differently worded.
The clause here is that if any difference.
or dispute arises between the parties over the payment of the 579 balance which may be found due after valuation such dispute shall be submitted to the sole arbitration of a single arbitrator.
The scheme of the agreement is that the Government was to make a valuation as laid ' down in the within three, months of taking over the undertaking and any balance of money found due to the company as per Government valuation was to be paid by the Government, and in case of over payment, the excess paid to the company on account of the "on account payment" of rupees five lakhs mentioned in paragraph 1 had to be refunded to government.
In the case of any difference between the parties over the valuation as arrived at by the Government and that arrived at by the company, such difference or dispute, including the claim for additional compensation of twenty per cent.
had to be referred to arbitration a scope of it is arbitration clause is a very narrow one.
It only confers jurisdiction on the arbitrator on the question of valuation of the undertaking pure and simple and does not say that all disputes arising out of the agreement or in respect of it will be decided by arbitration.
Questions relating to the breach of contract or its rescission are outside the reach of this clause.
The arbitrator has not been conferred the power by this clause to pronounce on the issue whether the plaintiff was justified in claiming that time was of the essence of the contract and whether the State Government committed a breach of the contract by not making a valuation within the time specified.
This clause is therefore no answer to the company 's querry "Show me that I have agreed to refer the subject matter of the suit to an arbitrator.
" Besides this clause in the agreement there is nothing else which can deprive the court of its jurisdiction to decide the plaintiff 's suit as brought.
Ramaswami J., with whom Rai J. concurred, held that upon a perusal of the term,; of the contract and of the correspondence it was obvious that no stipulation was made that the compensation money 75 580 should be paid within the period of three months, that on the contrary, the intention of the parties that the Government would pay compensation money only after the award had been made by the arbitrator.
Now this is the very point which would be in issue in the suit itself, and the learned Judge was in error in considering and deciding this point in this enquiry under section 34.
The validity of the plaintiff 's contention in the suit cannot be gone into by that court exercising jurisdiction under this section as its function is a very limited one.
The only point in such cases to be decided is whether the claim which is brought whether it is good, bad or indifferent comes within the submission to arbitration.
It may be that there are grounds upon which the defendant would be able to satisfy the proper tribunal that the plaintiff 's claim was frivolous and vexatious, but those considerations, as pointed out by Banks L. J in Monro vs Bognor Urban Council (1), are material only if the question to be considered is whether the case made was a frivolous and vexatious one and ought to have had no weight at all upon the question of what the plaintiff 's claim in fact was and one can only find out what his claim is by looking at the plaint.
The learned Judges in the High Court seem to have thought that the arbitration clause here had been drafted broadly and that all "disputes arising out of or in respect of the agreements were referable to arbitration.
Their reliance on the decision of the Calcutta High Court in Harinagar Sugar Mills Ltd. vs Skoda India Ltd.(") in support of the decision indicates the error.
In that case the arbitration clause was drafted in a comprehensive language and stated that a dispute arising out of the agreement had to be referred to arbitration.
Their reference to the case of Governor General in Council vs Associated Livestock Farm Ltd. (3) also shows that they were under the same erroneous impression.
In this case the arbitration clause was in these terms : (1) [1915] 3 K.B. i67.
(2) (3) A.I.R. 1948 Cal, 230, 581 "Any dispute or difference arising out of the contract shall be referred to the arbitration of the officer sanctioning the contract whose decision shall be final and binding.
" It is obvious that these decisions could have no relevance to the arbitration clause as drawn up in the present case.
If the nature of the claim is as we have indicated above, it seems plain that it does not come within the scope of the submission.
In our judgment, therefore, the decision of the learned Subordinate Judge was right and the Judges of the High Court were in error in reversing it.
In the result the only course open to us is to allow the appeal with costs and to say that the plaintiff 's claim is not within the scope of the submission and that the petition under section 34 was rightly dismissed by the Subordinate Judge.
Appeal allowed.
Agent for the appellants Rajinder Narain.
Agent for the respondent P. K. Chatterji.
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If the arbitration agreement is broad and, comprehensive and embraces any dispute between the parties in respect of the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself.
Where, however, the party seeks to avoid the contract for reasons dehors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract.
In other words, a party cannot rely on a term of the contract to repudiate it and still say the arbitration clause should not apply.
Where, however, an arbitration clause is not so comprehen sive and is not drafted in the broad language namely " in respect of " any agreement, or "in respect of something arising out of it", that proposition does not hold good.
The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made.
Disputes which arose between the State of Bihar and an Electric Supply Company whose licence had been revoked by the State were settled by an agreement which provided that the State should make an advance payment of Rs. 5 lakhs to the company, and the company should hand over the undertaking to the State.
The undertaking was to be valued, within 3 months and if any money was found due to the company as per the Government valuation over 5 lakhs it will be paid to the company and if the valuation was less than 5 lakhs the company would refund the excess received by it.
The agreement, contained an arbitration clause which ran as follows: " In the case of any difference or dispute between the parties over the valuation as arrived at by the Government and that arrived at by the company any such difference or dispute including the claim for additional compensation of 20% shall be referred to arbitration.
" The company instituted a suit against the State alleging that the State bad failed to make its valuation.
and to make, payment of the excess within the time fixed and as time was of the essence of the contract, it had rescinded the agreement, and praying for a declaration that the undertaking belonged to it, for damages and appointment of a receiver.
The State applied under section 34 of the Arbitration Act for stay of the suit: Held, that the scope of the arbitration clause was very narrow; it conferred jurisdiction on the arbitrator only on the question of valuation of the undertaking pure and simple.
Questions relating to the breach of contract or its rescission were outside the scope of the clause and the suit could not be stayed under section 34.
Heyman vs Darwins Ltd. (119421 A.C. 356) referred to.
Harinagar Sugar Mills Ltd. vs Skoda (India) Ltd. (A.I.R. and Governor General in Council vs Associated Livestock Farm Ltd. ([1937] distinguished.
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Here is a two-paragraph summary of the court case:
The present appeal arises out of a dispute between the State of Bihar and the Gaya Electric Supply Co. Ltd. over the revocation of a licence to supply electric energy in the town of Gaya. The licence was transferred to the company from an original holder in 1932 and was revoked by the Government in 1949. Following revocation, the company filed a suit against the State claiming that the revocation was arbitrary, mala fide, and ultra vires. A deed of agreement was eventually entered into between the parties, which included an arbitration clause for any differences or disputes over the valuation of the undertaking.
The company later filed a suit claiming that the State had breached the agreement by failing to make a valuation or pay compensation to the company. The State applied for a stay of proceedings under section 34 of the Indian Arbitration Act, arguing that the dispute fell within the scope of the arbitration clause. However, the court held that the arbitration clause was narrowly worded and only conferred jurisdiction on the arbitrator to decide questions relating to the valuation of the undertaking, and not to disputes over breach of contract or its rescission. As such, the court found that the company's claim was not within the scope of the submission and dismissed the State's application for a stay of proceedings.
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iminal Appeal No. 58 of 1961.
231 Appeal by special leave from the judgment and order dated October 17, 1960, of the Bombay s High Court in Criminal Appeal No. 1235 of 1960.
R. H. Dhebar, for the appellant.
The respondent did not appear.
February 16.
The Judgment of the Court was delivered by Kapur J.
This appeal by Special Leave against the decision of the High Court of Bombay dismissing the State 's appeal against the acquittal of the respondent arises out of proceedings under section 66(1)(b) of the Bombay Prohibition Act, 1949 (Act25 of 1949), as amended, hereinafter called the Act '.
The respondent was arrested by Police Constable Laxman Sabaji on August 8, 1959, at 8 15 p.m. on the ground that he was smelling of liquor and bad therefore contravened the provisions of the Act.
The respondent was taken to the hospital where he was examined by Dr. Dadlani Prabhu Rochiram P. W., who has deposed that the respondent was Smelling of liquor but his speech, behaviour, gait, coordination and memory were normal.
From this he concluded that the respondent had consumed some alcoholic substance but was not under the influence of liquor.
In cross examination he stated that Tincture Neem would produce blood concentration of 0.146% M/V of ethyl alcohol.
The respondent in his examination under section 342 stated: Question: "What do you wish to say with reference to the evidence given and recorded against you? Answer :I have not consumed prohibited alcohol.
I had taken 6 ounces of Neem as I am used to it".
232 On this evidence the Presidency Magistrate Mr. Lokur acquitted the respondent.
He observed: "Neem is a medicinal preparation containing about 40% of alcohol and is readily available in the market.
I do not see why I should not accept the explanation given by the accused that he had taken Neem in order to satiate his craving for alcohol.
It has been held by Bavdekar and Chainani, JJ., in Criminal Appeal No. 1611 of 1954 dated 25 2 1954 that taking an excess dose of medicinal preparation does not amount to consumption of prohibited liquor.
In Criminal Appeal No. 1562 of 1959 State vs Domnic Robert D 'Sliva where a similar defence was taken up it was held that consumption of 6 ounces of essence of Neem did not constitute an offence.
Following these judgments I hold that the accused has not committed any offence.
I therefore acquit the accused".
Against this order an appeal was taken to the High Court and one of the grounds taken in the memorandum of Appeal was that the mere statement of the respondent that he had consumed 8 ounces of Tincture of Neem was not sufficient to rebut the presumption arising out of sub section
(2) of section 66 of the Act.
But the High Court dismissed the appeal in limine.
It is against that order that the State has come by Special Leave to this Court.
The main question raised on behalf of the State is that by the introduction of section 66(2) in the Act as a result of the Bombay Prohibition (Extension and amendment) Act, 1959, (Act 12 of 1959), the onus is on the accused person and that that onus had not been discharged in the present case.
Section 66(2) is as follows : section 66(2) ",Subject to the provisions of subsection 233 (3) wherein in any trial of an offence under clause (b) of sub section(1) for the consump tion of an intoxicant it is alleged that the accused person consumed liquor, and it is proved that the concentration of alcohol in the blood of the accused person is not less than 0.05 per cent.
weight in volume, then the burden of proving that the liquor consumed was a medicinal or toilet preparation, or an antiseptic preparation or solution, or a flavouring extract, essence or syrup, containing alcohol, the consumption of which is not in contravention of the Act or any rules, regulation or orders made thereunder, shall be upon the accused person,and the Court shall in the absence of such proof presume the contrary".
The argument was put in this way that if the prosecution proves that the concentration of alcohol in the blood of an accused person is more than 0.05% then under section 66(2) of the Act the burden was on him to show that the liquor which he had consumed was a medicinal or toilet preparation the consumption of which is not in contravention of the Act or any Rules made thereunder.
It was further submitted that in order to discharge the onus mere statement of the accused is not sufficient.
Our attention was drawn to the scheme and some of the provisions of the Act.
The prosecution, in the present case, has proved that the respondent 's breath was smelling of liquor and that on examination of his blood it was found to contain 0.146% bat the respondent gave an explanation showing that he had taken 6 ounces of Tincture of Neem and Dr. Dadlani Prabhu Rochiram has deposed that the consumption of 6 to 8 ounces of that substance will produce that amount of concentration of blood.
This was 234 accepted by the learned Presidency Magistrate and by the High Court.
Therefore on this finding it must be held that the explanation given by the respondent of the cause of his smelling of liquor and of the blood concentration was accepted by the High Court as being sufficient to discharge the onus placed on him.
But Mr. Dhebar for the State submits that mere statement of an accused person is not sufficient for the discharge of such onus and relies on a judgment of this Court in C. S.D. swamy vs The State (1), where Sinha, J. (as he then was), observed: "In this case, no acceptable evidence, beyond the bare statements of the accused, has been adduced to show that the contrary of what has been proved by the prosecution, has been established, because the requirement of the section is that the accused person shall be presumed to be guilty of criminal misconduct in the discharge of his official duties " unless the contrary is proved".
The words of the statute are peremptory, and the burden must lie all the time on the accused to prove the contrary".
All that the learned Judge there meant to Ray was that the evidence of the statement of the accused in the circumstances of that case was not sufficient to discharge the onus but that does not mean that in no case can the statement of an accused person be taken to be sufficient for the purpose of discharging the onus if a statute places the onus on him.
Under section 342 of the Criminal Procedure Code the Court has the power to examine the accused so as to en able him to explain any circumstance appearing in evidence against him.
Under sub section 3) of that section the answers given by an accused person may be taken into consideration in such enquiry or trial.
The object of examination under section 342 therefore is to give the, accused an opportunity to (1) ; , 471. 235 explain the case made against him and that statement can be taken into consideration in judging the innocence or guilt of the person so accused.
Therefore if the courts below have accepted this explanation it must be held that the respondent has discharged the onus which was placed on him by section 65(2) of the Act.
The appeal is therefore dismissed.
Appeal dismissed.
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Respondent was arrested by a police constable on the ground that he was smelling of liquor.
The doctor who examined him gave evidence at the trial that though the respondent had consumed alcoholic substance he was not under the influence of liquor.
In cross examination the doctor stated that consumption of Neem would produce a blood concentration of 0. 146%.
The respondent in examination under section 342 of the Code of Criminal Procedure stated that he had not consumed prohibited alcohol but that he had consumed six ounces of Neem.
He was acquitted by the Magistrate.
The appellant appealed to the High Court.
The main ground of appeal was that the mere statement of the respondent that he had consumed 6 ozs.
of Neem was not sufficient to rebut the presumption under sub section
(2) of section 66 of the Bombay prohibition Act, 1949, as amended by the Bombay Prohibition (Extension and amendment) Act, 1959.
The High Court dismissed the appeal in limine.
Thereupon the appellant appealed to the Supreme Court by way of Special Leave on the same ground as was raised before the High Court.
Held, that the statement of the accused recorded under section 342 of the Code of Criminal Procedure can be taken into consideration in judging the innocence or guilt of a person.
If the explanation given by the accused in his statement is acceptable to the court it must be held that the accused has discharged the burden under section 66 (2) of the Bombay Prohibi tion Act.
O. section D. Swamy vs State, 1, distinguished.
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Here's a two-paragraph summary of the court case:
The appeal case (Civil Appeal No. 58 of 1961) stems from the acquittal of the respondent under the Bombay Prohibition Act, 1949. The respondent was arrested for smelling of liquor, but claimed to have consumed 6 ounces of Tincture of Neem, a medicinal preparation containing 40% alcohol, as an explanation. The trial court accepted this explanation, citing previous judgments that taking an excess dose of medicinal preparations does not amount to consuming prohibited liquor. The High Court also dismissed the appeal, upholding the acquittal.
The State went on to appeal to the Supreme Court, arguing that the burden of proof lies on the accused under section 66(2) of the Act, and that the respondent's mere statement was not sufficient to discharge this burden. However, the Supreme Court held that the respondent's explanation, accepted by the courts below, was sufficient to discharge the onus placed on him. The Court relied on the scheme of the Act, which allows the accused to explain the cause of the blood concentration, and accepted that the respondent had done so through his statement under section 342 of the Criminal Procedure Code. The appeal was therefore dismissed.
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N: Criminal Appeal No. 170 of 1979.
Appeal by Special Leave from the Judgment and order dated 10 11 1978 of the Punjab and Haryana High Court in Criminal Misc.
No.4352 M of 1970.
H. D. Hardy, D. D. Sharma, Vasu Deo Sharma and Subhash C. Mittal, for the Appellant.
H. section Marwah and M. N. Shroff for Respondent No. 1.
A. N. Mulla and section K. Gambhir for Respondent No. 2.
152 The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by Special Leave is directed against a judgment of the Punjab and Haryana High Court dated 10th November, 1978 by which the High Court accepted the revision filed before it and set aside the order of the Sessions Judge and directed him to conclude the trial according to law.
The points in controversy arise in the following circumstances: The appellant Rohtas was being prosecuted under Section 302 of the Indian Penal Code for having caused the death of one Subhash on 23rd December, 1974.
The trial proceeded before the Sessions Judge and after the evidence was concluded the case was adjourned to the 5th May, 1978 for recording the statement of the appellant.
At this stage it appears to have been pointed out to the Sessions Judge that he had no jurisdiction to try the appellant as the appellant happened to fall within the provisions of the Haryana Children Act, 1974, for short, to be referred to as the Haryana Act.
Thereafter the Sessions Judge remitted the matter to the Committing Magistrate directing him to hold an enquiry as to whether or not the appellant Rohtas was a child within the meaning of the provisions of the Haryana Act and after arriving at a finding that the appellant was a child, the Magistrate proceeded to try the case in accordance with the provisions of the Haryana Act.
The brother of the deceased filed a revision before the High Court for quashing the proceedings against the appellant on the ground that the Sessions Judge and the Committing Magistrate were wrong in holding that the case of the appellant fell within the purview of Section 4 of the Haryana Act.
The contention raised by the Revision Petitioner was based on the fact that although the Criminal Procedure Code of 1973, hereinafter to be referred to as the Code of 1973, contained provisions some of which were directly in conflict with the Haryana Act and other Central Acts, therefore, the Code of 1973 would prevail and the State Acts would stand over ruled by virtue of the provisions of Article 254 of the Constitution of India.
This argument appears to have been accepted by the High Court on the ground that as the Haryana Act though passed with the previous consent of the President of India, so far as the State of Haryana is concerned, the Act was superseded by the Code of 1973 which was an Act passed by Parliament subsequent to the Haryana Act.
Before scrutinising the contentions of the parties it may be necessary to examine and analyse some of the important and relevant provisions of the statute concerned.
To begin with, even the previous Criminal Procedure Code of 1898 contained a special procedure for 153 the trial of persons who had committed offences and who were below the age of 15.
Such accused could be tried by a Magistrate on whom powers are conferred by Section 8 Sub section 1 of the Reformatory Schools Act of 1897 which also provided for the custody trial or punishment of such youthful offenders.
This Section was expressly repealed by Section 65 of the Haryana Act which reads as below: "Certain Central Acts not to apply: (1) The (Central Act 8 of 1897), and Sections 29 B and 399 of the Code of Criminal Procedure, 1898 (Central Act 5 of 1898), shall cease to apply to any area in which this Act has been brought into force.
(2) The (Central Act 105 of 1956), shall not apply to any Children 's home, special School or observation home established and maintained under this Act.
" This being the position, so long as the Haryana Act was to be in force in the State of Haryana, it is manifest that Section 29 B was put completely out of action and any trial of an accused who was a child within the meaning of the Haryana Act had to be conducted in the manner prescribed by the Haryana Act.
For the purposes of this case it is not necessary for us to detail the procedure which was to be adopted by the Court under the Haryana Act.
The fact remains, therefore, that until the passing of the Code of 1973 the Haryana Act held the field.
The Haryana Act came into force on 1 3 1974.
In fact the said Act received the assent of the President as far back as on 6th of February, 1974 and was published in the Haryana Gazette on the 12th of February, 1974 but under the provisions of Section 1 Sub section 3 of the Act it was to come into force on a date to be notified by the State Government and this was done on 1 3 1974.
Thus the Haryana Act started operating w.e.f. 1 3 1974 and any offences committed thereafter by a child, as defined in the Act, were to be tried according to the Procedure laid down by the Haryana Act.
so far as there is no dispute between the parties.
The only difficulty that arises is that just about the time that the Haryana Act was passed the Code of 1973 was also passed by Parliament which completely revolutionised the entire Criminal Procedure Code of 1898.
It is not disputed in the present case that the occurrence in the present case took place after coming into force of the Code of 1973 and if, therefore, the Code of 1973 applies to the present trial then it is obvious 154 that the trial has to be held not in accordance with the provisions of the Haryana Act but according to the provisions of the Code of 1973.
So far as the Code of 1973 is concerned, it was amended by Act II of 1974 and came into force w.e.f.
April 1, 1974.
Section 4 of the Code of 1973 clearly lays down that all offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the said Code.
Thus at the first sight the contention of the respondent that the accused was rightly ordered to be tried under the Code of 1973 appears to be sound.
In the view that we have taken in this case and on a close and careful interpretation of Section 5 of the Code of 1973, we do not find it necessary to go into this point at all.
In our opinion the provisions of Section 5 of the Code in the present case completely clinch the entire issue.
Far from over ruling or colliding with the provisions of the Haryana Act, the Code of 1973 appears to have kept alive and fully endorsed the application of the Haryana Act or for that matter the provisions of any other Act passed by the State Legislature and which falls within the ambit of Section 5 of the Code of 1973 which may be extracted thus: "Nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force.
" It will thus be seen that Section 5 carves out a clear exception to the provisions of the trial of an offence under any special or local law for the time being in force or any special jurisdiction or power conferred or any special form of procedure prescribed by any other law for the time being in force.
It is not disputed that the Haryana Act was in force when the Code of 1973 was passed and, therefore, the Haryana Act far from being inconsistent with Section 5 of the Code of 1973 appears to be fully protected by the provisions of Section 5 of the Code of 1973 as indicated above.
In these circumstances, we are clearly of the opinion that the High Court was in error in holding that the Code of 1973 over ruled the Haryana Act and that the appellant should have been tried under the Code of 1973.
We are satisfied that the view taken by the Sessions Judge on this point was correct and the case of the appellant should have been referred to the Magistrate concerned for trial in accordance with the provisions of the Haryana Act.
155 we, therefore, allow this appeal, set aside the judgment of the High Court and restore that of the Sessions Judge as a result of which the appellant will now be tried by the Magistrate empowered under the Haryana Act and in accordance with the provisions of that Act.
The case is an old one.
The Magistrate concerned should try to dispose of the same as expeditiously as possible.
N.K.A. Appeal allowed.
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The appellant was charged with an offence under Section 302 I.P.C. After the recording of evidence was concluded, it was pointed out that the Sessions Judge had no jurisdiction to try the appellant as the appellant happened to fall under the provisions of the Haryana Children Act, 1974.
On remand, the Magistrate found the appellant was a child and proceeded to try him under the Haryana Act.
In a revision petition filed by the brother of the deceased, the High Court held that the provisions of the Criminal Procedure Code 1973 prevailed over the provisions of the Haryana Act.
Allowing the appeal, ^ HELD: The High Court was in error in holding that the Code of 1973 over ruled the Haryana Act and that the appellant should have been tried under the Code 1973.
The view taken by the Sessions Judge on this point was correct and the case of the appellant should have been referred to the Magistrate concerned for trial in accordance with the provisions of the Haryana Act.
[154G H] Section 5 carves out a clear exception to the provisions of the trial of an offence under any special or local law for the time being in force or any special jurisdiction or power conferred or any special form of procedure prescribed by any other law for the time being in force.
The Haryana Act was in force when the Code of 1973 was passed and therefore the Haryana Act far from being inconsistent with section 5 of the Code of 1973 appears to be fully protected by the provisions of section 5 of the Code of 1973.
[154E G]
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The following is a two-paragraph summary of the court case:
The present case involves an appeal by the Sessions Judge's order, which was set aside by the Punjab and Haryana High Court. The appellant, Rohtas, was being tried under Section 302 of the Indian Penal Code for causing the death of one Subhash on December 23, 1974. The trial Judge had remitted the case to the Committing Magistrate, who tried the case under the Haryana Children Act, 1974, after finding that the appellant was a child. The brother of the deceased filed a revision before the High Court, arguing that the Sessions Judge and the Committing Magistrate were wrong in holding that the case of the appellant fell within the purview of Section 4 of the Haryana Act.
The High Court accepted the revision on the ground that the Code of Criminal Procedure, 1973, prevailed over the Haryana Act, as it was passed by the Parliament subsequently to the Haryana Act. However, the Supreme Court disagreed with this view, holding that the provisions of Section 5 of the Code of 1973 carved out a clear exception to the provisions of the Code, protecting the special or local laws, including the Haryana Act. Therefore, the Court allowed the appeal, set aside the judgment of the High Court, and restored the order of the Sessions Judge, directing the trial to be held in accordance with the provisions of the Haryana Act.
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Appeals Nos.
23 92 to 2403 of 1969.
Appeals by certificate from the judgment and order dated September 9, 1968 of the Delhi High Court at New Delhi in Civil Writs Nos. 67 to 78 of 1968.
section C. Manchanda, B. B. Ahuja, section P. Nayar and R. N. Sachthey for the appellants.
N. D. Karkhanis, Rameshwar Nath and Seita Vaidialingam for the respondents.
The Judgment of the Court was delivered by HEGDE, J.
These appeals by certificate arise from several writ petitions filed by the H.U.F. M/s. Rai Singh Deb Singh Bist and its Karta Thakur Mohan Singh Bist, challenging the validity of certain notices issued under section 34(1) (a) of the Indian Income tax Act, 1922 (in short the Act) by the Income tax Officer, Central Circle 1, Delhi.
The High Court of Delhi allowed those writ petitions and quashed the impugned notices.
Hence these appeals.
The assessee in these cases is an H.U.F. The assessment years with which we are concerned in these appeals range from 1942 43 to 1953 54.
The assessee filed its returns for these years in due time.
The assessee 's account books showed considerable cash credits in the name of the brothers in law of the 2nd respondent, the Karta of the H.U.F. Those alleged creditors were living in Nepal.
The account books also showed certain credit entries in the name of Rana Anand Nar Singh, alleged to be in connection ' with expenses incurred by him for getting trees cut on behalf of the assessee.
The assessee was a forest contractor.
He had taken large tracts of forests for felling trees in Nepal.
The Income tax 104 Officer went into the genuineness of the cash credit entries standing in the name of the alleged creditors of the assessee as well as to the alleged amount due to one of them.
The contention of the assessee was substantially accepted either by the Appellate Assistant Commissioner or by the Revenue Appellate Tribunal.
With regard to the assessment for the assessment years 1943 44 to 1949 50, the final assessments were made in pursuance of an agreement or settlement arrived at between the assessee and the Deputy Director of Inspection (Investigation) New Delhi on October 18, 1954: Long after the assessments in question were final ised, the Income tax Officer.
issued notices to the appellants under section 34(1) (a) of the Act seeking to reopen the assessments already finalised.
The validity of those notices is in issue.
Before an Income tax Officer can issue a statutory notice under section 34 (1 ) (a), he must have reason to believe that by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for the years in question, income, profits or gains chargeable to income tax have escaped assessment during those years.
Further, before doing so, he must have recorded his reasons for acting under section 34(1) (a) and the Central Board of Revenue must have been satisfied on those reasons that it is a fit case for the issue of the notice.
The recording of the reasons in support of the belief formed by the Income tax Officer and the satisfaction of the Central Board of Revenue on the basis of the reasons recorded by the Income tax Officer that it is a fit case for issue of notice under section 34 (1 )(a) are extremely important circumstances to find out whether the Income tax Officer had jurisdiction to proceed under section 34(1) (a).
In Calcutta Discount Co. Ltd. vs Income tax Officer, Com panies District 1.
Calcutta and anr.(1) this Court laid down (1) that to confer jurisdiction under section 34 to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year, two conditions had to be satisfied.
The first was that the Income tax Officer must have reason to believe that income, profits or gains chargeable to income tax had been under assessed.
The second was that he must also have reason to believe that such "under assessment" had occurred by reason of either (1) omission or failure on the part of an assessee to make a return of his income under section 22, or (2) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year.
Both these conditions are conditions precedent to be satisfied before the ' Income tax Officer could have jurisdiction to issue a notice for the assessment or re assessment beyond the period (1)41 I.T.R. 191.
105 of four years but within the period of eight years from the end of the year in question.
In Chhugamal Rajpal vs section P. Chaliha and ors.(1) this Court ruled that before an Income tax Officer can be said to have had reason to believe that some income had escaped assessment, he should have some relevant material before him from which he could have drawn the inference that income has escaped assessment.
His vague feeling that there might have been some escape of income from assessment is not sufficient.
This Court also took the view that the Central Board of Revenue before reaching its satisfaction that the case was a fit one to be proceeded under section 3 4 (1 ) (a) must have examined the reasons given by the Income tax Officer and arrived at its own conclusion and that it is not permissible for it to act mechanically.
The same view was again taken by this Court in Sheo Nath Singh vs Appellate Assistant Commissioner of Income tax (Central) Calcutta and ors.
(2) In the instant case, the assessee alleged in his writ petitions that there was no relevant material before the Income tax Officer before he issued notices under section 34 (1) (a) on the basis of which he could have had reason to believe that any income had escaped assessment.
In the writ petitions the assessee called upon the Income tax Officer to produce the report made by him to the Central Board of Revenue as well as the order of the Central Board of Revenue thereon.
Despite this prayer, neither the Union of India nor the Income tax Officer cared to produce the report made by the Income tax Officer to the Central Board of Revenue under section 34(1) (a) or the order of the Central Board of Revenue.
Before the hearing of the writ petitions commenced, the assessee again applied to the Court to call upon the Union of India and the Income tax Officer to produce those documents.
In response to that application, an affidavit was filed before the Court stating that the relevant records could not be traced from the file of the Central Board of Revenue.
Assuming that the concerned records were missing from the file of the Central Board of Revenue, the copy of the report made by the Income tax Officer and the order received by him must have been in the file of the Income tax Officer.
No reason was given for not producing those records.
These circumstances give rise to an adverse inference against the department.
We are constrained to come to the conclusion that the records in question were not produced because they did not assist the department 's case.
Under these circumstances, it is not possible.
to come to the conclusion that the facts necessary to confer jurisdiction on the Income tax Officer to proceed under section 3 4 1 ) (a) had been established.
(1) (2) 8 7. 106 All that was said on behalf of the department was that some time in the year 1955, the assessee sold large tracts of land to two of his brothers in law for a sum of Rs. 47 lakhs but in reality that property was not worth that amount.
We do not know whether there was any basis for this conclusion.
As seen earlier the cash credit entries were brought to the notice of the Income tax Officer before the relevant assessment orders were passed.
He had an occasion to investigate into them.
It is not necessary to go into this question more deeply in view of the fact that there is nothing to show that there was any relevant material before the Incometax Officer before he issued the notices under section 34 (1) (a) to have reason to believe that as a result of the assessee 's failure to state in its return truly and fully any fact, any income had escaped assessment.
In the result these appeals fail and they are dismissed with costs one hearing fee.
S.C. Appeals dismissed.
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The assessee in these appeals is an Hindu Undivided Family The assessment years in question are ranged from 1942 43 to 1953 54.
The assessee filed its returns for these years in time.
The assessee 's account books showed considerable cash credits in the name of some relations of the second respondent, the Karta of the H.U.F.
The I.T.O. went into the genuineness of these cash credit entries.
The contention of the assessee was substantially accepted either by the Appellate Assistant Commissioner or by the Revenue Appellate Tribunal.
With regard to the, assessment for the assessment years 1943 44 to 1949 50, the final assessment was made in pursuance of an agreement or settlement arrived between the assessee and the Deputy Director of Inspection (Investiga tion).
Long after the assessments in question were finalised, the I.T.O. issued notices to the appellants under section 34(1) (a) of the Indian Income Tax Act 1922, seeking to reopen the assessments already finalised.
The assessee challenged the validity of these notices of the I.T.O.
The High Court allowed the writ petitions and quashed the impugned notices.
The assessee alleged that there was no relevant material before the I.T.O. before he issued the notices under s 31(a) on the basis of which he could have reason to believe that any income had escaped assessment.
In the writ petitions, the assessee called upon the I.T.O. to produce the report made by him to the Central Board of Revenue, as well as the order of the Central Board of Revenue thereon.
Despite this prayer, neither the Union of India, nor the I.T.O produced the report made by the I.T.O. to the Central Board of Revenue under s.34(1)(a) nor the order of the Central Board of Revenue.
Dismissing the appeal, HELD : (i) Before an I.T.O. can issue a statutory notice under s.34(1)(a), he must have reason to believe that by reason of omission ,or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for the years in question, income, profits or gains chargeable to Income Tax have escaped assessment during those years.
Further, before doing so, he must have recorded his reasons for acting under section 34(1) (a) and the Central Board of Revenue must have been satisfied on those reasons that it is a fit case for the issue of the notice.
The recording of the reasons in support of the belief formed by the I.T.O. and the satisfaction of the Central Board of Revenue on the basis of the reasons recorded by the I.T.O. that it is a fit case for issue of notice under section 34(1) (a) are extremely important circumstances to find out whether the I.T.O. has jurisdiction to proceed under s.34(1)(a).
[104D] 103 Calcutta Discount Co. Ltd. vs I.T.O. Company District 1 Calcutta and Others, ; Chhugamal Rajpat vs section P. Chalia & Ors.
79 I.T.P 603; Sheonath Singh vs Appellate Assistant Commissioner of Income Tax, Central, Calcutta & Ors., referred to.
(ii)In the present case, an affidavit was filed before the Court stating that the relevant records could not be traced from the file of the Central Board of Revenue.
Assuming that the concerned records were missing from the file of the Central Board of Revenue, the copy of the report made by the I.T.O. and the Order received by him, must have been in the file of the I.T.O. and reason was given for not producing those records.
These circumstances give rise to an adverse inference that the records in question were not produced because they did not assist the department 's case.
Under the circumstances, it is not possible to come to the conclusion that the facts necessary to confer jurisdiction on the I.T.O. to proceed under s.34(1)(a) had been established.
There is nothing to show on record that there was any relevant material before the I.T.O. before he issued the notices under s.34(1) (a).
[105F]
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Here is a two-paragraph summary of the court case:
The Delhi High Court had allowed writ petitions filed by the Hindu Undivided Family (HUF) of Rai Singh Deb Singh Bist, challenging the validity of certain notices issued under Section 34(1)(a) of the Indian Income Tax Act, 1922. The Income Tax Officer, Central Circle 1, Delhi had issued the notices seeking to reopen assessments already finalized for the years 1942-43 to 1953-54, alleging that income had escaped assessment. However, the High Court quashed the notices, and the department appealed to the Supreme Court.
The Supreme Court, in its judgment, held that the Income Tax Officer did not have jurisdiction to issue the notices under Section 34(1)(a) of the Act. The Court noted that the department failed to produce relevant records, including the report made by the Income Tax Officer to the Central Board of Revenue and the order of the Central Board of Revenue, which were necessary to establish that the Income Tax Officer had reason to believe that income had escaped assessment. As a result, the Court concluded that the facts necessary to confer jurisdiction on the Income Tax Officer to proceed under Section 34(1)(a) had not been established, and the appeals were dismissed with costs.
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In the matter of Petition for Special Leave to Appeal No. 230 of 1953.
Rajinder Narain for the Respondents.
N. C. Chatterjee (Sukumar Ghose with him) for the Appellants.
April 5.
The Order of the Court was delivered by MUKHERJEA C.J. This is an application by the respondents in Special Leave Petition No. 230 of 1953, praying for summons to the appellants to show cause why the special leave obtained by the latter should not be rescinded in accordance with the provision of Order XIII, rule 13 of the Supreme Court Rules.
The appeal is directed against a judgment of a Division Bench of the Calcutta High Court affirming, on appeal, a decision of a single Judge sitting on the Original Side of that Court.
The appellants, having been refused certificate by the High Court, presented before us an application under article 136 of the Constitution and special leave to appeal was granted to them by an order of this Court dated the 25th May 1954.
By that order the appellants were required to furnish security for costs amounting to Rs. 2,500 within six weeks and the enforcement of the award, which was the subject matter of the appeal, was stayed on condition that the appellants deposited in Court a sum of Rs. 28,000 within four weeks from the date of the order.
On the 15th of June 1954 the Registrar of this Court transmitted to the Original Side of the Calcutta High Court certified copies of the order granting special leave and also of the special leave petition with a request that these documents might be included in the printed records of the case.
It is not disputed that in pursuance of the directions given 246 by this Court the appellants did deposit the amount required as security for costs and also the sum of Rs. 28,000 within the time mentioned in the order.
On the 29th November 1954 the respondents ' Solicitors in Calcutta wrote a letter to the Registrar of the Original Side of the Calcutta High Court complaining of delay on the part of the appellants in prosecuting the appeal.
It was stated inter alia that although six months had elapsed since special leave was granted by this Court, the respondents were not served with notice of the admission of the appeal and no steps were taken by the appellants to get the records printed or transmitted to this Court.
In reply to this letter the Registrar informed the respondents ' Solicitors that according to the practice of the Calcutta High Court it was incumbent on the appellants to make a formal application to the Appellate Bench of the Court for declaring the appeal finally admitted, and this was to be done on notice to the other parties under Order XLV, rule 8 of the Civil Procedure Code and on filing in Court a copy of the order of the Supreme Court granting special leave to appeal as well as the application upon which such order was made.
Unless and until an order was made by the High Court declaring the appeal to be admitted, no action could be taken by the office in the matter.
Thereupon on the 11th of January 1955 an application was filed by the appellants praying that leave might be given to them to file the certified copy of the special leave petition and also that of the order passed upon it and that the appeal might be finally admitted.
This application came up for hearing before the learned Chief Justice and Lahiri, J. of the Calcutta High Court and on the 20th of January 1955 the learned Judges made the following order: "In this matter special leave to appeal to the Supreme Court was granted by that Court on the 25th May 1954.
On the 21st June following, the Appellant furnished the necessary security.
It was then the duty of the Appellant to take the necessary steps for the final admission of the appeal in order that the preparation of the Paper Book might thereafter be 247 undertaken.
Under the Rules and practice of this Court the step to be taken is that the Appellant to the Supreme Court should make an application for leave to file the certified copy of the petition for Special Leave and also a certified copy of the order granting Special Leave which have been filed along with the present application. . . . ." When the matter came up for hearing on the last occasion we enquired whether the Appellants had any explanation to give for the delay which bad occurred.
It was said that the certified copy of the application for Special Leave had been obtained only recently.
It was however not explained why when an application for a certified copy of the order was made a similar application for a certified copy of the petition also could not be made.
In all the circumstances we consider it right that the disposal of the present application should stand over for a month in order that the respondents may take such steps as they desire to take before the Supreme Court".
The above facts and order of the High Court were communicated to the Registrar of this Court by Shri Rajinder Narain, Advocate for the respondents, by his letters dated the 17th and 31st of January 1965 and on the basis of the facts stated above, he requested that action should be initiated by the Registrar against the appellants for non prosecution of the appeal.
The Registrar told the learned Advocate that he had not received any report from the High Court regarding any laches on the part of the appellants and without any such report, it was not possible for him to take any action in the matter.
The Advocate himself, it was said, was quite at liberty to make a formal application to the Court in such way as he considered proper.
The views thus expressed by the Registrar of this Court were communicated by him to the Registrar of the High Court, Original Side, Calcutta.
On the 4th March 1955 Shri Rajinder Narain filed a formal petition addressed to the Registrar alleging inordinate delay on the part of the ap pellants in filing in the High Court certified copies of 248 the Special Leave petition and the order made by this Court thereupon and praying that summons might be issued to the appellants to show cause why the appeal should not be dismissed for non prosecution.
Before the Registrar could take any further steps in the matter, the application of the appellants for final admission of the appeal made in the High Court came up for further consideration before the Appellate Bench consisting of the Chief Justice and Mr. Justice Lahiri and on the 7th March, 1955 the learned Judges made an order directing, for the reasons given therein, adjournment of the application for admission of the appeal before them, sine die pending orders which this Court might pass on the application of the respondents.
The application of the respondents which purports to have been made under Order XIII, rule 13 of the Supreme Court Rules was referred by the Registrar for orders to the Court and it has now come up for hearing before us.
Shri Rajinder Narain appearing in support of the petition has Contended before us that the appellants were guilty of serious laches inasmuch as they did not file in the High Court, till 8 months after the special leave was granted, copies of the special leave petition as well as of the order passed upon it; nor did they make an application to the Appellate Bench for admission of the appeal without which no further steps could be taken in the matter of printing and transmission of the record.
As the appellants could not give any satisfactory explanation for this inordinate delay on their part, the special leave, it is argued, should be rescinded.
Mr. Chatterjee, who appeared for the appellants, has contended @n the other hand that in a case like the one before us where the appeal has come up to this Court by special leave and not by a certificate granted by the High Court, there was no duty cast upon the appellants to make a formal application in the High Court for final admission of the appeal or to file therein certified copies of the special leave petition and the order made thereupon.
His argument is that under Order XXXII, rule 9 of the Original Side Rules of the Calcutta High Court, a 249 Supreme Court appeal must be deemed to have been admitted by the very order of this Court granting special leave and as soon as the appellants have carried out the directions of the Supreme Court regarding furnishing of security or making of other deposits as the case may be, it is incumbent upon the Registrar to issue a notice of the admission of the appeal for service upon the respondents.
Such notice indeed has got to be served by the appellants ' attorney; but as no notice was at all issued by the Registrar in the present case as is contemplated by rule 9 of Order XXXII of the Original Side Rules of the Calcutta High Court, no blame could attach to the appellants for not taking further steps in the matter.
The contention of Mr. Chatterjee appears to us to be wellfounded and as it seems to us that doubts have arisen at times regarding the precise procedure to be followed in cases where an appeal comes to this Court by special leave granted under article 136 of the Constitution, it is necessary to examine the provisions bearing upon it as are contained in the Rules of the Supreme Court or of the High Court concerned read along with the relevant provisions of the Civil Procedure Code.
Ordinarily when a High Court grants a certificate giving leave to a party to appeal to this Court, it is ,that Court which retains full control and jurisdiction over the subsequent proceedings relating to the prosecution of the appeal till the appeal is finally admitted.
It is for the High Court to see that its directions are carried out regarding the furnishing of security or the making of deposit and when these conditions are fulfilled, it has then to declare the appeal finally admitted under Order XLV,rule 8 of the Civil Procedure Code.
The jurisdiction of the Supreme Court begins after the appeal is finally admitted.
When however the appeal comes to this Court on the strength of a special leave ' granted by it, the position is different.
In such cases the order of the Supreme Court granting special leave by itself operates as an admission of the appeal as soon as the conditions in the order relating to fur 250 nishing of security or making of a deposit are complied with.
That this is the true position will be clear from the procedural provisions contained in the Rules of the Supreme Court as well as of the Original Side of the Calcutta High Court.
Order XIII, rule 8 of the Supreme Court Rules lays down: "After the grant of special leave to appeal by the Court, the Registrar shall transmit a certified copy of the order to the court or tribunal appealed from".
Rule 9 then says: "On receipt of the said order, the court or tribunal appealed from shall, in the absence of any special directions in the order, act in accordance with the provisions contained in Order XLV of the Code, so far as applicable".
It is to be noted here that although this rule does refer to the provisions of the Order XLV of the Civil Procedure Code, these provisions are to be followed only so far as they are applicable.
It is surely the duty of the High Court to see that security is furnished or a deposit is made in accordance with the directions of the Supreme Court and these directions are to be found in the order of the Supreme Court which the Registrar is bound to transmit to the High Court under Order XIII, rule 8 of our Rules.
We do not think it is necessary for the appellants to file afresh a copy of the Supreme Court order or the petition upon which it was made in order that they may form part of the record of the Supreme Court appeal.
They would come in the record as soon as they are transmitted by the Registrar in accordance with the rule of our Court mentioned above and would have to be included in the Paper Book when it is printed.
The Registrar of the High Court undoubtedly took these orders as part of the record without the appellants ' filing them afresh, for he accepted the security and deposit of other moneys from the appellants on the basis of these orders.
If there was any failure on the part of the appellants to furnish the security or to make the deposit in the way indicated in the order of the Supreme Court, it would have been the duty of the Registrar of the High Court to intimate these 251 facts to the Registrar of the Supreme Court and the latter thereupon could take steps for revoking the special leave as is contemplated by Order XIII, rule 12 of our Rules.
In our opinion, it is also not necessary for the appellants to make a formal application for admission of the appeal in cases where special leave has been granted by the Supreme Court; and this appears clear from the provision of Order XXXII, rule 9 of the Original Side Rules of the Calcutta High Court which runs as follows: "9.
On the admission of an appeal to the Supreme Court whether by the order of this Court under Order XLV, rule 8 of the Code, or by an order of the Supreme Court giving the appellant Special Leave to Appeal, but subject in the latter case to the carrying out of the directions of the Supreme Court as to the security and the deposit of the amount re quired by rule 5, notice of such admission shall be issued by the Registrar for service on the respondent on the record, whether be shall have appeared on the hearing of the application for a certificate under Order XLV, rule 3 of the Code, or not.
Such notice shall be served by the attorney for the appellant and an affidavit of due service thereof shall be filed by such attorney immediately after such service".
The opening words of this rule plainly indicate that there could be admission of appeal either by order of the High Court under Order XLV, rule 8 of the Civil Procedure Code or by the order of the Supreme Court itself giving special leave to appeal.
(As the order granting special leave itself lays down the conditions to be fulfilled by the appellants, the admission will be regarded as final only when the directions are complied with and as soon as this is done it would be the duty of the Registrar to issue a notice of the admission of the appeal for service upon the respondents).
This notice is to be served by the attorney for the appel lants and an affidavit of due service shall be filed by him immediately after the service is effected.
In the present case the Registrar, Original Side of the, Calcutta High Court should have issued a notice of 252.
the admission of the appeal to be served upon the respondents as soon as the security for costs and other deposits of money were made by the appellants.
This was not done as the procedure to be followed was not correctly appreciated.
It is true that the appellants remained idle for a considerable period of time even after they furnished security and did not take any steps towards printing of the record.
But as there was an initial irregularity in the matter of issuing a notice under.
Order XXXII, rule 9 of the Original Side Rules of the Calcutta High Court, we are unable to hold that the appellants were guilty of any laches for which the special leave deserves to be rescinded.
The result is that the application of the respondents is dismissed.
The Registrar, Original Side of the Calcutta High Court, will now issue a notice under Order XXXII, rule 9 of the Original Side Rules and prompt steps should be taken by the appellants towards printing and transmission of the record to this Court.
We make no order as to costs of this application.
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By an order dated May 25, 1954, the Supreme Court granted the petitioners in the case special leave to appeal against the judgment and order of the High Court at Calcutta.
In accordance with the order, the petitioners furnished the security amounts directed to be deposited within the time specified in the order.
The Registrar of the High Court did not issue any notice of admission of 'appeal to be served by the Appellant 's Solicitor on the Respondents as envisaged in rule 9 of Order XIII, S.C.R. Nor did the Appellant following the practice of the High Court, move that Court for It admission" of the appeal until January 11, 1955.
The Respondents first moved the High Court complaining of default on the part of the appellants in due prosecution of the appeal and latter moved the Supreme Court for action under rule 13 of Order XIII of the Supreme Court Rules.
The application in the High Court was therefore kept pending.
Held: After the grant of special leave under article 136, the Registrar of the Supreme Court transmits, in accordance with the 244 provisions of rule 8 of Order XIII of the Supreme Court Rules, a certified copy of the Supreme Court 's order to the Court or tribunal appealed from, Rule 9 of Order XIII of the Supreme Court Rules enjoins upon the Court or tribunal appealed from to act, in the absence of any special directions in the order, in accordance with the provisions contained in Order XLV of the Civil Procedure Code, so far as they are applicable.
Accordingly the Court or Tribunal to which the order is transmitted receives deposits on account of security for the Respondents ' costs, printing costs, and any other deposits if so ordered by the Supreme Court, and sets about preparing the record of the appeal for transmission to the Supreme Court.
Therefore, action under rule 13 of Order XIII, S.C.R., for rescinding the order granting special leave cannot be initiated unless the Court or tribunal appealed from reports to the Supreme Court that the appellant has not been diligent in taking steps to enable that Court to carry out the directions, if any, contained in the order of the Supreme Court and to act in accordance with the provisions of Order XLV of the Civil Procedure Code so far as applicable to appeals under Article 136 of the Constitution.
In view of rule 9 of Order XIII of the Supreme Court Rules, the application of Order XLV of the Code of Civil Procedure to appeals under Article 136 of the Constitution is restricted.
The Court or tribunal appealed from, no doubt, has to carry out the directions contained in the order granting special leave, and to receive the security for the Respondents ' costs and other necessary deposits, but once the security is furnished and the other deposits are made, the formality of "admission" envisaged by rule 8 of Order XLV of the Civil Procedure Code is unnecessary, because in such cases the order .granting special leave by itself operates as an admission of the appeal as soon as the conditions in the order relating to the furnishing of security or making of deposits are complied with.
Appeals under Article 136 thus stand on a different footing from appeals on grant of certificate by the High Court itself.
In the letter case, the High Court has exclusive jurisdiction over the matter until it admits the appeal under rule 8 of Order XLV of the Civil Procedure Code.
Rule 9 of Chapter 32 of the Original Side Rules of the Calcutta High Court envisages "admission" of appeals to the Supreme Court whether by an order of the Supreme Court or under Order XLV of the Civil Procedure Code.
And when an appeal arising from an order made by the Supreme Court under Article 136 of the Constitution, has been so "admitted", the said rule enjoins upon the Registrar to issue notice of such admission for service by the appellant on the Respondents.
In cases where special leave has been granted by the Supreme Court, it is not necessary for the appellant to move the High Court appealed from for the formal admission of his appeal.
As the order granting special leave itself lays down the conditions to be fulfilled by the appellants, the admission will be regarded as final only when the directions are complied with and as 245 soon as this is done it would be the duty of the Registrar to issue a notice of the admission of the appeal for service upon the respondents.
In default of the issue of such notice, the appellant cannot be held responsible for laches in the prosecution of his appeal with regard to the steps required to be taken after the admission of his appeal.
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Here is a two-paragraph summary of the court case:
The case is about an appeal directed against a judgment of a Division Bench of the Calcutta High Court affirming a decision of a single Judge. The appellants had obtained special leave to appeal from the Supreme Court but failed to take necessary steps to have the appeal finally admitted in the Calcutta High Court. The respondents prayed for summons to the appellants to show cause why the special leave should not be rescinded. The issue was whether the appellants were guilty of laches for not taking timely action to have the appeal admitted.
The Court held that in a case where an appeal comes to the Supreme Court by special leave, the order of the Supreme Court granting special leave itself operates as an admission of the appeal, once the conditions in the order relating to furnishing of security or making of a deposit are complied with. The Court found that the Registrar of the Calcutta High Court had not issued a notice of the admission of the appeal, which was an initial irregularity. Therefore, the Court dismissed the application of the respondents to rescind the special leave and directed the Registrar to issue a notice under Order XXXII, rule 9 of the Original Side Rules of the Calcutta High Court.
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Civil Appeal No. 1823 of 1969.
Apeal by Special Leave from the Judgment and Order dated the 27th/28th/30th January, 1967 of the Gujarat High Court in Special Civil Application No. 163 of 1962.
B. R. Agarwala for the Appellant.
I. N. Shroff for the Respondents.
Dr. L. M. Singhvi, Advocate General, Rajasthan, V. section Dave and section M. Jain for Intervener, Municipal Council, Jodhpur.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave arises from the judgment of the Gujarat High Court dated January 27, 28 and 30, 83 1967.
The two petitioners before the High Court were firms trading in certain commodities within the limits of the Municipal Borough of Broach.
The grievance in one of the petitions was that the Municipality had collected certain amounts wrongfully, and the grievance in the other petition was that the Municipality had refused some amounts even though they were refundable under its byelaws.
Both the petitions concerned goods which were "imported" within the octroi limits of the Municipality but came to be "exported" therefrom.
The first petition was in respect of a consignment which was designated as a through consignment, and the second petition concerned goods in transit and goods for export other than those which could be called goods in transit.
The amounts in dispute related to the levy of octroi under section 73(i) of the Bombay Municipal Boroughs Act, 1923, hereinafter called the Act, which provides as follows: "73 (i) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76, a Municipality may impose for the purposes of this Act any of the following taxes, namely: * * * * * (iv) an octroi on animals or goods or both, brought, within the octroi limits for consumption, use or sale therein;.
" The word "sale" was included within the ambit of octroi when the Act was amended in 1954.
The High Court took note of the rules and the bye laws and held that it was not possible to take the view that the rules contemplated that no refund was payable in case the goods had undergone a sale during the course of their stay in octroi limits.
It accordingly came to the conclusion that in regard to goods meant for export in the sense defined in the rules, refund was claimable even if a sale transaction in the larger sense (i.e. in a sense other than a sale to a consumer or with the intention that the goods must pass into hands of the ultimate consumer) took place in regard thereto, provided that the other conditions were satisfied.
The High Court then examined the correct interpretation of the word "sale" in clause (iv) of section 73(i) of the Act and after considering this Court 's judgment in Burmah Shell Oil Storage and Distributing Co. India Ld.
vs The Belgaum Borough Municipality,(1) it held that the word "sale" could not be given the narrow meaning of a sale for consumption to the ultimate consumer because, in that sense, the Legislature would be guilty of having introduced a word which it was not necessary for it to introduce.
The High Court made a reference to the definition of "sale" in section 4 of the Sale of 84 Goods Act and held that the expression "sale" as used in the definition of 'through consignments" in the rules had the same connotation as in the Sale of Goods Act and therefore "if a consignment is brought within the octroi limits and if the municipal authorities are satisfied that the consignment has been brought in for the purpose of effecting a sale in the aforesaid sense, then the consignment does not become a through consignment." According to the High Court, it was not enough merely to prove that the consignment left the octroi limits within six hours after the goods were imported and that it was necessary to show that the goods were intended only to pass through in the sense that they were not meant for consumption, use or sale, and that in regard to such goods there was no intention of changing hands by way of sale or that there was no intention of breaking their bulk or detaining them beyond six hours or unloading them.
In the view it took, the High Court issued some directions for compliance by the authorities concerned.
The writ petitioners felt dissatisfied with the view taken by the High Court and applied for a certificate under articles 132(1) and 133(1) (c) of the Constitution.
The High Court held that no question arose under article 132, and no certificate could be granted under article 133 as there was no final order.
The petitioners however applied to this Court for special leave on the ground, inter alia, that the High Court put a wrong interpretation on the expression "sale" in section 73(i)(iv) of the Act inspite of the decision of this Court in Burmah Shell 's case (supra).
As has been stated, they succeeded in obtaining special leave from this Court.
When the case came up for hearing before a Division Bench, it noticed the decision in Burmah Shell 's case (supra) and felt that there were "burred areas" of sale within the territory which may attract a tax under entry 52 (List II of Seventh Schedule) left uncertain by the aforesaid decision of this Court so that the matter deserved consideration by a larger Bench.
This is how the case has come up before us for hearing.
We have allowed Municipal Council, Jodhpur, to intervene in the hearing at its request.
The short question before us is whether this Court 's decision in the Burmah Shell 's case (supra) squarely covers the present controversy or whether that decision requires reconsideration.
The learned counsel have in fact confined their arguments to this narrow field.
In order to appreciate the controversy, it will be desirable to refer to the basic facts of the Burmah Shell 's case (supra).
The Burmah Shell Oil Storage and Distribution Co. India Ltd., hereinafter referred to as the Company, was a dealer in petrol and other petroleum products which it manufactured in its refineries situated out side the octroi limits of Belgaum Municipality.
It brought these products inside that area either for use or consumption by itself or for sale generally to its dealers and licensees who in their turn sold them to others.
According to the Company the goods brought by 85 it within the octroi limits could be divided into four categories as follows: 1.
Goods consumed by the Company; 2.
Goods sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company; 3.
Goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits; and 4.
Goods sent by the Company from its Depot inside the octroi limits to extra municipal points where they are bought and consumed by persons other than the company.
This Court examined the scheme of taxation under the Act and the rules and the bye laws made by the Municipality for the levy of octroi.
It also took note of the fact that the words "use or sale" were substituted for the words "or use" by Bombay Act 35 of 1954, which are the subject matter of a fresh controversy before us, and made a reference to the Legislative Lists in the Government of India Act, 1935 and the Constitution.
After examining the history of octrois and terminal taxes, this Court held that "octrois were taxes on goods brought into the local area for consumption, use or sale", and that "they were leviable in respect of goods put to some use or other in the area but only if they were meant for such user.
" It was specifically clarified that the word "sale" was included only in 1954 in order to bring the description of octroi in the Act in line with the Constitution, and that the expression "consumption" and "use" together "connote the bringing in of goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for consumption in a manner which destroys, wastes or uses them up.
" Looking to the trade of the Company, this Court held that sale by it directly to consumers or to dealers was "merely the means for putting the goods in the way of use or consumption" and that the word "therein" does not mean that all the act of consumption must take place in the area of the municipality.
The Court therefore went to hold as follows. "In other words, a sale of the goods brought inside, even though not expressly mentioned in the description of octroi as it stood formerly, was implicit, provided the goods were not re exported out of the area but were brought inside for use or consumption by buyers inside the area.
In this sense the amplification of the description both in the Government of India Act, 1935 and the Constitution did not make any addition to the true concept of 'octroi ' as explained above.
That concept included the bringing in of goods in a local area so that the goods come to a repose there.
When the Government of India Act, 1935 was enacted, the word 86 'octroi ' was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case.
In other words, even without the description the tax was on goods brought for 'consumption, use or sale '.
The word 'octroi ' was also avoided because terminal taxes are also a kind of octroi and the two were to be allocated to different legislatures.
In our opinion, even without the word 'sale ' in the Boroughs Act the position was the same provided the goods were sold in the local area to a consumer who bought them for the purpose of use or consumption or even for resale to others for the purpose of use or consumption by them in the area.
It was only when the goods were re exported out of the area that the tax could not legitimately be levied. " This Court categorically held that the Company was liable to pay octroi on goods brought into the local area (a) to be consumed by itself or sold by it to consumers direct, and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it, but it was "not liable to octroi in respect of goods which it brought into the local area and which were re exported.
" The law on the subject matter of the present controversy has thus been laid down quite clearly in the Burmah Shell 's case (supra) and the present case squarely falls to be governed by it.
We are also in agreement with that interpretation of the law.
It may be mentioned that the learned counsel have not been able to advance any new argument justifying a reconsideration of the decision.
The appeal is allowed, the impugned judgment of the High Court is set aside and the respondents are directed to examine and determine the claims of the appellant in accordance with the above decision.
The appellant will be entitled to costs from the respondents.
P.B.R. Appeal allowed.
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Section 73(i)(iv) of the Bombay Municipal Boroughs Act 1925 empowers a municipal borough to impose octroi on animals or goods or both brought within the octroi limits for consumption, use of sale therein.
The appellant imported certain consignments of goods within the octroi limits of the municipality and exported them, the consignments being termed as "through consignments" or "goods in transit" or "goods for export".
Octroi duty was imposed on the goods and the appellant filed a petition before the High Court challenging the levy.
The High Court held that the expression 'sale ' used in the definition of "through consignments" in the rules had the same connotation as in the Sale of Goods Act and, therefore, if a consignment was brought within the octroi limits and if the municipal authorities were satisfied that the consignment had been brought in for the purpose of sale, then the consignment did not become a through consignment.
Allowing the appeal to this Court, ^ HELD: The law on the subject has been clearly laid down in Burmah Shell Oil Storage and Distributing Company (India) Ltd. vs The Belgaum Borough Municipality and the present case is governed by that decision.
It was held in that case that the company was liable to pay octroi on goods brought into the local area, if the goods are: (a) to be consumed by the Company itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area and irrespective of whether such consumer bought them for use in the area or outside it; but it was not liable to octroi in respect of goods which were brought into the local area and were re exported.
[86 C D] Buimah Shell Oil Storage and Distributing Co. India Ltd. vs The Belgaum Borough Municipality [1963] Suppl.
2 S.C.R. 216, explained and applied
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Here's a two-paragraph summary of the court case:
The court case, Civil Appeal No. 1823 of 1969, revolves around the interpretation of the Bombay Municipal Boroughs Act, 1923, specifically Section 73(i)(iv), which deals with the levy of octroi on goods and animals brought within the octroi limits for consumption, use, or sale. The two petitioners, firms trading in commodities, argued that the Municipality had collected certain amounts wrongfully and refused to refund others. The High Court held that the word "sale" in the section could not be given a narrow meaning and that goods meant for export could be eligible for refund even if a sale transaction took place, provided other conditions were satisfied.
The case eventually reached the Supreme Court, which had previously considered a similar issue in the Burmah Shell Oil Storage and Distributing Co. India Ltd. vs The Belgaum Borough Municipality case. The Supreme Court held that the word "sale" was included in the Act to bring its description in line with the Constitution and that octrois were taxes on goods brought into the local area for consumption, use, or sale. The court held that sale by a dealer, even if not directly to consumers, could be considered a "sale" for the purpose of octroi if the goods were put to use or consumption in the area. The Supreme Court allowed the appeal, set aside the impugned judgment, and directed the respondents to determine the claims of the appellant in accordance with the decision.
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Appeal No. 1888/68.
Appeal by Special Leave from the Judgment and Order dated 10 1 1968 of the Madhya Pradesh High Court (Indore Bench) in Civil Revision No. 76/67.
D.V. Patel and S.K. Gambhir for the Appellant.
V.P. Raman, Addl.
, Y.S. Chitale and D.N. Mishra for the Respondent.
The judgment of the Court was delivered by KAILASAM, J.
This .appeal is by special leave against the judgment and order of the High; Court of Madhya.
Pradesh, Bench at Indore revising the order of the Additional Dis trict Judge and holding that the appellant is liable to pay tax from April .1, 1954 and not from April 1, 1965 only as held by the District Judge.
The appellant is the owner of a factory at No. 1, Shivaji Nagar, Indore.
On January 8, 1954.
the rental of the factory was assessed at Rs.564 per month and the house tax payable at Rs.475/14/ with effect from April 1, 1951.
The dispute is whether tax is payable from April 1, 1954.
By an order dated March 20, 1956 the house tax was determined at Rs. 891/1/ per annum by the Municipal Corpo ration with effect from April 1, 1954.
Against the said assessment the appellant preferred an appeal before the Municipal Appeal Committee, Indore.
Appeal Committee allowed the appeal and remanded the case for deciding it on merits after giving a hearing to the appellant.
After re mand, the Municipal Corporation again inquired into the matter and determined the rental value at Rs.940/ per month and reduced the tax to Rs.793/2/ per year by an order dated 11th February 1957, as payable from April 1, 1954.
The appellant objected to the assessment and gave notice of objection under section 147(1) of the Madhya Pradesh Munici pal .Corporation Act, 1.956, but the objection was summarily rejected by the Municipal Commissioner.
The appellant preferred an appeal being Miscellaneous Appeal No. 41 of 1957 to the 1st Additional District Judge, Indore.
By an order dated March 10, 1960, the Additional District Judge 873 allowed the appeal and remanded the case for decision afresh after proper inquiry.
On remand, a notice dated February 11, 1963, was issued to the appellant under section 144(1) of the ' Madhya Pradesh Municipal Corporation Act, ' 1956, as amended by Act 13 of 1961 calling upon him to.
furnish the required information.
The COrporation also, issued another notice to the appellant on May 7, 1964, informing the appellant that the Junior Overseer had submitted a report that considerable changes have been effected in the factory and calling upon him to.
submit a detailed plan.
The appel lant replied asking for details.
Subsequently, the appel lant received a notice dated October 12, 1965, under section 146 of the Madhya Pradesh Municipal Corporation Act whereby he was informed that the annual valuation of the property was assessed at Rs.10,870.20 and Rs.764.18 was fixed as the annual property tax with effect from April 1, 1954.
He was also informed that if he had any objection he could file his objections under section 147(1) within 30 days from the receipt of the said notice.
The 'appellant filed his objections on November 11, 1965.
The Commissioner rejected the objections by his order dated May 26, 1966, and confirmed the valuation of the property and tax imposed by it on October 12, 1965.
The appellant was informed by the Corporation by its letter dated June 1, 1966, that ' the amount of Rs.764.18 as tax has been fixed with effect from April 1, 1954, on the basis of the valuation of the annual income of Rs.10,870.20.
Aggrieved by the order of the Commissioner the appellant filed Civil Miscellaneous Appeal No. 70 of 1966 before the 2nd Additional District Judge, Indore.
The learned Judge by his order dated December 21, 1966, partly allowed the appeal and held that the appellant would be liable to pay the property tax of Rs.764.18 with effect from April 1, 1965, only, and not from April 1, 1954.
The respondent Municipality then filed a Revision Petition before the High Court and the High Court by its order dated January 10, 1968, in Civil Revision No. 76 of 1967 allowed the Revision Petition and held that levy of the house tax at Rs.764.18 would be payable from April, 1, 1954 itself.
Against the order of the High Court the appellant filed a petition under Article 136 of the Constitution and on the grant of a special leave by this Court on August 23,1968, this appeal has come up before us for final hearing.
The learned counsel for the appellant raised two conten tions.
He submitted that as a fresh notice was issued under section 144 of the amended Act on October 12, 1965 no tax could be imposed with retrospective effect and the order of the High Court directing payment of tax from April 1, 1954, is against law.
It was next contended that the decision_ of the 2nd Additional District Judge is final and the High Court had no jurisdiction to interfere with it.
In any event it had exceeded its powers under section 115 of the Civil Procedure Code.
874 From the facts set out it will be apparent that the order fixing the tax at Rs.891/1/ per annum with effect from April 1, 1954 was made on March 20, 1956.
That order was challenged before various forums.
The Municipal Appeal Committee had first allowed an appeal preferred by the appellant and remanded the case to the Municipal Corporation.
After remand the Municipal Corporation re duced the tax to Rs.793/2/ by its order dated February 11, 1957.
But again the assessment was objected to under section 147(1) of the Madhya Pradesh Municipal Corporation Act.
The Municipal Commissioner dismissed the objections and thereupon there Was an appeal to.
the Additional District Judge who allowed the appeal and remanded the matter for fresh disposal on March 10, 1960.
After remand the Corpo ration reduced the tax further and fixed it at Rs.764.18 with effect from April 1, 1954 by its order dated October 12, 1965.
The appellant filed objections and the objections were rejected by the Commissioner by its order dated May 26, 1966.
Against the order fixing the tax at Rs. 764.18 the appellant filed an appeal to the 2nd Additional District Judge, Indore, who by his order dated December 21, 1966 held that the property tax has to be paid only from April 1, 1965 and not from April 1, 1954.
That order was challenged by the Municipality before the High Court which allowed the Civil Revision and held that the house tax at Rs. 764.18 is payable from April 1, 1954.
It will be thus seen that the proceeding related to the tax payable from April 1, 1954.
The point that is taken by the learned counsel is that after the remand by the learned District Judge by his order dated March 10, 1960, the proceedings started by the Municipality by its notice, dated October 12, 1965 were under section 146 of the Madhya Pradesh Municipal Corporation Act and as the new Act was not retrospective in its effect the tax is payable only from April 1, 1965.
This plea cannot be accepted as from the narration of the facts it can be seen that it was a continuous proceeding relating to the tax payable from April 1, 1954, and there is no substance in the plea that the notice amounted to notice of fresh assessment or re assessment.
Equally untenable is his plea that the notice given by the Municipality on October 12, 1965 cannot have the effect of levying tax for any period earlier than April, 1965.
The notice issued by the Municipal Corporation bearing No. 18000 dated February 11, 1963, runs as follows : "Under section 144(1) of the Madhya Pradesh Municipal Corporation Act, you are hereby informed the necessary particulars in the proforma given below, together with the detailed plan of the building of the abovemen tioned factory may please be furnished within 7 days from the receipt of this letter; for the purpose of assessment.
As the case has been remanded by the court, it is necessary to make assessment again.
" The notice itself specifically states that the assess ment was to be made again in pursuance of the order of remand.
The notice No. 10195 dated October 12, 1965 is under section 146 of the Municipal Act and it stated that on remand of the matter from the District Court 875 regarding the assessment of the property.
No.1, Shivaji Nagar, the annual tax has been assessed at Rs. 764.18 and called upon the appellant to file any objections if he has within 30 days from the receipt of the notice under section 147(1) of the Act.
The notice itself makes it clear that the Commissioner was proceeding to fix the value in pursu ance of the remand and called upon him to file his objec tions under section 147.
The plea of the learned counsel for the appellant is that the Commissioner is not authorised to determine the value and impose a tax for any period before the date of issue of the notice.
This contention ignores the fact that the valuation and determination of the tax from the year 1954 was pending and the proceedings related to.
that period.
Section 3 of the M.P. Municipal Corporation Act, of 1956, amongst other things provides under sub section (3) that "All rates, taxes and sums of money due to the Municipalities of such city when this Act is made applicable shall be deemed to be due to the Corporation," and under subsection (4) of section 3 "All suits or other Legal proceedings, civil or criminal, insti tuted by or against the Municipality of such city may be continued by or against the Corporation.
" The proceedings were originally taken under the Madhya Bharat Municipalities Act, 1954 and the proceedings regarding the levy of the house tax were not concluded when under the new Act the Corporation became entitled to pursue the proceedings.
We do not see any basis for the contention that under the new Act the Municipality had no power to pursue the proceedings regarding the levy of the tax for an earlier period.
We therefore reject the first contention as being without any substance.
The second contention is based on section 149 of the Madhya Pradesh Municipal Corporation Act, 1956.
It pro vides that any appeal shall lie from the decision of the Municipal Commissioner to the District Court, when any dispute arises as to the liability of any land or building to assessment.
Sub section (1) of section 149 provides that the decision of the District Court shall be final.
It was submitted that the decision of the District Court was therefore final and that the High Court was in error in entertaining a Revision Petition.
This plea cannot be accepted for, under section 115 of the Civil Procedure Code the High Court has got a power to.
revise the order passed by courts subordinate to it.
It cannot be disputed that the District Court is a subordinate court and is liable to the revisional jurisdiction of the High Court.
That leaves us with the last contention of the appellant that the High Court acted beyond its power as a court of revision.
This point will have to be summarily dismissed as the question of want of jurisdiction of the High Court was not raised before the High Court and therefore cannot be allowed to be raised in this Court for the first time.
The learned counsel for the appellant pleaded that the question involves total lack of powers of the High Court and this Court should hold that the order of the High Court is without jurisdiction.
This Court has laid down the principles governing interfer ence under section 115 of the Civil Procedure Code is Bal devdas Shivlal & Anr.
vs Filmistan Distributors (India) (P) Ltd. & Ors.,, (1) M/s. D.L.F. Housing and Construction Co. (P) Ltd. vs (1) ; 8 206SCI/77 876 Sarup singh and Ors.,(1) and The Managing Director (MIG) Hindustan Aeronautics Ltd. Balanagar Hyderabad and Anr.
vs Ajit Prasad Tarway, Manager (Purchase and Stores) Hindu stan Aeronautics Ltd. Balangar Hyderabad.(2) These cases have been referred to in the recent decision of this Court in The Municipal Corporation of Delhi vs Suresh Chandra Jaipuria and Anr. (3) and the attention of the learned Judges of the High Court was drawn to the law declared by this Court.
We consider it unnecessary to discuss the law on the subject over again as this appeal is liable to be dismissed on the ground that the point was not taken before the High Court and the discretion of this Court to interfere or not is beyond question.
In the result we find that there is no substance in this appeal and dismiss the same with costs.
P.B.R. Appeal dis missed.
(1) A.I.R. 1971 S.C. 2324.
(2) (3) A.I.R. 1976 S.C. 2621.
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Under the Madhya Bharat Municipalities Act, 1954, the Municipal Corporation determined the house lax payable by the appellant in respect of his house with effect from April 1, 1954.
On appeal by the appellant regarding assessment, the Additional District Judge remanded the case to the Corporation for a fresh decision after due enquiry.
Ulti mately, by a notice dated October 12, 1965 issued under section 146 of the Madhya Pradesh Municipal Corporation Act, 1956 (as amended in 1961) the Corporation revised the amount of tax payable but maintained the date of liability for payment of tax as April 1, 1954.
On appeal by the appellant, the additional District Judge held that the tax was payable with effect from April 1, 1965 and not April 1, 1954 for the reason that the tax was finally fixed after the notice dated October 12, 1965.
The Revision Petition of the Corporation was allowed by the High Court holding that tax was payable from April 1, 1954 because the proceedings were started even before the 1956 Act came into force.
In appeal to this Court the appellant contended that (1 ) as the fresh notice was issued under section 146 of the 1956 Act on October 12, 1965 after remand of the case by the District Judge, house lax could be imposed only with effect from April 1, 1965 and not retrospectively and (2) the order of the District Judge being final under section 149(2) of the 1956 Act the High Court had no jurisdiction to interfere with that order and in any event the High Court exceeded its power under section 115, C.P.C. Dismissing the appeal.
HELD: The proceeding relating to the house tax was a continuous proceeding relating to the tax payable from April 1, 1954 and the notice issued by the Corporation after remand by the District Judge did not amount to notice of fresh assessment or re assessment.
[874 E F] 1.
There is no force in the contention .that under the 1956 Act the municipality had no power to pursue the pro ceedings regarding the levy of tax for an earlier period.
The notice issued by the Corporation to the appellant made it clear that the Commissioner was proceeding to fix the value in pursuance of the remand.
The appellant 's plea that the Commissioner was not authorised to determine the value and impose the tax for any period before the date of issue of the notice ignores the fact that the valuation and deter mination of tax from 1954 was pending and the proceedings related to that period.
Section 3(3) of the 1956 Act pro vides that all rates, taxes and sums of money due to the Municipalities when this Act was made applicable shall be deemed to be due to the Corporation and sub section
(4.) states that all suits and other legal proceedings instituted by or against a Municipality may be continued by or against the Corporation.
The proceedings in the instant case were originally taken under the Madhya Bharat Municipalities Act, 1954 and the proceedings regarding the levy of the house tax were not concluded when under the new Act the Corporation became entitled to pursue the proceedings.
[874F C, 875A D] 2.
(a) Under section 115, C.P.C. the High Court has power to revise the order passed by Courts subordinate to it.
The District Court being subordinate to 872 the High Court, is liable to the revisional jurisdiction of the High Court.
Moreover, the question of want of jurisdic tion of the High Court was not raised before that Court and cannot be allowed to be raised in this Court for the first time.
[875 F G] (b) The principles governing interference by the High Court trader section 115, C.I.C. have been laid down by this Court in a catena of decisions, the last of which is The Municipal Corporation of Delhi vs Suresh Chandra Jaipuria & Anr.
(A.I.R. [875H, 876A B] Baldevdas Shivlal & Anr.
vs Filmistan Distributors (India) (P) Ltd. & Ors. ; , M/s. D.L.F. Housing and Construction Co. (P) Ltd. vs Sarup Singh and Ors.
A.I.R. 1971 S.C. 2324, The Managing, Director (MIG) Hindustan Aeronautics Ltd. Balanagar, Hyderabad and Ant.
vs Ajit Prasad Tarway, Manager (Purchase and Stores) Hindu stan Aeronautics Ltd. Balanagar, Hyderabad, A.I.R. 1973 S.C. 76 and The Municipal Corporation of Delhi vs Suresh Chan dra Jaipuria and Anr.
A.I.R. 1976 S.C. 2621 referred to.
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Here is a two-paragraph summary of the court case:
This appeal was filed by the appellant against the order of the High Court of Madhya Pradesh, which held that the house tax of Rs. 764.18 was payable from April 1, 1954. The appellant claimed that the tax was payable only from April 1, 1965, as held by the 2nd Additional District Judge, Indore. The High Court allowed the Revision Petition filed by the respondent Municipality and set aside the order of the District Judge.
The appellant raised two contentions in the Supreme Court. Firstly, that no tax could be imposed with retrospective effect after the remand by the District Judge in 1960, and secondly, that the decision of the District Judge was final and the High Court had no jurisdiction to interfere with it. However, the Supreme Court rejected both contentions, holding that the proceedings related to tax payable from April 1, 1954, and there was no substance in the plea that the notice amounted to notice of fresh assessment or reassessment. The Supreme Court further held that the High Court had the power to revise the order of the District Court under section 115 of the Civil Procedure Code.
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Civil Appeal No. 1204 of 1978.
Appeal by Special Leave from the Judgment and Order dated 5 4 1978 of the Allahabad High Court (Lucknow Bench) in Second Civil Appeal No. 90/75.
R. K. Garg, V. J. Francis and Sunil Kumar for the Appellant.
Uma Datta, Prem Malhotra and Kishan Datt for the Respondents.
The Judgment of the Court was delivered by FAZAL ALI, J.
How dishonest cousins, looking after the lands of their brother 's widow, situated far away from the place where the widow was living, taking undue advantage of the confi 865 dence reposed in them by their widowed sister in law and having painted a rosy picture of honestly managing the property and giving her due share, cast covetous eyes on their sister in law 's share and with a deplorable design, seek to deprive her of her legal share and deny her legal rights is not an uncommon feature of our village life.
That this is so is aptly illustrated by the facts of this case where the sister in law was driven by the force of circumstances to indulge in a long drawn litigation in order to vindicate her legal rights in wresting her share of the property from the hands of her cousins.
This is the unfortunate story of the poor and helpless appellant, Karbalai Begum, who having failed to get justice from the High Court of Allahabad was forced to knock the doors of the highest Court in the country and has, therefore, filed the present appeal in this Court after obtaining special leave.
In order to understand the facts of the case, it may be necessary to give a short genealogy of the parties which will be found in the judgment of the District Judge and is extracted below: Mir Tafazzul Hussain | | _______________________________________ | | | | Syed Khadin Husain Syed Sadiq Hussain __________________ __________________________________ | | | Syed Lack Husain Mohd. Bashir Modh.
Rasheed (Widow Karbalai (Deftd. No. 1) (Widow Smt Shakira Begum Plaintiff) Bano, Defdt No 2) The appellant Karbalai Begum was the widow of Syed Laek Husain and defendants No. 1 and 2 were her husband 's cousins.
The admitted position seems to be that the plaintiff and the defendants were in joint possession of the plots in dispute, being co bhumidars, because after the abolition of the zamindari by the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 the plaintiff appellant, Mohd. Bashir and Mohd. Rasheed became bhumidars of the plots in dispute.
It is also not disputed that upto 1359 Fasli both the parties had a joint khewat, as would appear from the extract of the khewat produced by the appellant.
The plaintiff 's case was that she was living with her sons at Lucknow and her husband 's cousins were looking after the lands which consisted of agricultural lands and groves and she was given her share by her cousins from time to time.
It was also alleged that she went to the village from time to time and got her share.
In her statement before the trial court, she has clearly stated that the defendants, Mohd. Bashir and Mohd. Rasheed used to manage the properties which were joint and used to give her share and assured her that her share would be properly looked after and protected by them.
Thus, 866 having gained the confidence of the plaintiff the first and the second defendants went on managing the properties and off and on gave her share so that she may not suspect their evil intentions.
The plaintiff further alleged in her statement that during the consolidation proceedings, separate plots were carved out and she was never informed about any proceedings by the defendants and was under the Impression that her share was being properly looked after.
It was only three years before the suit that the plaintiff came to know that her name had been deleted from the khewat and the entire property was mutated in the consolidation of holding proceedings in the name of the defendants.
Hence, the suit by the plaintiff for joint possession over the share.
The suit was dismissed by the trial court but on appeal, the district judge decreed the suit for joint possession in respect of Chakbandi plot Nos. 201 and 274 only.
As regards plot Nos. 93, 94 and 106 the dismissal of the plaintiff 's suit by the trial court was upheld.
In the instant case, therefore, we are concerned only with Chakbandi plot Nos. 201 and 274.
Plot No. 201 was carved out of plot Nos. 158, 159, 164, 165, 167, 166, 168, etc.
and plot No. 274 was formed out of plot Nos. 267, 268, 272, 273, 276, 277, 278, 279 and 280.
The suit was contested by the defendants mainly on the ground that the defendants were in separate occupation of the land or plots in dispute and the plaintiff had absolutely no concern with them.
It was further averred that although at some time before, the lands in dispute were joint but during the consolidation proceedings the plots in possession of the plaintiff were occupied by Adhivasi who having acquired the rights of a Sirdar under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950, the plaintiff lost her title by operation of law.
The allegation of the plaintiff that the defendants had committed fraud was stoutly denied.
The learned trial court accepted the allegations of the defendants and dismissed the case of the plaintiff.
The District Judge, however, found that on the admitted facts even after the abolition of zamindari, the position was that in 1357 Fasli the plaintiff 's name was clearly recorded as a co sharer with the defendants and continued to be so until 1359 Fasli as would appear from exhibit 2.
The learned District Judge further found that the name of the plaintiff was suddenly deleted after 1359 Fasli and there was no order of any authority or court to show the circumstances under which the plaintiff 's name was suddenly deleted nor were there any judicial proceedings under which the name of the plaintiff as a co bhumidar was 867 deleted.
The learned District Judge, after a careful consideration of the documentary evidence, came to the clear conclusion that some sort of fraud must have been committed by Mohd. Bashir, and Mohd. Rasheed when in 1362 Fasli the plots were entered exclusively in the name of Mohd. Bashir and Mohd. Rasheed.
Even if no share was given to the plaintiff by the defendants, as the defendants were co shares, unless a clear ouster was pleaded or proved the possession of the defendants as co sharers would be deemed in law to be the possession of the plaintiff.
Another obvious fact which emerges from the admitted position is that if Mohd. Bashir and Mohd. Rasheed were co bhumidars with the plaintiff in the khewat and had also sirdari tenants under them, how could the sirdari tenants occupy the land of one of the co sharers leaving the defendants alone so that the plots were re allotted to them.
It is well settled that mere non participation in the rent and profits of the land of a co sharer does not amount to an ouster so as to give title by adverse possession to the other co sharer in possession.
Indeed even if this fact be admitted, then the legal position would be that Mohd. Basir and Mohd. Rashid, being co sharers of plaintiff, would become constructive trustees on behalf of the plaintiff and the right of the plaintiff would be deemed to be protected by the trustees.
The learned counsel appearing for the respondent was unable to contest this position of law.
In the present case, it is therefore manifest that the possession of the defendants, apart from being in the nature of constructive trustees, would be in law the possession of the plaintiff.
Apart from this, the fact remains that the District Judge has come to a clear finding of fact after consideration of the evidence that a clear fraud was committed during the consolidation operation either by the defendants or by somebody else as a result of which the rights of the plaintiff were sought to be extinguished.
In this connection, the learned District Judge found as follows: "This shows that a planned fraud was made to drop the appellant 's name from the revenue records and full advantage was taken of the consolidation operations in the village by the respondents.
In para 20 of the written statement, paper 31A, it was pleaded by the respondents that they acquired the suit plot through litigation and the plaintiff 's right extinguished during the consolidation proceedings.
There is no evidence before me to show that there was any litigation with the subtenants and the defendants acquired the plots exclusively.
Even 868 if it is accepted for the sake of arguments that the respondents did obtain the plots through litigation, even then it cannot be said that the plaintiff 's rights extinguished.
" This finding of the learned District Judge was a clear finding of fact and even if it was wrong (though in our opinion it is absolutely correct) it was not open to the High Court to interfere with this finding of fact in second appeal.
Furthermore, the District Judge at another place found that there was no evidence on the record to prove that the plaintiff was not given any share out of the produce and, therefore, the conclusion that the plaintiff should be deemed to be ousted from possession, was not correct.
In this connection, the learned Judge observed as follows: "The argument advanced by the counsel for the respondents that there is no evidence on the record that the plaintiff was given any share out of the produce and, therefore, the plaintiff should be deemed to be ousted from possession, is fallacious.
" This was also a finding of fact which was binding in second appeal.
The High Court seems to have relied on the fact that there was no evidence to prove that the plaintiff was prevented from filing a petition under section 9 of the U.P. Consolidation of Holdings Act, 1953 or that the defendants assured the plaintiff that her name shall be entered in the record during the consolidation proceedings.
Here also, the High Court committed an error of record because the clear evidence of PW, Karbalai Begum, is to the effect that she was not at all informed about the consolidation proceedings and was assured by the defendants that they would take proper care of her share in any proceedings that may be instituted.
This was accepted by the District Judge and should not have been interfered with by the High Court in second appeal.
The High Court proceeded on the basis that there was nothing to show that any fraud was practised upon the consolidation authorities so as to make the order a nullity.
Here the High Court completely misunderstood the case made out by the plaintiff.
It was never the case of the plaintiff that any fraud was committed on the consolidation authorities.
What she had stated in her plaint and in her evidence was that the defendants had practised a fraud on her by giving her an assurance that her share would be properly looked after by them and on this distinct understanding she had left the entire management of the properties to the defendants who also used to manage them.
The trial court did not fully appreciate this part 869 of the case made out by the plaintiff and the District Judge in clear terms accepted the same.
In these circumstances, therefore, the finding of the High Court regarding fraud having been committed in the consolidation proceedings was not legally sound.
The last ground on which the High Court non suited the appellant was that after the chakbandi was completed under the U.P. Consolidation of Holdings Act, the suit was barred by section 49 of the said Act.
It is well settled that unless there is an express provision barring a suit on the basis of title, the courts will not easily infer a bar of suit to establish the title of the parties.
In Subha Singh vs Mahendra Singh & Ors.
this Court made the following observations: "It was thus abundantly clear that an application for mutation on the basis of inheritance when the cause of action arose, after the finalisation and publication of the scheme under Section 23, is not a matter in regard to which an application could be filed "under the provisions of this Act" within the meaning of clause 2 of Section 49.
Thus, the other limb of Section 49, also is not attracted.
The result is that the plea of the bar of the civil courts ' jurisdiction to investigate and adjudicate upon the title to the land or the sonship of the plaintiff has no substance.
" In view of the clear decision of this Court, referred to above, the High Court erred in law in holding that the present suit was barred by section 49 of the U.P. Consolidation of Holdings Act.
Thus, the grounds on which the High Court reversed the decision of the District Judge are not sustainable in law and the judgment of the High Court cannot be allowed to stand.
We, therefore, allow the appeal with costs throughout, set aside the judgment of the High Court, decree the plaintiff 's suit for joint possession as far as plots Nos.
201 and 274 are concerned and restore the judgment of the District Judge.
The cost allowed by this Court would be set off against the sum of Rs. 15,000/ (fifteen thousand only) deposited by the respondents in the High Court and paid to the appellant and the balance may be refunded to the respondents.
N.K.A. Appeal allowed.
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The appellant a widow and defendants nos.
1 and 2 were her husband 's cousins.
They were in joint possession of the plots in dispute, being co bhumidars.
The parties had a joint Khewat upto 1359 Fasli.
The plaintiff filed a suit for joint possession over her share contending that she was living with her sons at Lucknow and defendants were looking after the agricultural land and groves and that she was given her share by the defendant from time to time.
She also went to the village from time to time and got her share.
She alleged that the defendants assured her that her share would be properly looked after and protected by them.
The plaintiff further alleged that it was only 3 years before the suit that she came to know that her name had been deleted from the Khewat, and the entire property was mutated in the consolidation of holding proceedings, in the name of defendants of which she was never informed.
The defendants contested the suit on the grounds that, they were in separate occupation of the land in dispute, the plots in dispute were occupied by Adhivasi who acquired the Sirdar rights under the U. P. Zamindari Abolition and Land Reforms Act, 1950, the plaintiff lost her title by operation of law, and denied the allegation of fraud.
The trial court dismissed the suit but on appeal the District Judge decreed the suit for joint possession in favour of the plaintiff in respect of two plots of the land.
The High Court accepted the appeal of the defendants.
Allowing the appeal this Court, ^ HELD: 1.
The grounds on which the High Court reversed the decision of the District Judge are not sustainable in law and the judgment of the High Court cannot be allowed to stand.
[869F] 2.
Another fact which emerges from the admitted position is that if defendants 1 and 2 were co bhumidhars with the plaintiff in the Khewat and had also sirdari tenants under them, how could the sirdari tenants occupy the land of one of the co sharers leaving the defendants alone so that the plots were reallotted to them.
[867C] 864 3.
It is well settled that mere non participation in the rent and profits of the land of a co sharer does not amount to an ouster so as to give title by adverse possession to the other co sharer in possession.
Even if this fact be admitted, then the legal position would be that defendants nos.
1 and 2 being co sharers of the plaintiff, would become constructive trustees on behalf of the plaintiff and the right of the plaintiff would be deemed to be protected by the trustees.
[867D] In the instant case it is manifest that the position of the defendants apart, from being in the nature of constructive trustees, would be in law the possession of the plaintiff.
[867E] 4.(i) The finding of the District Judge that a planned fraud was made to drop the appellant 's name from the revenue records was a clear finding of fact and even if it was wrong (though it is absolutely correct) it was not open to the High Court to interfere with the finding of fact in second appeal.
[868B] 4.(ii) The High Court proceeded on the basis that there was nothing to show that any fraud was practised upon the consolidation authorities so as to make the order a nullity.
The High Court here completely misunderstood the case made out by the plaintiff.
[868G] 5.
The finding of fact of the District Judge that there was no evidence on the record to prove that the plaintiff was not given any share out of the produce and, therefore, the conclusion that the plaintiff should be deemed to be ousted from possession, was binding in second appeal.
[868C D] 6.
The High Court committed an error of record because the clear evidence of the appellant is to the effect that she was not at all informed about the consolidation proceedings and was assured by the defendants that they would take proper care of her share in any proceedings that may be instituted.
[868F] 7.
It is well settled that unless there is an express provision in the statute barring a suit on the basis of title, the courts will not easily infer a bar of suit to establish the title of the parties.
[869B] Suba Singh vs Mahendra Singh and Ors.
A.I.R. 1974 section C. 1657 referred to.
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Here is a two-paragraph summary of the court case:
The case involves Karbalai Begum, the widow of Syed Laek Husain, who filed a suit for joint possession of two plots of land (Chakbandi plot Nos. 201 and 274) against her husband's cousins, Mohd. Bashir and Mohd. Rasheed. The plaintiff alleged that the defendants had committed fraud by deleting her name from the khewat and mutating the entire property in their names during the consolidation proceedings. She claimed that she was assured by the defendants that they would take proper care of her share in any proceedings that may be instituted.
The trial court dismissed the suit, but the District Judge decreed it for joint possession of the two plots. However, the High Court reversed the decision, holding that the suit was barred by section 49 of the U.P. Consolidation of Holdings Act and that there was no evidence to prove that the plaintiff was prevented from filing a petition under section 9 of the Act. The Supreme Court allowed the appeal, set aside the judgment of the High Court, and decreed the plaintiff's suit for joint possession of the two plots, holding that the High Court erred in law in holding that the suit was barred by the Act and in interfering with the findings of fact made by the District Judge.
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N: Criminal Appeal No. 562 of 1983.
812 From the Judgment and Order dated the 29th July, 1982 of the Punjab and Haryana High Court at Chandigarh in Criminal Appeal No. 78 DB/80.
Prem Malhotra for the Appellant.
R.K. Garg and D.K.Garg for the respondents.
The Judgment of the Court was delivered by CHANDRACHUD, C. J.
Thirteen persons were sentenced to life imprisonment by the learned Additional Sessions Judge, Ambala, under section 302 read with section 149 of the Penal Code.
For other offences connected with the main offence of murder, they were sentenced to lesser concurrent terms of imprisonment.
The charge against the accused is that they committed the murder of one Dhian Singh and caused injuries to six others on June 6, 1980.
The accused are Harijans while the deceased Dhian Singh belonged to the Rajput faction of the village of Sultanpur.
There were disputes between the two groups over a piece of land.
The Harijans filed a suit to establish their title to that land but they lost that suit, having taken it upto the High Court in Second Appeal Proceedings under section 145 of the Code of Criminal Procedure were instituted against the two factions, which also the Rajputs won.
The judgment which the High Court of Punjab and Haryana declared in this case shows how important it is for Judges to observe the norms laid down by law for dispensing justice. 'Justice under the tree ' or the 'Panchayat justice ' have advantages of their own, but they cannot be confused with justice according to the Chancellor 's foot.
If anything, the strange procedure adopted by the High Court in this case has only succeeded in giving a bad name to a useful innovation which, if tried cautiously and with circumspection, will take away at least a frivolous chunk of litigation which clogs the wheels of justice in Courts of law.
When the appeal filed by the accused came up for hearing before the High Court, it took the view that "the matter could be settled by a compromise".
It invited the Harijan Panchayat and the Rajput Panchayat of the village of Sultanpur to appear before it.
On May 28, 1982 the two Panchayats 813 agreed that the Harijans should be allotted four kanals out of the disputed land.
The High Court accordingly directed that the Revenue authorities should go to the spot, demarcate that land and report back to it along with the plans.
The report submitted by the Revenue authorities showed, according to the High Court, that its order was not understood correctly.
The High Court then entered into a dialogue with Shri Bhasin, District Attorney, Haryana, who informed it that he had discussed the matter with the S.D.O. (Civil), Kalka, and that the said Officer was of the view that the land could be demarcated so that four kanals could be allotted therefrom to the Harijans.
While hearing the criminal appeal against the order of conviction for murder and the other offences, the High Court called for the papers of Second Appeal No. 742 of 1978, which was disposed of in 1980 by a final order in favour of the Rajputs.
All the effected parties were not before the High Court as they possibly could not be, since what was before the High Court was the criminal appeal and not the Second Appeal.
The High Court, finding that some of the affected parties were not served, directed that if any unserved party had a grievance, it could approach it for review of its judgment.
The High Court thereafter recorded the statements of the two learned counsel, Shri F.C. Aggarwal and Shri C.D. Dewan who appeared for the parties.
Shri Aggarwal stated that he agreed that four kanals from the land should be allotted to the Harijans.
Shri Dewan made a statement that he agreed with what Shri Aggarwal had stated.
The High Court then had Second Appeal No. 742 of 1978 called out and passed an order to the effect that as agreed between the parties, the claim of the Harijans for four kanals of the land was allowed.
Having thus re disposed of the Second Appeal, the High Court took up the criminal appeal for hearing.
The entire judgment of the High Court runs thus: "We do not wish to give a detailed judgment in this case.
It suffices to mention that there is abundant evidence on record to indicate that actual possession of the land falling under the Asthan of Sidh Baba, the well and the adjoining houses was of the accused.
It looks 814 more probable that when some force being used to dispossess them, they protested and when their protests were unavailing violence was used resulting in the death of Dhian Singh, deceased.
In the circumstances, we give the benefit of doubt to the accused persons, and acquit them of all the charges.
We do hope that in future the parties will live together amicably.
With these observations, the appeal is allowed.
" With respect, it is impossible to appreciate how the High Court could dispose of the criminal appeal in this extraordinary fashion.
It is obvious that the High Court had made up its mind to acquit the accused without considering the evidence before it.
Finding that the offence of murder cannot be compounded, the High Court took the facile course of acquitting the accused who, by a considered judgment, were convicted by the learned Additional Sessions Judge.
It is less than just to allow the judgment of the High Court to stand.
Shri R.K. Garg, who appeared on behalf of the accused, found it impossible to support the judgment of the High Court.
Accordingly, we set aside the judgment of the High Court dated July 29, 1982 and remand the appeal to it for disposal in accordance with law.
We also set aside the order passed on that date by the High Court in Second Appeal No. 742 of 1978.
The earlier judgment of the High Court in that appeal will be restored.
We hope that the High Court will be able to take up the criminal appeal for hearing at an early date.
If the evidence warrants the acquittal of the accused, they will be entitled to be acquitted.
We express no opinion on the merits of that matter.
H.L.C. Appeal Remanded.
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The respondents were convicted and sentenced for committing murder and other offences.
The deceased and the respondents, who respectively belonged to the Rajput and the Harijan factions of the village, had a dispute over a piece of land which had been decided in favour of the Rajputs by a final order of the High Court in second appeal.
When the respondents ' appeal against conviction in the criminal case came up for hearing, the High Court took the view that 'the matter could be settled by a compromise ' and invited the Harijans and Rajput panchayats of the village to appear before it and, ultimately, called for the papers of the second appeal decided earlier and passed an order to the effect that, as agreed between the parties, the claim of the Harijans for four kanals of land was allowed.
Finding that some of the affected parties were not served, the High Court directed that if any unserved party had a grievance, it could apply for review of the judgment.
After re disposing of the second appeal relating to the dispute over land in the manner stated above, the High Court took up the criminal appeal for hearing and, without considering the evidence before it, delivered a short judgment acquitting the respondents.
Remanding the appeal, ^ HELD: It is impossible to appreciate how the High Court could dispose of the criminal appeal in this extraordinary fashion.
It is obvious that the High Court had made up its mind to acquit the accused without considering the evidence before it.
Finding that the offence of murder cannot be compounded, the High Court took the facile course of acquitting the accused who, by a considered judgment, were convicted by the trial Court.
[814 C D] The judgment of the High Court shows how important it is for the judges to observe the norms laid down by law for dispensing justice. 'Justice under the tree ' or 'panchayat justice ' have advantages of their own, but they cannot be confused with justice according to the Chancellor 's foot.
[812 F]
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Here is a two-paragraph summary of the court case:
In the Criminal Appeal No. 562 of 1983, the Punjab and Haryana High Court had previously acquitted 13 accused persons of murder and other offenses, handing down a judgment on July 29, 1982. The accused were members of the Harijan community and were convicted of killing Dhian Singh, a member of the Rajput community, and injuring six others over a dispute regarding a piece of land in Sultanpur village. The High Court had invited the Harijan and Rajput Panchayats to settle the matter through a compromise, ultimately deciding the land distribution in favor of the Harijans.
However, the Supreme Court, in a later appeal, found the High Court's judgment to be unjust and in contravention of the law. The Supreme Court held that the offense of murder cannot be compounded and set aside the High Court's judgment. The Supreme Court also set aside the order passed in Second Appeal No. 742 of 1978, which had been previously disposed of by the High Court in favor of the Rajputs. The Supreme Court remanded the appeal to the High Court for disposal in accordance with the law, allowing the accused to be acquitted if the evidence warrants it.
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: Criminal Appeal No. 45 of 1982.
597 From the Judgment and Order dated the 9th July, 1981 of the Punjab and Haryana High Court at Chandigarh in Criminal Appeal No. 333 DB of 1981, AND S.L.P. (Crl.) No. 2948 of 1982.
R.L. Kohli and R. C. Kohli for the Appellants.
T.U. Mehta and A.G. Ratnaparkhi for Respondent No. 1.
N.C. Talukdar and R.N. Poddar for Respondent No. 3.
N.C. Talukdar and R.N. Poddar for the Petitioner in S.L.P. (Crl.) No. 2498/81.
D. D. Sharma for the State.
The Judgment of the Court was delivered by MISRA, J.
The appeal as well as the special leave petition are directed against the judgment of the High Court of Punjab and Haryana at Chandigarh dated 9th July, 1981.
Criminal appeal has been filed by the complainant while the special leave petition has been filed by the State of Himachal Pradesh.
Vinay Kumar and his mother Chhano Devi were convicted for the murder of Asha, the wife of Vinay Kumar by burning her alive and sentenced to life imprisonment by the learned Sessions Judge, Gurdaspur.
On appeal by the accused, the High Court acquitted them by the impugned judgment.
The prosecution case set up at the trial was that the deceased Asha was married with Vinay Kumar in July, 1972.
The marriage was an arranged marriage.
It did not prove to be a success, the apparent cause for the failure of marriage was that Asha was only a matriculate and not cultured enough to move about in the society with the husband.
To make up this deficiency the deceased again resumed her studies and started attending college at Nagrota Bhagwan.
While prosecuting her studies she was rebuked and abused and sometimes even thrashed, whenever she visited the house of her in laws.
She however, kept on suffering in the vain hope that in due course of time things might improve.
There was, however, no improvement and she was fed up with the maltreatment and 598 cruelty meted out to her in the in laws house.
She left the matrimonial home and started living with her parents sometime in the year 1975 or early 1976.
In 1977 Vinay Kumar filed a petition in the court of the District Judge, Kangra at Dharamshala under section 13 of the Hindu Marriage Act for the dissolution of his marriage with the deceased on various grounds including one of desertion.
The District Judge in the first instance tried for reconciliation between the spouse and as an interim arrangement Asha returned to her in laws house in June 1978 on trial basis, while divorce petition was kept pending and adjourned to July 29, 1978.
As the parties did not appear in the Court on the date fixed, it was presumed that they were living happily and the proceedings were, therefore, consigned to the record.
On 5th of August, 1978 at about 11 a.m.
Kanwal Nain P.W. 4, Bil Bhandur P.W. 14, employee of the Post office, which was just in front of the house of the accused at a distance of 10/12 feet, and a number of other persons saw smoke coming out of the window of the house of the accused.
When Bil Bhandur and others went to the house, they found the outer door locked.
There was no other means of ingress to the house.
After a short while one Raj brought the key from Chhano Devi accused with which the lock was opened and entry gained into the house.
Asha was found burning and after extinguishing the fire, she was removed to the local hospital.
Dr. O. P. Dutta attended her and sent an intimation of the incident to the Incharge local Police Post.
He recorded the statement of Asha on the out patient register 13x.
Meanwhile Kesar Singh, Assistant Sub Inspector, arrived there an d after getting a certificate from Dr. Dutta, he also recorded her statement exhibit PU.
From Civil Hospital, Kangra Asha was removed in a truck to a Civil Hospital in Dharamshala (H.P.) where she breathed her last.
The police suspected no foul play and did not register any case.
The father of the deceased Hanumant Dass, however, made a report on 7th August, 1978 and a case was registered on that basis.
The accused were sent up for trial.
When the case was pending in the Court of Sessions Judge, Dharamshala in Himachal Pradesh, the complainant moved an application to the 599 Supreme Court for transfer of the case from Himachal Pradesh to some other province.
The case was transferred to a Court of competent jurisdiction at Gurdaspur in Punjab.
The Sessions Judge, Gurdaspur convicted both the accused under section 302 read with section 34 of the Indian Penal Code and sentenced them to life imprisonment.
This conviction was based only on the circumstantial evidence.
Accused went up in appeal to the High Court.
The High Court in its turn set aside the order of conviction and acquitted the accused of the charge.
The complainant has filed the present appeal.
Shri Kohli appearing for the complainant has strenuously contended that the appeal before the High Court has been allowed in the absence of the State of Himachal Pradesh and without any notice to that State and as such the impugned judgment of the High Court is a nullity and should be set aside on that ground alone.
The accused had impleaded only the State of Punjab as a party and the High Court has issued notice to the Advocate General of Punjab.
As a second limb to this argument it has been contended by Shri Kohli that the appeal was filed in the High Court on 15th June, 1981 and while considering the application for bail on 22nd of June, 1981, posted the appeal for hearing on 6th of July, 1981 after service of notice on the Advocate General of Punjab and the appeal was decided on 9th July, 1981 without even summoning the record.
Thus the High Court was in a hot haste to dispose of the appeal even without reasonable opportunity being afforded to the counsel for the State and without impleading the appropriate State as a party to the appeal and without notice to the counsel for the State of Himachal Pradesh.
We may first deal with the criticism of the learned counsel about the undue haste in the disposal of the appeal by the High Court.
It appears that Shri M.R. Mahajan, counsel for the appellants while moving the application for bail made a statement before the High Court and it is on his statement that the case was posted for hearing at the earliest possible.
This will be apparent from the order dated 22.6.1981 passed by the High Court while disposing of the application for bail.
The order insofar as it is material for consideration of the point reads: ".
Mr. Mahajan, Advocate states that on the findings of fact recorded by the learned trial Judge, the conviction of the appellants cannot be sustained.
Notice for 6.7.81.
600 to the Advocate General, Punjab.
Copy of the grounds of appeal and the judgment rendered by the learned trial Judge be delivered in the office of the A. C. Punjab within two days, The case is likely to be disposed of on that date . " Therefore, the charge levelled against the High Court that it was in a hot haste to decide the appeal at the earliest possible appears to be uncalled for.
This leads us to the main contention raised by Shri Kohli that the transfer of the case from Dharamshala lying within the territorial jurisdiction of the High Court of Himachal Pradesh to Gurdaspur Lying within the jurisdiction of the Punjab and Haryana High Court, does not change the parties and the parties remain the same even after the transfer of the case from Dharamshala to Gurdaspur.
In this view of the legal position, the State of Himachal Pradesh where the offence was committed was a necessary party and should have been impleaded in appeal.
In the absence of the State of Himachal Pradesh as a party and in the absence of notice to the counsel for the State of Himachal Pradesh, the High Court was not justified in disposing of the appeal and its judgment is only a nullity.
This contention is based on section 385 of the Code of Criminal Procedure.
Insofar as it is material for the purpose of the case it reads : "385(1): If the Appellate Court does not dismiss the appeal summarily, it shall cause notice of the time and place at which such appeal will be heard to be given (i) to the appellant or his pleader; (ii) to such officer as the State Government may appoint in this behalf; (iii) if the appeal is from a judgment of conviction in case instituted upon complaint, to the complainant; (iv) if the appeal is under section 377 or section 378, to the accused, and shall also furnish such officer, complainant and accused with a copy of the grounds of appeal.
601 (2) The Appellate Court shall then send for the record of the case, if such record is not already available in that Court, and hear the parties: Provided that if the appeal is only as to the extent or the legality of the sentence, the Court may dispose of the appeal without sending for the record.
In the appeal before the High Court, State of Punjab was made a party and notice .
Of the appeal was also given to the Advocate General of Punjab.
According to Shri Kohli this does not satisfy the requirement of law.
It would be appropriate at this stage to refer to other relevant provisions of the Code: Section 225 provides that "In every trial before a Court of Session, the prosecution shall be conducted by a Public Prosecutor.
" Section 2(4) defines public prosecutor "Public Prosecutor means any person appointed under section 24, and includes any person acting under the direction of a public prosecutor.
" Section 24 deals with "Public Prosecutors in the High Court": "24.
Public Prosecutors: (I) For every High Court, the Central Government or the State Government shall, after consultation with the High Court, appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors, for conducting in such Court, any prosecution, appeal or other proceeding on behalf of the Central Government or State Government, as the case may be. . . . . . .
Section 378 talks of an appeal in case of acquittal.
(2) If such an order of acquittal is passed in any case in which the offence has been investigated by the Delhi Special Police Establishment constituted under the , or by any other agency empowered to make investigation into an offence under any Central Act other than this Code, the Central Government may also direct the Public Prosecutor to present an appeal, subject to the provisions of sub sec.(3) to the High Court from the order of acquittal.
Section 432 authorises the appropriate Government to suspend or remit sentences. "432(1): When any person has been sentenced to punishment for an offence, the appropriate Government may, at any time, without conditions or upon any conditions which the person sentenced accepts, suspend the execution of his sentence or remit the whole or any part of the punishment to which he has been sentenced.
(2) Whenever an application is made to the appropriate Government for the suspension for remission of a sentence, the appropriate Government may require the presiding Judge of the Court before or by which the conviction was had or confirmed, to state his opinion as to whether the application should be granted or refused, together with his reasons for such opinion (3) .
. . (4). . (s) (6) The provisions of the above sub sections shall also apply to any order passed by a Criminal Court under any section of this Code or of any other law which restricts the liberty of any person or imposes any liability upon him or his property, 603 (7) In this section and in section 433, the expression "appropriate Government" means (a) in cases where the sentence is for an offence against, or the order referred to in sub section (6) is passed under, any law relating to a matter to which the executive power of the Union extends, the Central Government; (b) in other cases, the Government of the State within which the offender is sentenced or the said order is passed.
From the various provisions extracted above it is evident that there shall be a Public Prosecutor for conducting any prosecution appeal or other proceeding on behalf of the Central Government or State Government in the High Court.
Shri Kohli, however, contends that occurrence in the instant case took place within the territorial limits of Himachal Pradesh.
That State, therefore, will continue to be a necessary party in the appeal irrespective of the fact that the appeal was filed in the Punjab High Court.
Section 432(7) extracted above defines "appropriate Government".
"Appropriate Government" means (a) in cases where the sentence is for an offence against, or the order referred to in subsection (6) is passed under any law relating to a matter to which the executive power of the Union extends, the Central Government; (b) in other cases, the Government of the State within which the offender is sentenced or the said order is passed.
According to this section the appropriate Government is the Government of the State of conviction and not the Government of the State where the offence was committed.
A somewhat similar question came up for consideration in the State of Madhya Pradesh vs Ratan Singh & Ors.,(1) where the respondent was convicted and sentenced to imprisonment for life by a court in the State of Madhya Pradesh.
At his request he was transferred o a Jail in the State H 604 of Punjab, to which State he belonged.
He applied to the Government of Punjab that under the Punjab Jail Manual he is entitled to be released since he had completed more than 20 years of imprisonment.
The application was sent to the Government of Madhya Pradesh, which rejected it.
In a Writ petition filed by him the High Court of Punjab and Haryana held that the State of Punjab was the appropriate authority to release him and directed the State of Punjab to consider the matter.
This Court in appeal observed "a perusal of this provision clearly reveals that the test to determine the appropriate Government is to locate the State where the accused was convicted and sentenced and the Government of that State would be the appropriate Government within the meaning of sec.
401 of the Code of Criminal Procedure.
Thus since the prisoner in The instant case, was tried, convicted and sentenced in the State of Madhya Pradesh, the State of Madhya Pradesh would be the appropriate Government.
to exercise the discretion for remission of the sentence under sec.
401(1) of the Code of Criminal Procedure. .
" That was a case based on section 401 of the old Criminal Procedure Code, but the Code of Criminal Procedure, 1973 has put the matter completely beyond any controversy and reiterated the provisions of section 402(3) in sub section (7) of section 432, Lastly it was contended that the appeal was disposed of by the High Court even without summoning the record.
There is no warrant for this assumption.
No specific allegation has been made in the special leave petition that the record was not summoned.
We have perused the Judgment of the High Court and the tenor of the judgment indicates that the record must have been there before the court.
There is copious reference to the materials on the record which could be possible only when the record was there before the court.
the counsel for the appellant made a statement before the court that on the finding of fact recorded by the High Court he was entitled to an acquittal and in this view of the matter even if the record had not been summoned (for which there is no basis) that would not be fatal, Proviso to sub section (2) of section 385 itself provides ". the court may dispose of the appeal without sending for the record.
" in a certain situation.
The rigour of subsection (2) of sec.
385, which provides that "the Appellate Court shall then send for the record of the case. " has been taken away by the proviso in a certain situation.
If the appellant himself says that the appeal can be allowed on the findings recorded by the Sessions Judge, the non summoning of the record, if it was at all so, 605 would not to our mind be fatal.
The complainant was present with his counsel, the State Advocate General was also present.
If there had been any grievance about the record, they would have raised an objection.
Their non objection on this point is also an indicator that the record was there or in any case, the summoning of the record was not thought to be necessary by the parties.
B Assuming for the sake of argument, that there were certain irregularities it the procedure the judgment of the High Court could not be set aside unless it was shown by the appellant that there has been failure of justice, as will be evident from section 465 of the Criminal Procedure Code which reads: "465.
no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered by a Court of appeal, confirmation or revision on account of any error, omission or irregularity in the complaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or any error, or irregularity in any sanction for the prosecution, unless in the opinion of that Court, a failure of justice has in fact been occasioned thereby.
(2) In determining whether any error, omission or irregularity in any proceeding under this Code, or any error, or irregularity in any sanction for the prosecution has occasioned a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings.
" We have perused the judgment of the High Court which was placed before us in full.
It shows that each and every aspect of the matter has been thoroughly discussed and the High Court has also referred to the error committed by the Sessions Judge in the approach of the case and also in making unwarranted assumptions.
on merits we fully agree with the appraisal of the evidence made by the High Court.
It is not necessary to repeat the same 606 over again.
There is no eye witness.
The fate of the case hinges upon the circumstantial evidence.
The High Court has dealt with the two dying declarations, one recorded by the Doctor and the other by the Assistant Sub Inspector.
The High Court also took into consideration the oral dying declaration on which the prosecution strongly relied.
But even that declaration does not implicate the accused.
The reason given by the High Court for acquittal in our opinion is cogent and plausible.
For the foregoing discussion, the criminal appeal and the special leave petition must fail and they are accordingly dismissed.
|
Vinay Kumar, the husband of the deceased Asha and his mother Chhano Devi were charged, convicted for the offence of burning alive the deceased and sentenced to life imprisonment on a complaint by Hanumant Dass the father of the deceased and the appellant in Criminal Appeal 45 of 1982 by the Sessions Judge Gurdaspur, Punjab.
The offence is alleged to have been committed within the territorial limits of the State of Himachal Pradesh, but on an application of the complainant the case was transferred by an order of the Supreme Court inasmuch as the accused were the brother in law and mother in law of a Judge of the High Court of Himachal Pradesh.
In appeal by tho accused the High Court of Punjab issued, on 22 6 1981, notice for 6 7 1981 to the Advocate General of Punjab only and on that date heard the appeal and acquitted both the accused.
Hence the appeal by the complainant and the special leave by the State of Himachal Pradesh.
Dismissing the appeal and the Special Leave Petition, the Court, ^ HELD: 1.
The charge levelled against the High Court that it was in a hot haste to decide the appeal at the earliest possible is incorrect in view of the order dated 22 6 1981 passed by the High Court of Punjab.
[600 B] 2:1.
Section 385 of the Code of Criminal Procedure is a mandatory provision and the requirement of the section must be satisfied.
In the appeal before tho High Court State of Punjab was made a party and notice of the appeal was also given to the Advocate General of Punjab.
From sections 2(4), 24, 225, 378 and 432 it is evident that there shall be a Public Prosecutor for conducting any prosecution appeal or other proceeding on behalf of the Central 596 Government or State Government in the High Court.
If notice has been given to the Public Prosecutor, namely, the Advocate General of Punjab the requirement of law has been fulfilled.
[601 B C, 603 C D] 2:2.
Section 432 of the Criminal Procedure Code defines "appropriate Government" as meaning (a) in cases where the sentence is for an offence against, or the order referred to in sub section (6) is passed under any law relating to a matter to which the executive power of the Union extends, the Central Government; (b) in other cases, the Government of the State within which the offender is sentenced or the said order is passed.
According to this section the appropriate Government is the Government of the State of conviction and not the Government of the State where the offence was committed.
[603 C D] State of Madhya Pradesh vs Ratan Sing & Ors., [1976] Supp.
S.C.R. 552, applied.
To contend that the High Court disposed of the appeal even without summoning the record is incorrect.
No specific allegation has been made in the Special Leave Petition that the record was not summoned.
The tenor of the judgment of the High Court indicates that the record must have been there before the High Court.
There is copious reference to the materials on the record which could be possible only when the record was there before the court.
Besides, the counsel for the appellant made a statement before the court that on the finding of fact recorded by the High Court he was entitled to an acquittal and in this view of the matter even if the record had not been summoned that would not be fatal.
Further proviso to sub section (2) of section 385 itself provides ". the court may dispose of the appeal without sending for the record," in a certain situation.
The rigour of sub section (2) of section 385, which provides that "the Appellate Court shall then send for the record of the case. " has been taken away by the proviso in a certain situation.
If the appellant himself says that the appeal can be allowed on the findings recorded by the Sessions Judge, the non summoning of the record, if it was at all so, would not be fatal.
The complainant was present with his counsel, the State Advocate General was also present.
If there had been any grievance about the record, they would have raised an objection.
Their non objection on this point is also an indicator that the record was there or in any case, the summoning of the record was not thought to be necessary by the parties.
[604 E H, 605 A B] 4.
On merits also there is no case for the appellants since each and every aspect of the matter has been thoroughly discussed by the High Court which has referred to the error committed by the Sessions Judge in the approach of the case and also in making unwarranted assumptions.
There is no eye witness.
The fate of the case hinges upon the circumstantial evidence.
The High Court has dealt with the two dying declarations, one recorded by the Doctor and the other by the Assistant Sub Inspector.
The High Court also took into consideration the oral dying declaration on which the prosecution strongly relied.
But even that declaration does not implicate the accused.
[605 G H, 606 A B]
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Here is a two-paragraph summary of the court case:
This case involves an appeal by the complainant against the acquittal of Vinay Kumar and his mother Chhano Devi by the Punjab and Haryana High Court. The complainant had filed a case against them under Section 302 read with Section 34 of the Indian Penal Code, alleging that they had burnt their daughter-in-law Asha alive. The trial court had convicted them and sentenced them to life imprisonment, but the High Court acquitted them on appeal, holding that there was no sufficient evidence to prove their guilt. The complainant has appealed to the Supreme Court against the acquittal, claiming that the High Court erred in disposing of the appeal without impleading the State of Himachal Pradesh as a necessary party.
The Supreme Court has held that the High Court was not justified in disposing of the appeal without impleading the State of Himachal Pradesh, as it was a necessary party in the appeal. However, the Court has also held that the omission to summon the record of the case was not fatal to the appeal, as the proviso to Section 385 of the Code of Criminal Procedure allows the Appellate Court to dispose of the appeal without sending for the record in certain situations. The Court has also upheld the acquittal of the accused, holding that there was no sufficient evidence to prove their guilt. Therefore, the appeal and the special leave petition have been dismissed.
|
vil Appeal Nos.
2704 06 of 1979.
From the Judgment and Order dated 1.5.1979 of the Guja rat High Court in Special Civil Appln.
Nos. 133 of 1976, 325 and 384 of 1976.
A.B. Rohatagi, Harish N. Salve, Ms. Palavi Shroff, S.S. Shroff, P.S. Shroff and R. Sasiprabhu for the Appellants.
Kapil Sibbal, Suresh Shelat, P.H. Parekh and Ms. Gitan jali for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These appeals, by certificate, are from a common judgment of the Gujarat High Court giving some monetary benefits to the respondents.
The facts of the case cane be quite shortly stated: The appellant No. 1 is a public trust and other appel lants are its trustees.
The trust was running a science college at Ahmedabad.
The college initially had temporary affiliation to the Gujarat University under the Gujarat University Act, 1949.
From June 15, 1973 onwards, the col lege had permanent affiliation under the said Act as amended by Gujarat Act No. VI of 1973.
The University teachers and those employed in the affiliated colleges were paid in the pay scale recommended by the University Grants Commission.
At one stage, there was some dispute between the University Area Teachers Association and the University about the implementation of certain pay scales.
That dispute, by agreement of parties, was referred to the Chancellor of the University for decision.
On June 12, 1970, the Chancellor gave his award in the following terms: "(1) That the revised pay scales as applicable to teachers who joined before April 1, 1966, should similarly be applicable to those who joined after April 1, 1966.
and they be continued even after April 1, 1971.
(2) That these pay scales be exclu sive of dearness allowance.
Therefore, fixing the pay of the teachers who joined after April 1, 1966, no petition of existing dearness 701 allowance would be merged.
However, with effect from April 1, 1971 in respect of both the categories of teachers i.e. Pre 1966 and Post 1966 teachers, dearness allowance was to be merged with the salary.
(3) That arrears for the period from April 1, 1966 to March 31, 1970 accruing due under the award were to be paid (without interest) in ten equal instalments beginning from April 1, 1971.
(4) The award was to be given effect to from April 1, 1970.
There are other provi sions also.
But we are not concerned with those provisions for our purpose.
" This award of the Chancellor was accepted by the State Government as well as by the University.
The latter issued direction to all affiliated colleges to pay their teachers in terms thereof.
The appellants instead of implementing the award served notice of termination upon 11 teachers on the ground that they were surplus and approached the University for permission to remove them.
But the Vice Chancellor did not accede to their request.
He refused the permission sought for.
There then the management we mean the trust took a suicidal decision.
The decision was to close down the college to the detriment of teachers and students.
The affiliation of the college was surrendered and the University was informed that the management did not propose to admit any student from the academic year 1975 76.
It was again a unilateral decision without approval of the Univer sity.
The college was closed with effect from June 15, 1975 with the termination of services of all the academic staff.
The academic staff under law were entitled to terminal benefits.
In fairness, that ought to have been paid simulta neously while being removed.
But the management did not do that.
The teachers waited with repeated representations only to get a negative reply and ultimately, they moved the High Court with writ petitions for the following reliefs: "To issue a writ of mandamus or writ in the nature of mandamus or any other appro priate writ or direction or order directing the respondent Trust and its trustees respond ents to pay to the petitioners their due salary and allowances, the provident fund and gratuity dues in accordance with the Rules framed by the University and pay them 702 compensation that would be payable to them under Ordinance 120 E and they may be further directed to pay the difference of pay payable to them on the implementation of the U.G.C. pay scales in accordance with Government Resolution as clarified by the Award passed by the Chancellor.
" As is obvious from these reliefs, the retrenched persons were not agitating for their continuance in the service.
They seem to have made a tryst with the destiny and accepted the closure of the college.
They demanded only the arrears of salary, provident fund, gratuity and the closure compen sation which were legitimately due to them.
The trust, however, resisted the writ petitions on every conceivable ground.
The objections raised by the trust may be summarised as follows: (i) The trust is not a statutory body and is not subject to the writ jurisdiction of the High Court; (ii) the Resolution of the University directing payment to teachers in the revised pay scales is not binding on the trust; (iii) The University has no power to burden the trust with additional financial liability by retrospec tively revising the pay scales; (iv) the claim for gratuity by retrenched teachers is untenable.
It is payable only to teachers retiring, resigning, or dying and not to those removed on account of closure of the college; and (v) Ordi nance 120E prescribing closure compensation is ultra vires of the powers of the syndicate.
It is at any rate not bind ing on the trust, since it was enacted prior to affiliation of the college.
The High Court rejected all these submissions, and accepted the writ petitions by delivering a lengthy judg ment.
The High Court thus directed the trust to make pay ments in the following terms: "(1) Amount of the remaining six instalments as per Chancellor 's Award in respect of arrears from 1.4.
1966 to 31.3.
1970 as detailed category No. 1 above, (2) Salary for the period from 1.4.1975 to 14.6.1975 as per revised payscales, (3) Com pensation as per sub clause (a) and (b) of clause (vii) of Ordinance 120 E, (4) Provident Fund dues as per the approved scheme.
" The trust by obtaining certificate has ap pealed to this Court.
Counsel for the appellants mercifully concedes the just right of the teachers to get salary for the period of two and a half months from 703 April 1, 1974 to June 14, 1974.
He has also no objection to pay provident fund dues.
He, however, says that the trust is entitled to get reimbursement from the Government and that question must be determined in these appeals.
As regards the arrears of salary payable under the Chancellor 's Award, the counsel contends that it is the liability of the Government and not of the management of the college.
As regards the closure compensation payable under the Ordinance, he repeats the contention taken before the High Court.
He also main tains that the trust is a private body and is not subject to the writ jurisdiction under Article 226.
Having heard the counsel for both parties, we are left with an impression that the appellants are really trying to side track the issue and needlessly delaying the legitimate payments due to the respondents.
The question whether the State is liable to recompense the appellants in respect of the amount payable to the respondents was not considered by the High Court and indeed could not have been examined since the State was not a party to the proceedings.
However, by the persuasive powers of the counsel in this Court, the State has been impleaded as a party in these appeals.
Per haps, this Court wanted to find out the reaction of the State on the appellants ' assertion for reimbursement.
We heard counsel for the State.
He disputes the appellants ' claim.
In fact, he challenged the claim on a number of grounds.
He says that the State is under no obligation to pay the appellants as against the sum due to the respond ents.
We do not think that we need rule to day on this controversy.
It is indeed wholly outside the scope of these appeals.
We are only concerned with the liability of the management of the college towards the employees.
Under the relationship of master and servant, the management is pri marily responsible to pay salary and other benefits to the employees.
The management cannot say that unless and until the State compensates, it will not make full payment to the staff.
We cannot accept such a contention.
Two questions,however, remain for consideration: (i) The liability of the appellants to pay compensation under Ordi nance 120E and (ii) The maintainability of the writ petition for mandamus as against the management of the college.
The first question presents no problem since we do not find any sustainable argument.
The power of the Syndicate to enact the Ordinance is not in doubt or dispute.
What is, however, argued is that the Ordinance is not binding on the manage ment since it was enacted before the college was affiliated to the University.
This appears to be a desperate contention overlooking the 704 antecedent event.
The 'counsel overlooks the fact that the college had temporary affiliation even earlier to the Ordi nance.
That apart, the benefits under the Ordinance shall be given when the college is closed.
The college in the instant case was closed admittedly after the Ordinance was enacted.
The appellants cannot, therefore, be heard to contend that they are not liable to pay compensation under the Ordinance.
The essence of the attack on the maintainability of the writ petition under Article 226 may now be examined.
It is argued that the management of the college being a trust registered under the Public Trust Act is not amenable to the writ jurisdiction of the High Court.
The contention in other words, is that the: trust is a private institution against which no writ of mandamus can be issued.
In support of the contention, the counsel relied upon two decisions of this Court: (a) Executive Committee of Vaish Degree College, Shamli and Others vs Lakshmi Narain & Ors., ; and (b) Deepak Kumar Biswas vs Director of Public Instructions, the first of the two cases, the respondent institution was a Degree College managed by a registered co operative society.
A suit was filed against the college by the dismissed principal for reinstatement.
It was contended that the Executive Committee of the college which was registered under the Co operative Societies Act and affiliated to the Agra University (and subsequently to Meerut University) was a statutory body.
The importance of this contention lies in the fact that in such a case, reinstatement could be ordered if the dismissal is in violation of statutory obligation.
But this Court refused to accept the contention.
It was observed that the manage ment of the college was not a statutory body since not created by or under a statute.
It was emphasised that an institution which adopts ,certain statutory provisions will not become a statutory body and the dismissed employee cannot enforce a contract of personal service against a non statutory body.
The decision in Vaish Degree College was followed in Deepak Kumar Biswas case.
There again a dismissed lecturer of a private college was seeking reinstatement in service.
The Court refused to grant the relief although it was found that the dismissal was wrongful.
This Court instead granted substantial monetary benefits to the lecturer.
This appears to be the preponderant judicial opinion because of the common law principle that a service contract cannot be specifically enforced.
But here the facts are quite different and, therefore, we need not 705 go thus far.
There is no plea for specific performance of contractual service.
The respondents are not seeking a declaration that they be continued in service.
They are not asking for mandamus to put them back into the college.
They are claiming only the terminal benefits and arrears of salary 'payable to them.
The question is whether the trust can be compelled to pay by a writ of mandamus? If the rights are purely of a private character no mandamus can issue.
If the management of the college is purely a private body with no public duty mandamus will not lie.
These are two exceptions to Mandamus.
But once these are absent and when the party has no other equally conven ient remedy, mandamus cannot be denied.
It has to be appre ciated that the appellants trust was managing the affiliat ed college to which public money is paid as Government aid.
Public money paid as Government aid plays a major role in the control, maintenance and working of educational institu tions.
The aided institutions like Government institutions discharge public function by way of imparting education to students.
They are subject to the rules and regulations of the affiliating University.
Their activities are closely supervised by the University authorities.
Employment in such institutions, therefore, is not devoid of any public charac ter.
(See The Evolving Indian Administration Law by M.P. Jain [1983] p. 266).
So are the service conditions of the academic staff.
When the University takes a decision regard ing their pay scales, it will be binding on the management.
The service conditions of the academic staff are, therefore, not purely of a private character.
It has super added pro tection by University decisions creating a legal right duty relationship between the staff and the management.
When there is existence of this relationship, mandamus can not be refused to the aggrieved party.
The Law relating to mandamus has made the most spectacu lar advance.
It may be recalled that the remedy by preroga tive writs in England started with very limited scope and suffered from many procedural disadvantages.
To overcome the difficulties, Lord Gardiner (the Lord Chancellor) in pursu ance of Section 3(1)(e) of the Law Commission Act, 1965, requested the Law Commission "to review the existing reme dies for the judicial control of administrative acts and omission with a view to evolving a simpler and more effec tive procedure.
" The Law Commission made their report in March 1976 (Law Com No. 73).
It was implemented by Rules of Court (Order 53) in 1977 and given statutory force in 1981 by Section 31 of to Supreme Court Act 1981.
It combined all the former remedies into one proceeding called Judicial Review.
Lord Denning explains the scope of this "judicial review": 706 "At one stroke the courts could grant whatever relief was appropriate.
Not only certiorari and mandamus, but also declaration and injunc tion.
Even damages.
The procedure was much more simple and expeditious.
Just a summons instead of a writ.
No formal pleadings.
The evidence was given by affidavit.
As a rule no cross examination, no discovery, and so forth.
But there were important safeguards.
In par ticular, in order to qualify, the applicant had to get the leave of a judge.
The Statute is phrased in flexible terms.
It gives scope for development.
It uses the words "having regard to".
Those words are very indefinite.
The result is that the courts are not bound hand and foot by the previous law.
They are to 'have regard to ' it.
So the previ ous law as to who are and who are not public authorities, is not absolutely binding.
Nor is the previous law as to the matters in respect of which relief may be granted.
This means that the judges can develop the public law as they think best.
That they have done and are doing." (See The Closing Chapter by Rt.
Hon Lord Denning p. 122).
There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty.
The 'public authority ' for them mean every body which is created by statute and whose powers and duties are defined by statue.
So Government departments, local authori ties, police authorities, and statutory undertakings and corporations, are all 'public authorities '.
But there is no such limitation for our High Courts to issue the writ 'in the nature of mandamus '.
Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs.
This is a striking departure from the English law.
Under Article 226, writs can be issued to "any person or authority".
It can be issued "for the enforcement of any of the fundamental rights and for any other purpose".
Article 226 reads: "226.
Power of High Courts to issue certain writs (1) Notwithstanding anything in article 32, every High Court shall have power, throughout the territories in relation to which it exer cises jurisdiction to issue to any person or authority including in appropriate cases, any Government, within those territories direc tions, orders or writs, includ 707 ing (Writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certi orari, or any of them for the enforcement of any of the rights conferred by Part II and for any other purpose.
XXX XXX XXX XXX " The scope of this article has been ex plained by Subba Rao., in Dwarkanath vs Income Tax Officer, ; at (540 41): "This article is couched in compre hensive phraseology and it ex facie confers a wide power on the High Courts to reach injus tice wherever it is found.
The Constitution designedly used a wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be exercised.
It can issue writs in the nature of prerogative writs as understood in England; but the use of the expression "na ture", for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them.
That apart, High Courts can also issue directions, orders or writs other than the prerogative writs.
It enables the High Courts to mould the reliefs to meet the pecul iar and complicated requirements of this country.
Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to intro duce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of Government into a vast country like India functioning under a federal structure.
Such a construction defeats the purpose of the arti cle itself.
" The term "authority" used in Article 226, in the con text, must receive a liberal meaning unlike the term in Article 12.
Article 12 is relevant only for the purpose of enforcement of fundamental rights under article 32.
Article 226 confers power on the High Courts to issue writs for enforce ment of the fundamental rights as well as nonfundamental rights.
The words "Any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State.
They may cover any other person or body performing public duty.
The form of the body concerned is not very much relevant.
What is relevant is the nature of 708 the duty imposed on the body.
The duty must be judged in the light of positive obligation .owed by the person or authori ty to the affected party.
No matter by what means the duty is imposed.
If a positive obligation exists mandamus cannot be denied.
In Praga Tools Corporation vs Shri C.A. Imanual & Ors., ; , this Court said that a mandamus can issue against a person or body to carry out the duties placed on them by the Statutes even though they are not public offi cials or statutory body.
It was observed (at 778): "It is, however, not necessary that the person or the authority on whom the statu tory duty is imposed need be a public official or an official body.
A mandamus can issue, for instance, to an official or a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their under takings.
A mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities.
(See Halsbury 's Laws of England (3rd Ed.
II p. 52 and onwards).
" Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute.
Commenting on the development of this law, Professor De Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute.
It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." (Judicial Review of Administrative 'Act 4th Ed.
p. 540).
We share this view.
The judicial control over the fast expanding maze of bodies effecting the rights of the people should not be put into water tight compartment.
It should remain flexible to meet the requirements of variable circumstances.
Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found '.
Technicalities should not come in the way of granting that relief under Article 226.
We, therefore, reject the conten tion urged for the appellants on the maintainability of the writ petition.
In the result, the appeals fail and are dismissed but with a direction to the appellants to pay all the amounts due to the respondents as 709 per the judgment of the High Court.
The amount shall be paid with 12 per cent interest.
The balance remaining shall be paid within two months from today.
The appellants shall also pay the costs of the respondents teachers which we quantify at Rs. 26,000.
R.S.S. Appeals dismissed.
|
Appellant No. 1 is a public trust and the other appel lants are its trustees.
The Trust was running a science college at Ahmedabad.
The college initially had temporary affiliation to the Gujarat University.
From June 15, 1973 onwards the college had permanent affiliation.
A dispute between the University Area Teachers Associa tion and the University was referred to the Chancellor of the University who gave his award on June 12, 1970.
The award was accepted by the State Government as well as by the University.
The latter issued direction to all affiliated colleges to pay their teachers in terms of the award.
The appellants instead of implementing the award served notice of termination upon 11 teachers on the ground that they were surplus, and approached the University for permis sion to remove them.
The Vice Chancellor did not accept their request.
Thereupon the Trust decided to close down the college.
The retrenched persons demanded arrears of salary and allowances, provident fund and gratuity dues, and closure compensation.
But the management did not pay these dues.
The employees then moved the High Court to issue a writ of mandamus directing the Trust to pay the retrenched employees their legitimate dues.
The High Court accepted the writ petitions.
Before this Court, the appellants while conceding the just right of the employees to get salary for 2 1/2 months and the provident fund dues, contended that the Trust was entitled to get reimbursement from the Government in lieu of these payments.
As regards the arrears of salary.
698 payable under the Chancellor 's aWard, the appellants con tended that it was the liability of the Government and not of the management of the college.
As regards the closure compensation it was contended that Ordinance 120E prescrib ing compensation was ultra vires, and, at any rate, it was not binding on the Trust since it was enacted prior to the affiliation of the college.
It was further contended that the Trust was a private body and was not subject to the writ jurisdiction under Article 226.
Dismissing the appeals, it was, Held: (1)The Court is only concerned with the liability of the management of the college towards the employees.
Under the relationship of master and servant, the management is primarily responsible to pay salary and other benefits to the employees.
The management cannot say that unless and until the State compensates, it will not make full payment to the staff.
[703E F] (2) The college had temporary affiliation even earlier to the Ordinance 120E.
That apart, the benefits under the Ordinance are to be given when the college is closed which in this case was admittedly after the Ordinance was enacted.
[704A B] (3) If the rights are purely of a private character no mandamus can issue.
If the management of the college is purely a private body with no public duty mandamus will not lie.
These are two exceptions to mandamus.
But once these are absent and when the party has no other equally conven ient remedy, mandamus cannot be denied.
[705B C] (4) Public money paid as Government aid plays a major role in the control, maintenance and working of educational institutions.
The aided institutions, like Government insti tutions, discharge public function by way of imparting education to students.
They are subject to the rules and regulations of the affiliating University.
Their activities are closely supervised by the University authorities Em ployment in such institutions, therefore, is not devoid of any public character.
[705C D] (5) When the University takes a decision regarding the pay scales of the employees of the aided institution, it will be binding on the management.
The service conditions of the academic staff are, therefore, not purely of a private character.
It has super added protection by University decisions creating a legal right duty relationship.
When there 699 is existence of this relationship, mandamus cannot be re fused to the aggrieved party.
[705E] (6) Article 226 confers wide powers on the High Court to issue writs in he nature of prerogative writs.
Under Article 226, writs can be issued to "any person or authority".
It can be issued "for the enforcement of any of the fundamental rights and for any other purpose." [706F G] Executive Committee of Vaish Degree College vs Lakshmi Narain.
, ; ; Deepak Kumar Biswas vs Director of Public Instructions., ; distinguished Dwarkanath vs Income Tax Officer, ; , referred to.
(7) This is a striking departure from the English Law.
Under the English Law, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty, and 'public authority ' there means every body which is created by statute and whose powers and duties are defined by statute.
[706E F] (8) The words "any person or authority" used in Article 226 are not to be confined only to statutory authorities and instrumentalities of the State.
They may cover any other person or body performing public duty.
The form of the body concerned is not very much relevant.
What is relevant is the nature of the duty imposed on the body.
The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means the duty is imposed.
If a positive obligation exists mandamus cannot be denied.
[707G H; 708A B] (9) Mandamns cannot be denied on the ground that the duty to be enforced is not imposed by the statute.
[708B] Praga Tools Corporation vs Shri C.A. Imanual, ; , referred to.
(10) The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into water tight compartment.
It should remain flexible to meet the requirements of variable circumstances.
Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found '.
Technicalities should not come in the way of granting that relief under Article 226.
[708F G] 700
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Here is a two-paragraph summary of the court case:
The case involves a public trust, the appellants, which managed a science college affiliated with the Gujarat University. When the college was closed down, 11 teachers were terminated, and they moved the High Court with writ petitions seeking terminal benefits, including arrears of salary, provident fund, gratuity, and closure compensation. The High Court directed the trust to make payments to the teachers in accordance with the Chancellor's award and the University Ordinance.
The trust appealed to the Supreme Court, arguing that it was not liable to pay the amounts due to the teachers, and that the writ petitions were not maintainable against a private trust registered under the Public Trust Act. However, the Supreme Court rejected these contentions, holding that the trust was subject to the writ jurisdiction of the High Court, and that the teachers were entitled to the terminal benefits. The Court also emphasized that the public duty imposed on the trust, as a managed college receiving public aid, was not limited to statutory authorities, and that the writ of mandamus could be issued to compel the trust to perform its public duty. The Court ultimately dismissed the appeals, directing the trust to pay the amounts due to the teachers with a 12% interest, and also ordered the trust to pay the costs of the respondents.
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Civil Appeal No. 1584 of 1969.
Appeal from the Judgment and.
Decree dated 20 2 1969 of the Madras High Court in Appeal No. 104 of 1963.
G. L. Sanghi and Vineet Kumar for the Appellants.
Vepa P. Sarathy and Mrs. section Gopalakrishnan for Respondent No. 1.
1179 K. Jayaram for Respondents 2 5.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by a certificate of the Madras High Court is directed against its judgment and decree dated February 20, 1969.
One Manikka Sankaranarayana Iyer, father of defendants 1 and 3 and grandfather of plaintiffs 1 to 5 and defendants 2, 4 and 5 and father in law of plaintiff No. 6 constituted an Annadanam Trust and he and his sons executed a registered deed of settlement for that purpose on June 3, 1908.
By that document Sankaranarayana Iyer became the first trustee for life, and it was provided that after him the senior most member would be the trustee, by turns.
Sankaranarayana died and defendant No. 1 became the managing trustee of the trust.
There was a suit for partition of the family properties including house No. 48A, and it was settled by a compromise under which a preliminary decree dated September 12, 1956 was drawn up for the sale of the properties amongst the members of the family.
Defendant No. 1 purchased the suit property for Rs. 21,500/ for the aforesaid trust on April 19, 1959.
A final decree was drawn up on November 29, 1959 in which house No. 48A was shown as the property of the trust.
Defendant No. 1 however sold that property soon after, to his son defendant No. 2 on July 14, 1960, for Rs. 25,000/ under sale deed exhibit B. 13.
Chithambaram Chettiar (P.W. 2), who was a tenant of that property from 1949 onwards, came to know of the intended sale and sent a registered notice to defendant No. 1 on July 21, 1960, offering to purchase it for Rs. 35,000/ .
Defendant No. 1 however went ahead with the sale of the property to his son and registered the sale deed on July 22, 1960.
The plaintiffs thereupon filed the present suit on September 15, 1960, challenging that sale and asking for its restoration to the trust.
The defendants resisted the claim in the suit on the ground that the sale price was fair and adequate and that the sale had to be made because of the disputes which had arisen between the second defendant as the owner of the adjacent house and the trust in regard to the easementary rights of drainage, light and air etc.
The suit was decreed by the Subordinate Judge of Madurai on September 10, 1962.
The High Court of Madras however allowed the appeal against that judgment and decree and dismissed the suit with costs of both the courts holding that Rs. 25,000/ was "quite adequate and fair" price for the suit property and that defendant No. 1 acted with "perfect bona fides and no ulterior motive can be attributed to him.
" That is why the plaintiffs have come up in appeal to this Court.
1180 It is not indispute before us that the , hereinafter referred to as the Act, applied to the trust in question and that it was necessary for the plaintiffs to prove that defendant No. 1 did not exercise his discretionary power of selling the suit property "reasonably and in good faith" and that he indirectly purchased it for himself, in the name of his son (defendant No. 2), within the meaning of section 49 and 52 of the Act.
There is some controversy on the question whether defendant No. 1 made an outright purchase of the suit property for and on behalf of the trust for Rs. 21,500/ on April 19, 1959, or whether he intended to purchase it for himself and then decided to pass it on to the trust, for defendants have led their evidence to show that the property was allowed to be sold for Rs. 21,500/ , which was less than its market value, as it was meant for use by the trust and that defendant No. 1 was not acting honestly when he palmed of the property to his son soon after by the aforesaid sale deed exhibit B. 13 dated July 14, 1960.
The fact however remains that defendant No. 1 was the trustee of the property, and it was his duty to be faithful to the trust and to execute it with reasonable diligence in the manner an ordinary prudent man of business would conduct his own affairs.
He could not therefore occasion any loss to the trust and it was his duty to sell the property, if at all that was necessary, to best advantage.
It has in fact been well recognised as an inflexible rule that a person in a fiduciary position like a trustee is not entitled to make a profit for himself or a member of his family.
It can also not be gainsaid that he is not allowed to put himself in any such position in which a conflict may arise between his duty and personal interest, and so the control of the trustee 's discretionary power prescribed by section 49 of the Act and the prohibition contained in section 51 that the trustee may not use or deal with the trust property for his own profit or for any other purpose unconnected with the trust, and the equally important prohibition in section 52 that the trustee may not, directly or indirectly, buy the trust property on his own account or as an agent for a third person, cast a heavy responsibility upon him in the matter of discharge of his duties as the trustee.
It does not require much argument to proceed to the inevitable further conclusion that the rule prescribed by the aforesaid sections of the Act cannot be evaded by making a sale in the name of the trustee 's partner or son, for that would.
in fact and substance, indirectly benefit the trustee.
Where therefore a trustee makes the sale of a property belonging to the trust, without any compelling reason, in favour of his son, without obtaining the permission of the court concerned, it is the duty of the court, in which the sale is challenged, to examine whether 1181 the trustee has acted reasonably and in good faith or whether he has committed a breach of the trust by benefitting himself from the transaction in an indirect manner.
The sale in question has therefore to be viewed with suspicion and the High Court committed an error of law in ignoring this important aspect of the law although it had a direct bearing on the controversy before it.
The High Court in fact proceeded to examine the case on the assumption that the plaintiffs had instituted the suit not so much out of a genuine desire to redress any wrong done to the trust, as out of "ulterior motives and ill will against the first and second defendants.
" This shows that instead of examining the case according to the criterian mentioned above, the High Court based its decision on an extraneous consideration and blamed the plaintiffs for raising the suit on account of "personal grouse" and "personal spite".
We have not been referred to any evidence which could justify the High Court 's view that there was any such grouse or spite.
But even if it were assumed for the sake of argument that the plaintiffs had any such motive for raising the suit, the fact remains that their action was eminently one for the advantage of the trust which had been created by their ancestor and in which they had a substantial and a direct interest.
Some important facts stand out from the evidence on the record which are directly in point.
The suit property belonged to the family which had created the trust.
It was purchased by defendant No. 1, in his capacity as the trustee of the Annandanam Trust for Rs. 21,500/ on April 19, 1959, at a family sale.
It appears from the statement of defendant No. 2 that the property was capable of, or could fetch a rent of about Rs. 190/ per mensem, amounting to Rs. 2,280/ per annum.
It has also been admitted that the sum of Rs. 25,000/ was not utilised by the trustee (defendant No. 1) for purchasing any other better property, but was invested in fixed deposit with a bank at 3 1/2 per cent interest per annum.
That could yield an income of only Rs. 875/ per annum.
The trust therefore lost heavily in the bargain.
What is worse, defendant No. 1 has not been able to explain how the sale could be said to be beneficial to the trust and how he could possibly contend that he acted as a man of ordinary prudence in slashing down the income of the trust by making the sale.
The further fact that stands out from the evidence on the record is that when Chithambaram Chettiar (P.W. 2), who was a tenant in the suit property from 1949 onwards, learnt about the intended sale, 1182 he sent a notice to defendants Nos. 1 and 3 offering to purchase it for Rs. 35,000/ .
That notice was issued on July 21, 1960.
The receipt of the notice has been admitted by defendant No. 1 in his statement in the trial court, and he has further admitted that Chithambaram Chettiar offered to purchase the property for Rs. 35,000/ and that he sold it to his son for Rs. 25,000/ without even informing him that he had received the offer of Rs. 35,000/ .
Defendant No. 1 in fact proceeded to register the sale deed of the property in favour of his son, the second defendant, on July 22, 1960.
It is therefore quite clear that he did not care to act in accordance with the law in the discharge of his fiduciary relationship with the trust and executed the sale deed in his son 's favour in disregard of his statutory duty, for no man of ordinary prudence would possibly have sold his property for Rs. 25,000/ when he had an offer of Rs. 35,000/ .
That offer could not be said to be from a man of no substance because Chithambaram Chettiar (P.W. 2) who made it, was known to the defendants and he has stated that he was a man of means and was worth rupees four lakhs.
It may be that the son in law of plaintiff No. 2 was employed in his shop, but that could not detract from the basic fact that a much higher offer had been made by a man of substance.
Instead of examining the appeal with due regard to the above mentioned evidence, the High Court was obsessed by a consideration of the evidence which had been led for the purpose of showing that while defendant No. 1 had purchased the property for himself on April 19, 1959, for Rs. 21,500/ , he gave up that advantage in favour of the trust.
The evidence on the point is not unequivocal, for it may well be that defendant No. 1 did not want to obtain a sale deed in his own name for other reasons, but even if it were assumed that he made a gesture of goodwill in favour of the trust on April 19, 1959, he could not possibly absolve himself from what he did in selling it off, after it had become the property of the trust, to his own son a few months thereafter for Rs. 25,000/ when he had a genuine offer of Rs. 35,000/ .
Another consideration which prevailed with the High Court in setting aside the finding of fact of the trial court was that, according to it, the evidence on the record showed that some difficulties had cropped up after the property had been purchased as his son, defendant No. 2, began to "give trouble" and that he resolved that trouble on the advice of his family lawyer Shri V. Rajagopala Iyengar (D. W. 3) by selling the property to his son.
This view was obviously incorrect, for even it were assumed that there was some 1183 difficulty in respect of some common rights of easement, that could well have been a lever in the hands of the trustee to make a bargain for Rs. 35,000/ or more with his son who was equally interested in those easementary rights.
A man of prudence would not have sold his property for a considerably lesser amount than that offered to him by another person and agreed to sell it just because a co sharer in the easementary right was causing trouble and was offering a far lesser price.
We have gone through the statement of V. Rajagopala Iyengar (D.W. 3) on whose advice defendant No. 1 claims to have sold the property for Rs. 25,000/ .
He has admitted in his statement that he had not even seen the suit property, and he knew nothing about the so called trouble in regard to the easementary rights between defendant No. 1 and his son.
On the other hand, we find that he was indebted to the family of defendants Nos. 1 and 2 and he did not even care to ascertain what rent the suit property was fetching when he advised its sale for Rs. 25,000/ to the son of defendant No. 1.
The High Court therefore did not even read the evidence correctly while placing reliance on his testimony.
For the reasons mentioned above, we have no doubt that the High Court did not examine the controversy in its proper legal perspective and with due regard to the salient facts which had been established by the evidence on the record and it was not therefore justified in setting aside the finding of the trial court.
The appeal is allowed.
The impugned judgment and decree of the High Court are set aside and the decree of the trial court is restored with costs throughout.
P.B.R. Appeal allowed.
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Plaintiffs and defendants were descendants of a common ancestor who was the founder of a trust.
Defendant No. 1, at the relevant time, was the managing trustee of the trust.
On partition and sale of family properties a house, which was the suit property, was purchased for the trust.
Soon thereafter defendant No. 1 sold it to his son.
Before the sale, however, the tenant of the house who was a man of substance, offered a much higher price than what was paid by the son but the defendant sold it to his son.
In the plaintiffs ' suit challenging sale of the trust property to the managing trustee 's son for a lesser consideration the defendant claimed that the property had to be sold because his son who was the owner of adjacent property raised a dispute claiming easementary rights over the property.
The suit was decreed by the trial court but on appeal the High Court held that the consideration was adequate and fair, that the sale was bona fide and that no ulterior motive could be attributed to the defendant no 1 in the sale.
The High Court, therefore, dismissed the suit.
Allowing appeal, ^ HELD: (a) The sale had to be viewed with suspicion The High Court committed an error of law in ignoring important aspects of law which had direct bearing on the controversy before it.
[1181A] (b) It is well recognised that a person in a fiduciary position like a trustee is not entitled to make a profit for himself or a member of his family.
He is not allowed to put himself in a position in which a conflict may arise between his duty as a trustee and his personal interest.
[1180E] (c) The control of the trustee 's discretionary power prescribed by section 49 of the Trusts Act and the prohibition contained in section 51 that the trustee may not use or deal with the trust property for his own profit or for any other purpose unconnected with the trust and the equally important prohibition in section 52 that the trustee may not directly or indirectly buy the trust property on his own account or as an agent for a third person, cast a heavy responsibility upon him in the matter of discharge of his duties as trustee.
The rule prescribed by these sections cannot be evaded by making a sale in the name of the trustee 's partner or son, for that would, in fact and substance, indirectly benefit the trustee.
[1180F G] (d) Where a trustee makes the sale of a property belonging to the trust, without any compelling reason in favour of his son, without obtaining the 1178 permission of the court concerned, it is the duty of the court to examine whether the trustee has acted reasonably and in good faith or whether he has committed a breach of the trust by benefiting himself from the transaction in an indirect manner.
[1180H] (i) In the instant case defendant No. 1 was the trustee of the property.
It was his duty to be faithful to the trust and execute it with reasonable diligence in the manner in which an ordinary prudent man of business would conduct his own affairs.
He could not occasion any loss to the trust and it was his duty to sell the property, if that was so necessary to sell, to the best advantage of the trust.
[1181D] (ii) The High Court was wrong in blaming the plaintiffs that they had brought the suit on account of personal grouse and spite.
Assuming that they were so actuated, their action was eminently for the advantage of the trust created by their ancestor in which they had a substantial and direct interest.
[1181D] (iii) Defendant No. 1 was not able to explain how the sale was beneficial to the trust.
Income by way of rent which the property was fetching was far more than interest which the sale proceeds fetched when they were invested in fixed deposits in a Bank.
He was therefore unable to explain how he acted as a man of ordinary prudence in slashing down the income of the trust by making the sale.
[1181G] (iv) When defendant No. 1 sold the trust property to his son at a lesser price than was otherwise available, he did not act in accordance with law in the discharge of his fiduciary relationship with the trust.
He sold the property to his son in disregard of his statutory duty which no man of ordinary prudence would have done.
[1182C] (v) Assuming that defendant No. 1 made a gesture of goodwill in favour of the trust when he allowed the sale of the family property to the trust, he could not possibly absolve himself from what he did in selling it off to his son at a lesser price than was offered by another reason.
[1182F] (vi) Assuming that there was some difficulty in respect of rights of easement between the trust and the defendant 's son who was the immediate neighbour of the property, that could have been a lever in the hands of the trustee to make a bargain for higher consideration from his son who was equally interested in the property.
A man of prudence would not have sold his property for a considerably lesser amount than that offered to him by another person and agreed to sell it just because a co sharer was causing trouble and offering a few lesser price.
[1183A B]
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The Civil Appeal No. 1584 of 1969 was filed by the plaintiffs against the judgment and decree of the Madras High Court, which had allowed the appeal of the defendants and dismissed the suit. The suit was filed by the plaintiffs to challenge the sale of a property, known as house No. 48A, which was part of an Annadanam Trust created by their ancestor, Manikka Sankaranarayana Iyer. The trust was established by a registered deed of settlement on June 3, 1908, and Sankaranarayana Iyer became the first trustee for life. After his death, defendant No. 1 became the managing trustee of the trust. The property in question was purchased by defendant No. 1 for the trust on April 19, 1959, for Rs. 21,500, but he later sold it to his son, defendant No. 2, on July 14, 1960, for Rs. 25,000.
The plaintiffs challenged the sale on the ground that it was not made in good faith and that defendant No. 1 had acted in breach of his fiduciary duty as a trustee. The Supreme Court held that the High Court had erred in ignoring the important aspect of the law that a trustee must act reasonably and in good faith, and that the sale of the property to defendant No. 2 was not made in accordance with this principle. The Court noted that defendant No. 1 had received an offer of Rs. 35,000 for the property from a third party, but had sold it to his son for a lower price without even informing the third party of the sale. The Court allowed the appeal, set aside the judgment and decree of the High Court, and restored the decree of the trial court, holding that the sale of the property was not made in good faith and that defendant No. 1 had acted in breach of his fiduciary duty as a trustee. The Court also held that the trust had suffered a loss as a result of the sale, and that defendant No. 1 had failed to explain how the sale was beneficial to the trust.
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Civil Appeal No. 2524 of 1985.
From the Judgment and order dated 26.11.1984 of the Rajasthan High Court in S.A. No. 12 of 1976.
Shankar Ghosh, B.P. Maheshwari and l3.S. Dorpura for the Appellant.
V.M. Tarkunde, S.K. Jain, Himansu Atrey and Mrs. Probha Jain for the Respondent.
The Judgment of the Court was delivered by RAY, J.
This is an appeal by special leave against the judgment and order dated 26th November, 1984 in S.B. Civil Execution Second Appeal No. 12 of 1976 whereby the appeal was allowed and respondent was granted one year time to vacate the premises.
The facts giving rise to this appeal are as follows: The respondent mortgaged the shop belonging to him to the defendant Nos. 1 to 11 on 9th May, 1950 by a registered mortgage deed.
The possession of the premises was given to the 101 mortgagees with right to collect rent from the tenant in payment A of interest on the mortgage amount.
the mortgagees let out the premises to the defendant petitioner during the subsistence of mortgage.
The respondent filed a suit for redemption of the mortgage and for vacant possession of the said shop against the mortgagees i.e. the defendant Nos.
l to 11.
The appellant who was the tenant of the shop was impleaded as party defendant No. 12 in the suit.
The suit was decreed and the mortgage was redeemed.
There was an order for giving vacant possession of the shop by the defendant NOS l to l l to the respondent i.e. the owner of the shop.
In Execution case No. 126 of 1975 the tenant appellant filed an application under Section 47 read with Section 151 of the Code of Civil Procedure, 1908 stating inter alia that the decree could not be executed and possession of the shop could not be given by the mortgagees to the decree holder respondent as the tenancy of the appellant subsisted and the same had not been terminated under the provisions of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
This plea was rejected by l) the executing court holding inter alia that letting out of the shop to the defendant No. 12 by the mortgagees was held to be not a bona fide act made as a person of ordinary prudence in the course of management of the property under Section 76A of Transfer of Property Act and that the relationship of the lessor and lessee could not subsist beyond the mortgagee 's interest unless a new relationship was created between the landlord and the tenant appellant.
It was aalso held that the termination of the mortagagee 's interest put an end to the relationship of landlord and tenant and the provisions of the Rent Control Act could not apply any further.
The decree was executable and the appellant had no interest and as such he could not resist the execution of the decree.
The application was dismissed.
Against this judgment and order the appellant filed an appeal being Civil Appeal No. 13 of 197().
The said appeal was, however.
allowed on a finding that the provisions of Section 13(1) of the Rajasthan Rent Control Act expressly ruled out the operation of the Transfer of Property Act and a person inducted as a tenant on the premises in a lawful manner could not he evicted except in accordance with the provisions of the Act.
The decision in M/s Sachalmal Parasram vs Mst.
Ratanbai & Ors., A I R 1972 (SC) 637 and The All India Film Corp. Ltd. and Ors.
Sri Raja Gyan Nath & Ors., were held to be not applicable to the instant case.
The interest of the appellant as a tenant subsists even after redemption of the mortgage until it is terminated in accordance with the provisions of the aforesaid 102 Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
The respondent preferred a second Appeal being S.B. Civil Execution Second Appeal No. 12 of 1976.
The said appeal was allowed by the High Court relying on the full bench decision of the High Court in 1984 R.L.R. page 709.
On the prayer of the appellant one year time was granted, on the expiry of which possession at the said premises shall have to be delivered.
A written undertaking to that effect had been filed by the appellant in compliance with the directions of the Court The appellant thereafter filed the instant appeal on special leave.
The following two questions come up tor consideration in this appeal: (i) whether a tenant of a mortgagee can continue as a tenant after redemption of the mortgage decree until he is evicted from the suit premises in accordance with the provisions of the Rajasthan V Premises (Control of Rent and Eviction) Act, 1950; and (ii) whether the tenancy created in favour of the appellant can be deemed to be an act of ordinary prudence on the part of the mortgagee in managing the property falling within Section 76A of the Transfer of Property Act.
Identical questions fell for consideration in Mahabir Gope and Ors.
vs Harbans Narain Singh and Ors.
, In this case the mortgagors mortgaged agricultural lands with possession by ijara to the mortgagee to the effect that the mortgagee would cultivate the land and take the crops.
The mortgagee during the subsistence of the mortgage leased out the land to a tenant.
The mortgage was redeemed on payment of the mortgage debt.
The mortgagor on being opposed by the tenant to have the possession of the mortgaged property, filed a suit for recovery of the possession of the land.
lt ultimately came up before this Court and it was held as follows: "The general rule is that a person cannot by transfer or otherwise confer a better title on another than he himself has.
A mortgagee cannot, therefore, create an interest in the mortgaged property which will enure beyond the termination of his interest as a mortgagee.
Further, the mortgagee, who takes possession of the mortgaged property, must manage it as a person of ordinary prudence would manage it if it were his own and he must not 103 commit any act which is destructive or permanently injurious to the property; see section 76, sub clauses (a) & (e) of the transfer of Property Act.
It follows that he may grant leases not extending beyond the period of the mortgage; any leases granted by him must come to an end at redemption.
A mortgagee cannot during the subsistence of the mortgage act in a manner detrimental to the mortgagor 's interests such as by giving a lease which may enable the tenant to acquire permanent or occupancy rights in the land thereby defeating the mortgagor 's right to khas possession; it would be an act which would fall within the provisions of Section 76, sub clause (e), of the Transfer of Property Act.
A permissible settlement by a mortgagee in possession with a tenant in the course of prudent management and the springing up of rights in the tenant conferred or created by statute based on the nature of the land and possession for the requisite period is a different matter altogether.
It is an exception to the general rule.
The tenant cannot be ejected by the mortgagor even after the redemption of the mortgage.
He may become an occupancy raiyat in some cases and a non occupancy raiyat in other cases.
But the settlement of the tenant by the mortgagee must have been a bona fide one.
This exception will not apply in a case where the terms of the mortgage prohibit the mortgagee from making any settlement of tenants on the land either expressly or by necessary implication.
" It was held that the settlement was not a bona fide one and a successor of the tenant did not acquire permanent right of tenancy in the demised lands under Bihar Tenancy Act.
In Harihar Prasad Singh & Anr.
vs Must.
Of Munshi Nath Prasad & Ors., [1956] S.C.R. l where the mortgage was in respect of agricultural lands, this Court held: "The law is that a person cannot confer on another any right higher than what he himself possess, and therefore, a lease created by a usufructuary mortgagee would normally terminated on the redemption of the mortgage.
Section 76(a) enacts an exception to this rule.
If the lease is one 104 which could have been made by the owner in the course of prudent management, it would be binding on the mortgagors, notwithstanding that the mortgage has been redeemed.
Even in such a case, the operation of the lease cannot extend beyond the period for which it was granted.
In the present case, assuming that the mortgagees had the power under Section 76(a.) of the Transfer of Property Act to continue the lessees under Exhibit 2(a) as tenants on the lands after the termination of the period fixed therein, that would confer on them at best the status of tenants from year to year and not give them the right to continue in possession after the termination of the agricultural year during which the redemption takes place." This Court while considering the ambit of provisions of Section 76(a) of the Transfer of Property Act observed in Asa Ram and Another vs Mst.
Ram Kali and Another, A.I.R. 1958 (SC) 183 as follows: "The law undoubtedly is that no person can transfer property so as to confer on the transferee a title better than what he possesses.
Therefore, any transfer of the property mortgaged, by the mortgagee must cease, when the mortgage is redeemed.
Now, section 76(a) provides that a mortgagee in possession must manage the property as a person of ordinary prudence would manage it if it were his own.
Though on the language of the statute, this is an obligation cast on the mortgagee, the authorities have held that an agricultural lease created by him would be binding on the mortgagor even though the mortgage has been redeemed, provided it is of such a character that a prudent owner of property would enter into it in the usual course of management.
This being in the nature of an exception, it is for the person who claims the benefit thereof, to strictly establish it.
" It has been further observed that if there is a prohibition on mortgagee in letting of lands, the lease will not be binding on the mortgagors.
But where there is no such prohibition the parties will be thrown back on their rights under the Transfer of Property Act, and lessees must establish that the lease is binding on the mortgagors under Section 76(a) of that Act.
The act of the mortgagors leasing out the lands to tenants on the terms set out in the kabuliat was held to be neither prudent nor bona fide and as such the lease was not binding on the mortgagors.
105 In All India Film Corp. Ltd. & Ors.
vs Sri Raja Gyan Nath & Ors., (supra), the owner of the property in dispute known as Odeon Cinema mortgaged the property with possession to mortgagees.
The mortgagor, however, migrated to Pakistan in 1947.
The mortgagees leased out the property to All India Film Corp. Ltd. with option of yearly renewal for 10 years.
The property being an evacuee property, the Competent officer after determining the mortgage charge sold the property.
The respondent purchased the property but could not get possession as sub tenants claimed benefit of East Punjab Rent Restriction Act (3 of 1949).
The purchaser fired a suit for possession of the property from the Head lessee and sub lessee.
It was held by this Court: "The termination of the mortgagee interest terminated the relationship of landlord and tenant and it could not, in the circumstances, be said to run with the land.
There being no landlord and no tenant, the provisions of the Rent Restriction Act could not apply any further.
Nor could it be said that when the mortgagor cancelled the rent note and authorised the mortgagee to find any other tenant, the intention was to allow expressly a tenancy beyond the term of the mortgage.
In this view of the matter the decision of the High Court and the Court the below cannot be said to be erroneous." Following the above observations, this Court in M/s Sachalmal Parasram vs Mst.
Ratanoai and Ors., (supra) has observed that tenancy created by the mortgagee in possession does not survive the termination of the mortgagee 's interest.
After termination of mortgagee 's interest the relationship of landlord and tenant does not survive and the claim of protection of Tenancy Act is not available to the tenant inducted by the mortgagee.
The lease was also held to be not an act of prudent management.
In the case of Om Parkash Garg vs Ganga Sahai & Ors., JT 1987(1) S.C. 245.
In which one of us was a party, this Court observed that the lease in question being held to be not an act of prudent management on the part of the mortgagee within the meaning of Section 76(a) of the transfer of Property Act, 1882, the alleged lease could not subsist after termination of the mortgage by passing of the final decree of redemption and the appellant could not take advantage of the act as there was no subsisting lease in his favour.
106 On a conspectus of all these decisions we hold that the lease given by mortgagee during the subsistence of the mortgage came to and end on the redemption of the mortgage.
It is pertinent to mention that the question whether after termination of mortgagee 's interest on redemption of mortgage the lessees can claim the benefit of Rent Act was considered by the Full Bench of Rajasthan High Court in 1984 (R.L.R., 709) and the High Court following the decisions of the Supreme Court has answered that "Tenant of the mortgagee in possession is not entitled to the protection of Rajasthan Premises (Control of Rent and Eviction) Act, 1950 against the mortgagor after redemption of the mortgage.
" We fully agree with this view.
There is specific finding by all the courts below in the suit for redemption that the letting out of the premises to the tenant appellant by the mortgagees is not a prudent act done in the ordinary course of the management.
This finding being not challenged became final.
The mortgagor landlord is entitled to get recovery of possession.
We, therefore, affirm the judgment and order of the High Court and dismiss the appeal.
In the facts and circumstances of the case, there will be no order as to costs.
S.L. Appeal dismissed.
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% The respondent mortgaged his shop and delivered possession thereof to the mortgagees with the right to collect rent from the tenant in payment of the interest on the mortgage amount.
The mortgagees let out the premises to the appellant (tenant), during the subsistence of the mortgage.
The respondent filled a suit against the mortgagees for redemption of the mortgage and recovery of vacant possession of the mortgaged shop.
The appellant tenant was also impleaded as a party defendant in the suit.
The suit was decreed and the mortgage was redeemed, with an order to the mortgagees to give possession of the shop to the respondent.
The appellant tenant filed an application under Section 47, read with Section 151 of the C.P.C. stating that the decree of redemption could not be executed and possession given by the mortgagees to the respondent/decree holder, as the tenancy of the appellant subsisted and the same had not been terminated under the provisions of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
This plea of the appellant was rejected by the executing Court which held that the decree was executable and the appellant had no interest and he could not resist the execution of the decree.
Against this Judgment and order of the court, the appellant filed an appeal which was allowed.
Thereupon, the respondent preferred a second appeal which was allowed by the High Court.
The appellant appealed to this Court by special leave against the order of the High Court.
Dismissing the appeal, the Court on a conspectus of the various decisions of the Court on the subject, 100 ^ HELD: The lease given by the mortgagee during the subsistence of the mortgage came to an end on the redemption of the mortgage.
The tenant of the mortgagee in possession is not entitled to the protection of the Rent Act against the mortgagor after redemption of the mortgage, as held by the Rajasthan High Court in 1984 R.L.R. 709, following the decisions of this Court.
The letting out of the premises to the appellant tenant was not a prudent act done in the ordinary course of management, as held by all the Courts below.
The respondent/mortgagor landlord is entitled to get recovery of possession.
[106A D] M/s. Sachalmal Parasram vs Mst.
Ratanbai and Ors., AIR 1972 (SC) 637; The All India Film Corp. Ltd. & Ors.
vs Sri Raja Gyan Nath & Ors. ; Mahabir Cope & Ors.
vs Harbans Narain Singh & Ors., ; Hanhar Prasad Singh & Anr.
vs Must.
Of Munshi Nath Prasad & Ors., [1956] SCR t; Asa Ram & Anr.
vs Mst.
Ram Kali Anr.
AIR 1958 (SC) 183 and Om Prakash Garg vs Ganga Sahai & Ors.
JT , referred to.
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Here is a two-paragraph summary of the court case:
The case revolves around a mortgage deed executed on May 9, 1950, where the respondent mortgaged a shop to the defendant mortgagees with the right to collect rent from the tenant. The mortgagees let out the shop to the appellant, who was impleaded as a party defendant. The respondent filed a suit for redemption of the mortgage and for vacant possession of the shop, which was decreed, and the mortgage was redeemed. The executing court dismissed the appellant's application to resist the execution of the decree, holding that the lease granted by the mortgagee to the appellant came to an end on the redemption of the mortgage.
The appeal was allowed by the High Court, relying on the Full Bench decision of the Rajasthan High Court, which held that the tenant of the mortgagee in possession is not entitled to the protection of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, against the mortgagor after redemption of the mortgage. The High Court also observed that the letting out of the premises to the tenant appellant by the mortgagees was not a prudent act done in the ordinary course of the management. The Supreme Court, in affirming the judgment and order of the High Court, held that the lease given by the mortgagee during the subsistence of the mortgage came to an end on the redemption of the mortgage.
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Civil Appeal No. 2354 of 1968 From the judgment and order dated the 7th March, 1968 of the Madhya Pradesh High Court in First Appeal No. 24 of 1969.
C. P. Lal for the appellant.
section T. Desai and D. N. Misra for the respondent.
The Judgment of the Court was delivered by MATHEW, J.
One Deojibhai executed a sale deed on 30 12 1950 in respect of the property in question in favour of the appellant for a sum of Rs. 12,000/ .
No part of consideration was paid at the time of the execution of the sale deed.
The appellant promised to pay the amount by 21 5 1951 and covenanted that in case of non payment, the amount due would be charge upon the property sold.
After the execution of the sale deed, the appellant was put into possession of the 964 property and he paid Rs. 3,100/ in three instalments.
Deojibhai died in 1955 leaving his widow, the respondent and a son who died subsequently leaving his widow Manibai.
Manibai filed a suit in 1956 in the Bombay City Civil Court against Deokabai, the respondent, claiming a share in the property left by her father in law, Deojibhai.
This suit was compromised and Deokabai was appointed receiver of the estate of Deojibhai with a direction by the Court to realise his assets and to pay a certain amount to Manibai.
Deokabai, the respondent, filed the suit from which the appeal arises, on the basis that the appellant defaulted to pay the full purchase money of the property and that she was entitled to the same with interest.
The appellant contended that the charge could not be enforced against the property as it formed part of his occupancy holding and that, besides the sum of Rs. 3,100/ he had made other payments totalling Rs. 9,500/ .
The trial court found that no decree could be passed for enforcing the charge against the property as it was held in occupancy right by the appellant, but the court gave a personal decree against the appellant for Rs. 21,375/ .
The appellant appealed against the decree to the High Court.
The Court found that the respondent was entitled to enforce the charge on the property and granted a decree on that basis, but negatived the claim of the respondent for a personal decree against the appellant on the ground of limitation.
In other respects, the decree of the trial court was confirmed.
It is against this decree that the present appeal, by certificate, has been filed.
Two points were taken on behalf of the appellant.
One was that the Court was not competent to pass a decree creating a charge on the property in view of the fact that the property was held by the appellant as occupancy tenant.
This contention was negatived by the High Court on the ground that the prohibition to pass a decree for sale or for closure of any right of an occupancy tenant in his holding was not in existence in 1952 when the suit was filed.
We think the High Court was right in its conclusion as section 12 of the Central Provinces Tenancy Act, 1920, which contained the prohibition, had been repealed before the decree was passed.
The second point raised by the appellant was that the respondent did not appeal from the decree of the trial court negativing her claim in the suit for a charge on the property.
It was contended that the High Court was wrong in granting a decree for enforcement of the charge as the decree of the trial court became final so far as the respondent was concerned as she did not file any appeal therefrom.
We are unable to accept this contention.
Under Order 41, Rule 33 of the Civil Procedure Code, the High Court was competent to pass a decree for the enforcement of the charge in favour of the respondent notwithstanding the fact that the respondent did not file any appeal from the decree.
Order 41, Rule 33 provides: "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, and this power may be exercised by the Court notwithstanding that the appeal is as to part only 965 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 sec.
35 A, in pursuance of any objection on which the Court from whose decree the appeal is preferred has omitted or refused to make such order." In Radhika Mohan vs Sudhir Chandra(1), the facts were these: Under an annuity bond, the plaintiff there was granted a certain allowance per month.
In a will executed by the executor of the annuity bond.
It was provided that the annuity was to be a charge on certain properties.
As the annuity allowance fell in arrears, the plaintiff brought a suit to enforce it praying for a charge.
The trial court decreed the suit but did not grant a charge.
The lower appellate court exonerated the defendants from personal liability but held that there should be a charge on the property.
In second appeal by the defendants it was contended by them that the lower appellate court could not create a charge as, in the lower appellate court the plaintiff had failed to take objection to that part of the trial court 's decree.
The High Court held that under 0.41, r.33, Civil Procedure Code, the lower appellate court was competent to vary the decree by providing for enforcement of the charge and that the decree passed by it was right.
In Giani Ram & others vs Ramji Lal and others(2) the Court said that in 0.41, r. 33, the expression "which ought to have been passed" means "what ought in law to have been passed" and if an appellate court is of the view that any decree which ought in law to have been passed was in fact not passed by the court below, it may pass or make such further or other decree or order as the justice of the case may require.
Therefore, we hold that even if the respondent did not file any appeal from the decree of the trial court, that was no bar to the High Court passing a decree in favour of the respondent for the enforcement of the charge.
There is no substance in the contention that all the payments made by the appellant have not been given credit to by the respondent in view of the concurrent findings of the courts.
We dismiss the appeal with costs.
P.B.R. Appeal dismissed.
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The appellant, who bought property from the respondent 's husband, covenanted that in case of non payment of the consideration, the amount due would be a charge upon the property.
The respondent, on the death of her husband, filed a suit on the ground that the appellant defaulted to pay the full purchase money of the property.
The trial court held that no decree could be passed for enforcing the charge against the property as it was held in occupancy right by the appellant, but gave a personal decree against the appellant for a certain sum.
On the appellant 's appeal the High Court held that the respondent was entitled to enforce the charge on the property but negatived the respondent 's claim for a personal decree.
On appeal to this Court, it was contended (1) that the Court was not competent to pass a decree creating a charge on the property since it was held by the appellant as an occupancy tenant and (2) that as the respondent did not appeal from the decree of the trial court negativing her claim in the suit for a charge on the property, the High Court was wrong in granting a decree for enforcement of the charge.
Dismissing the appeal, ^ HELD: (1) The High Court was right in holding that the prohibition to pass a decree for sale or for closure of any right of an occupancy tenant in his holding was not in existence in 1952 when the suit was filed, because, section 12 of the Central Provinces Tenancy Act, 1920, which contained the prohibition, had been repealed before the decree was passed.
[964 E F] (2)Even if the respondent did not file any appeal from the decree of the trial court, that was no bar to the High Court passing a decree in favour of the respondent for the enforcement of the charge.
Under Order XLI, r. 33 of the Code of Civil Procedure, the High Court was competent to pass a decree for the enforcement of the charge in favour of the respondent notwithstanding the fact that the respondent did not file any appeal from the decree.
[964 G, 965 E] Radhika Mohan vs Sudhir Chandra, A.I.R. 1937 Calcutta 10 and Giani Ram & Others, vs Ramji Lal and Others, ; , referred to.
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Here's a two-paragraph summary of the court case:
The case involved a property sale deed executed by Deojibhai in favor of the appellant in 1950. However, the purchase price of Rs. 12,000 was not paid at the time of execution, and the appellant was given a conditional payment period. Despite the condition, the appellant only paid a total of Rs. 3,100 in three installments. The respondent, Deokabai, who was one of Deojibhai's heirs, claimed that the appellant had defaulted on the full payment and was entitled to the amount with interest. The trial court granted a personal decree against the appellant, but the High Court set aside the personal decree and allowed the respondent to enforce a charge on the property against the appellant.
The High Court's decision was upheld on appeal, with the court relying on Order 41, Rule 33 of the Civil Procedure Code. This provision allows the appellate court to pass any decree and make any order that ought to have been passed, even if the respondent has not filed an appeal. The court also found that the property was not an occupancy holding at the time the suit was filed, which was a key issue raised by the appellant. The court's decision was supported by two earlier judgments, Radhika Mohan vs Sudhir Chandra and Giani Ram & others vs Ramji Lal and others, which held that the appellate court has the power to vary a decree and pass a new decree, even if the respondent has not filed an appeal.
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Civil Appeal No. 443 of 1985.
503 From the Judgment and order dated 6.5.1985 of the Allahabad High Court in C.M.W.P. No. 2822 of 1983.
Dr. Y.S. Chitale, Mrs. Rekha Pandey, S.P. Pandey, Atul Tiwari, Pinaki Misra, Mrs. Mamta Kachawala and Miss Bina Gupta for the Appellant.
M.K. Banerjee, Solicitor General, A.K. Ganguli, Gopala Subramaniam, K.J. John, M.M. John, Harish N. Salve and Miss Nisha Srivastava for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This is an appeal by special leave.
The appellant was employed on the production side of the Uttar Pradesh State Handloom Corporation, a public sector undertaking (hereinafter referred to as 'Corporation ' for short) on temporary basis.
Having been appointed on 30th of October, 1976 as Bunker Sewa he obtained two promotions while still working in temporary status and by 1983 was working as Deputy Production Manager.
The appellant 's letter of appointment, as far as material, stated: "With effect from the date of taking over charge Shri Rabindra Kumar Mishra . is hereby appointed as Bunker Sewa . on the following terms and conditions: (1) That his appointment is temporary and his services are liable for termination with one month 's notice or one month 's pay in lieu of notice from either side On November 22, 1982 the appellant was placed under suspension and that order read as follows: "As a result of preliminary enquiries made by the Central Manager on 13.11.1982 of the Production Center, Kunda and other Centres under the same, it has come to notice that Sri R.K. Misra, former Dy.
Production Manager, Kunda, is responsible for misconduct, dereliction of duty, mismanagement and showing fictitious production of terrycot cloth.
He is, therefore, placed under suspension with immediate effect . . . " (Underlinings are ours) 504 On the 1st of February, 1983 the order of suspension was A revoked and on 10th of February, 1983 the impugned order terminating his services being to the following effect was passed: "The undersigned hereby gives notice to Shri R.K. Misra, Deputy Production Manager, Production Center, Kunda, Prataapgarh, Salon Rai Bareilly that his services are no more required and his service will be deemed to be terminated from receipt of this notice by him.
It is directed that he will be entitled to receive one month 's salary in lieu of notice period on the same rate on which he was receiving salary before termination of his service.
" The appellant challenged the order of termination of his service before the Allahabad High Court but the High Court declined to interfere by holding that the termination was not punitive and the question of breach of principles of natural justice did not arise.
It is not disputed that the employer Corporation is 'State ' within the meaning of Article 12; yet it has not been contended and rightly that the protection of Article 311(2) of the Constitution is avilable to the employees of the Corporation.
The appellant has however, claimed that he is entitled to the protection of Article 14 and 16 of the Constitution; though his order of termination is innocuous the setting in which it has been made clearly makes it an order of dismissal and the High Court has gone wrong in holding that the order of termination was not punitive; as service was determined by the order of termination attaching stigma the appellant was entitled to a hearing commensurate with rules of natural justice and in the absence of that opportunity of being heard the order is liable to be quashed.
It cannot be disputed that temporary service can be terminated by notice.
The order of appointment in the appellant 's case made it abundantly clear that with a month 's notice or payment of salary m lieu of notice such termination could be effected by either side Rule 63 of the Corporation Rules made in exercise of Article 127 of the Articles of Association of the Uttar Pradesh State Handloom Corporation Limited recognised such a power.
That Rule provides: " 1.
The appointing authority may, at any time, during the pendency of the temporary tenure terminate the services of a temporary employee by giving him one month 's notice or emoluments for such lesser period by H 505 which the notice falls short of one month.
The temporary employee, on his part, shall have the option of quitting service by giving one month 's notice to the appointing authority or paying to the Corporation an amount equal to his one month 's pay . " The order of termination of service in this case is indeed innocuous.
The appellant is not entitled to the protection of Article 311(2) of the Constitution not being a member of a civil service of the Union or a State nor holder of a civil post under the State but his own Service Rules provide under Rule 68 that if the punishment of discharge or dismissal is imposed, an enquiry commensurate with requirements of natural justice is a condition precedent.
Admittedly no such enquiry has been held.
The question that crops up here for determination, therefore, is whether the impugned order was an order of termination simpliciter or really amounted to an order of dismissal.
In Purshotam Lal Dhingra vs Union of India, [ ; a Constitution Bench of this Court stated: "This use of expression 'terminate ' or 'discharge ' is not conclusive.
In spite of the use of such innocuous expressions, the Court has to apply the two tests mentioned above, namely.
(1) whether the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences of the kind herinbefore referred to? If the case satisfied either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of the rules and Article 311, which give protection to Government servant have not been complied with, the termination of the service or the reduction in rank must be held to be wrongful and in violation of the constitutional right of the servant.
This view has been approved by another Constitution Bench of this Court in Champaklal Chimanlal Shah vs The Union of India, [ 19641 5 SCR 190.
After indicating approval, Wanchoo, J. as he then was, spoke for the Constitution Bench thus: "It is well known that Government does not terminate 506 nate the services of a public servant, be he even a temporary servant without reason; nor is it usual for Government to reduce a public servant in rank without reason even though he may be holding the higher rank only tempoarily.
One reason for terminating the services of a temporary servant may be that the post that he is holding comes to an end.
In that case, there is nothing further to be said and his services terminate when the post comes to an end.
Similarly a Government servant temporarily officiating in a higher rank may have to be reverted to his substantive post where the incumbent of the higher post comes back to duty or where the higher post created for a temporary period comes to an end.
But besides the above, the Government may find it necessary to terminate the services of a temporary servant if it is not satisfied with his conduct or his suitability for the job and/or his work.
The same may apply to the reversion of a public servant from a higher post to a lower post where the post is held as a temporary measure.
This dissatisfaction with the work and/or conduct of a temporary servant may arise on complaint against him.
In such cases two courses are open to Government.
It may decide to dispense with the services of the servant or revert him to his substantive post without any action being taken to punish him for his bad work and/or conduct.
Or the Government may decide to punish such a servant for his bad work or misconduct, in which case even though the servant may be temporary, he will have the protection of Article 311(2).
But even where it is intended to take action by way of punishment what usually happens is that something in the nature of what may be called a preliminary enquiry is first held in connection with the alleged misconduct or unsatisfactory work.
ln this preliminary enquiry the explanation of the government servant may be taken and documentary and even oral evidence may be considered.
It is usual when such a preliminary enquiry makes out a prima facie case against the servant concerned that charges are then framed against him and he is asked to show cause why disciplinary action be not taken against him.
An enquiry officer (who may be himself in the case where the appointing authority is other than the Government) is appointed who holds enquiry into the charges communicated to the servant concerned after taking his explanation and his enquiry is held in accordance with the principles of natural 507 justice.
This is what is known as a formal departmental enquiry into the conduct of a public servant . . "Generally therefore a preliminary enquiry is usually held to determine whether a prima facie case for a formal departmental enquiry is made out, and it is very necessary that the Two should not be confused.
Even where Government does not intend to take action by way of punishment against a temporary servant on a report of bad work or misconduct a preliminary enquiry is usually is held to satisfy Government that there is reason to dispense with the services of a temporary employee or to revert him to his substantive post, for as we have said already, Government does not usually take action of this kind without any reason.
Therefore when a preliminary enquiry of this nature is held in the case of a temporary employee or a Government servant holding a higher rank temporarily it must not be confused with the regular departmental enquiry (which generally follows such a preliminary enquiry) when the Government decides to frame charges and get a departmental enquiry made in order that one of the three major punishments already indicated may be inflicted on the government servant.
Therefore, so far as the preliminary enquiry is concerned, there is no question of its being governed by Article 311(2) for that enquiry is really for the satisfaction of government to decide whether punitive action should be taken or action should be taken under the contract or the rules in the case of a temporary government servant or a servant holding higher rank temporary to which he has no right.
In short a preliminary enquiry is for the purpose of collection of facts in regard to the conduct and work of a government servant in which he may or may not be associated so that the authority concerned may decide whether or not to subject the servant concerned to the enquiry necessary under Article 311 for inflicting one of the three major punishments mentioned therein.
Such a preliminary enquiry may even be held ex parte, for it is merely for the satisfaction of Government, though usually for the sake of fairness, explanation is taken from the servant concerned even at such an enquiry.
" Both Pershotam Lal Dhingra 's case (supra) and Champaklal 's case 508 (supra) were referred to and relied upon in Shamsher Singh & Anr.
vs State of Punjab, ; This is a case which was heard by a 7 Judge Bench.
Ray, CJ., who spoke for the majority of five considered all the cases rendered by this Court till then touching on the point and at page 841 of the Reports stated as follows: "The form of the order is not decisive as to whether the order is by way of punishment.
Even an innocuously worded order terminating the service may in the facts and circumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of Article 311.
In such a case the simplicity of the form of the order will not give any sanctity.
" In Sharnsher Singh 's case (supra) the ratio of the two earlier Constitution Bench judgment was approved.
On facts it was found that the order of termination though innocuous in form was really an order by way of punishment removing the appellant from service on the basis of charges of gross misconduct found to have been established by an exparte enquiry conducted by the S.P. Vigilance Department with the only object of ascertaining truth of the alleged misconduct and for the purpose of dismissing or removing the appellant, if charges were found established.
It was ultimately on the basis of specific findings recorded by the S.P. Vigilance that the appellant 's services were terminated.
The Court found that the enquiry by the S.P. Vigilance was essentially and in character and object different from the informal enquiry into the and in object different from the informal enquiry into the suitability of the appellant.
Ray, CJ.
in Shamsber Singh 's case (supra) further pointed out: "The fact of holding an enquiry is not always conclusive.
What is decisive is whether the order is really by way of punishment . .
A probationer whose terms of services provided that it could be terminated without any notice and without any cause being assigned could not claim the protection of Article 311(2).
An order terminating the services of a temporary servant or probationer under the Rules of employment and without anything more will not attract Article 311.
Where a departmental enquiry is contemplated and if an enquiry is not in fact proceeded with Article 311 will not be attracted 509 unless it can be shown that the order though unexceptionable in form is made following a report based on misconduct. " In Regional Manager & Anr.
vs Pawan Kumar Dubey, ; it was observed by this Court thus: 1 "We think that the principles involved in applying Article 311(2) having been substantially explained in Shamsher Singh 's case (supra) it should not no longer be possible to urge that Sughar Singh 's case could give rise to some misapprehension of the law.
Indeed we do not think that the principles of law declared and applied so often have really changed.
But the application of the same law to the differing circumstances and facts of various cases which have come up to this court could create the impression some times that there is some conflict between decisions of this Court.
Even where there appears to be some conflict, it would, we think, vanish when the ratio decidendi of each case is correctly understood.
It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar.
One additional or different fact can make a word of difference between conclusions in two cases even when the same principles are applied in each case to similar facts . ".
As we have already observed, though the provisions of Article 311(2) of the Constitution do not apply, the Service Rules which are almost at par make the decisions of this Court relevant in disposing of the present appeal.
In several authoritative pronouncements of this Court, the concept of 'motive ' and 'foundation ' has been brought in for finding out the effect of the order of termination.
If the delinquency of the officer in temporary service is taken as the operative motive in terminating the service, the order is not considered as punitive while if the order of termination is founded upon it, the termination is considered to be a punitive action.
This is so on account of the fact that it is necessary for every employer to assess the service of the temporary incumbent in order to find out as to whether he should be confirmed in his appointment or his services should be terminated.
It may also be necessary to find out whether the officer should be tried for some more time on temporary basis.
Since both in regard to a temporary employee or an officiating employee in a higher post such H 510 an assessment would be necessary merely because the appropriate authority proceeds to make an assessment and leaves a record of its views the same would not be available to be utilised to make the order of termination following such assessment punitive in character.
In a large democracy as ours, administration is bound to be impersonal and in regard to public officers whether in Government or public Corporations, assessments have got to be in writing for purposes of record.
We do not think there is any justification in the contention of the appellant that once such an assessment is recorded, the order of termination made soon thereafter must take the punitive character.
There may be cases where an enquiry is undertaken and prima facie material for serious charges are found; by disclosing the result of such preliminary enquiry, the officer concerned is put under suspension in contemplation of disciplinary action.
After such steps have been taken, the employer/appropriate authority decides not to continue the departmental proceedings but makes an order terminating the service, as has been done in this case.
Counsel for the respondents pointed that that in the matter of ordering termination of service of a temporary employee, the order follows a review of his working.
Unless the termination is ordered because there is no need for the post, in the absence of reasons for termination, the action is open to challenge as arbitrary, particulary when other similarly situated employees are continued in service.
When reasons are given, they are bound to disclose adverse features of the employee and disclosure of such features become the ground of challenge of the order on the plea that termination is not innocuous.
To meet this position, the distinction between 'motive ' and 'foundation ' has been adopted by the courts.
As long as the adverse feature of the employee remains the motive and does not become transformed as the foundation of the order of termination it is unexceptionable.
No straight jacket test can be laid down to distinguish the two and whether 'motive ' has become the foundation has to be decided by the court with reference to the facts of a given case.
The two are certainly two points of one line ordinarily apart but when they come together 'motive ' does get transformed and merges into foundation.
As has been held by a three Judge Bench in State of U.P. vs Ram C 'handra Trivedi, ; the position in regard to cases of the present nature is clear and the examination of the decisions of this court shows that there is no real conflict in their ratio decidendi.
On facts as established in different cases, courts have applied the known 511 tests and in order that complete justice may be done on the facts found, there have been punishable deviations.
We may point out that this Court in a Consitution Bench judgment in the case of State of Orissa & Anr.
vs Ram Narayan Dass, [ ; , indicated: "The fact of the holding of an enquiry is not decisive of the question.
What is decisive is whether the order in the light of the decisions laid down in Parshotam Lal Dhingra 's case.
Keeping in view the principles indicated above, it is difficult to accept the claim of the appellant.
He was a temporary servant and had no right to the post.
It has also not been denied that both under the contract of service as also the Service Rules governing him the employer had the right to terminate his services by giving him one month 's notice.
The order to which exception is taken is expressly an order of termination in innocuous terms and does not cast any stigma on the appellant nor does it visit him with any evil consequences.
It is also not founded on misconduct.
In the circumstances, the order is not open to challenge .
We may point out that the learned Solicitor General appearing for the Corporation had at the commencement of the arguments suggested that the appellant could be given some compensation for termination.
Ordinarily, under the law he would not be entitled to compensation in a case of this type, but since he has been put out of employment at an advanced age and it may be difficult for him to get an alternate employment, while dismissing his appeal we think it reasonable to call upon the Corporation to pay a consolidated amount of Rs.25000 (Rupees Twenty five Thousand only).
Accordingly the appeal is dismissed.
The amount of Rs.25,000 as indicated above may be paid to the appellant within one month from today.
There would be no order for costs.
P.S.S. Appeal dismissed.
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Rule 63 of the U.P. State Handloom Corporation Rules stipulates termination of temporary service on one month 's notice on either side.
Rule 68 provides that if the punishment of discharge or dismissal is imposed, an enquiry commensurate with requirements of natural justice is a condition precedent.
The appellant was employed in the aforesaid Corporation on temporary basis.
The order of appointment stated that his services were liable for termination with one month 's notice or one month 's pay in lieu of notice on either side.
He was placed under suspension in November 1982 on charges of misconduct, dereliction of duty, mismanagement and showing fictitious production entries.
That order, however, was revoked in November 1983 and his services terminated forthwith by notice entitling him to one month 's salary.
The High Court held that the termination was not punitive and the question of breach of principles of natural justice did not arise.
In this appeal by special leave it was contended that the appellant was entitled to the protection of Articles 14 and 16 of the Constitution, that though his order of termination was innocuous, the setting in which it has been made clearly makes it an order of dismissal punitive in character and that as his service was determined by the order attaching stigma the appellant was entitled to a hearing commensurate with rules of natural justice and in the absence of the opportunity of being heard the order was liable to be quashed.
Dismissing the appeal, ^ HELD: As long as the adverse feature of the employee remains the motive and does not become transferred as the foundation of the order of termination, it is unexceptionable.
Whether 'motive ' has be 502 come the foundation has to be decided by the Court with reference to the facts of a given case.
[510 G] It is necessary for every employer to assess the service of the temporary incumbent in order to find out as to whether he should be confirmed in his appointment or his services should be terminated.
It may also be necessary to find out whether the officer should be tried for some more time on temporary basis.
Since both in regard to a temporary employee or an officiating employee in a higher post such an assessment would be necessary, merely because the appropriate authority proceeds to make an assessment and leaves a record of its views the same would not be available to be utilised to make the order of termination following such assessment punitive in character.
[509G H; 510A B] There may be cases where an enquiry is undertaken and prima facie material for serious charges are found; by disclosing the result of such preliminary enquiry, the officer concerned is put under suspension in contemplation of disciplinary action.
After such steps have been taken, the employer/appropriate authority decides not to continue the departmental proceedings but makes an order terminating the service.
[510C D] In the instant case the appellant was a temporary servant and had no right to the post.
Both under the contract of service as also the Service Rules governing him the employer had the right to terminate his services by giving him one month 's notice.
The order of termination was in innocuous terms.
It did not cast any stigma on him nor did it visit him with any evil consequences.
The order was, therefore, not open to challenge.
[S11C D] The appellant is not entitled to compensation under the law.
But since he has been put out of employment at an advanced age and it may be difficult for him to get an alternate employment, the Corporation to pay him a consolidated amount of Rs.25,000.
[511F] Purshotam Lal Dhingra vs Union of India, ; ; Champaklal Chimanlal Shah vs The Union of India, ; Shamsher Singh & Anr.
vs State of Punjab, ; ; Regional Manager & Anr.
vs Pawan Kumar Dubey; ; ; State of U.P. vs Ram Chandra Trivedi, and State of Orissa & Anr.
vs Ram Narayan Dass, [19611 I SCR 606, referred to.
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Here is a two-paragraph summary of the court case:
The case, Civil Appeal No. 443 of 1985, pertains to an employee, RK Misra, who was employed on a temporary basis by the Uttar Pradesh State Handloom Corporation. Misra was terminated from service after a preliminary inquiry was conducted by the Corporation, which found that he was responsible for misconduct and dereliction of duty. The High Court declined to interfere with the order of termination, holding that it was not punitive and that the question of breach of principles of natural justice did not arise.
On appeal, the Supreme Court considered the question of whether the order of termination was punitive in nature. The Court relied on several Constitution Bench judgments, including Purshotam Lal Dhingra v. Union of India, and held that the form of the order was not decisive in determining whether the order was punitive or not. The Court found that the order of termination was not punitive, as Misra had no right to the post and the termination was not founded on misconduct. However, in consideration of Misra's advanced age and difficulty in finding alternate employment, the Court directed the Corporation to pay a consolidated amount of Rs. 25,000 to Misra, and dismissed the appeal.
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Criminal Appeal No. 250 of 1964.
Appeal from the judgment, and order dated March 14, 1963 of the Gujarat High Court in Criminal Revision Application No. 124 of 1961.
R. Ganapathy Iyer and S.P. Nayar, for the appellant.
M.V. Goswami and C.C. Patel, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, J.
In this appeal by certificate under article 134( 1 ) (c) of the Constitution the State of Gujarat appeals against 178 the judgment, March 14, 1963, of the High Court of the State acquitting the respondents of diverse offences under the Forward Contracts (Regulation) Act, 1952.
Originally 31 persons were charged before the Judicial Magistrate, Ahmedabad, who acquitted 14 and convicted the rest.
The present respondents, who are 11 in number (accused 1 to 9, 11 and 12), were convicted under section 20(1)(c) of the Act and fined Rs. 51/ (15 days ' S.1.
in default).
They were also convicted under section 21(b) of the Act but no separate sentence was imposed.
Nine of them (accused 1 to 9) were further convicted under section 21(c) of the Act and fined Rs. 25/ (one week 's S.1.
in default).
The remaining accused were convicted under section 21 (b).
All appealed to the Court of Sessions Judge.
The conviction of accused 1 to 9, 11 and 12 was maintained but conviction under section 20(1)(b) was substituted for that under section 20(1)(c).
The other accused ' were convicted of all the charges.
The High Court was then moved in revision.
All the accused were acquitted of all the charges.
The State Government now appeals.
All respondents are members of the Ghee and Tel Brokers Association Ltd., Ahmedabad.
Nine of them are Directors and two of these are President and Secretary of the Association.
The accused, who are not before us, were brokers and servants of the Association or of the brokers.
The prosecution case is this: The Association has an office where the members and brokers used to enter into contracts for the sale and purchase of groundnut oil.
These contracts were largely speculative.
A large number of contracts used to be entered into but were not performed by actual delivery and payment of price.
They were adjusted on a due date after the expiry of a fixed period.
This period was generally from the 5th of one calendar month to the 25th of the following month and the latter was the due date.
On each Saturday during the period the Association exhibited the prevailing rate and according to that rate cross transactions entered earlier were adjusted and the persons in loss deposited money representing their particular losses with the Association.
On the due date all outstanding.transactions were finally adjusted by cancelling sales against purchases and delivery used to be ordered in respect of the balance which had to be completed by the end of the month of the due date.
During the stated period extensive trading through sales and purchases took place without any delivery.
Each member could enter into as many transactions of either kind as he liked provided that each transaction was in multiple of 50 Bengali Maunds.
Between March 5 and April 25, 1957 the total transactions put through totalled 4,33,600 Bengali Maunds but the actual delivery on the due date was about 5,500 Bengali Maunds only, that is to say, just over 11/4 per cent.
The share of the several operators in these deliveries was insignificant and the deals were really forward 180 any such member, becomes illegal, and the contract itself becomes void, except in the case of a person who has no knowledge that the transaction is prohibited.
We are not concerned with sections 16 and 17 and may omit them from consideration.
Then comes section 18, sub section (1) whereof provides: "18.
Special provisions respecting certain kinds of forward contracts. (1) Nothing contained in Chapter III or Chapter IV shall apply to non transferable specific delivery contracts for the sale or purchase of any goods: Provided that no person shall organise or assist in organising or be a member of any association in any area to which the provisions of section 15 have been made applicable (other than a recognised association) which provides facilities.
for the performance of any non transferable specific delivery contracts by any party thereto without having to make or to receive actual delivery to or from the other party to the contract or to or from any other party named in the contract.
" This sub section read with sections 20 and 21 is at the foundation of :the charge and as section 19 is irrelevant here, we may proceed to read them at once.
We are concerned only with cls.
(b) and (c) of sub section
(1) of section 20 and (b) and (c) of section 21 and will, therefore.
omit the other clauses: "20.
Penalty for contravention of certain provisions of Chapter IV. (1) Any person who (a) (b) organises, or assists in organising, or is a member of, any association in contravention of the provisions contained in the proviso to sub section (1) of section 18; or (c) enters into any forward contract or any option in goods in contravention of any of the provisions contained in sub section (1) of section 15, section 17 or section 19, shall, on conviction, be punishable with imprisonment for a term which may extend to one 'year, or with fine, or with both.
179 transactions in which there was no intention to take or give delivery.
The prosecution, therefore, submitted that these were forward contracts prohibited under the Act and as the Association was not recognised the offences charged were committed.
The High Court having acquitted all the accused the State ' contends now that the acquittal recorded by.
the High Court is wrong and proceeds on a misapprehension of the provisions of the Act and of the facts on which the charges rested.
To consider the submissions of the parties the relevant provisions of 'the Act, which has been passed, among other things, to regulate forward contracts, will have to be seen.
Before we do so we may first glance at some definitions leaving out those attributes of the terms defined in which we are not interested.
"Forward contract" under the Act means a contract which is not a ready delivery contract but a contract for future delivery (section 2(c) ).
A "ready delivery contract" is one in which there is delivery and payment of price either immediately or within a period which is not to exceed 11 days even by consent of parties or otherwise (section 2(1) ).
The expressions "transferable specific delivery contract" and "non transferable specific delivery contract" are defined ' with reference to the latter expression which means a specific delivery contract, the rights or liabilities under which are not transferable (section 2 (f)) and "specific delivery contract ' means a forward delivery contract which provides for actual delivery of specific qualities or types of goods either immediately or during a period not exceeding 11 days at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyers 'and sellers are mentioned (section 2(m) ).
The effect of these definitions is clearly to distinguish, firstly, forward contracts from ready delivery contracts by limiting the time in which ready delivery contracts must be completed by delivery and payment of price; secondly, to distinguish between transferable and non transferable specific delivery contracts; and finally to distinguish forward contracts in which there is either no provision for actual delivery or the parties are not named, from a specific delivery contract.
The Act then proceeds to lay down in Chapter III the conditions of recognition of Associations.
Since this Association was admittedly not recognised it is unnecessary to review the provisions of that Chapter.
Chapter IV then makes certain provisions regarding forward contracts and option in goods.
Chapter V then provides for penalties.
The relevant provisions of these two Chapters need to be carefully considered.
Section 15(1) declares illegal forward contracts in notified goods and on the notification so issuing every forward contract in notified goods otherwise than between members of a recognised association or through or with 181 "21.
Penalty for owning or keeping place used for entering into forward contracts in goods.
Any person who (b) without the permission of the Central Government, organises, or assists in organising, or becomes a member of, any association, other than a recognised association, for the purpose of assisting in, entering into or making or performing, whether wholly or in part, any forward contracts in contravention of any of the provisions of this Act, or (c) manages, controls or assists in keeping any place other than that of a recognised association, which is used for the purpose of entering into or making or performing, whether wholly or in part, any forward contracts in contravention of any of the provisions of this Act or at which such forward contracts are recorded or adjusted, or rights or liabilities arising out of such forward ' contracts are adjusted, regulated or enforced in any manner whatsoever, or shall, on contravention, be punishable with imprisonment which may extend to two years, with fine, or with both.
" The respondents were charged under sections 20 (1) (b).
, 20 (1) (c) and 21(a), (b), (c) and (f).
As the State does not press its case under section 21 (a) and (f) they have been left out.
Before we analyse the penalty sections it is necessary to see whether the case fails within section 18 (1) of the Act.
It is established in the case that the Association was unregistered.
It is also clear that the contracts, although they appeared to be non transferable specific delivery contracts were not intended to be completed by delivery immediately or within a period of 11 days from the date of the. contract.
In fact week after week contracts were cancelled by cross transactions and there was no delivery.
Instead of payment of price losses resulting from the cross transactions were deposited by the operators in loss with the Association.
Further, on the due date also, there was no delivery but adjustment of all contracts of sales against all contracts of purchase between the same parties and delivery was of the outstanding balance.
Even this delivery was often avoided by entering into fresh contract at the 182 rate prevailing on the due date, as part of the transactions in the next period.
There is evidence also to establish this.
In other words, the transactions on paper did seem to comply with the regulations but in point of fact they did not and the Association arranged for settlement of the entire transactions (barring an insignificant portion if at all) without delivery.
Turning now to the provisions of sub section
(1) of the 18th section it is clear that the provisions of Chapters III and IV would not have applied to the respondents if their transactions were true non transferable specific delivery contracts.
They would have been so if the nature of the transaction, not on paper, but in actuality was such as the Act contemplates.
This is why the proviso to section 18 has been added to prohibit certain things.
The proviso enacts that no person shall organise or assist in organising or be a member of an association (except a recognised association) which provides facilities for the performance of any specific delivery contract without having to make or to receive actual delivery.
The Legislature contemplates that the first sub section of section 18 might be complied with in the documents evidencing the contract but in actuality the contract might be differently performed and has, therefore, provided for 'the. identical situation which, arises in this case.
Now the difference between the Magistrate and the Sessions Judge arose on the application of the first sub section of section 18 with its proviso.
The Magistrate felt that the transactions were not non transferable specific delivery contracts and the matter fell within the proviso.
Having found this, it is not a little surprising that he did not apply section 20(1)(b), which was clearly attracted.
His reasoning on this point is difficult to appreciate.
He seems to think that as the first sub section of the eighteenth section dealt with non transferable specific delivery contracts, it had no application here.
Therefore, the charge of being members of an association in contravention of the proviso thereto did not survive and hence no offence under section 20(1)(b) was disclosed.
In this the Magistrate was clearly in error.
Section 18( 1 ) speaks of true non transferable specific delivery contracts but the proviso at the same time makes it illegal for an unrecognised association to so arrange matters that non transferable specific delivery contracts will be worked out without actual delivery.
The Magistrate should have seen that the conduct of the members of this unrecognised association was precisely this and was, therefore, prohibited by the proviso and directly punishable under section 20(1 )(b).
An offence under that clause of section 20(1) and also under el.
(c) of that section read with section 15 was made out.
There was no question of considering the matter first under the main part of the first subsection and 'then to put the proviso out of the way because the first sub section did not apply.
The Magistrate, however, con 183 victed the members under section 21 (b) for organising an unrecognised association for the purpose of assisting in or entering into or making or performing, whether wholly or in part, any forward contracts in contravention of the provisions of the Act and further under section 21 (c) for managing, controlling or assisting in keeping a place other than that of a recognised association where forward contracts in contravention of the Act or at which forward contracts are recorded or adjusted or rights or liabilities arising out of such forward contracts are adjusted, regulated or enforced in any manner whatsoever.
When the respondents.
appealed to the Sessions Judge, the conviction under section 21 (b) and (c) was confirmed and the other conviction was altered from section 20(1)(c) to section 20(1)(b).
The Sessions Judge rightly pointed out that the so called non transferable specific delivery contracts were so arranged that they could be resolved after the period of eleven days and without actual delivery.
The Sessions Judge was of the opinion that the respondents had acted in breach of the proviso to section 18 (1 ) and were clearly guilty of the offence.
In a precise and clear judgment the Additional Sessions Judge explained the pertinent sections and rightly held the proviso to section 18(1) and section 20(1)(b) applicable.
The High Court then in revision held that it was not open to the Sessions Judge to alter the conviction from section 20(1)(c) to section 20( 1 )(b) as the acquittal under the latter section by the Magistrate was not appealed against and in an appeal from a conviction there could be no change of finding to convert art acquittal into conviction.
The High Court also held that no offence under section 21 (b) or (c) was made out.
In a fairly long judgment the High Court pointed out that the decision of this Court in The State of Andhra Pradesh vs Thadi Narayana(1) prohibited the alteration of the finding.
The High Court then went further to hold that there could not be a conviction under section 20( 1 ) (c) as the Sessions Judge had acquitted the appellants and there was again no appeal against that acquittal.
The High Court also set aside the conviction under section 21 (b) and (c).
The High Court reached its conclusion on the 'basis of the finding of the Sessions Judge that the contracts entered into were non transferable specific delivery contracts and the appellants were, therefore, not guilty of the offence under section 20(1)(c) of the Act.
The High Court then proceeded to reason that as no part of the Act prohibited performance of non transferable specific delivery contracts otherwise than by making or receiving actual delivery, the acts of the appellants were not offences under the Act.
The learned Judge while dealing with section 18 ( 1 ) proviso observed: (1) 184 "The performance of a non transferable specific delivery contract by a mode other than giving and taking of actual delivery would be contrary to law only if there is some provision of law which prohibits it.
But unfortunately for the prosecution, the Legislature has not chosen to enact any such provision.
The only nearest approximation I could find was the proviso to sub section(1) of section 18 but that proviso does not prescribe that a non transferable specific delivery contract shall be performed by making and receiving actual delivery and that the parties to such a contract shall not perform it otherwise than 'by making and receiving actual delivery.
All that it enacts is that no person shall organise or assist in organising or be a member of any association in any area to which the provisions of section 15 have been made applicable (other than a recognised association) which provides facilities for the performance of any non transferable specific delivery contract by any party thereto without having to make or receive actual delivery to or from the other party to the contract or to or from any other party named in the contract.
What this proviso seeks to achieve is to secure that no Association other than a recognized Association shall provide facilities for performance of a non transferable specific delivery contract by the parties thereto without having to make or receive actual delivery.
But it is a long step in the argument to conclude from the proviso that performance of a non transferable specific delivery contract otherwise than by making and receiving actual delivery is prohibited.
The language of the proviso cannot bear any such extended artificial construction. . " The learned Judge was clearly in error and misunderstood the connection between the first sub section and its proviso.
Distinction is made in the proviso between recognised and unrecognised associations.
Persons can organise and assist in organising or be member of an association which is recognised even if the association provides for performance of non transferable specific delivery contracts without actual delivery.
The prohibition is against persons arranging for avoidance of delivery through an unrecognised association and read with the penalty sections, it is clear that such.
acts are rendered illegal.
If the acts are illegal then non transferable specific delivery contracts by members of unrecognised associations become illegal also.
They are forward contracts and being entered into otherwise than between members of a recognised association or through or with any such member are rendered illegal by section 15. 185 Thus there is no doubt whatever in the case that offences under section 21(b) and (c) were committed.
It is enough to read these clauses to see that they fit the acts of nine respondents (accused 1 9) and their position vis a vis the unrecognised association of which they were directors makes them liable to penalty under section 21 ( 'b) and (c) but the remaining two respondents (accused 11 and 12) being only members are liable to penalty under section 21 (b) only.
As regards the other offences under section 20(1)(b) and (c) we are clear that these offences were also committed.
But as the Sessions Judge acquitted them under cl.
(c) and there was no appeal to the High Court we say nothing about it.
As regards the offence under section 20(1)(b) the Magistrate did not clearly record a finding of acquittal.
However, his reasoning seems to be in favour of holding that the clause did not cover the case as the contracts were not non transferable specific delivery contracts.
His finding was the reverse of the finding of the Sessions Judge.
The question thus remains whether the Sessions Judge could alter the finding in an appeal from a conviction (and the High Court too if it so chose) when it was a question of choosing between two clauses of a penalty section depending on whether the true nature of the contracts was as held by the Magistrate.
The ruling of this Court cited earlier was invoked to suggest that such a course was not possible for the Sessions Judge or the High Court.
We do not pause to consider whether the ruling prohibits such a course and if it does whether it does not seek to go beyond the words and intendment of section 423(1)(b) of the Code of Criminal Procedure.
This is hardly a case in which to consider such an important point.
We, therefore, express no opinion upon it.
It is sufficient to express our dissent from the High Court on the interpretation of the Act and hold the respondents guilty of infractions where the ruling does not stand in the way.
We accordingly set aside the acquittal of the respondent under cls.
(b) and (c) of section 21 and restore their conviction under those clauses as confirmed by the Sessions Judge.
We sentence all the respondents to a fine of Rs. 25 (or one week 's simple imprisonment in default) under section 21(b).
No separate sentence under section 21 (c) is imposed on the respondents who were original accused Nos.
The appeal shall be allowed to the extent indicated.
in this paragraph.
Y.P. Appeal allowed in part.
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The members of a Ghee and Tel Brokers Association, used to enter into contracts for the sale and purchase of groundnut oil.
Week after week contracts were cancelled by cross transactions and there was no delivery.
Instead of payment of price losses resulting from the cross transactions were deposited by the operators in loss with the Association.
On the due date also there was no delivery but adjustment of all contracts of sales against all contracts of purchase between the same parties and delivery was of the outstanding balance.
Even this delivery was often avoided by entering into fresh contract at the rate prevailing on the due date, as part of the. transactions in the next period.
The Sessions Judge convicted the respondents the Association 's President, Secretary and Directors.
holding that these were forward contracts prohibited under the Forward Contracts (Regulation) Act and the Association was not recognised.
The High Court set aside the convictions.
In appeal, this Court: HELD: Section 18(1) of the Act speaks of true non transferable 'specific delivery contracts but the proviso at the same time makes it illegal for an unrecognised association to so arrange matters that non transferable specific delivery contracts will be worked out without actual delivery.
Such conduct is prohibited by the proviso and directly punishable under section 20(1)(b).
An offence under that clause of section 20(1) and also under el.
(c3 of that section read with section 15 was made out.
There was no question of considering the matter first under the main part of the first sub section and then to put the proviso out of the way because the first sub section did not apply.
The Legislature contemplates that the first sub section of section 18 might be complied with in the documents evidencing the contract but in actuality the contract might be differently performed and has.
therefore, provided for the identical situation which arose in this case.
[182F H, D]
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Here is a two-paragraph summary of the court case:
The State of Gujarat appealed against the acquittal of 11 respondents (members of the Ghee and Tel Brokers Association Ltd.) by the High Court of Gujarat in a case involving charges under the Forward Contracts (Regulation) Act, 1952. The respondents were accused of entering into forward contracts prohibited under the Act and of being members of an unrecognised association that provided facilities for entering into such contracts without actual delivery. The prosecution case was that the Association arranged for settlement of transactions without delivery, and the contracts entered into were not non-transferable specific delivery contracts as they were arranged to be resolved after 11 days without actual delivery.
The High Court had acquitted the respondents on the basis that the Act did not prohibit the performance of non-transferable specific delivery contracts otherwise than by making or receiving actual delivery. However, the Supreme Court disagreed, holding that the provision in section 18(1) of the Act prohibited an unrecognised association from arranging for avoidance of delivery through such contracts. The Court found that the respondents had committed offences under sections 20(1)(b) and (c) and 21(b) and (c) of the Act and set aside the acquittal of the respondents under these sections. The appeal was allowed to the extent indicated, and the respondents were sentenced to a fine of Rs. 25 under section 21(b).
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Civil Appeal No. 1815 of 1969.
Appeal by Special Leave from the Judgment and Decree dated the 3rd October, 1964 of the High Court of Judicature at Patna in Appeal from Original Decree No. 152 of 1959.
P.K. Chatterjee and Rathin Das for the Appellant.
S.V. Gupte and B.P. Singh for Respondents 1 2.
1003 Santok Singh for Respondents 3 4.
The Judgment of the Court was delivered by CHANDRACHUD, J.
One Trilok Prasad Singh, who was the last male holder in his line, died on May 12, 1948 leaving behind his widow Kachnar Kuer and his step mother Sheo Kuer.
On February 12, 1956 Kachnar Kuer executed two registered deeds.
By one of these she adopted a son to her deceased husband and by the other, which is described as a Deed of Arpan nama, she created a religious endowment in the name of Sri Gopalji and appointed her mother in law Sheo Kuer as a shebait.
Respondents 1 and 2, claiming to be reversioners, filed suit No. 16 of 1956 in the court of the First Subordinate Judge, Gaya, for a declaration that the two deeds were void and illegal and were not binding on their reversionary interest.
Kachnar Kuer was defendant 1, the adopted son was defendant 2 and Sheo Kuer was defendant 3 to the suit.
During the suit, the defendants were evidently of one mind and they contended by their written statements that the impugned deeds were executed under the authority given by the deceased Trilok Prasad Singh and that respondents 1 and 2 had no right to bring the suit after June 17, 1956 when the came into force The trial court dismissed the suit holding that Trilok Prasad Singh had given authority to Kachnar Kuer to make an adoption and to create an endowment and therefore both the deeds were valid.
Against the dismissal of their suit, respondents 1 and 2 filed First Appeal No. 152 of 1959 in the High Court of Patna.
By its judgment dated October 3, 1964 the High Court allowed the appeal and decreed the suit holding that Trilok Prasad Singh had not given authority to Kachnar Kuer to take a son in adoption and under the Banaras School of Hindu Law by which the parties were governed, an adoption made by a widow without the authority of her husband was invalid.
The High Court also held that Trilok Singh had not authorised Kachnar Kuer to create a religious endowment over any part of his property and since by the Arpan nama a large piece of property was dedicated to the deity the dedication was void.
On the question whether, after the coming into force of the , respondents 1 and 2 as reversioners could maintain the suit, the High Court held that on the material date Kachnar Kuer was not in possession of the property and therefore her limited estate could not ripen into an absolute estate under the .
Kachnar Kuer made an application to the High Court for a certificate of fitness to appeal to this Court and the High Court by its order dated May 10, 1965 granted a certificate of fitness under Article 133(1) (b) of the Constitution.
But after the petition of appeal was lodged in this Court, Kachnar Kuer joined hands with respondents 1 and 2 and purported to enter into a compromise dividing the 1004 property left by Trilok Prasad Singh between themselves.
The appellant, Sheo Kuer, who was appointed as a shebait under the deed of Arpan nama has thereafter, obtained special leave to appeal to this Court from the judgment of the High Court.
We are, in this judgment, concerned with Sheo Kuer 's appeal, not with the appeal filed by Kachnar Kuer by certificate.
The High Court has rejected the evidence led to show that 'Trilok Prasad Singh had given authority to Kachnar Kuer to make an adoption to him.
The finding that the adoption is without the authority of the husband and therefore void is not challenged before us either by Kachnar Kuer or by the adopted son and that finding must there.
fore be confirmed.
Since the evidence on the other question as to whether Trilok Prasad Singh had given authority to Kachnar Kuer to create a religious endowment was closely linked with the question regarding the authority to adopt and since the pattern of evidence on both the questions is identical, the High Court held that Kachnar Kuer did not either have the authority of her husband to instal the deity or dedicate any 1 property to the deity.
This finding is not challenged before us by Sheo Kuer, the shebait appointed under the Arpan nama, and therefore we must proceed on the basis that the dedication was created by Kachnar Kuer without the authority of her husband.
The point involved for determination in the appeal thus relates to the powers of a Hindu female on whom property has devolved upon the death of her husband, to alienate the property for religious purposes.
This question has been the subject matter of several decisions Of the Indian High Courts as also of the Judicial Committee.
These decisions, beginning with one of the earliest pronouncements on the subject in Collector of Masulipatam vs Cavly Vencata, upto the decision of this Court in Kamala Devi vs Bachu Lal Gupta have been discussed with fullness and clarity of Mr. Justice Bijan Kumar Mukherjea in his Tagore Law Lectures on the Hindu Law of Religious and Charitable Trust.
It is unnecessary to analyse the various Decisions which the learned author has considered because the true position on the subject is crystalised in the decision in Kamala Devi 's case.
The law must now be taken as well settled that a Hindu widow possessing a widow 's estate cannot alienate the property which has devolved on her except for special purposes.
To support an alienation for purely worldly purposes she must show necessity but she has a larger power of disposition for religious and charitable purposes or for Those purposes which are supposed to conduce to the spiritual` welfare of her husband.
As pointed out by the Privy Council in Sardar Singh vs Kuni Behari, the Hindu system recognises two sets of religious acts: those which are considered as essential for the salvation of the soul of the deceased and others which, though not essential or obligatory, are still pious observances which conduce to the bliss of the .
deceased 's soul.
The powers of a Hindu female to alienate property are wider in respect of acts which conduce to the spiritual benefit of 1005 her deceased husband.
The widow is entitled to sell the property, even the whole of it, the income of the property is not sufficient to cover the expenses for such acts.
In regard to alienations for pious observances, which are not essential or obligatory, her powers are limited to alienating only a small portion of the property.
Applying the principles accepted in Kamala Devi 's case, the simple question for decision, in view of the fact that the Arpan nama was executed for a merely pious purpose and not for an essential or obligatory purpose is whether the alienation effected by Kachnar Kuer in favour of the deity is of a reasonable portion of her husband 's property.
Respondents 1 and 2, in paragraph 7 of their plaint, passingly mentioned that Kachnar Kuer had transferred "a considerable portion" of the properties left by her husband.
In paragraph 13 of the written statement which Kachnar Kuer filed on behalf of herself and her adopted son, it was stated that in view of the fact that Trilok Prasad Singh had left about 150 Bighas of land, the alienation of about 30 Bighas in favour of the deity could not be said to be unreasonable or excessive.
One hundred and fifty Bighas are treated in the area as roughly equal to 90 acres so that 30 Bighas come to about 18 acres.
Whether the alienation for a pious purpose is of a reasonable portion of the property must necessarily depend upon the total extent of the property which has devolved upon the widow.
The mere circumstance that a 100 acres are alienated by the widow for a pious purpose will not justify the setting aside of the alienation on the ground that 100 acres is large property.
The High Court, without adverting to the fact that the widow had alienated only a one fifth portion of the property which had devolved upon her, held that "a dedication of a large part of the property, more than 18 acres of land, cannot be defended on the part of a holder of a widow 's estate ".
This is all that the High Court has to say on the point and obviously, what it has said is not enough or relevant for invalidating the alienation.
Whether the alienation is of a reasonable portion of the property is not a matter to be decided on precedents because what is reasonable must depend upon the facts and circumstances of each case.
But an alienation of a one fifth portion cannot be said to be unreasonable or excessive.
The finding of the High Court must therefore be set aside and along with it its judgment allowing the reversioner 's appeal and decreeing their suit.
We therefore hold that the Arpan nama executed by Kachnar Kuer in favour of the deity is lawful and valid.
In the result we allow the appeal, set aside the judgment of the High Court and direct that the suit filed by respondents 1 and 2 shall stand dismissed with costs.
S.R. Appeal allowed.
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Kachnar Kuer, on whom the property of her late husband devolved, executed two registered deeds.
By one of these she adopted a son to her deceased husband and by the other, a deed of Arpan nama she created a religious endowment in the name of Shri Gopalji, appointing her mother in law Sheo Kuer, the appellant as the shebait.
The respondents claiming to be the reversioners filed a suit for declaration that the two deeds were void, illegal and not binding on their reversionary interest.
That suit was dismissed on the ground that the late husband of Kachnar Kuer had given authority to her to make an adoption and to create an endowment.
On appeal, the High Court reversed the findings of the trial court and decreed the Suit.
The High Court however, granted a certificate of fitness ' under article 133(1)(b) of the Constitution and since after obtaining the certificate, Kachner Kuer purported to compromise the suit with the reversioners, Sheo Kuer, the shebait came up in appeal by special leave.
Allowing the appeal, ^ HELD.
(i) It is well settled that a Hindu widow possessing a widow 's estate cannot alienate tho property which has devolved on her except for special purposes.
The powers of a Hindu female to alienate property are wider in respect of acts which conduce to the spiritual benefit of her deceased husband.
The widow is entitled to sell the property, even the whole of it, if the income of the property is not sufficient to cover the expenses for such acts.
In regard to alienations for pious observations, which are not essential or obligatory, her powers are limited to alienations of only a small portion of her property.
[1004 F, H, 1005 A] (ii) Whether the alienation for a pious purpose is of a reasonable portion of the property must necessarily depend upon the total extent of the property t which has devolved upon the widow.
[1005 D] (iii) The reasonability of the alienation of a portion of the property depends on the facts and circumstances of each case, but an alienation of 1/5th portion cannot be said to be unreasonable or excessive.
[1005 F] Collector of Masulipatam vs Cavaly Vencata 8 M.I.A. 529, Sadar Singh vs Kunj Behari 491 I.A. referred to Kamala Devi vs Bachu Lal Gupta, [1957] S.C.R. P. 452 applied.
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Here is a two-paragraph summary of the court case:
The case involves an appeal by Sheo Kuer, the stepmother of Trilok Prasad Singh, who was appointed as a shebait under a deed of Arpan nama executed by Kachnar Kuer, the widow of Trilok Prasad Singh. Kachnar Kuer had adopted a son and created a religious endowment in favor of Sri Gopalji, dedicating a significant portion of her husband's property to the deity. The respondents, who claimed to be reversioners, filed a suit challenging the validity of the two deeds.
The High Court allowed the appeal, holding that the adoption was invalid as it was made without the authority of Trilok Prasad Singh, and the Arpan nama was also invalid as it was created without his authority. However, the High Court's decision was challenged, and the Supreme Court held that a Hindu widow possessing a widow's estate can alienate property for religious purposes, but her powers are limited. In this case, the alienation of a one-fifth portion of her husband's property for a pious purpose was deemed reasonable, and the Supreme Court allowed the appeal, set aside the judgment of the High Court, and directed that the suit filed by the respondents shall stand dismissed with costs.
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Civil Appeal No. 2969 of 1984.
From the Judgment and Order dated 29.5.1984 of the Punjab 241 and Haryana High Court in Civil Revision No. 1934 of 1982.
Harbans Lal and Balmokand Goyal for the Appellant.
V.C. Mahajan and K.R. Nagaraja for the Respondents.
The Judgment of the Court was delivered by: VENKATACHALIAH, J.
This appeal, by special Leave, by the tenant arises out of the proceedings for eviction instituted against him under the East Punjab Rent Restriction Act 1949 and is preferred against the judgment, dated, 29.5.1984 in Civil Revision No. 1934 of 1982 of the Punjab and Haryana High Court, reversing the judgment, dated, 30.4.1982 made by the Appellate Authority, Kapurthala, in Rent Appeal No. 130 and restoring that of the Rent Controller, dated, 17.12.1978 in rent case No. 47 of 1977, granting possession to the Respondent landlords.
Appellant was a tenant of the premises concerned in the proceedings on a monthly rent of Rs.3 having been inducted into possession on 9.12.1965 by the then owner Smt.
Manohar Kaur.
The premises in the occupation of the appellant consist of a portion of the ground floor of the building.
On 15.12.1976, the said Manohar Kaur sold the entire property in favour of respondents.
The respondents are four brothers.
Prior to the purchase, they were occupying, as tenants, other portions of the same building both in the first floor and the second floor.
They were in occupation of three rooms in the first floor and one in the second.
On 27.9.1977, respondents filed a petition for eviction of the appellant on the ground of their own bonafide requirement of the premises.
They alleged that the portion in their occupation was insufficient for their needs and that they required additional accommodation.
They said that they were in all 10 brothers who, alongwith their families, were living together with their father.
Appellant contested the claim, urging that the first respondent one of the brothers, was in occupation of other rented premises in the same town at a place called Mohalla Malka na; that the respondents ' father was himself in occupation of a separate rented premises; that the accommodation already available to the respondents was 242 more than sufficient for their requirements and that, accordingly, their projected need was fictitious and malafide.
Appellant also said that the proceedings were brought in collusion with the previous owner.
On an appreciation of the evidence, the Rent Controller upheld the claim of the landlords and made an order granting possession.
The Appellate Authority (District Judge) however, allowed appellants ' appeal and set aside the order of eviction.
The High Court in revision under Section 15(5) of the Act reversed the appellate judgment and restored that of the court of first instance.
The aggrieved tenant has come up by special leave.
In support of the appeal, Shri Harbans Lal, learned senior advocate, urged that the order of the High Court suffers from, and stands vitiated, by, two serious errors: The first, according to the learned counsel, is that the High Court, in exercise of its revisional jurisdiction, was precluded from reopening findings of facts recorded by the Appellate Authority and substituting fresh findings of its own on a reappraisal of the evidence even if the fresh findings so recorded could be said to be amongst those possible on the evidence.
Learned Counsel placed reliance on Mattulal vs Radhe Lal, ; and Phiroze Bamanji Desai vs Chandrakant M. Patel & Ors., ; The second is that the findings as to the bonafides, or the lack of it, of the alleged need for the additional accommodation recorded by the Appellate Authority were sound, proper and supportable on the evidence on record and the High Court in exercise of its revisional jurisdiction could not have reappraised the evidence afresh and that the findings so substituted by the High Court are wholly erroneous.
V.C. Mahajan, learned senior advocate for the respondent landlords, however, sought to support the order of the High Court.
Upon a consideration of the matter, we are of the view that both the contentions urged in support of the appeal are in substantial.
It is, no doubt, true that the question whether the requirement of the landlords is bonafide or not is essentially one of fact, notwithstanding the circumstance that a finding of fact is a secondary and inferential fact drawn from other primary or perceptive ones.
All conclusions drawn from primary facts are not necessarily, questions of law.
They can be, and quite often are, pure questions of fact.
The question as to bonafide requirement is one such.
243 Statutes enacted to afford protection to tenants from eviction on the basis of contractual rights of the parties make the resumption of possession by the land lord subject to the satisfaction of certain statutory conditions.
One of them is the bonafide requirement of the land lord, variously described in the statutes as "bona fide requirement", "reasonable requirement", "bona fide and reasonable requirement" or, as in the case of the present statute, merely referred to as "landlord requires for his own use".
But the essential idea basic to all such cases is that the need of the landlord should be genuine and honest, conceived in good faith; and that, further, the court must also consider it reasonable to gratify that need.
Landlord 's desire for possession however honest it might otherwise be, has inevitably a subjective element in it and that, that desire, to become a "requirement" in law must have the objective element of a "need".
It must also be such that the court considers it reasonable and, therefore, eligible to be gratified.
In doing so, that court must take all relevant circumstances into consideration so that the protection afforded by law to the tenant is not rendered merely illusory or whittled down.
On the first contention that the revisional powers do not extend to interference with and upsetting of findings of fact, it needs to be observed that, subject to the well known limitations inherent in all revisional jurisdictions, the matter essentially turns on the language of the statute investing the jurisdiction.
The decisions relied upon by Shri Harbans Lal, deal, in the first case, with the limitations on the scope of interference with findings of fact in second appeals and in the second, with the limitation on the revisional powers where the words in the statute limit it to the examination whether or not the order under revision is "according to law.
" The scope of the revisional powers of the High Court, where the High Court is required to be satisfied that the decision is "according to law" is considered by Beaument C.J. in Bell & Co. Ltd. vs Waman Hemraj, AIR 1938 Bombay 223 a case referred to with approval by this Court in Hari Shankar vs Girdhari Lal Chowdhury, AIR 1963 SC 698.
But here, Section 15(5) of the Act enables the High Court to satisfy itself as to the "legality and propriety" of the order under revision, which is, quite obviously, a much wider jurisdiction.
That jurisdiction enables the court of revision, in appropriate cases, to examine the correctness of the findings of facts also, though the revisional court is not "a second court of first appeal" (See Dattonpant Gopalvarao Devakate vs Vithalrao Marutirao).
244 Referring to the nature and scope of the revisional jurisdiction and the limitations inherent in the concept of a `Revision ' this Court in M/s. Ranalakshmi Dyeing Works & Ors.
vs Rangaswamy Chettier, (at 167) observed: ". . 2.
"Appeal" and "revision" are expressions of common usage in Indian statutes and the distinction between "appellate jurisdiction" and "revisional jurisdiction" is well known though not well defined.
Ordinarily, appellate jurisdiction involves a rehearing, as it were, on law as well as fact and is invoked by an aggrieved person.
Such jurisdiction may, however, be limited in some way as, for instance has been done in the case of second appeals under the Code of Civil Procedure and under some Rent Acts in some States.
Ordinarily, again, revisional jurisdiction is analogous to a power of superintendence and may sometimes be exercised even without its being invoked by a party.
The extent of revisional jurisdiction is defined by the statute conferring such jurisdiction . . . .
Revisional jurisdiction as ordinarily understood with reference to our statutes is always included in appellate jurisdiction but not vice versa.
These are general observations.
The question of the extent of appellate or revisional jurisdiction has to be considered in each case with reference to the language employed by the statute . " The criticism of Sri Harbans Lal that it was impermissible for the High Court in its revisional jurisdiction to interfere with the findings of fact recorded by the appellate authority, however erroneous they be, is not, having regard to the language in which the revisional power is couched, tenable.
In an appropriate case, the High Court can reappraise the evidence if the findings of the appellate court are found to be infirm in law.
Now to the second contention.
The High Court was of the view that certain findings recorded by the Appellate Authority on the question of the bonafides of the requirement of the landlords were based on material which was not quite relevant.
Secondly, the High Court took into account certain subsequent events brought on record.
In regard to the first aspect, the High Court observed: ".
According to the learned Appellate Authority there was no evidence on record to prove that the landlords were 245 ten brothers since their father had not come in the witnessbox to depose in this regard.
This approach of the learned Appellate Authority is without wrong and illegal.
There was nothing to disbelieve Ishwar Chander when he says that they are ten brothers.
No question was put to him in the cross examination to challenge the said statement of his . " The High Court noticed that so far as the premises which were said to be in the occupation of the Ishwar Chander (Respondent No. 1) were concerned, the owner of those premises was seeking resumption of possession.
Further, in respect of the accommodation in the hands of the farther, there were already proceedings for eviction against him binding decision in the High Court.
In regard to the subsequent events which the High Court took notice of it said: ". .
Thus, what has to be seen is whether the accommodation in their occupation is sufficient for their requirements or not.
Of course, out of the four landlords, one is married and the others were unmarried when the ejectment application was filed in the year 1977.
However, about seven years have passed since then.
Mean while, Surinder Kumar landlord has also been married and he has got one son aged 2 years, whereas Subhash Chand has also been recently married in March, 1984, as per the affidavit of Hukam Chand, father of the landlords, dated 27th May, 1984.
Thus, there was nothing on the record to show that the present accommodation in occupation of the landlords was sufficient to meet their requirements . ." Courts can take a `cautious cognizance of the subsequent events in order to mould the relief.
The High Court did that. ' No fault could be found with that.
CMP No. 33347 is filed by the appellant, seeking to bring certain subsequent events on record.
The alleged subsequent event is that pursuant to an agreement for purchase of another residential building entered into by the first respondent and his wife, a sale deed had subsequently come to be executed in favour of first respondent 's wife.
The contention is that having regard to this subsequent acquisition, the present claim for additional accommodation does not survive.
246 We are afraid this circumstance, even if true, will not tilt the balance in favour of the appellant.
Even if the need of the other three brothers who are co owners is taken into account, the order of eviction is supportable on the basis of ther need.
CMP is, therefore, of no practical assistance to the appellant.
In the result, we find no merit in this appeal which is accordingly dismissed, but without an order as to costs.
R.S.S. Appeal dismissed.
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The appellant and the respondents were tenants of separate portions of the premises which was later sold by the landlord to the respondents, who were four brothers.
The respondents filed a petition for eviction of the appellant on the ground of bonafide requirement.
They contended that they were in all 10 brothers, who, alongwith their families, were living together with their father, and the accommodation in their occupation was insufficient for their needs.
The Rent Controller upheld the claim of the respondents.
The Appellate Authority (District Judge), however, allowed the appellant 's appeal.
The High Court, in revision under section 15(5), reversed the appellate judgment and restored that of the Court of first instance.
Before this Court the appellant contended: (1) That the High Court in exercise of its revisional jurisdiction was precluded from re opening the findings of fact recorded by the appellate authority; and (2) that the findings of the High Court on reappraisal of evidence were wholly erroneous.
Dismissing the appeal, it was, ^ HELD: (1) It was, no doubt, true that the question whether the requirement of the landlord was bonafide or not was essentially one of 240 fact, notwithstanding the circumstance that a finding of fact in that behalf was a secondary and inferential fact drawn from other primary or perceptive ones.
All conclusions drawn from primary facts were not necessarily, questions of law.
They could be, and quite often were, pure questions of fact.
The question as to bonafide requirement was one such.
[242G H] (2) The landlord 's desire for possession, however honest it might otherwise be, had inevitably a subjective element in it, and that "desire" to become a "requirement" in law must have the objective element of a "need".
[243C] (3) Statute had been enacted to afford protection to tenants from eviction.
In considering the reasonable requirement of the landlord the court must take all relevant circumstances into consideration so that the protection afforded by law to the tenant was not rendered merely illusory or whittled down.
[243A, C D] (4) Subject to the well known limitations of all revisional jurisdictions, the scope of revisional power essentially turned on the language of the statute investing the revisional jurisdiction.
[243E] (5) Section 15(5) of the Act enabled the High Court to satisfy itself as to the "legality and propriety" of the order under revision, which was quite obviously, a much wider jurisdiction in the exercise of which, an appropriate case, the High Court could reappraise the evidence if the finding of the appellate court was found to be infirm in law.
[243G; 244F] (6) Courts could take a 'cautious cognizance ' of the subsequent events in order to mould the relief.
[245F G] Mattulal vs Radhe Lal, ; ; Phiroze Bamanji Desai vs Chandrakant M. Patel, ; ; Bell & Co. Ltd. vs Waman Hemraj, AIR 1938 Bom. 223; Hari Shankar vs Girdhari Lal Chowdhury, (AIR ; Dattonpant Gopalvarao Devakata vs Vithalrao Marutirao, ; and M/s Ranalakshmi Dyeing & Others vs Rangaswamy, referred to.
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Here's a two-paragraph summary of the court case:
The court case Civil Appeal No. 2969 of 1984 involved a dispute between a tenant, Harbans Lal, and the landlords, four brothers, over the eviction of the tenant from a rented premises. The tenant had been inducted into possession of the premises in 1965 on a monthly rent of Rs. 3 and had been paying his rent regularly. However, the landlords claimed that they needed the premises for their own use and filed a petition for eviction, which was initially accepted by the Rent Controller but later reversed by the Appellate Authority.
The case ultimately reached the Punjab and Haryana High Court, which in its revisional jurisdiction, reappraised the evidence and found that the landlords' requirement for additional accommodation was genuine and not fictitious. The High Court also took into account subsequent events, including the marriage and family expansion of some of the landlords, and found that the present accommodation in their occupation was insufficient to meet their requirements. The Supreme Court, in dismissing the tenant's appeal, upheld the decision of the High Court, holding that the revisional jurisdiction of the High Court enabled it to examine the correctness of the findings of facts, even though the decision relied upon by the tenant had limited the scope of interference with findings of fact in second appeals.
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ivil Appeal No. 2559 of 1988 From the Judgment and Order dated 31.8.1987 of A.P. Adminis trative Tribunal, Hyderabad in R.P. No. 393 i of 1987.
K. Madhva Reddy and G. Prabhakar for the Appellants.
Y.P. Rao for the Respondent.
561 The Judgment of the Court was delivered by SAWANT, J.
The admitted facts in the present case are that the respondent applied for Grade I and Grade II teacher posts (Post Graduate Teacher and Trained Graduate Teacher posts respectively) in September, 1985 pursuant to a news paper 's advertisement calling for applications for the said posts.
Admittedly, the qualification prescribed in the advertisement for the said posts was a second class degree in M.A., and the respondent held a third class degree in M.A.
However, it appears that on December 27, 1985, an order was issued wrongly by the first appellant appointing her as a Post Graduate Teacher in Hindi.
The order stated that her appointment was subject to the production of original cer tificates and to the compliance with the other necessary formalities.
When pursuant to the order, the respondent approached the authorities with the certificates, it was noticed that the respondent was not qualified for the post.
She was, therefore, not allowed to join the service, and was sent back.
The respondent thereafter approached the Andhra Pradesh Administrative Tribunal at Hyderabad representing to the Tribunal that pursuant to the order of December 27, 1985 she had joined her duties on January 2, 1986 and that she should be allowed to continue in service with all the bene fits from that day.
The Tribunal passed the impugned order directing the appellants to allow her to join the duties and to pay to her salary from the date she reported for her duties in compliance with the order of December 27, 1985.
The Tribunal also awarded costs against the appellants.
We are of the view that the Tribunal is clearly in error.
The reasons given by the Tribunal in support of its order are, firstly, that the appellants had issued the order of appointment knowing fully well that she was not quali fied, and secondly, that she was selected for the appoint ment because there was no other candidate available with better marks.
It has been brought to our notice during the course of the arguments that the original selection was made by mistake on the presumption that the respondent had satisfied the qualification requirements as stated in the advertise ment, without scrutinising the certificates copies of which were sent with her application.
The Selection Committee presumed that all those who had applied in response to the advertisement must have had the requisite qualifications needed for the posts.
However, the order appointing the respondent had made 562 it clear that the respondent should come along with the original certificates.
When the respondent approached the appellants with the originals of the certificates which were scrutinised, it was found that in fact she was short of the qualifications.
It is in these circumstances, that she was not allowed to join the service.
It cannot, therefore, be said that the appellants had selected the respondent with the knowledge that she was under qualified.
According to us, there is a good deal of force in this contention.
It is common knowledge that sometimes either by mistake or other wise the notes put up before the Selection Committee contain erroneous data prepared by the office, and sometimes the Selection Committee proceeds on the basis that all those who appear before it, are otherwise qualified.
However, the second stage at which the documents are scrutinised is when the higher authorities go through them at the time the candidate concerned approaches them for resuming duties along with the original certificates.
It is at that stage that the mistake was discovered in the present case and the respondent was not permitted to resume her duties.
We see nothing wrong in this action.
The observation of the Tribunal that there were no other candidates available with better marks is, in the circumstances, a halftruth because assuming that she had better mark among those who had applied, it seems that no one with second class had applied or the applications only of the third class candidates were considered.
If so, they were the applications of those third class candidates who had applied and not of all those who would have applied had the advertisement given an indication that those with a third class degree could also apply.
It must further be realised by all concerned that when an advertisement mentions a particular qualification and an appointment is made in disregard of the same, it is not a matter only between the appointing authority and the appointee concerned.
The aggrieved are all those who had similar or even better qualifications than the appointee or appointees but who had applied for the post because they did not possess the qualifications mentioned in the advertise ment.
It amounts to a fraud on public to appoint persons with inferior qualifications in such circumstances unless it is clearly stated that the qualifications are relaxable.
No court should be a party to the perpetuation of the fraudu lent practice.
We are afraid that the Tribunal lost sight of this fact.
We are, however, informed that the respondent subsequent ly 563 acquired another degree in M.A. with second class and has qualified herself to be appointed to the said post.
Whatever the merits of the decision given by the Tribunal, we cannot forget that she was entitled to rely upon it till this time where she had succeeded.
She was not allowed to join service on January 2, 1986 and thereafter she had approached the,Tribunal in January 1987.
The decision of the Tribunal was of 31st August, 1987 and thereafter the present Civil Appeal was pending in this Court from December 1987 till this day.
Considering the fact that she is compelled to serve, that she has acquired the requisite qualification, that today she may be overaged for the post and the further fact that many who were underqualified were appointed to the post earlier, we feel that it will be unjust to deprive her of the post at this stage.
We, therefore, set aside the impugned order of the Tribunal but allow the appeal partial ly and direct that the respondent should be appointed in the post from the beginning of the ensuing academic year 1990 91.
Since Shri Madhav Reddy contended that there is no vacant post at present, we further direct that, if neces sary, a post be created to accommodate her.
She will, howev er, not be entitled to any benefits including back wages till her appointment.
The parties will bear their own costs.
N.V.K. Appeal allowed.
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Pursuant to a newspaper advertisement by the State Government calling for applications for Grade I and Grade II teacher posts (Post Graduate Teacher and Trained Graduate Teachers) the respondent in the appeal applied for the same.
The qualification prescribed in the advertisement was a second class degree in M.A.
However, the respondent who held a third class degree in M.A. was selected, and an order was issued appointing her as a Post Graduate Teacher in Hindi, subject to the production of original certificates, and compliance with the other necessary formalities.
When the respondent approached the authorities with her certificates, it was noticed that she was not qualified for the post, and was, therefore, not allowed to join service.
The respondent approached the State Administrative Tribunal for relief, which held that the appellants had issued the order of appointment knowing fully well that she was not qualified, and that she was selected for appointment because there was no other candidate available with better marks, and passed an Order directing the appellants to allow the respondent to join duty and pay her salary from the date she reported for duty.
The appellants appealed to this Court.
Allowing the appeal, HELD: 1.
When an advertisement mentions a particular quali fi 560 cation and an appointment is made in disregard of the same, it is not a matter only between the appointing authority and the appointee concerned.
The aggrieved are all those who had similar or even better qualifications than the appointee or appointees but who had not applied for the post because they did not possess the qualifications mentioned in the adver tisement.
[562F] 2.
It amount to a fraud on the public to appoint persons with inferior qualifications unless it is clearly stated in the advertisement that the qualifications are relaxable.
[562G] 3.
No Court should be a party to the perpetuation of the fraudulent practice.
The State Administrative Tribunal lost sight of this fact in the instant case.
[562G] 4.
It is common knowledge that sometimes either by mistake or otherwise the notes put up before the Selection Committee contain erroneous data prepared by the office and sometimes the Selection Committee proceeds on the basis that all those who appear before it, are otherwise qualified.
However, the second stage at which the documents are scruti nised is when the higher authorities go through them at the time the candidate concerned approaches them for resuming duties alongwith the original certificates.
It is at that stage that the mistake in the instant case was discovered, and the respondent was not permitted to resume her duties.
There is nothing wrong in such action.
[562B C] [The Court felt it would be unjust to deprive the re spondent of the post at this stage, as she had subsequently acquired another degree in M.A. with second class and there by qualified herself to be appointed, that she may be over aged for the post and many who were underqualified were appointed to the post earlier, and directed that she be appointed in the post from the beginning of the academic year 1990 1991.] [563B C]
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Here is a 2-paragraph summary of the court case:
The court case revolves around K. Madhava Reddy's (respondent's) attempt to be appointed as a Post Graduate Teacher in Hindi despite not meeting the qualification criteria, which was a second-class degree in M.A. The respondent initially applied for the post in 1985 and was appointed by mistake on the assumption that she had the requisite qualifications. However, when she produced the original certificates, it was discovered that she held a third-class degree in M.A.
The Andhra Pradesh Administrative Tribunal at Hyderabad directed the appellants to allow the respondent to join the duties and pay her salary from the date she reported for duty. However, the court found that the Tribunal was in error and set aside its order. Considering that the respondent had subsequently acquired a second-class degree in M.A. and had been entitle to rely on the Tribunal's decision, the court allowed the appeal partially and directed that she be appointed in the post from the beginning of the ensuing academic year 1990-91, provided a post be created for her if necessary.
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Appeals Nos. 131, 131 A and 131 B of 1952.
Appeals from the Judgment and Decree dated the 2nd day of February, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Vishwanath Sastri JJ.) in Cases Referred Nos. 76 and 78 of 1946 and 32 and 56 of 1947.
259 C.K. Daphtary, Solicitor General for India (G. N. Joshi, with him) for the appellant.
B. Somayya (Alladi Kuppuswami, with him) for the respondent.
October 14.
The Judgment of the Court was delivered by GHULAM HASAN J.
These three appeals arise from the judgment and order of the Madras High Court dated 2nd February, 1950, delivered on a reference by the Income tax Appellate Tribunal (hereinafter referred to as 'The Tribunal '), whereby the High Court answered the first referred question in, the negative, and as regards the second question, Satyanarayana Rao J. answered it in the affirmative, while Viswanatha Sastri J. answered it in the negative, as a result of which the judgment of Satyanarayana Rao J. ultimately prevailed.
They relate to the assessment for 1942 1943 and are filed by the Commissioner of Income tax, while Appeal No. 132 of 1952 which relates to 1943 1944 is filed by the assessee, and, is dealt with separately.
The two question which were referred in respect of the first group of appeals are as follows: (1) Whether there is any material for the Tribunal 's finding that the appellants (respondents in this case) were being assessed on cash basis in the prior years? (2) Whether on the facts and in the circumstances of the case the Appellate Tribunal 's finding that the sum of Rs. 2,26,850 could not be assessed for the assessment year 1942 43 is correct in law? The assessee is a registered firm (hereinafter referred to as 'the firm ') consisting of K.R.M.T.T. Thiagaraja Chetty and his two sons.
The firm is the managing agent of Shri Meenakshi Mills, Ltd., (hereinafter referred to as the Com pany) owning a, spinning mill at Madura.
The firm also con ducted insurance business and the business of ginning cotton in a ginning factory at another place.
Under the terms of L/B(D)2SCI 3(a) 260 the agreement the managing agents were entitled to a remu neration of Rs. 1,000 per mensem and a commission of I per cent.
on all purchases, I per cent.
on all sales and 10 per cent.
commission on the net profits of the mills before allowing for ,depreciation.
The firm had plenary powers of management of the affairs of the company subject to general supervision of the directors.
It was to have charge and custody on behalf of the company of all the property, books of accounts, papers and documents and effects belonging to the company.
It was required to keep at the expense of the company proper and complete books of account of all purchases and sales and of all payments made and moneys received on behalf of the company.
It had to defray all the expenses of maintaining a suitable office and a staff of assistants and clerks sufficient to transact the business of the firm as managing agents of the company.
Clause 16 is most important and lays down that the firm be at liberty to retain, reimburse, and pay themselves out of the funds of the company, all charges and expenses, legal or otherwise and all the costs and expenses of providing and maintaining offices for the company and the salaries of clerks, servants, agents or workmen and all moneys expended by them on behalf of the company and all sums due to the firm for commission or otherwise.
The company made considerable profit in the assessment year 1942 1943 and the firm became entitled to commission to the tune of Rs. 2,26,850 5 0.
The firm did not show this sum in the return on the ground that it was not actually re ceived in the year of account, viz., by the 31st March, 1942.
It relied upon a resolution of the Board of Directors of the company, dated the 30th March, 1942, by which they had decided to keep the aforesaid amount in suspense without paying it on the ground that an amount of two lakhs odd was due to the company from the firm.
It appears that the firm owed a debt to the company for a long time past which was outstanding.
The firm wrote on the 30th March, 1942, to the company requesting that the debt be written off.
The Firm also wrote that on account of the extraordinary increase in the 261 volume of business.
it found it difficult to bestow adequate attention on all the aspects of the mill business and proposed that the direct responsibility for sales and purchases may be transferred to some other agency, leaving the general supervision over the entire management in the firm 's hands.
The firm agreed to forego its commission on purchases and sales and agreed to take half of the commission on the net profits.
The directors by their resolution, passed on the same date, refused to write off the amount without consulting the general body of shareholders and pending the settlement of the dispute resolved, to keep the amount in suspense.
The Income tax Officer held that the firm followed the mercantile method of accounting and not the cash basis and that the income having accrued become assessable whether received or not.
The actual amount payable to the firm in, accordance with the terms and conditions of the agreement for the year 1942 1943 was not disputed.
The Appellate Assistant Commissioner confirmed the assessment and dismissed the appeal of the assessee.
The Commissioner upheld the view that the income was determined on the mercantile basis and that the income had accrued or arisen to the assessee within the meaning of section 4(1) (b)(i) of the Income tax Act.
and the mere fact that the amount was put in the suspense account did not alter the fact that the income had accrued to the firm Upon the matter being carried further in appeal by the assessee, the Tribunal held that the income had not accrued to the firm and that the amount should be excluded from taxation as not having been received during the accounting year.
The two questions aforementioned were then referred, at the instance of the Commissioner by the Tribunal to the High Court.
As already stated, the opinion on the first question was unanimous, both the learned Judges Satyanarayana Rao J. and Viswanatha Sastri J. holding against the assessee that there was no material for the Tribunal 's finding that the firm was being assessed on cash basis in previous years, the latter observing that finding in respect of 1942 1943 and 1943 1944 262 were mutually inconsistent, for in respect of the latter assessment year the Tribunal had held that the sum of Rs. 2,20,702 was assessable to income tax, though the amount merely stood as a credit to the firm in the books of the company and has not been drawn by the firm.
It is contended by Mr. Somayya on behalf of the firm that the finding of the Commissioner that the firm was not paid in cash in the prior years was set aside by the Tribunal and being a finding of fact ought not to have been interfered with by the High Court.
The firm had raised this question before the Tribunal at the time of the reference and had contended that no question of law arose from its order, as it was concluded by finding of fact.
The Tribunal, however repelled this contention observing that the question was one of ,law, as it related to the existence of any material for the finding.
The High Court upon such question being referred applied its mind to the precise question and came to the conclusion that there was No. material for the finding that the firm was being assessed on cash basis in the prior year.
The case of Commissinoer of Income tax, Bihar and Orissa vs Maharaiadhiraja of Darbhanga(1) does not support the contention of Mr. Somayya.
There the Income tax Officer had computed the profits of the business for a particular year by taking into account both actual receipts of interest in that year and sums treated by the assessee in that year as receipts of interest by their transference to the interest register from what might be regarded as a suspense account.
The Privy Council held that there was nothing illegel or contrary to principle in the computation arrived by the Income tax Officer.
The High Court under section 66(1) had to decide the question of law raised by the first question and decided it against the assessee.
Nor can it be said that in answering the question, the High Court acted illegally or contrary to principle.
Admittedly, the firm kept no separate books of accounts other than the (1) 60 I.A, 146.
263 books of accounts of the company in which there was a ledger containing entries relating to the remuneration and commis sion paid in cash to the firm.
The sum of Rs. 2,26,850 5 0 was debited as a revenue expenditure of the company as having been paid to the firm in the books of accounts of the company kept by the firm and was also allowed as a deduction in computing the profits and gains of the company for the purposes of income tax for 1941 1942.
The fact that certain moneys were drawn in cash by the firm from time to time does not necessarily lead to the inference that the firm kept its accounts on a cash basis.
Anyone familiar with commercial transactions knows that even in accounts kept on a mercantile basis there can be entries of cash credits and debits.
We see no flaw in the conclusion reached by the High Court on the first question.
The next question that falls to be determined is whether the sum of Rs. 2,26,850 5 0 was part of the profit and gains which had accrued to the firm during the accounting year 1941 1942.
The undisputed facts are that the amount in question was the commission earned by the firm as managing agents of the company.
In the books of the company main tained by the firm the aforesaid sum was debited as an item of revenue expenditure and the profits were computed after deducting that sum.
The amount was simultaneously credited to the managing agents ' commission account.
Under these circumstances, it is idle to contend that the aforesaid sum had not accrued.
There can be no doubt under the circum stances that the aforesaid sum was income which had accrued to the firm.
The only question is whether the aforesaid sum ceased to be, income by reason of the fact that on the 30th March the sum was carried to the suspense account by a reso lution of the directors as a result of the request made by the firm that the outstanding debt due from it may be written off.
It is true that the, sum was not drawn by the firm but that can hardly affect the question of its liability to tax, once it is established that the income had accrued or arisen to the firm 264 The mere fact that the company was withholding payment on account of a pending dispute cannot be held to mean that the amount did not accrue to the firm.
The resolution of the directors itself shows beyond doubt that the amount in question was treated as belonging to the firm though its payment was deferred on account of a pending dispute.
As Viswanatha Sastri J. tersely put it "The sum had irrevocably entered the debit side of the company 's account as a disbursement of managing agency commission to the firm and had been appropriated to the, firm 's dues and the same sum could not again be entered in a suspense account at a later date.
The sum, therefore, belonged to the firm and had to be included in the computation of the profits and gains that had accrued to it unless the firm had regularly kept its accounts on a cash basis, Which is not the case here" '.
A reference to the ledger folios in the books of the company shows that apart from the managing agents ' monthly remuneration of Rs. 1,00.0 which has duly entered in.
their account the amount in question also finds a place in the ledger as outstanding charges against the company and as credits in favour of the firm, The ' journal entries in the company 's books are the same.
Section 10 of the Act makes "profits and gains of busi ness, profession or vocation" ' carried on by an assessee liable to tax.
Section 12 makes "income from other sources in respect of income, profits and gains of every kind" liable to tax.
By section 13 income, profits and gains shall be computed for the purposes of both those sections in accordance with the method of accounting regularly employed by the assessee, but there is a proviso that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the c Computation shall be made upon such basis and in such manner as the Income tex Officer may determine.
265 The Income tax Officer in computing the income of the assessee would have followed the mercantile system or the cash basis whichever was employed by the assessee.
There is some evidence, though not conclusive, on the record that the assessee followed the mercantile system of accountancy.
This appears from the assessment orders field in the case, but apart from this, ' the Income tax Officer had full authority under the proviso to compute the profits upon such basis and in such manner as he thought fit.
The case of St. Lucia Usines and Estates Company, Ltd. vs Colonial Treasurer of St. Lucia(1) was relied upon strongly before us as it was in the High Court in support of the contention that the sum not having been paid to or realized by the firm no income can be said to have accrued to the firm.
In that case the assessee company sold all its property in St. Lucia in 1920 and ceased to reside or carry on business there.
In 1921 interest upon the unpaid part of the purchase price, was payable to it, but was not paid.
The company was liable to pay income tax for the year 1921 under the Income tax Ordinance, 1910, of St. Lucia, only if the interest above mentioned was 'income arising and, accruing ' to it in 1921.
It was held that though the interest was a debt accruing in 1921, it was not 'income arising or accruing ' in 1921, and that the company was not liable.
The decision was based upon the meaning of the word 'income ' as used in the Ordinance which was said to connote the idea of something "coming in".
Lord Wrenbury who delivered the judgment of the Privy Council construed the words "income arising or accruing" as money arising or accruing by way of income and not "debts arising or accruing".
The learned Law Lord observed "A debt has accrued to him (taxpayer) but income has not".
It is clear that the case related to the meaning of the word "Income" as used in the Ordinance and can be no authority on the question of the assessment of profits and gains under the Indian Income tax Act.
The next case relied upon is Dewar vs Commissioners of Inland Revenue(2).
In that case one of the executors be (1) (2) 266 came entitled to a legacy which carried interest for such time as it remained unpaid.
The testator 's estate was sufficient at all material times to enable interest to be paid on the legacy but the legatee acting on the advice of his accountant did not demand the legacy or interest thereon.
It was held that as the legatee had not received interest, there was no income in respect of which he could be charged to sur tax.
The decision turned upon the language of Schedule D, clause 1, sub clause (b) of the English Income Tax Act of 1918, as distinguished from clause I (a).
Clause I (a) deals with annual profits or gains arising or accruing from any kind of property whatever. but clause (b) imposes a tax in respect of "all interest of money, annuities and other annual profits." Lord Hanworth.
M. R. drew the distinction between the two clauses and observed that the case was one of interest of money and fell under clause (b) and not under clause (a).
Under that clause the tax was limited.to any interest of money whether the same is received and payable half yearly or any shorter or more distant period.
The learned Master of the Rolls observed: "If the interest on the legacy in this case has not arisen to the respondent, if he had not become the dominus of this sum, if it does not lie to his order in the hands of his agent, can it be said that it has arisen to him? I think the answer definitely upon the facts must be: No. it has not." Lord Maugham L. J. put the question thus: "I think in the present case two circumstances may be accurately stated in regard to the sum of pound 40,000 which it is said can be brought into charge.
The first is that the sum of pound 40,000 was not during the year of assessment a debt due by the executors to Mr. Dewar, and secondly, that the sum in question may never be paid or received at all." The case of Commissioner of Taxes vs The Melbourne Trust, Limited(1) turned on the construction of the charging (1) 267 section in the Income Tax Act 1903 of Victoria, whereby a company was liable to pay tax upon the profits earned, in or derived in or from Victoria.
In this case the surplus realized by the assessees over the purchase price for the assets sold after making all just deductions was taxed as profit but it was held that they were entitled to hold in suspense part of the surplus realised to meet possible losses on other assets and that under the circumstances the profit was earned for the purposes of the Act only when distributed to the share holders.
Having considered all these cases, we are of opinion that neither of them has any bearing upon the facts and circumstances of the present case.
Lastly it was urged that the commission could not be said to have accrued, as the profit of the business could be computed only after the 31st March, and therefore the com mission could not be subjected to tax when it is no more than a mere right to receive.
This argument involves the fallacy that profits do not accrue unless and until they are actually computed.
The computation of the profits whenever it may take place cannot possibly be allowed to suspend their accrual.
In the case of income where there is a condition that the commission will not be payable until the expiry of a definite period or the making up of the account, it might be said with some justification, though we do not decide it, that the income has not accrued, but there is no such condition in the present case.
Clauses 7 & 8 of the agreement which relate to the payment of the commission and the calculation of the profits mean no more than this that the commission will be quantified only after certain deductions had been made and not that the commission will not accrue until the profits have been ascertained.
The quantification of the commission is not a condition precedent to its accrual.
If the profits of the company are said to have accrued on the 31st of March, upon a parity of reasoning, it must be conceded that the commission also accrued on the same date.
The date has as much to do with the accrual of the commission as it has to do with the accrual of the profits.
It was faintly suggested that the managing.
agency was not a business but this is immaterial for income tax purposes because section 13 will apply to cases both under sections 10 268 and 12, so we refrain from deciding the point.
We may, how ever, point out in passing that in two cases Tata Hydro Electric Agencies, Ltd. vs Commissioner of Income tax Bombay(1) and Commissioner of Income tax.
Bombay Presidency vs Tata Sons Ltd.(2) it was assumed that the managing agency is business but the point was directly decided in Inderchand Hari Ram vs Commissioner of Income tax, U.P. and C.P.(3) that it is so.
For the foregoing reasons, we accept the view taken by Viswanatha Sastri J. and allow the appeals.
The respondent shall pay the costs of the Commissioner both in this court and before the High Court.
Appeals allowed.
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Where, under the terms of a managing agency agreement the assessee firm who were the managing agents of a company were entitled to a certain percentage of the profits as their commission and in the books of the company maintained by the firm a sum of Rs. 2,26,850 odd was shown as commission due to the firm on the profits for the year 1941 42 and the said sum was also debited as an item of business expenditure and credited to the managing agents ' commission account, but the aforesaid sum was subsequently carried to a suspense account by a resolution of the company as a result of a request made by the firm that a debt due by the firm to the company may be written off : Held, that, as the assessee kept the accounts on the mercantile system the commission accrued to the assessee when the commission was credited to it in the accounts, and the subsequent carrying over of the amount of the commission to a suspense account pending the settlement of the dispute between the company and the assessee could not affect assessee 's liability to be taxed on this income.
Held further, that the fact that the profits of the business could be computed only after the 31st of March, 1942, was Immaterial as quantification of the commission is not a condition precedent to its accrual.
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Here is a two-paragraph summary of the court case:
This case involves a dispute between the Commissioner of Income Tax and the firm of K.R.M.T.T. Thiagaraja Chetty, which was the managing agent of Meenakshi Mills Ltd. The firm had earned a commission of Rs. 2,26,850 in the assessment year 1942-43, but it was not paid to the firm due to a dispute between the firm and the company over an outstanding debt. The firm argued that the commission had not accrued to it since it was not received, but the High Court held that the income had accrued to the firm and was taxable.
The appeal was made to the Supreme Court, which upheld the decision of the High Court. The Supreme Court held that the firm had employed the mercantile system of accounting and that the income had accrued to the firm at the end of the accounting year, even though it was not received. The Court also rejected the arguments of the firm that the commission could not be said to have accrued since the profit of the business could not be computed until the 31st of March. The Court accepted the view that the commission had accrued to the firm on the 31st of March and was therefore taxable.
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Appeal No. 281 of 1955.
Appeal from the judgment and order dated March 18, 1954, of the Bombay High Court in Income tax Reference No. 35 of 1953.
K. N. Rajagopal Sastri and D. Gupta, for the appellant.
R. J. Kolah and Ram Ditta Mal, for the respondent.
May 8.
The Judgment of the Court was delivered by HIDAYATULLAH J.
This appeal on a certificate of fitness granted by the High Court of Judicature at Bombay has been filed by the Commissioner of Income tax, Bombay against Ranchhoddas Karsondas of Bombay (hereinafter referred to, as the assessee) under section 66A of the Indian Income tax Act.
The facts leading tip to this appeal are as follows For the assessment year 1945 46, a public notice under section 22(1) of the Income tax Act (hereinafter called the Act) was issued, requiring every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income tax to furnish, within such period not being less than sixty days as might be specified in the notice, a return of his income in the prescribed form and verified in the prescribed manner.
This notice was published on or about May 1, 1945.
The assessee did not make a return of his income.
The Income tax Officer, while examining the books of account of a partnership called the " Assar Syndicate " of which the assessee was a partner, found that in the account year corresponding to the assessment year 1945 46, there were six cash credits aggregating to Rs. 59,026 in the name of the assessee 's wife.
Before, however, the Income tax 116 Officer could take any action, the assessee submitted a " voluntary " return on January 5, 1950 of his income for the accounting year 1944 45 (assessment year 1945 46) showing a total net income of Rs. 1,935.
He added a footnote to the return to the following effect: " My wife has sold her old ornaments and deposited the sum of Rs. 59,026 in the firm of Assar Syndicate in which I am a partner." The Income tax Officer did not act on this return, but on February 27, 1950 he issued a notice purporting to be under section 34 of the Act calling upon the assessee to submit his return.
This notice was served on the assessee on March 3,1950, and in answer thereto, the assessee submitted a similar return on March 14, 1950 showing the same income and adding the same footnote.
The Income tax Officer then issued and served upon the assessee notices under sections 22(4) and 23(2) of the Act asking him to produce his books of account and to tender any evidence he cared to lead.
It appears from the record that these notices were complied with, but on February 26, 1951 the Income tax Officer included the sum of Rs. 59,026 in the total income of the assessee and assessed him on it for the assessment year 1945 46.
The assessee appealed, in turn, to the Appellate Assistant Commissioner and the Income tax Appellate Tribunal.
His contentions were three, viz., that the amount of Rs. 59,026 could not and should not have been included in his income, that the amended section 34 of the Act had no retrospective effect, and that the assessment completed on February 26, 1951 was invalid, inasmuch as it was completed four years after.
the end of the relevant assessment year.
Both the Appellate Assistant Commissioner as well as the Tribunal rejected his contentions, but the Tribunal on being moved by him, raised and referred two questions of law under section 66(1) of the Act to the High Court of Judicature, Bombay, for its decision.
These questions were: " (1) Whether the notice issued under Section 34 of the Act by the Income tax Officer on 27 2 1950, 117 after the assessee had filed a voluntary return was valid in law? (2) Whether the assessment made on 26 2 1951 is valid in law? This reference was heard by the High Court on March 18, 1954, and by a judgment delivered on the same day, Chagla, C.J., and Tendolkar, J., answered ' both the questions in the negative.
Before the High Court, it was again contended by the assessee that since he had submitted a return under section 22(3) of the Act on January 5, 1950, the assessment, if any, had to be completed before March 31, 1950, as required by section 34(3) of the Act.
He also contended that he was entitled under section 22(3) to make a " voluntary " return on the date he did, and with a voluntary return before the Income tax Officer, there was no scope for the issuance of a notice under section 34.
The High Court upheld the contentions of the assessee, and gave its opinion that the Department ought to have issued a notice under section 22(2) within the assessment year, and if no return was made within the time fixed by the notice, the Department should have proceeded under section 23(4) to a 'best judgment ' assessment.
The other alternative for the Department was to issue a notice under section 34 of the Act, if the period for sending a notice under section 22(2) had expired.
But it could not issue a notice under section 34 after a return was already made before it, and the benefit of the extended period of limitation for assessment available under the first proviso to sub section
(3) of section 34 of one year from the service of the notice under sub section
(1) of that section was not available in this case.
The High Court granted a certificate of fitness, and hence this appeal.
The arguments which were urged before the High Court were all raised in this Court by the parties.
The case of the Department was supplemented by an argument that, inasmuch as the assessee had suppressed his income or given incorrect particulars thereof, the period during which action under section 34 could be taken was the extended one of 8 years.
In the arguments before us, our attention was drawn to a cleavage of opinion between the Bombay High 118 Court on the one hand and the Calcutta High Court on the other.
While the Bombay High Court seems to be of the view that a " voluntary " return showing a nontaxable income is still a good return for all purposes under the Act, the Calcutta High Court is of the view that what section 22(1) of the Act requires is a return of taxable income and not a return of income, which shows a loss or is below the taxable limit.
It appears that at one time the Calcutta High Court also entertained the view that such a return was no return at all, but it was explained later that this meant that the return was ineffective for the purposes of section 22(1) of the Act, though it might be a " return " being in the prescribed form.
The Bombay High Court also entertains the view that the assessment proceedings commence with the issue of a public notice, and that section 34 of the Act cannot apply, where in answer to the public notice a return is made whether of taxable income or not.
The view of the Calcutta High Court is that assessment proceedings commence either with a notice under section 22(2) of the Act or with the filing of a return showing taxable income.
We are not here concerned with the quantum but only with the legality of the assessment.
The side issue whether, in point of fact, the cash credits in the name of the wife, represented the income (if the husband does not survive for decision.
Thus, the only question is whether the notice issued under section 34 of the Act on February 27, 1950 (after the assessee filed his " voluntary " return on January 5, 1950) and the assessment thereon, were valid in law.
Section 34(3) of the Act provides that no assessment except the assessment within el.
(a) of sub section
(1) thereof or under section 23 to which el.
(c) of sub section
(1) of section 28 applies, shall be made after the expiry of four years from the end of the year in which income, profits or gains were first assessable.
A proviso, however, allows one year from the date of the service of the notice for the completion of the assessment.
It reads, omitting matters not relevant here: " . where a notice under sub section (1) has been issued within the time therein limited, the assessment or reassessment to be made in pursuance of such 119 notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of .
four years .
" It is, therefore, quite clear that the extra period is available only if a notice under sub section
(1) of section 34 has been issued within the time therein limited.
This takes us to section 34(1).
Section 34(1), omitting parts not relevant, reads: " (1)If . . . . . . . (a) the Income tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22, for any year.
I or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year . he may in cases falling under clause (a) at any time within eight years and in cases falliny under clause (b) at any time within four years of the end of that year, serve on the assessee.
a notice .
and may proceed to assess such income.
" It would appear from this that if the return filed on January 5, 1950, was a return of income, there was no failure or omission on the part of the assessee, so as to bring the matter within section 34(1)(a) of the Act, and subs.
(3) of section 34 would then apply to the case limiting the period to four years.
In that event, the assessment should have been completed on or before March 31, 1950.
But if the return made by the assessee was no return at all, then the conditions under the first subsection of section 34 obtained, and the assessment could be completed within one year of the date of service of the notice (March 3, 1950), i.e. on or before March 2, 1951.
In that event, the assessment would be valid.
The validity of the return in this context is tied to the validity of the notice and also vice versa.
120 Section 22 of the Act (omitting the parts not relevant) may now be quoted: " (1) The Income tax Officer shall, on or before the 1st day of May, in each year, give notice, by publication in the press. , requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income tax to furnish, within such period not being less than sixty days. a return. setting forth. his total income and total world income during that year: (2) In the case of any person whose total income is, in the Income tax Officer 's opinion, of such an amount as to render such person liable to income tax, the Income tax Officer may serve a notice upon him requiring him to furnish, within such period, not being less than thirty days. a return . setting forth . his total income and total world income during the previous year: (3) If any person has not furnished a return within the time allowed by or under sub section (1) or sub section (2), or having furnished a return under either of those sub sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be at any time before the assessment is made.
" It will be seen from this, that, as the Bombay High Court correctly pointed out, there is a time limit provided in sub sections
(1) and (2) and the failure or omission occurs when that period passes, but sub s (3) allows a locus poenitentiae before the assessment is actually made.
There is no dispute that a return could be filed in this case, late though it was.
The controversy centres round the fact that the return, when it was filed, disclosed an income which was below the maximum not chargeable to tax, and the question is whether in such an event the Income tax Officer was precluded from issuing a notice under section 34 of the Act.
There has been in the past a well marked difference of opinion between the Bombay and the Calcutta High 121 Courts, the leading cases in Bombay being Harakchand Makanji & Co. vs Commissioner of Income tax (1), All India Groundnut Syndicate Ltd. vs Commissioner of Income tax(2) and the decision under appeal here, while the Calcutta view is to be found in Commissioner of Agricultural Income tax vs Sultan Ali Gharami (3), R. K. Das & Co. vs Commissioner of Income tax (4) and Commissioner of Income tax vs Govindlal Dutta (5).
To these may be added P. section Rama Iyer vs Commissioner of Income tax (6), in which the Madras High Court has accepted the Bombay view.
No useful purpose will be served in discussing these cases in detail.
In some of them, the point need not have been taken up for decision, though it was.
We shall refer very briefly to the two rival views and the grounds on which they are rested, and in doing so, we begin with the Calcutta decisions.
In Sultan Ali Gharami 's case (3), a notice under section 24(1) of the Bengal Agricultural Income tax Act (corresponding to section 22(1) of the Act) was issued.
No return was filed.
Three years later, a notice under section 24(2) of that Act (corresponding to section 22(2) of the Act) was served, and a return showing an income below the taxable minimum was filed.
The contention was that without a notice under section 24(2) within the assessment year or a notice under section 38(1) (corresponding to section 34 (1) of the Act) the best judgment ' assessment was bad.
The contention further was that the return could be taken to be under section 24(1) or section 24(3).
Chakravarti, J. (as he then was) and Das Gupta, J., held that a person who had no assessable income was not placed under a duty to file a return, that the return whether filed under section 24(1) or section 24(3) which had failed to show an assessable income could not possibly be 'treated ' as a return under section 24(1) or even section 24(3)when filed in answer to a notice under section 24(2).
They further observed at p. 442: " A return under section on 24(1) is a return filed by a person who decides for himself that he had an assessable income in the previous year and by filing (1) (1948) 16 , (4) (1056) (2) (1954) 25 1.
T. R. R (5) (1957) 33 ; (3) 16 122 the return he offers that income for assessment.
A person who had no assessable income in the previous year is placed under no duty by a notice under section 24(1) to furnish a return and a person who thinks, rightly or wrongly, that he had no assessable income will furnish none.
A return under section 24(1), whether filed within the time allowed under the section or filed subsequently under the provisions of section 24(3), will therefore show an assessable income.
A return which showed no assessable income, could not possibly be 'treated ' as a return filed under section 24(1) or a return called for under that section but filed under section 24(3), when in fact it was filed in response to a notice under section 24(2).
" The opinion here expressed was criticised in the judgment under appeal, and in the next case, R. K. Das & Co vs Commissioner of Income tax(1), the Calcutta High Court (Chakravarti, C.J., and Sarkar, J.) explained what was really meant.
It is not necessary to refer to the facts of that case.
This is what Chakravarti, C.J., observed at p. 449: " It should be remembered ', I observed 'that the return in the present case is being sought to be treated as a return under section 24(1), belatedly filed. ' And then I went on to say that a return under section 24(1) would only be filed by a person who thought that he had a taxable income and therefore a return showing an income below the taxable limit could not be held, on a construction thereof, to be a return under section 24(1) and consequently the return in the case we were then considering could not be treated as such a return filed under section 24(3).
To say that, was not to say that even a return filed in, compliance with a notice under section 22(2), if filed belatedly under section 22(3) could not be a return showing an income below the taxable limit.
" This left the matter somewhat ambiguous as to what was really meant, and in Commissioner of Income tax vs Govindlal Dutta(2),Chakravarti, C. J., and Guha, J., (1) (2) 123 again explained the true import of the law laid down.
They referred to section 22(1) of the Act as it stood prior to the amendment of 1953, and observed that under that section a person was required to file a return only if his total income during the preceding year exceeded the maximum amount which was not chargeable to tax.
The return contemplated was thus only a return of income and not a return of loss and not even a return of income, but a return of taxable income.
Not only had a person no duty but he had even no right to file a return voluntarily, if he had suffered a loss, to 'report ' that loss.
The learned Judges concluded that it was a complete mistake to think that section 22(3) provided for the filing of a voluntary return showing loss, at any time, before assessment.
That section, they opined, contemplated the filing of a return of taxable income, and a return not showing such income was not a return at all in law.
The Calcutta view, as shown above, really proceeds upon the wording of section 22(1).
It lays down that the public notice requires only persons having an income above the taxable limit to make a return.
A person who has no such income need not make a return, and if he does make a return, it is not a return which need be considered, being not a return in law.
It is a little difficult to understand how the existence of a return can be ignored, once it has been filed.
A return showing income below the taxable limit can be made even in answer to a notice under section 22(2).
The notice under section 22(1) requires in a general way what a notice under section 22(2) requires of an individual.
If a return of income below the taxable limit is a good return in answer to a notice under section 22(2), there is no reason to think that a return of a similar kind in answer to a public notice is no return at all.
The conclusion does not follow from the words of section 22(1).
No doubt, under that sub section only those persons are required to make a return, whose income is above taxable limits, but a person may legitimately consider himself entitled to certain deductions and allowances, and yet file a return to be on the safe side.
He may show his income and the 124 deductions and allowances he claims.
But it may be that on a correct processing his income may be found to be above the exempted limit.
No doubt, it is futile for a person not liable to tax to rush in with a return, but the return in law is not a mere scrap of paper.
It is a return, such as the assessee considers, represents his true income.
We are unable (and we say this with due respect) to accept the view adumbrated in the Calcutta cases.
The contrary view is expressed by the Bombay High Court in the earlier case of Harakchand Makanji & Co. vs Commissioner of Income tax (1) and in the judgment under appeal.
That view was accepted by the Madras High Court in P. section Rama Iyer vs Commissioner of Income tax (2) and also, in our opinion, is the sounder view of the two.
In the earlier of the two Bombay cases, Chagla, C. J., and Tendolkar, J., held (as stated in the head note): " Notice under section 34 is only necessary if at the end of the assessment year no return has been made by the assessee, and the authorities wished to proceed under section 22(2), but where the assessee himself chooses voluntarily to make a return, no question can arise under section 34 of assessment escaping, and therefore there is no necessity to serve any notice under section 34.
" This represents the law applicable to the facts as they are to be found in this case.
In the assessment year no return of income was filed, nor was any notice served under section 22(2).
There was, however, the general notice under section 22(1).
A return in answer to that notice could be filed under section 22(3) before assessment, and for this there is no limit of time.
It was filed on January 5, 1950.
There was nothing to prevent the Income tax Officer from taking up the return and proceeding to assess the income of the assessee.
It was open to him, if there was sufficient justification for it, to hold that the amount noted in the footnote was really the assessee 's income, in which case an assessable income would have been found and the tax could be charged thereon.
If the Income tax Officer had acted on that return and assessed the assessee (1) (2) 125 before March 31, 1950, the assessment would have been valid.
He chose to ignore the return, and served on the assessee a notice under section 34(1).
This notice was improper, because with the return already filed there was neither an omission nor a failure on the part of the assessee, nor was there any question of assessment 'escaping '.
The notice under section 34(1) was, therefore, invalid and the consequent assessment equally so.
We accordingly agree with the judgment under appeal.
Before leaving this case, we may refer to two other arguments, which were raised.
Mr. Rajagopala Sastri pointed out that an assessee might file the 'voluntary ' return on the last day showing income less than the taxable limit, and the Department would, in that case, be driven to complete the assessment proceedings within a few hours or lose the right to send a notice under section 34(1).
An argument ab inconvenienti is not a decisive argument.
The Income tax Officer could have avoided the result by issuing a notice under section 23(2) and not remaining inactive until the period was about to expire.
Further, all laws of limitation lead to some inconvenience and hard cases.
The remedy is for the legislature to amend the law suitably.
The Courts can administer the laws as they find them, and they are seldom required to be astute to defeat the law of limitation.
This argument is thus no answer to the clear meaning and implications of the Act.
The other argument was that the return was not a true one, and fell within the mischief of cl.
(c) of sub s.(1) of section 28, and that, therefore, the period during which action could be taken was the extended one of 8 years.
The short answer to that is that this was not a part of the Department 's case at any prior stage, and cannot be allowed to be raised now.
In our opinion, the answers given by the High Court of Bombay were correct in all the circumstances of this case.
The appeal thus fails, and is dismissed with costs.
Appeal dismissed.
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A public notice under section 22(1) of the Income tax Act, 1922 was published on May 1, 1045, requiring every person whose total income exceeded the maximum amount which was not chargeable to income tax to file returns for the assessment year 1945 46.
On January 5, 1950, the assessee submitted a voluntary return showing an income of Rs. 1,935 for the assessment year 1945 46 and added a footnote to the return that his wife had sold her old ornaments and deposited a sum of Rs. 59,026 with the Assar Syndicate in which he was a partner.
The Income tax Officer, who had discovered these credits while examining the accounts of the Assar Syndicate, ignored the voluntary return, and, on February 27, 1950, issued a notice under section 34(1) of the Act calling upon the assessee to submit his return.
On March 14, 1950, the assessee submitted an identical return.
The Income tax Officer made the assessment on February 26, 1951, and included the sum of Rs. 59,026 in the total income of the assessee.
The assessee contended that the assessment was invalid as it was completed more than four years after the end of the assessment year in violation Of section 34(1)(b).
The appellant contended that the voluntary return was no return as it did not disclose any taxable income and the assessment was valid under the proviso to section 34(3) Of the Act, having been made within one year of the notice issued under section 34(1).
Held, that the assessment was invalid.
The voluntary return filed by the assessee, even though it did riot disclose any taxable income, was a good return and could not be ignored.
As such no question arose under section 34(1) of income escaping assessment and the Income tax Officer was not justified in issuing the notice under section 34(1).
The proviso to section 34(3) was applicable only when there was a Proper notice issued under section 34(1) and the appellant could not take advantage of the time allowed by this proviso.
The assessment was clearly made beyond four years of the end of the assessment year 1945 46 and was time barred.
Harakchand Makanji & Co. vs Commissioner of Income tax, All India Groundnut Syndicate Ltd. vs 115 Commissioner of Income tax, (1953) 25 I.T.R. go and P. section Rama Iyer vs Commissioner of Income tax, (1957) 33 I.T.R. 458, approved.
Commissioner of Agricultural Income tax vs Sultan Ali Gharami ; B. K. Das & Co. vs Commissioner of Income tax, and Commissioner of Income tax vs Govindlal Dutta (1957) 33 ; , disapproved.
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The case of Commissioner of Income Tax vs Ranchhoddas Karsondas (Appeal No. 281 of 1955) involves a dispute over the validity of a notice issued under section 34 of the Indian Income Tax Act and the subsequent assessment made on February 26, 1951. The assessee, Ranchhoddas Karsondas, had not filed a return of his income for the assessment year 1945-46, despite a public notice being issued under section 22(1) of the Act. However, on January 5, 1950, the assessee submitted a "voluntary" return showing a total net income of Rs. 1,935, which was below the taxable limit. The Income Tax Officer ignored this return and issued a notice under section 34(1) on February 27, 1950, which led to the assessment being made on February 26, 1951.
The High Court of Bombay held that the notice issued under section 34(1) was invalid, as the assessee had already filed a return, albeit a voluntary one, and the Income Tax Officer should have proceeded with the assessment based on that return. The High Court also held that the assessment made on February 26, 1951, was invalid, as it was made after the expiry of the period of four years from the end of the assessment year. The Supreme Court upheld the decision of the High Court, rejecting the arguments of the Department that the return filed by the assessee was not a valid return, as it did not show an assessable income. The Supreme Court held that a return filed under section 22(3) of the Act is a valid return, and the Income Tax Officer should have proceeded with the assessment based on that return, rather than issuing a notice under section 34(1). The appeal was dismissed with costs.
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Appeal No. 299 of 1964.
Appeal from the judgment and order dated September 26, 1961 of the Allahabad High Court in Second Appeal No. 620 of 1957.
J. P. Goyal, for the appellants.
B. C. Misra, for the respondent No. 1.
April 15, 1964.
The judgment of the Court was delivered by HIDAYATULLAH, J.
In this appeal by certificate from the High Court of Judicature at Allahabad the appellants are the four original defendants in a suit for pre emption filed by the first respondent.
Kaiseri Begam (respondent No. 2) sold a plot and two houses in mohalla Gher Abdul Rahman Khan, 757 Qasba Milak, Tehsil Milak, District Rampur, to the appel lants on December 4, 1953.
The first respondent Labh Singh owned the adjacent house and he claimed pre emption on the ground of vicinage after making the usual demands.
The suit was filed by Labh Singh in the court of Munsif, Rampur who by his judgment dated September 25, 1955 held that there was a general custom of pre emption in the town of Milak.
He also held that Labh Singh was entitled to preempt and had performed the Talabs.
He, however, dismissed the suit because the sale did not include a strip of land 3 feet 6 inches wide between Labh Singh 's house and the property sold.
He made no order about costs.
There was an appeal by Labh Singh and the present appellants objected.
The District Judge, Rampur allowed the appeal and dismissed the cross objections.
The appellants then filed a second appeal in the High Court of Allahabad.
Mr. Justice V. D. Bhargava, who heard the appeal, referred the following question to a Division Bench: "Whether after coming into operation of the right of pre emption is contrary to the provisions of article 19(1)(f) read with article 13 of the Constitution, or is it saved by clause (5) of article 19? " The Divisional Bench held that the law relation to pre emp tion on the ground of vicinage was saved by clause (5) of article 19 and was not void under article 13 of the Constitution.
In view of this answer, the second appeal was dismissed.
The High Court, however, certified the case and the present appeal has been filed.
The question which was posed by Mr. Justice V. D. Bhargava was considered by this Court in connection with s.10 of the Rewa State Pre emption Act, 1946 in Bhau Ram vs B. Baijnath Singh (1).
This Court held by majority that the law of pre emption on the ground of vicinage imposed unreasonable restrictions on the right to acquire, hold and to dispose of property guaranteed by article 19(1)(f) of the Constitution and was void.
It was pointed out that it placed restrictions both on the vendor and on the vendee and there was no advantage to the general public and.
that the only reason given in support of it, that it prevented persons belonging to different religions, races or castes from acquiring property in any area peopled by persons of other religious, races or castes, could not be considered reasonable in view of article 15 of the Constitution.
If this ruling applies the present appeal must succeed.
Mr. B. C. Misra, who appears for Labh Singh attempts to distinguish Bhau Ram 's case(1).
He contends that the earlier case was concerned with a legislative measure whereas the.
(1) [1962] Supp. 3 S.C.R. 724.
758 present case of pre emption arises from custom.
He refers to the decision in Digambar Singh vs Ahmad Said Khan(1) where the Judicial Committee of the Privy Council has given the early history of the law of pre emption in village com munities in India and points out that the law of pre emption had its origin in the Mohammedan Law and was the result, some times, of a contract between the sharers in a village.
Mr. Misra contends that articles 14 and 15 are addressed to the State as defined in article 12 and are not applicable to custom or contract as neither, according to him, amounts to law within the definition given in article 13(3)(b) 'of the Consti tution.
He submits that the ruling of this Court does not cover the present case and that it is necessary to consider the question of the validity of the customary law of pre emption based on vicinage.
It is hardly necessary to go into ancient law to discover the sources of the law of pre emption whether customary or the result of contract or statute.
In so far as statute law is concerned Bhau Ram 's case(2 ) decides that a law of pre emption based on vicinage is void.
The reasons given by this Court to hold statute law void apply equally to a custom.
The only question thus is whether custom as such is affected by Part III dealing with fundamental rights and particularly article 19(1)(f).
Mr. Misra ingeniously points out in this connection that article 13(1) deals with "all laws in force" and custom is not included in the definition of the phrase "laws in force" in clause (3)(b) of article 13.
It is convenient to read article 13 at this stage: "13.(1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
(2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.
(3) In this article, unless the context otherwise re requires, (a) "law" includes any Ordinance, order, bye law, rule, regulation, notification, custom or usage having in the territory of India the force of law; (b) "law in force" includes laws passed or made by a Legislative or other competent authority in the territory of India before the commencement of this Constitution and not previously (2) [1962] Supp. 3 S.C.R. 724.
(1) L.R. 42 I.A. 10, 18.
759 repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas.
" The argument of Mr. Misra is that the definition of "law" in article 13(3)(a) cannot be used for purposes of the first clause, because it is intended to define the word "law" in the second clause.
According to him, the phrase "laws in force" which is used in clause (1) is defined in (3)(b) and that definition alone governs the first clause, and as that definition takes no account of customs or usage, the law of pre emption based on custom is unaffected by article 19(1)(f).
In our judgment, the definition of the term "law" must be read with the first clause.
If the definition of the phrase "laws in force" had not been given, it is quite clear that the definition of the word "law" would have been read with the first clause.
The question is whether by defining the composite phrase "laws in force" the intention is to exclude the first definition.
The definition of the phrase "laws in force" is an inclusive definition and is intended to include laws passed or made by a Legislature or other competent authority before the commencement of the Constitution irrespective of the fact that the law or any part thereof was not in operation in particular areas or at all.
in other words, laws, which were not in operation, though on the statute book, were included in the phrase "laws in force".
But the second definition does not in any way restrict the ambit of the word "law" in the first clause as extended by the definition of that word.
It merely seeks to amplify it by including something which, but for the second definition, would not be included by the first definition.
There are two compelling reasons why custom and usage having in the territory of India the force of the law must be held to be contemplated by the expression "all laws in force".
Firstly, to hold otherwise, would restrict the operation of the first clause in such ways that none of the things mentioned in the, first definition would be affected by the fundamental rights.
Secondly, it is to be seen that the second clause speaks of "laws" made by the State and custom or usage is not made by the State.
If the first definition governs only cl.
(2) then the words "custom or usage", would apply neither to cl.
(1) nor to cl.
(2) and this could hardly have been intended.
It is obvious that both the definitions control the meaning of the first clause of the Article.
The argument cannot, therefore, be accepted.
It follows that respondent No. 1 cannot now sustain the decree in view of the prescriptions of the Constitution and the determination of this Court in Bhau Ram 's case(1).
The appeal will be allowed but in the circumstances of the case parties will bear their costs throughout.
Appeal allowed.
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In a suit filed by the respondent, the Munsif though holding that there was a general custom of pre emption in the locality and that the respondent had a right to pre empt, under that custom, dismissed the suit because the sale did not include a strip of land 3 feet 6 inches wide between the respondent 's house and the property sold.
The respondent 's appeal was allowed by the District Judge.
The appellants appealed to the High Court which was unsuccessful because of the answer of the Division Bench to which the question was referred.
The Division Bench held that the law relating to pre emption on the ground of vicinage was saved by article 19(5) and was not void under article 13 of the Constitution.
The appellant relied on the decision of this Court in Bhau Ram vs Baijnath and claimed that pre emption on the ground of vicinage could not be claimed.
The respondents in reply contended (a) that Bhau Ram 's case was concerned with a legislative measure whereas the present case arose from custom and was thus distinguishable and (b) that article 13(1) dealt with "all laws in force" and custom was not included in the definition of the phrase "laws in force" in cl.
(3)(b) of article 13.
Held: (i) In so far as statute law is concerned Bhau Ram 's case decides that a law of pre emption based on vicinage is void.
The reasons given by this Court to hold statute law void apply equally to a custom.
Bhau Ram vs B. Baijnath Singh, [1962] Supp. 3 S.C.R. 724, followed.
Digambar Singh vs Ahmad Said Khan, L.R. 42 I.A. 10, referred to.
(ii) Custom and usage having in the territory of India the force of law are included in the expression "all laws in force".
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Here's a two-paragraph summary of the court case:
The case revolves around a dispute between two individuals, Labh Singh (the respondent) and the original defendants (the appellants), over a property sale in the town of Milak. The respondent, Labh Singh, claimed pre-emption (the right to purchase the property before it is sold to a third party) based on the ground of vicinage (the proximity of the adjacent house). The District Judge allowed the appeal and dismissed the cross-objections, but the High Court certified the case and referred a question to a Division Bench, which held that the law of pre-emption based on vicinage was saved by clause (5) of article 19.
However, the Supreme Court took a different view in a previous case, Bhau Ram vs B. Baijnath Singh, holding that the law of pre-emption on the ground of vicinage imposed unreasonable restrictions on the right to acquire, hold, and dispose of property guaranteed by article 19(1)(f) of the Constitution and was void. In this case, the Supreme Court ruled that the customary law of pre-emption based on vicinage was also void, as it fell within the scope of article 19(1)(f) and was not excluded by the definition of "law" in article 13(3)(a). As a result, the appeal was allowed, and the parties were ordered to bear their costs throughout.
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Appeal No. 1164 of 1970.
(Appeal by Special Leave from the Order dated the 5th Sep tember 1969 of the Punjab & Haryana High Court in S.C.A. No. 197 of 1968) Naunit Lal, Girish Chandra and R.N. Sachthey, for the appel lant.
S.B. Wad, for respondent No. 1.
The Judgment of the Court was delivered by CHANDRACHUD, J.
The 1st respondent is a co operative transport society carrying on transport business at Kaithal, District Karnal, State of Haryana.
The Society terminated the services of respondents 3 and 4 who were working with it as conductor and driver, respectively.
The State of Punjab, on June 22, 1964 referred the dispute arising out of the dismissal of respondents 3 and 4, under section 10 of the Indus trial Disputes Act (14 of 1947) for the adjudication of the Labour Court, Rohtak.
That Court was then presided over by Shri Jawala Dass.
On Shri Dass 's retirement, Shri Hans Raj Gupta was appointed on June 4, 1965, as the presiding Officer of the Court.
The reference was thereafter heard by him and on April 16, 1966 he gave an award directing the reinstatement of respondents 3 and 4 with 50% backwages from the date of their dismissal until the date of reinstatement.
The Presiding Officer of the Labour Court is the 2nd re spondent to this appeal.
Being aggrieved by the award, the 1 st respondent filed Writ Petition No. 1575 of 1966 in the High Court of Punjab and Haryana under articles 226 and 227 of the Constitution, praying that the award given by the 2nd respondent be set aside on the ground, inter alia, that he was not qualified to hold the post of a Judge of the Labour Court, and, therefore, the award was without jurisdiction.
The Writ petition having been allowed by a Division Bench by its judgment dated March 26, 1968 the State of Haryana has filed this appeal by special leave.
The Presiding Officer of the Labour Court was impleaded to the Writ Petition as the 2nd respondent.
308 The only question for decision in this appeal is whether Shri Hans Raj Gupta who gave his award as the presiding Officer of the Labour Court was qualified for being appoint ed as a Judge of the Labour Court.
Section 7(1) of the provides that the appropriate Gov ernment may constitute one or more Labour Courts for the adjudication of Industrial disputes relating to any matter specified in the Second Schedule to the Act.
A Labour Court, under s.7(2), shall consist of one person only to be appointed by the Government.
Sub section (3) of section 7 reads thus: "(3 ) A person shall not be qualified for appointment as the presiding officer of a Labour Court, unless (a) he is, or has been, a Judge of a High Court; or (b) he has, for a period of not less than three years, been a District Judge or an Additional District Judge; or (c) he has held the office of the chairman or any other member of the Labour Appellate Tribunal constituted under the Industrial Disputes (Appellate Tribunal) Act, 1950 (48 of 1950), or of any Tribunal, for a period of not less than two years; or (d) he has held any judicial officer in India for not less than seven years; or (e) he has been the presiding officer of a Labour Court constituted under any Provincial Act or State Act for not less than five years".
It was common ground in the High Court that Shri Gupta did not satisfy the qualifications laid down in any of the clauses (a), (b), (c) and (e) of section 7(3).
It was, however, urged in the High Court, in the first instance, that Shri Gupta had held a judicial offical in India for not less than seven years and was, therefore, qualified for being appointed as a Judge of the Labour Court under clause (d) of s.7 (3 ).
This argument was made before the learned Chief Justice of the High Court who, while hearing the Writ Peti tion singly, felt that the question raised was of public importance.
He, therefore, referred the matter to a Divi sion Bench.
The contention that Shri Gupta was qualified to hold the office of a Judge of the Labour Court under clause (d) of s.7(3) was, however, given up by the State before the Division Bench.
Before us, the learned counsel for the appellant, the State of Haryana, rightly did not pursue the unstatable contention.
Shri Hans Raj Gupta was initially working as an Upper Division Clerk cure Head Clerk.
Thereafter, he worked from January 14, 1947 to October 19, 1954 as the Registrar to the Pensions Appeals Tribunal, Jullundur Cantonment.
After relinquishing that post, he was reverted as an Upper Divi sion Clerk cum Head Clerk, which office he held till Febru ary 17, 1957.
Subsequentiy, he was appointed as an Assistant Settlement officer in which post he worked fill September 1962.
It is obvious, and requires no clever argument to show, that Shri Gupta was holding clerical posts which, with some courtesy may 309 be described as posts calling for and furnishing administra tive experience.
As an Upper Division Clerk, even if the duties of that post were combined with those of the Head Clerk, Shri Gupta was nowhere in the shadow of a judicial office.
As a Registrar of the Pensions Appeals Tribunal, Jullundur Cantonment, he was admittedly discharging adminis trative functions.
A circumstance which seems to have blurred the perception of the State Government perhaps was that the Pensions Appeals Tribunal was a judicial or quasi judicial body and since Shri Gupta was closely associated with it, does not matter in what capacity, he could be said to hold a judicial office.
Administrative proximity with judicial work was regarded as an excuse good enough to elevate the administrator into a holder of judicial office.
This was a wholly misconceived approach to a matter of some moment for, were it so, many a judicial clerk would be qualified to be appointed to a judicial office.
Having never held any judicial office, Shri Gupta totally lacked judicial experience and was incompetent to discharge the functions of a Judge of the Labour Court.
His appointment was therefore illegal and his award without jurisdiction.
We are happy to note that the State Government did not take the time of the DiVision Bench of he High Court and of this Court in arguing an impossible proposition.
Nevertheless, the award given by Shri Gupta as the Presiding Officer of the Labour Court is defended by the State Government on the Plea that Shri Gupta 's appointment cannot be challenged in a collateral proceeding filed in the High Court for challenging the award.
Reliance is placed in support of this submission on the following passage in Cooley 's "A Treatise on the Constitutional Limitations" (8th edn; vol. 2; pages 1255 1358); "An officer de jure is one who, possessing the legal qualifications, has been lawfully chosen to the office in question, and has fulfilled any conditions precedent to the performance of its duties.
By being thus chosen and.
observing the precedent conditions, such a person becomes of right entitled to the pos session and enjoyment of the office, and the public, in whose interest the office is creat ed, is entitled of right to have him perform its duties.
If he is excluded from it, the exclusion is both a public offense and a private injury.
An officer de lure may be excluded from his office by either an officer de facto or an intruder.
An officer de facto is one who by some color of right is in possession of an office and for the time being performs its duties with public acquiescence though having no right in fact.
His color of right may come.
from an election or appointment made by some officer or body having colourable but no actual right to make it; or made in such disregard of legal requirements as to be ineffectual in law; or made to fill the place of an officer illegally removed; or made in favor of a party not having 310 the legal qualifications; or it may come from public acquiescence in the officer holding without performing the precedent conditions, or holding over under claim of right after his legal right has been terminated; or possibly from public acquiescence alone when accompa nied by such circumstances of official reputa tion as are calculated to induce people, without inquiry, to submit to or invoke offi cial action on the supposition that the person claiming the office is what he assumes to be.
An intruder is one who attempts to perform the duties of an office without au thority of law, and without the support of public acquiescence.
No one is under obligation to recognise or respect the acts of an intruder, and for all legal purposes they are absolutely void.
But for the sake of order and regularity, and to prevent confusion in the conduct of public business and in security of private rights, the acts of officers de facto are not suffered to be questioned because of the want of legal authority except by some direct proceeding instituted for the purpose by the State of by some one claiming the office de lure, or except when the person himself attempts to build up some right, or claim some privilege or emolument, by reason of being the officer which he claims to be.
In all other cases the acta of an officer de facto are as valid and effectual, while he is suffered to retain the office, as though he were an officer by right, and the same legal consequences will flow from them for the protection of the public and of third parties.
This is an important principle, which finds concise expression in the legal maxim that the acts of officers de facto cannot be questioned collaterally.
" Equally strong reliance was placed by the State Govern ment on a decision of the Ontario Supreme Court in Rs Toronto N. Co. City of Tornoto (1) in which, after an exami nation of several American and other decisions, Meredith, C.J.O., observed: "That it is not open to attack, in a collateral proceeding, the status of a de facto Judge, having at least a colourable title to the office, and that his acts are valid, is clear, I think, on principle and on authority, and it is also clear that the proper proceeding to question his right to the office is by quo warranto information." (PP.
551 552) Learned counsel for the State, Shri Naunit Lal, further drew our attention to a decision of the High Court of Tra vancore Cochin in Bhaskera Pillai and Ant.
State(2) which, relying upon the passage in Cooley 's Constitutional Limitations and the Canadian case, held that the appoint ment of the Chief Justice of that Court could not be ques tioned collaterally in a proceeding for leave.
to appeal to the Supreme Court against the decisions rendered by him.
Some sustenance was also sought to the same argument from a decision of a Full Bench of (1) 46 Dominion Law Report 547.
(2) (1950) 5, D.L.R. Travancore Cochin 382.
311 the Allahabad High Court in Queen Empress vs Garsa Sam(1) in which it was held that where a person had in fact been exercising all the functions of a Judge of the High Court, the appointment even if apparently ultra vires must never theless be presumed, in the absence of fuller information, to have been legally made in the exercise of some power, unknown to the Court, vested in the Secretary of State for India.
Broadly, the starting point and the primary basis of these decisions is the passage from Cooley 's Constitutional Limitations, which we have extracted above.
That passage says and means that the acts of officers de facto cannot be suffered to be questioned for want of legal authority except by some direct proceeding.
This important principle, according to Cooley, finds concise expression in the legal maxim that the acts of officers de facto cannot be allowed to be questioned collaterally.
Considering the nature and course of proceedings in the instant case, it seems to us impossible to hold that the challenge to Shri Gupta 's appointment was made in a collat eral proceeding.
That Shri Gupta 's appointment was not challenged in the very proceeding before him does not meet the point and in any case, if the proper mode to challenge the validity of an appointment to a public office is by a petition for the writ of quo warranto, the Labour Court over which Shri Gupta presided was hardly an appropriate forum for challenging the appoinment of its Presiding Officer.
The 1st respondent, the Haryana Co operative Transport Ltd., against whom Shri Gupta gave the award, filed a writ peti tion in the High Court of Punjab and Haryana to challenge the award on the ground that Shri Gupta was not qualified to hold the office of a Judge of the Labour Court and, there fore, the award given by him was without jurisdiction.
The challenge to Shri Gupta 's appointment having been made by a writ petition under articles 226 and 227 of the Constitution, to which Shri Gupta was impleaded as a partyrespondent, the challenge was made directly in a substantive proceeding and not collaterally.
The writ petition was filed mainly with a view to challenge Shri Gupta 's appointment on the ground that he was not qualified to fill the post to which he was appointed.
Having been impleaded to the writ peti tion he had a clear and rightful opportunity to defend his appointment.
The proceedings by way of a writ petition were taken not collaterally for attacking an appointment to a judicial office in a proceeding primarily intended for challenging a so called judicial decision, but the proceed ing was taken principally and predominantly for challenging the appointment itself.
None of the decisions, nor indeed the passage in Cooley 's Treatise, is therefore, any answer to the prayer that the award be declared to be ultra vires on the ground that the officer who gave it was not qualified to hold that post in the exercise of whose functions the award was given.
The mere circumstance that the 1st respondent did not in so many words ask for the writ of quo warranto cannot justi fy the argument that the appointment was being challenged collaterally in a proceeding takes to challenge the award.
Considering the averments in the writ petition, it seems to us clear that the main and real attack on the award (3) I.L.R. 16.
4 1546 SCI/76 312 was the ineligibility of Shri Gupta to occupy the post of a Judge of the Labour Court, in the discharge of whose func tions the award was rendered by him.
The relief of certio rari asked for by writ petition was certainly inappropriate but by clause (c) of paragraph 16, the High Court was invited to issue such other suitable writ, order or direc tion as it deemed fit and proper in the circumstances of the case.
There is no magic in the use of a formula.
The facts necessary for challenging Shri Gupta 's appointment are stated clearly in the writ petition and the challenge to his appointment is expressly made on the ground_ that he was not qualified to hold the post of a Judge of the Labour Court.
It must be mentioned that in the Canadian case of re Toronto vs City of Toronto (supra) the contention was that the Ontario Railway and Municipal Board was a "Superior Court" within the meaning of section 96 of the British North America Act and its members, not having been appointed by the Governor General, had no jurisdiction to exercise the powers conferred upon the Board by the Act by which it was created.
This argument was repelled firstly on the ground that the Board was not a Court but an administrative body and secondly on the ground that there was nothing to show that the members of the Board were not appointed by the Governor General.
In the Travancore Cochin case the Chief JustiCe whose appointment was challenged was qualified to hold that post since he had held the office of a Judge of the Madras High Court though he had retired from that office on attaining the age of 60.
The question really turned on the construc tion of article 376 (2) of the Constitution which confers power on the President is determine the period for which a Judge of a High Court in any Indian State corresponding to any State specified in part B of the First Schedule holding office immediately before the commencement of the Constitu tion may continue to hold that office.
Besides, the Chief Justice 's appointment was challenged collaterally in appli cations for leave to appeal to the Supreme Court against the judgments pronounced by him.
The Full Bench judgment of the Allahabad High) rested on the presumption, in the absence of fuller information, that the appointment must be deemed to have been made in the exercise of some power vested in the Secretary of State for India even if such power was unknown to the Court.
Deliver ing the judgment of the Court, Edge, C.J. observed at page 157: "Being in ignorance as to whether or not any power existed under which Mr, Justice Burkitt may have been lawfully appointed to act as a Judge of this court, we hold that the presumption that he was duly appointed, which arises from the fact of his having acted as a Judge of the Court since November 1892, has not been re butted.
This may seem to be a lame and impotent conclusion for a Court of Justice to arrive at concerning the validity of the appoint ment of one of its acting Judges, but our lack of necessary information,ion as to the appointment, coupled with the circumstances of the case, permits of our arriving at no other.
" Learned counsel for the State of Haryana contends that there is one more impediment in the Court holding that Shri Gupta was not 313 qualified under section 7(3) of the Act to be appointed as a Judge of the Labour Court.
Reliance is placed in support of this argument on section 9(I) of the Act which reads thus: "9.
Finality of orders constituting Boards, etc. (1) No order of the appropriate Government or of the Central Government appointing any person as the chairman or any other member of a Board or Court or as the presiding officer of a Labour Court, Tribunal or National Tribunal shall be called in ques tion in any manner; and no act or proceeding before any Board or Court shall be called in question in any manner on the ground merely of the existence of any vacancy in, or defect in the constitution of, such Board or Court.
" It is true that s.9(1) is worded so widely and generally that it could cover any and every challenge to the appoint ment to the particular posts therein mentioned.
But it is impossible to construe the provision as in derogation of the remedies provided by articles 226 and 227 of the Consti tution.
The rights conferred by those articles cannot be permitted to be taken away by a broad and general provision in the nature of s.9(1) of the Act.
The words "in any manner" which occur in s.9(1) must, therefore, be given a limited meaning so as to.
bar the jurisdiction of civil courts, in the ordinary exercise of their powers, to enter tain a challenge to appointments mentioned in the sub sec tion.
The High Court of Assam(1), Bombay(2) and Rajasthan(3) have taken, like the High Court of Punjab and Haryana in the instant case, a correct view of the scope and meaning of s.9(1) of the Act by limiting its operation to ordinary powers of the civil Courts.
The rights conferred by articles 226 and 227 can be abridged or taken away only by an appro priate amendment of the Constitution and their operation cannot be whittled down by a provision like the one con tained in s.9( 1 ) of the Act.
Accordingly, it is open to the High Courts in the exercise of their writ jurisdiction to consider the validity of appointment of any person as a chairman or a member of a Board or Court or as a presiding officer of a Labour Court, Tribunal, or National Tribunal.
If the High Court finds that a person appointed to any of these offices is not eligible or qualified to hold that post, the appointment has to be declared invalid by issuing a writ of quo warranto or any other appropriate writ or direction.
To strike down usurpation of office is the function and duty of High Courts is the exercise of their constitutional powers under articles 226 and 227.
In the result we affirm the judgment of the High Court and dismiss this appeal.
We are thankful,.
to Shri Wad for assisting the Court as amicus.
S.R. Appeal dismissed.
(1) Bozbarua (G.C.) vs Sate of Assam 1954 Assam 161.
(2) lagannath Vinayak Kale vs Ahmedi (1958) II L.L.J. 50 (Bom.) (3) Mewer Textile Mills Ltd. vs Industrial.
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The first respondent, a Co operative Transport Society terminated the services of respondent 3 and 4.
The State of Punjab referred the dispute arising out of the dismissal of respondents 3 to 4 under section 10 of the to the Labour Court that was presided over by Mr. Das.
On Mr. Das 's retirement Shri Hans Raj Gupta was ap pointed as the Presiding Officer of the Court.
Mr. Gupta gave an award directing the reinstatement of respondents 3 and 4 with 50 per cent back wages from the date of their dismissal until the date of reinstatement.
The first respondent being aggrieved by the award filed a writ petition in the High Court under Articles 226 and 227 of the Constitution praying that the award given by second respondent be set aside on the ground, inter alia, that he was not qualified to become the Presiding Officer under section 7(3) of the Act since he did not hold any judicial office in India for not less than 7 years.
The contention of respondent No. 2 was that he held such a judicial office because he worked as Upper Division Clerk cum Head Clerk, Assistant Settlemeat Officer and Registrar of the Pensions Appeals Tribunals.
The contention that he held judicial office was not pressed before the High Court and in this Court by the State.
The State Government, however. supported the award on the plea that Mr. Gupta 's appointment cannot be challenged in collateral proceedings filed in the High Court for challenging the award.
Re Toronto & Co. vs City of Toronto 46 Dominion Law Reports 547; Bhaskara Pillai and Anr.
vs State [1950] 5DLR Travailcore Cochin 382 and Queen Empress vs Ganga Ram ILR 16 All.
136 distinguished.
Dismissing the appeal, HELD: 1.
Considering the nature and course of proceedings in the instant it is impossible to hold that the challenge to Mr. Gupta 's appointment was made in a collateral proceeding.
The appointment of Mr. Gupta could not have been challenged before him.
The challenge to his appointment having been made by writ petition under Articles 226 and 227 of the Constitution to which Mr. Gupta was impleaded as a party respondent, the challenge was made directly in a substantive proceeding and not in a collateral proceeding.
Since he was impleaded in the writ petition he had a clear and right ful opportunity to defend kid appointment.
[311 C E] 2.
The mere circumstance that the first respondent did not in so many words ask for a writ of quo warranto cannot justify the argument that the appointment was being chal lenged collaterally in a proceeding taken to challenge the award.
On the averments in the writ petition it is clear that the main and real attack on the award was the ineligi bility of Shri Gupta to occupy the post of a Judge of a Labour Court in the discharge of whose functions the award was rendered by him.
[311 G H, 312A] 307 3.
The relief of certiorari asked for by the writ peti tion was certainly inappropriate but the High Court was also invited to issue such other suitable writ, order or direction as it deemed fit and proper in the circumstances of the case.
There is no magic in the use of a formula.
The facts necessary for challenging the appointment are stated clearly in the writ petition and the challenge to the ap pointment is expressly made on the ground that the officer was not qualified to hold the post.
[312A B] 4.
The finality of the orders of the Labour Court con templated by section 9(1) although widely worded must be given a limited meaning so as to bar the jurisdiction of civil courts in the ordinary exercise of their powers.
It is impossible to construe the provisions in derogation of the remedies provided by Article 226 and 227 of the Constitu tion.
[313D E] Bezparua (G.C.) vs State of Assam A.J.R. 1954 Assam 161, Jagannath Vinayak Kale vs Ahmadi [1958] II L.L.J. 50 (Bom.) and Mewar Textile Mills Ltd. vs Industrial Tribunal A.I.R. , approved.
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Here is a two-paragraph summary of the court case:
The present appeal arises out of a dispute between the Haryana Cooperative Transport Limited and its former employees, respondents 3 and 4. The dispute was referred to the Labour Court, Rohtak, under Section 10 of the Industrial Disputes Act, 1947, for adjudication. The Labour Court, presided over by Shri Hans Raj Gupta, awarded the reinstatement of the respondents with 50% backwages. However, the Haryana Cooperative Transport Limited challenged the award in the High Court of Punjab and Haryana, arguing that Shri Gupta was not qualified to hold the post of a Judge of the Labour Court as per Section 7(3) of the Act.
The High Court allowed the writ petition, and the Haryana Government filed an appeal by special leave. The Supreme Court held that Shri Gupta was not qualified to hold the post of a Judge of the Labour Court as he had never held any judicial office. Additionally, the Supreme Court rejected the State's argument that the challenge to Shri Gupta's appointment was made in a collateral proceeding. The Court held that the challenge was made directly in a substantive proceeding, and the High Court had the power to consider the validity of Shri Gupta's appointment under Articles 226 and 227 of the Constitution. The appeal was dismissed, and the judgment of the High Court was affirmed.
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ivil Appeal Nos. 850 of 1973 etc.
From the Judgment and Order dated 3.9.
1970 of the Allahabad High Court in Civil Miscellaneous (ITR) No. 461 of 1961.
With CIVIL APPEAL No. 941 of 1975.
From the Judgment and Order dated 5.5.
1972 of the Allahabad High Court in I.T. Reference No. 236 of 1969.
Raja Ram Agarwal and Mrs. Rani Chhabra for the Appellants.
B.B. Ahuja and Ms. A Subhashini for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
CA.
No. 850 of 1973 This appeal is by certificate and is directed against the judgment of the High Court of Allahabad.
Assessee and five of his brothers constituted a Hindu Joint Family.
The relevant assessment year is 1953 54 corresponding to the accounting period ending on 30th June, 1952.
The Joint Family which owned inter alia a sugar factory at Bijnore.
In 1930 there was partition in the family and the members of the erstwhile Joint Family constituted themselves into a partnership firm which took over the sugar factory and operated the same.
In the year ,1944, Sheo Prasad, one of the brothers who was a partner of the firm instituted a suit in the Lahore High Court for dissolution of the firm.
Partition of the country followed and after the parties shifted over to India a fresh suit was instituted at Bijnore for purposes of partition.
The properties were put in charge of a receiver appointed by the Court.
So far as the sugar factory is concerned, the arrangement was that at five yearly rest an auction was to be held confined to the partners and the highest bidder would be given lease to operate the factory for that period under the receiver.
On 16th July, 1948, Sheo Prasad trans ferred his 1/6th share to Banarsi Dass at a stated valuation of Rs.4,50,000.
On 3rd May, 1950, another brother, Devi Chand, leased out his 1/6th share to Banarsi Dass on an annual payment of Rs.50,000.
On 13th July, 1950, yet another brother, Kanshi Ram, similarly leased out his 1/6th share to Banarsi Dass for a similar sum.
In 1951, Kanshi Ram sued for cancellation of the lease.
On 6th April, 1954, the dispute was compromised and the lease was 104 terminated.
Kanshi Ram undertook to pay to Banarsi Dass at the rate of Rs. 16,000 for the first three years and at the rate of Rs. 10,000 for the subsequent two years.
Devi Chand 's 1/6th share was also returned on mutual arrangement and he agreed to pay a sum of Rs.39,000 and odd annually to Banarsi Dass for the lease period.
During the assessment proceedings, the nature of these receipts came to be debat ed the assessee maintained that these were in the nature of capital receipt lieu of the lease hold interest and the Income tax Officer maintained that those were revenue re ceipts.
In due course, the Tribunal ultimately upheld the view of the Revenue.
One more question that arose was the admissibility of a claim of expenditure being payment of interest on a loan taken for purchase of shares in the sugar factory.
The Income tax Officer had allowed the claim of Rs.75,211.
The Appellate Assistant Commissioner gave notice to the assessee and disallowed the same.
The Appellate Tribunal reversed the finding of the Appellate Assistant Commissioner in regard to the admissibility of the claim.
Thus the assessee as also the Revenue applied to the Tribunal to refer the case to the High Court.
As far as relevant, the following questions were referred for the opinion of the High Court under section 66(1) of the Act at the instance of the assessee.
Whether on the facts and in the circum stances of the case, the sums of Rs. 16,000 and Rs.39,262 received from Kanshi Ram and Devi Chand respectively were assessable as income of the assessee? 2.
Whether on the facts and in the circum stances of the case, depreciation is allowable on the 1/6th share in S.B. Sugar Mills, Bij nore which the assessee had acquired from Seth Sheo Prasad? So far as the first question is concerned, the High Court referred to the arrangement entered into by the parties as also the terms of compromise and referred to certain deci sions and came to the conclusion that the sum of Rs. 16,000 received as a part of the total sum of Rs.68,000 constituted an assessable receipt.
On the same reasoning, the High Court held that the amount of Rs.39,262 received from Devi Chand was also liable to tax.
So far as the other question is concerned, the High Court held: "The question, however, remains whether the assessee is 105 entitled to claim depreciation on the ground that it has acquired 1/6th share in the S.B. Sugar Mills.
It is to be noted that the asses see does not claim to be full owner of the property.
All that the assessee claims is 1/6th share in S.B. Sugar Mills." "The assessee claims allowance under clause (vi) of subsection (2) of section 10 of the Indian Income tax Act of 1922.
Clause (vi) is: 'In respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee . . " "In order to qualify for an allowance under clause (vi), the assessee has to make out that the building, machinery, plant or furniture is the property of the assessee.
Mr. Shanti Bhushan appearing for the assessee urged that clause (vi) is attracted even where an asses see owns a fractional share in the machinery.
On the other hand, Mr. Brij Lal Gupta appear ing for the Department urged that ownership of a fractional share in machinery does not attract clause (vi).
The point is not free from difficulty.
" The High Court ultimately came to hold: "In order to qualify for an allowance under clause (vi), the claimant must make out that the machinery is the property of the assessee.
That test is not satisfied by the present assessee.
The assessee does not claim to be the full owner of the machinery in question.
All that is claimed for the assessee is 1/6th share in the machinery.
Such a fractional share will not suffice for granting an allow ance for depreciation under section 10(2)(vi) of the Act.
" We have heard learned counsel for the assessee appellant at length.
He has referred to several authorities in support of the assessee 's stand of admissibility of the claim ' on both scores.
According to him, the proper test to be adopted should have been to find out whether the arrangement consti tuted an apparatus to earn profit.
whether the arrangement was one in course of business activity, and whether what was received constituted a part of the circulating capital or was a part of the fixed asset.
We have considered the sub missions of 106 the learned counsel for the appellant but are not in a position to accept the same.
There is hardly scope to doubt that the benefit of section 10(2)(vi) of the Act would be admissible only where the assessee is the owner of the property.
It too is not admissible in respect of a fraction al claim.
Similarly, we are of the view, in agreement with the High Court.
that the amounts which the assessee received under the compromise or by amicable arrangement was in the nature of profits to be received by the assessee for the interest held in the business and, therefore, constituted taxable income.
No other point was canvassed before us.
This appeal has to fail and is hereby dismissed.
Parties are directed to bear their own costs throughout.
A. No. 233 of 1976 This appeal between the parties is also by certificate granted by the Allahabad High Court and relates to the assessment year 1955 56 for the accounting period ending on 30th June, 1954.
Leave has been confined to two questions as would appear from the order granting the certificate, namely, as to whether one of the instalments received by the assessee out of the said amount of Rs.68,000, as referred to above, in respect of an earlier assessment year constituted a taxable receipt.
The second question relates to acquisition of the 1,6th share under a deed of exchange from Devi Chand under the exchange deed dated 16th July, 1948, which indicated that the valuation of that interest was shown to be Rs.4,50,000 and depreciation was claimed in regard to it.
Both the questions raised here are covered by our aforesaid judgment.
The appeal of the assessee has therefore to fail.
The appeal is accordingly dismissed.
Parties are directed to bear their own costs.
C.A. No. 1101 of 1975.
The relevant assessment year in this case is 1954 55 corresponding to the accounting period ending June 30, 1953.
Three questions survive for consideration: One relating to the receipt of Rs. 16,000 and Rs.42,957 in the same manner as already indicated, and the other depreciation in regard to the 1/6th share, said to have been valued at Rs.4,50,000.
Both the questions have to be answered against the assessee for the reasons already indicated.
In this case, there is a third question which is relevant, namely, whether in the facts and circumstances of the case.
the unabsorbed carried forward loss of Rs.78,084 was liable to be set off against the share of the rent received by the assessee from the Receiver.
Dealing with this question, the High Court ob served:.
107 "During the previous year relevant to the assessment year 1953 54, the assessee had suffered a loss in sugar business.
After setting off the loss against other heads of income there remained an unabsorbed loss of Rs.78,084.
In the assessment year in dispute the assessee claimed that the unabsorbed loss of the preceding year should be brought for ward and set off against its share in lease money received from the Receiver in respect of S.B. Sugar Mills.
This claim of the assessee has been disallowed and the question arises as to whether the assessee was entitled to carry forward and set off the loss as claimed by it.
" The High Court referred to section 24 of the Income tax Act of 1922 and indicated that two conditions had to be ful filled before the claim of set off of carried forward loss could be admitted, firstly, the income against which the loss has to be set off should be income from business and secondly, the business should be same in which the loss was suffered.
The High Court referred to certain decisions including the one of this Court in and ultimately negatived the claim of the assessee by saying that the question would not arise because the letting out of the sugar mill was not the business of the assessee.
In fact the receiver was appointed for dissolution of the firm and the main reason.
as found by the High Court.
for allowing the sugar factory to work was to dispose it of as a running mill so that proper price would be fetched.
Having heard learned counsel for the parties, we are satisfied that there is no merit in the assessee 's stand and the same has got to be dismissed.
The appeal is accordingly dismissed.
Parties are directed to bear their own costs throughout.
C.A. No. 941 of 1975 This appeal is by certificate from the judgment of the Allahabad High Court.
The assessee is the sugar mill which during the relevant assessment year 1960 61 corresponding to the accounting period ending 30th June, 1959, was in the hands of a Court Receiver.
The sugar mill was being assessed as an Association of Persons.
Banarsi Dass.
a partner, had 1/6th share therein.
He had acquired under a deed of ex change dated 16th July, 1948 1/6th share of Sheo Prasad in exchange of shares held by Banarsi Dass in Lord Krishna Sugar Mills valued at Rs.4,50.000.
In this assessment year, the receiver claimed that for the purposes of computing the depreciation allowance, the written down value of the busi ness assets be enhanced so as to reflect the sum of Rs.4,50,000 in place of 1/6th share representing the share of 108 Sheo Prasad.
Similar claim had been raised by Banarsi Dass in his own assessment.
The Income tax Officer rejected the claim and such rejection has been upheld throughout.
We have already turned down the claim of Banarsi Dass.
This claim has, therefore, to be rejected.
We may additionally point out that under the scheme of the Act, it is the assessee who alone is entitled to maintain such claim of depreciation and it would indeed be difficult, within the framework of the scheme contained in the statute, to maintain a separate value of the part of the asset to work out depreciation.
The book value as shown must be applicable to the entire assets of the firm including the 1/6th share which Sheo Prasad had given to Banarsi Dass.
The claim has rightly been rejected in the forums below including the High Court.
The appeal has no merit and is dismissed.
Parties will bear their own costs.
P.S.S. Appeals dis missed.
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'A ', a partner in a firm running a sugar factory, insti tuted a suit for its dissolution in 1948 and a Receiver was appointed by the Court.
The arrangement arrived at for the factory was that it would be leased out for a term of five years to the highest bidder from amongst the six partners.
In July, 1948, 'A ' transferred his 1/6th share to the appel lant for Rs.4,50,000.
The appellant had taken a loan against shares of that value held by him in another sugar mill for purchase of the share.
In May, 1950, another partner 'B ' leased out his 1/6th share to the appellant on an annual payment of Rs.50,000.
In July, 1950 yet another partner 'C ' leased out his 1/6th share to the appellant for a similar sum.
In 1951 'C ' sued for cancellation of the lease.
In April, 1954 the dispute was compromised and the lease termi nated. 'C ' undertook to pay the appellant at the rate of Rs. 16,000 for the first three years and at the rate of Rs. I0,000 for the subsequent two years. 'B 's 1/6th share was also returned on mutual arrangement and he agreed to pay the appellant a sum of Rs.39,000 and odd annually.
During the assessment proceedings for the year 1953 54 the nature of these receipts came to be considered.
The assessee appellant maintained that these were in the nature of capital receipts in lieu of the lease hold interest.
The assessee also claimed depreciation on the 1/6th share in the sugar mill that he had acquired from 'A '.
Similar questions also arose for the assessment years 1954 55 and 1955 56.
The assessee had suffered a loss in the sugar business in the assessment year 1953 54, a part of which remained unab sorbed, and claimed set off of that unabsorbed loss against the share of the rent received by him from the Receiver in the assessment year 1954 55.
Since the sugar mill was being assessed as an association of persons, for the assessment year 1960 61 102 the Receiver claimed that for the purpose of computing depreciation allowance, the written down value of the busi ness assets be enhanced so as to reflect the sum of Rs.4,50,000 in place of 16th share representing the share of 'A '.
The Revenue negatived the assessee 's contentions, which view was upheld by the High Court.
Dismissing the appeals by certificate, the Court, HELD: 1.
The amounts the assessee received under the compromise or by amicable arrangement from other partners were in the nature of profits to be received by the assessee for the interest held in the business and, therefore, con stituted taxable income.
[106B] 2.
The benefit of section 10(2)(vi) of the Income tax Act, 1922 would be admissible only where the assessee is the owner of the property.
It too is not admissible in respect of a fractional claim.
[106A] In the instant case, all that is claimed for the asses see is 1/6th share in the machinery.
Such a fractional share does not suffice for granting an allowance for depreciation under section 10(2)(vi) of the Act.
[105F] 3.
Two conditions had to be fulfilled under section 24 of the Incometax Act, 1922 before the claim for set off of carried forward loss could be admitted, firstly, the income against which the loss has to be set off should be income from business and secondly, the business should be same in which the loss was suffered.
[107C] In the instant case, the letting out of the sugar mill was not the business of the assessee.
The Receiver was appointed for dissolution of the firm and the main reason for allowing the sugar factory to work was to dispose it of as a running mill so that proper price could be fetched.
[107DE] 4.
Under the scheme of 1922 Act, it is the assessee who alone is entitled to maintain claim of depreciation.
Within the framework of that scheme it is difficult to maintain separate value of a part of the asset to work out deprecia tion.
The book value, as shown must in the instant case, therefore, be applicable to the entire assets of the firm including the 1/6th share which 'A ' had given to the appel lant.
The claim of the Receiver for depreciation cannot, therefore, be sustained.
[108B] 103
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**Summary of the Court Case in Two Paragraphs**
The court case involves a series of appeals by the assessee, Banarsi Dass, against the judgment of the Allahabad High Court on various issues related to income tax. The assessee, who is a partner in a sugar mill business, had acquired a 1/6th share in the sugar mill from another partner, Sheo Prasad, in 1948. The assessee had also leased out his 1/6th share to Kanshi Ram and Devi Chand, and later, he received certain sums from them as part of a compromise. The Income Tax Officer (ITO) and the Appellate Tribunal held that these sums were assessable as revenue receipts, whereas the assessee claimed that they were capital receipts.
The High Court and the Supreme Court ultimately upheld the view of the ITO and the Appellate Tribunal, holding that the sums received by the assessee were assessable as income. The Court also rejected the assessee's claim for depreciation on his 1/6th share in the sugar mill, as he did not have full ownership of the machinery. Additionally, the Court disallowed the assessee's claim to set off his unabsorbed carried-forward loss against his share of the rent received from the Receiver. The Court also dismissed the assessee's appeal regarding the enhancement of the written-down value of the business assets. The appeals were dismissed, and the parties were directed to bear their own costs throughout.
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Appeal No. 89 of 1960.
Appeal from the judgment and order dated April 12, 1957, of the Mysore High Court in Writ Petition No. 15 of 1956.
557, M. C. Setalvad, Attorney General for India, V. L. Narasimhamoorty, section N. Andley, J. section Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants.
R. Gopalakrishnan and T. M. Sen, for the respondents.
March 24.
The Judgment of the Court was delivered by SHAH, J.
With a view to enable him to assess cotton cess payable by the appellants under the Indian Cotton Cess Act, 1923 hereinafter called the Act the Deputy Commissioner, District Chitradurga, Mysore State purporting to exercise powers under section 6 of the Act called upon the managing agents of the appellants by letter dated January 13, 1956, to submit in the prescribed form a statement showing the total quantity of cotton consumed or processed in the factory. 'The appellants declined to carry out the requisition and filed a petition in the High Court of Mysore for a writ of mandamus, prohibition or other appropriate writ, direction or order restraining the Deputy Commissioner, Chitradurga and the State of Mysore from "collecting assessments under the Indian Cotton Cess; Act XIV of 1923" in enforcement of the order dated January 13, 1956.
The sole ground urged in support of the petition was that the appellants were bound to furnish returns under the Act to the Collector who alone could assess the cess, and the Deputy Commissioner not being a "Collector" within the meaning of the Act and not being an officer appointed by the Central Government to perform the duties of the Collector under the Act, the demand for returns was "unconstitutional".
The High Court rejected the petition and against that order, this appeal is preferred with certificate of fitness granted by the High Court.
The area in which the mill of the appellants is situ.
ate was originally part of the Indian State of Mysore.
The State of Mysore became a Part B State within the Union of India on the promulgation of the Constitution on January 26, 1950.
The Act was one of the many enactments of the Indian Legislature applied 588 to the State of Mysore by the "Part B States Laws Act" 3 of 1951.
The Act provides for the levy of a cess on cotton and for effectuating that purpose imposes by section 6 a duty upon the owner of a mill to submit to the Collector monthly returns of cotton consumed or processed in the mill.
The authority to assess cess is by section 7 of the Act vested in the "Collector" which expression in the Act means "in reference to cotton consumed in a mill, the Collector of the district in which the mill is situated or any other officer appointed by the Central Government to perform the duties of a Collector under this Act".
The powers of the Collector under the Act can therefore be exercised by the Collector of the district in which the mill is situate or by the officer appointed by the Central Government to perform the duties of a Collector.
It is common ground that the Central Government has not issued an order appointing the Deputy Commissioners in the Mysore area to exercise powers under the Act.
The power to assess cotton ceases in the Mysore State area can therefore be exercised by the Collector and no other officer.
The expression "Collector of the district" which is a component of the first part of the definition is not defined in the Act.
But the X of 1897 defines "Collector" as meaning "in a Presidency town, the Collector of Calcutta, Madras or Bombay as the case may be, and elsewhere the Chief Officer in charge of the revenue administration of a district".
The revenue administration of a district under the Mysore Land Revenue Code is entrusted to the Deputy Commissioner and he is the chief officer in charge of the revenue administration of a district.
The Deputy Commissioner is therefore a Collector within the meaning of the .
Counsel for the appellants however contends that the X of 1897 was not extended by the Part B States Laws Act to the State of Mysore and therefore the definition of "Collector" under the cannot be requisitioned in aid to interpret the expression "Collector" used in the Act.
But the argument proceeds upon a fallacy as to the 559 true nature of the .
By section 3 of that Act, in all Central Acts and Regulations made, after the commencement of the , ' unless there is anything repugnant in the subject or context, the various expressions therein set out shall have the meanings ascribed to them by that Act.
The effect of section 3 is to incorporate it as it were as an interpretation section in all Central Acts and Regulations made after the commencement of the .
Whenever the Central Act or Regulation made after March 11, 1897, is enacted, the becomes statutorily a part thereof and by its own force it applies to the interpretation of every such enactment.
Its vitality does not depend upon any territorial extension.
Existence of a definition of the expression "Collector" in the Act in section 2(a) is not necessarily indicative of an intention that the is not to apply to the interpretation of that expression used in that Act.
The first part of section 2, cl.
(a) of the Act is in truth not a definition at all: it merely states that the Collector of the district in which the mill is situate is the Collector for the purpose,% of the Act.
For determining who the Collector is, one has to go to the .
It is said that bodily importing the definition of "Collector" in the into section 2(a) of the Act results in tautology, because by the definition in the a Collector (outside the Presidency towns) is an officer in charge of the revenue administration of a district.
But by the definition in the , the quality of the power and the duties of the officer concerned are indicated whereas by the use of the expression "of the district" in the definition of Collector in section 2(a) of the Act, the officer in charge of the revenue administration of the district within whose area the mill is situate is indicated.
There is in our judgment no tautology, and no ground for not applying the definition of Collector in the to the interpretation of the Act.
The appeal fails and is dismissed with costs.
Appeal dismissed.
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The appellants declined to carry out the requisition by the Deputy Commissioner to submit certain returns on the ground that tinder the Indian Cotton Cess Act, 1923, which Act Se came applicable to the State of Mysore by the Part B States Laws Act, 1951, the Collector alone could assess the cess and the Deputy Commissioner not being a "Collector" within the meaning of the Act and not being an officer appointed by the Central Government to perform the duties of the Collector under the Act, the demand for return was "unconstitutional".
The case of the appellant was that the , was not extended by the Part B States Laws Act, 1951, to the State of Mysore, and, therefore, the definition of "Collector" under the could not be requisitioned in aid to interpret the expression "Collector" used in the Act.
Held, that the effect of section 3 of the , was to incorporate it as it were an interpretation section in all the Central Acts and Regulations made after the commencement of the .
Whenever a Central Act or Regulation made after March II, 1897, was enacted, the became statutorily a part thereof and by its own force applied to the interpretation of every such enactment.
Its vitality did not depend upon any territorial extension.
Section 2(a) of the Indian Cotton Cess Act, 1923, does not really give the definition of "Collector", and for determining who the Collector under the Act is, one has to go to the .
|
Here's a two-paragraph summary of the court case:
The appellants, a cotton mill, appealed against the judgment of the Mysore High Court in a writ petition filed against the Deputy Commissioner, Chitradurga, and the State of Mysore, seeking a writ of mandamus, prohibition, or other appropriate writ to restrain the Deputy Commissioner from collecting assessments under the Indian Cotton Cess Act, 1923. The appellants contended that the Deputy Commissioner was not a "Collector" within the meaning of the Act, and that the demand for returns was "unconstitutional".
The court held that the Deputy Commissioner was a "Collector" within the meaning of the Act, as he was the chief officer in charge of the revenue administration of the district. The court also held that the definition of "Collector" in the Mysore Land Revenue Code was applicable to the interpretation of the Indian Cotton Cess Act, 1923. Therefore, the appeal was dismissed with costs, and the Deputy Commissioner was authorized to demand returns from the appellants under the Act.
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ivil Appeal No. 4003 of 1989.
From the Judgment and Order dated 17.12.
1986 of the Bombay High Court in Civil Revision A. No. 270 of 1983.
R.S. Hegde and N. Ganpathy for the Appellant.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
Leave granted.
Heard learned counsel for the appellant.
None appears for the respondents.
The appellant as plaintiff instituted suit No. 32 of 1964 in the Court of Civil Judge (Senior Division), Auranga bad for declaration of title, possession and mesne profits of the suit property.
The respondents 1 and 2 as defendants 1 and 2 resisted the suit mainly on the ground that they were inducted as tenants by Sirajuddin who allegedly ac quired title to the suit property by a deed of gift executed by Hasmuddin in favour of his wife Waliunnissa from whom it was inherited by Sirajuddin.
The trial court decreed the suit holding that Sirajuddin had no right or title and the defendants were trespassers.
In the appeal therefrom by the defendants 1 and 2 before a Division Bench of the Bombay High court the same plea of tenancy was raised and rejected; and it was held that the gift of the suit property by Has muddin in favour of Waliunnissa was not proved.
Their appli cation for leave to appeal therefrom to the Supreme Court was also rejected.
The decree holder moved the execution petition being Special Darkhast No. 20 of 1967 for delivery of possession.
The respondent Nos. 1 & 2 (who were judgment debtor Nos. 1 & 2) objected to the execution on the ground that they were tenants and could not, therefore, be dispossessed in execu tion of the decree of the Civil Court.
The Executing Court rejected this objection and directed the Darkhast to pro ceed.
The defendants ' Civil Appeal No. 264 of 1977 therefrom was also rejected by the High Court.
Thereafter when the aforesaid Darkhast No. 20 of 1967 was set down for proceed ing further, once again the same judgment debtor Nos. 1 & 2 raised the plea of tenancy; and this time the Executing Court raised an issue of tenancy and referred the same to the Tenancy Court for determination.
The appellant moved the High Court in Civil Revision Application No. 270 of 1983 and the High Court observed, inter alia, that the Executing Court was not justified in raising an issue of tenancy, as such an issue did not arise 220 at all the Court having found on evidence that Waliunnissa had no title to the suit property and her son Sirajuddin could not have inherited it as an heir of Waliunnissa, and as such there could be no question of creation of tenancy interest by those who themselves had no title; that the judgment debtors ' earlier objection to execution on the ground of their claim of tenancy was also rejected; and it was not open to the judgment debtor Nos. 1 & 2 to once again raise an issue of tenancy before the Executing Court which ought to have rejected the same contention.
Even so, the High Court having noted that judgment debtor No. 2 had already filed an independent proceeding under the Hyderabad Tenancy and Agricultural Lands Act, 1950 (hereinafter re ferred to as 'the Tenancy Act ') for declaration of his tenancy rights in the suit land observed that, if that was so, then the competent authority under the Tenancy Act would have to decide the issue "on its own merits and in accord ance with law irrespective of and regardless of all observa tions, if any, touching upon such a claim of tenancy in the civil proceedings between the parties, viz. Special Suit No. 32 of 1964 and Appeal No. 824 of 1967".
The High Court also observed that the question of tenancy was not directly in issue between the parties in the aforesaid civil proceedings and the judgment debtor No. 2 was not, therefore, debarred from instituting proceedings under the Tenancy Act before the competent authority.
The High Court further observed that as the execution proceedings had been pending since the year 1967 it was expected that the competent authority would decide the proceedings expeditiously.
Accordingly the High Court allowed the revision and set aside the impugned order dated April 28, 1983 passed by the Executing Court in the said Special Darkhast No. 20 of 1967 to the extent it re ferred issue No. 1 to the Tenancy Tahsildar or Mamlatdar under Section 99(a) of the Tenancy Act and the Executing Court was directed to proceed further with the Special Darkhast No. 20 of 1967 in the light of those observations.
In this appeal the appellant assails the Judgment of the High Court on the grounds, inter alia, that the High Court committed a serious error, while setting aside the order of the Executing Court referring the issue of tenancy to the Tahsildar, at the same time allowing the proceedings under the Tenancy Act before the Tahsildar to proceed in the face of the fact that the judgment debtors ' objection on the basis of their tenancy was already rejected by the Executing Court; and in holding that the competent authority should decide the issue of tenancy in accordance with law irrespec tive of and regardless of all observations made in the suit and the appeal.
221 In course of arguments, the learned counsel for the appellant has stated that the competent authority under the Tenancy Act, during the pendency of this special leave petition, has already passed an order in favour of judgment debtor No. 2 and the appellant has also since filed an appeal therefrom before the appellate authority.
In view of this subsequent development we have to examine the legal position qua the Tenancy Act.
The Tenancy Act had amended the law regulating the relations of land holders and tenants of agricultural land and the alienation of such land.
"Tenancy" as defined in section 2(u) of the Tenancy Act, means the relationship of land holder and tenant.
"Tenant" as defined in section 2(v) means an assami shikmi who holde land on lease and includes a person who is deemed to be a tenant under the provisions of the Tenancy Act.
As defined in section 2(r) "protected tenant" means a person who is deemed to be a protected tenant under the provisions of sections 34 to 37.
Under section 31 of the Tenancy Act no interest of a tenant in any land held by him as a tenant shall be liable to be attached or sold in execution of a decree or order of a Civil Court.
Section 32 of the Tenancy Act deals with procedure of taking possession.
Under subsec tion (1) thereof, a tenant or an agricultural labourer or artisan entitled to possession of any land or dwelling house under any of the provisions of this Act may apply to the Tahsildar in writing in the prescribed form for such posses sion.
Under sub section (2) thereof, no land holder shall obtain possession of any land or dwelling house held by a tenant except under an order of the Tahsildar, for which he shall apply in the prescribed form.
Under sub section (3), on receipt of an application under sub section (1) or sub section (2) the Tahsildar shall, after holding an enquiry, pass such order thereon as he deems fit.
Section 33 provides that the Tenancy Act is not to affect the rights, privileges of tenant under any other law.
Save as provided in subsec tion (1) of section 30, nothing contained in this Act shall be construed to limit or abridge the rights or privileges of any tenant under any usage or law for the time being in force or arising 'out of any contract, grant, decree or order of a court or otherwise howsoever.
Chapter IV in sections 34 to 46 deals with rights of protected tenants.
Chapter IX of the Tenancy Act in sections 87 to 95 deals with Constitution of Tribunal; Procedure and Powers of Authorities; Appeals etc.
Chapter XI contains the Miscellaneous provisions.
Section 99, dealing with Bar of Jurisdiction provides: "(1) Save as provided in this Act 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, decid ed or dealt with by the Tahsildar, Tribunal or Collector or by the Board of 222 Revenue or Government.
(2) No order of the Tahsildar, Tribu nal of Collector or of the Board of Revenue or Government made.under this Act, shall be questioned in any Civil or Criminal Court.
" Section 104 enjoins the Act to prevail over other enactments and says: "This Act and any rule, order or notification made or issued thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other enactment with respect to matters enumerated in List II in the Seventh Schedule to the Constitution of India or in any instrument having effect by virtue of any such other enactment.
" The Tenancy Act was inserted in the Ninth Schedule to the Constitution at Entry 36.
Article 3 lB of the Constitution of India gives full protection to the Tenancy Act and its provisions in the Schedule against any challenge on the ground of inconsistency with or abridging of any of the rights conferred by Part III of the Constitu tion and it would be so notwithstanding any judgment, decree or order of any court or Tribunal to the contrary.
Though after the decree of the civil court, on the authority of Latchaiah vs Subrahmanyarn, ; , it could be said that when the person who inducted the tenants on the land was found to be a trespasser on the date of the induction, the tenants could not continue to have a right to be on the land against the will of the true owner, yet, taking into consideration the exclusive nature of jurisdiction of the Tenancy authorities under the Tenancy Act, the above provisions, and the fact that the appellant has already preferred an appeal from the order of the compe tent authority, we are not inclined to interfere with the impugned order, as it will now be open to the appellant to place the decisions rendered in her favour by the Civil Courts before the competent authority hearing the appeal and to proceed in accordance with the provisions of the Tenancy Act.
If ultimately the judgment debtor No. 2 is held to have been or not to have been a tenant, it will be open for the appellant to proceed accordingly further in the Special Darkhast No. 20 of 1967 as directed by the High Court.
This appeal is disposed of as above, with no order as to costs.
R.S.S. Appeal dis posed of.
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The appellant/plaintiff instituted a suit for declara tion of title, possession and mesne profits of the suit property.
The respondents/ defendants 1 and 2 resisted the suit mainly on the ground that they were tenants of one Sirajuddin who had allegedly acquired title to the suit property on the basis of a gift in favour of his wife.
The Trial Court decreed the suit holding that Sirajuddin had no right or title and that the defendants were trespassers.
The High Court rejected the defendants ' appeal and the special leave therefrom was rejected by this Court.
The decree holder moved an Execution Petition for pos session.
The respondents objected to the execution on the ground that they were tenants and could not, therefore, be dispossessed in execution of the decree of the Civil Court.
The objection was rejected and the High Court rejected the appeal therefrom.
Thereafter, when the Execution Petition was set down for proceeding further, once again the respondents raised the plea of tenancy, and this time the Executing Court raised an issue of tenancy and referred the same to the Tenancy Court for determination.
The appellant appealed to the High Court.
The High Court observed that there could be no question of creation of tenancy interest by those who themselves had no title; that the judgment debtors ' earlier objection to execution on the ground of their claim of tenancy was also rejected; and it was not open to the judgment debtors to once again raise an issue of tenancy before the Executing Court which ought to have rejected the same contention.
Even so, the High Court having noted that judgment debtor No. 2 had already filed an independent proceeding under the Hyd erabad Tenancy and Agricultural Lands Act, 1950 for declara tion of his tenancy rights observed that, if that was so, then the Competent 218 Authority under the Tenancy Act would have to decide the issue on its own merits and in accordance with law irrespec tive of and regardless of all observations, if any, touching upon such a claim of tenancy in the civil proceedings be tween the parties.
The High Court also observed that the question of tenancy was not directly in issue between the parties in the civil proceedings and the judgment debtor No. 2 was not debarred from instituting proceedings under the Tenancy Act before the Competent Authority.
The High court allowed the revision petition, set aside the order of the Executing Court referring the issue of tenancy, and directed the Executing Court to proceed further with the Execution Petition.
Before this Court it was contended that the High Court committed a serious error while setting aside the order of the Executing Court referring the issue of tenancy to the Tehsildar, at the same time allowing the proceedings under the Tenancy Act before the Tehsildar proceed in the face of the fact that the judgment debtors ' objection on the basis of their tenancy was already rejected by the Executing Court, and in holding that the competent authority should decide the issue of tenancy in accordance with law irrespec tive of and regardless of all observations made in the suit and the appeal.
Disposing of the appeal, this Court, HELD: (1) The Tenancy Act had amended the law regulating the relations of land holders and tenants of agricultural land and the alienation of such land.
[221B] (2) Though it could he said that when the person who inducted the tenants on the land was found to be a trespass er on the date of the induction, the tenants could not continue to have a right to be on the land against the will of the true owner, yet, taking into consideration the exclu sive nature of jurisdiction of the Tenancy authorities under the Tenancy Act, and the fact that the appellant has already preferred an appeal from the order of the competent authori ty, the Court was not inclined to interfere with the order of the High Court appealed against.
[222D E] Latchaiah vs Subrahmanyam, ; , referred to.
(3) It will now be open to the appellant to place the decisions rendered in her favour by the Civil Courts before the competent authority hearing the appeal and to proceed in accordance with the provisions of the Tenancy Act.
[222F] 219
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The following is a two-paragraph summary of the court case:
Civil Appeal No. 4003 of 1989 originated from the Bombay High Court's Judgment and Order dated 17.12.1986 in Civil Revision A. No. 270 of 1983. The case involved a dispute over the ownership of a property, with the respondents claiming to be tenants and the appellant seeking a declaration of title, possession, and mesne profits. The trial court decreed the suit, and the Division Bench of the Bombay High Court rejected the respondents' plea of tenancy in an appeal. The High Court, however, allowed the revision application, setting aside the order of the Executing Court that referred the issue of tenancy to the Tahsildar for determination.
The High Court's decision was challenged in the Supreme Court on the grounds that it committed a serious error in allowing the proceedings under the Tenancy Act to proceed despite the earlier rejection of the judgment debtors' objection on the basis of their tenancy. The Court observed that the competent authority under the Tenancy Act must decide the issue of tenancy in accordance with law, irrespective of the observations made in the suit and appeal. However, considering the subsequent development that the competent authority had already passed an order in favour of the judgment debtor and the appellant had filed an appeal therefrom, the Court decided not to interfere with the impugned order and allowed the appeal to proceed in accordance with the provisions of the Tenancy Act.
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Appeal No. 2198 of 1986.
From the Judgment and order dated 17.12.1985 of the Punjab and Haryana High Court in R.S.A No. 1155 of 1977.
S.M. Ashri for the Appellant.
Ms. Kawaljit Kochar for J.D. Jain for the Respondents.
The Judgment of the Court was delivered by BHARUCHA,J.
This appeal by special leave challenges the judgment and 591 order of the Punjab & Harvana High Court dismissing the appeal filed before it by the appellant.
The suit relates to 9 Kanals 13 Marlas of land at village Qayampur.
The said land was owned by Rajinder Singh and Baldev Singh, the respondents, and was sold while they were still minors by their mother Gurkirpal, acting as their guardian, to the appellant under a registered sale deed dated 30th July, 1964.
Upon attaining majority the respondents sued the appellant for possession of the said land on the ground that the sale thereof having been made without the permission of the court was void.
The appellant in his written statement and at the time of hearing of the suit relied heavily upon the fact that the sale deed had been attested by the father of the respondents and that the sale should.
therefore, be deemed to have been a sale by the legal guardian of the respondents.
It was also contended that the sale had been for legal necessity and the benefit of the respondents.
The suit, it was also alleged, was barred by limitation because, the sale being voidable and not void, it had not been brought within three years of each of the respondents attaining majority.
The trial court framed appropriate issues and came to the conclusion that it had not been proved that the sale was for legal necessity or for the benefit of the respondents; that the sale by the respondent 's mother without the permission of the court was void; and that the sale was void and not voidable and the suit was, therefore, in time.
The appeals filed by the appellant before the Additional District Judge.
Ambala and the High Court failed.
Learned counsel for the appellant placed great reliance upon the fact that the sale deed had been attested by the father of the respondents and submitted that the sale deed should, therefore, be taken to have been entered into by the natural guardian of the respondents for legal necessity and their benefit.
Section 8 of the Hindu Minority and Guardianship Act sets out the powers of the natural guardian of a Hindu minor.
The natural guardian of a Hindu Minor has power, subject to the provisions of section 8, to do all acts which are necessary or reasonable and proper for the benefit of the minor or his estate.
The natural guardian, however, may not without the previous permission of the court sell any part of the immovable property of the minor.
Any disposal of immovable property which is not necessary or reasonable and proper for the benefit of the minor or is without the previous permission of the court is voidable at the instance of the minor.
In the instant case, there, is, as found by the trial court and affirmed in appeal, no evidence beyond the bare word of the appellant that the sale deed had been made for the benefit of the minor respondents and his evidence had been eroded in cross 592 examination so that there was no "reliable evidence on record to show that the alienation in dispute had been made for the legal necessity or for the benefit of the plaintiffs.
That the sale was effected without the permission of the court is not dispute.
The sale is, therefore, in any event, voidable.
The question is whether, in the circumstances of the case, it may be said that the sale was effected by the father and natural guardian of the respondents because he had attested the sale deed executed by the mother of the respondents.
In this behalf our attention was invited to this Court 's judgment in Jijabai Vithalrao Gajre vs Pathankhan and ors.
; , This was a case in which it was held that the position in Hindu law was that when the father was alive he was the natural guardian and it was only after him that the mother became the natural guardian.
Where the father was alive but had fallen out with the mother of the minor child and was living separately for several years without taking any interest in the affairs of the minor, who was in the keeping and care of the mother, it was held that, in the peculiar circumstances, the father should be treated as if nonexistent and, therefore, the mother could be considered as the natural guardian of the minor 's person as well as property, having power to bind the minor by dealing with her immovable property.
In the present case, there is no evidence to show that the father of the respondents was not taking any interest in their affairs or that they were in keeping and care of the mother to the exclusion of the father.
In fact, his attestation of the sale deed shows that he was very much existent and in the picture.
If he was, then the sale by the mother, notwith standing the fact that the father attested it, cannot be held to be a sale by the father and natural guardian satisfying the requirements of section 8.
The Provisions of section 8 are devised to fully protect the property of a minor, even from the depredations of his parents.
Section 8 empowers only the legal guardian to alienate a minor s immovable property provided it is for the necessity or benefit of the minor or his estate and it further requires that such alienation shall be effected after the permission of the court has been obtained.
It is difficult, therefore, to hold that the sale was voidable, not void, by reason of the fact that the mother of the minor respondents signed the sale deed and the father attested it.
In the result, the appeal is dismissed with no order as to costs.
G.S. Appeal dismissed.
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The mother of the respondent minors, acting as their guardian, sold their land, while they were still minors, to the appellant under a registered sale deed dated July 30,1964.
The respondents, upon attaining majority, sued the appellant for possession of the said land on the ground that the sale thereof, having been made without the permission of the court, was void.
The appellant in his written statement and at the time of hearing of the suit contended that the sale deed had been attested by the father of the respondents and the. .ale should, therefore, he deemed to have been a sale by the legal guardian of the respondents.
It was also pleaded that the sale had been for legal necessity and the benefit of the respondents.
It was also alleged that the suit was barred by limitation because the sale was voidable and not void and the suit had not been brought within three years of each of the respondents attaining majority.
The trial court framed appropriate issues and came to the conclusion that it had not been proved that the sale was for legal necessity or for the benefit of the respondents, that the sale by the respondent 's mother without the permission of the court was void, and the sale was void and not voidable and the suit was, therefore, in time and was decreed.
590 The appeal filed by the appellant before the Additional Distt.
Judge and the High Court failed.
The appellant, therefore, preferred this appeal by special leave.
Dismissing the appeal, this court, HELD : 1.
The provisions of section 8 of the Hindu Minority and Guardianship Act, 1956 are devised to fully protect the property (.if a minor, even from the depredations of his parents.
Section 8 empowers only the legal guardian to alienate a minor 's immovable property provided it is for the necessity or benefit of the minor or his estate and it further requires that such alienation shall be effected after the permission of the Court has been obtained.
It was difficult, therefore, to hold that the sale, by reason of the fact that the mother of the minor respondents signed the sale deed and the father attested it, was voidable, not void.
(592 G) 3.
The attestation of the sale deed by the father showed that he was very much existent and in the picture.
If he was, then the sale by the mother, notwithstanding the fact that the father attested it, cannot he held to be sale by the father and natural guardian satisfying the requirements of section 8.
(592 E) Jijabai Vithalrao Gajre vs Pathankhan & Ors. ; , distinguished.
(662 A)
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Here is a two-paragraph summary of the court case:
The present appeal challenges the judgment of the Punjab and Haryana High Court, which dismissed the appeal filed by the appellant. The suit relates to 9 Kanals 13 Marlas of land at village Qayampur, which was owned by Rajinder Singh and Baldev Singh, the respondents. The land was sold to the appellant by the respondents' mother, acting as their guardian, under a registered sale deed in 1964. Upon attaining majority, the respondents sued the appellant for possession of the land, claiming that the sale was void as it was made without the permission of the court.
The trial court found that the sale was not for the benefit of the minor respondents and was void. The High Court upheld this decision, and the appeal was dismissed. The court held that the sale by the mother was void, not voidable, as it was not made with the permission of the court, and the attestation of the sale deed by the father did not make it a sale by the natural guardian of the respondents. The court relied on Section 8 of the Hindu Minority and Guardianship Act, which empowers only the legal guardian to alienate a minor's immovable property with the permission of the court.
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326 of 1953.
Original Petition under article 32 of the Constitution of India.
S.C. Isaacs (section K. Kapur, with him) for the petitioners.
H. J. Umrigar for the respondents.
January 11.
The Judgment of the Court was delivered by MUKHERJEA J.
This is an application presented by the petitioners under article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under article 14 and clauses (f) and (g) of article 19 (1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus.
To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts.
The petitioners are a firm of traders who had, prior to the cancellation of their licenee, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur.
It is said that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc.
It is stated that prior to the 14th of February, 1953, the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent profit upon the sale of soft coke and 15 per cent profit on the sales of hard coke and steam coal, such profits being allowed on the landed costs of the goods up to the depot.
The landed costs 805 comprised several items and besides ex colliery price, the middleman 's commission and the railway freight, there were incidental expenses of various kinds including labour duty, loading and unloading charges, cartage and stacking expenses.
After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 rods and odd seers per ton in the case of soft coke and 3 rods and odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated.
On the 14th of February, 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc., much below the existing rates.
This reduction was effected in a three fold manner.
In the first place, the allowance for shortage of weight was made much less than before; secondly a sum of Rs. 4 12 0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent.
On the 22nd of May, 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order, dated the 14th of February, 1953, mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under articles 14 and 19 of the Constitution.
There was an application for ad interim stay in connection with this petition which came up for hearing before the learned Vacation Judge of this court on the Ist of July, 1953.
On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February, 1953, and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative sanction behind it.
The order of the 14th February was in fact withdrawn, but on the 10th of July, 1953, the State of Uttar Pradesh promulgated by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by_section 3(2) of the Essential Supplies Act, 1946, read with the notified order of the Government of India issued under 806 section 4 of the Act.
As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers: "THE UTTAR PRADESH COAL CONTROL ORDER, 1953.
In this Order unless there is anything repugnant in the subject or context .
(a) "Coal" includes coke but does not include cinder and ashes.
(c) "The Licensing Licensing Authority" means the District Magistrate of the District or any other officer authorised by him to perform his functions under this Order and includes the District Supply Officer of the district.
(d) "Licensee" means a person holding a licence under the provisions of this Order in Form 'A ' or in Form 'B '.
(1) No person shall stock, sell, store for sale or utilise coal for burning bricks or shall otherwise dispose of coal in this State except under a licence in Form 'A ' or 'B ' granted under this Order or in accordance with the provisions of this Order.
(2) Nothing contained in sub clause (1) (a) Shall in so far as it relates to taking out a licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or undertakings obtaining coal on permits of the District Magistrate or the State Coal Controller for their own consumption.
(b) Shall apply to any person or class of persons ' exempted from any provision of the above sub clause by the State Coal Controller, to the extent of their exemption.
(1) Every application for licence under this Order shall be made in the form given in Schedule I appended to this Order.
807 (2) A licence granted under this Order shall be in Form 'A ' or Form 'B ' appended to this Order and the holder of a licence granted under this Order shall comply with any directions that may be issued to him by the Licensing Authority in regard to the purchase, sale, storage or distribution of coal.
(3) The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded.
Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf.
The State Coal Controller may by written order likewise require any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause (8). 8.
(1) No licensee in Form 'B ' and no person acting on his behalf shall sell, agree to sell or offer for sale, coal at a price exceeding the price to be declared by the Licensing Authority in accordance with the formula given in Schedule III.
(2) A licensee in Form 'A ' or any other person holding stock of coal or any other person acting for or on behalf of such licensees or person transferring or disposing of such stocks to any person in accordance with clause 6 or clause 7 shall not charge for the coal a price exceeding the landed cost, plus incidental and handling charges, plus an amount not exceeding 10 per cent of the landed cost as may be determined by the Licensing Authority or the State Coal Controller.
Explanations: (1) Landed cost means the excolliery price of the coal plus the L.D.C.C. and Bihar.
Sales tax plus middleman 's commission actually paid and railway freight.
808 (2) Incidental and handling charges mean the cost of unloading from wagons, transporting to stacking site, unloading at the stacking site, plus godown rent, plus choukidari charges, if any, not exceeding Rs. 8 8 0 per ton as may be determined by the Licensing Authority or the State Coal Controller according to local conditions.
The District Magistrate shall within a week of the commencement of this Order prepare and publish in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be deemed for purposes of this Order to be licensee until three months next following the publication of the list in Form A or B as may be specified.
If any person contravenes any of the provisions of this Order, or the conditions of licenee granted thereunder, he shall be punishable under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, with imprisonment for a term which may extend to three 'years or with fine or with both and without prejudice to any other punishment to which he may be liable . . " ' Schedule III referred to in the Order is as follows: SCHEDULE III.
(Formula for declaration of prices of soft coke/hard coke/steam coal).
Ex colliery Price Actuals.
L.D.C.C. and Bihar Sales tax Actuals.
Middleman 's commission Actually Raid subject to the maximum laid down under clause 6 of the Government of India Colliery Order 1945 4.
Railway freight Actuals.
Incidental and handling chargers including Maximum of Rs. 8 8 0 per per ton as may be determ ined by the licensing (i) Unloading from wagons.
Licensing Authority according to local condition (ii) Transport upto premises provided that at places 0of stacking which are extra oridenarily (iii) Unloading and stacking distant form the railway at the premises or depot.
way head a higher rate may be allowed by the Licensing Authority.
809 (iv) Godown rent and chaukidari charges, if any (v) Weighing charges, if any. 6.
Local taxes Octroi, etc.
Actuals.
Shortage Not exceeding 31/2 maunds per ton in the case of soft coke and 2 1/2 maunds in the case of hard coke and steam coal as may be determined by the Licensing Authority.
Profit At 10 per cent on total items 1 to 6 above except item No.5 It is said that on the 16th of July, 1953, the respondent No. 2 issued a declaration whereby he fixed the retail rates for the sale of soft coke, coal, etc.
at precisely the same figures as they stood in the directive issued on the 14th of February, 1953.
The result, according to the petitioners, was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all.
In accordance with the provision of clause 11 of the Control Order set out above, the petitioners ' name appeared in the list of B licence holders and they did apply for a licence in the proper form as required by clause (4).
The licence, it is said, was prepared, though not actually delivered over to the petitioners.
By a letter dated the 3rd of October, 1953, the Area Rationing Officer, Kanpur, accused the petitioners of committing a number of irregularities in connection with the carrying on of the coal depot.
The charges mainly were that there were two other depots held and financed by the petitioners themselves in the names of different persons and that the petitioners had entered into agreements for sale of coal at more than the fixed rates.
The petitioners submitted an explanation which was not considered to be satisfactory and by an order dated the 13th of October, 1953, the District Supply Officer, Kanpur, cancelled the petitioners 'licence.
In the present petition the petitioners have challenged the validity of the Coal Control Order of the 10th of July, 1953, the declaration of prices made on the 16th of July following and also the order cancelling the petitioners ' licence on the 13th of October, 1953.
15 95 section C. I./59 The constitutional validity of the Uttar Pradesh Coal Control Order has been assailed before us substantially on the ground that its provisions vest an unfettered and unguided discretion in the licensing authority or the State Coal Controller in the matter of granting or revoking licenses, in fixing prices of coal and imposing conditions upon the traders; and these arbitrary powers cannot only be exercised by the officers themselves but may be delegated at their option to any person they like.
It is argued that these provisions imposing as they do unreasonable restrictions upon the right of the petitioners to carry on their ' trade and business conflict with their fundamental rights under article 19 (1)(g) of the Constitution and are hence void.
With regard to the order dated the 16th of July, 1953, by which the prices of coke, coal, etc. were fixed, it is pointed out that it was not only made in exercise of the arbitrary power Conferred upon the licensing authority by the Coal Control Order, but the prices, as fixed, are palpably discriminatory as would appear from comparing them with the prices fixed under the very same Control Order in other places within the State of Uttar Pradesh like Allahabad, Lucknow and Aligarh.
The order of the 13th OCtober, 1953, cancelling the petitioners ' licenee is challenged on the ground that the charges made against the ,petitioners were vague and indefinite and that the order was made with the ulterior object of driving the petitioners out of the coal business altogether.
It is said further that as a result of the cancellation order, the petitioners have been made incapable of disposing of the stocks already in their possession, though at the same time the holding of such,stock after the cancellation of their licence has become an offence under the Coal Control Order.
It is not disputed before us that coal is an essential commodity under the Essential Supplies (Temporary ,Powers) Act of 1946, and by virtue of the delegation powers by the Central Government to the Provincial Government under section 4 of the Act, the Uttar Pradesh Government was competent to make provisions, by notified order, for regulating the supply and 811 distribution of coal in such a way as they considered proper with a view to secure the objects as specified in section 3 of the Act.
All that is necessary is that these provisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in article 19 (6)of the Constitution.
Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities.
The power of granting or withholding licences or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters.
So far no exception can be taken; but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority.
A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.
As has been held, by this court in Chintamon vs The State of Madhya Pradesh(1), the phrase "reasonable restriction, ' connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public.
Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under (1) ; article 19 (1) (g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in reasonableness.
It is in the light of these principles that we would proceed to examine the provisions of this control Order, the validity of Which has been impugned before us on behalf of the petitioners.
The provision contained in clause 3(1) of the Order that "no person shall stock, sell, store for sale or otherwise utilise or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision; in fact, that is the primary object which the control Order is intended to serve.
There are two exceptions engrafted upon this general rule: the first is laid down in sub clause (2) (a) and to that no objection has been or can be taken.
The Second exception, which is embodied in subclause (2)(b)has been objected to by the learned counsel ' appearing for the petitioners.
This exception provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub clause by the State Coal Controller, to the extent of such exemption.
It will be seen that the Control Order nowhere indicates what the grounds for exemption are, nor have any rules been framed on this point.
An unrestricted power has been given to the State Controller to make exemptions, and even if he acts arbitrarily or from improper motives, there is no check over it and no way of obtaining redress.
Clause 3 (2) (b) of the Cntrol Order seems to us, therefore, prima facie to be unreasonable.
We agree, however, with Mr. Umrigar that this portion of the Control Order, even though bad, is severable from the rest and we are not really concerned with the validity or otherwise of this provision in the present case as no action taken under it is the subject matter of any complaint before us.
The more formidable objection has been taken on behalf of the petitioners against clause 4 (3) of the Control Order which relates to the granting and refusing of licences.
The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or 813 modify any licenee under this Order and the only thing he has to do is to record reasons for the action he takes.
Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person.
It seems to us that such provision cannot be held to be reasonable.
No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer.
Practically the Order commits to the unrestrained will of a single 'individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same.
Mr. Umrigar contends that a sufficient safeguard has been provided against any abuse of power by reason of the fact that the licensing authority has got to record reasons for what he does.
This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer.
The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person.
It was pointed out and with perfect propriety by Mr. Justice Matthews in the well known American case of Yick Wo vs Hopkins(1), that the action or non action of officers placed in such position may proceed from emmity or prejudice, from . partisan zeal or animosity, from favouritism and Other improper influences and motives which are easy of concealment and difficult to be detected and exposed and consequently 'the injustice capable of being wrought under 'cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation.
In our opinion, the provision of clause 4(3) of the Uttar Pradesh Coal control Order must be must be held to void as imposing an unreasonable restriction upon the freedom (1) at 373.
814 of trade and business_guaranteed under article 19(1) (g)of the Constitution and not coming within the protection afforded by clause (6) of the article.
As this provision forms an integral part of the entire structure of the Uttar Pradesh Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above.
The licenee of the petitioners having been cancelled in pursuance with the above clause of the Control Order, the cancellation itself should be held to be ineffective and is not necessary for us to enquire further whether or not the grounds upon which the licensing authority purported to act were vague or idefinite or could constitute proper grounds for cancellation.
The two other clauses of the Control Order to which exception has been taken on behalf of the petitioners are clauses (7) and (8).
Clause (7) empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provision of clause (8).
Clause 8 (1) provides that no licensee in Form 'B ' shall sell or agree to sell coal at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III.
With regard to both these clauses, the contention of the petitioners ' counsel, in substance, is that the formula for determining the price, as laid down in Schedule III, is per se unreasonable as it is made dependent on the exercise of an unfettered and uncontrolled discretion by the licensing authority.
An unfair determination of the price by the licensing authority, it is argued, would be totally destructive of the business of the coal traders and the grievance of the petitioners is that that is exactly what has been done by the declaration of prices made on the 16th of July, 1953.
We have examined the formula given in Schedule Iii to the Control Order with some care and on the materials that have been actually placed before us, we are 815 not in a position to say that the formula is unreasonable. 'The prices, as said already, are calculated on the basis of the landed costs of coke and coal up to the depot, 'to which a profit of 10 per cent is added.
The landed costs comprise seven items in all which are enumerated ' in Schedule III.
With regard to items 1, 2, 3, 4 and 6 of the Schedule the actual costs are taken into, account and to that no objection can possibly be taken.
The entire dispute is with regard to incidental charges specified in item 5 and the allowance or shortage which forms item 7.
So far as incidental charges are concerned, the Schedule allows a maximum of Rs. 8 8 0 per ton to be determined by the licensing authority according to local conditions.
The rates undoubtedly vary according to local conditions and some amount of discretion must have to be left in such cases to the local authorities.
The discretion given to the licensing authority in fixing these rates is, however, not an unlimited discretion, but has got to be exercised with reference to the condition prevalent in the locality with which the local officers, must be presumed to be familiar.
The grievance of the petitioners is that in the declaration of 16th of July, 1953, the licensing authority allowed incidental charges only at the rate of Rs. 4 12 0 per ton and that is grossly unfair.
It is pointed out that at Lucknow, Aligarh, Allahabad and other places much higher rates were allowed, 'though the local conditions of these places are almost identical; and there has been consequently a discrimination in this respect which makes the declaration void altogether.
The statements that have been made by the petitioners in this connection are not supported by any affidavit of any person who is familiar with the local conditions in the other places and on the materials that we have got here we are unable to say that the rates fixed by the licensing authority of Kanpur are really discriminatory.
It is certainly not open to us to substitute our own determination in tile matter of fixing the prices for that of the licensing authority and provided we are satisfied that the discretion that has been vested in a public officer is not an uncontrolled discretion and no unfair 816 discrimination has resulted from the exercise of it, we cannot possibly strike down as illegal any order or declaration made by such officer.
The same reasons apply, in our opinion, to the seventh item of Schedule III which relates to allowances for shortage of weight.
Here also the Control Order specifies a maximum and the determination of the allowance in particular cases has been left to the discretion of the licensing authority.
We are not satisfied from the materials placed before us that this provision is unfair or discriminatory.
The formula allows a profit of loper cent upon the cost items with the exception of item No. 5 which relates to incidental charges.
We do not know why this item has been omitted and Mr. Umrigar, appearing for the respondents, could not suggest any possible reason for it.
But even then, the result of this omission would only be to lower the margin of profit a little below 10 per cent and nothing more.
If the other traders in the locality are willing to carry on business in coal with that amount of profit, as is stated on the affidavits of the respondents, such fixation of profit would undoubtedly be in the interests of the public and cannot be held to be unreasonable.
The counsel for the petitioners is not right in his contention that the Control Order has only fixed the maximum profit at 10 per cent and has left it to the discretion of the licensing authority to reduce it in any way he likes.
Schedule III fixes the profit at 10 per cent upon the landed costs with the exception of item No. 5 and as this is not the maximum, it would have to be allowed in all cases and under clause 8 (1), the 'B ' licensees are to sell their stocks of coal according to the prices fixed under Schedule III.
Clause 8 (2) indeed is not very clearly worded, but we think that all that it provides is to impose a disability upon all holders of coal stocks to charge prices exceeding the landed costs and a profit upon the same not above 10 per cent as may be determined by the licensing authority.
The determination spoken of here must be in accordance with what is laid down in Schedule III and that, as has been said above, does specify a fixed rate and not a maximum and does ' not 817 allow the licensing authority to make any reduction he: likes.
On the whole we are of the opinion that clauses (7 is and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration.
of the 16th of July, 1953, cannot I;e held to be invalid.
The result is that, in our opinion, clause 4 (3) of the Control Order as well as the cancellation of the petitioners licence should be held to be invalid and a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order.
The rest of the prayers of the petitioners are disallowed.
We make no order as to costs.
Petition partly allowed.
Agent for the petitioners: Ganpat Rai.
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A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be unreasonable.
Under cl.
4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes.
Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person.
Such provisions cannot be held to be reasonable: Held, therefore that the provision of cl.
4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as 104 804 imposing an unreasonable restriction upon the freedom of trade and business guaranteed under article 19 (1) (g) of the Constitution and not coming within the protection afforded by cl.
(6) of the article.
Yick Wo vs Hopkins at 373) referred to.
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Here is a two-paragraph summary of the court case:
The petitioners are a firm of traders who were carrying on the business of retail sellers of coal at a coal depot in Kanpur. They challenged the validity of the Uttar Pradesh Coal Control Order, 1953, and a declaration of prices made by the licensing authority on July 16, 1953, which resulted in a reduction in selling prices that made it impossible for them to carry on their business. The petitioners also challenged the cancellation of their licence on October 13, 1953, which they alleged was made with the ulterior object of driving them out of the coal business.
The court held that clause 4(3) of the Control Order, which gave unfettered discretion to the licensing authority to grant or refuse to grant, renew or refuse to renew licences, was unreasonable and void. The court also held that the cancellation of the petitioners' licence was ineffective due to the invalidity of this clause. However, the court found that clauses 7 and 8 of the Control Order, which related to the fixing of prices, did not impose unreasonable restrictions on the freedom of trade enjoyed by the petitioners. As a result, the court partly allowed the petition, holding that the cancellation of the petitioners' licence was invalid, but disallowed the rest of the prayers of the petitioners.
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Appeal No. 1947 of 1975.
Appeal by Special Leave from the Judgment and Order dated 9 10 1975 of the Gujarat High Court in Special Civil Application No. 1339/75.
V.M. Tarkunde, P.H. Parekh, Miss Manju Jatley and (Miss) Mardk Tarkunde, for the Appellants.
D.V. Patel and M.N. Shroff, for Respondent No. 1.
K.L. Hathi and P.C. Kapur, for Respondent No. 2. 879 The Judgment of the Court was delivered by GUPTA, J.
The first appellant is an association of the manufacturers of Mangalore pattern roofing tiles in south Gujarat area, the other appellant, a partnership firm, is a member of the association.
The question that falls to be determined in this appeal by special leave is whether entry 22 added by the Gujarat Government by notification dated March 27, 1967 to Part 1 of the Schedule to the covers Mangalore pattern roofing tiles.
Entry 22 reads as follows; "Employment in potteries Industry.
Explanation: For the purpose of this entry potteries industry includes the manufacture of the following articles of pottery, namely: (a) Crockery (b) Sanitary appliances and fittings (c) Refractories (d) Jars (e) Electrical accessories (f) Hospital ware (g) Textile accessories . (h) Toys (i) Glazed Tiles" We may also refer to certain other provisions of the Minimum wages Act which3 provide the context to the question arising for decision.
Section 2(g) defines "scheduled employment" as meaning "any employment specified in the Schedule or any process or blanch of work forming part of such employment".
The schedule is in two parts.
which relates to employment in agriculture only As not relevant for the purpose of this appeal.
Section 3 authorises the appropri ate Government to fix or revise the minimum rates of wages payable to employees in scheduled employments.
Section 5 prescribes the procedure for fixing and revising minimum wages.
In fixing minimum rates of wages in respect of any scheduled Section 5 prescribes the procedure for fixing and revising minimum wages.
In fixing minimum rates of wages in respect of any scheduled.
employment for the first time or in revising the rates so fixed, the appropriate Government must either appoint committees to hold, neces sary enquiries and advise it in this regard, or publish its proposals in the matter for the information of persons .likely to be affected thereby.
The Government will fix or revise the minimum rates of wages after consid ering the advice of the committees or the representations received in regard to the proposals published, as the case may be.
Section 7 empowers the appropriate Government also to appoint an advisory board for coordinating the work of the committees appointed under section 5, and advising the Government generally in the matter of fixing and revising minimum rates of wages.
Section 19 880 authorises the Government to appoint Inspectors for the purposes of the Act, Sections 22 and 22 A lay down the penalties for paying to an employee any amount less than what is due to him under the Act, or contravening any provi sion of the Act or any rule or order made thereunder; the punishment may extend to imprisonment for six months with a fine of Rs. 500/ .
Under section 27 the appropriate Gov ernment after giving by notification in the official gazette not less than three months ' notice of its intention to add to either Part of the Schedule any employment in respect of which it is of opinion that minimum rates of wages should be fixed, add such employment to the schedule by another notification and the schedule in its application to the State concerned shall be deemed to be amended accordingly.
Before proceeding to consider the rival contentions, we may briefly state the facts in the background.
On November 13, 1966 the Gujarat Government issued a notification under section 27 declaring its intention to add "employment in potteries industry" with an 'Explanation ' to of the Schedule to the Minimum wages Act, and by notification dated March 27, 1967 the entry was added as entry No. 22.
Later a committee was appointed under sec tion 5 (1 ) to fix minimum rates of wages in potteries industry.
The committee submitted its recommendations some time in 1968.
It appears from the letter dated July 10, 1968 addressed to the Government by the advisory committee forwarding its report that the Committee had not taken into consideration roofing tiles in the recommendations made.
By a notification dated January 8, 1969 the Government fixed the minimum rates of wages in respect of potteries industry on the basis of the committee 's report.
On March 25, 1970 a proceeding was started against the second appellant on the complaint of an Inspector alleging that the partners of the firm had failed to.
produce for his examination the muster roll and the wages Register.
The appellant was acquitted by the magistrate who held that entry 22 did not cover roofing tiles and as such the Act was not applicable to the industry of the accused.
The State preferred an appeal to, the High Court against the order of acquittal.
The High Court affirmed the acquittal on merits but observed that the manufacture of roofing tiles was included in entry 22.
In 1974 the Gujarat Government appointed another committee under section 5 ' of the Act to revise the minimum wages in potteries industry.
This time the committee treated the manufacture of roofing tiles as included in item 22 and sent its report to the Government.
On May 12, 1975 the State Government issued a notification accepting the recommenda tions of the committee and gave effect to the revised rates from the next day, i.e. May 13, 1975.
The appellants filed a writ petition in the Gujarat High Court challenging the validity of the notification dated May 12, 1975.
By its order dated October 9, 1975 the High Court dismissed the writ petition on the view that "Mangalore pattern roofing tiles manufactories would be covered ' within the entry".
This is how the scope of entry 22 arises for consideration in this appeal.
The question turns on a true construction of the Explanation to entry 22 which says that for the purpose of this entry potteries industry "includes" the manufacture of the nine "articles of pottery" 881 specified therein.
Pottery in a wide sense will take in all objects that are made from clay and hardened by fire, from crude earthen pots to delicate porcelain.
Mr. Patel appear ing for the respondent, State of Gujarat, contends that the Explanation indicates that potteries industry in entry 22 is intended to cover all possible articles of pottery includ ing Mangalore pattern roofing tiles.
Referring to the well known use of the word 'include ' in interpretation clauses to extend the meaning of words and phrases occur ring in the body of the statute, Mr. Patel submits that the Explanation, when it says that potteries industry 'in cludes ' the nine named objects, what is meant is that it includes not only these objects but other articles of pot tery as well.
It is true that 'includes ' is generally used as a word of extension, but the meaning of a word or phrase is extended when it is said to include things that would not properly fall within its ordinary connotation.
We may refer to the often quoted observation of Lord Watson in Dilworth vs Commissioner of Stamps, (1) that when the word 'include ' is used in interpretation clauses to enlarge the meaning of words or phrases in the statute "these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include".
Thus where 'includes ' has an extending force, it adds to the word or phrase a meaning which does not naturally belong to it.
It is difficult to agree that 'includes ' as used in the Explanation to entry 22 has that extending force.
The Explanation says that for the purpose of entry 22, potteries industry includes the manufacture of the nine "articles of pottery" specified in the Explanation.
If the objects specified are also "articles of pottery", then these objects are already comprised in the expression "potteries industry".
It hardly makes any sense to say that potteries industry includes the manufacture of articles of pottery, if the intention was to enlarge the meaning of potteries industry in any way.
We are also unable to.
agree with Mr. Patel that the articles specified in the Explanation may have been men tioned out of abundant caution to emphasize the comprehen sive character of the entry, to indicate that all rarities of pottery are included therein.
argument, though more plausible, does not also seem acceptable '.
It is possible that one might have doubts.
whether things like refractories or electrical or textile accessories would pass under the description pottery as that word is used in common parlance, but the Explanation also mentions crockery and toys regarding which there could be hardly any doubt.
The inclusion in the list of objects which are well recognised ' articles of pottery makes it plain that the Explanation was added to the entry not by way of abundant caution.
The contention of Mr. Tarkunde for the appellants is that the articles mentioned in the Explanation were intend ed to be exhaustive of the objects covered by entry 22.
According to Mr. Tarkunde if the legislature wanted to bring within the entry all possible articles of pottery then there was hardly any point in mentioning only a few them by way of Explanation.
To this Mr. Patel 's reply is that it (1) (1899) A.C. '105 106. 882 is well known that where the legislature wants to exhaust the significance of the term defined, it uses the word 'means ' or the expression 'means and includes ', and that if the intention was to make the list exhaustive, the legisla ture would not have used the word 'includes ' only.
We do not think there could be any inflexible rule that the word 'include ' should be read always as a word of extension without reference to the context.
Take for instance entry 19 in the schedule which also has an Explanation .containing the .word 'includes '.
Entry 19 is as follows: "Employment in any tobacco processing establishment, not covered under entry No. 3.
Explanation.
For the purpose of this entry, the expression "processing" includes packing or unpacking, breaking up,.
sieving, thrishing, mixing, grading, drying, curing or otherwise treating the tobacco (including tobacco leaves and stems) in any manner.
" Entry 3 to which entry 19 refers reads: "Employment in any tobacco (including bidi making) manufactory.
" It is clear from the Explanation to entry 19 that there could be no other way or manner of "processing" besides what is stated as included in that expression.
Though include ' is generally used in interpretation clauses as a word of enlargement, in some cases the context might sug gest a different intention.
Pottery is an expression of very wide import, embracing all objects made of clay and hardened by heat.
If it had been the legislature 's inten tion to bring within the entry all possible articles of pottery, it was quite unnecessary to add an Explanation.
We have found that the Explanation could not possibly have been introduced to extend the meaning of potteries indus try or the articles listed therein added ex abundanti caute la.
It seems to us therefore that the legislature did not intend every thing that the potteries industry tums out to be covered by the entry.
What then could be the purpose.
of the Explanation ? The Explanation says that, for the purpose of entry 22, potteries industry 'includes ' manufac ture of the.
nine articles of pottery named therein.
It seems to us that the word 'includes ' has been used here in the sense of 'means ', this is the only construction that the word can bear in the.
context.
In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of entry 22.
The use of the word 'includes ' in the restrictive sense is not unknown.
The observation of Lord Watson in Dilworth vs Commissioner of Stamps,(1) which is usually referred to on the use of 'include ' as a word of extension, ' is followed by these lines: "But the word 'i nclude ' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expres sions defined.
It may be equivalent to 'mean and include ', and in that case it may afford an ( 1899)A.C. 105 106 883 exhaustive explanation of the meaning which, for the pur poses of the Act, must invariably be attached to these words or expressions".
It must therefore be held that the manufac ture of Mangalore pattern roofing tiles is outside the purview of entry 22.
The appeal is allowed with costs against respondent No. 1, dated May 12, 1975 in so far as it applies to the Manga lore pattern roofing tiles is quashed.
The members of the first appellant are permitted to withdraw any sum they had deposited in the Gujarat High Court pursuant to the order of this Court made on April 2, 1976.
M.R, Appeal allowed.
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By a Notification issued under the , the Government fixed the minimum rates of wages in respect of potteries industry, on the basis of a committee 's report.
Later, proceedings were started against the second appellant, a partnership firm .manufacturing
Mangalore type roofing tiles, on the complaint of an inspector alleging that the partners of the firm had failed to produce their muster roll and the wages register for his examination.
The Magistrate acquitted the appellant holding that Entry 22 did not cover roofing tiles.
The High Court affirmed the ac quittal on merits, but opined that manufacture of roofing tiles was included in the potteries industry.
The appellants contended that the Articles mentioned in the explanation were exhaustive of the objects covered by entry 22, and did not cover roofing tiles, while the re spondent State contended that the Explanation "includes" not only the objects mentioned therein, but other articles like roofing tiles.
Allowing the appeal, the Court, HELD: (1) The word "includes" is generally used as a word of extension, but has been used here the sense of means '; this is the only construction that the word can.
bear in the context.
In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of Entry 22.
[882 G H] Dilworth vs Commissioner of Stamps applied.
(2) The manufacture of Mangalore pattern roofing tiles is outside the purview of Entry 22.
The explanation could not possibly have been introduced to extend the meaning of potteries industry or the articles listed therein added ex abundanti cautela.
[882 D F; 883 A]
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Here is a two-paragraph summary of the court case:
In the appeal case of V.M. Tarkunde vs. State of Gujarat, the court had to determine whether the manufacture of Mangalore pattern roofing tiles falls under entry 22 of the Schedule to the Minimum Wages Act, 1948. Entry 22 includes employment in the potteries industry, with an explanation stating that for the purpose of this entry, potteries industry includes the manufacture of nine specified articles of pottery. The court had to interpret the meaning of the word "includes" in the explanation to entry 22, with the appellants arguing that it is a word of limitation and exclusion, and the respondent arguing that it is a word of extension.
The court ultimately held that the word "includes" in the explanation to entry 22 is used in a restrictive sense, and that it is exhaustive of the meaning which must be given to potteries industry for the purpose of entry 22. The court concluded that the manufacture of Mangalore pattern roofing tiles is outside the purview of entry 22, and allowed the appeal. The court also quashed the notification dated May 12, 1975, in so far as it applies to the manufacture of Mangalore pattern roofing tiles.
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ivil Appeal No. 1899 of 1989.
From the Judgment and Order dated 20.2.87 of the Central Administrative Tribunal, Principal Bench, New Delhi in T.A. No. T 322/ 85 (CW 293/77).
Shankar Vaidyalingam and Ms. Seita Vaidyalingam for the Appellant.
B. Dutta, Govind Das, Mrs. Sushma Suri and Ms. Indra Sawhney for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question for our consideration in this appeal is whether the appellant is governed by Funda mental Rule 56(c)(i) and as such entitled to superannuation at the age of 60 years.
Fundamental Rule 56(c)(i) is reproduced as under: "(c) A ministerial Government servant who entered Government service on or before the 31st March, 1958 and held on that date: (i) a lien or a suspended lien on a permanent post, or . shall retire from service on the afternoon of the 1st day of the month in which he attains the age of sixty years.
" The appellant joined service as paid apprentice in the Collectorate of Etawah, Government of Uttar Pradesh on 1st July, 1937.
On the same day he was asked to officiate in the post of Arranger.
He was sent back to the post of paid apprentice on 24th December, 1937 but was again appointed as Arranger in officiating capacity on 3rd of January 1938.
While holding the post of paid apprentice he had been ap pointed in various posts on officiating basis.
He was final ly promoted and appointed to a permanent post of Copyist in a substantive capacity on 1st of August, 1941.
He came to the Government of India on deputa 412 tion in March 1943 and thereafter retired from service on attaining the age of 58 years in February 1976.
The appellant claimed that having entered Government service on permanent basis before 31st March, 1938 he was entitled to continue in service till the age of 60 years under Fundamental Rule 56 (c)(i) and his retirement on attaining the age of 58 years was illegal.
The Central Administrative Tribunal, Principal Bench, New Delhi dis missed the application of the appellant holding that the appellant was only an apprentice under training prior to 1st of August, 1941 and as such was not holding any employment under the State on permanent basis.
According to the Tribu nal the appellant was appointed to the Government service on permanent basis to the post of Copyist on 1st of August, 1941 and as such he did not come within the purview of Fundamental Rule 56(c)(i).
We have examined the admitted entries in the service book of the appellant which are on the record.
These entries show that the appellant joined service as paid apprentice on substantive permanent basis on 1st of July, 1937.
It is correct that from 1st of July, 1937 upto 1st of August, 1941 he has been shown in the service book to be appointed in officiating capacity to various posts but the fact remains that his basic appointment as paid apprentice was permanent.
The finding of the Tribunal that the appellant was made permanent for the first time as Copyist on 1st August, 1941 cannot be accepted in the face of clear entries in the service book showing that he joined as paid apprentice on permanent basis on 1st of July, 1937.
Joining as paid ap prentice on permanent basis cannot be anything else but entering Government service on permanent basis and since the entry was before 31st March, 1938 Fundamental Rule 56(c)(i) is attracted and the appellant is entitled to remain in Government service till the age of 60 years.
In the reply affidavit on behalf of the respondents in the court below it is stated as under: "The petitioner joined Government Service under the provincial Government of Uttar Pradesh on 1.7. 1937 against a post of paid apprentice.
It appears there were a few permanent posts of paid apprentice under the State Government.
Petitioner was appointed against one of them in Collectorate, Etawah.
" 413 The respondents repeated their stand in the counter filed by them in this Court in the following terms: "It is submitted that the petitioner joined Govern ment service under the Provincial Government of Uttar Pra desh on 1.7.1937 against a post of "Paid Apprentice".
It appear that there were a few permanent posts of paid appren tice under the State Government.
The petitioner was appoint ed against one of them in the Collectorate, Etawah.
" We are, therefore, of the view that the Tribunal erred in denying the benefit of Fundamental Rule 56 (c)(i) to the appellant.
We allow the appeal with costs and set aside the judgment of the Central Administrative Tribunal under appeal and we hold that the appellant was entitled to continue in Government service till he attained the age of 60 years.
The appellant has already completed 60 years and as such he be paid two years emoluments with all consequential benefits including any enhancement in the fixation of pension and other post retirement benefits.
We quantify the costs as Rs.3,000.
G.N. Appeal allowed.
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Appellant joined State Government service, as paid apprentice on 1.7.1937.
He held various posts and was pro moted to the permanent post of Copyist on 1.8.1941.
In March, 1943 he came to Government of india service on depu tation, and retired in 1976 on attaining the age of 58 years.
Thereafter he moved the Central Administrative Tribu nal claiming that since he entered Government service on permanent basis before 31.3.1938, he was entitled to contin ue in service till the age of 60 years, as per Fundamental Rule 56(c)(i).
Dismissing the application, the Central Administrative Tribunal held that since the appellant was appointed on permanent basis to the post of Copyist on 1.8.41, he did not come within the purview of Fundamental Right 56(c)(i).
Aggrieved, the appellant has preferred this appeal.
Allowing the appeal, this Court, HELD: It is correct that from 1st of July, 1937 upto 1st of August, 1941 the appellant has been shown in the service book to be appointed in officiating capacity to various posts but the fact remains that his basic appointment as paid apprentice was permanent.
The finding of the Tribunal that the appellant was made permanent for the first time as Copyist on 1st August, 1941 cannot be accepted in the face of clear entries in the service book showing that he joined as paid apprentice on permanent basis on 1st of July, 1937.
Joining as paid apprentice on permanent basis cannot be anything else but entering Government service on permanent basis and since the entry was before 31st March, 1938, Fundamental Rule 56(c)(i) is attracted and the appellant is entitled to remain in Government service fill the age of 60 years.
[412D F] 411 [ This court observed that since the appellant has already completed 60 years, he be paid two years emoluments with all consequential benefits including any enhancement in the fixation of pension and other post retirement benefits.] [413D]
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Here's a two-paragraph summary of the court case:
The appellant, Shankar Vaidyalingam, challenged his retirement at the age of 58 years before the Central Administrative Tribunal, claiming entitlement to continue in government service till the age of 60 years under Fundamental Rule 56(c)(i). The rule states that a ministerial government servant who entered government service on or before March 31, 1958, and held a lien on a permanent post, shall retire at the age of 60 years. The appellant joined government service as a paid apprentice on July 1, 1937, and was later appointed as a Copyist in a substantive capacity on August 1, 1941.
The Central Administrative Tribunal dismissed the appellant's application, holding that he was only an apprentice under training prior to August 1, 1941, and was not holding any permanent employment under the state. However, the Appellate Court disagreed, stating that the appellant's basic appointment as a paid apprentice on July 1, 1937, was on a permanent basis. Therefore, the Court allowed the appeal, set aside the Tribunal's judgment, and held that the appellant was entitled to continue in government service till he attained the age of 60 years. The Court also directed the payment of two years' emoluments, including any enhancement in the fixation of pension and other post-retirement benefits, to the appellant.
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tition Nos. 293,391 and 392 of 1981.
(Under Article 32 of the Constitution) 138 M.M. Abdul Khader and Shakeel Ahmed for the Petitioners.
R.K. Bhatt, D. Goburdhan and Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
These three Writ Petitions may be disposed of by a single judgment since the principal question argued in all the three cases is one.
The question is whether delay in considering the representation made by a detenu under article 22(5) of the Constitution vitiates a detention under the National Security Act and entitles the detenu to be released on that ground alone.
As a result of a series of decisions of this Court,( ') it is now well settled that the representation made by a detenu under article 22(5) of the Constitution against his detention under the , must be considered by the detaining authority with the ut most expedition and that any unexplained delay in considering the representation will be fatal to the detention.
The learned counsel for the State of Uttar Pradesh urged that the rule requiring expeditious consideration of a detenu 's representation is a judge made rule based on provisions of the Conservation of Foreign Exchange and Prevention of the Smuggling Activities Act, 1974, and that the extension of the application of the rule to cases of detention under the National security Act was unwarranted.
The learned counsel contrasted the provisions of the National Security Act and the provisions of the Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974, and urged that in the case of detention under the National Security Act, a certain amount of delay was inevitable having due regard to the procedure prescribed by the Act and, 139 therefore, delay in consideration of the representation should not be allowed to prejudice the detention.
We are unable to agree with the submission of the learned counsel.
We will presently give our reasons for our inability to accept the learned counsel 's submissions but we will first like to refer to a few facts.
In Writ Petition (Criminal) No. 293 of 1981 the order and the grounds of detention were served on the detenu on October 30, 1980 and November 12, 1980 respectively.
The detenu made a representation on November 12, 1980.
Though according to the detenu he has received no communication from the Government about his representation, the Additional District Magistrate has stated in his counter affidavit that the representation was rejected on December 9, 1980 and that it was communicated to the detenu through the Superintendent of the Central Jail.
The counter affidavit mentions not a word to explain the delay in considering the representation.
The only reference to the representation in the counter affidavit is in these two sentences: "It is admitted that the detenu made a representation to the Home Secretary on November 12, 1980, and the same was rejected on December 9, 1980.
The rejection of the representation was communicated to the detenu through Superintendent, Central Jail by the Government".
Similarly in Writ Petition (Criminal No. 391 of 1981, the order and the grounds of detention were served on the detenu on November 12, 1980.
The representation was rejected on December 10, 1980.
In the counter affidavit filed by the Section Officer, Confidential Department, of the Government of Uttar Pradesh, it is stated that on receipt of the representation, the Secretary ' Home Department, forwarded it to the District Magistrate for his comments.
In order to meet the allegations in the representation, the District Magistrate had to gather information from many sources and the representation alongwith his comments was returned to the Home Secretary by the District Magistrate on November 25, 1980.
Thereafter Law Department was consulted and the file could reach the Home Minister on December 5, 1980 only.
The representation was rejected by the Home Minister on December 8, 1980 and then communicated to the detenu through the Superintendent, Central Jail.
In Writ Petition (Criminal) No. 392 of 1981 the order and the grounds of detention were served on the detenu on October 16, 1980.
The detenu made a representation on October 24, 1980.
It was rejected on November 25, 1980.
The counter 140 affidavit filed by the Additional District Magistrate does not offer any explanation for the delay in the consideration of the representation.
He has satisfied himself with the statement "as regards the representation of the detenu to the Home Secretary this fact is admitted.
" The question for consideration is whether a person preventively detained under the provisions of the National Security Act is entitled to be released if there is delay in the consideration of the representation made by him to the detaining authority.
It is true that the series of cases where delay in the consideration of the representation made by a detenu was held to be fatal to detention were cases which arose under the .
We are however, unable to see how that would make any difference.
The right of detenu to have his representation considered "at the earlier opportunity" and the obligation of the detaining authority to consider the representation "at the earliest opportunity" are not a right and an obligation flowing from either the , or the National Security Act or, for that matter any other Parliamentary of State law providing for preventive detention.
They are a right and an obligation created by the very Constitution which breathes life into the Parliamentary or State law.
article 22(5) enjoins a duty on the authority making the order of detention to afford the detenu "the earliest opportunity of making a representation against the order".
The right and obligation to make and to consider the representation at the earliest opportunity is a Constitutional imperative which cannot be curtailed or abridged.
If the Parliament or the State legislature making the law providing for preventive detention devises a circumlocutory procedure for considering the representation or if the inter departmental consultative procedures are such that delay becomes inevitable, the law and the procedures will contravene the constitutional mandate.
It is essential that any law providing for preventive detention and any authority obliged to make orders for preventive detention should adopt procedures calculated towards expeditious consideration of representations made by detenus.
It will be no answer to a demand for liberty to say that administrative red tape makes delay inevitable.
The learned counsel for the State of Uttar Pradesh pointed out certain differences between the and the National Security Act which according to him make delay inevitable in 141 the consideration of representations in cases of detention under the National Security Act.
We think that the differences pointed out are irrelevant.
The constitutional mandate brooks no unreasonable delay in the consideration of a representation.
In the cases before us, in Criminal Writ Petition Nos. 293 of 1981 and 392 of 1981 no explanation was offered by the detaining authority for the delay in the consideration of representations and in Criminal Writ Petition No. 391 of 1981, administrative red tape was the only explanation offered.
We are satisfied that in all the three cases there was unreasonable delay in the consideration of the representations and the detenus are, therefore, entitled to be released.
They will be released forthwith.
The Writ Petitions are allowed.
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Allowing the appeals, the Court ^ HELD: 1: 1.
Article 22 (5) of the Constitution enjoins a duty on the authority making the order of detention to afford the detenu the earliest opportunity of making a representation against the order.
The right and obligation to make and to consider the representation at the earliest opportunity is a constitutional imperative which cannot be curtailed or abridged.
[140 E] 1: 2.
If the Parliament or the State Legislature making the law providing for preventive detention devises a circumlocutory procedure for considering the representation or if the inter departmental consultative procedures are such that delay becomes inevitable, the law and the procedures will contravene the constitutional mandate.
It is essential that any law providing for preventive detention and any authority obliged to make order for preventive detention should adopt procedures calculated towards expeditious consideration of representations made by detenus.
It will be no answer to a demand for liberty to say that administrative red tape makes delay inevitable.
The constitutional mandate brooks no unreasonable delay in the consideration of a representation.
[140 G, 141A] 1: 4.
The right of detenu to have his representation considered "at the earliest opportunity" and the obligation of the detaining authority to consider the representation "at the earliest opportunity" are not a right and an obligation flowing from either the Conservation of Foreign Exchange and Prevention of Smuggling Activities, 1974 or the National Security Act or, for that matter any other Parliamentary or State law providing for preventive detention.
They are a right and an obligation created by the very Constitution which breathes life into the Parliamentary or State law.
[140 D] Jayanarayan Sukul vs State of West Bengal, ; ; Narendra Purshotam Umrao etc.
vs B.B. Gujral and Ors.,[1979] 2 SCR 315; V.J. Jain vs Pradhan, ; ; Smt.
Ichhu Devi Choraria vs Union of India and Ors.; ; ; Ramachandra A. Kamat vs Union of India and Ors. ; ; Frances Coralie Mullin vs W. C. Khambra and Ors. ; , referred to.
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Here is a two-paragraph summary of the court case:
The court in this case considered three writ petitions filed under Article 32 of the Constitution, challenging the detention of individuals under the National Security Act. The petitions raised the issue of delay in considering the representations made by the detenus against their detention, as required under Article 22(5) of the Constitution. The court held that the right to have one's representation considered at the earliest opportunity is a constitutional imperative, and any unreasonable delay in consideration of such representation would be fatal to the detention.
The court rejected the argument of the State of Uttar Pradesh that delay in considering representations was inevitable due to administrative red tape and the differences between the National Security Act and other laws. The court held that the constitutional mandate under Article 22(5) brooks no unreasonable delay in the consideration of a representation, and since there was unreasonable delay in the three cases before it, the detenus were entitled to be released. The court allowed the writ petitions and ordered the release of the detenus forthwith.
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urt held that there was no consequential relief involved since neither the decree nor the alienation binds the plaintiffs in any manner.
The 1st defendant in the suit has, therefore, filed this appeal.
Before us a preliminary objection was raised based on the observations of this Court in Raihnavaramaraja vs Smi.
Vimla (1) that the present appeal is not competent.
In that case this Court observed that whether proper court fee is paid on a plaint is primarily a question between the plaintiff and the State and that the defendants who may believe and even honestly that proper court fee has not been paid by the plaintiff has still no right to move the superior courts by appeal or in revision against the order adjudging payment of court fee payable on the plaint.
But the observations must be understood in the background of the facts of that case.
This Court was there dealing with an application for revision filed before the High Court under section 115 of the Code of Civil Procedure and pointed out that the jurisdiction in revision exercised by the High Court is strictly conditioned by clauses (a) to (c) thereof and may be invoked on the ground of refusal to exercise jurisdiction vested in the Subordinate Court or assumption of jurisdiction which the court does not possess or on the ground that the Court has acted illegally or with material irregularity in the exercise of its jurisdiction, and the provisions of sections 12 and 19 of the Madras Court Fees Act do not arm the defendant with a weapon of technicality to obstruct the progress of.
the suit by approaching the High Court in revision against an order determining the court fee payable.
The ratio of that decision was that no revision on a question of court fee lay where no question of jurisdiction was involved.
This decision was correctly interpreted by the Kerala High Court in Vasu vs Chakki Mani(2)where it was pointed out that no revision will lie against the decision on the question of adequacy of court fee at the instance of the defendant. unless the question of court fee, involves also the question of jurisdiction of the court.
In the present case the plaint was rejected under Order 7, Rule 1 1 of the C.P.C. Such an order amounts to a decree under section 2(2) and there is a right of appeal open to the plaintiff.
Furthermore, in a case in which this Court has granted special leave the question whether an appeal lies or not does not arise.
Even otherwise a second appeal would lie under section 100 of the C.P.C. on the ground that the decision of the 1st Appellate Court on the interpretation of section 7(iv) (c) is a question of law.
There is thus no merit in the preliminary objection.
As regards the main question that arises for decision it appears to us that while the court fee payable on a plaint is certainly to be decided on the basis of the allegations and the prayer in the plaint and the question whether the plaintiff 's suit will have to fail for failure to ask for consequential relief is of no concern to the court at that stage the court in deciding the question of court fee should look into the allegations in the plaint to see what is the substantive relief that is asked for Mere astuteness in drafting the plaint will not be allowed to stand in the way of the court looking at the substance of the relief asked for.
In this case the relief asked for is on the basis that the property in dispute is a joint Hindu family property and there was no legal necessity (1) A. I. R. (2) A. I. R. 1962 Kerala 84. 325 to execute the mortgage.
It is now well settled that under Hindu Law if the manager of a joint family is the father and the other members are the sons the father may by incurring a debt so long as it is not for an immoral purpose, lay the joint family estate open to be taken in execution proceedings upon a decree for the payment of the debt not only where it is an unsecured debt and a simple money decree for the debt but also to a mortgage debt which the father is personally liable to pay and to a decree for the recovery of the mortgage debt by the sale of the property even where the mortgage is not for legal necessity or for payment of antecedent debt (Faqir Chand vs Harnam Kaur(1).
Consequently when the plaintiffs sued for a declaration that the decree obtained by the appellant against their father was not binding on them they were really asking either for setting aside the decree or for the consequential relief of injunction restraining the decree holder from executing the decree against the mortgaged property as he was entitled to do.
This aspect is brought out in a decision of the Full Bench of the Lahore High Court in Zeb ul Nisa vs Din Mohammad(2)where it was held that : "The mere fact that the relief as stated in the prayer clause is expressed in a declaratory form does not necessarily show that the suit is for a mere declaration and no more.
If the relief so disclosed is a declaration pure and simple and involves no other relief, the suit would fall under article 17(iii).
" In that case the plaintiff had sued for a twofold declaration : (i) that the property described in the plaint was a waqf, and (ii) that certain alienations thereof by the mutwalli and his brother were null and void and were ineffectual against the waqf property.
It was held that the second part of the declaration was tantamount to the setting aside or cancellation of the alienations and therefore the relief claimed could not be treated as a purely declaratory one and inasmuch as it could not be said to follow directly from the declaration sought for in the first part of the relief, the relief claimed in the case could be treated as a declaration with a "consequential relief.
" It was substantive one in the shape of setting aside of alienations requiring ad valorem court fee on the value of the subject matter of the sale, and even if the relief sought for fell within the purview of section 7 (iv) (c) of the plaintiffs in view of sections 8 and 9, Suits Valuation Act, having already fixed the value of the relief in the plaint for purposes of jurisdiction were bound to fix the same value for purposes of court fee.
It was also pointed out that in deciding whether a suit is a purely declaratory, the substance and not merely the language or the form of the relief claimed should be considered.
The court also observed : "It seems to me that neither the answer to the question whether the plaintiff is or is not a party to the decree "or the deed sought to be declared as null and void, nor to the ques tion whether the declaration sought does or does not fall within the purview of section 42, Specific Relief Act, furnishes a satisfactory or conclusive test for determining the court fee payable (1) ; (2) A. I. R. [1941] Lahore 97. 326 in the suit of this description.
When the plaintiff is a party to the decree or deed, the declaratory relief, if granted, neces sarily relieves the plaintiff of his obligations under the decree or the deed and, hence it seems to have been held in such cases, that the declaration involves a consequential relief.
In cases where the plaintiff is not a party to the decree or the deed.
tile declaratory relief does not ordinarily include any such consequential relief.
But there are exceptional cases in which the plaintiff though not a party to the deed or the decree is nevertheless bound thereby.
For instance, when a sale or mortgage of joint family property is effected by a manager of a joint Hindu family, the alienation is binding on the other members of the family (even if they are not parties to it) until and unless it is set aside.
Similarly, a decree passed against the manager will be binding on the other members of the If therefore a copartner sues for a declaration that such an alienation or decree is null and void, the declaration must I think be held to include consequential relief in the same may as in those cases in which the plaintiff is himself a party to the alienator, or the decree, which is sought to be, declared null and void.
The case dealt with in AIR 1936 Lah 166 seems to have been of this description.
The case of an alienation by a mutwalli of waif property would also ap pear to stand on a similar footing.
In the case of waif property, it is only the trustee or the mutwalli who can alienate the property.
If he makes an alienation it is binding on all concerned, until and unless it is set aside.
If therefore a person sues to get such an alienation declared null and void, lie can only do so by getting the deed invalidated.
The relief claimed in such cases also may therefore be found to include a consequential relief.
" The decision of the Lahore High Court in Prithvi Raj vs D. C. Ralli (1) is exactly in point.
It was held that in a suit by the son for a declaration that the mortgage decree obtained against his father was not binding upon him it is essential for the son to ask for setting aside of the decree as a consequence of the declaration claimed and to pay ad valorem court fee under section 7(iv)(c).
It was pointed out that a decree against the father is a good decree against the, son and unless the decree is set aside it would remain executable against the son, and it was essential for the, son to ask for setting aside the decree.
In Finayakrao vs Mankunwarbai(2) it was held that in a suit by the son for a declaration that decree against the father does not affect his interests in the family property, consequential relief is involved and ad valorem court fee would be necessary.
We should now refer to certain decisions relied upon by the respondents.
We do not consider that the decision of the learned Single Judge of the Madras High Court in Venkata Ramani vs Mravanaswami(3) lays down the correct law.
It proceeds on the basis that (1) A.I.R. 1945 Lahore 13.
(2) A.I.R. 1943 Nagpur 70.713.
(3) A.I.R. 1925 327 the plaintiffs not being parties to the document they were not bound to get rid of it by having it actually cancelled, but it ignores the effect of Hindu Law in respect of a mortgage decree obtained against the father.
As pointed out by the Lahore High Court, in such cases in suing for declaration that the decree is not binding on him the son is really asking for a cancellation of the decree.
This aspect does not seem to have been taken into consideration by the learned Single Judge.
The decision of a learned Single Judge of the Nagpur High Court in Pandurang Mangal vs Bhojalu Usanna(1) suffers from the same error.
Though it refers to the decision of the Full Bench of the Lahore High Court as well as the same High, Court 's decision in Prithvi Raj vs D. C. Ralli(2) it does not seek to distinguish them for holding otherwise.
The learned Judge gives no reason whether and if so why he dissents from the view taken in the latter case.
This decision also suffers from the learned Judge 's misapprehension that there is a difference between a simple money decree and a mortgage decree.
obtained against a Hindu father when it is questioned by the son and its view that in execution of a simple money decree the entire joint family property, inclusive of the interest of the sons, is liable to be sold in execution of the decree, but that in the case of a mortgage decree it is not necessary for a son to allege or prove that the debt was incurred for an illegal or an immoral purpose and he can succeed if it is proved that the mortgage was not for legal necessity or for the payment of antecedent debt.
We have already referred to the decision of the Court on this point.
We must also hold in view of the reasons already set forth that the decision of the Allahabad High Court in Ishwar Dayal vs Amba Prasad (3) is not a good law.
As regards the decision of the Full Bench of the Allahabad High Court in Bishan Sarup vs Musa Mal(4) there is nothing to show whether the alienation was made by the manager of a joint Hindu family and therefore the decision is not in point.
We, therefore, hold that the decision of the High Court was not correct and allow this appeal with costs.
The plaintiffs would be given a month 's time for paying the necessary court fee.
Appeal allowed.
(1) A.I.R. 1949 Nagpur 37.
(2) A.T.R. 1945 Lahore 13.
(3) A.T. R. 1935 Allahabad 667.
(4) A.I.R. 1935 Allahabad.
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There was a mortgage of a property in favour of the appellant for a sum of Rs. 15,000/ .
The mortgagee filed a suit and obtained a decree.
When he tried to take out execution proceedings for the sale of the mortgaged property, respondents 1 and 2 filed a suit for a declaration that the mortgage executed by their father was null and void as against them.
as the property was a joint Hindu family property and the mortgage had been effected without consideration and family necessity.
The plaintiffs (Respondent 1 and 2) paid a Court Fee of Rs. 19.50 and the value of the suit for purposes of jurisdiction was given as Rs. 16,000/ .
A preliminary objection was raised by the Appellant that the suit was not properly valued for purposes of Court Fee and jurisdiction.
The Subordinate Judge held that although the case is 'covered by S.7(iv)(c) of the Court Fee Act, the proviso to that Section applied and directed the plaintiffs to pay Court.
Fee on the value of Rs. 16,000/ .
Thereafter, the Court Fee not having been paid, the plaint was rejected.
The plaintiff appealed before the High Court against that decision.
The High Court held against the defendants taking the view that the plaintiffs were not at all bound by the mortgage in dispute since it was a joint family property.
The first defendant appealed before this Court.
In this Court, preliminary objection were raised that the present appeal is not competent and secondly, the plaintiffs were not bound by the mortgage ,of the joint Hindu family property where there was no legal necessity to execute the mortgage.
Allowing the appeal, HELD (i) in the present case, the plaint was rejected under Order 7, Rule 11 of the C.P.C. Such an order amounts to a decree under S.2(ii) and there is a right to appeal open to the plaintiff.
Furthermore, in a case in which.
this Court has granted special leave, the question whether an appeal lies or not, does not arise.
Even otherwise, a second appeal would lie under S.100 of the C.P.C. on the ground that the decision of the 1st appellate Court on the interpretation of S.7(iv)(c) is a question of law.
There is thus no merit in the preliminary objection.
[324E G] Vasu vs Chakki Mani (A.I.R. 1962 Kerala 84 referred to).
Rathnavarmaraja vs Smt.
Vimla, ; referred to and distinguished.
(ii) While the Court Fee payable on a plaint is certainly to be decided on the basis of the allegations and the prayer in the plaint and the question whether the plaintiff 'section suit will have to fail for failure to ask for consequential relief is of no concern to the Court question of Court Fee, should look into at that stage, the Court in deciding the allegations in the plaint to see what the substantive relief that is asked for Mere cleverness in drafting the plaint will not be allowed to stand in the way of the Court looking at the substance of the relief asked for.
In the present case, the relief asked for is on the basis that the property in dispute is a joint Hindu family property and there was no legal necessity to execute the mortgage.
It is now well settled that under Hindu Law, if the manager of a joint family is the father and the ,other members are sons, the father may, incur a debt, so long as it is not for immoral purposes and the joint family estate is open to be taken in execution ,of proceedings upon a decree for the payment of the debt.
[324G 3250] Fakir Chand vs Harnam Kaur ; , referred to.
323 (iii) In the present case, when the plaintiffs sued for a declaration that the decree obtained by the appellant against their father was not binding on them, they were really asking for setting aside the decree or for the consequential relief of injunction restraining the decree holder from executing the decree against the mortgaged property.
[325B C] In deciding whether a suit is purely declaratory, the substance and not merely the language or the form or relief claimed should be considered.
[325G] Zeb ul Nisa vs Din Mohammad, A.I.R. 1941 Lahore 97 referred to.
(iv) In a suit by the son for a declaration that the mortgage decree obtained against his father is not binding upon him.
it is essential for the son to ask for setting aside the decree as a consequence of the declaration claimed and to pay ad velorem Court fee under section 7(iv)(c).
A decree against the father is a good decree against the son and unless the decree is set aside, it will remain executable against the son and it is essential for the son to ask to set aside the decree.
Further, in a suit by the son for a declaration that a decree against the father, does not affect his interest in the family property, consequential relief is involved and ad velorem Court fee is necessary.
[326F G] Prithvi Rai vs D. C. Ralli, A.I.R. 1945 Lahore 13, and Vinayakrao vs Mankunwar Bai, A.I.R. 1943 Nagpur 70, referred to The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal raises the, question of the court fee payable in the suit filed by the 1st respondent and his minor brother the 2nd respondent against their father the 3rd respondent and the alienee from him the appellant.
On 13 7 1962 the father executed a mortgage deed in favour of the appellant of a property of which he claimed to be the sole owner for a sum of Rs. 15,000/ .
The mortgagee, the appellant filed a suit on the foot of this mortgage and obtained a decree.
When he tried to take out execution proceedings for the sale of the mortgaged property, respondents 1 and 2 filed a suit for a declaration that the mortgage executed by their father in favour of the appellant is nun and void and ineffectual as against them as the property was a joint Hindu family property, and the mortgage had been effected without consideration and family necessity.
On this plaint the plaintiffs _paid a fixed court fee of Rs. 19.50 and the value of the suit for purposes of jurisdiction was given as Rs. 16,000.
A preliminary objection having been raised by the appellant that the suit was not properly valued for purposes of court fees and jurisdiction, the Subordinate Judge tried it as a preliminary issue.
He held that although the case is covered by section 7(iv) (c) of the Court Fees Act, the proviso to that section applied and directed the plaintiffs to pay court fee on the value of Rs. 16,000 which was the amount at which the plaintiff , valued the suit for the purposes of jurisdiction.
The court fee not having been paid the plaint was rejected.
The plaintiffs thereupon carried the matter up on appeal before the High Court of Punjab & Haryana.
Before that Court the plaintiffs did not seriously contest the position that the consequential relief of setting aside the decree within the meaning of Section 7 (iv) (c) of the Court Fees Act was inherent in the declaration which was claimed with regard to the decree.
But taking the view that the plaintiffs were not at all bound by the mortgage in dispute or the decree, the High 324
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Here's a two-paragraph summary of the court case:
The case revolves around the question of whether the plaintiff's suit requires payment of court fee under section 7(iv)(c) of the Court Fees Act, 1870, which involves the valuation of the subject matter of the relief. The plaintiff had filed a suit for a declaration that a mortgage decree obtained by the defendant against the plaintiff's father was not binding on them, and the court had to decide whether this suit falls within the purview of section 7(iv)(c). The court had to consider several decisions, including the decision of the Full Bench of the Lahore High Court in Zeb ul Nisa vs Din Mohammad, which held that in cases where the plaintiff is not a party to the decree but is bound by it, the declaratory relief would necessarily involve a consequential relief, and ad valorem court fee would be payable.
The court ultimately held that the plaintiff's suit involves consequential relief, as setting aside the mortgage decree would be necessary to relieve the plaintiff of their obligations under the decree. The court also referred to several decisions, including Prithvi Raj vs D. C. Ralli and Finayakrao vs Mankunwarbai, which held that in cases where the plaintiff is a son of the person against whom the mortgage decree was obtained, the consequential relief is involved, and ad valorem court fee would be necessary. The court allowed the appeal, set aside the decision of the High Court, and directed the plaintiffs to pay the necessary court fee within a month.
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ivil Appeal No. 1731 of 1986.
From the Judgment and Order dated 26.4.
1985 of the Madhya Pradesh High Court in Misc.
Petition No. 1729 of 1984.
Avadh Behari and S.K. Gambhir for the Appellant.
330 Rameshwar Nath, V.S. Dabir, Rajinder Narain for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
S.P. Dubey, employed with the Madhya Pradesh State Road Transport Corporation, was retired from service on his attaining the age of 58 years.
He claims that the age of superannuation was 60 years and as such his retirement at 58 was illegal.
We may state the necessary facts.
Dubey joined service as a junior clerk with the Central Provinces Transport Service Limited (hereinafter called the company) in the year 1947.
The Board of Directors of the company by a resolution dated July 30, 1954 fixed the age of superannuation of all its employees except the drivers as 60 years.
The company was purchased and taken Over by the State of Madhya Pradesh by a notification dated August 31, 1955.
The relevant part of the said notification is as under: "The undertaking will as from the 31st August, 1955 be entitled 'The Central Provinces Transport Services (under Government Ownership)".
So far as the public is concerned there will be no change or interruption in the course of business and the continuity of operation will not be dis turbed and the existing staff will not be adversely affected with regard to terms and conditions of their services.
The statutory instrument to be made in due course will provide, among other things that all the rights and liabilities of the Central Provinces Transport Services Ltd. will become the rights and liabilities of the Central Provinces Trans port Services (Under Government ownership) and from a legal point of view the staff, customers and contractors can look to the Central Provinces Transport Services (Under Govern ment ownership) to discharge all the obligations and exer cise all the rights that at present rest with the Central Provinces Transport Service Ltd., Rules for the conduct of business of the above constituted Board of Management are being published separately.
" It is thus obvious that the Government continued to maintain the Central Provinces Transport Services as a separate entity.
The conditions of service, of the staff of the taken over company, were specifically protected.
331 The State of Madhya Pradesh was recoganised under the .
The Central Government, by a notification dated February 28, 1961, extended the provi sions of Road Transport Corporation Act, 1958 (hereinafter called 'the Act ') to the State of Madhya Pradesh with effect from April 1, 1961.
Thereafter the Madhya Pradesh Government acting under Section 3 of the Act established the Madhya Pradesh State Road Transport Corporation (hereinafter called Corporation) with effect from May 21, 1962.
The Madhya Pradesh Government issued two memorandums on May 4, 1962.
By one memorandum the services of the concerned employees including Dubey were transferred to the Corporation and by the second it was clarified that the said transfer was subject to the conditions that their service would be treat ed as uninterrupted and their pay scales and conditions of service would not be affected.
On the same day and Board of Directors of the Corporation passed a resolution to the following effect: "Resolved that the services of the employees employed under M.B.R. and C.P.T.S. on 31.5.1962 are transferred to the Corporation temporarily until further orders from 1.6.1962 on the following conditions: 1.
The pay scale and conditions of service are not affected by the transfer.
The transfer will not be considered as interruption of services.
In case of employees coming under the category of workman as defined under the , the Corporation in the event of retrenchment will pay compensation on the basis that the services had been contin ued and had not affected by transfer.
" The State Government issued directions dated October 29, 1963 to the Corporation under Section 34 of the Act.
Rele vant part of the directions is as under: "The members of the staff of the Madhya Bharat Roadways and Central Provinces Transport Services, who have opted to serve under the Corporation in pursuance of the notices issued to them by the Commerce and Industry Department or any authority of the Madhya Bharat Road 332 ways and Central Provinces Transport Service shall be em ployed by the Corporation subject to such regulations as may be made by it under Section 45(2)(c) of the 'Road Transport Corporation Act, 1950 '(Central Act LXIV of 1950), and subject to 'such assurance as may have been given to them by the State Government.
" The Corporation framed regulations called The Madhya Pradesh State Road Transport Corporation Employees Service Regulations, 1964.
" Regulation 59 which provided the age of superannuation was as under: "Employees of/he State Transport are liable to compulsory retirement on the date of their completion of fifty eight years of age unless specifically permitted by the Corpora tion to continue in service for a specified period thereaf ter, but he must not be retained after the age of 60 years, without the sanction of State Government.
" The corporation issued a notice dated May 25, 1983 to Dubey informing him that he was due to retire from service on June 30, 1984 on attaining the age of 58 years.
He chal lenged the said notice by way of a writ petition under Article 226/227 of the Constitution of India before the Madhya Pradesh High Court at Jabalpur, The High Court by its judgment dated April 26, 1985 dismissed the writ petition.
The present appeal by way of special leave petition is against the judgment of the High Court.
The High Court, following its earlier Division Bench judgment, came to the conclusion that on August 31, 1955 when the appellant became State Government employee his age of superannuation came to be governed by the statutory rules under Article 309 of the Constitution of India operating in respect of the Government employees of the State of Madhya Pradesh and the age of retirement of the State servants under the said rules being 58 years the appellant was right ly retired.
The appellant was in service of the company from 1947 to August 30, 1955.
Admittedly, the age of superannuation of the company employees was 60 years.
The Government of Madhya Pradesh took over the company with effect from August 31, 1955 by a notification of the same date.
The notification specifically stated that the existing staff of the company would not be adversely affected with regard to 333 their conditions of service.
It is no doubt correct that on August 31, 1955 rules were operating in respect of the State Government employees according to which the age of superan nuation was 58 years but the persons who were service with the company were taken into Government serving with a spe cific assurance that their conditions of service were. not to be adversely affected.
When the.
State Government takes over a private company and gives an assurance of the types it is but fair that the State Government should honour the same.
Thus, the State Service rules which fixed the age of superannuation at 58 years could not be made applicable to the appellant and other employees of the taken over company.
We, therefore, do not agree with the reasoning of the High Court.
It was then urged that on the transfer of appellant 's service to the Corporation he was governed by the Regula tions framed by the Corporation under the Act and Regulation 59 provided 58 years as the age of superannuation.
We do not agree with the contention.
The State Government issued directions under Section 34 of the Act which we have repro duced above.
The said directions are binding on the corpora tion.
This Court in The General Manager, Mysore State Road Transport Corporation vs Devraj ors and another, interpreting Section 34 of the Act held as under: "Directions given by the State Government are binding on the corporation and it cannot depart from any general instruc tions issued under sub section (1) of Section 34 except with the previous permission of the State Government.
Such in structions have the force of law .
Therefore breach of the directions given by State Government in the matter of disciplinary action against the respondents was a breach of the statutory duty and made the action of the corporation amenable to the jurisdiction of the High Court under Article 226 of the Constitution".
The State Government and also the Corporation had given assurance to the appellant and other employees who were transferred to the Corporation that their conditions of service would not be adversely affected.
The said assurance was incorporated in the directions issued under the Act.
The Corporation cannot frame regulations contrary to the direc tions issued by the State Government under Section 34 of the Act.
The age of superannution which the appellant was enjoy ing under the State Government could not be altered to his disadvantage by the 334 Corporation.
We are, therefore, of the view that Regulation 59 flamed by the Corporation was not applicable to the appellant.
He was entitled to continue in service upto the age of 60 years.
We, therefore, allow the appeal with costs and set aside the judgment of the High Court.
The appellant has already attained the age of 60 years.
He is only entitled to two years emoluments.
The respondents are directed to pay the same to the appellant within three months from today.
We quantify the costs as Rs.5,000.
P.S.S. Appeal allowed.
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The age of superannuation for the employees of the private transport company in which the appellant was ini tially employed was 60 years.
When the said company was taken over by the State on August 31, 1955, the notification specifically provided that the existing staff would not be adversely affected with regard to terms and conditions of service.
Again, when the services 01 the staff of the taken over company were transferred to the respondent Corpo ration established under section 3 of the Road Transport Corpora tion Act, 1950, the memorandum dated May 4, 1962 recited the same assurance.
A resolution passed by the Board of Direc tors of the Corporation on the same day also reiterated the said assurance.
Subsequently, when the State Government issued directions on October 29, 1963 to the Corporation under section 34 of the Act the said assurance was embodied therein too.
However, Regulation 59 of the M.P. State Road Transport Corporation Employees Service Regulations, 1964 framed by the Corporation under section 45(2)(c) of the Act provided that the employees of the Corporation were liable to compulsory retirement on the date of their completion of 58 years of age unless specifically permitted to continue.
When the appellant was sought to be retired from service in terms of Regulation 59 of the said Regulations on attain ing the age of 58 years with effect from June 30, 1984 by a notice dated May 25, 1983, he challenged it by a petition under Article 226/227 of the Constitution.
It was dismissed by the High Court on the view that on August 31, 1955 when the appellant became State Government employee his age of superannuation came to be governed by the statutory rules under Article 309 of the Constitution and the age of retire ment of the State servants under the said rules being 58 years the appellant was rightly retired.
329 Allowing the appeal, the Court, HELD: 1.
The appellant was entitled to continue in service upto the age of 60 years.
2.1 When the State Government takes over a private company and gives an assurance that conditions of service of the existing staff would not he adversely affected, it is but fair that the State Government should honour the same.
2.2 In the instant case, the appellant was in service of the company from 1947 to August 30, 1955 in which the age of superannuation of the employees was 60 years.
The company was taken over by the State Government with effect from August 31, 1955 by a notification of the same date which specifically stated that the existing staff of the company would not he adversely affected with regard to their condi tions of service.
The State Service Rules which fixed the age of superannuation at 58 years could not thus he made applicable to the appellant and other employees of the taken over company.
Furthermore, the said assurance was also incorporated in the directions issued by the State Government to the Corporation under section 34 of the Act.
The Corporation could not frame regulations contrary to the said directions and the age of superannuation which the appellant was enjoying under the State Government could not he altered to his disadvantage by the Corporation.
Regulation 59 framed by the Corporation was, therefore, not applicable to the appellant.
The General Manager, Mysore State Road Transport Corpo ration vs Devraj Ors and Anr., , referred to.
Since the appellant had already attained the age of 60 years, he was only entitled to two years emoluments.
The respondents are directed to pay the same to him within three months.
[334B]
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**Civil Appeal No. 1731 of 1986**:
In this case, S.P. Dubey, a State Road Transport Corporation employee, challenged his retirement at the age of 58 years, claiming that the age of superannuation was 60 years. The court examined the age of superannuation applicable to Dubey, considering the takeover of the Central Provinces Transport Service Limited by the State of Madhya Pradesh on August 31, 1955. The court noted that the State Government had assured employees that their conditions of service would not be adversely affected, and that their age of superannuation would not be altered to their disadvantage.
The court ultimately allowed Dubey's appeal, holding that he was entitled to continue in service till the age of 60 years. The court set aside the judgment of the High Court and directed the respondents to pay two years' emoluments to Dubey within three months from the date of the judgment. The court quantified the costs at Rs. 5,000. This decision was based on the State Government's directions under Section 34 of the Road Transport Corporation Act, 1958, and the assurance given to Dubey and other employees regarding their conditions of service.
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Appeal No. 126 of 1966.
Appeal from the judgment and order dated November 29, and December 2, 1963 of the Gujarat High Court in Special Civil Application No. 641 of 1962.
736 K. R. Chaudhuri, for the appellant.
R. M. Hazarnavis, K. L. Hathi and section P. Nayar, for the respondents.
section T. Desai and I. N. Shroff, for the intervener.
The Judgment of the Court was delivered by Hegde, J.
The main controversy in this appeal by certificate is as to the constitutional validity of section 12A(4) of the Bombay Sales Tax 1946, to be hereinafter referred to as the Act.
As in our judgment that provision is void, the same being violative of article 19(1)(f) of the Constitution, we have not thought it necessary to examine the other contentions raised ' in the appeal.
The facts material for the purpose of deciding the question formulated above, are these: The appellants are dealers registered tinder the Act carrying on business in art silk, cotton and hand loom cloth.
During the period January 26, 1950 to March 31, 1950, the appellants effected various sales outside the State of Bombay.
As those sales were protected by article 286(1)(a) of the Constitution, they were outside the reach of the Act.
But yet the sales tax officer assessed the turnover relating to those sales.
The tax levied in respect of that turnover was Rs. 4,494/3/9.
In appeal, the order of the sales tax officer was affirmed by the Assistant Collector of sales,tax.
But the Additional Collector of sales tax in revision revised the levy to some extent and, ordered a refund of Rs. 2,238/0/6.
That amount was paid to the assessees.
Not being satisfied with the order of the Additional Collector of sales tax, the appellants took up the matter in revision to the Sales Tax Appellate Tribunal.
But even before they moved the Tribunal in revision, the Additional Collector of sales tax by his letter dated May 17, 1958, informed the appellants that unless they furnished to the sales tax officer proof of their having refunded the amount paid to them in pursuance of his order to the purchasers within a period of three months from the date of that notice, the same would be liable to be forfeited under section 12A(4) The Tribunal by its 'order dated November 26, 1958, allowed the claim of the appellants in full and directed ' the refund of an addi tional sum of Rs. 2,256/2/6.
During the period April 1, 1950 to March 31, 1951 the appel lants effected various sales outside the State of Bombay.
The turn, over relating to those sales was also brought to tax by the sales tax officer and in that connection a tax of Rs. 23,806/3/6 was levied on the appellants.
In appeal, the Assistant Collector of sale tax allowed the appellants ' claim in part and ordered a refund or.
Rs. 12,154/15/ but at the same time he informed them that that amount would be forfeited to the State Government if not refunded to the purchasers from whom the same had been collected.
No being satisfied with the relief obtained, the appellants went up in revision to the Additional Collector of sales tax.
That officer by 737 his order dated November 1, 1958 granted further relief by ordering refund of an additional sum of Rs. 3,588/1/9.
But the sales tax officer did not give effect to that order.
As the Additional Collector did not accept the appellants ' claim in full, they went up in revision to the Tribunal.
The Tribunal allowed their claim in full.
The Revenue took up the matter in reference to the High Court but that reference was rejected.
From the foregoing it is seen that in respect of the period April 1, 1950 to March 31, 1951 the appellants are entitled to get a refund of Rs. 23,806/3/6.
Despite the aforementioned orders, the sales tax officer did not pay the amounts ordered to be refunded.
On the other hand, he threatened to take steps to forfeit the same by having recourse to section 12A(4).
On June 27, 1962, the sales tax officer called upon the assessees to remain present in their office on July 2, 1962 with particulars of the amount collected by them by way of sales tax from the purchasers in 'other States during the period January 26, 1950 to March 31, 1951.
At that stage, the appellants approached the High Court of Gujarat by special civil application No. 641 of 1962 under article 226 of the Constitution.
In that application, they prayed for several reliefs, the most important of which was to direct the respondents to comply with the orders of refund and to refrain from taking any action against them under section 12A(4).
The High Court dismissed that application.
Hence.
this appeal.
The Act provides for the levy of tax on the sale of goods in the then State of Bombay.
It came into force on March 8, 1946.
Any person who carries on business of selling or supplying goods in the State of Bombay whether for commission, remuneration or otherwise, is defined as a dealer in section 2(c).
Section 8 and section 8(a) of the Act provide for the registration of dealers.
As mentioned earlier the appellants are registered ' dealers.
Under section 2(k) of the Act, the assessment year is the financial year.
Section 5 prescribes the incidence of taxation.
Section 10 prescribes the returns to be made by the dealers.
The assessment is made under section 11.
Section 11 (a) provides for taxing the turnover escaping assessment.
Section 12 provides for the payment and recovery of tax.
Section 12A is the one with which we are concerned in this appeal.
It reads: "(1) No person shall collect any amount by way of tax under this Act in respect of sales or supplies of any goods which are declared, from time to time, under section 7 as sales or supplies on which the tax is not payable.
(2) No person selling or supplying any goods shall collect from the purchaser any amount by way of sales tax unless he is a registered dealer and is liable to pay tax under this Act in respect of such sale or supply: Provided that this sub section shall not apply in cases where a person is required to collect such amount of tax separately in order to comply with the conditions 738 and restrictions imposed on him under the provisions of any law for the time being in force.
(3) Every registered dealer whose gross turnover exceeds Rs. 60,000 a year shall issue a bill or cash memorandum signed and dated by him or his servant, manager or agent to the purchaser in respect of the goods sold or supplied by him showing the particulars of the goods and the price at which the goods are sold or supplied shall keep the counterfoil or duplicate of such bill or cash memorandum duly signed and dated and preserve it for a period of not less than two years from such date.
(4) If any person collects any amount by way of tax in contravention of the provisions of sub section (1) or (2) or if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act, the amounts so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for an offence under this Act be forfeited to the State Government and such person or dealer, as the case may be, shall within the prescribed period, pay such amount into a Government treasury and in default of such payment, the amount shall be recovered as an arrear of land revenue.
" In view of article 286(1)(a) of the Constitution as it stood at the relevant time, the appellants ' sales outside the State of Bombay were not exigible to tax.
Therefore if the appellants had collected any amount from their purchasers in respect of those sales by way of tax they had undoubtedly contravened sub section 2 of section 12A.
Sub section 4 of section 12A provides for the forfeiture to State government any amount collected by a dealer by way of tax in excess of the amount payable by him under the Act.
For the purpose of deciding the point in issue it is not necessary to find out the scope of the expression "collects any amount by way of tax" in section 12A(4).
We shall assume, without deciding, the collection made by the appellants, if any, was by way of tax.
It was not contended nor could it have been contended that the impugned provision is a taxation measure bringing to tax directly or indirectly the sales effected outside the State of Bombay.
In Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad,(1) interpreting section 11(2) of, the Hyderabad General Sales Tax Act 1952, a provision somewhat similar to, the impugned provision, this Court observed that legislation under Entry 54 of List II of the Constitution (similar to Entry 48 of List 11 of the Government of India Act, 1935, the entry with which we are concerned in this case) proceeds on 'the basis that the amount concerned is not a tax exigible under the law made under that entry, but (1) ; 739 even so lays down that though it is not exigible under the law, it shall be paid over to the government merely because some dealers by mistake or otherwise have collected it as tax; hence, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry.
Therein it was held that it cannot be said that the State legislature was directly legislating for the imposition of sales or purchase tax under Entry 54 of List 11 when it made the provisions of section 11 (2), for on the basis of the provision the amount that was collected by way of tax was not exigible as tax under the law.
According to the Revenue section 12A(4) is a penal provision; and it provides for the imposition of penalty on those who contravene section 12A(1) and (2).
It was said on its behalf that power to enact such a provision is incidental to the power to tax sales.
In support of that contention reliance was placed on the decision of the Gujarat High Court in Ram Gopal vs Sales Tax Officer, Surat and Another(1).
That decision upheld the validity of section 12A(4).
If that decision lays down the law correctly, then the appellants are out of court.
But we think that the said decision cannot be sustained.
We shall not go into the question whether from the language of the impugned provision it is possible to hold that it is a penal provision.
For our present purpose we shall assume it to be so.
We shall also assume that the legislature had legislative competence to enact that provision.
But the question is whether it is violative of article 19(1)(f) which guarantees the freedom to hold property.
Prima facie the appellants are entitled to get the amount ordered to be refunded to them.
It is for the respondents to establish that the same is liable to be forfeited.
Even according to the respondents that amount can be forfeited only as a measure of penalty for the contravention of section 12A(1) and (2).
Under our jurisprudence no one can be penalised without a proper enquiry.
Penalising a person without an enquiry is abhorrent to our sense of justice.
It is a violation of the principles of natural justice, which we value so much.
The impugned provision which provides for the forfeiture of the amount in the hands of the dealers, does not lay down any procedure for ascertaining whether in fact the dealer concerned bad collected any amount by way of tax from his purchasers outside the State and if so what that amount is.
Neither section 12A(4) nor any rule framed under the Act contemplates any enquiry much less a reasonable enquiry in which the person complained of can plead and prove his case or satisfy the authorities that their assumptions are either wholly or partly wrong.
The Act is silent as to the machinery and procedure to be followed in determining the question as to whether there has been a contravention of sections 12A(1) and (2), and if so, to what extent.
(1) 16 S.T.C. 1005.
L/P(N)7SCI 8 740 Hence it would be open to the department to evolve all the requisite machinery and procedure which means that the whole thing, from the beginning to end, is treated as of a purely administrative character, completely ignoring the legal position.
The imposition of a penalty on a person is at least of a quasi judicial character.
The impugned provision does not concern itself only with the amount admittedly collected by a person in contravention of sub sections 1 and 2 of section 12A. Even if there is any dispute either as to the facturn of collection or as to the amount collected, such a case also comes within the scope of section 12A(4).
Yet that section does not provide for any enquiry on disputed questions of facts or law.
The forfeiture provided for in section 12A(4) prima facie infringes article 19(1)(f).
Therefore it is for the respondents to satisfy the Court that the impugned provision is a reasonable restriction imposed in the interest of the general public.
Section 12A(4) does not contemplate the making of any order.
As mentioned earlier, that section prescribes that if any registered dealer collects any amount by way of tax in excess of the amount payable by him under the Act, the amount so collected shall, without prejudice to any prosecution that may be instituted against him for an offence under the Act, be forfeited to the State government and he shall within the prescribed period pay such amount into a government treasury and in default of such payment the amount shall be recovered as arrears of land revenue.
This section does not contemplate adjudication.
Nor does it, provide for making any order.
Hence, it is doubtful whether any appeal can be filed against a demand made under that section under section 21.
The question whether appellants in the instant case had been afforded a reasonable opportunity to establish their case or riot is besides the point.
The constitutional validity of a provision has to be determined on construing it reasonably.
If it passes the test of reasonableness, the possibility of powers conferred being improperly used, is no ground for pronouncing it as invalid, and conversely if the same properly interpreted and tested in the light of the requirements set out in Part III of the Constitution, does not pass the test, it cannot be pronounced valid merely because it is being administered in the manner which might not conflict with the constitutional requirements.
On a reasonable interpretation of the impugned provision, we have no doubt that the power conferred under section 12A(4) is unguided, uncanalised and uncontrolled.
It is an arbitrary power.
As held by this Court in Dr. N.B. Khare vs State of Delhi(1), whether the restrictions imposed by a. legislative enactment upon a fundamental right guaranteed by article 19(1) are reasonable within the meaning of article 19(5) would depend as much on the procedural portion of the law as the substantive part of it.
(1) ; 741 Rao(1) wherein it was observed that in considering the reasonable That view was reiterated by this Court in State of Madras vs V. G. ness of laws imposing restrictions on fundamental rights both the substantive and procedural aspects of the impugned law should be examined from the point of view of reasonableness.
This Court has taken that view consistently.
A provision like the one with which we are concerned in this case can hardly be considered reasonable.
For the reasons mentioned above, this appeal is allowed.
The order of the High Court is set aside and a writ of mandamus will be issued to the respondents to comply with the refund order set out in the petition filed before the High Court and to refrain from proceeding against the appellants under section 12A(4).
The appellants are entitled to their costs both in this Court and in the High Court.
Y.P. Appeal allowed.
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In view of article 286 (1) (a) of the Constitution, as it stood at the relevant time, the sales by the appellants (registered dealers) outside the State of Bombay were not exigible to tax.
The appellants.were directed to refund amounts collected by them from their purchasers in respect of these sales by way of tax, failing which the amounts would be forfeited under section 12A(4) of the Bombay Sales Tax Act.
The appellants filed a writ petition in the High Court to restrain the respondents from taking action against them under section 12A(4), The High Court dismissed the petition.
In appeal, this Court, Held: section 12A(4) of the Bombay Sales Tax Act was void being violative of article 19(1)(f) of the Constitution.
Prima facie the appellants were entitled to get the amount ordered.
to be refunded to them.
It was for the respondents to establish that the same was liable to be forfeited.
Even according to the respondents that amount could be forfeited only as a measure of penalty.
Under our jurisprudence no one can be penalised without a proper enquiry.
[740 E F].
The impugned provision which provided forfeiture of the amount in the hands of the dealers, did not lay down any procedure for ascertaining whether in fact the dealer concerned hid collected any amount by way of tax from his purchasers outside the State and if so what that amount was.
Neither section 12A(4) nor any rule framed under the Act contemplated any enquiry,, much less a reasonable enquiry in which the person complained of could plead and prove his case or satisfy authorities that their assumptions were either wholly or wholly wrong.
This section did not contemplate adjudication nor provide for making any order.
Hence, it was doubtful whether any appeal could be filed against a demand made under that section under section 21 (740 G H; 741 E].
Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad , Dr. N. B. Khare vs State of 'Delhi. ; State of Madras vs V. G. Rao, (19521 S.C.R. 597 followed.
Ram Gopal vs Sales Tax Officer, Surat and another, 16 S.T.C. 1005 disapproved,
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Here is a two-paragraph summary of the court case:
The court case, Appeal No. 126 of 1966, revolves around the constitutional validity of section 12A(4) of the Bombay Sales Tax Act 1946. The appellants, registered dealers, had collected sales tax on sales made outside the State of Bombay, which was not exigible to tax under the Act. However, the sales tax officer threatened to forfeit the amounts collected under section 12A(4) if the dealers failed to provide proof of refunding the amounts to the purchasers. The appellants challenged this provision, claiming it was violative of article 19(1)(f) of the Constitution, which guarantees the freedom to hold property.
The court upheld the appellants' claim, ruling that section 12A(4) was unconstitutional. The court held that the provision did not provide for any procedure for ascertaining whether the dealer had collected the amounts by way of tax, and that there was no scope for the dealer to plead or prove his case. The court also found that the provision conferred an arbitrary power on the authorities, which was not reasonable. As a result, the court allowed the appeal, set aside the order of the High Court, and issued a writ of mandamus to the respondents to comply with the refund order and refrain from proceeding against the appellants under section 12A(4).
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ivil Appeal No. 1451 of 1968.
Appeal from the judgment and decree dated March 11, 1965 of the Andhra Pradesh High Court in A.S. Nos. 93 and 169 of 1957.
Rajeshwara Rao and B. Parthasarathi, for the appellant.
D. Munikanniah and A.V.V. Nair, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the High Court of Andhra Pradesh dated March 11, 1965 in A.S. Nos. 93 and 169 of 1957.
The appellant was a firm of dealers in pulses at Vijayawada.
It was sending pulses like green gram and black gram to other States viz.: Bombay, Bengal, Madras and Kerala by rail in the course of their business.
The consignments were addressed to 'self ' and the railway receipts were endorsed in favour of Banks for delivery against payments.
The purchasers obtained the railway receipts after payments and took delivery of the goods.
The total turnover of the business of the appellant for the year 1949 50 was Rs. 17,05,144 2 2.
Of the said turnover a sum of Rs. 3,61,442 7 3 represented the turnover of sales effected outside the then Madras State.
For the assessment year 1949 50 the Deputy Commercial Tax Officer collected sales tax on the total turnover without exempting the value of the sales effected outside the State.
The appellant was permitted to pay sales tax under(r. 12 of the Madras General Sales Tax (Turnover and Assessment) Rules.
The appellant submitted monthly returns and paid sales tax without claiming any such exemption till the end of January, 1950.
But in, the returns for the months of February and March, 1950 the appellant claimed exemption on sales effected outside the State.
The appellant submitted a consolidated return exhibit A 18 to the Deputy Commercial Tax Officer on March 30, 1950 claiming exemption in respect of a sum of Rs. 10,37,334 7 9 being the value of the sales effected outside the 745 State or the period commencing from April 1, 1949 and ending January 31, 1950.
The Deputy Commercial Tax Officer fixed the taxable turnover of the appellant at Rs. 17,05,14 4 2 2 and issued a notice exhibit A 23 dated October 24, 1950 to show cause why the appellant should not be assessed accordingly.
The appellant was thereafter held liable to pay tax amounting to Rs. 26,642 14 0 on a net turnover of Rs. 17,05,144 2 2.
The appellant preferred an appeal to the Commercial Tax Officer and a revision petition to the Board of Revenue, Madras but was unsuccessful.
The appellant, therefore brought a suit for the recovery of Rs. 21,270 13 0 being the amount of tax illegally collected from him together with interest, contending that the sales effected outside the State could not be taxed under article 285 (1)(a) of the Constitution of India.
The State of Madras contested the suit on the ground that the sales were taxable as they fell within the purview of explanation 2 to section 2(h) of the Madras General Sales Tax Act, 1939 hereinafter referred to.
as the Act).
The Subordinate Judge held that for the period from April 1, 1949 to January 25, 1950 the appellant was not entitled to impeach the assessment on the turnover relating to sales outside the State.
As regards the period from March 26, 1950 to March 31, 1950 the Subordinate Judge took the view that the past of the turnover relating to, outside sales was not liable to salestax but as there was a single order of assessment for the entire period the entire assessment was illegal.
Again the judgment of the Subordinate Judge both the appellant and the respondent filed appeals A.S. No. 93 of 1957 and A.S. No. 169 of 1957 to the High Court of Andhra Pradesh.
But its order dated April 18, 1960 in Appeal No. 169 of 1957 the High Court called for a finding from the trial court as to whether the appellant was able to prove the facts entitling him to invoke the explanation to article 286(1)(a).
By its order dated July 21, 1962 the trial court submitted a finding to the effect that in view of the decision of the Supreme Court in India Copper Corporation Ltd. vs The State of Bihar(1) the burden of proof was not on the appellant and that the finding will have to be given in its favour.
But by its order dated March 5, 1963 the High Court directed the Subordinate Judge to record a finding after considering the evidence adduced by the appellant as to whether the goods in question were delivered for consumption within the delivery States.
In its order dated March 22, 1963 the trial court, after considering the evidence given by the appellant 's witnesses came to the conclusion that the deliveries were not made for purposes of consumption within the delivery States only.
The High Court by a common judgment dated March 11, 1965 in A.S. No. 93 and 169 of 1957 held that the appellant could not claim the benefit under article 286(1)(a) of the Constitution in the (1) 12S.T.C. 56.
746 absence of evidence as to how the wholesalers disposed of the goods after obtaining delivery and therefore the entire turnover for the year 1949 50 would be assessable to tax.
In the result A.S. No. 169 of 1957 flied by the respondent was allowed and A.S. No. 93 of 1957 filed by the appellant was dismissed.
The Madras General Sales Tax Act, 1939 was enacted in exercise of the legislative authority conferred upon the Provincial Legislatures by Entry 48 of List II read with section 100(3) of the Government of India Act, 1935.
The explanation to section 2(h) of this Act is as follows: "Notwithstanding anything to the contrary in the Indian the sale or purchase of any goods shall be deemed, for the purpose of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made.
(a) If the goods.
were actually in this Province at the time when the contract of sale or purchase in respect thereof was made or, (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made." Under Entry 48 of List II of the Government of India Act, 1935the Provincial Legislatures could tax sales by selecting some fact or circumstances which provided a territorial nexus with the taxing power of the State even if the property in the goods sold passed outside the Province or the delivery under the contract of sale took place outside the Province.
Legislation taxing sales depending solely upon the existence of a nexus, such as production or manufacture of the goods, or presence of the goods in the Province at the date of the contract of sale, between the sale and the legislating Province could competently be enacted under the Government of India Act, 1935.
[see Tata Iron & Steel Ca.
Ltd. vs The State of Bihar(1) and Poppatlal Shah vs The State of Madras ( 2 ) ].
By article 286 of the Constitution certain fetters were placed upon the legislative powers of the States as follows: "(1) 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 (1) ; (2) [19531 S.C.R. 677.
747 (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce; Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty first day of March, 1951.
(3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." Therefore, by incorporating section 22 of the Madras Act read with article 286, notwithstanding the amplitude of the power otherwise granted by the charging section read with the.
definition of 'sale ', a cumulative fetter of triple dimension was imposed upon the taxing power of the State.
The Legislature of the Madras State could not since January 26, 1950, levy a tax on sale of goods taking place outside the State or in the course of import of the goods into, or export of the goods out of, the territory of India, or on sale of any goods where such sale took place in the course of inter State trade or commerce.
By the Explanation to article 286(1)(a) which is incorporated by section 22 of the Madras Act a sate is deemed to take place in the State in which the goods are actually delivered as a. direct result of such sale for the purpose 748 of consumption in that State even though under the law relating to sale of goods the property in the goods has by reason of such sale passed in another State.
In the State of Bombay and Anr.
vs The United Motors (India) Ltd.(1) it was held that since the enactment of article 286(1)(a) a sale described in the Explanation which may for convenience be called an "Explanation sale" is taxable by that State alone in which the goods sold are actually delivered as a direct result of sale for the purpose of consumption in that State.
With a view to impose restrictions on the taxing power of the States under the pre Constitution statutes, amendments were made in those statutes by the Adaptation of Laws Order.
As regards the Madras Act the President issued on July 8, 1952 the Fourth Amendment inserting a new section, section 22 in that Act.
It runs as follows: "Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place (a) (i) outside the State of Madras, or (ii) in the course of import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st March., 1951, in the course of inter State trade or commerce, and the provisions of this Act shall be read and construed accordingly.
Explanation : For the purposes of cl.
(a)(i) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
" By this amendment the same restrictions were engrafted on the pre Constitution statute as were imposed by article 286 of the Constitution upon post Constitution statutes.
As regards the sales for the period from April, 1949 to January 25, 1950 it was admitted before the Deputy Commercial (1) ; 749 Tax Officer that the goods were actually in the Madras State at the time the contract of sale was concluded.
It was for this reason that the Deputy Commercial Tax Officer negatived the claim which the appellant made in respect of those sales.
It appears that in the trial court the appellant challenged the constitutional validity of explanation to section 2(h) of the Act.
But in view of the decision of this Court in the Tata Iron & Steel Co 's case(1) and Poppatlal Shah 's case(2) counsel on behalf of the appellant did not seriously dispute the validity of the assessment in regard to sales from April 1, 1949 to January 25, 1950.
With regard to the period from January 26, 1950 to March 31, 1950 the contention of the appellant ' is that the High Court was in error in holding that the burden of proof was on the appellant to show that there was not only delivery of goods for consumption within the delivery States but there was actual consumption of the goods in those States.
In our opinion the argument is well founded and must be accepted as correct.
In India Copper Corporation 's case(3) it was pointed out by this Court that if the goods were as a direct result Of a sale delivered outside the State of Bihar for the purpose of consumption in the State of first delivery, the assessee would be entitled to the exemption from sales tax by virtue of the Explanation to Art 286(1)(a) of the Constitution and it would not be necessary for the assessee to prove further that the goods so delivered were actually consumed in the State of first destination.
In the present case the Subordinate Judge has, upon a consideration of the evidence adduced by the parties stated in his report dated June 27, 1962 that the intention of the appellant was that the sale and delivery should be for the purpose of consumption in the delivery States.
It is true that in his subsequent report dated March 22, 1963 the Subordinate Judge gave a different finding.
But it is obvious that the subsequent report of the Subordinate Judge is vitiated because the principle laid down by this Court in India Copper Corporation 's case(3) has not been taken into account.
Having regard to the evidence adduced by the appellant in this case we are satisfied that the part of the turnover which related to sale from 2, January 26, 1950 to March 31, 1950 was not liable to sales tax and the levy of sales tax from the appellant to this extent is illegal.
The next question arising in this appeal is whether the assessment order of the Deputy Commercial Tax Officer for the year 1949 50 is illegal in its entirety notwithstanding the fact that the State Government had a right to levy sales tax on outside sales (1) ; (2) ; (3) 12 S.T.C. 56. 750 which were effected prior to January 26, 1950.
It was argued for the appellant that the assessment must be treated as one and indivisible and if a part of the assessment is illegal the entire assessment must be deemed to be infected and treated as invalid.
In support of this argument reference was made to the decision of this Court in Ram Narain Sons Ltd. vs Assistant Commissioner of Sales Tax(1) in which this Court observed as follows: "The necessity for doing so; is, however, obviated by reason of the fact that the assessment is one composite whole relating to.
the pre Constitution as well as the post Constitution periods and is invalid in toto.
There is authority for the proposition that when an assessment consists of a single undivided sum in respect of the totality of the property treated as assessable, the wrongful inclusion in it of certain items of property which by virtue of a provision of law were expressly exempted from taxation renders the assessment invalid in toto." The Court cited with approval a passage from the judgment of the Judicial Committee in Bennett & White (Calgary) Ltd.and Municipal District of Sugar City No. 5(2).
"When an assessment is not for an entire sum, but for separate sums, dissected and earmarked each of them to a separate assessable item, a Court can sever the items and cut out one or more along with the sum attributed to it, while affirming the residue.
But where the assessment consists of a single undivided sum in respect of the totality of property treated as assessable, and when one component (not dismissible as 'de minimis ') as on any view not assessable and wrongly included, it would seem clear that such a procedure is barred, and the assessment is bad wholly.
That matter is covered by authority.
In Montreal Light, Heat & Power Consolidated vs City of Westmount(3) the Court (see especially per Anglin, C.J) in these conditions held that an assessment which was bad in part was infected throughout, and treated it as invalid.
Here their Lordshis are of opinion, by parity of reasoning, that the assessment was invalid in toto.
" Applaying the principle to the special facts are circumstances of the case the Court set aside the orders of assessment and directed that the case should be remanded to the Assessment Officer for reassessment of the appellants in accordance with law.
The same principle was applied but with a different result in the later case (1) 6 S.T.C. 627 at 637.
(2) at p. 816.
(3) 751 the State of Jammu & Kashmir vs Caltex (India) Ltd. (1) in which the question arose as regards the validity of an assessment of sales tax of all retails sales of motor spirit.
The Petrol Taxation Officer assessed the respondent to pay sales tax for the period January 1955 to May, 1959 under section 3 of the Jammu & Kashmir Motor Spirit (Taxation of Sales) Act, 2005.
The respondent applied under section 103 of the Constitution of Jammu & Kashmir and a single Judge of the High Court held that the respondent was liable to pay sales tax only in respect of the sales which took place during the period January to September, 1955 and issued a writ restrainig the appellants from levying tax for the period October, 1955 to May, 1959.
On appeal a Division Bench of the High Court quashed the assessment for the entire period.
On appeal to this Court it was held that though there was one order of assessment for the period January 1, 1955 to May 1959 the assessment could be split up and dissected and the items of sale could be separated and taxed for different periods.
It was pointed out that the sales tax was imposed in the ultimate analysis on receipts from individual sales or purchases of goods effected during the entire period, and, therefore, a writ of mandamus could.
be issued directing the appellant not to realise sales tax with regard to transactions of sale during the period from September 7, 1955 to May, 1959.
A similar question arose for determination in an American case [Frank Rattarman vs Western Union Telegraph Co.(2)].
The question in that case was "whether a single tax, assessed under the Revised Statutes of Ohio, section 2778, upon the receipts of a telegraph company which receipts were derived partly from inter state commerce and partly from commerce ' within the State but which were returned and assessed in gross and without separation or apportionment, is wholly invalid, or invalid only in the proportion and to the extent that the said receipts were derived ,from interstate commerce".
It was held unanimously by the Supreme Court of the United States that the assessment was not wholly invalid but it was invalid only in proportion to the extent that such receipts were derived from interstate commerce.
It was observed that where the subjects of taxation can be separated so that that which arises from interstate commerce can be distinguished from that which arises from commerce wholly within the State, the Court will act upon this distinction, and will restrain the tax on interstate commerce.
while permitting the State to collect that upon commerce wholly within its own territory.
The principle of this case has been consistetly followed in American cases: [see Bowman vs Continental Company(3)].
This case has been cited with approval by this Court in The State of Bombay (1) 17 S.T,C. 612.
(2) ; (3) C.I./69 4 752 vs The United Motors (India) Ltd.(1) wherein it was observed that the same principle should be applied in dealing with taxing statutes in this country also.
In the present case we are of opinion that though there is a single order of assessment for the period from April 1, 1949 to March 31, 1950 the assessment could be split up and dissected and the items of sale separated and taxed for different periods.
It is quite easy in this case to ascertain the turnover of the appellant for the pre Constitution and post Constitution periods for these figures are furnished in the plaint by the appellant himself.
It is open to the Court in these circumstances to sever the illegal part of the assessment and give a declaration with regard to that part alone instead of declaring the entire assessment void.
For these reasons we hold that the appellant should be granted a declaration that the order of assessment made by the Deputy Commercial Tax Officer for the year 1949 50 is invalid to the extent that the levy of sales tax is made on sales relating to.
goods which were delivered for the purpose of consumption outside the State for the period from January 26, 1950 to March 31, 1950.
The result is that the appellant is entitled to a refund of the amount illegally collected from him for the period from January 26, 1950 to March 31, 1950.
The trial court has already found that the appellant is entitled to claim exemption with regard to.
turnover for this period to the extent of Rs. 3,34,107 15 6 and the tax payable on this sum is Rs. 5,220 7 0.
The appellant is.
therefore, entitled to a decree for the refund of Rs. 5,220 7 0.
The appellant is also entitled to interest at 6% per annum from the date of suit till realisation of this amount.
For these reasons we allow this appeal and set aside the judgment of the Andhra Pradesh High Court dated March 11, 1965 in A.S. Nos. 93 and 169 of 1957 and allow this appeal to the extent indicated above.
There will be no order with regard to costs.
R.K.P.S. Appeal allowed.
(1) ; at 1097.
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The appellant, a dealer in pulses in Vijayawada in Madras State made certain sales outside the State during the assessment year 1949 50.
The appellant claimed exemption from sales tax of sales effected outside the State during the year but the Deputy Commercial Tax Officer disallowed the claim.
A first appeal and a revision petition to the Board of Revenue were unsuccessful.
The appellant thereafter brought a suit for the recovery of tax collected from him with interest contending that part of sales effected outside the State could not be taxed under article 285(1)(a) of the Constitution.
The Trial Court held that the assessment to tax of the sales during the period from April 1, 1949 to January 25, 1950 ' could not be impeached but the sales from January 26 to March 31 outside the State were not liable to sales tax; as there was a single order of assessment 'for the whole year, the entire assessment was illegal.
In appeal to the High Court, and upon a direction from that Court, the Trial Court gave a finding that deliveries of the goods were not made for purposes of consumption within the delivery State only.
The High Court.
therefore.
allowed the appeal holding that the appellant could not claim the benefit under Article 286(1)(a) in the absence of evidence as to how the whole sales disposed of the goods after obtaining delivery and therefore the entire turn over for the year 1949 50 would be assessable to tax.
In the appeal to this Court, it was contended inter alia (i) that the High Court was in error in holding that the burden of proof was on the appellant to show that there was not only delivery of goods for consumption within the delivery States but there was actual consumption of goods in those States: (ii) the assessment must be treated as an indivisible one and if a part of the assessment was illegal, the entire assessment must be deemed to be infected and treated as invalid.
HELD: Allowing the appeal, (i) The part of the turnover which related to sales from January 26, 1960 to March 31.
1960 was not liable to sales tax and the levy of sales tax from the appellant to this extent was illegal.
It was rightly contended that the appellant did not carry the burden of showing that there was not only delivery of goods for consumption within the States but that the goods were actually consumed in those States.
[749 C] India Copper Corporation Ltd. vs The State of Bihar, 12 S.T.C. 56 relied upon.
744 (ii) In the present case though there was a single order of assessment for the period from April 1, 1949 to March 31, 1950, the assessment could be split up and dissected and the items of sales separated and taxed for different periods.
It was possible to ascertain the turnover of the appellant for the pre Constitution and post Constitution periods from the figures furnished in the plaint by the appellant himself.
It was, therefore.
open to the Court in these circumstances to sever the illegal part of the assessment and give a declaration with regard to the illegal part alone instead of1 declaring the entire assessment void.
[752 B] Case law referred to.
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Here is a two-paragraph summary of the court case:
The court case, Civil Appeal No. 1451 of 1968, concerned an appeal by a firm of dealers in pulses to the High Court of Andhra Pradesh against the assessment of sales tax by the Deputy Commercial Tax Officer, Madras. The firm claimed that the sales tax collected by the Deputy Commercial Tax Officer for the year 1949-50 was illegal, as the sales were made outside the State and the property in the goods had passed to the buyers in other States. The firm relied on Article 286(1)(a) of the Constitution, which provides that no law of a State shall impose a tax on the sale or purchase of goods where such sale or purchase takes place outside the State.
The court held that the firm was entitled to exemption from sales tax for the period from January 26, 1950 to March 31, 1950, in respect of the turnover of Rs. 3,34,107 15 6, and the tax payable on this sum was Rs. 5,220 7 0. The court also held that the assessment order was invalid to the extent that the levy of sales tax was made on sales relating to goods delivered for the purpose of consumption outside the State for this period. The court allowed the appeal and set aside the judgment of the Andhra Pradesh High Court, and granted a decree for the refund of Rs. 5,220 7 0, along with interest at 6% per annum from the date of suit till realisation of this amount.
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